<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 1998
REGISTRATION NO. 333-63593
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO THE
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PROVIDENT BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter )
<TABLE>
<S> <C> <C>
FEDERAL 6712 (TO BE APPLIED FOR)
(State or Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Code Identification No.)
Organization) Number)
</TABLE>
400 RELLA BOULEVARD
MONTEBELLO, NEW YORK 10901
(914) 369-8040
(Address and Telephone Number of Principal Executive Offices)
GEORGE STRAYTON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
400 RELLA BOULEVARD
MONTEBELLO, NEW YORK 10901
(914) 369-8040
(Name, Address and Telephone Number of Agent for Service)
COPIES TO:
ERIC LUSE, ESQ.
KENNETH R. LEHMAN, ESQ.
LUSE LEHMAN GORMAN POMERENK & SCHICK, P.C.
5335 WISCONSIN AVENUE, N.W., SUITE 400
(202) 274-2000
WASHINGTON, D.C. 20015
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this registration statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box: [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
PROPOSED PROPOSED
AMOUNT TO BE MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF REGISTERED OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED PER OFFERING REGISTRATION FEE
SHARE/UNIT PRICE (1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.10 par value per share 4,007,175 shares $10.00 $40,071,750 $11,822 (2)
Participation Interests (2) 340,000 interests -- -- --
==================================================================================================================
</TABLE>
____________________
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Previously submitted.
(3) The securities of Provident Bancorp, Inc. to be purchased by the Provident
Savings Bank 401(k) Plan as adopted by Provident Bank are included in the
amount shown for Common Stock. However, pursuant to Rule 457(h) of the
Securities Act of 1933, as amended, no separate fee is required for the
participation interests. Pursuant to such rule, the amount being
registered has been calculated on the basis of the number of shares of
Common Stock that may be purchased with the current assets of such Plan.
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 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 SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
================================================================================
<PAGE>
PROSPECTUS
UP TO 3,323,500 SHARES OF COMMON STOCK
PROVIDENT BANCORP, INC.
400 RELLA BOULEVARD
MONTEBELLO, NEW YORK, 10901
================================================================================
Provident Bancorp, Inc., a federal corporation, is offering for sale up to
3,323,500 shares, or 46.6% of its to-be outstanding common stock, in
connection with the mutual holding company reorganization of Provident Bank.
Provident Bancorp, Inc. will issue the remaining 53.4% of its to-be outstanding
common stock to Provident Bancorp, MHC, a federal mutual holding company. The
shares of common stock of Provident Bancorp, Inc. are being offered to the
public under the terms of a plan of reorganization that must be approved by
members of Provident Bank and by the Office of Thrift Supervision. Because the
names of Provident Bank, Provident Bancorp, Inc. and Provident Bancorp, MHC are
so similar, we will refer to Provident Bank as the "Bank," we will refer to
Provident Bancorp, Inc. as the "Company," and we will refer to Provident
Bancorp, MHC as the "Mutual Holding Company."
================================================================================
OFFERING TERMS
An independent appraiser has estimated that the market value of the Company
after giving effect to the reorganization and offering is between $52,700,000
and $71,300,000. Based on the valuation, the Company will issue between
5,270,000 and 7,130,000 shares of its common stock in the reorganization. The
Company intends to sell 46.6% of these shares, or between 2,456,500 and
3,323,500 shares, to the public, and issue 53.4% of these shares, or between
2,813,500 and 3,806,500 shares, to the Mutual Holding Company. The Company may
increase the shares issued in the reorganization to up to 8,199,500 shares. If
the Company increases the shares issued in the reorganization it will also
increase the shares it sells in the offering to up to 3,822,025 shares. The
number of shares to be issued is subject to approval of the Office of Thrift
Supervision. Based on these estimates, the Company is making the following
offering of shares of common stock.
<TABLE>
<CAPTION>
Adjusted
Minimum Midpoint Maximum Maximum
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
. Price per share.................... $ 10.00 $ 10.00 $ 10.00 $ 10.00
. Number of shares................... 2,456,500 2,890,000 3,323,500 3,822,025
. Offering expenses.................. $ 1,250,000 $ 1,250,000 $ 1,250,000 $ 1,250,000
. Net proceeds....................... $23,315,000 $27,650,000 $31,985,000 $36,970,250
. Net proceeds per share............. $9.49 $ 9.57 $ 9.62 $ 9.67
</TABLE>
PLEASE REFER TO RISK FACTORS BEGINNING ON PAGE _____ OF THIS DOCUMENT.
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 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 IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Ryan, Beck & Co., Inc. will use its best efforts to assist 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.
The Company has applied to have the common stock quoted on the Nasdaq National
Market under the symbol "PBCP"
For information on how to subscribe, call the Stock Information Center at
(914) 369-8550.
RYAN, BECK & CO., INC.
Prospectus dated November __, 1998
<PAGE>
[MAP OF ROCKLAND COUNTY, NEW YORK, INCLUDING HOME OFFICE AND BRANCH OFFICES OF
PROVIDENT BANK AND LIST OF THESE OFFICES AND STREET ADDRESSES]
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION AND STOCK OFFERING.... 4
SUMMARY AND OVERVIEW................................................. 7
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA....................... 14
RECENT DEVELOPMENTS.................................................. 16
RISK FACTORS......................................................... 21
PROVIDENT BANCORP, MHC............................................... 26
PROVIDENT BANCORP, INC............................................... 27
PROVIDENT BANK....................................................... 27
REGULATORY CAPITAL COMPLIANCE........................................ 28
USE OF PROCEEDS...................................................... 29
DIVIDEND POLICY...................................................... 30
MARKET FOR COMMON STOCK.............................................. 30
CAPITALIZATION....................................................... 31
PRO FORMA DATA....................................................... 32
PROPOSED PURCHASES BY DIRECTORS AND EXECUTIVE OFFICERS............... 39
THE REORGANIZATION AND OFFERING...................................... 40
PROVIDENT BANK CONSOLIDATED STATEMENTS OF INCOME..................... 53
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................................... 54
BUSINESS OF PROVIDENT BANCORP, INC................................... 70
BUSINESS OF PROVIDENT BANK........................................... 70
TAXATION............................................................. 98
REGULATION...........................................................100
MANAGEMENT OF THE COMPANY............................................106
MANAGEMENT OF THE BANK...............................................108
RESTRICTIONS ON ACQUISITION OF THE COMPANY...........................117
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY..........................119
TRANSFER AGENT AND REGISTRAR.........................................120
LEGAL AND TAX MATTERS................................................120
CHANGE IN ACCOUNTANTS................................................120
EXPERTS..............................................................121
ADDITIONAL INFORMATION...............................................121
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS...........................F-1
GLOSSARY.............................................................G-1
</TABLE>
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION AND STOCK OFFERING
Q: WHAT IS THE PURPOSE OF THE REORGANIZATION AND STOCK 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 customers, employees,
management and directors may obtain an equity ownership in the Company.
You will have the opportunity to subscribe for stock. Stockholders of the
Company will 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 product lines and to diversify operations.
Moreover, the capital raised in the offering may be used to acquire new
branch offices or other financial institutions. Also, as a stock bank
operating through a holding company structure, we will improve our future
access to the capital markets.
Q: WHY IS THE BANK FORMING A TWO-TIER MUTUAL HOLDING COMPANY AND CONDUCTING A
MINORITY STOCK OFFERING INSTEAD OF UNDERGOING A STANDARD, OR FULL
CONVERSION TO STOCK FORM?
A: The Bank is currently a well-capitalized financial institution with
tangible capital equal to 7.3% of total assets at June 30, 1998. 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 to the public at the time of the reorganization, and, as a result,
raises less than half the capital that would be raised in a standard
conversion. Management believes that the proceeds from the offering will
provide the Bank with sufficient capital to implement its business
strategy, and that at the present time the Bank would not have a use for
the additional capital that would be raised if all shares were sold.
In addition, because OTS regulations and policy generally prohibit the sale
of a savings association in the mutual holding company structure, the
reorganization and offering will permit the Bank to achieve the benefits of
the stock form of organization without the threat of a change of control,
which may occur following a standard conversion from mutual to stock form.
Q: WHO WILL BE THE MINORITY STOCKHOLDERS OF THE COMPANY?
A: All persons who purchase common stock in the offering, including the
employee stock ownership plan the Bank is adopting in connection with the
reorganization, will be minority stockholders of the Company, and will own
46.6% of the Company's common stock upon completion of the offering. The
Mutual Holding Company will initially own 53.4% of the Company's common
stock, and will remain the majority stockholder of the Company as long as
the Mutual Holding Company remains in existence.
Q: HOW DO I ORDER THE STOCK?
A: You must complete and return the stock order form to us together with your
payment, so that we receive it on or before 12:00 noon, New York time, on
December 17, 1998.
4
<PAGE>
Q: WHO WILL BE PERMITTED TO PURCHASE STOCK?
A: The stock is being offered for sale in the following order of priority in a
subscription offering:
. Persons who had aggregate deposit accounts of at least $50 with the
Bank on December 31, 1996 ("Eligible Account Holders"). Any remaining
shares will be offered to:
. The Bank's tax-qualified employee plans. Any remaining shares will be
offered to:
. Persons other than Eligible Account Holders who had aggregate deposit
accounts of at least $50 with the Bank on September 30, 1998
("Supplemental Eligible Account Holders"). Any remaining shares will
be offered to:
. Depositors of the Bank as of October 30, 1998 (the "Voting Record
Date") and borrowers of the Bank as of July 9, 1998 whose borrowings
remained outstanding as of the Voting Record Date, who are not
Eligible Account Holders or Supplemental Eligible Account Holders
("Other Members"). Any remaining shares will be offered to:
. Employees, officers and directors of the Bank.
If the above persons do not subscribe for all of the shares, the remaining
shares may be offered in a community offering to certain members of the
general public, with preference given to natural persons residing in
Rockland County, New York.
Q: HOW MUCH STOCK MAY I ORDER?
A: The minimum number of shares that may be purchased is 25 shares. No
Eligible Account Holder, Supplemental Eligible Account Holder or Other
Member may, in their capacities as such, purchase more than 20,000 shares
(or $200,000) of common stock. No person, together with associates of and
persons acting in concert with such person, may purchase in the offering
more than 40,000 shares (or $400,000) of common stock. However, both of
these purchase limitations may be increased or decreased at the sole
discretion of the Company and the Bank, provided that the overall
purchase limitation may not be reduced below 1% of the shares issued in the
offering.
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 described above that are contained 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 of the offering, 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."
The categories are described in answer to the second preceding question.
Q: AS A DEPOSITOR OR BORROWER 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, including the section titled "Risk Factors."
5
<PAGE>
Q: WHO CAN HELP ANSWER ANY QUESTIONS I MAY HAVE ABOUT THE OFFERING?
Most of your questions will be answered by the Question and Answers
Brochure that accompanies this Prospectus. If you have additional questions
about the offering, you may contact:
STOCK INFORMATION CENTER
PROVIDENT BANK
(914) 369-8550
SELLING OR ASSIGNING YOUR SUBSCRIPTION RIGHTS IS ILLEGAL. ALL PERSONS
EXERCISING THEIR SUBSCRIPTION RIGHTS WILL BE REQUIRED TO CERTIFY THAT THEY ARE
PURCHASING SHARES SOLELY FOR THEIR OWN ACCOUNT AND THAT THEY HAVE NO AGREEMENT
OR UNDERSTANDING REGARDING THE SALE OR TRANSFER OF SUCH SHARES. THE COMPANY AND
THE BANK INTEND TO PURSUE ANY AND ALL LEGAL AND EQUITABLE REMEDIES IN THE EVENT
IT BECOMES AWARE OF THE TRANSFER OF SUBSCRIPTION RIGHTS. ORDERS KNOWN TO
INVOLVE THE TRANSFER OF SUBSCRIPTION RIGHTS WILL NOT BE HONORED. IN ADDITION,
PERSONS WHO VIOLATE THE PURCHASE LIMITATIONS MAY BE SUBJECT TO SANCTIONS AND
PENALTIES IMPOSED BY THE OTS.
6
<PAGE>
SUMMARY AND OVERVIEW
This summary highlights selected information from this Prospectus 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 the
entire Prospectus carefully, including the consolidated financial statements and
the notes to the consolidated financial statements of the Bank. Certain
financial information contained in the Prospectus has been derived from the
audited and unaudited consolidated financial statements of the Bank.
You should note as you read this Prospectus that at times capitalized terms
are used. These capitalized terms are generally defined in the glossary that is
at the end of this Prospectus. Defined terms are used to help you differentiate
between the various components of the transaction, to simplify the discussion
and to avoid unnecessary repetition by not having to define or describe a term
each time it is used. For example, to avoid confusion, all of the steps that
are part of the transactions described in this Prospectus are referred to as the
"Reorganization," and the offer and sale of 46.6% of the Company's common stock
is referred to as the "Offering." To further assist you in reading this
Prospectus, in addition to including a glossary, each term defined in the
glossary is also defined the first time that it is used in the Prospectus.
THE COMPANIES
Provident Bancorp, MHC
400 Rella Boulevard
Montebello, New York 10901
(914) 369-8040
The Mutual Holding Company is not currently an operating company and has
not engaged in any business to date. Upon completion of the Reorganization, the
Mutual Holding Company will be chartered under Federal law and will own 53.4% of
the outstanding common stock of the Company. The Mutual Holding Company is
not expected to engage in any business activities other than owning the Common
Stock of the Company. So long as the Mutual Holding Company exists, it will own
at least a majority of the Company's voting stock. Following completion of the
Reorganization, persons who were members of the Bank will become members of the
Mutual Holding Company, so long as their existing borrowings from the Bank
remain outstanding or they continue to maintain a deposit account with the
Bank.
Provident Bancorp, Inc.
400 Rella Boulevard
Montebello, New York 10901
(914) 369-8040
The Company is not currently an operating company and has not engaged in
any business to date. After the Reorganization, the Company will own all of the
Bank's common stock. Purchasers in the Offering will own 46.6% of the Company's
common stock and the Mutual Holding Company will own 53.4% of the Company's
common stock. Although these percentages may change in the future, the Mutual
Holding Company must always own a majority of the Company's Common Stock as long
as the Mutual Holding Company remains in existence. It is expected that the
Company will make the loan to the ESOP and invest up to 42% of the net proceeds
of the Offering as described in "Use of Proceeds." The holding company
structure will provide us greater flexibility in terms of operations, expansion
and diversification. See page __.
Provident Bank
400 Rella Boulevard
Montebello, New York 10901
(914) 369-8040
7
<PAGE>
The Bank is a community bank that offers financial services to individuals,
families and businesses primarily in Rockland County, New York and communities
in contiguous counties. The Bank is engaged primarily in the business of
offering various FDIC-insured savings and demand deposits to individual and
business customers through eleven full-service offices, and using those
deposits, together with funds generated from operations and borrowings, to make
one- to four-family residential and commercial real estate loans, consumer
loans, construction and land loans, commercial business loans, and multi-family
residential loans. The Bank also invests its funds in mortgage-backed
securities and investment securities. At June 30, 1998, the Bank had total
assets of $679.1 million, total deposits of $580.1 million and total equity of
$53.9 million. See pages __ to __.
THE REORGANIZATION AND OFFERING
The Reorganization and Offering involve a number of steps, including the
following:
. The Bank will establish the Company and the Mutual Holding Company,
neither of which will have any assets prior to the completion of the
Reorganization.
. 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 Company.
. The Company will issue between 5,270,000 and 7,130,000 shares of
its common stock, par value $0.10 per share (the "Common Stock"), in
the Reorganization; 53.4% of these shares (or between 2,813,500
shares and 3,806,500 shares) will be issued to the Mutual Holding
Company, and 46.6% (or between 2,456,500 shares and 3,323,500
shares) will be offered for sale in the Offering.
. Membership interests that depositors and certain borrowers had in the
Bank will become membership interests in the Mutual Holding 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 control 100% of the votes eligible to be cast by
members of the Mutual Holding Company immediately after the
Reorganization and, through the Mutual Holding Company, will control
53.4% of the votes eligible to be cast by the Company's stockholders
immediately following the Reorganization.
8
<PAGE>
DESCRIPTION OF THE MUTUAL HOLDING COMPANY STRUCTURE
Following completion of the Reorganization, the corporate structure of the
Bank will be as follows:
Minority
Provident Stockholders
Bancorp, (Including ESOP)
MHC
53.4% of 46.6% of
the the
Common Common
Stock Stock
Provident Bancorp, Inc.
100% of the
Common Stock
Provident Bank
The mutual holding company structure differs in significant respects from
the 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 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 its reorganization and stock offering. 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. The Company is selling 46.6% of its Common Stock in the
Offering. This will enable the Company to issue authorized but unissued shares
of Common Stock, or treasury stock, to finance the acquisition of other
financial institutions in stock-for-stock acquisitions, while still remaining in
the mutual holding company structure. The Company has no current plans,
understandings or agreements regarding any acquisition or merger, and such
transactions would be subject to regulatory approval. The shares that are
issued to the Mutual Holding Company may be subsequently sold to the Bank's
customers in an incremental stock offering or if the Mutual Holding Company
converts from the mutual to the stock form of organization. See "Conversion of
the Mutual Holding Company to the Stock Form of Organization."
In addition, because Office of Thrift Supervision ("OTS") regulations and
policy generally prohibit the sale of a savings institution in the mutual
holding company structure, management believes that the Reorganization and
Offering will permit the Bank to achieve the benefits of a stock company without
the threat of a change of control that may occur following a standard conversion
from mutual to stock form.
Because the Mutual Holding Company is a mutual corporation, its actions
will not necessarily always be in the best interests of the Company's minority
stockholders. In making business decisions, the Mutual Holding Company's Board
of Directors will consider a variety of constituencies, including the customers
and employees of the Bank, and the communities in which the Bank operates. As
the majority stockholder of the Company, the Mutual Holding Company is also
interested in the continued success and profitability of the Bank and the
Company. Consequently, the Mutual Holding Company will act in a manner that
furthers the general interest of all of its constituencies, including, but not
limited to, the interests of the minority stockholders of the Company. The
Mutual Holding Company believes that the interests of the stockholders of the
Company, and those of the Mutual Holding Company's other constituencies, are in
many circumstances the same, such as the ongoing profitability of the Company
and the Bank and continued service to the communities in which the Bank
operates.
9
<PAGE>
THE STOCK OFFERING
The Company is offering for sale between 2,456,500 and 3,323,500 shares of
its Common Stock at a price of $10.00 per share (the "Subscription Price"). The
Offering may be increased to 3,822,025 shares without further notice to you if
the estimated pro forma market value of the Common Stock (the "Independent
Valuation") is increased as a result of changes in market or financial
conditions prior to the completion of the Offering. The shares sold in the
Offering will represent a minority ownership interest of 46.6% (the "Minority
Ownership Interest") of the shares of Common Stock of the Company. The remaining
53.4% of the shares of Common Stock of the Company will be issued to the Mutual
Holding Company.
STOCK PURCHASE PRIORITIES
The Common Stock is being offered for sale in the following order of
priority in a subscription offering (the "Subscription Offering"):
(i) the Bank's Eligible Account Holders (holders of deposit accounts
totaling $50 or more as of December 31, 1996);
(ii) the Bank's tax-qualified employee benefit plans, including the ESOP,
which intends to purchase 8% of the shares sold in the Offering
(however, the ESOP shall have the first priority to purchase any
Common Stock which is sold in excess of 3,323,500 shares);
(iii) the Bank's Supplemental Eligible Account Holders (holders of deposit
accounts totaling $50 or more as of September 30, 1998);
(iv) depositors of the Bank as of the Voting Record Date (October 30,
1998), and borrowers of the Bank as of July 9, 1998 whose borrowings
remain outstanding as of the Voting Record Date, who are not Eligible
Account Holders or Supplemental Eligible Account Holders ("Other
Members");
(v) employees, officers and directors of the Bank.
Any shares of Common Stock not subscribed for in the Subscription Offering
may be offered for sale in a community offering (the "Community Offering") and
possibly a syndicated community offering (the "Syndicated Community Offering").
See pages ___ to ___. Ryan, Beck & Co., Inc. ("Ryan Beck") will assist in
selling the Common Stock on a best efforts basis.
PROHIBITION ON TRANSFER OF SUBSCRIPTION RIGHTS
Selling or assigning your subscription rights is illegal. If you exercise
your subscription rights you will be required to certify that you are purchasing
shares solely for your own account and that you have no agreement or
understanding regarding the sale or transfer of such shares. The Company and
the Bank intend to pursue any and all legal and equitable remedies in the event
the Company and the Bank become aware of the transfer of subscription rights,
and the Company and the Bank will not honor orders known to involve the transfer
of such rights. In addition, persons who violate the purchase limitations may
be subject to sanctions and penalties imposed by the OTS. In order to maintain
the appropriate stock purchase priorities, stock order forms submitted in the
Subscription Offering must indicate the name of the Eligible Account Holder or,
Supplemental Eligible Account Holder or Other Member, as the case may be.
Adding the name(s) of other persons who are not account holders, or were account
holders at a later date, will result in a loss of your purchase priority.
10
<PAGE>
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED
RP Financial, LC., Arlington, Virginia, an appraisal firm independent of
the Bank and experienced in appraisals of savings banks, has estimated that, in
its opinion, as of October 30, 1998, the aggregate pro forma market value of the
Company and the Bank ranged from $52.7 million to $71.3 million (the "Estimated
Valuation Range") with a midpoint of $62.0 million. The Company is offering to
sell 46.6% of its Common Stock in the Offering and, based on the Independent
Valuation, 46.6% of the Common Stock ranged in value from $24.6 million to $33.2
million, with a midpoint of $28.9 million (the "Offering Range"). The Company is
offering its Common Stock for sale at $10.00 per share, representing 2,456,500
shares and 3,323,500 shares at the minimum and maximum of the Offering Range,
respectively, with a midpoint of 2,890,000 shares. The Independent Valuation was
based in part upon the Bank's financial condition and operations and the effect
of the additional capital raised by the sale of Common Stock in the Offering. In
addition to the 2,456,500 to 3,323,500 shares to be sold in the Offering,
between 2,813,500 and 3,806,500 shares will be issued to the Mutual Holding
Company, which will represent 53.4% of the outstanding shares of Common Stock.
The Independent Valuation will be updated prior to the completion of the
Offering. If the Independent Valuation increases, there will be a corresponding
change in the total number of shares issued to the Mutual Holding Company in the
Reorganization and sold to subscribers in the Offering, but the percentage of
shares of the Company's Common Stock owned by the Mutual Holding Company and the
Minority Stockholders will not materially change as a result of a change in the
Independent Valuation. If the Independent Valuation increases by 15%, or up to
$82.0 million, the number of shares sold in the Offering will, subject to OTS
approval, increase to 3,822,025 shares and the number of shares issued to the
Mutual Holding Company will increase to 4,377,475 shares. Prospective purchasers
will be given the opportunity to change or withdraw their purchase orders only
if the Estimated Valuation Range decreases below the minimum or increases by
more than 15% above the maximum of such range, or if fewer than 2,456,500 shares
or more than 3,822,025 shares are sold in the Offering. See pages __ to __.
TERMINATION OF THE OFFERING
The Subscription Offering will terminate at 12:00 noon, New York time,
on December 17, 1998. The Community Offering, if one is held, is expected to
begin immediately after the termination of the Subscription Offering, but may
begin concurrently with, during or promptly after the Subscription Offering. The
Community Offering may terminate on or after December __, 1998, but in any
event, no later than __________, 1999, without OTS approval.
BENEFITS TO MANAGEMENT AND EMPLOYEES FROM THE OFFERING
The Bank's full-time employees will be eligible to participate in the ESOP.
The Company also intends to implement a stock recognition plan (the "Recognition
Plan") and a stock option plan (the "Stock Option Plan") following completion of
the Reorganization, which will benefit the Bank's and the Company's officers and
directors. If the Recognition Plan is adopted, certain officers and directors
will be awarded shares of Common Stock at no cost to them. However, the
Recognition Plan and Stock Option Plan may not be adopted until at least six
months after completion of the Reorganization and are subject to shareholder
approval.
11
<PAGE>
The following table presents the dollar value of the shares to be granted
pursuant to the proposed stock benefit plans and the percentage of the Company's
outstanding Common Stock which will be represented by these shares.
<TABLE>
<CAPTION>
PERCENTAGE OF
VALUE OF OUTSTANDING
SHARES GRANTED/(1)/ COMMON STOCK
------------------- -------------
<S> <C> <C>
BENEFIT PLANS:
ESOP.................. $ 2,312,000 3.73%
Recognition Plan...... 1,156,000 1.86
Stock Option Plan..... --/(2)/ 4.66
---------- -----
$ 3,468,000 10.25%
- -------------------------
</TABLE>
/(1)/ Assumes shares are granted at $10.00 per share and that shares are sold in
the Offering at the midpoint of the Offering Range.
/(2)/ Recipients of stock options realize value only in the event of an increase
in the price of the Common Stock of the Company, in comparison to the
grant or exercise price, following the date stock options are exercisable.
Options to purchase 289,000 shares at the midpoint of the Offering Range
may be granted if the Stock Option Plan is approved by shareholders.
In addition to the current employment agreement with President and Chief
Executive Officer George Strayton, following the Offering the Bank will also
enter into employment agreements with certain officers of the Bank, which will
provide for benefits and cash payments in the event of a change in control of
the Company or the Bank. See "Management of the Bank--Benefit Plans."
USE OF THE PROCEEDS RAISED FROM THE SALE OF COMMON STOCK
The Company expects to use the net proceeds from the Offering as follows:
. Between $20.3 million and $20.4 million will be used to buy all the
capital stock of the Bank,
depending on how many shares are sold in the offering.
. Between $2.0 million and $3.1 million will be loaned to the ESOP to
fund its purchase of Common Stock.
. Between $983,000 and $1.5 million will be used to fund the
Recognition Plan's purchase of Common Stock.
. Up to $11.9 million will be retained by the Company for general
corporate purposes, and will be invested initially in short- and
medium-term investments.
The proceeds to be received by the Bank will be available for general
corporate purposes including continued expansion of the retail banking franchise
through new branch openings or acquisitions, continued growth in the loan
portfolio, and the purchase of investment and mortgage-backed securities. See
pages __ and __.
DIVIDENDS
The Company intends to pay an annual cash dividend of $0.12, payable
quarterly at $0.03 per share. The payment of dividends is expected to begin
following the first full quarter after completion of the Reorganization. See
pages __ to __.
MARKET FOR THE COMMON STOCK
The Company has never issued capital stock. The Company expects that the
Common Stock will be quoted on the Nasdaq National Market under the symbol
"PBCP", but there can be no assurance that an active and liquid
12
<PAGE>
trading market in the Common Stock will develop or be maintained. The
requirements for listing include a minimum number of publicly traded shares,
market makers and record holders, and a minimum market capitalization. Ryan Beck
has indicated its intention to make a market in the Common Stock, subject to
compliance with applicable provisions of federal and state securities laws and
other regulatory requirements, although Ryan Beck is not required to do so. If
you purchase shares, you may not be able to sell them when you want to at a
price that is equal to or more than the price you paid. See page ____.
CONVERSION OF THE MUTUAL HOLDING COMPANY TO THE STOCK FORM OF ORGANIZATION
OTS regulations and the Bank's Plan of Reorganization from a Mutual Savings
Bank to a Mutual Holding Company and Stock Issuance Plan (the "Plan") permit the
Mutual Holding Company to convert from the mutual to the capital stock form of
organization. There can be no assurance that such a transaction will ever
occur, and the Board of Directors has no current intention or plan to undertake
such a transaction. If the Mutual Holding Company were to convert to the
capital stock form of organization, eligible depositors and borrowers would
receive the right to subscribe for shares of the new stock holding company
that would be formed in the transaction. The new stock holding company would be
100% publicly owned. Any such transaction would be subject to OTS regulations
in effect at that time, as well as approval by the Company's stockholders and
certain of the Bank's depositors and borrowers. In such a transaction, under
current OTS policy, each share of Common Stock outstanding and held by persons
other than the Mutual Holding Company would be converted automatically into
shares of common stock of the new stock holding company. The number of shares
that each stockholder would receive would be determined pursuant to an exchange
ratio that ensures that after the transaction (subject only to an adjustment to
reflect any dividends that the Mutual Holding Company may have waived and any
assets that the Mutual Holding Company may have other than common stock of the
Company), the percentage of the to-be outstanding shares of the new stock
holding company received by such stockholder in exchange for his/her Common
Stock equals the percentage of the outstanding shares of Common Stock owned by
such stockholder immediately prior to the conversion transaction.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following selected historical financial data at and for each of the
years in the five-year period ended September 30, 1997 is derived in part from
the audited consolidated financial statements of the Bank. Data at and for the
nine-month periods ended June 30, 1998 and 1997 is derived in part from the
unaudited consolidated financial statements of the Bank. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of such results for such unaudited periods
have been made. The selected financial data set forth below is qualified in its
entirety by, and should be read in conjunction with, the unaudited consolidated
financial statements as of June 30, 1998 and for the nine months ended June 30,
1998 and 1997, and the audited consolidated financial statements as of September
30, 1997 and 1996 and for the years ended September 30, 1997, 1996 and 1995,
including the notes thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT JUNE 30, AT SEPTEMBER 30,
------------------ ----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
SELECTED FINANCIAL CONDITION DATA:
Total assets........................... $679,104 $641,583 $648,742 $634,250 $526,593 $480,478 $470,021
Loans receivable, net.................. 440,360 389,213 404,497 369,487 331,947 315,154 295,077
Mortgage-backed securities (1):
Held to maturity..................... 89,334 104,186 104,071 112,863 80,735 -- --
Available for sale................... 43,775 35,873 36,153 41,482 30,329 -- 1,010
Held for investment.................. -- -- -- -- -- 97,780 96,544
Investment securities (1):
Held to maturity..................... 20,197 27,181 22,195 22,138 37,920 -- --
Available for sale................... 48,629 49,367 48,517 47,313 21,456 -- --
Held for investment.................. -- -- -- -- -- 47,356 58,155
Deposits............................... 580,075 557,934 546,846 545,286 443,667 419,808 413,816
Borrowings............................. 25,048 13,000 24,000 13,000 13,900 10,100 9,800
Equity................................. 53,879 49,141 50,399 45,536 43,828 38,551 33,746
NINE MONTHS
ENDED JUNE 30, YEARS ENDED SEPTEMBER 30,
------------------ ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
SELECTED OPERATING DATA:
Interest and dividend income........... $ 35,739 $ 34,755 $ 46,555 $ 42,566 $ 37,030 $ 32,175 $ 33,543
Interest expense....................... 15,609 15,070 20,179 18,585 15,064 11,556 13,945
-------- -------- -------- -------- -------- -------- --------
Net interest income.................. 20,130 19,685 26,376 23,981 21,966 20,619 19,598
Provision for loan losses.............. 1,347 875 1,058 911 760 452 760
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision
for loan losses..................... 18,783 18,810 25,318 23,070 21,206 20,167 18,838
Non-interest income.................... 2,298 2,212 2,711 2,451 2,100 2,168 2,247
Non-interest expense (excluding special
assessment)........................... 15,642 15,188 20,602 19,436 15,264 13,518 12,154
SAIF special assessment (2)............ -- -- -- 3,298 -- -- --
-------- -------- -------- -------- -------- -------- --------
Income before income tax expense and
cumulative effect of change in
accounting principle................ 5,439 5,834 7,427 2,787 8,042 8,817 8,931
Income tax expense..................... 1,995 2,370 2,829 690 3,239 3,611 3,593
-------- -------- -------- -------- -------- -------- --------
Income before cumulative effect of
change in accounting principle..... 3,444 3,464 4,598 2,097 4,803 5,206 5,338
Cumulative effect of change in
accounting
for income taxes...................... -- -- -- -- -- 401 --
-------- -------- -------- -------- -------- -------- --------
Net income (2)....................... $ 3,444 $ 3,464 $ 4,598 $ 2,097 $ 4,803 $ 4,805 $ 5,338
======== ======== ======== ======== ======== ======== ========
</TABLE>
(Footnotes on next page)
14
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS
ENDED JUNE 30, AT OR FOR THE YEARS ENDED SEPTEMBER 30,
-------------- -------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:
PERFORMANCE RATIOS (3):
Return on assets (ratio of net income to
average total assets) (2)(4)............... 0.70% 0.73% 0.72% 0.36% 0.96% 1.01% 1.15%
Return on equity (ratio of net income
to average equity) (2)(4).................. 8.72 9.72 9.51 4.60 11.77 13.37 17.54
Average interest rate spread (4)(5)......... 3.80 3.95 3.92 3.88 4.15 4.19 4.06
Net interest margin (4) (6)................. 4.30 4.37 4.36 4.30 4.53 4.46 4.35
Efficiency ratio (7)........................ 69.74 69.36 70.83 73.53 63.43 59.32 55.64
Non-interest expense to average total
assets (4) (8)............................. 3.19 3.20 3.24 3.91 3.06 2.83 2.62
Average interest-earning assets to average
interest-bearing liabilities................ 114.95 112.75 113.07 112.60 112.38 110.86 109.35
ASSET QUALITY RATIOS:
Non-performing assets to total assets....... 0.90 0.67 0.75 1.21 1.29 0.94 1.17
Non-performing loans to total loans......... 1.30 0.89 1.16 1.72 1.99 1.19 1.46
Allowance for loan losses to
non-performing loans....................... 79.27 112.08 80.80 52.87 52.59 75.55 59.49
Allowance for loan losses to total loans
receivable, net............................ 1.03 1.00 0.93 0.91 1.05 0.90 0.87
CAPITAL RATIOS:
Equity to total assets at end of period..... 7.93 7.66 7.77 7.18 8.32 8.02 7.18
Average equity to average assets............ 8.05 7.51 7.59 7.83 8.17 7.53 6.56
OTHER DATA:
Number of full-service offices.............. 11 11 11 11 9 9 9
</TABLE>
_______________________________
/(1)/ The Bank has classified its securities as "held to maturity" or "available
for sale" since October 1, 1994, when it adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." Prior thereto, substantially all securities were
classified as "held for investment."
/(2)/ The SAIF special assessment in fiscal 1996 represents the Bank's share of
an assessment imposed on all financial institutions with deposits insured
by the Savings Association Insurance Fund (the "SAIF"). On an after-tax
basis, the special assessment reduced net income for fiscal 1996 by
approximately $2.0 million. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Comparison of Operating
Results for the Years Ended September 30, 1997 and 1996" and Note 8 of the
Notes to Consolidated Financial Statements.
/(3)/ Ratios for the nine-month periods have been annualized.
/(4)/ Ratio is based on average monthly balances during the indicated periods.
/(5)/ The average interest rate spread represents the difference between the
weighted-average yield on interest-earning assets and the weighted-average
cost of interest-bearing liabilities for the period.
/(6)/ The net interest margin represents net interest income as a percent of
average interest-earning assets for the period.
/(7)/ The efficiency ratio represents non-interest expense (other than the SAIF
special assessment in fiscal 1996) divided by the sum of net interest
income and non-interest income.
/(8)/ Excluding the SAIF special assessment, the ratio of non-interest expense
to average total assets for fiscal 1996 was 3.34%.
15
<PAGE>
RECENT DEVELOPMENTS
The selected historical financial data set forth below as of September 30,
1997 and for the year then ended is derived in part from the audited
consolidated financial statements of the Bank. Data set forth below as of other
dates and for other periods is derived in part from the unaudited consolidated
financial statements of the Bank. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair presentation
of such results for such unaudited periods have been made. The selected
financial data set forth below is qualified in its entirety by, and should be
read in conjunction with, the audited consolidated financial statements as of
and for the year ended September 30, 1997, including the notes thereto, included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT AT AT
SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
1998 1998 1997
------------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets.................................... $691,068 $679,104 $648,742
Loans receivable, net........................... 463,667 440,360 404,497
Mortgage-backed securities (1):
Held to maturity............................... 79,226 89,334 104,071
Available for sale............................. 49,912 43,775 36,153
Investment securities (1):
Held to maturity............................... 19,176 20,197 22,195
Available for sale............................. 48,071 48,629 48,517
Deposits........................................ 573,174 580,075 546,846
Borrowings...................................... 38,646 25,048 24,000
Equity.......................................... 55,200 53,879 50,399
<CAPTION>
THREE MONTHS YEARS ENDED
ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest and dividend income.................... $ 12,209 $ 11,800 $ 47,948 $46,555
Interest expense................................ 5,271 5,109 20,880 20,179
-------- -------- -------- -------
Net interest income........................... 6,938 6,691 27,068 26,376
Provision for loan losses....................... 390 183 1,737 1,058
-------- -------- -------- -------
Net interest income after provision for loan
losses....................................... 6,548 6,508 25,331 25,318
Non-interest income............................. 782 499 3,080 2,711
Non-interest expense............................ 6,181 5,414 21,823 20,602
-------- -------- -------- -------
Income before income tax expense.............. 1,149 1,593 6,588 7,427
Income tax expense.............................. 351 459 2,346 2,829
-------- -------- -------- -------
Net income.................................... $ 798 $ 1,134 $ 4,242 $ 4,598
======== ======== ======== =======
</TABLE>
(Footnotes on next page)
16
<PAGE>
<TABLE>
<CAPTION>
AT OR AT OR
FOR THE THREE MONTHS FOR THE YEARS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:
PERFORMANCE RATIOS:
Return on assets (ratio of net income to
average total assets) (2)(3)............................. 0.46% 0.70% 0.64% 0.72%
Return on equity (ratio of net income
to average equity) (2)(3)................................ 5.73 8.95 7.94 9.51
Average interest rate spread (2)(3)(4).................... 3.74 3.86 3.78 3.92
Net interest margin (2)(3) (5)............................ 4.22 4.32 4.28 4.36
Efficiency ratio (6)...................................... 80.06 75.30 72.39 70.83
Non-interest expense to average total assets (2)(3)....... 3.58 3.34 3.29 3.24
Average interest-earning assets to average
interest-bearing liabilities (3).......................... 114.80 114.03 114.91 113.07
ASSET QUALITY RATIOS:
Non-performing assets to total assets..................... 0.94 0.75 0.94 0.75
Non-performing loans to total loans....................... 1.32 1.16 1.32 1.16
Allowance for loan losses to non-performing loans......... 80.33 80.80 80.33 80.80
Allowance for loan losses to total loans receivable, net.. 1.06 0.93 1.06 0.93
CAPITAL RATIOS:
Equity to total assets at end of period................... 7.99 7.77 7.99 7.77
Average equity to average assets.......................... 8.07 7.81 8.05 7.59
OTHER DATA:
Number of full-service offices............................ 11 11 11 11
</TABLE>
_______________________________
/(1)/ The Bank has classified its securities as "held to maturity" or "available
for sale" since October 1, 1994, when it adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities."
/(2)/ Ratios for the three-month periods have been annualized.
/(3)/ Ratios are based on average monthly balances during the indicated periods.
/(4)/ The average interest rate spread represents the difference between the
weighted-average yield on interest-earning assets and the weighted-average
cost of interest-bearing liabilities for the period.
/(5)/ The net interest margin represents net interest income as a percent of
average interest-earning assets for the period.
/(6)/ The efficiency ratio represents non-interest expense divided by the sum of
net interest income and non-interest income.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
Total assets increased to $691.1 million at September 30, 1998 from
$648.7 million at September 30, 1997, an increase of $42.4 million or 6.5%. The
asset growth was primarily attributable to a $59.2 million increase in net loans
receivable, partially offset by an $11.1 million decrease in mortgage-backed
securities and a $3.5 million decrease in investment securities, as the Bank's
asset mix shifted from mortgage-backed and investment securities into loans.
One- to four-family real estate loans increased $48.3 million to
$290.2 million at September 30, 1998 from $241.9 million at September 30, 1997.
The increase consisted of a $49.3 million increase in fixed-rate loans partially
offset by a $1.0 million decline in adjustable-rate loans, as borrowers
preferred fixed-rate mortgage loans in the current low interest rate
environment. A significant portion of the Bank's fixed-rate residential loan
originations during this period were bi-weekly loans and loans with 15 and 20-
year maturities.
Commercial real estate loans increased to $64.9 million at September 30,
1998 from $55.7 million at September 30, 1997. Construction and land loans
decreased to $27.3 million from $31.7 million during the same period. Multi-
family real estate loans decreased to $7.0 million at September 30, 1998 from
$7.4 million at September 30, 1997.
17
<PAGE>
Consumer loans increased by $1.0 million to $61.8 million at September 30,
1998 from $60.8 million at September 30, 1997. This change was primarily the
result of an $8.0 million increase in the Bank's "homeowner loans" (fixed-rate,
fixed-term consumer loans secured by a junior lien on the borrower's primary
residence), offset by a $7.0 million decline in home equity lines of credit and
other consumer loans. The Bank's commercial business loans increased by $5.4
million to $27.1 million at September 30, 1998 from $21.7 million at September
30, 1997.
The Bank's total securities portfolio decreased by $14.5 million to $196.4
million at September 30, 1998 from $210.9 million at September 30, 1997. This
decrease resulted primarily from a decrease in mortgage-backed securities to
$129.1 million at September 30, 1998 from $140.2 million at September 30, 1997,
as the Bank redeployed these funds into loan originations. Investment
securities, consisting primarily of short- and medium-term U.S. Treasury and
agency notes, declined to $67.2 million at September 30, 1998 from $70.7 million
at September 30, 1997.
Asset growth was funded through a $26.3 million increase in deposits and a
$14.6 million increase in FHLB borrowings. The Bank's certificates of deposit
increased $13.1 million to $249.2 million at September 30, 1998 from $236.1
million at September 30, 1997. Passbook, club and money market accounts
increased by $3.4 million to $231.9 million at September 30, 1998 from $228.5
million at September 30, 1997. During the same period, demand and NOW accounts
grew by $9.9 million to $92.1 million at September 30, 1998 from $82.2 million
at September 30,1997. Advances from the FHLB increased to $38.6 million from
$24.0 million over the same time period.
Total equity increased to $55.2 million at September 30, 1998 from $50.4
million at September 30, 1997, reflecting net income of $4.2 million and a
$559,000 increase in the after-tax net unrealized gain on securities available
for sale.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
AND SEPTEMBER 30, 1997
GENERAL. Net income for the three months ended September 30, 1998 was
$798,000 compared to $1.1 million for the three months ended September 30, 1997.
The decrease was due primarily to increases in the provision for loan losses and
non-interest expense, partially offset by increases in net interest income and
non-interest income.
INTEREST INCOME. Interest income increased by $409,000, or 3.5%, to $12.2
million for the three months ended September 30, 1998 from $11.8 million for the
three months ended September 30, 1997. The increase was due primarily to a
$38.1 million increase in average interest-earning assets and also to a change
in asset mix, which together more than offset the impact of a 20 basis point
decrease in the average yield to 7.42% from 7.62%. Loan balances increased
while investment and mortgage-backed securities declined. Income from loans
increased $775,000, partially offset by a $206,000 decrease in income from
mortgage-backed securities and a $160,000 decrease in income from investment
securities and other interest-earning assets.
INTEREST EXPENSE. Interest expense increased by $162,000, or 3.2%, to $5.3
million for the three months ended September 30, 1998 from $5.1 million for the
three months ended September 30, 1997. This increase was partially the result
of a $29.6 million increase in the average balance of interest-bearing
liabilities in the 1998 period compared to the 1997 period, offset, in part, by
an 8 basis point decrease in the average rate paid on such liabilities to 3.68%
from 3.76% over the same period. The increase in overall interest expense
resulted primarily from a $125,000 increase in interest expense on borrowings,
which resulted from a $9.6 million increase in the average balance of borrowings
to $28.2 million for the three months ended September 30, 1998 from $18.6
million for the three months ended September 30, 1997, partially offset by a 47
basis point decrease in the average cost of borrowings to 6.05% from 6.52%.
NET INTEREST INCOME. For the three months ended September 30, 1998 and
1997, net interest income was $6.9 million and $6.7 million, respectively. The
$247,000 increase in net interest income was primarily attributable to an $8.5
million increase in average net earning assets (interest-earning assets less
interest bearing liabilities), partially offset by a 12 basis point decline in
the net interest rate spread to 3.74% from 3.86%. The Bank's net
18
<PAGE>
interest margin decreased to 4.22% in the three months ended September 30, 1998
from 4.32% in the three months ended September 30, 1997.
PROVISION FOR LOAN LOSSES. The Bank's provision for loan losses increased
by $207,000 to $390,000 for the three months ended September 30, 1998 from
$183,000 for the three months ended September 30, 1997. The increased provision
reflects several factors such as loan portfolio growth, including commercial
real estate and commercial business loans, and an increase in non-performing
loans to $6.1 million at September 30, 1998 from $5.7 million at June 30, 1998
and $4.7 million at September 30, 1997.
NON-INTEREST INCOME. Total non-interest income increased by $283,000 to
$782,000 for the three months ended September 30, 1998 from $499,000 for the
three-month period ended September 30, 1997. The lower amount in the 1997
period was primarily due to a loss on the Bank's investment in a limited
partnership that generates low-income housing tax credits. Deposit-related fees
and charges, which are the largest component of non-interest income, increased
to $570,000 for the three months ended September 30, 1998 from $553,000 for the
three months ended September 30, 1997.
NON-INTEREST EXPENSE. Non-interest expense increased by $767,000, or
14.2%, to $6.2 million for the three months ended September 30, 1998 from $5.4
million for the three months ended September 30, 1997. Compensation and
employee benefits increased by $418,000 to $3.0 million from $2.6 million
primarily due to a $190,000 increase related to the early termination of a long-
term incentive plan for senior officers and directors, as well as a $131,000, or
7.2%, increase in salary expense for Bank officers and staff combined with
higher directors' expenses of $102,000. The increase in non-interest expense
also reflects $246,000 in costs associated with the Bank's conversion to a new
core data processing system, which is anticipated to occur by December 31, 1998,
and an $88,000 increase in other data processing expenses.
INCOME TAXES. Income tax expense was $351,000 for the three months ended
September 30, 1998 compared to $459,000 for the same period in 1997,
representing effective tax rates of 30.5% and 28.8%, respectively.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND
SEPTEMBER 30, 1997
GENERAL. Net income for the fiscal year ended September 30, 1998 was $4.2
million compared to $4.6 million for the fiscal year ended September 30, 1997.
The decrease was due primarily to increases in the provision for loan losses and
non-interest expense, partially offset by an increase in net interest income and
a decrease in income tax expense.
INTEREST INCOME. Interest income increased by $1.4 million, or 3.0%, to
$48.0 million for the fiscal year ended September 30, 1998 from $46.6 million
for the fiscal year ended September 30, 1997. The increase was due primarily to
an increase in average interest-earning assets. The impact of declining yields
and spreads was partially offset by a change in asset mix. Loan balances
increased while investment and mortgage-backed securities declined. Income from
loans increased $2.5 million, partially offset by a $576,000 decrease in income
from mortgage-backed securities and a $519,000 decrease in income from
investment securities and other interest-earning assets. The increase in income
from loans was attributable to a $43.1 million increase in the average balance
of loans to $428.5 million from $385.4 million, partially offset by a 26 basis
point decrease in the average yield on loans to 8.19% from 8.45%. The increase
in average loans resulted primarily from the origination of one- to four-family
mortgage loans. The decrease in the average yield on loans reflects declining
market interest rates, as the Bank originated new one-to four-family loans with
yields lower than the average yield on the existing loan portfolio. The
decrease in income from mortgage-backed securities was attributable almost
entirely to an $8.3 million decrease in the average balance of mortgage-backed
securities to $136.0 million from $144.3 million, as the average yield on
mortgage-backed securities remained essentially unchanged. The decrease in
income from investment securities was attributable to a $7.6 million decrease in
the average balance of investment securities to $64.2 million from $71.8
million, combined with a 20 basis point decrease in the average yield on
investment securities to 5.91% from 6.11%.
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INTEREST EXPENSE. Interest expense increased by $701,000, or 3.5%, to
$20.9 million for the fiscal year ended September 30, 1998 from $20.2 million
for the fiscal year ended September 30, 1997. This increase was due primarily
to a $15.9 million increase in the average balance of interest-bearing
liabilities in the 1998 period compared to the 1997 period. The increase in
overall interest expense resulted primarily from a $425,000 increase in interest
expense on certificates of deposit and a $238,000 increase in interest expense
on borrowings. The increase attributable to certificates of deposit resulted
from a $3.7 million increase in the average balance of certificates of deposit
to $241.0 million in fiscal 1998 from $237.3 million in fiscal 1997, combined
with a 10 basis point increase in the average cost of certificates of deposit to
5.30% from 5.20%. The increase attributable to borrowings resulted from a $5.1
million increase in the average balance of borrowings to $28.8 million for the
fiscal year ended September 30, 1998 from $23.7 million for the fiscal year
ended September 30, 1997, which was partially offset by a 28 basis point
decrease in the average cost of borrowings to 5.99% from 6.27%.
NET INTEREST INCOME. For the fiscal years ended September 30, 1998 and
1997, net interest income was $27.1 million and $26.4 million, respectively.
The $692,000 increase in net interest income was primarily attributable to a
$12.2 million increase in net interest-earning assets (interest-earning assets
less interest-bearing liabilities), partially offset by a 14 basis point decline
in the net interest rate spread to 3.78% from 3.92%. The Bank's net interest
margin decreased to 4.28% in the fiscal year ended September 30, 1998 from 4.36%
in the fiscal year ended September 30, 1997.
PROVISION FOR LOAN LOSSES. The Bank's provision for loan losses increased
by $679,000 to $1.7 million for the fiscal year ended September 30, 1998 from
$1.1 million for the fiscal year ended September 30, 1997. The increased
provision reflects continued loan portfolio growth, including commercial real
estate and commercial business loans, as well as an increase in non-performing
loans to $6.1 million at September 30, 1998 from $4.7 million at September 30,
1997.
NON-INTEREST INCOME. Non-interest income increased by $369,000, or 13.6%,
to $3.1 million for the fiscal year ended September 30, 1998 from $2.7 million
for the fiscal year ended September 30, 1997. This reflects a $164,000 increase
in the gain on sale of loans to $170,000 in fiscal 1998 from $6,000 in fiscal
1997, primarily from a higher volume of loan sales, as the Bank decided to sell
newly originated, longer term fixed-rate mortgage loans as part of its interest
rate risk management. In addition, deposit-related fees and charges increased
$137,000, or 6.7%, to $2.2 million for the fiscal year ended September 30, 1998
from $2.0 million for the fiscal year ended September 30, 1997.
NON-INTEREST EXPENSE. Non-interest expense increased by $1.2 million, or
5.9%, to $21.8 million for the fiscal year ended September 30, 1998 from $20.6
million for the fiscal year ended September 30, 1997. Compensation and employee
benefits increased by $591,000 to $10.5 million from $9.9 million primarily due
to a $335,000, or 4.9%, increase in salaries for Bank officers and staff, and a
$90,000 increase in medical and disability insurance. In addition, there was a
charge of approximately $190,000 related to the early termination of a long-term
incentive plan for senior officers and directors. The increase in non-interest
expense also reflects $340,000 in conversion-related expenses associated with
the new core processing system and an increase of $160,000 in legal expenses.
INCOME TAXES. Income tax expense was $2.3 million for the fiscal year
ended September 30, 1998 compared to $2.8 million for fiscal 1997, representing
effective tax rates of 35.6% and 38.1%, respectively.
REGULATORY CAPITAL
At September 30, 1998, the Bank exceeded all of its regulatory capital
requirements with a leverage capital level of $50.6 million, or 7.4% of adjusted
assets (which is above the required level of $20.6 million, or 3.0%) and a risk-
based capital level of $55.5 million, or 14.2% of risk-weighted assets (which is
above the required level of $31.3 million, or 8.0%). See "Regulatory Capital
Compliance," "Regulation--Regulatory Capital Requirements" and Note 11 of the
Notes to Consolidated Financial Statements.
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RISK FACTORS
In addition to the other information in this Prospectus, you should
consider carefully the following risk factors in evaluating an investment in the
Common Stock.
POTENTIAL EFFECTS OF CHANGES IN INTEREST RATES AND THE CURRENT INTEREST RATE
ENVIRONMENT
The Bank's net income and financial condition are significantly affected by
changes in market interest rates, and its results of operations substantially
depend on its net interest income. Net interest income is the difference
between the interest income earned on the Bank's interest-earning assets and the
interest expense paid on its interest-bearing liabilities. The Bank's interest-
bearing liabilities reprice or mature sooner than the contractual repricing
dates or maturities of its interest-earning assets. Thus, if interest rates
were to rise quickly, interest-bearing liabilities would reprice to higher rates
sooner than would the interest-earning assets. However, repayment options are
available to residential loan borrowers. Should interest rates fall
precipitously, many borrowers would tend to refinance, and interest rates on
interest earning assets could fall as quickly, and perhaps lower, than the
interest rates on the Bank's liabilities. As a result, large fluctuations in
interest rates in either direction would likely result in a decrease in the
Bank's average interest rate spread and net interest income. Net interest
income could also be negatively impacted by a flat or inverted yield curve.
Depending on market interest rates and the Bank's capital and liquidity
position, the Bank may retain all of its newly originated longer-term fixed-
rate, fixed-term residential mortgage loans or may decide to sell all or a
portion of such loans on a servicing-retained basis. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Management of Market Risk."
Changes in interest rates also affect the value of the Bank's interest-
earning assets, and in particular the Bank's securities portfolios. Generally,
the value of debt securities fluctuates inversely with changes in interest
rates. That is, an increase in interest rates would result in a decrease in the
value of debt securities. At June 30, 1998, the Bank's investment securities
and mortgage-backed securities portfolios totaled $201.9 million, and included
$92.4 million of securities available for sale. After-tax 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 effect on stockholders' equity. See "Business of the
Bank--Investment Activities."
The Bank is also subject to reinvestment risk relating to interest rate
movements. Changes in interest rates can affect the average life of loans and
mortgage-backed securities. Decreases in interest rates can result in increased
prepayments of loans and mortgage-backed securities, as borrowers refinance to
reduce borrowing costs. Under these circumstances, the Bank is subject to
reinvestment risk to the extent that it is not able to reinvest such prepayments
at rates that are comparable to the rates on the maturing loans or securities.
Moreover, volatility in interest rates can also result in the flow of funds away
from the Bank into investments such as U.S. Government and corporate securities
and other investments that generally pay higher rates of return than the rates
paid on deposits by financial institutions.
LENDING RISKS ASSOCIATED WITH COMMERCIAL AND MULTI-FAMILY REAL ESTATE,
CONSTRUCTION AND LAND AND COMMERCIAL BUSINESS LENDING
At June 30, 1998, the Bank's portfolio of commercial and multi-family real
estate loans totaled $70.8 million or 15.5% of total loans, its portfolio of
construction and land loans totaled $27.8 million or 6.1% of total loans and its
portfolio of commercial business loans totaled $24.0 million or 5.3% of total
loans. As part of management's strategy of operating the Bank as a community
bank, it is expected that these loans will increase as a percentage of the
Bank's total loan portfolio. These types of loans generally expose a lender to
a greater risk of loss than one- to four-family residential loans. See
"Business of the Bank--Lending Activities" and "Business of the Bank--Lending
Activities--Non-performing Assets and Delinquencies."
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GEOGRAPHIC CONCENTRATION OF LOANS
The Bank's mortgage loans are secured by residential and commercial real
estate properties located primarily in Rockland County, New York. If the local
economy, national economy or real estate market weakens, the financial condition
and results of operations of the Bank could be adversely affected. A weakening
in the local real estate market or a decline in the local economy could increase
the number of delinquent or non-performing loans and reduce the value of the
collateral securing such loans, which would reduce the Bank's net income.
COMPETITION
Numerous commercial banks and savings institutions have branches in the
immediate vicinity of the Bank. There is strong competition from financial
institutions and mortgage brokers in the Bank's local market, as well as from
mutual funds, in both originating loans and attracting funds. The Bank's primary
competitors are commercial banks, other savings institutions, commercial banks,
mortgage banking companies and mortgage brokers. Trends toward the consolidation
of the financial institutions industry and removal of restrictions on interstate
banking and branching may make it more difficult for smaller institutions such
as the Bank to compete effectively with large national and regional banking
institutions. Such competition may have an adverse effect on the Bank's growth
and profitability in the future. See "Competition."
DECREASED RETURN ON AVERAGE EQUITY IMMEDIATELY AFTER REORGANIZATION
At June 30, 1998, the Bank's equity as a percentage of assets was 7.93%,
and for the nine months ended June 30, 1998 the Bank's annualized return on
average equity (net income divided by average equity) was 8.72%. The Company's
consolidated equity as a percentage of assets will significantly increase as a
result of its receipt of the net proceeds received in the Offering. On a pro
forma basis as of June 30, 1998, the Company's consolidated equity as a
percentage of consolidated assets would be approximately 12.11% at the
adjusted maximum of the Offering Range. Management believes that it will take
time to prudently deploy the capital raised in the Offering. As a result, until
the Company has leveraged the capital raised in the Offering by increasing the
Company's interest-earning assets (and its interest-bearing liabilities) and
reducing its equity as a percentage of assets, the Company's return on average
equity is expected to be below the Bank's historical returns. There can be no
assurances that the Company will be able to successfully leverage the capital
raised in the Offering, or that the Company will be successful in generating
future returns on equity equal to the Bank's historical returns or industry
averages. The decreased return on average equity may adversely affect the
market price of the Company's Common Stock.
MINORITY PUBLIC OWNERSHIP AND CERTAIN ANTI-TAKEOVER PROVISIONS
VOTING CONTROL OF THE MUTUAL HOLDING COMPANY. Under regulations of the
OTS, the Plan, and the Company's governing corporate instruments, a majority of
the Company's voting shares must be owned by the Mutual Holding Company, and the
Mutual Holding Company will own 53.4% of the Common Stock outstanding at the
completion of the Offering. The Mutual Holding Company will be controlled by
its executive officers and directors, who initially will consist of persons who
are executive officers and directors of the Company. The Mutual Holding Company
will elect all members of the Board of Directors of the Company, and, with
certain exceptions, will control the outcome of matters presented to the
stockholders of the Company for resolution by vote. The situations in which
the Mutual Holding 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 Holding Company),
any stockholder vote relating to the Mutual Holding 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 Holding Company and
of two-thirds of all shares including shares held by the Mutual Holding
Company), or any other stockholder vote in which the OTS may impose such a
requirement. The Mutual Holding Company, acting through its Board of Directors,
will be able to control the business and operations of the Company and the Bank
and will be able to prevent any challenge to the ownership or control of the
Company by stockholders other than the Mutual
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Holding Company ("Minority Stockholders"). Although OTS regulations and the Plan
permit the Mutual Holding 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 Holding Company will occur.
PROVISIONS IN THE COMPANY'S AND THE BANK'S GOVERNING INSTRUMENTS. In
addition, certain provisions of the Company's charter and bylaws, particularly a
provision limiting voting rights, as well as certain federal regulations will
assist the 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).
POSSIBLE DILUTION IN OWNERSHIP INTEREST
DIVIDEND WAIVERS BY THE MUTUAL HOLDING COMPANY. It has been the policy of
many mutual holding companies to waive the receipt of dividends declared by
their subsidiaries. OTS regulations require that mutual holding companies
request OTS approval before they waive dividends. The OTS has generally
permitted mutual holding companies to waive dividends under certain conditions,
including that in the event the Mutual Holding Company converts to stock form in
the future (a "Conversion Transaction"), any waived dividends would reduce the
percentage of the resulting entity's shares of common stock issued to Minority
Stockholders in exchange for their shares of Common Stock. The reduction would
be calculated by multiplying the Minority Ownership Interest (expressed as a
percentage) immediately prior to the Conversion Transaction by the following
fraction:
(Company stockholders' equity immediately prior to Conversion Transaction) -
(aggregate amount of dividends waived by Mutual Holding Company)
----------------------------------------------------------------------------
Company stockholders' equity immediately prior to Conversion Transaction
See "Regulation--Holding Company Regulation--Conversion of the Mutual
Holding Company to Stock Form." The Mutual Holding Company has not determined
whether it will waive dividends declared by the Company and there is no
assurance that the OTS would approve any request by the Mutual Holding Company
to waive dividends.
TERMS OF ANY CONVERSION TRANSACTION. If the Mutual Holding Company
conducts a Conversion Transaction, the stock offering that would be conducted as
part of the Conversion Transaction would include maximum purchase limitations
that restrict the amount of stock that a person could purchase. Minority
Stockholders would be likely to receive shares of the resulting entity in
exchange for their shares of Common Stock. Under current OTS policy, the shares
of the resulting entity that Minority Stockholders receive in exchange for their
shares of Common Stock will be included in the maximum purchase limitations that
apply to the stock offering. This means that certain Minority Stockholders may
not be able to exercise subscription rights to purchase shares of common stock
sold in the Conversion Transaction.
POSSIBLE DILUTIVE EFFECT OF ISSUANCE OF ADDITIONAL SHARES
Various possible and planned issuances of additional shares of Common Stock
could dilute the interests of prospective stockholders of the Company following
consummation of the Offering, as noted below.
The number of shares to be sold in the Offering may be increased as a
result of an increase in the Estimated Valuation Range of up to 15% to reflect
changes in the market and financial conditions and demand for the stock
following the commencement of the Offering. In the event that the Estimated
Valuation Range is so increased, it is expected that the Company will issue up
to 8,199,500 shares of Common Stock. An increase in the number of shares will
decrease net income per share and stockholders' equity per share on a pro forma
basis and will increase the Company's consolidated stockholders' equity and net
income. See "Capitalization" and "Pro Forma Data."
The Recognition Plan that the Bank intends to implement no earlier than six
months after the Reorganization intends to acquire an amount of Common Stock
equal to 4% of the shares of Common Stock sold in the Offering.
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Such shares of Common Stock may be acquired in the open market with funds
provided by the Company, if permissible, or from authorized but unissued shares
of Common Stock. See "Pro Forma Data" and "Management of the Bank--Recognition
Plan." Moreover, the Company's Stock Option Plan will reserve for future
issuance pursuant to such plan a number of shares of Common Stock equal to 10%
of the Common Stock sold in the Offering (289,000 shares, based on the midpoint
of the Offering Range). See "Pro Forma Data" and "Management of the Bank--
Executive Compensation--Stock Option Plan."
If the Company issues additional shares of Common Stock in a supplemental
offering to increase the Minority Ownership Interest to 49.9% of the outstanding
Common Stock, the additional shares of Common Stock to be issued would be
received from the Mutual Holding Company and, as a result, no dilution of
Minority Stockholders would occur as a result of such an incremental stock
offering.
EXPENSES ASSOCIATED WITH ESOP AND RECOGNITION PLAN
The Bank will recognize material employee compensation and benefit expenses
assuming the ESOP and the Recognition Plan are implemented. The actual
aggregate amount of these new expenses cannot be predicted at the present time
because applicable accounting practices require that such expenses be measured
based on the fair market value of the shares of Common Stock. In the case of
the ESOP, fair market value would be measured when shares are committed to be
released for allocation to the ESOP participants; in the case of the Recognition
Plan, fair market value would be measured at the grant date and amortized over
the award's vesting period. These expenses have been reflected in the pro forma
financial information under "Pro Forma Data" assuming the Purchase Price ($10.00
per share) represents the fair market value for accounting purposes. Actual
expenses, however, will be based on the fair market value of the Common Stock at
future dates, which may be higher or lower than the Purchase Price. Future
increases in expenses may adversely affect the market price of the Company's
Common Stock. See "Management of the Bank--Executive Compensation--Benefits--
Employee Stock Ownership Plan and Trust" and "--Benefits--Recognition Plan."
RISKS ASSOCIATED WITH YEAR 2000 ISSUES
The Bank, like all companies that utilize computer technology, is facing
the significant challenge of ensuring that its computer systems will be able to
process time-sensitive data accurately beyond the Year 1999 (referred to as the
"Year 2000 issue"). The Year 2000 issue has arisen since many existing computer
programs use two digits rather than four in data fields that define the year.
Such computer programs may recognize a data field using "00" as the Year 1900
rather than the Year 2000. If the Bank's computer systems are not adequately
changed to properly identify the Year 2000, computer applications could fail or
create erroneous results, and the Bank could experience a temporary inability to
process transactions and engage in other normal business activities. The Year
2000 issue could have a significant adverse impact on the Bank's products,
services and competitive condition.
The Bank has conducted a comprehensive review of its computer systems to
identify systems that could be affected by the Year 2000 issue, and has
developed an implementation plan (including establishing priorities for mission-
critical applications) to modify or replace the affected systems and test them
for Year 2000 compliance. The Bank's most significant mission-critical
applications are those that compromise its "core" data processing system for
loans, deposits and the general ledger. The Bank plans to convert to a new core
system by December 31, 1998, which it believes will enhance the quality of its
information technology and result in improved customer service. Like the Bank's
present core system, the new system is maintained by a third-party vendor. The
Bank plans to begin Year 2000 testing on the new core system promptly following
the conversion, with a targeted testing completion date of March 31, 1999.
The Bank realizes that the Year 2000 issue extends beyond the computer
systems associated with its operations. The Bank has identified and begun a
process of quantifying external risks posed by the Year 2000 problem. The
Bank's Year 2000 plan addresses each of these factors and, in cases where risks
may be high, the Bank intends to take action to protect its interests. The Bank
has not quantified the potential impact of each of these
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external risks, but will develop estimates over the coming months. These
potential risks may relate to borrowers, depositors, legal issues, liquidity,
shareholder reporting and auditing of the Year 2000 process.
The Bank presently believes that, with modifications to existing software
and conversions to new software, the Year 2000 issue will be mitigated without
causing a material adverse impact on its operations. However, if such
modifications and conversions are not made, or are not completed timely, the
Year 2000 issue could have a material adverse impact on the Bank's operations.
Monitoring and managing the Year 2000 issue will result in additional direct and
indirect costs for the Bank. Costs incurred to date have not been material, and
management does not expect that additional costs to be incurred in connection
with the Year 2000 issue will have a material impact on the Bank's financial
condition or results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Year 2000 Considerations."
RECENT MARKET VOLATILITY
In recent months, stock markets in the United States and worldwide have
been extremely volatile. The securities of individual companies have, in many
instances, experienced significant fluctuations in price for reasons unrelated
to the specific company's financial condition, results of operations or business
prospects. In particular, the value of all financial institution securities has
been adversely affected by weakening economies worldwide, even though local
community-based financial institutions may not have any credit exposure outside
the United States. An investor should understand that, in the short-term, the
value of an investment in the Common Stock is subject to fluctuation, including
loss, due to volatility in stock markets generally.
INTENT TO REMAIN INDEPENDENT
The Bank has operated as an independent community-oriented savings
institution since 1888. The Bank intends to continue to operate as an
independent community-oriented savings institution following the Reorganization.
The Bank and the Company will be controlled by the Mutual Holding Company, and,
under current OTS policy, control of the Mutual Holding Company may not be sold
to a third party. Accordingly, you are urged not to subscribe for shares of
Common Stock if you are anticipating a sale of control of the Bank or the
Company. See "Business of the Bank."
LACK OF ACTIVE MARKET FOR THE COMMON STOCK
The Company has never issued capital stock to the public, and there can be
no assurance that an active and liquid trading market for the Common Stock will
develop or be maintained. It is anticipated that the Common Stock will be
quoted on the Nasdaq National Market under the symbol "PBCP." Ryan Beck has
indicated its intention to make a market in the Common Stock, subject to
compliance with applicable provisions of federal and state securities laws and
other regulatory requirements, although Ryan Beck is not required to do so.
Other factors, including the recent stock market volatility, the expected
increase in compensation expense following the Offering and the Bank's reduced
return on equity following the Offering may adversely affect the after-market
trading price of the Common Stock. If you purchase shares of Common Stock, you
may not be able to sell them when you want to at a price that equals or exceeds
the price you paid for the Common Stock. See "--Recent Market Volatility," "--
Decreased Return in Average Equity Immediately After Reorganization" and
"Expenses Associated With ESOP and Recognition Plan."
RISK OF DELAYED OFFERING
Although the Reorganization and Offering are expected to be completed
within the time periods indicated in this Prospectus, it is possible that
adverse market, economic or other factors may significantly delay the completion
of the Reorganization and Offering, which could significantly increase the costs
of the Reorganization and Offering. See "The Reorganization and Offering."
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PROVIDENT BANCORP, MHC
The Mutual Holding Company will be formed as a federal mutual holding
company and will initially own 53.4% of the Common Stock. The Company has not
yet been formed, although the OTS has approved an application for the Mutual
Holding Company to become a savings and loan holding company. The Mutual
Holding Company will have all of the powers set forth in its federal charter,
and federal law and OTS regulations. The Mutual Holding Company initially will
not conduct any active business other than activities relating to its investment
in a majority of the Common Stock and maintenance of books and records relating
to its members. The Mutual Holding Company does not intend to employ any
persons other than its officers, although it may use the Bank's support staff
from time to time. Federal law and OTS regulations, and the Plan, require that
as long as the Mutual Holding Company is in existence it must own a majority of
the Company's common stock. Federal law and OTS regulations, and the Plan,
permit the Mutual Holding Company to convert to the capital stock form of
organization. The manner in which such a transaction would be conducted and the
regulations and policy affecting such a transaction are described in
"Regulation--Holding Company Regulation."
Although many federal mutual holding companies waive the receipt of cash
dividends declared by their subsidiaries, the Mutual Holding Company has not
determined whether or not it will do so, and intends to make such a
determination at the time the Company declares a dividend. OTS regulations
require the Mutual Holding Company to give the OTS prior written notice of any
such waiver, and the conditions pursuant to which the OTS generally approves
dividend waivers are described in "Regulation--Holding Company Regulation." The
Mutual Holding Company's Board of Directors will waive dividends paid by the
Company if the Board determines that such a waiver is in the Mutual Holding
Company's members' best interest because, among other reasons: (i) the Mutual
Holding Company has no need for the dividend considering its business
operations; (ii) the cash that would be received could be invested by the
Company or the Bank at a more favorable rate of return; (iii) such waiver may
increase the capital of the Bank and enhance its business so that members will
continue to have access to the offices and services of the Bank; and (iv) such
waiver preserves the net worth of the Mutual Holding Company through its
principal asset (the Company, and indirectly, the Bank), which would be
available for distribution in the unlikely event of a voluntary liquidation of
the Company and the Bank after satisfaction of claims of depositors and
creditors. The Board of Directors may consider other factors in determining
whether such waiver is consistent with its fiduciary duties to members of the
Mutual Holding Company. Any waiver of dividends by the Mutual Holding Company
is likely to result in a downward adjustment to the ratio pursuant to which
shares of Common Stock are exchanged for shares of the resulting company in a
Conversion Transaction.
The Mutual Holding Company's Board of Directors will accept dividends paid
by the Company in an amount necessary to pay the Mutual Holding Company's
expenses, and will accept additional dividends if it determines that accepting
such dividends is in the Mutual Holding Company's best interest because, among
other reasons: (i) the Mutual Holding Company may increase its direct ownership
of the Company, and indirect ownership of the Bank, by using cash dividends to
purchase additional shares of Common Stock in the open market from time to time;
and (ii) such dividends may be used to promote activities that are in the
interest of members and the Bank's community. Any purchases of Common Stock by
the Mutual Holding Company will increase the percentage of the outstanding
shares of Common Stock held by the Mutual Holding Company and, in a Conversion
Transaction, will decrease the aggregate number of shares of the resulting
company issued to Minority Stockholders in exchange for their shares of Common
Stock.
The Mutual Holding Company's executive office will located at the executive
offices of the Bank, at 400 Rella Boulevard, Montebello, New York 10901. Its
telephone number will be (914) 369-8040.
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PROVIDENT BANCORP, INC.
The Company will be formed as a federal corporation and will own 100% of
the Bank's common stock. The Company has not yet been formed, and, accordingly,
no financial statements of the Company are included in this Prospectus. The OTS
has approved an application for the 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 Company will
have all of the powers set forth in its federal charter and federal law and OTS
regulations.
The Company will retain up to 50% 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 sold in the Offering. The
remainder of the net proceeds will be used for general corporate purposes. The
holding company structure will provide the 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 Company will be subject to the same restrictions under federal
law as the Mutual Holding Company. The Company has no present plans regarding
diversification, acquisitions or expansion. The Company initially will not
conduct any active business and does not intend to employ any persons other than
its officers, although it may utilize the Bank's support staff from time to
time.
The Company's executive office will be located at the executive offices of
the Bank, at 400 Rella Boulevard, Montebello, New York 10901. Its telephone
number will be (914) 369-8040.
PROVIDENT BANK
The Bank was organized in 1888 as a New York-chartered mutual savings and
loan association and adopted a federal mutual charter in 1986. The Bank's
deposits are insured by the Savings Association Insurance Fund (the "SAIF"), as
administered by the FDIC, up to the maximum amount permitted by law. The Bank
is engaged primarily in the business of offering various FDIC-insured savings
and demand deposits to customers through its eleven full-service offices, and
using those deposits, together with funds generated from operations and
borrowings, to originate one-to four-family residential and commercial real
estate loans, consumer loans, construction and land loans, commercial business
loans, and multi-family residential loans. The Bank also invests in investment
securities and mortgage-backed securities. At June 30, 1998, the Bank had total
assets of $679.1 million, total deposits of $580.1 million and total equity of
$53.9 million.
The Bank's executive office is located at 400 Rella Boulevard, Montebello,
New York 10901. Its telephone number is (914) 369-8040.
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REGULATORY CAPITAL COMPLIANCE
At June 30, 1998, the Bank exceeded each of its regulatory capital
requirements. Set forth below is a summary of the Bank's compliance with the OTS
capital standards as of June 30, 1998, on an historical and pro forma basis
assuming that the indicated number of shares were sold as of such date and all
or a portion of the net Offering proceeds were used by the Company to purchase
all of the outstanding common stock of the Bank. The Bank and Company intend to
increase the Bank's pro forma core capital to 10% of pro forma total assets
after the Offering; accordingly, $20.3 million, $20.3 million, $20.4 million and
$20.4 million of the net Offering proceeds would be received by the Bank at the
minimum, midpoint, maximum and adjusted maximum of the Offering Range. The
amount received by the Bank at the minimum of the Offering Range would represent
all of the net Offering proceeds, while the amounts at the midpoint, maximum and
adjusted maximum of the Offering Range would represent all but $3.8 million,
$7.5 million and $11.9, respectively, which would be retained by the Company.
For purposes of the table below, the entire amount expected to be borrowed by
the ESOP and the cost of all shares expected to be acquired by the Recognition
Plan are deducted from pro forma regulatory capital. See "Management of the
Bank."
<TABLE>
<CAPTION>
PRO FORMA AT JUNE 30, 1998, BASED UPON THE SALE OF
------------------------------------------------------------------------------
4,007,175 SHARES/(1)/
2,575,500 SHARES 3,030,000 SHARES 3,484,500 SHARES AT ADJUSTED
HISTORICAL AT AT MINIMUM OF AT MIDPOINT OF AT MAXIMUM OF MAXIMUM OF
JUNE 30, 1998 OFFERING RANGE OFFERING RANGE OFFERING RANGE OFFERING RANGE
---------------- ---------------- ---------------- ---------------- ---------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ ------- ------ ------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity under generally
accepted accounting
principles................ $53,879 7.93% $74,146 10.57% $74,204 10.57% $74,239 10.57% $74,278 10.57%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Tangible capital/(2)/:
Tangible capital/(3)/.... $49,402 7.32% $69,669 10.00% $69,727 10.00% $69,762 10.00% $69,801 10.00%
Requirement.............. 10,120 1.50 10,453 1.50 10,459 1.50 10,465 1.50 10,471 1.50
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess................. $39,282 5.82% $59,216 8.50% $59,268 8.50% $59,297 8.50% $59,330 8.50%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Core capital/(2)/:
Core capital/(3)/........ $49,402 7.32% $69,669 10.00% $69,727 10.00% $69,762 10.00% $69,802 10.00%
Requirement/(4)/......... 20,239 3.00 20,906 3.00 20,918 3.00 20,930 3.00 20,943 3.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess................. $29,163 4.32% $48,763 7.00% $48,809 7.00% $48,832 7.00% $48,859 7.00%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Risk-based capital/(2)/:
Risk-based capital
/(3)(5)/................. $53,950 14.23% $74,217 19.02% $74,275 19.02% $74.310 19.02% $74.350 19.02%
Requirement.............. 30,331 8.00 31,220 8.00 31,236 8.00 31,251 8.00 31,269 8.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess................. $23,619 6.23% $42,997 11.02% $43,039 11.02% $43,059 11.02% $43,081 11.02%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
- ---------------------------
/(1)/ As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Offering Range of up to 15% as a
result of regulatory considerations, demand for the shares, or changes in
market conditions or general financial and economic conditions following
the commencement of the Offering.
/(2)/ Tangible capital levels are shown as a percentage of tangible assets. Core
capital levels are shown as a percentage of total adjusted assets. Risk-
based capital levels are shown as a percentage of risk-weighted assets.
/(3)/ Pro forma capital levels assume that (i) the Bank funds the Recognition
Plan through purchases in the open market of a number of shares equal to
4% of the Common Stock sold in the Offering, (ii) the ESOP purchases 8% of
the shares sold in the Offering and (iii) the Mutual Holding Company is
capitalized with $100,000. See "Management of the Bank" for a discussion
of the Recognition Plan and ESOP.
/(4)/ The current core capital requirement for savings associations is 3% of
total adjusted assets. The OTS has proposed core capital requirements that
would require a core capital ratio of 3% of total adjusted assets for
thrifts that receive the highest supervisory rating for safety and
soundness and a 4% to 5% core capital ratio requirement for all other
thrifts. See "Regulation--Federal Regulation of Savings Institutions--
Capital Requirements."
/(5)/ Assumes net proceeds are invested in assets that carry a 50% risk-
weighting.
28
<PAGE>
USE OF PROCEEDS
Although the actual net proceeds from the sale of the Common Stock cannot
be determined until the Offering is completed, it is presently anticipated
(based on the assumptions set forth in "Pro Forma Data") that the net proceeds
from the sale of the Common Stock will be as set forth in the following table.
<TABLE>
<CAPTION>
NET OFFERING PROCEEDS
BASED UPON THE SALE FOR $10.00 PER SHARE OF
------------------------------------------------
3,822,025
2,456,500 2,890,000 3,323,500 SHARES AT
SHARES AT SHARES AT SHARES AT ADJUSTED
MINIMUM OF MIDPOINT OF MAXIMUM OF MAXIMUM OF
OFFERING OFFERING OFFERING OFFERING
RANGE RANGE RANGE RANGE
------------ ------------ ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Gross proceeds.......... $ 24,565 $ 28,900 $ 33,235 $ 38,220
Offering expenses....... 1,250 1,250 1,250 1,250
---------- ---------- ---------- ---------
Estimated net proceeds.. $ 23,315 $ 27,650 $ 31,985 $ 36,970
========== ========== ========== =========
</TABLE>
The Company will use between $20.3 million and $20.4 million of the net
proceeds of the Offering at the minimum and maximum, as adjusted, of the
Offering Range, to purchase all of the Common Stock to be issued by the Bank.
Such portion of net proceeds received by the Bank from the Company will be added
to the Bank's general funds and the Bank currently intends to invest
substantially all of such funds initially in short-term investments. Over time,
management currently intends to use the Offering proceeds for general corporate
purposes, including increasing its loan originations and purchasing investment
and mortgage-backed securities. The Bank will target commercial business and
commercial real estate loans, along with residential mortgage and consumer
loans. The Bank may also use such funds for the expansion of its retail banking
franchise through new branch openings or acquisitions. The manner and timing of
the Bank's deployment of the Offering proceeds will depend on market conditions,
and management has not allocated specific amounts for any such specific purpose.
To the extent that the stock-based benefit programs which the Company intends to
adopt subsequent to the Offering are not funded with authorized but unissued
shares of Common Stock, the Company or Bank may use net proceeds from the
Offering to fund the purchase of stock to be awarded under such stock benefit
programs. See "Risk Factors--Possible Dilutive Effect of Issuance of Additional
Shares" and "Management of the Bank--Stock Option Plan" and "--Recognition
Plan."
The Company intends to use between $2.0 million and $3.1 million of the
net proceeds it retains at the minimum and maximum, as adjusted, of the Offering
Range to make a loan directly to the ESOP to enable the ESOP to purchase 8% of
the shares sold in the Offering, and between $983,000 and $1.5 million will be
used to fund the Recognition Plan's purchase of a number of shares equal to 4%
of the shares sold in the Offering. See "Management of the Bank--Employee Stock
Ownership Plan and Trust" and "--Recognition Plan." The remaining proceeds
retained by the Company (up to $11.9 million) will be invested initially in
short- and medium-term investments. The net proceeds retained by the Company
may also be used to support the future expansion of operations, including the
acquisition of other financial institutions or diversification into other
banking related businesses, although the Company and the Bank have no current
arrangements, understandings or agreements regarding any such transactions.
Management has not allocated specific amounts for any such specific purpose.
Upon completion of the Reorganization, the Company will be regulated as a mutual
holding company under the Home Owners' Loan Act (the "HOLA") and regulations of
the OTS. See "Regulation --Holding Company Regulation."
Upon completion of the Reorganization, the Board of Directors of the
Company will have the authority to repurchase stock, subject to statutory and
regulatory requirements. Based upon facts and circumstances following the
Reorganization and subject to applicable regulatory requirements, the Board of
Directors may determine to repurchase stock in the future. Such facts and
circumstances may include but not be limited to (i) market and economic factors
such as the price at which the stock is trading in the market, the volume of
trading, the attractiveness of other investment alternatives in terms of the
rate of return and risk involved in the investment, and the opportunity to
improve the Company's return on equity; (ii) the avoidance of dilution to
stockholders by not
29
<PAGE>
having to issue additional shares to cover the exercise of stock options or to
fund employee stock benefit plans; and (iii) any other circumstances in which
repurchases would be in the best interests of the Company and its shareholders.
Current OTS policy restricts the Company from implementing a stock repurchase
program for at least six months following the completion of the Offering. In the
event the Company determines to repurchases stock, such repurchases may be made
at market prices which may be in excess of the Subscription Price in the
Offering. To the extent that the Company repurchases stock at market prices in
excess of the per share book value, such repurchases may have a dilutive effect
upon stockholders' equity per share of Common Stock.
DIVIDEND POLICY
Upon completion of the Offering, the Board of Directors of the Company will
have the authority to declare dividends on the Common Stock, subject to
statutory and regulatory requirements. The Company intends to pay an annual
cash dividend of $0.12, payable quarterly at $0.03 per share. The payment of
dividends is expected to begin following the first full quarter after the
completion of the Reorganization.
Dividends will be subject to determination and declaration by the Board of
Directors in its discretion, which will take into account the Company's
consolidated financial condition and results of operations, tax considerations,
industry standards, economic conditions, capital levels, regulatory restrictions
on dividend payments by the Bank to the Company, general business practices and
other factors. The 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
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 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 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,"
Note 10 to the Consolidated Financial Statements, and "Regulation--Federal
Regulation of Savings Institutions--Limitations on Capital Distributions."
If permitted by regulatory authorities, the Mutual Holding Company may
waive the receipt of any cash dividends declared on the Common Stock if the
Mutual Holding Company's Board of Directors determines that such waiver is in
the best interests of the Mutual Holding Company. The Board of Directors may
conclude that such waiver, which permits retention of capital by the Company, is
in the best interests of the Mutual Holding Company because, among other
reasons, (i) the Mutual Holding Company has no need for the dividend considering
its current business operations, and (ii) the cash that would be received could
be invested by the Company at a more favorable rate of return. The Board of
Directors may consider other factors in determining whether such waiver is
consistent with its fiduciary duties to the Mutual Holding Company. A waiver of
dividends by the Mutual Holding Company will result in a greater likelihood that
dividends will be paid to stockholders other than the Mutual Holding Company.
There is no assurance that the Mutual Holding Company will waive the receipt of
dividends.
Additionally, in connection with the Reorganization, the Company and Bank
have committed to the OTS that during the one-year period following the
consummation of the Reorganization, the 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 COMMON STOCK
The Company has received conditional approval to have the Common Stock
quoted on the Nasdaq National Market System under the symbol "PBCP" subject to
the completion of the Offering and compliance with certain conditions including
the presence of at least three registered and active market makers. Ryan Beck
has indicated its
30
<PAGE>
intention to make a market in the Common Stock, and based on the Bank's analysis
of the results of recent conversion stock offerings, it is anticipated that the
Company will satisfy the listing requirements.
The existence of a public trading market will depend upon the presence in
the market of both willing buyers and willing sellers at any given time. The
presence of a sufficient number of buyers and sellers at any given time is a
factor over which neither the Company nor any broker or dealer has control. The
absence of an active and liquid trading market may make it difficult to sell the
Common Stock and may have an adverse effect on the price of the Common Stock.
Purchasers should consider the potentially illiquid and long-term nature of
their investment in the Common Stock.
CAPITALIZATION
The following table presents the historical capitalization of the Bank at
June 30, 1998, and the pro forma consolidated capitalization of the Company as
of that date, giving effect to the Offering based upon the sale of the number of
shares indicated in the table and the other assumptions set forth below and
under "Pro Forma Data."
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED CAPITALIZATION
BASED UPON THE SALE FOR $10.00 PER SHARE OF
-----------------------------------------------------
3,822,025
2,456,500 2,890,000 3,323,500 SHARES AT
SHARES AT SHARES AT SHARES AT ADJUSTED
MINIMUM OF MIDPOINT OF MAXIMUM MAXIMUM OF
HISTORICAL OFFERING OFFERING OFFERING OFFERING
CAPITALIZATION RANGE RANGE RANGE RANGE /(1)/
-------------- ----------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Deposits /(2)/.................................. $ 580,075 $ 580,075 $580,075 $580,075 $580,075
Borrowings...................................... 25,048 25,048 25,048 25,048 25,048
---------- ---------- -------- -------- --------
Total deposits and borrowings................. $ 605,123 $ 605,123 $605,123 $605,123 $605,123
========== ========== ======== ======== ========
Stockholders' equity:
Preferred stock, $0.10 par value, per share;
10,000,000 shares authorized; none to be
issued /(3)/.................................. $ -- $ -- $ -- $ -- $ --
Common stock, $0.10 par value per share;
20,000,000 shares authorized; shares to be
issued as shown /(3)/......................... -- 527 620 713 820
Additional paid-in capital /(3)/............... -- 22,788 27,030 31,272 36,150
Retained earnings /(4)/........................ 53,493 53,393 53,393 53,393 53,393
Net unrealized gain on securities available for
sale, net of income taxes..................... 386 386 386 386 386
Less:
Common Stock acquired by ESOP /(5)/........... -- (1,965) (2,312) (2,659) (3,058)
Common Stock acquired by
Recognition Plan /(6)/....................... -- (983) (1,156) (1,329) (1,529)
Total stockholders' equity................... $ 53,879 $ 74,146 $ 77,961 $ 81,776 $ 86,162
Total stockholders' equity as a percentage of
total assets.................................. 7.93% 10.60% 11.09% 11.57% 12.11%
</TABLE>
- --------------------------------------
/(1)/ As adjusted to give effect to an increase in the number of shares which
could occur due to a 15% increase in the Estimated Valuation Range to
reflect changes in market or general financial conditions following the
commencement of the 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)/ Reflects the sale of shares in the Offering. Does not include proceeds
from the Offering that the Company intends to lend to the ESOP to enable
it to purchase shares of Common Stock in the Offering. No effect has been
given to the issuance of additional shares of Common Stock pursuant to the
Stock Option Plan that the Company expects to adopt. If such plan is
approved by stockholders, 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. See "Management of the Bank."
31
<PAGE>
/(4)/ The retained earnings of the Bank will be substantially restricted after
the Reorganization. See "Dividend Policy" and "Regulation--Federal
Regulation of Savings Institutions--Limitations on Capital Distributions."
Pro forma amounts are reduced by the $100,000 that will be used to
capitalize the Mutual Holding Company.
/(5)/ Assumes that 8% of the shares sold in the Offering will be purchased by
the ESOP and that the funds used to acquire the ESOP shares will be
borrowed from the Company. The Common Stock acquired by the ESOP is
reflected as a reduction of stockholders' equity. As the ESOP debt is
repaid, shares will be released and allocated to participants' accounts,
and a corresponding reduction in the charge against stockholders' equity
will occur. See "Management of the Bank--Executive Compensation--
Employee Stock Ownership Plan and Trust."
/(6)/ Assuming the receipt of shareholder approval, the Company intends to
implement the Recognition Plan. Assuming such implementation, the
Recognition Plan will purchase an amount of shares equal to 4% of the
shares of Common Stock sold in the Offering if the Recognition Plan is
implemented within one year of the completion of the Reorganization or up
to 5% of the shares of Common Stock sold in the Offering if the
Recognition Plan is implemented more than one year after the
Reorganization. Such shares may be purchased from authorized but unissued
shares or in the open market. If authorized but unissued shares of Common
Stock are issued to the Recognition Plan equal to 4% of the shares sold in
the Offering, instead of open market purchases, the voting interests of
existing shareholders would be diluted by approximately 1.9%. Under the
terms of the Recognition Plan, assuming it is implemented within one year
of the Reorganization, shares awarded to officers and directors will vest
at the rate of 20% per year. The Common Stock to be purchased by the
Recognition Plan represents unearned compensation and is, accordingly,
reflected as a reduction to pro forma stockholders' equity. As shares of
the Common Stock granted pursuant to the Recognition Plan vest, a
corresponding reduction in the charge against stockholders' equity will
occur.
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Offering is completed. The following estimated pro forma
information is based upon assumptions, including that: (i) the ESOP will
purchase 8% of the Common Stock sold in the Offering, and the remaining shares
will be sold in the Subscription and/or Community Offering; (ii) Ryan Beck will
receive a fee of $450,000; (iii) Offering expenses, excluding the fee paid to
Ryan Beck, will be approximately $800,000; and (iv) the Mutual Holding Company
will be capitalized with $100,000 which will be contributed by the Bank from
equity. Actual Offering expenses may vary from those estimated. Additional
assumptions are described in the footnotes to the table.
Pro forma consolidated net income of the Company for the nine months ended
June 30, 1998 and for the fiscal year ended September 30, 1997 has been
calculated as if the Common Stock had been sold at the beginning of the
respective periods and the net proceeds had been invested at 5.37% and 5.44%,
respectively (the one year U.S. Treasury bill rate as of June 30, 1998 and
September 30, 1997, respectively). The U.S. Treasury bill rate was used on the
reinvestment of proceeds because it more appropriately reflects a market rate of
return, as compared to using the rate equal to the arithmetic average of the
average yield on the Bank's interest-earning assets and its average cost of
deposits. The tables do not reflect the effect of withdrawals from deposit
accounts for the purchase of Common Stock. The pro forma after-tax yield on
reinvestment of the net proceeds is assumed to be 3.22% for the nine months
ended June 30, 1998 and 3.26% for the fiscal year ended September 30, 1997 (in
both cases, based on an assumed tax rate of 40%). 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 to give effect to
the purchase of shares by the ESOP. No effect has been given in the pro forma
stockholders' equity calculations for the assumed earnings on the net proceeds.
As discussed under "Use of Proceeds," the Company will retain 50% of the net
proceeds of the Offering.
The pro forma information derived from the above assumptions 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 considered
indicative of future results of operations. Pro forma consolidated stockholders'
equity represents the difference between the stated amount of assets and
liabilities of the Company. 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.
32
<PAGE>
The following tables set forth pro forma data of the Company at or
for the nine months ended June 30, 1998 and at or for the fiscal year ended
September 30, 1997, based on the assumptions set forth above and in the
footnotes to the tables, and should not be used as a basis for projections of
market value of the common stock following the Offering. The tables below give
effect to the Recognition Plan, which is expected to be adopted by the Company
following the Offering and presented to stockholders for approval. See
"Management of the Bank--Recognition Plan." No effect has been given in the
tables to the possible issuance of additional shares reserved for future
issuance pursuant to the Stock Option Plan to be adopted by the Board of
Directors of the Company and presented to stockholders for approval, nor does
book value as presented give any effect to the liquidation account to be
established for the benefit of Eligible Account Holders or Supplemental Eligible
Account Holders, or the tax effect of the bad debt reserve and other factors.
<TABLE>
<CAPTION>
AT OR FOR THE NINE MONTHS ENDED JUNE 30, 1998
BASED UPON THE SALE FOR $10.00 PER SHARE OF
-------------------------------------------------------------------
3,822,025
2,456,500 2,890,000 3,323,500 SHARES/(1)/
SHARES SHARES SHARES AT ADJUSTED
AT MINIMUM OF AT MIDPOINT OF AT MAXIMUM OF MAXIMUM OF
OFFERING RANGE OFFERING RANGE OFFERING RANGE OFFERING RANGE
-------------- -------------- -------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Gross proceeds................................................ $ 24,565 $ 28,900 $ 33,235 $ 38,220
Less offering expenses........................................ 1,250 1,250 1,250 1,250
---------- ---------- ---------- ----------
Estimated net proceeds....................................... 23,315 27,650 31,985 36,970
Less common stock acquired by ESOP............................ (1,965) (2,312) (2,659) (3,058)
Less common stock acquired by Recognition Plan................ (983) (1,156) (1,329) (1,529)
---------- ---------- ---------- ----------
Estimated net proceeds, as adjusted......................... $ 20,367 $ 24,182 $ 27,997 $ 32,383
========== ========== ========== ==========
FOR THE NINE MONTHS ENDED JUNE 30, 1998
Consolidated net income:
Historical net income........................................ $ 3,444 $ 3,444 $ 3,444 $ 3,444
Pro forma income on net proceeds /(2)/....................... 490 582 674 780
Less pro forma ESOP adjustment /(3)/......................... (88) (104) (120) (138)
Less pro forma Recognition Plan adjustment /(4)/............. (88) (104) (120) (138)
---------- ---------- ---------- ----------
Pro forma net income........................................ $ 3,758 $ 3,818 $ 3,878 $ 3,948
========== ========== ========== ==========
Net income per share:
Historical................................................... $ 0.68 $ 0.58 $ 0.50 $ 0.44
Pro forma income on net proceeds /(2)/....................... 0.10 0.10 0.10 0.10
Less pro forma ESOP adjustment/ (3)/......................... (0.02) (0.02) (0.02) (0.02)
Less pro forma Recognition Plan adjustment /(4)/............. (0.02) (0.02) (0.02) (0.02)
---------- ---------- ---------- ----------
Pro forma net income per share/ (3)(4)(5)/.................. $ 0.74 $ 0.64 $ 0.56 $ 0.50
========== ========== ========== ==========
Number of shares used in calculating earnings per share /(6)/. 5,088,219 5,986,140 6,884,061 7,916,670
========== ========== ========== ==========
AT JUNE 30, 1998
Stockholders' equity:
Historical /(7)/............................................. $ 53,879 $ 53,879 $ 53,879 $ 53,879
Estimated net proceeds /(8)/................................. 23,315 27,650 31,985 36,970
Less capitalization of the Mutual Holding Company............ (100) (100) (100) (100)
Less common stock acquired by ESOP /(3)/..................... (1,965) (2,312) (2,659) (3,058)
Less common stock acquired by Recognition Plan /(4)/......... (983) (1,156) (1,329) (1,529)
---------- ---------- ---------- ----------
Pro forma stockholders' equity /(5)/........................ $ 74,146 $ 77,961 $ 81,776 $ 86,162
========== ========== ========== ==========
Stockholders' equity per share:
Historical /(7)/............................................. $ 10.22 $ 8.69 $ 7.56 $ 6.57
Estimated net proceeds /(8)/................................. 4.42 4.46 4.49 4.51
Less capitalization of the Mutual Holding Company............ (0.02) (0.02) (0.02) (0.01)
Less common stock acquired by ESOP /(3)/..................... (0.37) (0.37) (0.37) (0.37)
Less common stock acquired by Recognition Plan /(4)/......... (0.19) (0.19) (0.19) (0.19)
---------- ---------- ---------- ----------
Pro forma stockholders' equity per share/(4)(5)/........... $ 14.06 $ 12.57 $ 11.47 $ 10.51
========== ========== ========== ==========
Number of shares used in calculating
stockholders' equity per share............................... 5,270,000 6,200,000 7,130,000 8,199,500
========== ========== ========== ==========
Offering price as a multiple of pro forma net earnings
per share (annualized)....................................... 10.14x 11.72x 13.39x 15.00x
========== ========== ========== ==========
Offering price as a percentage of pro forma stockholders'
equity per share............................................. 71.12% 79.55% 87.18% 95.15%
========== ========== ========== ==========
</TABLE>
(Footnotes begin on next page)
33
<PAGE>
_________________________
/(1)/ As adjusted to give effect to an increase in the number of shares which
could occur due to a 15% increase in the Estimated Valuation Range to
reflect changes in market or general financial conditions following the
commencement of the Offering.
/(2)/ No effect has been given to withdrawals from deposit accounts for the
purpose of purchasing Common Stock. Since funds on deposit at the Bank may
be withdrawn to purchase shares of Common Stock (which will reduce
deposits by the amount of such purchases), the net amount of additional
funds available to the Bank for investment following receipt of the net
proceeds of the Offering will be reduced by the amount of such
withdrawals.
/(3)/ It is assumed that 8% of the shares sold in the Offering will be purchased
by the ESOP. For purposes of this table, the funds used to acquire such
shares are assumed to have been borrowed by the ESOP from the Company. The
amount to be borrowed is reflected as a reduction of stockholders' equity.
The Bank intends to make annual contributions to the ESOP in an amount at
least equal to the principal and interest requirement of the debt. The
Bank's payment of the ESOP debt is based upon equal principal installments
plus interest over a 10-year period. Assuming the Company makes the ESOP
loan, interest income earned by the Company on the ESOP debt will offset
the interest paid by the Bank. Accordingly, only the principal payments on
the ESOP debt are recorded as an expense (tax-effected) to the Company on
a consolidated basis. The pro forma net earnings information makes the
following assumptions: (i) the Bank's contribution to the ESOP is
equivalent to the debt service requirement for a nine-month period and was
made at the end of the period; (ii) 14,739, 17,340, 19,941 and 22,932
shares at the minimum, midpoint, maximum and adjusted maximum of the
Offering Range, respectively, were committed to be released at an
average fair value of $10.00 per share; and (iii) only the ESOP shares
committed to be released were considered outstanding for purposes of the
net earnings per share calculations. See "Management of the Bank--Employee
Stock Ownership Plan and Trust."
/(4)/ Gives effect to the Recognition Plan expected to be adopted by the Company
following the Offering. This plan intends to acquire a number of shares of
common stock equal to 4% of the shares sold in the Offering, or 98,260,
115,600, 132,940 and 152,881 shares of common stock at the minimum,
midpoint, maximum and adjusted maximum of the Offering Range,
respectively, either through open market purchases, or from authorized but
unissued shares of common stock or treasury stock of the Company, if any.
Funds used by the Recognition Plan to purchase the shares will be
contributed to the plan by the Company. In calculating the pro forma
effect of the Recognition Plan, it is assumed that the shares were
acquired by the plan in open market purchases at the beginning of the
period presented for a purchase price equal to the Subscription Price, and
that 20% of the amount contributed was an amortized expense during the
period. The issuance of authorized but unissued shares of the common stock
to the Recognition Plan instead of open market purchases would dilute the
voting interests of existing stockholders by approximately 1.9% and pro
forma net earnings per share would be $0.72, $0.62, $0.55 and $0.49 at
the minimum, midpoint, maximum and adjusted maximum of the Offering Range,
respectively, and pro forma stockholders' equity per share would be
$14.00, $12.53, $11.44 and $10.50 at the minimum, midpoint, maximum and
adjusted maximum of the Offering Range, respectively. The actual purchase
price of the shares granted under the Recognition Plan may be higher or
lower than the Subscription Price. See "Management of the Bank--
Recognition Plan."
/(5)/ No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan expected to be adopted by the
Company following the Offering. An amount equal to 10% of the common stock
sold in the Offering, or 245,650, 289,000, 332,350 and 382,202 shares at
the minimum, midpoint, maximum and adjusted maximum of the Offering Range,
respectively, will be reserved for future issuance upon the exercise of
options to be granted under the Stock Option Plan. The issuance of common
stock pursuant to the exercise of options under the Stock Option Plan will
result in the dilution of existing stockholders' interests. Assuming all
options were exercised at the end of the period at an exercise price equal
to the Subscription Price, existing stockholders' voting interest would be
diluted by 4.5%, and at the minimum, midpoint, maximum and adjusted
maximum of the Offering Range, the pro forma net earnings per share would
be $0.71, $0.61, $0.54 and $0.48, respectively, and the pro forma
stockholders' equity per share would be $13.88, $12.46, $11.40 and
$10.48, respectively. See "Management of the Bank--Stock Option Plan."
/(6)/ Such number of shares includes shares sold in the Offering and shares
issued to the Mutual Holding Company in the Reorganization. The number of
shares outstanding excludes shares to be acquired by the ESOP amounting to
181,781, 213,860, 245,939 and 282,830 at the minimum, midpoint, maximum
and adjusted maximum of the Offering Range, respectively. The number of
shares outstanding includes ESOP shares committed to be released of
14,739, 17,340, 19,941 and 22,932 at the minimum, midpoint, maximum and
adjusted maximum,
34
<PAGE>
respectively. No effect has been given to the issuance
of additional shares of Common Stock pursuant to the Stock Option Plan
(which will not be established within the first year after the conclusion
of the Offering unless approved by Minority Stockholders). Recognition
Plan shares are assumed to be fully vested for purposes of computing net
earnings per share.
/(7)/ Stockholders' equity represents the excess of the carrying value of the
assets of the Bank over its liabilities. The amounts shown do not reflect
the federal income tax consequences of the potential restoration to income
of the bad debt reserves for income tax purposes, which would be required
in the event of liquidation. Retained earnings will be substantially
restricted following the Reorganization. See " Dividend Policy" and Note
10 of Notes to the Consolidated Financial Statements. For purposes of
calculating pro forma stockholders' equity per share, shares outstanding
represent total shares issued in the Offering and to the Mutual Holding
Company of 5,270,000, 6,200,000, 7,130,000 and 8,199,500 at the minimum,
midpoint, maximum and adjusted maximum of the Offering Range,
respectively.
/(8)/ Includes assumed proceeds from sale to the Recognition Plan for $10.00 per
share of a number of authorized but unissued shares equal to 4% of the
Minority Ownership Interest. Purchases by the Recognition Plan will be
made at the fair market value of such shares at the time of purchase,
which may be more or less than $10.00 .
35
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED SEPTEMBER 30, 1997
BASED UPON THE SALE FOR $10.00 PER SHARE OF
-----------------------------------------------------------------
4,007,175
2,575,500 3,030,000 3,484,500 SHARES/(1)/
SHARES SHARES SHARES AT ADJUSTED
AT MINIMUM OF AT MIDPOINT OF AT MAXIMUM OF MAXIMUM OF
OFFERING RANGE OFFERING RANGE OFFERING RANGE OFFERING RANGE
-------------- -------------- -------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Gross proceeds................................................. $ 24,565 $ 28,900 $ 33,235 $ 38,220
Less offering expenses......................................... 1,250 1,250 1,250 1,250
---------- ---------- ---------- ----------
Estimated net proceeds........................................ 23,315 27,650 31,985 36,970
Less common stock acquired by ESOP............................. (1,965) (2,312) (2,659) (3,058)
Less common stock acquired by Recognition Plan................. (983) (1,156) (1,329) (1,529)
---------- ---------- ---------- ----------
Estimated net proceeds, as adjusted.......................... $ 20,367 $ 24,182 $ 27,997 $ 32,383
========== ========== ========== ==========
FOR THE YEAR ENDED SEPTEMBER 30, 1997
Consolidated net income:
Historical net income......................................... $ 4,598 $ 4,598 $ 4,598 $ 4,598
Pro forma income on net proceeds /(2)/........................ 662 786 911 1,054
Less pro forma ESOP adjustment /(3)/.......................... (118) (139) (160) (183)
Less pro forma Recognition Plan adjustment /(4)/.............. (118) (139) (160) (183)
---------- ---------- ---------- ----------
Pro forma net income......................................... $ 5,024 $ 5,106 $ 5,189 $ 5,286
========== ========== ========== ==========
Net income per share:
Historical.................................................... $ 0.90 $ 0.77 $ 0.67 $ 0.58
Pro forma income on net proceeds /(2)/........................ 0.13 0.13 0.13 0.13
Less pro forma ESOP adjustment/ (3)/.......................... (0.02) (0.02) (0.02) (0.02)
Less pro forma Recognition Plan adjustment /(4)/.............. (0.02) (0.02) (0.02) (0.02)
---------- ---------- ---------- ----------
Pro forma net income per share/ (3)(4)(5)/................... $ 0.99 $ 0.86 $ 0.76 $ 0.67
========== ========== ========== ==========
Number of shares used in calculating earnings per share /(6)/.. 5,093,132 5,991,920 6,890,708 7,924,314
========== ========== ========== ==========
AT SEPTEMBER 30, 1997
Stockholders' equity:
Historical /(7)/.............................................. $ 50,399 $ 50,399 $ 50,399 $ 50,399
Estimated net proceeds /(8)/.................................. 23,315 27,650 31,985 36,970
Less capitalization of the Mutual Holding Company............. (100) (100) (100) (100)
Less common stock acquired by ESOP /(3)/...................... (1,965) (2,312) (2,659) (3,058)
Less common stock acquired by Recognition Plan /(4)/.......... (983) (1,156) (1,329) (1,529)
---------- ---------- ---------- ----------
Pro forma stockholders' equity /(5)/......................... $ 70,666 $ 74,481 $ 78,296 $ 82,682
========== ========== ========== ==========
Stockholders' equity per share:
Historical /(7)/.............................................. $ 9.56 $ 8.12 $ 7.06 $ 6.14
Estimated net proceeds /(8)/.................................. 4.42 4.46 4.49 4.51
Less capitalization of the Mutual Holding Company............. (0.02) (0.01) (0.01) (0.01)
Less common stock acquired by ESOP/(3)/....................... (0.37) (0.37) (0.37) (0.37)
Less common stock acquired by Recognition Plan/(4)/........... (0.19) (0.19) (0.19) (0.19)
---------- ---------- ---------- ----------
Pro forma stockholders' equity per share/(4)(5)/............ $ 13.40 $ 12.01 $ 10.98 $ 10.08
========== ========== ========== ==========
Number of shares used in calculating
stockholders' equity per share................................ 5,270,000 6,200,000 7,130,000 8,199,500
Offering price as a multiple of pro forma net earnings
per share..................................................... 10.10x 11.63x 13.16x 14.93x
========== ========== ========== ==========
Offering price as a percentage of pro forma stockholders'
equity per share.............................................. 74.63% 83.26% 91.07% 99.21%
========== ========== ========== ==========
</TABLE>
(Footnotes begin on next page)
36
<PAGE>
_________________________
/(1)/ As adjusted to give effect to an increase in the number of shares which
could occur due to a 15% increase in the Estimated Valuation Range to
reflect changes in market or general financial conditions following the
commencement of the Offering.
/(2)/ No effect has been given to withdrawals from deposit accounts for the
purpose of purchasing Common Stock. Since funds on deposit at the Bank may
be withdrawn to purchase shares of Common Stock (which will reduce
deposits by the amount of such purchases), the net amount of additional
funds available to the Bank for investment following receipt of the net
proceeds of the Offering will be reduced by the amount of such
withdrawals.
/(3)/ It is assumed that 8% of the shares sold in the Offering will be purchased
by the ESOP. For purposes of this table, the funds used to acquire such
shares are assumed to have been borrowed by the ESOP from the Company. The
amount to be borrowed is reflected as a reduction of stockholders' equity.
The Bank intends to make annual contributions to the ESOP in an amount at
least equal to the principal and interest requirement of the debt. The
Bank's payment of the ESOP debt is based upon equal principal installments
plus interest over a 10-year period. Assuming the Company makes the ESOP
loan, interest income earned by the Company on the ESOP debt will offset
the interest paid by the Bank. Accordingly, only the principal payments on
the ESOP debt are recorded as an expense (tax-effected) to the Company on
a consolidated basis. The pro forma net earnings information makes the
following assumptions: (i) the Bank's contribution to the ESOP is
equivalent to the debt service requirement for a full year and was made at
the end of the period; (ii) 19,652, 23,120, 26,588 and 30,576 shares at
the minimum, midpoint, maximum and adjusted maximum of the Offering Range,
respectively, were committed to be released at an average fair value of
$10.00 per share; and (iii) only the ESOP shares committed to be released
were considered outstanding for purposes of the net earnings per share
calculations. See "Management of the Bank--Employee Stock Ownership Plan
and Trust."
/(4)/ Gives effect to the Recognition Plan expected to be adopted by the Company
following the Offering. This plan intends to acquire a number of shares of
common stock equal to 4% of the shares sold in the Offering, or 98,260,
115,600, 132,940 and 152,881 shares of common stock at the minimum,
midpoint, maximum and adjusted maximum of the Offering Range,
respectively, either through open market purchases, or from authorized but
unissued shares of common stock or treasury stock of the Company, if any.
Funds used by the Recognition Plan to purchase the shares will be
contributed to the plan by the Company. In calculating the pro forma
effect of the Recognition Plan, it is assumed that the shares were
acquired by the plan in open market purchases at the beginning of the
period presented for a purchase price equal to the Subscription Price, and
that 20% of the amount contributed was an amortized expense during the
period. The issuance of authorized but unissued shares of the common stock
to the Recognition Plan instead of open market purchases would dilute the
voting interests of existing stockholders by approximately 1.9% and pro
forma net earnings per share would be $0.98, $0.84, $0.75 and $0.67 at
the minimum, midpoint, maximum and adjusted maximum of the Offering Range,
respectively, and pro forma stockholders' equity per share would be
$13.35, $11.97, $10.97 and $10.08 at the minimum, midpoint, maximum and
adjusted maximum of the Offering Range, respectively. The actual purchase
price of the shares granted under the Recognition Plan may be higher or
lower than the Subscription Price. See "Management of the Bank--
Recognition Plan."
/(5)/ No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan expected to be adopted by the
Company following the Offering. An amount equal to 10% of the common stock
sold in the Offering, or 245,650, 289,000, 332,350 and 382,202 shares at
the minimum, midpoint, maximum and adjusted maximum of the Offering Range,
respectively, will be reserved for future issuance upon the exercise of
options to be granted under the Stock Option Plan. The issuance of common
stock pursuant to the exercise of options under the Stock Option Plan will
result in the dilution of existing stockholders' interests. Assuming all
options were exercised at the end of the period at an exercise price equal
to the Subscription Price, existing stockholders' voting interest would be
diluted by 4.5%, and at the minimum, midpoint, maximum and adjusted
maximum of the Offering Range, the pro forma net earnings per share would
be $0.96, $0.83, $0.74 and $0.65, respectively, and the pro forma
stockholders' equity per share would be $13.25, $11.92, $10.93 and
$10.08, respectively. See "Management of the Bank--Stock Option Plan."
/(6)/ Such number of shares includes shares sold in the Offering and shares
issued to the Mutual Holding Company in the Reorganization. The number of
shares outstanding excludes shares to be acquired by the ESOP amounting to
176,868, 208,080, 239,292 and 275,186 at the minimum, midpoint, maximum
and adjusted maximum of the Offering Range, respectively. The number of
shares outstanding includes ESOP shares committed to be released of
19,652, 23,120, 26,588 and 30,576 at the minimum, midpoint, maximum and
adjusted maximum,
37
<PAGE>
respectively. No effect has been given to the issuance of additional
shares of Common Stock pursuant to the Stock Option Plan (which will not
be established within the first year after the conclusion of the Offering
unless approved by Minority Stockholders). Recognition Plan shares are
assumed to be fully vested for purposes of computing net earnings per
share.
/(7)/ Stockholders' equity represents the excess of the carrying value of the
assets of the Bank over its liabilities. The amounts shown do not reflect
the federal income tax consequences of the potential restoration to income
of the bad debt reserves for income tax purposes, which would be required
in the event of liquidation. Retained earnings will be substantially
restricted following the Reorganization. See "Dividend Policy" and Note
10 of Notes to the Consolidated Financial Statements. For purposes of
calculating pro forma stockholders' equity per share, shares outstanding
represent total shares issued in the Offering and to the Mutual Holding
Company of 5,270,000, 6,200,000, 7,130,000 and 8,199,500 at the minimum,
midpoint, maximum and adjusted maximum of the Offering Range,
respectively.
/(8)/ Includes assumed proceeds from sale to the Recognition Plan for $10.00 per
share of a number of authorized but unissued shares equal to 4% of the
Minority Ownership Interest. Purchases by the Recognition Plan will be
made at the fair market value of such shares at the time of purchase,
which may be more or less than $10.00.
38
<PAGE>
PROPOSED PURCHASES BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding intended Common Stock
subscriptions by each of the Directors and executive officers of the Bank and
the Company and their associates, and by all such Directors and executive
officers as a group. In the event the individual maximum purchase limitation is
increased, persons subscribing for the maximum amount may increase their
purchase order. This table excludes shares to be purchased by the ESOP, and any
Recognition Plan awards or Stock Option Plan grants that may be made no earlier
than six months after the completion of the Reorganization. See "Management of
the Bank--Recognition Plan" and "--Stock Option Plan."
<TABLE>
<CAPTION>
PERCENT OF
INTENDED SUBSCRIPTIONS SHARES ISSUED
POSITION ---------------------------------- IN THE
NAME WITH THE BANK TOTAL SHARES/(1)/ AGGREGATE PRICE OFFERING/(2)/
- -------------------------------- ---------------------------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C>
William F. Helmer Chairman of the Board 40,000 $ 400,000 1.2%
George Strayton President, Chief Executive Officer 40,000 400,000 1.2
and Director
Dennis L. Coyle Vice Chairman of the Board 40,000 400,000 1.2
Murray L. Korn Director 40,000 400,000 1.2
Donald T. McNelis Director 20,000 200,000 *
Richard A. Nozell Director 7,500 75,000 *
William R. Sichol, Jr. Director 20,000 200,000 *
Wilbur C. Ward Director 7,500 75,000 *
F. Gary Zeh Director 40,000 400,000 1.2
Daniel G. Rothstein Executive Vice President, 35,000 350,000 1.1
Chief Credit Officer
and Regulatory Counsel
Robert J. Sansky Executive Vice President and 10,000 100,000 *
Director of Human Resources
Katherine A. Dering Senior Vice President and 10,000 100,000 *
Chief Financial Officer
Stephen G. Dormer Senior Vice President and 10,000 100,000 *
Director of Business Activity
John F. Fitzpatrick Senior Vice President and 10,000 100,000 *
Director of Support Services
------- ----------
All Directors and executive
officers as a group (14 persons) 330,000 $3,300,000 9.9%
======= ========== ===
- ----------------
</TABLE>
* Less than 1%.
/(1)/ The maximum number of shares for which any officer or director may
subscribe is 40,000 shares.
/(2)/ At the maximum of the Offering Range.
39
<PAGE>
THE REORGANIZATION AND OFFERING
THE OTS HAS APPROVED THE PLAN AND THE OFFERING OF THE COMMON STOCK SUBJECT
TO THE APPROVAL OF THE BANK'S MEMBERS AND THE SATISFACTION OF CERTAIN CONDITIONS
IMPOSED BY THE OTS. HOWEVER, SUCH APPROVAL DOES NOT CONSTITUTE A RECOMMENDATION
OR ENDORSEMENT OF THE OFFERING OR THE PLAN BY THE OTS.
DESCRIPTION OF AND REASONS FOR THE REORGANIZATION
Pursuant to the Plan, which has been approved unanimously by the Board of
Directors, 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. The Reorganization will be effected as follows or in
any other manner that is consistent with applicable federal law and regulations
and the intent of the Plan:
(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 Company as a wholly-owned subsidiary;
(iv) the Bank will exchange its charter for a federal stock savings bank
charter and Interim One will exchange its charter for a federal
mutual holding company charter to become the Mutual Holding Company;
(v) simultaneously with step (iv), Interim Two will merge with and into
the Bank with the Bank as the resulting institution;
(vi) all of the initially issued stock of the Bank will be transferred to
the Mutual Holding Company in exchange for membership interests in
the Mutual Holding Company; and
(vii) the Mutual Holding Company will contribute the capital stock of the
Bank to the Company, and the Bank will become a wholly-owned
subsidiary of the Company.
Concurrently with the Reorganization, the Company will offer for sale 46.6%
of its Common Stock, and issue the remaining 53.4% of its Common Stock to the
Mutual Holding Company.
In adopting the Plan, the Bank's Board of Directors determined that the
Reorganization is in the best interest of the Bank. The primary purpose of the
Reorganization is to establish a structure that will enable the Bank to compete
and expand more effectively in the financial services marketplace, and that will
enable the Bank's depositors, certain borrowers, employees, management and
directors to obtain an indirect equity ownership interest in the Bank. The new
structure will permit the Company to issue capital stock, which is a source of
capital not available to mutual savings banks, and the Company will take
advantage of this new ability by issuing Common Stock in the Offering. Since
the Company is not offering all of its Common Stock for sale in the Offering
(but is issuing a majority of its stock to the Mutual Holding Company), the
Reorganization will result in less capital raised in comparison to a standard
mutual-to-stock conversion. The Reorganization, however, also will offer the
Bank the opportunity to raise additional capital since the stock held by the
Mutual Holding Company will be available for sale in the future in the event the
Company sells additional shares to depositors and others in one or more
incremental stock offerings, or if the Mutual Holding Company converts to the
capital stock form of organization in a Conversion Transaction. See
"Regulation--Holding Company Regulation--Conversion of the Mutual Holding
Company to Stock Form."
40
<PAGE>
The Reorganization will also give the Bank greater flexibility to structure
and finance the expansion of its 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 the Bank has no
current arrangements, understandings or agreements regarding any such
opportunities, the Company will be in a position after the Reorganization,
subject to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise. Lastly, the Reorganization
will enable the Bank to better manage its capital by giving the Bank broader
investment opportunities through the holding company structure, and will enable
====
the 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 ability to remain an independent
savings bank and to provide community-oriented financial services will be
preserved through the mutual holding company structure.
The Board of Directors believes that these advantages outweigh the
potential disadvantages of the mutual holding company structure, which may
include: (i) the inability of stockholders other than the Mutual Holding Company
to obtain majority ownership of the Company and the Bank, which may result in
the perpetuation of the management and Board of Directors of the Bank and the
Company; and (ii) that the mutual holding company structure is a relatively new
form of corporate ownership, and new regulatory policies relating to the mutual
interest in the Mutual Holding Company that may be adopted from time-to-time may
have an adverse impact on minority stockholders. A majority of the voting stock
of the Company will be owned by the Mutual Holding Company, which is a mutual
corporation that will be controlled by its members, who will be certain of the
Bank's customers. While this structure will permit management to focus on the
Company's and the Bank's long-term business strategy for growth and capital
redeployment without excessive pressure from stockholders, it will also serve to
perpetuate the existing management and directors of the Bank. The Mutual
Holding Company will be able to elect all members of the Board of Directors of
the Company, and will be able to control the outcome of all matters presented to
the stockholders of the Company for resolution by vote except for certain
matters that must be approved by more than a majority of stockholders of the
Company. No assurance can be given that the Company will not take action
adverse to the interests of the Minority Stockholders.
Following the completion of the Reorganization, all depositors of the Bank
as of the effective date of the Reorganization and all borrowers of the Bank as
of July 9, 1998 will become members of the Mutual Holding Company so long as
they continue to hold deposit accounts or their loans remain outstanding with
the Bank. In addition, all persons who become depositors subsequent to the
Reorganization will become members of the Mutual Holding Company.
All insured deposit accounts of the Bank that are transferred to the Bank
in stock form will continue to be federally insured by the FDIC and the SAIF up
to the legal maximum limit in the same manner as deposit accounts existing in
the Bank immediately prior to the Reorganization. Upon completion of the
Reorganization, the Bank may 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 and OTS regulations. Although the Company will have the
power to issue shares of capital stock to persons other than the Mutual Holding
Company, as long as the Mutual Holding Company is in existence, the Mutual
Holding Company will be required to own a majority of the voting stock of the
Company. The Company may issue any amount of non-voting stock to persons other
than the Mutual Holding Company and the Company must own 100% of the voting
stock of the Bank. The Bank and the Company may issue any amount of non-voting
stock or debt to persons other than the Mutual Holding Company.
Completion of the Reorganization is subject to the approval of the Plan by
the Bank's members. The Plan is being presented for a vote of the Bank's
members at a special meeting to be held on December 21, 1998.
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED IN THE REORGANIZATION AND
OFFERING
The Plan and federal and state regulations require that the aggregate
purchase price of the Common Stock issued in the Offering must be based on the
appraised pro forma market value of the Common Stock, as determined by an
independent valuation. The Bank has retained RP Financial, which has prepared
the Independent Valuation.
41
<PAGE>
For its services in making such appraisal, RP Financial will receive a fee of
$45,000 (which amount does not include a fee of $7,500 to be paid to RP
Financial for assistance in preparation of a business plan). The Bank and the
Company have agreed to indemnify RP Financial and its employees and affiliates
against certain losses (including any losses in connection with claims under the
federal securities laws) arising out of its services as appraiser, except where
RP Financial's liability results from its negligence or bad faith.
The Independent Valuation was prepared by RP Financial in reliance upon the
information contained in the Prospectus, including the Consolidated Financial
Statements. 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 marketing
area; 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 publicly traded savings institutions in mutual holding
company form on a pro forma fully converted basis; the aggregate size of the
Offering; the impact of the Reorganization on the Bank's stockholders' equity
and earnings potential; the proposed dividend policy of the Company and the
capacity to pay dividends; and the trading market for securities of other
subsidiaries of mutual holding companies and general conditions in the market
for such securities.
The Board of Directors reviewed the Independent Valuation and, in
particular, considered (i) the Bank's financial condition and results of
operations for the nine months ended June 30, 1998, (ii) financial comparisons
of the Bank in relation to financial institutions of similar size and asset
quality, and (iii) stock market conditions generally and in particular for
financial institutions, all of which are set forth in the Independent Valuation.
The Board also reviewed the methodology and the assumptions used by RP Financial
in preparing the Independent Valuation.
The Independent Valuation states that as of October 30, 1998, the
estimated pro forma market value of the Common Stock ranged from a minimum of
$52,700,000 to a maximum of $71,300,000 with a midpoint of $62,000,000 (the
"Estimated Valuation Range"). The Bank's Board of Directors determined to offer
the shares in the Offering for the Subscription Price of $10.00 per share.
Based on the Estimated Valuation Range and the Subscription Price, the number of
shares of Common Stock that the Company will issue will range from 5,270,000
shares to 7,130,000 shares, with a midpoint of 6,200,000 shares. The Bank's
Board of Directors determined to offer 46.6% of such shares in the Offering, or
between 2,456,500 shares and 3,323,500 shares with a midpoint of 2,890,000
shares (the "Offering Range"). The 53.4% of the to-be outstanding shares of
Common Stock that are not sold in the Offering will be issued to the Mutual
Holding Company.
Following commencement of the Subscription Offering, the maximum of the
Estimated Valuation Range may be increased by up to 15% to up to $81,995,000,
which will result in a corresponding increase in the maximum of the Offering
Range to up to 3,822,025 shares to reflect changes in market and financial
conditions, without the resolicitation of subscribers. The minimum of the
Estimated Valuation Range and the minimum of the Offering Range may not be
decreased without a resolicitation of subscribers. The Subscription Price of
$10.00 per share will remain fixed. See "--Limitations Upon Purchases of Common
Stock" as to the method of distribution and allocation of additional shares that
may be issued in the event of an increase in the Offering Range to fill unfilled
orders in the Subscription and Community Offerings. In the event the
Independent Valuation is updated to increase the pro forma market value of the
Common Stock to more than $81,995,000 or less than $52,700,000, such
appraisal will be filed with the Securities and Exchange Commission (the "SEC")
by post-effective amendment.
THE INDEPENDENT VALUATION, HOWEVER, 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 CONSOLIDATED
FINANCIAL STATEMENTS AND OTHER INFORMATION PROVIDED BY THE BANK, NOR DID RP
FINANCIAL VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE BANK. THE
INDEPENDENT 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 SUBSCRIPTION
PRICE.
42
<PAGE>
The Independent Valuation will be updated at the time of the completion of
the Offering. If the update to the Independent Valuation at the conclusion of
the Offering results in an increase in the maximum of the Estimated Valuation
Range to more than $81,995,000 and a corresponding increase in the Offering
Range to more than 3,822,025 shares, or a decrease in the minimum of the
Estimated Valuation Range to less than $52,700,000 and a corresponding
decrease in the Offering Range to fewer than 2,456,500 shares, then the
Company, after consulting with the OTS, may terminate the Plan and return all
funds promptly with interest or resolicit subscribers relative to a new
Estimated Valuation Range and Offering Range, or take such other actions as
permitted by the OTS in order to complete the Reorganization and the Offering.
If a resolicitation is commenced, unless subscribers respond affirmatively
within a designated period of time, all funds will be promptly returned with
interest to subscribers as described above. A resolicitation, if any, following
the conclusion of the Subscription and Community Offerings would not exceed 45
days unless further extended by the OTS for periods of up to 90 days not to
exceed 24 months following the special meeting of the Bank's members at which
the Plan is presented for member approval, or December __, 2000.
An increase in the Independent Valuation and the number of shares to be
issued in the Offering would decrease both a subscriber's ownership interest and
the Company's pro forma earnings and stockholders' equity on a per share basis
while increasing pro forma earnings and stockholders' equity on an aggregate
basis. A decrease in the Independent Valuation and the number of shares to be
issued in the Offering would increase both a subscriber's ownership interest and
the Company's pro forma earnings and stockholders' equity on a per share basis
while decreasing pro forma net income and stockholders' equity on an aggregate
basis. For a presentation of the effects of such changes, see "Pro Forma
Data."
Copies of the appraisal report of RP Financial and the detailed memorandum
of the appraiser setting forth the method and assumptions for such appraisal are
available for inspection at the main office of the Bank and the other locations
specified under "Additional Information."
No sale of shares of Common Stock may be consummated unless, prior to such
consummation, RP Financial confirms to the Bank and the OTS that, to the best of
its knowledge, nothing of a material nature has occurred that, taking into
account all relevant factors, would cause RP Financial to conclude that the
Independent Valuation is incompatible with its estimate of the pro forma market
value of the Common Stock of the Company at the conclusion of the Offering. Any
change that would result in an aggregate purchase price that is below the
minimum or above the maximum of the Estimated Valuation Range would be subject
to OTS approval. As described above, if such confirmation is not received,
the Bank may extend the Offering, reopen or begin a new offering, establish a
new Estimated Valuation Range and begin a resolicitation of all purchasers with
the approval of the OTS or take such other actions as permitted by the OTS in
order to complete the Offering.
PURCHASE PRIORITIES AND METHOD OF OFFERING SHARES IN THE OFFERING
Concurrent with the Reorganization, the Company is offering shares of
Common Stock to persons other than the Mutual Holding Company. The Company is
offering between 2,456,500 and 3,323,500 shares of the Common Stock (subject
to adjustment to up to 3,822,025 shares in the event of an increase in the
maximum of the Estimated Valuation Range). The shares of Common Stock that will
be sold in the Offering will constitute no more than 46.6% of the shares that
will be outstanding immediately at the conclusion of the Offering. Following
the Reorganization and the Offering, the Company also will be authorized to
issue additional Common Stock or preferred stock to persons other than the
Mutual Holding Company, without prior approval of the holders of the Common
Stock. Subject to the limitations set forth in the "--Limitations Upon
Purchases of Common Stock" section, the priorities for the purchase of shares
are as follows:
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each depositor with aggregate
deposit account balances of $50 or more (a "Qualifying Deposit") as of December
31, 1996 (the "Eligibility Record Date," and such account holders, "Eligible
Account Holders") will receive nontransferable subscription rights to subscribe
for up to the greater of 20,000 shares or 15 times the product (rounded down to
the next whole number) obtained by multiplying the total number of shares to be
issued in the Offering by a fraction of which the numerator is the amount of the
Eligible Account Holder's Qualifying Deposit and the denominator is the total
amount of Qualifying Deposits of all Eligible
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Account Holders, in each case on the Eligibility Record Date, subject to the
overall purchase limitation and exclusive of shares purchased by the ESOP from
any increase in the shares offered pursuant to an increase in the maximum of the
Offering Range. See "--Limitations Upon Purchases of Common Stock." If there are
not sufficient shares available to satisfy all subscriptions, shares first will
be allocated so as to permit each 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 for which he subscribed.
Thereafter, unallocated shares (except for additional shares issued to the ESOP
upon an increase in the maximum of the Offering Range) will be allocated to each
subscribing Eligible Account Holder whose subscription remains unfilled in the
proportion that the amount of his aggregate 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 Order Form all deposit accounts in which he or she has an ownership
interest on the Eligibility Record Date. Failure to list an account could
result in fewer shares being allocated than if all accounts had been disclosed.
Neither the Company nor the Bank nor any of their agents shall be responsible
for orders on which all Qualifying Deposit Accounts have not been fully and
accurately disclosed. The subscription rights of Eligible Account Holders who
are also directors or officers of the Bank or their associates will be
subordinated to the subscription rights of other Eligible Account Holders to the
extent attributable to increased deposits in the twelve months preceding the
Eligibility Record Date. For allocation purposes, Qualifying Deposits will be
divided in the case of multiple orders.
PRIORITY 2: EMPLOYEE PLANS. To the extent that there are sufficient shares
remaining after satisfaction of subscriptions by Eligible Account Holders, the
tax-qualified employee plans, including the ESOP, will receive nontransferable
subscription rights to purchase Common Stock in the Offering on behalf of
participants subject to the purchase limitations described herein. The ESOP
intends to subscribe for 8% of the Common Stock issued in the Offering,
including 8% of the total number of shares issued if the maximum of the Offering
Range is increased. The priority right of the ESOP to purchase shares is
subordinate to the rights of Eligible Account Holders to subscribe for shares,
except that the ESOP shall have first priority to purchase shares issued in
excess of the maximum of the Offering Range in the event of an increase in the
maximum of the initial Estimated Valuation Range and the Offering Range.
PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent that
there are sufficient shares remaining after satisfaction of subscriptions by
Eligible Account Holders and the ESOP, each depositor with a Qualifying Deposit
as of September 30, 1998 (the "Supplemental Eligibility Record Date") who is not
an Eligible Account Holder ("Supplemental Eligible Account Holder") will receive
nontransferable subscription rights to subscribe for the greater of up to 20,000
shares, or 15 times the product (rounded down to the next whole number) obtained
by multiplying the number of shares issued in the Offering by a fraction of
which the numerator is the amount of the Supplemental Eligible Account Holder's
Qualifying Deposit and the denominator is the total amount of Qualifying
Deposits of all Supplemental Eligible Account Holders, in each case on the
Supplemental Eligibility Record Date, subject to the overall purchase
limitation. See "--Limitations Upon Purchases of Common Stock." If there are
not sufficient shares available to satisfy all subscriptions, shares first will
be allocated 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 for which he
subscribed. Thereafter, unallocated shares will be allocated to each
subscribing Supplemental Eligible Account Holder whose subscription remains
unfilled in the proportion that the amount of his or her Qualifying Deposit
bears to the total amount of Qualifying Deposits of all subscribing Supplemental
Eligible Account Holders whose subscriptions remain unfilled.
To ensure proper allocation of stock, each Supplemental Eligible Account
Holder must list on his Order Form all deposit accounts in which he or she has
an ownership interest on the Supplemental Eligibility Record Date. Failure to
list an account could result in less shares being allocated than if all accounts
had been disclosed. For allocation purposes, Qualifying Deposits will be
divided in the case of multiple orders. Neither the Company nor the Bank nor
any of their agents shall be responsible for orders on which all Qualifying
Deposit Accounts have not been fully and accurately disclosed.
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PRIORITY 4: OTHER MEMBERS. To the extent that there are shares remaining
after satisfaction of subscriptions by Eligible Account Holders, the Employee
Plans, and Supplemental Eligible Account Holders, depositors as of the Voting
Record Date and borrowers as of July 9, 1998 whose borrowings remained
outstanding as of the Voting Record Date ("Other Members") who is not an
Eligible Account Holder or Supplemental Eligible Account Holder will receive
nontransferable subscription rights to subscribe for 20,000 shares subject to
the overall purchase limitation. See "--Limitations on Stock Purchases." If
there are not sufficient shares available to satisfy all subscriptions,
available shares will be allocated on a pro-rata basis based on the size of
the subscriptions.
PRIORITY 5: DIRECTORS, OFFICERS AND EMPLOYEES. To the extent that shares
remain available for purchase after satisfaction of all subscriptions of the
Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible
Account Holders, and Other Members, each employee, officer and director of the
Bank who is not an Eligible Account Holder, Supplemental Eligible Account
Holder or Other Member shall have the opportunity to purchase up to 20,000
shares. In the event that directors, officers and employees subscribe for a
number of shares, which, when added to the shares subscribed for by Eligible
Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account
Holders, and Other Members is in excess of the total shares offered in the Stock
Offering, the subscriptions of such persons will be allocated among directors,
officers and employees on a pro rata basis based on the size of each person's
orders.
COMMUNITY 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 unsubscribed shares directly to the general public for the Subscription Price
of $10.00 per share. If a Community Offering is conducted, it will be for a
period of not more than 45 days unless extended by the Company and the Bank, and
may begin concurrently with, during or promptly after the Subscription Offering.
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 $400,000
of Common Stock offered in the Community Offering. Further, the Company may
limit total subscriptions so as to assure that the number of shares available
for a syndicated community offering may be up to a specified percentage of the
number of shares of Common Stock. The Company may reserve shares offered in the
Community Offering for sales to institutional investors.
In the event of an oversubscription for shares in the Community Offering,
shares may be allocated in the sole discretion of the Bank (to the extent shares
remain available) first to natural persons residing in the Bank's local
community of Rockland County, New York (the "Community"), then to any other
persons subscribing for shares in the Community Offering so that each such
person may receive the lesser of the number of shares subscribed for or 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
the Bank's 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 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 director shall be examined for purposes of this
definition. The Bank may use deposit or loan records or such other evidence
provided to it to determine whether a person is a resident. In all cases,
however, such a determination shall be in the sole discretion of the Bank.
The Bank and the Company, in their sole discretion, may reject
subscriptions, in whole or in part, received from any person in the Community
Offering.
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SYNDICATED COMMUNITY OFFERING
Depending on market conditions, the Common Stock may be offered for sale
(for $10.00 per share) to the general public on a best efforts basis in the
Syndicated Community Offering by a selling group of broker-dealers ("Selected
Dealers") to be managed by Ryan Beck. Ryan Beck, in its discretion, will
instruct Selected Dealers as to the number of shares to be allocated to each
Selected Dealer. Only upon allocation of shares to Selected Dealers may
Selected Dealers take orders from their customers. Investors who desire to
purchase shares in the Community Offering directly through a Selected Dealer,
which may include Ryan Beck, are advised that Selected Dealers are required
either: (a) upon receipt of an executed Order Form or direction to execute an
Order Form on behalf of an investor, to forward the appropriate purchase price
to the Bank for deposit in a segregated account on or before twelve noon,
prevailing time, of the business day next following such receipt or execution;
or (b) upon receipt of confirmation of an investor's interest in purchasing
shares, and following a mailing of an acknowledgment by such member to such
investor on the business day next following receipt of confirmation, to debit
the account of such investor on the third business day next following receipt of
confirmation and to forward the appropriate purchase price to the Bank for
deposit in the segregated account on or before twelve noon, prevailing time, of
the business day next following such debiting.
It is expected that the Syndicated Community Offering will begin during or
as soon as practicable after termination of the 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. If for any reason a Syndicated Community Offering of
unsubscribed shares of Common Stock cannot be effected or is deemed inadvisable,
the Boards of Directors of the 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 OTS and to compliance with applicable state
and federal securities laws.
RESTRICTIONS ON AGREEMENTS OR UNDERSTANDINGS REGARDING TRANSFER OF COMMON STOCK
TO BE PURCHASED IN THE OFFERING
Prior to the completion of the Offering, no person 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 person 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 intends to pursue any and all legal and
equitable remedies in the event it becomes aware of any such agreement or
understanding, and will not honor orders reasonably believed by the Bank to
involve such an agreement or understanding.
PROCEDURE FOR PURCHASING SHARES
To ensure that each purchaser receives a Prospectus in the Stock Offering
and Community Offering at least 48 hours before the Expiration Date,
Prospectuses will not be mailed any later than five days prior to such date or
hand delivered any later than two days prior to such date. Order forms may only
be distributed with a Prospectus.
EXPIRATION DATE. The Offering will terminate at 12:00 noon, New York
time on December 17, 1998, unless extended by the Bank for up to an additional
45 days or, if approved by the OTS, for an additional period after such 45-day
extension (as so extended, the "Expiration Date"). The Subscription Offering
may terminate before the Community Offering is commenced or during an extension
of the Community Offering The Bank is not required to give purchasers notice of
any extension unless the Expiration Date is later than ______, 1999, in which
event purchasers will be given the right to increase, decrease, confirm, or
rescind their orders. If the minimum number of shares offered in the Offering
^(2,456,500 shares) is not sold by the Expiration Date, the Bank may terminate
the Offering and promptly refund all orders for Common Stock. If the number of
shares is reduced below the minimum of the Offering Range or increased more
than 15% above the Offering Range, purchasers will be given an opportunity to
increase, decrease, or rescind their orders.
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USE OF ORDER FORMS. In order to purchase the Common Stock, each purchaser
must complete and sign an Order Form, except for certain persons purchasing in
the Syndicated Community Offering as more fully described above. Any person
receiving an Order Form who desires to purchase Common Stock may do so by
delivering (by mail or in person) to the Bank a properly executed and completed
Order Form, together with full payment for the shares purchased. The Order Form
must be received prior to 10:00 a.m., New York time on December __, 1998. ONCE
TENDERED, AN ORDER FORM CANNOT BE MODIFIED OR REVOKED WITHOUT THE CONSENT OF THE
BANK. Each person ordering shares is required to represent that they are
purchasing such shares for their own account. The interpretation by the Bank of
the terms and conditions of the Plan and of the acceptability of the Order Forms
will be final. The Bank is not required to accept copies or facsimiles of Order
Forms. Neither the Bank, the Company, nor Ryan Beck is obligated to deliver a
Prospectus and an Order Form by any means other than the U.S. Postal Service.
PAYMENT FOR SHARES. Payment for all shares will be required to accompany
all completed Order Forms for the purchase to be valid. Payment for shares may
be made by (i) check or money order, or (ii) authorization of withdrawal from
passbook accounts or certificates of deposit maintained with the Bank.
Appropriate means by which such withdrawals may be authorized are provided in
the Order Forms. Once such a withdrawal amount has been authorized, a hold will
be placed on such funds, making them unavailable to the depositor until the
Offering has been completed or terminated. The withdrawal will be made upon
consummation of the Offering. In the case of payments authorized to be made
through withdrawal from deposit accounts, all funds authorized for withdrawal
will continue to earn interest at the contract rate until the Offering is
completed or terminated. Interest penalties for early withdrawal applicable to
certificate accounts will not apply to withdrawals authorized for the purchase
of shares; however, if a withdrawal results in a certificate account with a
balance less than the applicable minimum balance requirement, the certificate
shall be canceled at the time of withdrawal without penalty, and the remaining
balance will earn interest at the Bank's passbook rate subsequent to the
withdrawal. In the case of payments made by check or money order, such checks
and money orders shall be made payable to "Provident Bank." Such funds will be
placed in a segregated savings account and interest will be paid by the Bank at
the Bank's passbook rate, from the date payment is received until the Offering
is completed or terminated. Such interest will be paid by check, on all funds
held, promptly upon completion or termination of the Offering. An executed
Order Form, once received by the Bank, may not be modified, amended or rescinded
without the consent of the Bank, in which event subscribers may be given the
opportunity to increase, decrease, confirm or rescind their orders for a
specified period of time. If the ESOP purchases shares of Common Stock, such
plan will not be required to pay for such shares until consummation of the
Offering.
Owners of self-directed IRAs may use the assets of such IRAs to purchase
shares of Common Stock in the Offering. Individuals who are participants in
self-directed tax qualified plans maintained by self-employed individuals
("Keogh Plans") may use the assets in their self-directed Keogh Plan accounts to
purchase shares of Common Stock in the Offering. In addition, the provisions of
ERISA and Internal Revenue Service ("IRS") regulations require that executive
officers, directors, and 10% stockholders who use self-directed IRA funds and/or
Keogh Plan accounts to purchase shares of Common Stock in the Offering, make
such purchase for the exclusive benefit of the IRA and/or Keogh Plan
participant.
A depositor interested in using his or her IRA funds to purchase Common
Stock must do so through a self-directed IRA. Since the Bank does not offer
such accounts, it will allow a depositor to make a trustee-to-trustee transfer
of the IRA funds to a trustee offering a self-directed IRA program without early
withdrawal penalties with the agreement that such funds will be used to purchase
the Common Stock in the Offering. There will be no early withdrawal or IRS
penalties for such transfers. The new trustee would hold the Common Stock in a
self-directed account in the same manner as the Bank now holds the depositor's
IRA funds. An annual administrative fee may be payable to the new trustee.
Depositors interested in using funds in a Provident Bank IRA to purchase Common
Stock should contact the Stock Information Center as soon as possible so that
the necessary forms may be forwarded for execution and returned prior to the
Expiration Date.
DELIVERY OF STOCK CERTIFICATES. Certificates representing Common Stock
issued in the Offering will be mailed by the Company to the persons entitled
thereto at the registration address noted on the Order Form, as soon as
practicable following consummation of the Offering. Any certificates returned
as undeliverable will be held by
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the Company until claimed by persons legally entitled thereto or otherwise
disposed of in accordance with applicable law. Until certificates for the Common
Stock are available and delivered to purchasers, purchasers may not be able to
sell the shares of stock which they ordered. Subscribers are at their own risk
if they sell shares before receiving the certificates or determining whether
their subscription has been accepted.
PLAN OF DISTRIBUTION AND SELLING COMMISSIONS
Offering materials for the Offering initially have been distributed to
certain persons by mail, with additional copies made available at the Bank's
offices and by Ryan Beck.
To assist in the marketing of the Common Stock, the Bank has retained Ryan
Beck, a broker-dealer registered with the NASD. Ryan Beck will assist the Bank
in the Offering as follows: (i) in training and educating the Bank's employees
regarding the mechanics and regulatory requirements of the Offering; (ii) in
conducting informational meetings for employees, customers and the general
public; and (iii) in coordinating the selling efforts in the Bank's local
communities. For these services, Ryan Beck will receive an advisory and a
management fee of $450,000. In the event of a Syndicated Community Offering,
Selected Dealers, which may include Ryan Beck, will receive a fee equal to 5.5%
of the aggregate amount of the Common Stock sold pursuant to selected dealer
agreements.
The Bank also will reimburse Ryan Beck for its reasonable out-of-pocket
expenses, the estimated maximum of which are $60,000 (including legal fees and
expenses up to a maximum of $40,000) associated with its marketing effort. The
Bank has made an advance payment to Ryan Beck in the amount of $25,000. The
Bank will indemnify Ryan Beck against liabilities and expenses (including legal
fees) incurred in connection with certain claims or litigation arising out of or
based upon untrue statements or omissions contained in the offering materials
for the Common Stock, including liabilities under the Securities Act of 1933.
Directors and executive officers of the Bank may participate in the
solicitation of offers to purchase Common Stock. Other trained employees of the
Bank may participate in the Offering in ministerial capacities, providing
clerical work in effecting a sales transaction or answering questions of a
ministerial nature. Other questions of prospective purchasers will be directed
to executive officers or registered representatives. The Bank will rely on Rule
3a4-1 of the Securities Exchange Act of 1934 (the "Exchange Act"), so as to
permit officers, directors, and employees to participate in the sale of the
Common Stock. No officer, director, or employee of the Bank will be compensated
for his participation by the payment of commissions or other remuneration based
either directly or indirectly on the transactions in the Common Stock.
A Stock Information Center will be established at the Bank's administrative
headquarters. Employees will inform prospective purchasers to direct their
questions to the Stock Information Center and will provide such persons with the
telephone number of the Center.
Notwithstanding any other provision of the Plan, no person is entitled to
purchase any Common Stock to the extent such purchase would be illegal under any
federal or state law or regulation (including state "blue-sky" laws and
regulations), or would violate regulations or policies of the NASD, particularly
those regarding free riding and withholding. The Bank and/or its agents may ask
for an acceptable legal opinion from any purchaser as to the legality of such
purchase and may refuse to honor any such purchase order if such opinion is not
timely furnished. The Plan prohibits the Bank from lending funds or extending
credit to any persons to purchase Common Stock in the Offering.
LIMITATIONS UPON PURCHASES OF COMMON STOCK
The following additional limitations have been imposed upon purchases of
shares of Common Stock. Defined terms used in this section and not otherwise
defined in this Prospectus shall have the meaning set forth in the Plan. In all
cases, the Bank shall have the right, in its sole discretion, to determine
whether prospective purchasers are "Associates," or "Acting in Concert" as
defined by the Plan and in the Glossary, and in interpreting
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any and all other provisions of the Plan. 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.
1. The aggregate amount of outstanding Common Stock owned or controlled
by persons other than Mutual Holding Company at the close of the
Offering shall not exceed 50% of the total outstanding Common Stock.
2. No Person, together with Associates thereof, or group of persons
Acting in Concert, may purchase more than $400,000 of Common Stock
issued in the Offering to Persons other than the Mutual Holding
Company, except that: (i) the Company may, in its sole discretion and
without further notice to or solicitation of subscribers or other
prospective purchasers, increase such overall purchase limitation to
up to 5% or decrease it to 1% of the number of shares issued in the
Offering; (ii) Tax-Qualified Employee Plans may purchase up to 10% of
the shares issued in the Offering; and (iii) for purposes of this
paragraph 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.
3. The aggregate amount of Common Stock acquired in the Offering by all
Management Persons and their Associates, exclusive of any stock
acquired by such persons in the secondary market, shall not exceed 25%
of the outstanding shares of Common Stock held by persons other than
the Mutual Holding Company at the close of the Offering. In
calculating the number of shares held by Management Persons and their
Associates under this paragraph or under the provisions of paragraph 4
below, shares held by any Tax-Qualified Employee Benefit Plan or any
Nontax-Qualified Employee Benefit Plan of the Bank that are
attributable to such persons shall not be counted.
4. The Boards of Directors of the Bank and the Company may, in their sole
discretion, increase the overall purchase limitation to up to 9.9%,
provided that orders for Common Stock in excess of 5% of the number of
shares of Common Stock issued in the Offering shall not in the
aggregate exceed 10% of the total shares of Common Stock issued in the
Offering (except that this limitation shall not apply to purchases by
Tax-Qualified Employee Plans). If such 5% limitation is increased,
subscribers for the maximum amount will be, and certain other large
subscribers in the sole discretion of the Company and the Bank may be,
given the opportunity to increase their subscriptions up to the then
applicable limit. Requests to purchase additional shares of Common
Stock under this provision will be determined by the Board of
Directors of the Company, in its sole discretion. The minimum number
of shares that can be subscribed for is 25 shares.
5. Notwithstanding any other provision of the 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 Association of
Securities Dealers, Inc., particularly those regarding free riding and
withholding. The 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.
6. The Board of Directors of the 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 the Plan.
The Company, 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 Plan
if they 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
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under the Plan reside in such state or foreign county; (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.
OTS regulations define "acting in concert" as (i) knowing participation in
a joint activity or interdependent conscious parallel action towards a common
goal whether or not pursuant to an express agreement, or (ii) a combination or
pooling of voting or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise. THE BANK WILL PRESUME THAT
CERTAIN PERSONS ARE ACTING IN CONCERT BASED UPON VARIOUS FACTS, INCLUDING THE
FACT THAT PERSONS HAVE JOINT ACCOUNT RELATIONSHIPS OR THE FACT THAT SUCH PERSONS
HAVE FILED JOINT SCHEDULES 13D WITH THE SEC WITH RESPECT TO OTHER COMPANIES.
Directors are not treated as Associates of one another solely because of
their board membership. Compliance with the foregoing limitations does not
necessarily constitute compliance with other regulatory restrictions on
acquisitions of the Common Stock. For a further discussion of limitations on
purchases of the Common Stock during and subsequent to Reorganization, see
"--Restrictions on Sale of Stock by Directors and Officers," "--Restrictions on
Purchase of Stock by Directors and Officers Following the Offering," and
"Restrictions on Acquisition of the Company."
RESTRICTIONS ON REPURCHASE OF STOCK BY THE COMPANY
OTS regulations and policy currently prohibit the Company from repurchasing
any of its shares within three years following the Offering unless the
repurchase is (i) part of a general repurchase made on a pro rata basis pursuant
to an offer approved by the OTS and made to all stockholders (except the Mutual
Holding Company may be excluded from the repurchase with OTS approval),
(ii) limited to the repurchase of qualifying shares of a director, or (iii) in
open market transactions by a tax-qualified or nontax-qualified employee benefit
plan of the Bank (but not the Company) in an amount reasonable and appropriate
to fund such plan.
RESTRICTIONS ON SALE OF STOCK BY DIRECTORS AND OFFICERS
All shares of the Common Stock purchased by directors and officers and
associates of directors and officers of the Bank or the Stock Company in the
Offering will be subject to the restriction that such shares may not be sold or
otherwise disposed of for value for a period of one year following the date of
purchase, except for any disposition of such shares (i) following the death of
the original purchaser or (ii) by reason of an exchange of securities in
connection with a merger or acquisition approved by the applicable regulatory
authorities. Sales of shares of the Common Stock by the Company's directors and
officers will also be subject to certain insider trading and other transfer
restrictions under the federal securities laws. See "Regulation--Federal
Securities Laws" and "Description of Capital Stock of the Company."
Each certificate for such restricted shares will bear a legend prominently
stamped on its face giving notice of the restrictions on transfer, and
instructions will be issued to the Company's transfer agent to the effect that
any transfer within such time period of any certificate or record ownership of
such shares other than as provided above is a violation of the restriction. Any
shares of Common Stock issued pursuant to a stock dividend, stock split or
otherwise with respect to restricted shares will be subject to the same
restrictions on sale.
RESTRICTIONS ON PURCHASE OF STOCK BY DIRECTORS AND OFFICERS FOLLOWING THE
OFFERING
OTS regulations provide that for a period of three years following the
Reorganization, without prior written approval of the OTS, neither directors nor
officers of the Bank or the Company nor their associates may purchase shares of
the Common Stock, except from a dealer registered with the SEC. This restriction
does not, however, apply to negotiated transactions involving more than 1% of
the outstanding Common Stock, to shares purchased pursuant to stock option or
other incentive stock plans approved by the Company's shareholders, or to shares
purchased by employee benefit plans maintained by the Company which may be
attributable to individual officers or directors.
50
<PAGE>
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND COMMON STOCK
Prior to the completion of the Reorganization, OTS regulations and the Plan
prohibit any person with subscription rights from transferring or entering into
any agreement or understanding to transfer the legal or beneficial ownership of
the subscription rights issued under the Plan or the shares of Common Stock to
be issued upon their exercise. Such rights may be exercised only by the person
to whom they are granted and only for his or her account. Each person exercising
such subscription rights will be required to certify that he or she is
purchasing shares solely for his or her own account and that he or she has no
agreement or understanding regarding the sale or transfer of such shares. The
regulations also prohibit any person from offering or making an announcement of
an offer or intent to make an offer to purchase such subscription rights or
shares of Common Stock prior to the completion of the Reorganization and
Offering. THE BANK INTENDS TO PURSUE ANY AND ALL LEGAL AND EQUITABLE REMEDIES
IN THE EVENT IT BECOMES AWARE OF THE TRANSFER OF SUBSCRIPTION RIGHTS AND WILL
NOT HONOR ORDERS KNOWN TO INVOLVE THE TRANSFER OF SUCH RIGHTS. IN ADDITION,
PERSONS WHO VIOLATE THE PURCHASE LIMITATIONS MAY BE SUBJECT TO SANCTIONS AND
PENALTIES IMPOSED BY THE OTS.
FEDERAL AND STATE TAX CONSEQUENCES OF THE REORGANIZATION
The Bank intends to proceed with the Reorganization on the basis of an
opinion from its special counsel, Luse Lehman Gorman Pomerenk & Schick, P.C.,
Washington, D.C., as to certain tax matters that are material to the
Reorganization. The opinion is based, among other things, on certain factual
representations made by the Bank, including the representation that the exercise
price of the subscription rights to purchase the Common Stock will be
approximately equal to the fair market value of the stock at the time of the
completion of the Reorganization. With respect to the subscription rights, the
Bank has received a letter from RP Financial which, based on certain
assumptions, concludes that the subscription rights to be received by Eligible
Account Holders, Supplemental Eligible Account Holders and Other Members do not
have any economic value at the time of distribution or the time the subscription
rights are exercised, whether or not a Community Offering takes place, and Luse
Lehman Gorman Pomerenk & Schick, P.C.'s opinion is given in reliance thereon.
The opinion of Luse Lehman Gorman Pomerenk & Schick, P.C., provides
substantially as follows:
1. The change in form from a mutual savings bank ("Mutual Bank") to a
stock savings bank (the "Stock Bank") will qualify as a reorganization
under Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended
(the "Code"), and no gain or loss will be recognized by the Bank in either
its mutual form or stock form by reason of the Reorganization.
2. No gain or loss will be recognized by the Mutual Bank upon the
transfer of the Mutual Bank's assets to the Stock Bank solely in exchange
for shares of Stock Bank stock and the assumption by the Stock Bank of the
liabilities of the Mutual Bank.
3. No gain or loss will be recognized by Stock Bank upon the receipt of
the assets of the Mutual Bank in exchange for shares of Stock Bank common
stock.
4. Stock Bank's holding period in the assets received from the Mutual
Bank will include the period during which such assets were held by the
Mutual Bank.
5. Stock Bank's basis in the assets of the Mutual Bank will be the same
as the basis of such assets in the hands of the Mutual Bank immediately
prior to the Reorganization.
6. The Stock Bank will succeed to and take into account the Mutual Bank
earnings and profits or deficit in earnings and profits, as of the date of
the Reorganization.
7. The Stock Bank depositors will recognize no gain or loss solely by
reason of the Reorganization.
8. The Mutual Holding Company and Minority Stockholders will recognize no
gain or loss upon the transfer of Stock Bank stock and cash, respectively,
to the Company in exchange for Common Stock.
51
<PAGE>
9. The Company will recognize no gain or loss upon its receipt of Stock
Bank stock and cash from the Mutual Holding Company and Minority
Stockholders, respectively, in exchange for Common Stock.
10. The basis of the Common Stock to Minority Stockholders will be the
Subscription Price and a shareholder's holding period for Common Stock
acquired through the exercise of subscription rights will begin on the date
the rights are exercised.
The opinion of Luse Lehman Gorman Pomerenk & Schick, P.C., unlike a letter
ruling issued by the Internal Revenue Service (the "IRS"), is not binding on the
IRS and the conclusions expressed therein may be challenged at a future date.
The IRS has issued favorable rulings for transactions substantially similar to
the proposed Reorganization, but any such ruling may not be cited as precedent
by any taxpayer other than the taxpayer to whom the ruling is addressed. The
Bank does not plan to apply for a letter ruling concerning the Reorganization.
The Bank has also received an opinion from KPMG Peat Marwick LLP that the
New York State Franchise Tax on banking corporations and New York State personal
income tax consequences of the proposed transaction are consistent with the
federal income tax consequences.
52
<PAGE>
PROVIDENT BANK
CONSOLIDATED STATEMENTS OF INCOME
The Consolidated Statements of Income for the years ended September 30,
1997 and 1996 have been audited by KPMG Peat Marwick LLP, independent auditors,
whose report appears elsewhere in this Prospectus. The Consolidated Statement of
Income for the year ended September 30, 1995 has been audited by Deloitte &
Touche LLP, independent auditors, whose report appears 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,
all adjustments (consisting only of normal recurring accruals) necessary for a
fair presentation of such results for such unaudited periods have been made.
The results of operations for the nine months ended June 30, 1998 are not
necessarily indicative of results that may be expected for the year ending
September 30, 1998. The Consolidated Statements of Income should be read in
conjunction with the other Consolidated Financial Statements and the Notes
thereto included in this Prospectus beginning on page F-1.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
JUNE 30, SEPTEMBER 30,
-------------------- ---------------------------
1998 1997 1997 1996 1995
-------- -------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans.............................. $25,962 $24,249 $32,544 $29,210 $26,740
Interest on mortgage-backed securities................. 6,748 7,118 9,398 9,008 6,687
Interest and dividends on investment securities and
other earning assets.................................. 3,029 3,388 4,613 4,348 3,603
------- ------- ------- ------- -------
Total interest and dividend income.................. 35,739 34,755 46,555 42,566 37,030
------- ------- ------- ------- -------
Interest expense:
Deposits (Note 8)....................................... 14,315 13,889 18,692 17,113 14,440
Borrowings.............................................. 1,294 1,181 1,487 1,472 624
------- ------- ------- ------- -------
Total interest expense................................. 15,609 15,070 20,179 18,585 15,064
------- ------- ------- ------- -------
Net interest income.................................... 20,130 19,685 26,376 23,981 21,966
Provision for loan losses (Note 4)...................... 1,347 875 1,058 911 760
------- ------- ------- ------- -------
Net interest income after provision for
loan losses........................................ 18,783 18,810 25,318 23,070 21,206
------- ------- ------- ------- -------
Non-interest income:
Loan servicing.......................................... 443 445 583 648 676
Banking service fees and other income................... 1,855 1,767 2,128 1,803 1,424
------- ------- ------- ------- -------
Total non-interest income........................... 2,298 2,212 2,711 2,451 2,100
------- ------- ------- ------- -------
Non-interest expense:
Compensation and employee benefits (Note 12)............ 7,501 7,328 9,915 9,063 7,601
Occupancy and office operations (Notes 6 and 13)........ 2,346 2,287 3,167 2,936 2,430
Advertising and promotion............................... 825 748 1,038 1,251 700
Federal deposit insurance costs, including a special
assessment of $3,298 in 1996 (Note 11)................. 246 336 409 4,373 996
Data processing......................................... 612 435 580 573 491
Foreclosed real estate expense (income),
net (Note 7)........................................... 66 (109) (40 ) 441 100
Amortization of branch purchase premiums (Note 8)....... 1,200 1,129 1,506 691 --
Other................................................... 2,846 3,034 4,027 3,406 2,946
------- ------- ------- ------- -------
Total............................................... 15,642 15,188 20,602 22,734 15,264
------- ------- ------- ------- -------
Income before income tax expense.................... 5,439 5,834 7,427 2,787 8,042
------- ------- ------- ------- -------
Income tax expense (Note 10)............................ 1,995 2,370 2,829 690 3,239
------- ------- ------- ------- -------
Net income......................................... $ 3,444 $ 3,464 $ 4,598 $ 2,097 $ 4,803
======= ======= ======= ======= =======
</TABLE>
- -------------------------
Note references are to the Notes to Consolidated Financial Statements beginning
on page F-8.
53
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Bank's results of operations depend primarily on its net interest
income, which is the difference between the interest income on its earning
assets, such as loans and securities, and the interest expense paid on its
deposits and borrowings. Results of operations are also affected by non-
interest income and expense, the provision for loan losses and income tax
expense. Non-interest income consists primarily of banking service fees and
income from loan servicing. The Bank's non-interest expense consists primarily
of salaries and employee benefits, occupancy and office expenses, amortization
of branch purchase premiums, advertising and promotion expense, data processing
expenses and federal deposit insurance costs. Results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory authorities.
The Bank's equity position (as well as its regulatory capital) will
significantly increase as a result of the net proceeds that it receives in the
Offering. Management expects to leverage the new capital by increasing the
Bank's interest-earning assets thereby reducing the Bank's equity as a
percentage of assets. Until such leverage is achieved, however, the Bank's
return on average equity is expected to be below the Bank's historical levels
and industry averages. The net proceeds of the Offering are expected to be used
for general corporate purposes, including the origination of residential and
commercial real estate loans, commercial business loans, and consumer loans.
The net proceeds also will be invested in investment securities and mortgage-
backed securities. The Bank may also use such funds for the expansion of its
retail banking franchise through new branch openings or acquisitions.
MANAGEMENT STRATEGY
Management intends to continue the Bank's growth as an independent
community bank offering a broad range of customer-focused services as an
alternative to money center banks in its market area. The majority of the
Bank's senior management have extensive backgrounds with commercial banking
institutions. In recent years, management determined that the long-term growth
and success of the Bank would be enhanced by operating as a community bank
rather than a traditional thrift institution, and as a result, management
implemented a business strategy that included: (i) creating an infrastructure
for commercial and consumer banking, including an experienced commercial loan
department and delivery systems to accommodate the needs of business and
individual customers; and (ii) placing a greater emphasis on commercial real
estate and business lending, as well as checking and other transaction accounts.
Highlights of the Bank's business strategy are as follows:
. Community banking and customer service. As an independent community
bank, a principal objective of the Bank is to anticipate the financial
services needs of its customers, and to meet those needs in an effective
and personalized manner. The Bank continually receives input from
customers through its branch office network and marketing surveys, and
is committed to implementing new programs and services designed to
attract new customers and strengthen existing relationships. The Bank
intends to use new technologies to offer customers new financial
products and services as market and regulatory conditions permit,
including PC banking, cash management and sweep accounts, although the
Bank does not currently offer these products or services. The Bank also
expects to offer asset management, trust services and personal financial
planning in the near future. The Bank's branch offices are operated on a
full-service basis, and branch office personnel are authorized to accept
applications for mortgage and consumer loans and approve consumer loans.
. Growing and diversifying the loan portfolio. The Bank offers retail
customers a broad range of residential mortgage and consumer loans. The
Bank has grown its loan portfolio by $145.3 million, or 49.2%, to $440.4
million at June 30, 1998 from $295.1 million at September 30, 1993. At
June 30, 1998, the Bank's loan portfolio represented 64.8% of total
assets. The Bank targets commercial business and commercial real estate
lending as a means of improving the yield on its loan portfolio and
shortening the average
54
<PAGE>
maturity of its assets. The Bank also has established experienced
commercial loan and credit administration departments that management
believes are critical to the success of its commercial banking strategy.
The Bank's commercial loans include commercial mortgages, multi-family
mortgages, construction loans to builders and business loans. Total
outstanding balances in these commercial loan categories increased by
$45.2 million, or 69.9%, to $109.9 million at June 30, 1998 from $64.7
million at September 30, 1993.
. Expanding the retail banking franchise. The Bank intends to continue to
expand its retail banking franchise and to increase the number of
households served in its market area. The Bank fosters a sales culture
in its branch offices that emphasizes transaction accounts. At June 30,
1998, core deposits (demand, NOW, savings and money market deposits)
represented 58.1% of the Bank's total deposits, and the weighted average
rate on the Bank's total deposits was 3.31%. Since 1993, the Bank has
opened two full-service branch offices, including the first supermarket
branch in Rockland County, and also has purchased two existing branches
from other banks. The Bank intends to pursue opportunities to expand its
branch network as market conditions permit. Two of the Bank's branch
offices are now open seven days a week, and additional branch offices
will offer seven-day banking to accommodate all customers. The Bank has
12 automated teller machines ("ATMs") and participates in networks that
permit customers to access their accounts through ATMs worldwide.
. Maintaining asset quality. Strong asset quality is a critical component
of the Bank's long-term growth and financial success. Accordingly,
management is committed to maintaining conservative underwriting
standards in originating loans. For example, the credit review of each
commercial loan is performed by a department independent of the
department that originates the loan. At the end of the past five fiscal
years and at June 30, 1998, non-performing assets averaged 1.04% of
total assets. At June 30, 1998, the Bank's non-performing loans totaled
$5.7 million, representing 1.30% of the loan portfolio, and non-
performing assets totaled $6.1 million, or 0.90% of total assets. The
Bank's allowance for loan losses was $4.5 million at June 30, 1998,
representing 1.03% of total loans and 79.27% of non-performing loans.
. Managing interest rate risk. The Bank, like most financial institutions,
is subject to interest rate risk since its liabilities generally have
shorter terms to repricing or maturity than its assets. As a result, its
liabilities are more sensitive to changes in market interest rates.
Management has reduced the Bank's exposure to interest rate risk by
originating and retaining adjustable rate mortgage ("ARM") loans,
commercial real estate and commercial business loans, and consumer
loans. Management also manages interest rate risk by investing a portion
of the Bank's assets in shorter duration investment securities and
mortgage-backed securities. Depending upon market interest rates and the
Bank's capital and liquidity positions, the Bank from time to time sells
(on a servicing-retained basis) fixed-rate long term mortgage loans. As
of June 30, 1998, securities available for sale totaled $92.4 million,
or 13.6% of total assets. The Bank's securities held to maturity totaled
$109.5 million, or 16.1% of total assets.
MANAGEMENT OF MARKET RISK
QUALITATIVE ANALYSIS. Like other financial institutions, the Bank's most
significant form of market risk is interest rate risk. The general objective of
the Bank's interest rate risk management is to determine the appropriate level
of risk given the Bank's business strategy, and then manage that risk in a
manner that is consistent with the Bank's policy to reduce the exposure of the
Bank's net interest income to changes in market interest rates. The Bank's
asset/liability management committee ("ALCO"), which consists of senior
management, evaluates the interest rate risk inherent in certain assets and
liabilities, the Bank's operating environment, and capital and liquidity
requirements, and modifies lending, investing and deposit gathering strategies
accordingly. A committee of the Board of Directors reviews the ALCO's
activities and strategies, the effect of those strategies on the Bank's net
interest margin, and the effect that changes in market interest rates would have
on the value of the Bank's loan and securities portfolios. See "Risk Factors--
Potential Effects of Changes in Interest Rates and the Current Interest Rate
Environment."
The Bank actively evaluates interest rate risk concerns in connection with
its lending, investing, and deposit activities. The Bank emphasizes the
origination of residential monthly and bi-weekly fixed-rate mortgage loans,
55
<PAGE>
residential and commercial ARM loans, and consumer loans. Depending on market
interest rates and the Bank's capital and liquidity position, the Bank may
retain all of its newly originated fixed-rate, fixed-term residential mortgage
loans or may decide to sell all or a portion of such longer-term loans on a
servicing-retained basis. The Bank also invests in short-term securities, which
generally have lower yields compared to longer-term investments. Shortening the
maturities of the Bank's interest-earning assets by increasing investments in
shorter-term loans and securities helps to better match the maturities and
interest rates of the Bank's assets and liabilities, thereby reducing the
exposure of the Bank's net interest income to changes in market interest rates.
These strategies may adversely impact net interest income due to lower initial
yields on these investments in comparison to longer term, fixed-rate loans and
investments. The Bank has also purchased interest rate caps to synthetically
extend the duration of its portfolio of short-term certificates of deposit. The
counterparty in the transaction has agreed to make interest payments to the
Bank, based on a $20 million notional amount, to the extent that the three-month
LIBOR rate exceeds 6.5% over the term of the cap agreement, which has a five
year term ending in March 2003. See Note 14 of the Notes to Consolidated
Financial Statements. By purchasing shorter term assets and extending the
duration of its liabilities, management believes that the corresponding
reduction in interest rate risk will enhance long-term profitability.
QUANTITATIVE ANALYSIS. The Bank monitors interest rate sensitivity
primarily through the use of a model that simulates net interest income under
varying interest rate assumptions. The Bank also evaluates this sensitivity
through a net portfolio value model that estimates the change in the Bank's net
portfolio value ("NPV") over a range of interest rate scenarios. NPV is the
present value of expected cash flows from assets, liabilities and off-balance
sheet contracts. Both models assume estimated loan prepayment rates,
reinvestment rates and deposit decay rates which seem most likely based on
historical experience during prior interest rate changes.
The table below sets forth, as of June 30, 1998, the estimated changes in
the Bank's NPV and its net interest income that would result from the designated
instantaneous changes in the U.S. Treasury yield curve.
<TABLE>
<CAPTION>
NPV NET INTEREST INCOME
------------------------------------------------------- ---------------------------------------------------
ESTIMATED INCREASE INCREASE (DECREASE) IN
CHANGE IN (DECREASE) IN NPV ESTIMATED ESTIMATED NET INTEREST INCOME
INTEREST RATES ESTIMATED ------------------------------------- NET INTEREST ---------------------------------
(BASIS POINTS) NPV AMOUNT PERCENT INCOME AMOUNT PERCENT
- -------------- ---------------- ------------------ ------------------ ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
+300 $59,095 $(15,067) (20)% $24,496 $ 675 3%
+200 65,916 (8,246) (11) 24,526 705 3
+100 70,039 (4,123) (6) 24,173 352 1
0 74,162 -- -- 23,821 -- --
-100 76,736 2,574 3 23,315 (506) (2)
-200 79,310 5,148 7 22,809 (1,012) (4)
-300 80,281 6,119 8 22,319 (1,502) (6)
</TABLE>
The table set forth above indicates that at June 30, 1998, in the event of
an abrupt 200 basis point decrease in interest rates, the Bank would be expected
to experience a 7% increase in NPV. In the event of an abrupt 200 basis point
increase in interest rates, the Bank would be expected to experience an 11%
decrease in NPV. Since June 30, 1998, there have been no significant changes in
the Bank's interest rate risk exposures or how those exposures would be managed.
Computations of prospective effects of hypothetical interest rate changes are
based on numerous assumptions including relative levels of market interest
rates, loan prepayments and deposit decay, and should not be relied upon as
indicative of actual results. Further, the computations do not reflect any
actions management may undertake in response to changes in interest rates.
Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurements. Modeling changes in NPV requires making certain
assumptions that may or may not reflect the manner in which actual yields and
costs respond to changes in market interest rates. The NPV table presented above
assumes that the composition of the Bank's interest sensitive assets and
liabilities existing at the beginning of a period remains constant over the
period being measured. It also assumes that a particular change in interest
rates is reflected uniformly across the yield curve regardless of the duration
to maturity or the repricing characteristics of specific assets and liabilities.
Accordingly, although the NPV table provides an indication of the Bank's
sensitivity to interest rate changes at a
56
<PAGE>
particular point in time, such measurements are not intended to and do not
provide a precise forecast of the effect of changes in market interest rates on
the Bank's net interest income and will differ from actual results.
ANALYSIS OF NET INTEREST INCOME
Net interest income is the difference between interest income on interest-
earning assets and interest expense on interest-bearing liabilities. Net
interest income depends on the relative amounts of interest-earning assets and
interest-bearing liabilities and the interest rates earned or paid on them,
respectively.
The following tables set forth balance sheets, average yields and costs,
and certain other information at June 30, 1998, for the nine-month periods ended
June 30, 1998 and 1997, and for the years ended September 30, 1997, 1996 and
1995. No tax-equivalent yield adjustments were made, as the effect thereof was
not material. All average balances are monthly average balances which, in the
opinion of management, are not materially different from daily average balances.
Non-accrual loans were included in the computation of average balances, but have
been reflected in the table as loans carrying a zero yield. The yields set
forth below include the effect of deferred fees, discounts and premiums which
are included in interest income.
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------
AT JUNE 30, 1998 1998 1997
--------------------- ----------------------------------- -----------------------------------
AVERAGE AVERAGE
ACTUAL AVERAGE OUTSTANDING AVERAGE OUTSTANDING AVERAGE
BALANCE YIELD/RATE BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE
-------- ---------- ----------- -------- ---------- ----------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans receivable (1)............ $440,360 8.22% $420,683 $25,962 8.25% $381,695 $24,249 8.49%
Mortgage-backed securities (2).. 133,109 6.49 138,328 6,748 6.52 146,094 7,118 6.51
Investment securities (2)....... 68,826 5.81 63,164 2,806 5.94 70,480 3,223 6.11
Other........................... 8,690 5.43 4,194 223 7.11 3,457 165 6.38
-------- -------- ------- -------- -------
Total interest-earning assets.. 650,985 7.57 626,369 35,739 7.63 601,726 34,755 7.72
------- -------
Non-interest-earning assets...... 28,119 29,733 32,675
-------- -------- --------
Total assets.................. $679,104 $656,102 $634,401
======== ======== ========
INTEREST-BEARING LIABILITIES:
Savings deposits (3)............ $174,502 2.23 $163,407 2,731 2.23 $162,418 2,713 2.23
Money market and
NOW deposits................. 120,405 2.38 112,301 2,016 2.40 108,646 1,992 2.45
Certificates of deposit......... 243,335 5.22 240,210 9,568 5.33 237,175 9,184 5.18
Borrowings...................... 25,048 6.13 29,009 1,294 5.96 25,451 1,181 6.20
-------- -------- ------- -------- -------
Total interest-bearing
liabilities.................. 563,290 3.73 544,927 15,609 3.83 533,690 15,070 3.77
------- -------
Non-interest-bearing
liabilities..................... 61,935 58,373 53,041
-------- -------- --------
Total liabilities.............. 625,225 603,300 586,731
Equity........................... 53,879 52,802 47,670
-------- -------- --------
Total liabilities and equity... $679,104 $656,102 $634,401
======== ======== ========
Net interest income.............. $20,130 $19,685
======= =======
Net interest rate spread (4)..... 3.84% 3.80% 3.95%
Net interest-earning assets (5).. $ 87,695 $ 81,442 $ 68,036
======== ======== ========
Net interest margin (6).......... 4.30% 4.37%
Ratio of interest-earning
assets to interest-bearing
liabilities.................... 115.57% 114.95% 112.75%
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------------------------------
1997 1996 1995
--------------------------------- --------------------------------- ---------------------------------
AVERAGE AVERAGE AVERAGE
OUTSTANDING AVERAGE OUTSTANDING AVERAGE OUTSTANDING AVERAGE
BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE
----------- -------- ---------- ----------- -------- ---------- ----------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans receivable (1)...... $385,355 $32,544 8.45% $348,155 $29,210 8.39% $321,727 $26,740 8.31%
Mortgage-backed
securities (2)........... 144,252 9,398 6.52 137,772 9,008 6.54 102,314 6,687 6.54
Investment securities (2). 71,826 4,385 6.11 66,554 4,020 6.04 56,821 3,309 5.82
Other..................... 3,526 228 6.47 5,681 328 5.77 4,101 294 7.17
-------- ------- -------- ------- -------- -------
Total interest-earning
assets.................. 604,959 46,555 7.70 558,162 42,566 7.63 484,963 37,030 7.64
------- ------- -------
Non-interest-earning assets 31,861 24,009 14,541
-------- -------- --------
Total assets............. $636,820 $582,171 $499,504
======== ======== ========
INTEREST-BEARING
LIABILITIES:
Savings deposits (3)...... $164,726 3,670 2.23 $161,215 3,592 2.23 $167,910 3,741 2.23
Money market and
NOW deposits.......... 109,289 2,675 2.45 99,344 2,480 2.50 83,763 2,136 2.55
Certificates of deposit... 237,262 12,347 5.20 212,476 11,041 5.20 170,737 8,563 5.02
Borrowings................ 23,730 1,487 6.27 22,686 1,472 6.49 9,139 624 6.83
-------- ------- -------- ------- -------- -------
Total interest-bearing
liabilities........... 535,007 20,179 3.78 495,721 18,585 3.75 431,549 15,064 3.49
------- ------- -------
Non-interest-bearing
liabilities............... 53,489 40,880 27,150
-------- -------- --------
Total liabilities........ 588,496 536,601 458,699
Equity..................... 48,324 45,570 40,805
-------- -------- --------
Total liabilities and
equity.................. $636,820 $582,171 $499,504
======== ======== ========
Net interest income........ $26,376 $23,981 $21,966
======= ======= =======
Net interest rate
spread (4)................ 3.92% 3.88% 4.15%
Net interest-earning
assets (5)................ $ 69,952 $ 62,441 $ 53,414
======== ======== ========
Net interest margin (6).... 4.36% 4.30% 4.53%
Ratio of interest-earning
assets to interest-bearing
liabilities.............. 113.07% 112.60% 112.38%
</TABLE>
(1) Balances include the effect of net deferred loan origination fees and
costs, loans in process and the allowance for loan losses.
(2) Average outstanding balances are based on amortized cost.
(3) Includes club accounts and interest-bearing mortgage escrow balances.
(4) Net interest rate spread represents the difference between the yield on
average interest-earning assets and the cost of average interest-bearing
liabilities.
(5) Net earning assets represents total interest-earning assets less total
interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total
interest-earning assets.
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The following table presents the dollar amount of changes in interest
income and interest expense for the major categories of the Bank's interest-
earning assets and interest-bearing liabilities. Information is provided for
each category of interest-earning assets and interest-bearing liabilities with
respect to (i) changes attributable to changes in volume (i.e., changes in
average balances multiplied by the prior-period average rate) and (ii) changes
attributable to rate (i.e., changes in average rate multiplied by prior-period
average balances). For purposes of this table, changes attributable to both rate
and volume, which cannot be segregated, have been allocated proportionately to
the change due to volume and the change due to rate.
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30, YEARS ENDED SEPTEMBER 30,
-------------------------------- ------------------------------------------------------------------
1998 VS. 1997 1997 VS. 1996 1996 VS. 1995
-------------------------------- -------------------------------- --------------------------------
INCREASE (DECREASE) INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO TOTAL DUE TO TOTAL DUE TO TOTAL
-------------------- INCREASE -------------------- INCREASE -------------------- INCREASE
VOLUME RATE (DECREASE) VOLUME RATE (DECREASE) VOLUME RATE (DECREASE)
-------- ---------- ---------- -------- ---------- ---------- -------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans receivable.......... $2,422 $(709) $1,713 $3,141 $193 $3,334 $2,216 $254 $2,470
Mortgage-backed securities (379) 9 (370) 422 (32) 390 2,318 3 2,321
Investment securities..... (327) (90) (417) 322 43 365 584 127 711
Other..................... 38 20 58 (135) 35 (100) 98 (64) 34
------ ----- ------ ------ ---- ------ ------ ---- ------
Total interest-earning
assets.................. 1,754 (770) 984 3,750 239 3,989 5,216 320 5,536
------ ----- ------ ------ ---- ------ ------ ---- ------
INTEREST-BEARING
LIABILITIES:
Savings deposits.......... 17 1 18 78 -- 78 (149) -- (149)
Money market and NOW
deposits................ 66 (42) 24 244 (49) 195 390 (46) 344
Certificates of deposit... 119 265 384 1,290 16 1,306 2,159 319 2,478
Borrowings................ 160 (47) 113 66 (51) 15 879 (31) 848
------ ----- ------ ------ ---- ------ ------ ---- ------
Total interest-bearing
liabilities............. 362 177 539 1,678 (84) 1,594 3,279 242 3,521
------ ----- ------ ------ ---- ------ ------ ---- ------
Change in net interest
income.................... $1,392 $(947) $ 445 $2,072 $323 $2,395 $1,937 $ 78 $2,015
====== ===== ====== ====== ==== ====== ====== ==== ======
</TABLE>
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND SEPTEMBER 30, 1997
Total assets increased by $30.4 million, or 4.7%, to $679.1 million at
June 30, 1998 from $648.7 million at September 30, 1997. The growth in assets
was primarily attributable to a $35.9 million increase in loans receivable,
partially offset by a $9.0 million decline in investment and mortgage-backed
securities, as the Bank's asset mix continued to shift from investment and
mortgage-backed securities into loans. Asset growth was funded primarily from
deposit inflows through the Bank's existing branch network. Investment
securities at June 30, 1998 totaled $68.8 million, a decrease of $1.9 million,
from $70.7 million at September 30, 1997. Mortgage-backed securities at
June 30, 1998 totaled $133.1 million, a decrease of $7.1 million from September
30, 1997. One-to four-family residential mortgage loans increased by $29.7
million to $271.6 million at June 30, 1998 from $241.9 million at September 30,
1997, reflecting the continuation of the strong market for new mortgage loans
and loan refinancings. Due to the significant increase in loan refinancings, the
Bank reentered the secondary mortgage sales market after an absence of three
years by selling substantially all of its 30 year fixed-rate loans originated
between December 1, 1997 and June 30, 1998. On a combined basis, total
outstanding balances in the Bank's commercial loan categories (commercial
mortgages, multi-family mortgages, construction loans to builders and business
loans) increased by $4.8 million, or 4.6%, to $109.9 million at June 30, 1998
from $105.1 million at September 30, 1997. Other assets of the Bank decreased to
$6.2 million at June 30, 1998 from $7.2 million at September 30, 1997, primarily
due to $1.2 million in amortization of core deposit purchase premiums.
Total deposits at June 30, 1998 were $580.1 million, an increase of
$33.3 million, or 6.1%, from $546.8 million at September 30, 1997. The increase
was primarily due to growth in the Bank's demand and NOW accounts, which
increased by $13.9 million to $96.1 million at June 30, 1998 from $82.2 million
at September 30, 1997, largely as a result of the Bank's promotion of its
"Select" and "Select Plus" checking account products. The Bank's passbook
savings accounts, certificates of deposit and money market accounts grew to
$161.3 million, $243.3 million
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<PAGE>
and $79.4 million, respectively, at June 30, 1998, representing increases of
$8.1 million, $7.2 million and $4.1 million, respectively, over the nine-month
period.
FHLB borrowings at June 30, 1998 were $25.0 million, an increase of
$1.0 million from $24.0 million at September 30, 1997. Mortgage escrow funds
increased by $9.9 million to $14.5 million at June 30, 1998 from $4.6 million
at September 30, 1997, while the bank overdraft liability decreased by
$17.5 million to $147,000 at June 30, 1998 from $17.6 million at September 30,
1997. The increase in mortgage escrow funds and the decrease in the overdraft
liability primarily reflect the effect of real estate tax payments made by the
Bank on September 30, which is a tax due date, while similar payments are not
due on June 30.
Total equity increased to $53.9 million at June 30, 1998 from $50.4 million
at September 30, 1997, reflecting net income of $3.4 million and a $36,000
increase in the after-tax net unrealized gain on securities available for sale.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
Total assets increased to $648.7 million at September 30, 1997 from
$634.3 million at September 30, 1996, an increase of $14.4 million, or 2.3%. The
asset growth was primarily attributable to a $35.0 million increase in loans
receivable, partially offset by a $14.1 million decrease in mortgage-backed
securities, as the Bank's asset mix shifted from mortgage-backed securities into
loans. Other assets of the Bank decreased to $7.2 million at September 30, 1997
from $8.6 million on September 30, 1996, primarily reflecting $1.5 million in
amortization of core deposit purchase premiums.
Net loans receivable increased by $35.0 million to $404.5 million at
September 30, 1997 from $369.5 million at September 30, 1996. One- to four-
family real estate loans increased by $22.0 million to $241.9 million at
September 30, 1997, from $219.9 million at September 30, 1996. The increase
consisted of a $20.6 million increase in fixed-rate loans and a $1.4 million
increase in ARM loans, as most of the Bank's customers continued to favor fixed-
rate residential loans in the current low interest rate environment. A
significant part of the Bank's fixed-rate residential loan originations during
this period were bi-weekly loans and loans with 15 and 20 year maturities.
Multi-family real estate loans decreased to $7.4 million at September 30,
1997 from $7.7 million at September 30, 1996. Commercial real estate loans
decreased to $55.7 million at September 30, 1997 from $58.6 million at
September 30, 1996. Construction and land loans increased to $31.7 million from
$28.0 million during the same period.
Consumer loans increased $6.0 million to $60.8 million at September 30,
1997 from $54.8 million at September 30, 1996. This increase was primarily the
result of a $6.1 million increase in the Bank's "homeowner loans," which are
fixed-rate, fixed-term consumer loans secured by a junior lien on the borrower's
primary residence. The Bank's commercial business loans increased by $6.4
million to $21.7 million at September 30, 1997 from $15.3 million at September
30, 1996. The increase in consumer and commercial business lending is part of a
continued emphasis on increasing assets that have higher yields and are more
sensitive to market interest rates, to partially offset the interest rate risk
inherent in the fixed-rate real estate loan portfolio. While commercial and
consumer loans generally entail greater credit risk than one- to four-family
real estate loans, they are also shorter term, higher yielding assets that help
meet the interest rate risk management objectives of the Bank.
The Bank's total securities portfolio decreased by $12.9 million to
$210.9 million at September 30, 1997 from $223.8 million at September 30, 1996.
This decrease resulted primarily from a decrease in mortgage-backed securities
to $140.2 million at September 30, 1997 from $154.3 million at September 30,
1996, as the Bank redeployed these funds into loan originations. Investment
securities, consisting primarily of short- and medium-term U.S. Treasury and
agency notes, grew slightly to $70.7 million at September 30, 1997 from
$69.5 million at September 30, 1996.
60
<PAGE>
Asset growth was funded with a $1.6 million increase in deposits and an
$11.0 million increase in FHLB borrowings. The composition of the Bank's
deposits continued to change during the year ended September 30, 1997, primarily
due to growth in transaction accounts, partially offset by outflows of deposits
acquired in the 1996 branch office purchases, especially in maturing, higher-
rate certificates of deposit which the Bank chose not to retain. The Bank's
certificates of deposit declined $4.9 million to $236.1 million at September 30,
1997 from $241.0 million at September 30, 1996. Passbook, club and money market
accounts declined to $228.5 million at September 30, 1997 from $230.7 million at
September 30, 1996. During the same period, demand and NOW accounts grew by
$8.5 million to $82.2 million at September 30, 1997 from $73.7 million at
September 30, 1996.
Total equity increased to $50.4 million at September 30, 1997 from
$45.5 million at September 30, 1996, reflecting net income of $4.6 million and a
$265,000 increase in the after-tax net unrealized gain on securities available
for sale.
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND
JUNE 30, 1997
GENERAL. The net income of the Bank depends primarily on its net interest
income, which is the difference between interest earned on the Bank's interest-
earning assets, consisting primarily of loans and securities, and the interest
paid on interest-bearing liabilities, consisting primarily of deposits and
borrowings. Net interest income is a function of the Bank's interest rate
spread, which is the difference between the average yield earned on interest-
earning assets and the average rate paid on interest-bearing liabilities, as
well as a function of the average balance of interest-earning assets as compared
to interest-bearing liabilities. The Bank's earnings also are affected by its
level of banking service fees and other non-interest income, as well as its
level of non-interest expenses, including salaries and employee benefits,
occupancy and office expenses, amortization of branch purchase premiums,
advertising and promotion expense, data processing expenses and federal deposit
insurance costs.
Net income for the nine months ended June 30, 1998 was $3.4 million
compared to $3.5 million for the nine months ended June 30, 1997. The decrease
was due primarily to increases in the provision for loan losses and non-interest
expenses, largely offset by an increase in net interest income and a decrease in
income tax expense.
INTEREST INCOME. Interest income increased by $984,000, or 2.8%, to
$35.7 million for the nine months ended June 30, 1998 from $34.8 million for the
nine months ended June 30, 1997. The increase was due primarily to an increase
in average interest-earning assets. The impact of declining yields and spreads
was partially offset by a change in asset mix. Loan balances increased while
investment and mortgage-backed securities declined. Income from loans increased
$1.7 million, partially offset by a $370,000 decrease in income from mortgage-
backed securities and a $359,000 decrease in income on investment securities and
other earning assets. The increase in income from loans was attributable to a
$39.0 million increase in the average balance of loans to $420.7 million from
$381.7 million, partially offset by a 24 basis point decrease in the average
yield on loans to 8.25% from 8.49%. The increase in average loans resulted
primarily from the origination of one-to four-family mortgage loans in a
continuing low interest rate environment. The decrease in the average yield on
loans resulted from declining market interest rates, as the Bank originated new
one- to four-family loans with yields lower than the average yield on the
existing loan portfolio. The decrease in income from mortgage-backed securities
was attributable almost entirely to a $7.8 million decrease in the average
balance of mortgage-backed securities to $138.3 million from $146.1 million, as
the average yield on mortgage-backed securities remained essentially unchanged.
The decrease in income from investment securities was attributable to a
$7.3 million decrease in the average balance of investment securities to
$63.2 million from $70.5 million combined with a 17 basis point decrease in the
average yield on investment securities to 5.94% from 6.11%.
INTEREST EXPENSE. Interest expense increased by $539,000, or 3.6%, to
$15.6 million for the nine months ended June 30, 1998 from $15.1 million for the
nine months ended June 30, 1997. This increase was the result of an
$11.2 million increase in the average balance of interest-bearing liabilities in
the 1998 period compared to the 1997 period and a 6 basis point increase in the
average rate paid on such liabilities over the same period. The increase in
overall interest expense resulted primarily from a $384,000 increase in interest
expense on certificates of deposit and a $113,000 increase in interest expense
on borrowings. The increase attributable to certificates of deposit resulted
from a $3.0 million increase in the average balance of certificates of deposit
to $240.2 million in
61
<PAGE>
1998 from $237.2 million in 1997, combined with a 15 basis point increase in the
average cost of certificates of deposit to 5.33% from 5.18%. The increase
attributable to borrowings resulted from a $3.6 million increase in the average
balance of borrowings to $29.0 million for the nine months ended June 30, 1998
from $25.4 million for the nine months ended June 30, 1997, which was partially
offset by a 24 basis point decrease in the average cost of borrowings to 5.96%
from 6.20%.
NET INTEREST INCOME. For the nine months ended June 30, 1998 and 1997, net
interest income was $20.1 million and $19.7 million, respectively. The $445,000
increase in net interest income was primarily attributable to a $13.4 million
increase in net earning assets (interest-earning assets less interest-bearing
liabilities), partially offset by a 15 basis point decline in the net interest
rate spread to 3.80% from 3.95%. The Bank's net interest margin decreased to
4.30% in the nine months ended June 30, 1998 from 4.37% in the nine months ended
June 30, 1997.
PROVISION FOR LOAN LOSSES. The Bank records provisions for loan losses,
which are charged to earnings, in order to maintain the allowance for loan
losses at a level which is considered appropriate to absorb probable loan losses
inherent in the existing portfolio. In determining the appropriate level of the
allowance for loan losses, management considers past and anticipated loss
experience, evaluations of real estate collateral, current and anticipated
economic conditions, volume and type of lending, and the levels of non-
performing and other classified loans. The amount of the allowance is based on
estimates and the ultimate losses may vary from such estimates. Management of
the Bank assesses the allowance for loan losses on a quarterly basis and makes
provisions for loan losses in order to maintain the adequacy of the allowance.
The Bank's provision for loan losses increased by $472,000 to $1.3 million
for the nine months ended June 30, 1998 from $875,000 for the nine months ended
June 30, 1997. The increased provision reflects several factors including
(i) continued loan portfolio growth, including commercial real estate and
commercial business loans, (ii) an increase in non-performing loans to
$5.7 million at June 30, 1998 from $4.7 million at September 30, 1997, and
(iii) an increase in net loan charge-offs to $578,000 for the nine months ended
June 30, 1998 from $355,000 for the nine months ended June 30, 1997, primarily
due to a partial charge-off of $350,000 in the current year on $1.3 million in
loans to a borrower who declared bankruptcy.
NON-INTEREST INCOME. Non-interest income primarily consists of fee income
for bank services, but also includes gains and losses from the sale of loans and
securities. Total non-interest income increased by $86,000, or 3.9%, to
$2.3 million for the nine months ended June 30, 1998 from $2.2 million for the
nine-month period ended June 30, 1997. The primary reason for the improvement
was a $179,000 increase in the gain on sale of loans to $185,000 for the nine
months ended June 30, 1998 from $6,000 for the nine months ended June 30, 1997.
The increase in loan sales in 1998 was the result of the Bank's decision to sell
newly originated, longer term fixed-rate mortgage loans as part of its interest
rate risk management. In addition, deposit-related fees and charges increased
$121,000, or 8.2%, to $1.6 million for the nine months ended June 30, 1998 from
$1.5 million for the nine months ended June 30, 1997. Partially offsetting these
increases was the recognition in the current-year period of a $192,000 loss on
an investment in a limited partnership that generates low-income housing tax
credits, which offset a portion of the Bank's income tax expense.
NON-INTEREST EXPENSE. Non-interest expense increased by $454,000, or 3.0%,
to $15.6 million for the nine months ended June 30, 1998 from $15.2 million for
the nine months ended June 30, 1997. The increase was primarily due to a
$177,000 increase in data processing expenses, a $175,000 increase in foreclosed
real estate expenses and a $173,000 increase in compensation and employee
benefits. These increases were offset, in part, by decreases in other non-
interest expenses of $188,000 and federal deposit insurance costs of $90,000.
Data processing expenses increased to $612,000 for the nine months ended
June 30, 1998 from $435,000 for the nine months ended June 30, 1997.
Approximately half of the $177,000 increase in data processing expenses related
to costs associated with the Bank's conversion to a new core data processing
system which is anticipated to occur by December 31, 1998. Foreclosed real
estate expenses were $66,000 for the nine months ended June 30, 1998 compared to
income of $109,000 for the same period in 1997, primarily due to the recognition
of a gain on the sale of a foreclosed property in the 1997 period. Compensation
and employee benefits increased to $7.5 million from $7.3 million primarily due
to a $108,000, or 4.0%, increase in salaries for Bank officers and a $78,000
62
<PAGE>
increase in medical and disability insurance. Other non-interest expenses
decreased to $2.8 million from $3.0 million between the two reporting periods
due to a decrease of $136,000 in miscellaneous non-interest expenses, a decrease
of $52,000 in insurance premiums, and a decrease of $42,000 in net correspondent
bank charges. These decreases were partially offset by higher legal costs of
$149,000 in the nine months ended June 30, 1998. Notwithstanding an increase in
total deposits, federal deposit insurance costs decreased to $246,000 for the
nine months ended June 30, 1998 from $336,000 for the nine months ended June 30,
1997, due to lower insurance rates imposed by the FDIC.
INCOME TAXES. Income tax expense was $2.0 million for the nine months
ended June 30, 1998 compared to $2.4 million for the same period in 1997,
representing effective tax rates of 36.7% and 40.6%, respectively. The lower
effective tax rate reflected, in part, tax benefits from the recognition of low-
income housing tax credits and state tax bad debt deductions.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND
SEPTEMBER 30, 1996
GENERAL. Net income for the fiscal year ended September 30, 1997 was
$4.6 million, an increase of $2.5 million, or 119.3%, from net income of
$2.1 million for the fiscal year ended September 30, 1996. The increase was
due primarily to a $3.3 million special assessment during fiscal 1996 to
recapitalize the SAIF. The after-tax impact of this one-time assessment was a
$2.0 million reduction of net income in fiscal 1996. The remaining increase in
net income was due to higher net interest income and non-interest income,
partially offset by increases in non-interest expenses and income tax expense.
INTEREST INCOME. Interest income increased by $4.0 million, or 9.4%, to
$46.6 million for the year ended September 30, 1997 from $42.6 million for the
year ended September 30, 1996. The increase was primarily due to a $3.3 million
increase in income from loans, a $390,000 increase in income from mortgage-
backed securities and a $365,000 increase in income from investment securities.
The increase in income from loans was attributable to a $37.2 million increase
in the average balance of loans to $385.4 million from $348.2 million, and a
6 basis point increase in the average yield on loans from 8.39% to 8.45%. In
fiscal 1997, the Bank continued its focus on increasing the loan portfolio by
reinvesting the proceeds from branch purchases and from repayments on investment
and mortgage-backed securities into loans. The increase in income from
investment securities was attributable to a $5.2 million increase in the average
balance of investment securities to $71.8 million from $66.6 million, and a
7 basis point increase in the average yield on investment securities to 6.11%
from 6.04%. The increase in income from mortgage-backed securities was
attributable to a $6.5 million increase in the average balance of mortgage-
backed securities to $144.3 million from $137.8 million, which was partially
offset by a 2 basis point decrease in the average yield on mortgage-backed
securities to 6.52% from 6.54%. Average balances for securities were higher in
fiscal 1997 than fiscal 1996 because securities purchased during fiscal 1996
were held for the entire 1997 fiscal year.
INTEREST EXPENSE. Interest expense increased by $1.6 million, or 8.6%, to
$20.2 million for the fiscal year ended September 30, 1997 from $18.6 million
for the fiscal year ended September 30, 1996. Overall, the average balance of
interest-bearing liabilities increased by $39.3 million in fiscal 1997, and the
average rate paid on these liabilities increased 3 basis points to 3.78% in
fiscal 1997 from 3.75% in fiscal 1996. The increase in interest expense
resulted primarily from a $1.3 million increase in interest expense on
certificates of deposit and a $195,000 increase in interest expense on money
market and NOW accounts. The increase attributable to certificates of deposit
resulted from a $24.8 million increase in the average balance of certificates of
deposit to $237.3 million in fiscal 1997 from $212.5 million in fiscal 1996.
The increase in interest expense attributable to money market and NOW accounts
was due to a $10.0 million increase in the average balance of these accounts to
$109.3 million in fiscal year 1997 from $99.3 million in fiscal 1996. This
increase was partially offset by a 5 basis point decrease in the average cost of
money market and NOW accounts to 2.45% from 2.50%. The average balance in
savings deposits increased by $3.5 million to $164.7 million in fiscal 1997 from
$161.2 million in fiscal 1996, resulting in a $78,000 increase in interest
expense for fiscal 1997.
NET INTEREST INCOME. Net interest income increased $2.4 million, or 10.0%,
to $26.4 million in fiscal 1997 from $24.0 million in fiscal 1996. The increase
was attributable to a $7.5 million increase in net earning assets and
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<PAGE>
a 6 basis point increase in the net interest margin to 4.36% in fiscal 1997 from
4.30% in fiscal 1996. The net interest rate spread increased 4 basis points to
3.92% in fiscal 1997 from 3.88% in fiscal 1996.
PROVISION FOR LOAN LOSSES. The Bank's provision for loan losses increased
by $147,000 to $1.1 million for the year ended September 30, 1997 from $911,000
for the year ended September 30, 1996. The increase in the provision reflects
management's evaluation of changes in the level of losses inherent in the loan
portfolio as a result of ongoing portfolio growth and changes in the portfolio
mix. The allowance for loan losses represented 0.93% of net loans receivable at
September 30, 1997, compared to 0.91% at September 30, 1996.
NON-INTEREST INCOME. Non-interest income was $2.7 million for the year
ended September 30, 1997, a $260,000, or 10.6%, increase from $2.5 million for
the year ended September 30, 1996. Income from bank services and fees on
deposit accounts increased by $325,000 to $2.1 million for the fiscal year ended
September 30, 1997, from $1.8 million in fiscal 1996 primarily reflecting higher
transaction volume. Income from loan servicing decreased $65,000 for the year
ended September 30, 1997 to $583,000 from $648,000 for fiscal 1996, as the
balance of loans serviced for others declined due to refinancing trends and the
Bank's decision to retain most loans originated during that period.
NON-INTEREST EXPENSE. Non-interest expense decreased by $2.1 million, or
9.4%, to $20.6 million for the year ended September 30, 1997 from $22.7 million
for the year ended September 30, 1996. The decrease was due primarily to a non-
recurring $3.3 million special assessment to recapitalize the SAIF during the
year ended September 30, 1996. This was partially offset by an $852,000
increase in compensation and employee benefits, an $815,000 increase in
amortization of branch purchase premiums, a $621,000 increase in other expenses
and a $231,000 increase in occupancy and office expenses. Decreases in non-
interest expense for the year ended September 30, 1997 compared to the year
ended September 30, 1996 include a $213,000 decrease in advertising and
promotion expense, and a $481,000 decrease in expenses for foreclosed real
estate. Increases in compensation and employee benefits, amortization of
branch purchase premiums, occupancy and other expenses in fiscal 1997 reflect
the first full year of operating costs related to two purchased branches which
were operated by the Bank for only four and six months, respectively, in fiscal
1996.
INCOME TAXES. Income tax expense was $2.8 million for the year ended
September 30, 1997 compared to $690,000 for the year ended September 30, 1996,
representing effective tax rates of 38.1% in fiscal 1997 and 24.8% in fiscal
1996. The lower effective tax rate in fiscal 1996 primarily reflects the
recognition of a deferred tax benefit due to an amendment in New York State tax
law concerning tax bad debt reserves. See Note 10 of the Notes to Consolidated
Financial Statements.
COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 1996
AND SEPTEMBER 30, 1995
GENERAL. Net income for the year ended September 30, 1996 was
$2.1 million, a decrease of $2.7 million, or 56.3%, from net income of
$4.8 million for the year ended September 30, 1995. The decrease was due
primarily to the one-time $3.3 million special assessment in 1996 to
recapitalize the SAIF. The after-tax impact of this one-time assessment was a
$2.0 million reduction in net income for fiscal 1996. In addition, increases in
net interest income and non-interest income in fiscal 1996 were more than offset
by increases in non-interest expenses other than the special assessment.
INTEREST INCOME. Interest income increased by $5.6 million, or 15.0%, to
$42.6 million for the year ended September 30, 1996 from $37.0 million for the
year ended September 30, 1995. The increase was primarily due to a $2.5 million
increase in income from loans, a $2.3 million increase in income from mortgage-
backed securities, and a $711,000 increase in income from investment securities.
The increase in income from loans was attributable to a $26.5 million increase
in the average balance of loans to $348.2 million from $321.7 million, and an
8 basis point increase in the average yield on loans to 8.39% from 8.31%. The
increase in income from mortgage-backed securities was attributable to a
$35.5 million increase in the average balance of mortgage-backed securities to
$137.8 million in fiscal 1996 from $102.3 million in fiscal 1995. The increase
in income from investment securities was partly attributable to a 22 basis point
increase in the average yield on investment securities to 6.04% from 5.82%, and
to a $9.8 million increase in the average balance of investment securities to
$66.6 million in fiscal 1996 from
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<PAGE>
$56.8 million in fiscal 1995. Both investment securities and mortgage-backed
securities increased during fiscal 1996 as the Bank purchased securities to
deploy the funds received in the branch purchase transactions.
INTEREST EXPENSE. Interest expense increased by $3.5 million, or 23.4%, to
$18.6 million for the year ended September 30, 1996 from $15.1 million for the
year ended September 30, 1995. This increase resulted primarily from a
$2.5 million increase in interest expense on certificates of deposit, and a
$344,000 increase in interest expense on money market and NOW accounts, as well
as an $848,000 increase in interest paid on borrowings. These increases were
partially offset by a $149,000 decrease in interest expense on savings accounts.
The increase in interest expense on certificates of deposit was the result of a
$41.8 million increase in the average balance of certificates of deposit to
$212.5 million from $170.7 million, and an 18 basis point increase in the
average cost of certificates of deposit to 5.20% from 5.02%. The increase in
interest expense on money market and NOW accounts was the result of a
$15.5 million increase in the average balance of these accounts to $99.3 million
in fiscal 1996 from $83.8 million in fiscal 1995, which was partially offset by
a 5 basis point decrease in the average cost of these accounts to 2.50% in
fiscal 1996 from 2.55% in fiscal 1995. The decrease in interest expense on
savings accounts was due to a $6.7 million decrease in the average balance of
total savings accounts to $161.2 million from $167.9 million. The increase in
the average balance of certificate of deposit accounts and the decrease in the
average balance of savings accounts were due primarily to customers shifting
funds from lower yielding savings accounts to higher yielding certificates of
deposit. The increase in interest expense on borrowings was due to an increase
in the average balance of borrowings to $22.7 million in fiscal 1996 from
$9.1 million in fiscal 1995.
PROVISION FOR LOAN LOSSES. The Bank's provision for loan losses increased
to $911,000 for the year ended September 30, 1996 from $760,000 for the year
ended September 30, 1995. This increase enabled the Bank to maintain an adequate
ratio of the allowance for loan losses to total loans at the end of each period
commensurate with the loan growth and the changing mix of the portfolio.
NON-INTEREST INCOME. Non-interest income was $2.5 million for the year
ended September 30, 1996, a $351,000 increase from $2.1 million for the year
ended September 30, 1995. Fee income from Bank services and fees on deposit
accounts increased $379,000 to $1.8 million for the year ended September 30,
1996 from $1.4 million for the year ended September 30, 1995. Loan servicing
income decreased $28,000 to $648,000 for 1996 from $676,000 for 1995. This
decrease reflected a decline in service fee income collected for servicing loans
sold in the secondary market. The decrease was related to the decline in the
balance of the loan servicing portfolio, as the Bank retained the loans that it
originated for its own portfolio.
NON-INTEREST EXPENSE. Non-interest expense increased by $7.4 million, or
48.9%, to $22.7 million for the year ended September 30, 1996 from $15.3 million
for the year ended September 30, 1995. The increase was primarily due to the
one-time $3.3 million special assessment in 1996 to recapitalize the SAIF.
Other non-interest expense increases related primarily to the initial inclusion
of expenses associated with two branches purchased during fiscal 1996. These
expenses included a $1.5 million increase in compensation and employee benefits,
a $506,000 increase in occupancy and office operations, a $551,000 increase in
advertising and promotion, a $341,000 increase in foreclosed real estate
expense, and a $691,000 increase in amortization of branch purchase premiums.
INCOME TAXES. Income tax expense was $690,000 for the year ended
September 30, 1996 compared to $3.2 million for the year ended September 30,
1995. The increase was due to a decrease in the effective tax rate to 24.8% for
fiscal 1996 from 40.3% for fiscal 1995. The lower effective tax rate in fiscal
1996 primarily reflected the recognition of a deferred tax benefit due to an
amendment in New York State tax law concerning tax bad debt reserves. See Note
10 of the Notes to Consolidated Financial Statements.
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LIQUIDITY AND CAPITAL RESOURCES
The objective of the Bank's liquidity management is to ensure the
availability of sufficient cash flows to meet all financial commitments and to
capitalize on opportunities for expansion. Liquidity management addresses the
Bank's ability to meet deposit withdrawals on demand or at contractual maturity,
to repay borrowings as they mature, and to fund new loans and investments as
opportunities arise.
The Bank's primary sources of funds are deposits, proceeds from principal
and interest payments on loans and securities, and to a lesser extent,
borrowings and proceeds from the sale of fixed-rate mortgage loans in the
secondary mortgage market. While maturities and scheduled amortization of loans
and securities, and proceeds from borrowings are predictable sources of funds,
other funding sources such as deposit inflows, mortgage prepayments and mortgage
loan sales are greatly influenced by market interest rates, economic conditions
and competition.
The Bank's primary investing activities are the origination of both
residential one- to four-family and commercial real estate loans, and the
purchase of investment securities and mortgage-backed securities. During the
nine months ended June 30, 1998 and the years ended September 30, 1997, 1996,
and 1995, the Bank's loan originations totaled $143.6 million, $112.8 million,
$108.8 million and $66.2 million, respectively. Purchases of mortgage-backed
securities totaled $25.5 million, $12.1 million, $72.3 million and $29.0 million
for the nine months ended June 30, 1998 and the years ended September 30, 1997,
1996 and 1995, respectively. Purchases of investment securities totaled
$22.1 million, $13.2 million, $42.4 million and $29.1 million for the nine
months ended June 30, 1998 and the years ended September 30, 1997, 1996 and
1995, respectively. These activities were funded primarily by deposit growth and
by principal repayments on loans and securities. Loan sales totaling $16.9
million provided an additional source of liquidity during the nine months ended
June 30, 1998. Loan origination commitments totaled $29.8 million at June 30,
1998, comprised of $20.1 million at adjustable or variable rates and
$9.7 million at fixed rates. The Bank anticipates that it will have sufficient
funds available to meet current loan commitments.
Deposit flows are generally affected by the level of interest rates, the
interest rates and products offered by local competitors, and other factors.
The net increase in total deposits was $33.2 million, $1.6 million,
$101.6 million and $23.9 million for the nine months ended June 30, 1998 and the
years ended September 30, 1997, 1996 and 1995, respectively. The deposit
increase in fiscal 1996 was primarily associated with two branch purchase
transactions in which the Bank assumed deposit liabilities totaling
$104.5 million. Certificates of deposit that are scheduled to mature in one year
or less from June 30, 1998 totaled $180.5 million. Based upon its prior
experience and current pricing strategy, the Bank believes that a significant
portion of such deposits will remain with the Bank.
The Bank monitors its liquidity position on a daily basis. Excess short-
term liquidity is usually invested in overnight federal funds sold, which
amounted to $5.0 million at June 30, 1998. The Bank generally remains fully
invested and utilizes additional sources of funds through FHLB advances, which
amounted to $25.0 million at June 30, 1998.
At June 30, 1998, the Bank exceeded all of its regulatory capital
requirements with a leverage capital level of $49.4 million, or 7.3% of adjusted
assets (which is above the required level of $20.2 million, or 3.0%) and a risk-
based capital level of $53.9 million, or 14.2% of risk-weighted assets (which is
above the required level of $30.3 million, or 8.0%). See "Regulatory Capital
Compliance," "Regulation--Regulatory Capital Requirements" and Note 11 of the
Notes to Consolidated Financial Statements.
YEAR 2000 CONSIDERATIONS
The Bank, like all companies that utilize computer technology, is facing
the significant challenge of ensuring that its computer systems will be able to
process time-sensitive data accurately beyond the Year 1999 (referred to as the
"Year 2000 issue"). The Year 2000 issue has arisen since many existing computer
programs use two digits rather than four in date fields that define the year.
Such computer programs may recognize a date field using "00" as the Year 1900
rather than the Year 2000. Software, hardware and equipment both within and
outside the Bank's direct control (and with which the Bank interfaces either
electronically or operationally), are likely to be affected by the Year 2000
issue. If the Bank's computer systems are not adequately changed to properly
identify the Year 2000,
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computer applications could fail or create erroneous results. Calculations that
rely on date field information (such as interest, payment or due dates, and
other operating functions) would generate results which could be significantly
misstated, and the Bank could experience a temporary inability to process
transactions and engage in other normal business activities. In addition, under
certain circumstances, failure to adequately address the Year 2000 issue 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 issue could have a significant adverse impact on the Bank's products,
services and competitive condition.
The Bank has conducted a comprehensive review of its computer systems to
identify systems that could be affected by the Year 2000 issue, and has
developed an implementation plan (including establishing priorities for mission-
critical applications) to modify or replace the affected systems and test them
for Year 2000 compliance. The Bank's plan includes actions to identify Year
2000 issues attributable to its own systems and, where necessary, to remediate
or replace affected systems and applications. In addition, the Bank is
assessing the Year 2000 readiness of third parties who supply products and
services to the Bank, or who have material business relationships with the Bank
(including customers), since the failure of such third parties to address their
own Year 2000 issues may have an adverse effect on the Bank. The Bank is
currently in the process of seeking assurances from these third parties either
as to their current Year 2000 compliance or that they are in the process of
complying with the Year 2000 issue. However, no guaranty can be given that all
such third parties will be prepared for the Year 2000 issue, and any such
assurances provided by third parties do not provide the Bank with legal recourse
should these parties not be prepared for the Year 2000. The actions being taken
by the Bank in response to Year 2000 issues are consistent with the guidelines
set forth in policy statements issued by the bank regulatory agencies.
The Bank realizes that the Year 2000 issue extends beyond the computer
systems associated with its operations. The Bank has identified and begun a
process of quantifying external risks posed by the Year 2000 problem. The
Bank's Year 2000 plan addresses each of these factors and, in cases where risks
may be high, the Bank intends to take action to protect its interests. The Bank
has not quantified the potential impact of each of these external risks, but
will develop estimates over the coming months. These potential risks may relate
to borrowers, depositors, legal issues, liquidity, shareholder reporting and
auditing of the Year 2000 process.
The risk exists that some of the Bank's commercial borrowers may not be
prepared for Year 2000 issues and may suffer financial harm as a result. This,
in turn, represents risk to the Bank regarding the repayment of loans from those
commercial customers. The Bank has surveyed its existing commercial customers
with aggregate outstanding loan balances of $250,000 or more regarding their
Year 2000 preparedness. The results of this survey process were not conclusive
as to the overall level of Year 2000 risk in the Bank's commercial loan
portfolio. As a result, the Bank is conducting personal interviews with its
larger commercial borrowers to determine their readiness. Thus, while the Bank
does not yet have specific financial data regarding the potential effect of the
Year 2000 issues on its commercial customers, the Bank recognizes this as a risk
and will continue to seek evidence of preparedness from its major borrowers.
The Bank also had begun a process to assess Year 2000 readiness as a component
of its risk evaluation for new commercial borrowers.
The Bank's most significant mission-critical applications are those that
comprise its "core" data processing system for loans, deposits and the general
ledger. The Bank plans to convert to a new core system by December 31, 1998,
which it believes will enhance the quality of its information technology and
result in improved customer service. Like the Bank's present core system, the
new system is maintained by a third-party vendor. The Bank plans to begin Year
2000 testing on the new core system promptly following the conversion, with a
targeted testing completion date of March 31, 1999.
The Bank presently believes that, with modifications to existing software
and conversions to new software, the Year 2000 issue will be mitigated without
causing a material adverse impact on its operations. However, if such
modifications and conversions are not made, or are not completed timely, the
Year 2000 issue could have a material adverse impact on the Bank's operations.
While the Bank expects to complete its Year 2000 plan on a timely basis, there
can be no assurance that the systems of other companies on which the Bank's
systems may rely also will be completed in a timely fashion. In addition, the
Bank exchanges data with a number of other entities, such as credit
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bureaus and governmental entities. The failure of these entities to adequately
address the Year 2000 issue could adversely affect the Bank's ability to conduct
its business.
The Bank is preparing a Year 2000 business resumption contingency plan to
document pre-determined actions to help the Bank resume normal operations in the
event of failure of any mission-critical service and product, as specified in
the Bank's Year 2000 inventory list. Unforeseeable events related to Year 2000
readiness may have an adverse impact on the Bank's operations. In preparing its
contingency plan, the Bank has categorized unforseen events as "uncontrollable"
and "controllable". Uncontrollable events, such as loss of the global power
grid and telephone service failures, will affect all companies, government and
customers. These global events cannot be remedied by anyone other than the
appropriate responsible party. However, the Bank is ensuring the availability
of cash to meet potential depositor demand due to concerns about the
availability of funds after December 31, 1999. As part of its contingency
planning process, the Bank will conduct a business impact analysis to identify
potential disruption and the effect such disruption could have on business
operations should a service provider or software vendor be unable to restore
systems and/or business operations. The Bank will establish a recovery program
that identifies participants, processes and equipment that might be necessary
for the Bank to function adequately. The basic priorities for restoring service
will be based on the essential application processing required to ensure that
the Bank can continue to serve its customers. The Bank will also institute a
resumption tracking system for critical operations to ensure that appropriate
pre-determined actions are identified. The tracking system will also identify
any required resources (equipment, personnel etc.) needed to restore operations.
The Bank expects to complete the contingency plan by March 31, 1999.
Monitoring and managing the Year 2000 issue will result in additional
direct and indirect costs for 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's direct and indirect costs of addressing the Year 2000 issue are
charged to expense as incurred, except for costs incurred in the purchase of new
software or hardware, which are capitalized. To date, costs incurred and
expensed primarily relate to the dedication of internal resources employed in
the assessment and development of the Bank's Year 2000 plan, as well as the
testing of hardware and software owned or licensed for its personal computers.
Costs incurred to date have not been material, and management does not expect
that additional costs to be incurred in connection with the Year 2000 issue will
have a material impact on the Bank's financial condition or results of
operations.
IMPACT OF NEW ACCOUNTING STANDARDS
FASB STATEMENT ON EARNINGS PER SHARE. In February 1997, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 128. The Statement establishes standards for computing
and presenting earnings per share and applies to entities with publicly held
common stock or potential common stock. This Statement simplifies the prior
accounting standards for computing earnings per share, as set forth in
Accounting Principles Board ("APB") Opinion No. 15. SFAS No. 128 replaces the
presentation of primary earnings per share ("EPS") with basic EPS and requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures. Basic EPS excludes dilution
and is computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if securities or other
contracts to issue common stock (such as stock options) were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. This Statement will apply to the
Company's earnings per share disclosures which will be made from the date of
completion of the Reorganization and Offering.
FASB STATEMENT ON ACCOUNTING FOR STOCK-BASED COMPENSATION. In October
1995, the FASB issued SFAS No. 123 which addresses accounting for stock-based
compensation arrangements such as the Stock Option Plan and Recognition Plan
which are expected to be implemented subsequent to the Reorganization. SFAS
No. 123 defines a "fair-value-based method" of accounting whereby compensation
cost is measured at the grant date of a stock-based compensation award based on
the fair value of the award; such compensation cost is recognized as expense
over the
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service (vesting) period. The FASB has encouraged all entities to adopt the
fair-value-based method; however, SFAS No. 123 allows entities to continue the
use of the "intrinsic-value-based method" prescribed by APB Opinion No. 25.
Under the intrinsic-value-based method, compensation cost is measured based on
the award's intrinsic value, or the excess (if any) of the market price of the
stock at the grant date over the exercise price, i.e., the amount (if any) that
the employee must pay to acquire the stock. However, most stock option grants
have no intrinsic value at the grant date and, as such, no compensation cost is
recognized under APB Opinion No. 25. Entities electing to continue to apply APB
Opinion No. 25 must make certain pro forma disclosures of net income and
earnings per share, as if the fair-value-based method had been applied to awards
granted in fiscal years beginning after December 15, 1994. The Company expects
to adopt the "intrinsic-value-based method" as prescribed by APB Opinion No. 25.
Accordingly, no compensation expense will be recognized for the Stock Option
Plan since the exercise price of the options will equal the market price of the
underlying stock at the grant date. The grant date fair value of shares awarded
under the Recognition Plan will be recognized as expense on a straight-line
basis over the vesting period. See "Pro Forma Data."
FASB STATEMENT ON TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENTS OF LIABILITIES. In June 1996, the FASB issued SFAS No. 125
which 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. SFAS
No. 125 applies to transactions such as sales of loans with servicing retained,
loan securitizations, repurchase agreements, securities lending, loan
participations and in-substance deficiencies of debt. SFAS No. 125
distinguishes transfers of financial assets that are sales from transfers that
are secured borrowings. Under the financial-components approach, after a
transfer of financial assets, an entity recognizes all financial and servicing
assets it controls and liabilities it has incurred and derecognizes financial
assets it no longer controls and liabilities that have been extinguished. If a
transfer does not meet the criteria for a sale, the transaction is accounted for
as a secured borrowing with a pledge of collateral. SFAS No. 125 applies
prospectively to transactions occurring after January 1, 1997, although the
effective date of certain provisions was January 1, 1998. SFAS No. 125 has not
had, and is not expected to have, a material impact on the Bank's financial
statements.
FASB STATEMENT ON REPORTING COMPREHENSIVE INCOME. In June 1997, the FASB
issued SFAS No. 130, "Reporting Comprehensive Income," which establishes
standards for the reporting and display of comprehensive income (and its
components) in financial statements. The standard does not, however, specify
when to recognize or how to measure items that make up comprehensive income.
Comprehensive income represents net income and certain amounts reported directly
in equity, such as the net unrealized gain or loss on available-for-sale
securities. While SFAS No. 130 does not require a specific reporting format, it
does require that an enterprise display in the financial statements an amount
representing total comprehensive income for the period. SFAS No. 130 is
effective for fiscal years beginning after December 15, 1997 and, accordingly,
will be adopted by the Company in its 1999 fiscal year. Management does not
anticipate that the adoption of this standard will significantly affect the
Company's financial reporting.
FASB STATEMENT ON SEGMENT DISCLOSURES AND RELATED INFORMATION. In June
1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," which changes the way public companies report
information about segments of their business and requires them to report
selected segment information in their quarterly reports issued to shareholders.
Among other things, SFAS No. 131 requires public companies to report (i) certain
financial and descriptive information about its reportable operating segments
(as defined), and (ii) certain enterprise-wide financial information about
products and services, geographic areas and major customers. The required
segment financial disclosures include a measure of profit or loss, certain
specific revenue and expense items, and total assets. SFAS No. 131 is effective
for reporting by public companies in fiscal years beginning after December 15,
1997 and, accordingly, would be adopted by the Company in its 1999 fiscal
year. SFAS No. 131 is not expected to have a significant impact on the
Company's financial reporting.
FASB STATEMENT ON EMPLOYER DISCLOSURES ABOUT PENSIONS AND OTHER
POSTRETIREMENT BENEFITS. In February 1998, the FASB issued SFAS No. 132 which
standardizes the disclosure requirements for pensions and other postretirement
benefits; requires additional information on changes in the benefit obligations
and fair values of plan assets; and eliminates certain present disclosure
requirements. SFAS No. 132 does not change the recognition or
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measurement requirements for postretirement benefits. SFAS No. 132 is effective
for fiscal years beginning after December 15, 1997 and, accordingly, will be
adopted by the Company in its 1999 fiscal year. Management does not anticipate
that this standard will significantly affect the Company's financial reporting.
FASB STATEMENT ON DERIVATIVES AND HEDGING ACTIVITIES. In June 1998, the
FASB issued SFAS No. 133 which establishes accounting and reporting standards
for derivative instruments and for hedging activities. SFAS No. 133 requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial condition at fair value. If certain conditions are met,
a derivative may be specifically designated as a fair value hedge, a cash flow
hedge, or a foreign currency hedge. A specific accounting treatment applies to
each type of hedge. Entities may reclassify securities from the held-to-
maturity category to the available-for-sale category at the time of adopting
SFAS No. 133. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999, although early adoption is permitted.
The Bank has not yet selected an adoption date or decided whether it will
reclassify securities between categories. The Bank has engaged in limited
derivatives and hedging activities covered by the new standard, and does not
expect to significantly increase such activities in the near term. Accordingly,
SFAS No. 133 is not expected to have a material impact on the Company's
consolidated financial statements.
FASB STATEMENT ON RETAINED MORTGAGE-BACKED SECURITIES. In October 1998,
the FASB issued SFAS No. 134 which addresses the accounting for mortgage-backed
securities retained by an entity after it securitizes mortgage loans held for
sale. SFAS No. 134 provides for the classification of such retained securities
as held for investment, available for sale, or trading in accordance with SFAS
No. 115. Prior accounting standards limited the classification of these
securities to the trading category. SFAS No. 134 is effective for the first
fiscal quarter beginning after December 15, 1998 and is not expected to have a
material impact on the Company's consolidated financial statements.
BUSINESS OF PROVIDENT BANCORP, INC.
Pursuant to the Plan, the Bank will organize the Company as a majority-
owned subsidiary of the Mutual Holding Company. The Company will own 100% of
the common stock of the Bank. The Company is not currently an operating
company. Following the Reorganization, in addition to directing, planning and
coordinating the business activities of the Bank, the Company initially will
invest the net proceeds it retains primarily in short and medium-term
investments. The Company also intends to fund the loan to the ESOP to enable the
ESOP to purchase up to 8% of the Common Stock sold in the Offering. In the
future, the Company may acquire or organize other operating subsidiaries,
including other financial institutions and financial services companies. See
"Use of Proceeds." Presently, there are no agreements or understandings for an
expansion of the Company's operations. Initially, the Company will neither own
nor lease any property from any third party, but will instead use the premises,
equipment and furniture of the Bank. At the present time, the Company does not
intend to employ any persons other than certain senior officers of the Bank, who
will not be compensated separately by the Company. The Company may use the
support staff of the Bank from time to time, if needed. Additional employees
will be hired as appropriate to the extent the Company expands its business in
the future.
BUSINESS OF PROVIDENT BANK
GENERAL
The Bank has been serving the financial needs of Rockland County residents
since its establishment in 1888. The Bank's principal business consists of
offering savings and other deposit products to individuals and businesses, and
using those deposits together with funds generated from operations and
borrowings, to make one- to four-family residential and commercial real estate
loans, consumer loans, construction and land loans, commercial business loans,
and multi-family residential loans. The Bank also invests in mortgage-backed
securities and investment securities. The Bank's income is derived principally
from the interest on its mortgage, consumer and commercial loans and securities,
loan servicing income, and service charges and fees collected on its deposit
accounts. The Bank's primary sources of funds are deposits, principal and
interest payments on loans and securities, and borrowings from the FHLB.
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MARKET AREA
The Bank is an independent community bank offering a broad range of
customer-focused services as an alternative to money center banks in its market
area. The Bank currently operates eleven full-service banking offices,
including one supermarket branch in Rockland County, New York. The Bank's
primary market for deposits is currently concentrated around the areas where its
full-service banking offices are located. The Bank's primary lending area also
has been historically concentrated in Rockland and contiguous counties.
Rockland County is a suburban market with a broad employment base. The
population of Rockland County was approximately 265,000 as of 1990, and was
estimated to be approximately 279,000 in 1997, an increase of 5.2%. Rockland
County also serves as a bedroom community for nearby New York City and other
suburban areas including Westchester County and northern New Jersey. The
Rockland County economy has improved significantly since the early 1990s. The
unemployment rate in Rockland County was approximately 4.7% in 1996 and 3.8% in
1997. The favorable economic environment in the New York metropolitan area has
led to an increase in residential and commercial construction activity in recent
years.
The economy of the Bank's primary market areas is based on a mixture of
service, manufacturing and wholesale/retail trade. Other employment is provided
by a variety of industries and state and local governments. The diversity of the
employment base is evidenced by the major employers which include the State of
New York, Rockland County, Wyeth Ayerst, Novartis Pharmaceutical Corporation,
NYNEX Mobile Communications, Orange and Rockland Utilities, Nyack and Good
Samaritan Hospitals, Chromalloy, and Helen Hayes Hospital. Additionally,
Rockland County has numerous small employers.
FUTURE ACQUISITION AND EXPANSION ACTIVITY
Both nationally and in New York, the banking industry is undergoing a
period of consolidation marked by numerous mergers and acquisitions. Although
the Bank does not have a formal program to acquire other banking or thrift
institutions, and although there are no current understandings or agreements
(written or oral) regarding any such transactions, the Bank may be presented
with opportunities to acquire institutions or bank branches that could expand
and strengthen its market position. Acquisitions typically involve the payment
of a premium over book and market values and, therefore, some dilution of the
Company's book value and net income per share may occur in connection with any
future acquisition.
LENDING ACTIVITIES
GENERAL. Historically, the principal lending activity of the Bank has been
the origination of fixed-rate and ARM loans collateralized by one- to four-
family residential real estate located within its primary market area. The Bank
also originates commercial real estate loans, commercial business loans,
construction and land loans and consumer loans such as home equity lines of
credit and homeowner loans. The Bank retains most of the loans that it
originates, although from time to time it may sell longer-term one- to four-
family residential real estate loans. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations-Management of Market Risk."
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LOAN PORTFOLIO COMPOSITION. The following table sets forth the composition
of the Bank's loan portfolio by type of loan at the dates indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------------------
JUNE 30, 1998 1997 1996
------------------- ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FIRST MORTGAGE LOANS
One- to four-family...................... $271,593 59.4% $241,895 57.7% $219,868 57.2%
Multi-family............................. 7,108 1.6 7,358 1.8 7,743 2.0
Commercial real estate................... 63,712 13.9 55,747 13.3 58,640 15.4
Construction and land.................... 27,785 6.1 31,740 7.6 28,035 7.3
-------- ------ -------- ----- -------- -----
Total first mortgage loans......... 370,198 81.0 336,740 80.4 314,286 81.9
-------- ------ -------- ----- -------- -----
OTHER LOANS
Consumer loans:
Home equity lines of credit............. 28,362 6.2 31,456 7.4 31,306 8.1
Homeowner loans......................... 25,418 5.6 18,678 4.5 12,575 3.3
Other consumer loans.................... 8,855 1.9 10,670 2.5 10,916 2.8
-------- ------ -------- ----- -------- -----
Total consumer loans.............. 62,635 13.7 60,804 14.4 54,797 14.2
Commercial business loans............... 24,036 5.3 21,651 5.2 15,263 3.9
-------- ------ -------- ----- -------- -----
Total other loans................. 86,671 19.0 82,455 19.6 70,060 18.1
-------- ------ -------- ----- -------- -----
Total loans receivable................... 456,869 100.0% 419,195 100.0% 384,346 100.0%
====== ===== =====
Loans in process........................ (12,732) (11,424) (11,775)
Allowance for loan losses............... (4,548) (3,779) (3,357)
Deferred loan origination costs, net.... 771 505 273
-------- -------- --------
Total loans receivable, net............. $440,360 $404,497 $369,487
======== ======== ========
<CAPTION>
SEPTEMBER 30,
------------------------------------------------------------
1995 1994 1993
------------------ ------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FIRST MORTGAGE LOANS
One- to four-family...................... $199,078 59.0% $194,425 60.8% $191,168 63.9%
Multi-family............................. 6,903 2.0 7,408 2.3 7,869 2.6
Commercial real estate................... 60,186 17.9 55,053 17.3 44,194 14.8
Construction and land.................... 8,553 2.5 8,455 2.6 5,863 1.9
-------- ----- -------- -------- -------- --------
Total first mortgage loans......... 274,720 81.4 265,341 83.0 249,094 83.2
-------- ----- -------- -------- -------- --------
OTHER LOANS
Consumer loans:
Home equity lines of credit............. 31,550 9.4 27,711 8.6 23,498 8.0
Homeowner loans......................... 9,937 2.9 7,939 2.5 7,739 2.6
Other consumer loans.................... 9,917 2.9 8,124 2.5 10,527 3.5
-------- ----- -------- -------- -------- --------
Total consumer loans.............. 51,404 15.2 43,774 13.6 41,764 14.1
Commercial business loans............... 11,144 3.4 10,595 3.4 7,949 2.7
-------- ----- -------- -------- -------- --------
Total other loans................. 62,548 18.6 54,369 17.0 49,713 16.8
-------- ----- -------- -------- -------- --------
Total loans receivable................... 337,268 100.0% 319,710 100.0% 298,807 100.0%
===== ======== ========
Loans in process........................ (2,240) (2,083) (1,173)
Allowance for loan losses............... (3,472) (2,837) (2,565)
Deferred loan origination costs, net.... 391 364 8
-------- -------- --------
Total loans receivable, net............. $331,947 $315,154 $295,077
======== ======== ========
</TABLE>
72
<PAGE>
LOAN MATURITY SCHEDULE. The following table summarizes the contractual
maturities of the Bank's loan portfolio at June 30, 1998. Loans with adjustable
or renegotiable interest rates are shown as maturing at the end of the
contractual term of the loan. The table reflects the entire unpaid principal
balance of a loan maturing in the period that includes the final payment date
and, accordingly, does not give effect to periodic principal payments or
possible prepayments.
<TABLE>
<CAPTION>
MULTI-FAMILY AND
ONE- TO FOUR-FAMILY COMMERCIAL REAL ESTATE CONSTRUCTION AND LAND
------------------------- ------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE AMOUNT RATE
------------ ----------- ------------ ----------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Due During the Years
Ending June 30,
- ---------------------------
1999 (1)................... $ 236 9.10% $ 4,047 8.52% $18,429 9.19%
2000....................... 366 9.08 3,650 8.77 8,144 8.79
2001....................... 761 9.15 1,547 8.39 750 8.50
2002 and 2003.............. 3,206 8.25 4,214 8.90 -- --
2004 to 2008............... 21,917 8.00 17,168 8.80 462 8.00
2009 to 2023............... 148,115 7.70 39,879 8.51 -- --
2024 and following......... 96,992 7.57 315 8.67 -- --
-------- ------- -------
Total................. $271,593 7.69% $70,820 8.62% $27,785 9.04%
======== ==== ======= ==== ======= ====
<CAPTION>
CONSUMER COMMERCIAL BUSINESS TOTAL
------------------------- ------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE AMOUNT RATE
------------ ----------- ------------ ----------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Due During the Years
Ending June 30,
- ---------------------------
1999 (1)................... $ 1,149 10.18% $14,494 9.04% $ 38,355 9.09%
2000....................... 3,188 10.78 1,455 9.05 16,803 9.19
2001....................... 4,391 10.49 2,258 8.73 9,707 9.49
2002 and 2003.............. 12,043 9.47 2,731 9.31 22,194 9.16
2004 to 2008............... 32,979 9.04 2,234 8.73 74,760 8.67
2009 to 2023............... 8,885 9.32 864 9.72 197,743 7.95
2024 and following......... -- -- -- -- 97,307 7.58
------- ------- --------
Total................. $62,635 9.37% $24,036 9.04% $456,869 8.22%
======= ===== ======= ==== ======== ====
</TABLE>
___________________
(1) Includes demand loans, loans having no stated maturity, and overdraft
loans.
73
<PAGE>
The following table sets forth the dollar amounts of fixed- and adjustable-
rate loans at June 30, 1998 that are contractually due after June 30, 1999.
<TABLE>
<CAPTION>
DUE AFTER JUNE 30, 1999
------------------------------
FIXED ADJUSTABLE TOTAL
-------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
First mortgage loans:
One- to four-family...................... $188,543 $ 82,814 $271,357
Multi-family and commercial real estate.. 15,726 51,047 66,773
Construction and land.................... -- 9,356 9,356
-------- -------- --------
Total first mortgage loans............ 204,269 143,217 347,486
Consumer loans........................... 32,017 29,469 61,486
Commercial business loans................ 316 9,226 9,542
-------- -------- --------
Total loans........................... $236,602 $181,912 $418,514
======== ======== ========
</TABLE>
ONE- TO FOUR-FAMILY REAL ESTATE LENDING. The Bank's primary lending
activity is the origination of one-to four-family residential mortgage loans
secured by properties located in the Bank's primary market area. The Bank
offers conforming and non-conforming, fixed-rate and adjustable-rate,
residential mortgage loans with maturities of up to 30 years and maximum loan
amounts generally of up to $600,000.
The Bank currently offers both fixed- and adjustable-rate conventional
mortgage loans with terms of 10 to 30 years that are fully amortizing with
monthly or bi-weekly loan payments. One- to four-family residential mortgage
loans are generally underwritten according to Fannie Mae and Freddie Mac
guidelines, and loans that conform to such guidelines are referred to as
"conforming loans." The Bank generally originates both fixed-rate and ARM loans
in amounts up to the maximum conforming loan limits as established by Fannie Mae
and Freddie Mac secondary mortgage market standards, which are currently
$227,150 for single-family homes. Private mortgage insurance is generally
required for loans with loan-to-value ratios in excess of 80%. Loans in excess
of conforming loan limits, in amounts of up to $600,000, are also underwritten
to both Fannie Mae and Freddie Mac secondary mortgage market standards. These
loans are eligible for sale to various conduit firms that specialize in the
purchase of such non-conforming loans, although most of these loans are retained
in the Bank's loan portfolio.
The Bank's bi-weekly one- to four-family residential mortgage loans result
in significantly shorter repayment schedules than conventional monthly mortgage
loans. The accelerated repayment schedule that accompanies a bi-weekly mortgage
loan results in lower total interest payments and a more rapid increase in home
equity. Bi-weekly mortgage loans are also repaid through an automatic deduction
from the borrower's savings or checking account, which enables the Bank to avoid
the cost of processing payments. As of June 30, 1998, bi-weekly loans totaled
$56.5 million or 20.8% of the Bank's residential loan portfolio.
Fixed-rate mortgage loans originated by the Bank include due-on-sale
clauses which provide that the loan is immediately due and payable in the event
the borrower transfers ownership of the property. Due-on-sale clauses are an
important means of adjusting the yields on the Bank's fixed-rate residential
loan portfolio, and the Bank generally exercises its rights under these clauses.
The Bank actively monitors its interest rate risk position to determine the
desirable level of investment in fixed-rate mortgages. Depending on market
interest rates and the Bank's capital and liquidity position, the Bank may
retain all of its newly originated longer term fixed-rate, fixed-term
residential mortgage loans or may decide to sell all or a portion of such loans
in the secondary mortgage market to government sponsored enterprises such as
Fannie Mae and Freddie Mac. As a matter of policy, the Bank retains the
servicing rights on all loans sold to generate fee income and reinforce its
commitment to customer service. For the nine months ended June 30, 1998, the
Bank sold mortgage loans totaling $16.9 million compared with $197,000 for the
nine months ended June 30, 1997. As of June 30, 1998 and 1997, the Bank's
portfolio of loans serviced for others totaled $128.5 million and
$130.7 million, respectively. The Bank's portfolio of loans serviced for others
totaled $127.6 million, $143.0 million and $160.9 million at September 30, 1997,
1996 and 1995, respectively.
74
<PAGE>
The Bank currently offers several ARM loan products secured by residential
properties with rates that adjust every six months to one year, after an initial
fixed-rate period ranging from six months to seven years. After the initial
term, the interest rate on these loans is reset based upon a contractual spread
or margin above the average yield on U.S. Treasury securities, adjusted to a
constant maturity of six months to one year (the "U.S. Treasury Constant
Maturity Index"), as published weekly by the Federal Reserve Board. ARM loans
are generally subject to limitations on interest rate increases of 2% per
adjustment period, and an aggregate adjustment of 6% over the life of the loan.
ARM loans require that any payment adjustment resulting from a change in the
interest rate on the ARM loan be sufficient to result in full amortization of
the loan by the end of the loan term, and thus, do not permit any of the
increased payment to be added to the principal amount of the loan, commonly
referred to as negative amortization. Although ARM loans are offered with terms
of up to 30 years, these loans generally remain outstanding for substantially
shorter periods of time. At June 30, 1998, the Bank's ARM portfolio included
$20.4 million in loans which reprice every six months, $33.9 million in one-year
ARMs and $28.5 million in loans with an initial fixed-rate period ranging from
three to seven years.
The retention of ARM loans, as opposed to long term, fixed-rate residential
mortgage loans, in the Bank's portfolio helps reduce its exposure to interest
rate risk. However, ARM loans generally pose different credit risks than fixed-
rate loans primarily because the underlying debt service payments of the
borrowers rise as interest rates rise, thereby increasing the potential for
default. In order to minimize this risk, borrowers of one-to four-family one
year ARM loans are qualified at the rate which would be in effect after the
first interest rate adjustment, if that rate is higher than the initial rate.
Management believes that these risks, which have not had a material adverse
effect on the Bank to date, generally are less than the interest rate risks
associated with holding longer-term fixed-rate loans.
While one- to four-family residential loans typically are originated with
15 to 30 year terms, such loans generally remain outstanding in the Bank's loan
portfolio for substantially shorter periods of time because borrowers must
prepay their loans in full upon sale of the property pledged as security or upon
refinancing the loan. Thus, average loan maturity is a function of, among other
factors, the level of purchase and sale activity in the Bank's primary lending
market, prevailing market interest rates, and the interest rates payable on
outstanding loans.
The Bank requires title insurance on all of its one-to four-family mortgage
loans, and also requires that fire and extended coverage casualty insurance
(and, if appropriate, flood insurance) be maintained in an amount at least equal
to the lesser of the loan balance or the replacement cost of the improvements.
Loans with loan-to-value ratios in excess of 80% must have private mortgage
insurance, although occasional exceptions may be made. Nearly all residential
loans must have a mortgage escrow account from which disbursements are made for
real estate taxes and for hazard and flood insurance.
COMMERCIAL REAL ESTATE AND MULTI-FAMILY REAL ESTATE LENDING. The Bank
originates real estate loans secured predominantly by first liens on commercial
real estate and apartment buildings. The commercial real estate properties are
predominantly non-residential properties such as office buildings, shopping
centers, retail strip centers, industrial and warehouse properties and, to a
lesser extent, more specialized properties such as churches, mobile home parks,
restaurants, motel/hotels and auto dealerships. The Bank may, from time to
time, purchase commercial or multi-family real estate loan participations.
Loans secured by commercial real estate totaled $63.7 million or 13.9% of the
Bank's total loan portfolio as of June 30, 1998, and consisted of 175 loans
outstanding with an average loan balance of approximately $364,000. Loans
secured by multi-family residential real estate totaled $7.1 million or 1.6% of
the Bank's total loan portfolio as of June 30, 1998, and consisted of 34 loans
outstanding with an average loan balance of approximately $209,000.
Substantially all of the Bank's commercial real estate and multi-family loans
were secured by properties located in its primary market area.
As part of the Bank's ongoing interest rate risk management, the Bank
offers adjustable-rate commercial and multi-family real estate loans. The
initial interest rates on these loans adjust after an initial three or five year
period to new market rates that generally range between 200 to 350 basis points
over the then current three or five year U.S. Treasury or FHLB rates.
Commercial real estate loans typically have a term of approximately 10 years,
with an amortization schedule of approximately 20 years, and may be repaid
subject to certain penalties.
75
<PAGE>
Multi-family real estate loans typically have a term of 10 years, with a 25 year
amortization schedule, and also may be prepaid subject to penalties.
In the underwriting of commercial and multi-family real estate loans, the
Bank generally lends up to 70% of the property's appraised value on apartment
buildings, up to 70% of the property's appraised value on commercial properties
that are not owner-occupied, and up to 75% of the property's appraised value on
commercial properties that are owner-occupied. Appraised values are determined
by independent appraisers designated by the Bank. The Bank generally obtains an
environmental assessment from an independent engineering firm of any
environmental risks that may be associated with a particular building or the
site. Decisions to lend are based on the economic viability of the property and
the creditworthiness of the borrower. Creditworthiness is determined by
considering the character, experience, management and financial strength of the
borrower, and the ability of the property to generate adequate funds to cover
both operating expenses and debt service. In evaluating a commercial real
estate loan, the Bank emphasizes primarily the ratio of net cash flow to debt
service for the property, generally requiring a ratio of at least 110%, computed
after deduction for a vacancy factor and property expenses deemed appropriate by
the Bank. In addition, a personal guarantee of the loan is generally required
from the principal(s) of the borrower. On all real estate loans, the Bank
requires title insurance insuring the priority of its lien, fire and extended
coverage casualty insurance, and flood insurance, if appropriate, in order to
protect the Bank's security interest in the underlying property.
Commercial real estate and multi-family loans generally carry higher
interest rates and have shorter terms than those on one- to four-family
residential mortgage loans. Commercial real estate and multi-family loans,
however, entail significant additional credit risks compared to one- to four-
family residential mortgage loans, as they typically involve large loan balances
concentrated with single borrowers or groups of related borrowers. In addition,
the payment experience on loans secured by income producing properties typically
depends on the successful operation of the related real estate project and thus
may be subject to a greater extent to adverse conditions in the real estate
market and in the economy generally.
CONSTRUCTION AND LAND LOANS. The Bank originates acquisition, development
and construction loans to builders in its market area. Acquisition loans are
made to help finance the purchase of land intended for further development,
including single-family houses, multi-family housing, and commercial income
property. In some cases, the Bank may make an acquisition loan before the
borrower has received approval to develop the land as planned. Loans for the
acquisition of land are generally limited to the Bank's most creditworthy
customers. In general, the maximum loan-to-value ratio for a land acquisition
loan is 50% of the appraised value of the property. Acquisition loans are often
made in conjunction with development and construction loans. Acquisition loans
may also be made to borrowers who already own the property, but who require
additional financing to develop the property.
The Bank also makes development loans to builders in its market area to
finance improvements to real estate, consisting mostly of single-family
subdivisions, typically to finance the cost of utilities, roads and sewers.
Builders generally rely on the sale of single family homes to repay development
loans, although in some cases the improved building lots may be sold to another
builder. The maximum loan-to-value ratio for these loans is generally 60% of
the appraised value of the property. Advances are made in accordance with a
schedule reflecting the cost of improvements. The Bank's policy is to confirm
prior to each advance that the improvements have been completed properly as
evidenced by an inspection report issued by an appraiser or engineer hired by
the Bank. In addition, prior to advancing funds, the Bank confirms that its
lien priority remains in effect.
The Bank also grants construction loans to area builders, often in
conjunction with development loans. These loans finance the cost of completing
homes on the improved property. The loans are generally limited to the lesser
of 70% of the appraised value of the property or the actual cost of
improvements. In the case of single-family construction, the Bank limits the
number of houses it will finance that are not under contract for sale. As part
of its underwriting process for construction loans on income producing
properties, such as apartment buildings and commercial rental properties, the
Bank considers the likelihood of leasing the property at the expected rental
amount, and the time to achieve sufficient occupancy levels. The Bank generally
requires a percentage of the building to be leased prior to granting a
construction loan on income producing property.
76
<PAGE>
Advances on construction loans are made in accordance with a schedule
reflecting the cost of construction. The Bank's policy is to confirm prior to
each advance that the construction has been completed properly as evidenced by
an inspection report issued by an appraiser or engineer hired by the Bank. The
Bank also confirms that its lien priority remains in force before advancing
funds. Repayment of construction loans on residential subdivisions is normally
expected from the sale of units to individual purchasers. In the case of income
producing property, repayment is usually expected from permanent financing upon
completion of construction. The Bank commits to provide the permanent mortgage
financing on most of its construction loans on income-producing property.
Acquisition, development and construction lending exposes the Bank to
greater credit risk than permanent mortgage financing. The repayment of
acquisition, development and construction loans depends upon the sale of the
property to third parties or the availability of permanent financing upon
completion of all improvements. In the event the Bank makes an acquisition loan
on property that is not yet approved for the planned development, there is the
risk that approvals will not be granted or will be delayed. These events may
adversely affect the borrower and the collateral value of the property.
Development and construction loans also expose the Bank to the risk that
improvements will not be completed on time in accordance with specifications and
projected costs. In addition, the ultimate sale or rental of the property may
not occur as anticipated.
As of June 30, 1998, the Bank had $8.8 million in acquisition and
development loans, and $19.0 million in construction loans.
CONSUMER AND OTHER LOANS. The Bank originates a variety of consumer and
other loans, including homeowner loans, home equity lines of credit, new and
used automobile loans, and personal unsecured loans, including both fixed-rate
installment loans and prime rate variable lines-of-credit. As of June 30, 1998,
consumer loans totaled $62.6 million, or 13.7% of the total loan portfolio.
At June 30, 1998, the largest group of consumer loans consisted of
$53.8 million of loans secured by junior liens on residential properties. The
Bank offers fixed-rate, fixed-term second mortgage loans, referred to as
"homeowner loans," and adjustable-rate home equity lines of credit. Homeowner
loans are offered in amounts up to 100% of the appraised value of the property
(including prior liens) with a maximum loan amount of $75,000. Home equity loans
are generally offered in amounts up to 75% of the appraised value of the
property including prior liens, with a maximum loan amount of $200,000. As of
June 30, 1998, homeowner loans totaled $25.4 million or 5.6% of the Bank's total
loan portfolio. The disbursed portion of home equity lines of credit totaled
$28.4 million, or 6.2% of the Bank's total loan portfolio, with $24.9 million
remaining undisbursed.
Other consumer loans include personal loans and loans secured by new or
used automobiles. As of June 30, 1998, these loans totaled $8.9 million, or 1.9%
of the Bank's total loan portfolio. The Bank originates automobile loans
directly to its customers and has no outstanding agreement with automobile
dealerships to generate indirect loans. The maximum term for an automobile loan
is generally 60 months for a new car, and 36 to 48 months for a used car. The
Bank will generally lend up to 100% of the purchase price of a new car, and up
to 90% of the lesser of the purchase price or the National Automobile Dealers'
Association book rate for a used car. The Bank requires all borrowers to
maintain collision insurance on automobiles securing loans in excess of $5,000,
with the Bank listed as loss payee. Personal loans also include secured and
unsecured installment loans. Unsecured installment loans generally have shorter
terms than secured consumer loans, and generally have higher interest rates than
rates charged on secured installment loans with comparable terms.
The Bank's procedures for underwriting consumer loans include an assessment
of an applicant's credit history and the ability to meet existing obligations
and payments on the proposed loan. Although an applicant's creditworthiness is
a primary consideration, the underwriting process also includes a comparison of
the value of the collateral security, if any, to the proposed loan amount.
Consumer loans generally entail greater risk than residential mortgage
loans, particularly in the case of consumer loans that are unsecured or secured
by assets that tend to depreciate, such as automobiles. In such cases,
repossessed collateral for a defaulted consumer loan may not provide an adequate
source of repayment for the outstanding loan and the remaining deficiency often
does not warrant further substantial collection efforts against the
77
<PAGE>
borrower. In addition, the repayment of consumer loans depends on the borrower's
continued financial stability, as their repayment is more likely than a single
family mortgage loan to be adversely affected by job loss, divorce, illness or
personal bankruptcy. Furthermore, the application of various federal and state
laws (including bankruptcy and insolvency laws) may limit the amount that can be
recovered on such loans.
COMMERCIAL BUSINESS LOANS. The Bank currently offers commercial business
loans to customers in its market area, some of which are secured in part by
additional real estate collateral. In an effort to expand its customer account
relationships and develop a broader base of more interest rate sensitive assets,
the Bank makes various types of secured and unsecured commercial loans for the
purpose of financing equipment acquisition, expansion, working capital and other
general business purposes. The terms of these loans generally range from less
than one year to seven years. The loans are either negotiated on a fixed-rate
basis or carry adjustable interest rates indexed to a lending rate which is
determined internally, or a short-term market rate index. The Bank may, from
time to time, purchase commercial business loan participations. At June 30,
1998, the Bank had 251 commercial business loans outstanding with an aggregate
balance of $24.0 million, or 5.3% of the total loan portfolio. As of June 30,
1998, the average commercial business loan balance was approximately $96,000.
Commercial credit decisions are based upon a complete credit assessment of
the loan applicant. A determination is made as to the applicant's ability to
repay in accordance with the proposed terms as well as an overall assessment of
the risks involved. An investigation is made of the applicant to determine
character and capacity to manage. Personal guarantees of the principals are
generally required. In addition to an evaluation of the loan applicant's
financial statements, a determination is made of the probable adequacy of the
primary and secondary sources of repayment to be relied upon in the transaction.
Credit agency reports of the applicant's credit history as well as bank checks
and trade investigations supplement the analysis of the applicant's
creditworthiness. Collateral supporting a secured transaction is also analyzed
to determine its marketability and liquidity. Commercial business loans
generally bear higher interest rates than residential loans, but they also
involve a higher risk of default since their repayment is generally dependent on
the successful operation of the borrower's business.
LOAN ORIGINATIONS, PURCHASES, SALES AND SERVICING. While the Bank
originates both fixed-rate and adjustable-rate loans, its ability to generate
each type of loan depends upon borrower demand, market interest rates, borrower
preference for fixed- versus adjustable-rate loans, and the interest rates
offered on each type of loan by other lenders in the Bank's market area. This
includes competing banks, savings banks, credit unions, and mortgage banking
companies, as well as life insurance companies, and Wall Street conduits that
also actively compete for local commercial real estate loans. Loan originations
are derived from a number of sources, including branch office personnel,
existing customers, borrowers, builders, attorneys, real estate broker referrals
and walk-in customers.
The Bank's loan origination and sales activity may be adversely affected by
a rising interest rate environment that typically results in decreased loan
demand. Accordingly, the volume of loan originations and the profitability of
this activity can vary from period to period. One- to four-family residential
mortgage loans are generally underwritten to current Fannie Mae and Freddie Mac
seller/servicer guidelines. One- to four-family loans are also closed on
standard Fannie Mae/Freddie Mac documents and sales are conducted using standard
Fannie Mae/Freddie Mac purchase contracts and master commitments as applicable.
One- to four-family mortgage may be loans sold both to Fannie Mae and Freddie
Mac on a non-recourse basis whereby foreclosure losses are generally the
responsibility of either Fannie Mae or Freddie Mac and not the Bank. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Management of Market Risk."
The Bank is a qualified loan servicer for both Fannie Mae and Freddie Mac.
The Bank's policy has been to retain the servicing rights for all loans sold,
and to continue to collect payments on the loans, maintain tax escrows and
applicable fire and flood insurance coverage, and supervise foreclosure
proceedings if necessary. The Bank retains a portion of the interest paid by
the borrower on the loans as consideration for its servicing activities.
78
<PAGE>
The following table sets forth the loan origination, sale and repayment
activities of the Bank for the periods indicated. The Bank has not purchased
any loans in recent years.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JUNE 30, YEAR ENDED SEPTEMBER 30,
------------------- ------------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Unpaid principal balances at
beginning of period................. $419,195 $384,346 $384,346 $337,268 $319,710
-------- -------- -------- -------- --------
Originations by Type
- ---------------------------
Adjustable-rate:
First mortgage loans:
One- to four-family............... 12,424 7,919 11,299 7,814 9,350
Multi-family...................... 388 325 325 778 225
Commercial real estate............ 11,541 7,825 7,932 5,108 7,528
Construction and land............. 9,338 12,213 14,240 25,235 7,717
Other loans:
Consumer.......................... 8,038 10,321 14,166 12,315 4,866
Commercial business............... 12,329 5,115 8,140 6,595 4,803
-------- -------- -------- -------- --------
Total adjustable-rate........... 54,058 43,718 56,102 57,845 34,489
-------- -------- -------- -------- --------
Fixed-rate:
First mortgage loans:
One- to four-family............... 65,462 16,122 33,214 41,022 16,974
Commercial real estate............ 3,919 585 710 385 512
Construction and land............. 563 859 1,002 1,643 1,139
Other loans:
Consumer.......................... 16,072 12,143 16,954 4,489 10,008
Commercial business............... 3,512 3,008 4,788 3,397 3,071
-------- -------- -------- -------- --------
Total fixed-rate................ 89,528 32,717 56,668 50,936 31,704
-------- -------- -------- -------- --------
Total loans originated.......... 143,586 76,435 112,770 108,781 66,193
-------- -------- -------- -------- --------
Sales
- ---------------------------
First mortgage loans................ (16,932) (197) (197) (433) (1,605)
-------- -------- -------- -------- --------
Principal Repayments
- ---------------------------
First mortgage loans................ (52,067) (33,833) (45,021) (39,146) (32,034)
Other loans......................... (35,738) (23,561) (31,352) (19,736) (14,616)
-------- -------- -------- -------- --------
Total principal
repayments........................ (87,805) (57,394) (76,373) (58,882) (46,650)
-------- -------- -------- -------- --------
Net charge-offs...................... (578) (355) (636) (1,026) (125)
Transfers to real estate
owned............................... (597) (694) (715) (1,362) (255)
-------- -------- -------- -------- --------
Unpaid principal balances
at end of period.................... 456,869 402,141 419,195 384,346 337,268
Loans in process..................... (12,732) (9,505) (11,424) (11,775) (2,240)
Allowance for loan losses............ (4,548) (3,877) (3,779) (3,357) (3,472)
Deferred loan origination
costs, net.......................... 771 454 505 273 391
-------- -------- -------- -------- --------
Net loans at end of period........... $440,360 $389,213 $404,497 $369,487 $331,947
======== ======== ======== ======== ========
</TABLE>
LOAN APPROVAL AUTHORITY AND UNDERWRITING. The Bank has four levels of
lending authority: the Board of Directors, the Director Loan Committee, the
Management Loan Committee, and individual loan officers. The Board grants
lending authority to the Director Loan Committee, the majority of the members of
which are Directors. The Director Loan Committee in turn may grant authority to
the Management Loan Committee and individual loan officers. In addition,
designated members of management may grant authority to individual loan officers
up to specified limits. The lending activities of the Bank are subject to
written policies established by the Board. These policies are reviewed
periodically.
The Director Loan Committee may approve loans of up to a maximum of $3.2
million in the aggregate to any one borrower and related entities in accordance
with the Bank's loans-to-one borrower policy. The Management Loan Committee may
approve loans of up to an aggregate of $650,000 to any one borrower and related
borrowers.
79
<PAGE>
Two loan officers with sufficient loan authority acting together may approve
loans up to $350,000. The maximum individual authority to approve an unsecured
loan is $50,000.
The Bank has established a risk rating system for its commercial business
loans, commercial and multi-family real estate loans, and construction loans to
builders. The risk rating system assesses a variety of factors to rank the risk
of default and risk of loss associated with the loan. These ratings are
performed by commercial credit personnel who do not have responsibility for loan
originations. The Bank determines its maximum loans to one borrower based upon
the rating of the loan. The large majority of loans fall into three categories.
The maximum for the best rated borrowers is $7.5 million, for the next group of
borrowers is $5.5 million, and for the third group is $3.5 million. Sublimits
apply based on reliance on any single property, and for commercial loans.
In connection with its mortgage loans, the Bank requires property
appraisals performed by independent appraisers who are approved by the Board.
Appraisals are then reviewed by the appropriate loan underwriting areas of the
Bank. The Bank also requires title insurance, hazard insurance and, if
indicated, flood insurance on property securing its mortgage loans. For
consumer loans under $50,000, such as equity lines of credit and homeowner
loans, title insurance is not required.
LOAN ORIGINATION FEES AND COSTS. In addition to interest earned on loans,
the Bank also receives loan origination fees. Such fees vary with the volume
and type of loans and commitments made, and competitive conditions in the
mortgage markets, which in turn respond to the demand and availability of money.
The Bank defers loan origination fees and costs, and amortizes such amounts as
an adjustment to yield over the term of the loan by use of the level-yield
method. Deferred loan origination costs (net of deferred fees) were $771,000 at
June 30, 1998.
To the extent that originated loans are sold on or after January 1, 1997,
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," requires the Bank to capitalize a mortgage
servicing asset at the time of the sale. In the nine months ended June 30,
1998, the Bank recognized $169,000 in income upon capitalization of originated
mortgage servicing rights for loans sold on a servicing-retained basis. The
capitalized amount is amortized thereafter (over the period of estimated net
servicing income) as a reduction of servicing fee income. The unamortized
amount is fully charged to income when loans are prepaid. Asset recognition of
servicing rights on sales of originated loans was not permitted under accounting
standards in effect prior to SFAS No. 125, when the Bank sold the majority of
the loans it presently services for others. Originated mortgage servicing rights
with an amortized cost of $163,000 are included in other assets at June 30,
1998. See also Notes 1 and 4 of the Notes to Consolidated Financial Statements.
LOANS-TO-ONE BORROWER. Savings associations are subject to the same loans-
to-one borrower limits as those applicable to national banks, which under
current regulations restrict loans to one borrower to an amount equal to 15% of
unimpaired net worth on an unsecured basis, and an additional amount equal to
10% of unimpaired net worth if the loan is secured by readily marketable
collateral (generally, financial instruments and bullion, but not real estate).
The Bank monitors its credit limits by relationship and by total credit
exposure, including the unused portion of credit made available by the Bank,
such as unadvanced amounts on construction loans and unused lines of credit.
At June 30, 1998, the five largest aggregate amounts loaned to individual
borrowers by the Bank (including any unused lines of credit) were as follows:
$7.4 million, consisting of mortgage-secured and unsecured financing;
$4.4 million secured by a mortgage; $3.6 million secured by a mortgage;
$3.6 million, consisting of mortgage-secured and unsecured financing; and
$3.5 million, consisting of mortgage-secured financing. All of the loans
discussed above are performing in accordance with their terms.
DELINQUENCIES AND CLASSIFIED ASSETS
COLLECTION PROCEDURES. A computer generated late notice is sent by the
17th day of the month requesting the payment due plus the late charge that was
assessed. After the late notices have been mailed, accounts are assigned to a
collector for follow-up to determine reasons for delinquency and to review
payment options. Additional system-generated collection letters are sent to
customers every 10 days. Notwithstanding ongoing collection efforts, all
consumer loans are fully charged-off after 120 days.
80
<PAGE>
LOANS PAST DUE AND NON-PERFORMING ASSETS. Loans are reviewed on a regular
basis. Loans are placed on non-accrual status when either principal or interest
is 90 days or more past due. In addition, loans are placed on non-accrual
status when, in the opinion of management, there is sufficient reason to
question the borrower's ability to continue to meet contractual principal or
interest payment obligations. Interest accrued and unpaid at the time a loan is
placed on a non-accrual status is reversed from interest income. Interest
payments received on non-accrual loans are not recognized as income unless
warranted based on the borrower's financial condition and payment record. At
June 30, 1998, the Bank had non-accrual loans of $5.7 million, representing
loans of $4.8 million which were 90 days or more delinquent and a current loan
of $962,000 which was on non-accrual status due to concerns about the borrower's
ability to continue making contractual payments. The ratio of non-performing
loans to total loans was 1.30% at June 30, 1998.
Real estate acquired as a result of foreclosure or by deed in lieu of
foreclosure is classified as real estate owned ("REO") until such time as it is
sold. When real estate is acquired through foreclosure or by deed in lieu of
foreclosure, it is recorded at its fair value, less estimated costs of disposal.
If the fair value of the property is less than the loan balance, the difference
is charged against the allowance for loan losses. At June 30, 1998, the Bank
had REO of $366,000. The Bank had total non-performing assets (non-accrual loans
and REO) of $6.1 million and a ratio of non-performing assets to total assets of
0.90% at June 30, 1998.
81
<PAGE>
The following table sets forth certain information with respect to the
Bank's loan portfolio delinquencies at the dates indicated.
<TABLE>
<CAPTION>
LOANS DELINQUENT FOR
------------------------------------
60-89 DAYS 90 DAYS AND OVER TOTAL
---------------- ----------------- -----------------
NUMBER AMOUNT NUMBER AMOUNT NUMBER AMOUNT
------ ------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
At June 30, 1998
- ----------------
First mortgage loans:
One- to four-family......... 16 $1,310 34 $3,323 50 $4,633
Multi-family................ 1 143 -- -- 1 143
Commercial real estate...... -- -- 2 848 2 848
Construction and land....... -- -- 1 180 1 180
----- ------ ----- ------ ----- ------
17 1,453 37 4,351 54 5,804
Other loans:
Consumer.................... 5 98 15 230 20 328
Commercial business......... 1 76 9 194 10 270
----- ------ ----- ------ ----- ------
Total..................... 23 $1,627 61 $4,775 84 $6,402
===== ====== ===== ------ ===== ======
At September 30, 1997
- ---------------------
First mortgage loans:
One- to four-family......... 11 $1,245 28 $2,549 39 $3,794
Multi-family................ 1 146 -- -- 1 146
Commercial real estate...... 1 58 4 1,375 5 1,433
Construction and land....... -- -- 2 276 2 276
----- ------ ----- ------ ----- ------
13 1,449 34 4,200 47 5,649
Other loans:
Consumer.................... 5 87 23 234 28 321
Commercial business......... 4 98 7 243 11 341
----- ------ ----- ------ ----- ------
Total..................... 22 $1,634 64 $4,677 86 $6,311
===== ====== ===== ====== ===== ======
At September 30, 1996
- ---------------------
First mortgage loans:
One- to four-family......... 15 $ 936 37 $2,731 52 $3,667
Commercial real estate...... 2 282 11 2,087 13 2,369
Construction and land....... -- -- 3 920 3 920
----- ------ ----- ------ ----- ------
17 1,218 51 5,738 68 6,956
Other loans:
Consumer.................... 4 109 24 503 28 612
Commercial business......... 1 65 3 109 4 174
----- ------ ----- ------ ----- ------
Total 22 $1,392 78 $6,350 100 $7,742
===== ====== ===== ====== ===== ======
</TABLE>
82
<PAGE>
NON-PERFORMING ASSETS. The table below sets forth the amounts and
categories of the Bank's non-performing assets at the dates indicated. At each
date presented, the Bank had no troubled debt restructurings (loans for which a
portion of interest or principal has been forgiven and loans modified at
interest rates materially less than current market rates).
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans:
One- to four-family.................... $3,323 $2,549 $2,731 $1,972 $1,158 $1,416
Commercial real estate................. 848 1,375 2,087 3,346 1,222 1,465
Construction and land/(1)/............. 1,142 276 920 209 209 30
Consumer............................... 230 234 503 421 329 390
Commercial business.................... 194 243 109 654 837 1,011
------ ------ ------ ------ ------ ------
Total non-performing loans.......... 5,737 4,677 6,350 6,602 3,755 4,312
------ ------ ------ ------ ------ ------
Real estate owned:
One- to four-family.................... 92 186 347 50 508 773
Commercial real estate................. 274 -- 960 160 242 401
------ ------ ------ ------ ------ ------
Total real estate owned............. 366 186 1,307 210 750 1,174
------ ------ ------ ------ ------ ------
Total non-performing assets.............. $6,103 $4,863 $7,657 $6,812 $4,505 $5,486
====== ====== ====== ====== ====== ======
Ratios:
Non-performing loans to total loans.... 1.30% 1.16% 1.72% 1.99 % 1.19% 1.46%
Non-performing assets to total assets.. 0.90 0.75 1.21 1.29 0.94 1.17
</TABLE>
- -----------------------
/(1)/ Non-accrual construction and land loans at June 30, 1998 include a loan
with a balance of $962,000 which was current in accordance with its
contractual terms. Management placed this loan on non-accrual status
during the nine months ended June 30, 1998 due to concerns about the
borrower's ability to continue making contractual payments.
For the year ended September 30, 1997 and for the nine months ended
June 30, 1998, gross interest income that would have been recorded had the non-
accrual loans at the end of the period remained on accrual status throughout the
period amounted to $411,000 and $523,000, respectively. Interest income actually
recognized on such loans totaled $147,000 for the year ended September 30, 1997
and $241,000 for the nine months ended June 30, 1998.
CLASSIFICATION OF ASSETS. The Bank's policies, consistent with regulatory
guidelines, provide for the classification of loans and other assets such as
securities that are considered to be of lesser quality as substandard, doubtful,
or loss assets. An asset is considered substandard if it is inadequately
protected by the current net worth and paying capacity of the obligor or of the
collateral pledged, if any. Substandard assets include those characterized by
the distinct possibility that the savings institution will sustain some loss if
the deficiencies are not corrected. Assets classified as doubtful have all of
the weaknesses inherent in those classified substandard with the added
characteristic that the weaknesses present make collection or liquidation in
full, on the basis of currently existing facts, conditions, and values, highly
questionable and improbable. Assets classified as loss are those considered
uncollectible and of such little value that their continuance as assets is not
warranted. Assets that do not expose the Bank to risk sufficient to warrant
classification in one of the aforementioned categories, but which possess some
weaknesses, are required to be designated as special mention by management. As
of June 30, 1998, the Bank had $4.6 million of assets designated as special
mention.
When the Bank classifies assets as either substandard or doubtful, it
allots for analytical purposes a portion of general valuation allowances or loss
reserves to such assets as deemed prudent by management. General allowances
represent loss allowances that have been established to recognize the inherent
risk associated with lending activities, but which have not been allocated to
particular problem assets. When the Bank classifies problem assets as loss, it
is required either to establish a specific allowance for losses equal to 100% of
the amount of the assets so classified, or to charge-off such amount. The
Bank's determination as to the classification of its assets and the amount of
its valuation allowance is subject to review by its regulatory agencies, which
can order the establishment of additional loss allowances. Management regularly
reviews the Bank's asset portfolio to determine whether any assets require
classification in accordance with applicable regulations. On the basis of
management's review of the
83
<PAGE>
Bank's assets at June 30, 1998, classified assets consisted of substandard
assets of $4.7 million (loans receivable of $4.3 million and REO of $366,000)
and doubtful assets (loans receivable) of $101,000. There were no assets
classified as loss at June 30, 1998.
ALLOWANCE FOR LOAN LOSSES. The Bank provides for loan losses based on the
allowance method. Accordingly, all loan losses are charged to the related
allowance and all recoveries are credited to it. Additions to the allowance for
loan losses are provided by charges to income based on various factors which, in
management's judgment, deserve current recognition in estimating probable
losses. Management regularly reviews the loan portfolio and makes provisions
for loan losses in order to maintain the adequacy of the allowance for loan
losses. The allowance for loan losses consists of amounts specifically allocated
to non-performing loans and potential problem loans (if any) as well as
allowances determined for each major loan category. Loan categories such as
single-family residential mortgages and consumer loans are generally evaluated
on an aggregate or "pool" basis by applying loss factors to the current balances
of the various loan categories. The loss factors are determined by management
based on an evaluation of historical loss experience, delinquency trends, volume
and type of lending conducted, and the impact of current economic conditions in
the Bank's market area. While management uses the best information available to
make evaluations, future adjustments to the allowance may be necessary if
conditions differ substantially from the assumptions used in making the
evaluations.
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize additions to the allowance based
on their judgments of information available to them at the time of their
examination.
At June 30, 1998, the allowance for loan losses was $4.5 million, which
equaled 1.03% of net loans and 79.27% of non-performing loans. For the nine
months ended June 30, 1998 and the years ended September 30, 1997 and 1996, the
Bank recorded net loan charge-offs of $578,000, $636,000 and $1.0 million,
respectively, as a reduction of the allowance for loan losses. Provisions for
loan losses added to the allowance were $1.3 million, $1.1 million and $911,000
during the respective periods. The Bank's provisions for loan losses are
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
84
<PAGE>
The following table sets forth activity in the Bank's allowance for loan
losses for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JUNE 30, YEARS ENDED SEPTEMBER 30,
------------------- ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning of period.................. $3,779 $ 3,357 $3,357 $ 3,472 $2,837 $2,565 $1,963
------ ------- ------ ------- ------ ------ ------
Charge-offs:
One- to four-family........................... (3) (83) (114) (33) (85) (86) (79)
Commercial real estate........................ (87) (84) (301) (840) - (56) (47)
Construction and land......................... (350) - - - - - -
Consumer...................................... (161) (136) (171) (203) (67) (59) (52)
Commercial business........................... (10) (93) (173) - - - -
------ ------- ------ ------- ------ ------ ------
Total charge-offs....................... (611) (396) (759) (1,076) (152) (201) (178)
------ ------- ------ ------- ------ ------ ------
Recoveries:
One- to four-family........................... - - 42 3 - - -
Commercial real estate........................ - 4 32 14 - - -
Consumer...................................... 33 37 49 33 27 21 19
Commercial business........................... - - - - - - 1
------ ------- ------ ------- ------ ------ ------
Total recoveries........................ 33 41 123 50 27 21 20
------ ------- ------ ------- ------ ------ ------
Net charge-offs................................. (578) (355) (636) (1,026) (125) (180) (158)
Provision for loan losses....................... 1,347 875 1,058 911 760 452 760
------ ------- ------ ------- ------ ------ ------
Balance at end of period........................ $4,548 $ 3,877 $3,779 $ 3,357 $3,472 $2,837 $2,565
====== ======= ====== ======= ====== ====== ======
Ratios:
Net charge-offs to average loans outstanding.. 0.14% 0.09% 0.17% 0.29% 0.04% 0.06% 0.05%
Allowance for loan losses to non-performing
loans...................................... 79.27 112.08 80.80 52.87 52.59 75.55 59.49
Allowance for loan losses to total loans
receivable, net............................ 1.03 1.00 0.93 0.91 1.05 0.90 0.87
</TABLE>
85
<PAGE>
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES. The following tables set forth
the allowance for loan losses allocated by loan category, the total loan
balances by category, and the percent of loans in each category to total loans
at the dates indicated. The allowance for loan losses allocated to each
category is not necessarily indicative of future losses in any particular
category and does not restrict the use of the allowance to absorb losses in
other categories.
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------------------------------------------
JUNE 30, 1998 1997 1996
------------------------------- ------------------------------ -------------------------------
PERCENT PERCENT PERCENT
OF LOANS OF LOANS OF LOANS
LOAN IN EACH LOAN IN EACH LOAN IN EACH
BALANCES CATEGORY BALANCES CATEGORY BALANCES CATEGORY
LOAN LOSS BY TO TOTAL LOAN LOSS BY TO TOTAL LOAN LOSS BY TO TOTAL
ALLOWANCE CATEGORY LOANS ALLOWANCE CATEGORY LOANS ALLOWANCE CATEGORY LOANS
--------- -------- ---------- --------- -------- ---------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First mortgage loans:
One- to four-family........ $1,150 $271,593 59.4% $ 734 $241,895 57.7% $ 756 $219,868 57.2%
Multi-family............... 47 7,108 1.6 47 7,358 1.8 47 7,743 2.0
Commercial real estate..... 1,810 63,712 13.9 1,384 55,747 13.3 1,200 58,640 15.4
Construction and land...... 306 27,785 6.1 389 31,740 7.6 389 28,035 7.3
Consumer loans.............. 862 62,635 13.7 782 60,804 14.4 429 54,797 14.2
Commercial business loans... 373 24,036 5.3 443 21,651 5.2 536 15,263 3.9
------ -------- ----- ------ -------- ----- ------ -------- -----
Total..................... $4,548 $456,869 100.0% $3,779 $419,195 100.0% $3,357 $384,346 100.0%
====== ======== ===== ====== ======== ===== ====== ======== =====
<CAPTION>
SEPTEMBER 30,
------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------- ------------------------------ -------------------------------
PERCENT PERCENT PERCENT
OF LOANS OF LOANS OF LOANS
LOAN IN EACH LOAN IN EACH LOAN IN EACH
BALANCES CATEGORY BALANCES CATEGORY BALANCES CATEGORY
LOAN LOSS BY TO TOTAL LOAN LOSS BY TO TOTAL LOAN LOSS BY TO TOTAL
ALLOWANCE CATEGORY LOANS ALLOWANCE CATEGORY LOANS ALLOWANCE CATEGORY LOANS
--------- -------- ---------- --------- -------- ---------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First mortgage loans:
One- to four-family........ $ 696 $199,078 59.0% $ 738 $194,425 60.8% $ 840 $191,168 63.9%
Multi-family............... 47 6,903 2.0 47 7,408 2.3 41 7,869 2.6
Commercial real estate..... 1,330 60,186 17.9 673 55,053 17.3 514 44,194 14.8
Construction and land...... 389 8,553 2.5 344 8,455 2.6 284 5,863 1.9
Consumer loans.............. 474 51,404 15.2 499 43,774 13.6 625 41,764 14.1
Commercial business loans... 536 11,144 3.4 536 10,595 3.4 261 7,949 2.7
------ -------- ----- ------ -------- ----- ------ -------- -----
Total..................... $3,472 $337,268 100.0% $2,837 $319,710 100.0% $2,565 $298,807 100.0%
====== ======== ===== ====== ======== ===== ====== ======== =====
</TABLE>
SECURITIES ACTIVITIES
The Bank's securities investment policy is established by the Board of
Directors. This policy dictates that investment decisions will be made based on
the safety of the investment, liquidity requirements, potential returns, cash
flow targets, and consistency with the Bank's interest rate risk management.
The Board's asset/liability committee oversees the Bank's investment program and
evaluates on an ongoing basis the Bank's investment policy and objectives. The
chief financial officer, or the chief financial officer acting with the chief
executive officer, is responsible for making securities portfolio decisions in
accordance with established policies. The Bank's chief financial officer and
chief executive officer have the authority to purchase and sell securities
within specific guidelines established by the investment policy. However, all
transactions are reviewed by the Board's committee on at least a quarterly
basis.
The Bank's current policies generally limit securities investments to U.S.
Government and agency securities, municipal bonds, and corporate debt
obligations as well as investments in preferred and common stock of government
agencies, such as Fannie Mae, Freddie Mac and the Federal Home Loan Bank
("federal agency securities"). Securities in these categories are classified as
"investment securities" for financial reporting purposes. The policy also
permits investments in mortgage-backed securities, including pass-through
securities issued and guaranteed by
86
<PAGE>
Fannie Mae, Freddie Mac and Ginnie Mae as well as collateralized mortgage
obligations ("CMOs") issued or backed by securities issued by these government
agencies. Also permitted are investments in securities issued or backed by the
Small Business Administration and asset-backed securities collateralized by auto
loans, credit card receivables, and home equity and home improvement loans. The
Bank's current investment strategy uses a risk management approach of
diversified investing in fixed-rate securities with short- to intermediate-term
maturities, as well as adjustable-rate securities, which may have a longer term
to maturity. The emphasis of this approach is to increase overall investment
securities yields while managing interest rate risk. To accomplish these
objectives, the Bank focuses on investments in mortgage-backed securities and
CMOs. In addition, U.S. Government and other non-amortizing securities are used
for call protection and liquidity.
87
<PAGE>
The composition and maturities of the investment securities portfolio (debt
securities) and the mortgage-backed securities portfolio at June 30, 1998 are
summarized in the following table. Maturities are based on the final
contractual payment dates, and do not reflect the impact of prepayments or
redemptions that may occur.
<TABLE>
<CAPTION>
MORE THAN ONE YEAR MORE THAN THAN FIVE YEARS
ONE YEAR OR LESS THROUGH FIVE YEARS THROUGH TEN YEARS
-------------------- -------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AMORTIZED AVERAGE AMORTIZED AVERAGE AMORTIZED AVERAGE
COST YIELD COST YIELD COST YIELD
--------- --------- --------- --------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT SECURITIES:
U.S. Government
securities.............. $18,974 5.50% $17,231 6.15% $ -- --%
Federal agency
obligations............. 1,030 5.79 26.507 5.86 -- --
Corporate debt securities 1,998 5.35 -- -- -- --
Municipal and other
securities.............. 285 5.35 26 8.02 -- --
------- ------- ----------
Total................. $22,287 5.49% $43,764 5.97% $ -- --%
======= ==== ======= ==== ========== =======
MORTGAGE-BACKED SECURITIES:
Ginnie Mae............... $ -- --% $ 13 7.50% $ 1,390 7.61%
Fannie Mae............... -- -- 8,786 6.07 13,586 6.15
Freddie Mac.............. 3,078 5.60 1,287 7.31 8,846 6.62
CMOs and REMICs.......... -- -- -- -- 12,148 6.24
Other.................... -- -- -- -- -- --
------- ------- ----------
Total.................. $ 3,078 5.60% $10,086 6.23% $35,970 6.35%
======= ==== ======= ==== ========== =======
<CAPTION>
MORE THAN TEN YEARS TOTAL SECURITIES
------------------- -----------------------------
WEIGHTED WEIGHTED
AMORTIZED AVERAGE AMORTIZED FAIR AVERAGE
COST YIELD COST VALUE YIELD
--------- -------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INVESTMENT SECURITIES:
U.S. Government
securities.............. $ -- --% $ 36,205 $ 36,348 5.81%
Federal agency
obligations............. -- -- 27,537 27,495 5.85
Corporate debt securities -- -- 1,998 1,996 5.35
Municipal and other
securities.............. 400 6.75 711 711 6.25
------- -------- --------
Total................. $ 400 6.75% $ 66,451 $ 66,550 5.81%
======= ==== ======== ======== ====
MORTGAGE-BACKED SECURITIES:
Ginnie Mae............... $ 5,498 7.15% $ 6,901 $ 6,983 7.25%
Fannie Mae............... 17,947 6.65 40,319 40,399 6.35
Freddie Mac.............. 30,562 6.96 43,773 44,269 6.81
CMOs and REMICs.......... 23,344 6.23 35,492 35,757 6.23
Other.................... 6,336 6.82 6,336 6,430 6.82
------- -------- --------
Total.................. $83,687 6.69% $132,821 $133,838 6.49%
======= ==== ======== ======== ====
</TABLE>
88
<PAGE>
INVESTMENT SECURITIES. At June 30, 1998, the Bank held $68.8 million, or
10.1% of total assets, in investment securities, consisting primarily of U.S.
Government and agency obligations with short- to medium-term maturities (one to
five years). While these securities generally provide lower yields than other
investments such as mortgage-backed securities, the Bank's current investment
strategy is to maintain investments in such instruments to the extent
appropriate for liquidity purposes, as collateral for borrowings, and for
prepayment protection.
SFAS No. 115 requires the Bank to designate its securities as held to
maturity, available for sale, or trading, depending on the Bank's ability and
intent. The Bank does not have a trading portfolio. As of June 30, 1998, $48.6
million of the investment securities portfolio, or 7.2% of total assets, was
classified as available for sale. At such date, $20.2 million of the investment
securities portfolio, or 3.0% of total assets, was classified as held to
maturity.
The following table sets forth the composition of the Bank's investment
securities portfolio at the dates indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------------------------------------
JUNE 30, 1998 1997 1996 1995
---------------- ---------------- ---------------- ----------------
AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE COST VALUE COST VALUE
------- ------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY:
U.S. Government securities........... $ 8,979 $ 8,975 $ 8,952 $ 8,913 $13,888 $13,763 $23,945 $23,774
Federal agency obligations........... 10,507 10,493 12,521 12,457 7,514 7,307 13,506 13,521
Municipal and other securities....... 711 711 722 721 736 730 469 469
------- ------- ------- ------- ------- ------- ------- -------
Total investment securities held
to maturity................. 20,197 20,179 22,195 22,091 22,138 21,800 37,920 37,764
------- ------- ------- ------- ------- ------- ------- -------
SECURITIES AVAILABLE FOR SALE:
U.S. Government securities........... 27,227 27,372 27,273 27,387 24,185 24,046 7,123 7,144
Federal agency obligations........... 17,029 17,003 15,993 15,948 16,976 16,814 9,974 10,166
Corporate debt securities............ 1,998 1,996 3,007 3,005 4,037 4,033 4,078 4,045
Equity securities.................... 2,017 2,258 2,017 2,177 2,017 2,420 17 101
------- ------- ------- ------- ------- ------- ------- -------
Total investment securities
available for sale.......... 48,271 48,629 48,290 48,517 47,215 47,313 21,192 21,456
------- ------- ------- ------- ------- ------- ------- -------
Total investment securities...... $68,468 $68,808 $70,485 $70,608 $69,353 $69,113 $59,112 $59,220
======= ======= ======= ======= ======= ======= ======= =======
Weighted average term to maturity...... 2 years 2 years 2 years 2 years
</TABLE>
U.S. Government and Agency Obligations. At June 30, 1998, the Bank's U.S.
Treasury securities portfolio totaled $36.4 million, or 5.4% of total assets, of
which $27.3 million was classified as available for sale and $9.0 million was
classified as held to maturity. All of the Bank's U.S. Treasury securities at
that date had maturities of less than five years, with a weighted average yield
of 5.81%. At June 30, 1998, the federal agency securities portfolio totaled
$27.5 million, or 4.1% of total assets, of which $17.0 million was classified as
available for sale and $10.5 million was classified as held to maturity. All of
the Bank's agency securities had maturities of less than five years, with a
weighted average yield of 5.85%. The agency securities portfolio includes both
non-callable and callable debentures. The agency debentures are callable on a
quarterly basis following an initial holding period of from twelve to twenty-
four months.
Corporate Bonds and Other Debt Securities. At June 30, 1998, the Bank held
one corporate debt security, in the amount of $2.0 million, which was classified
as available for sale. This security had a maturity of less than one year and a
yield of 5.35%. Although corporate bonds may offer a higher yield than that of a
U.S. Treasury security of comparable duration, corporate bonds also may have a
higher risk of default due to adverse changes in the creditworthiness of the
issuer. In recognition of this potential risk, the Bank's policy limits
investments in corporate bonds to securities with maturities of three years or
less and rated "AA" or better by at least one nationally recognized rating
agency, and to a total investment of no more than $2.0 million per issuer and a
total portfolio limit of $10.0 million. Bank policy limits investments in
floating-rate corporate bonds to securities with maturities of five years or
less and rated "AA" or better, and to a total investment of no more than $2.0
million per issuer and a total portfolio limit of $20.0 million. At June 30,
1998, the Bank held two bonds issued by states and political subdivisions in the
amount of $685,000. The bonds are not rated and have an estimated fair value of
$685,000.
89
<PAGE>
Equity Securities. At June 30, 1998, the Bank's equity securities
portfolio totaled $2.2 million, all of which was classified as available for
sale, and consisted of preferred stock issued by Freddie Mac and Fannie Mae.
The Bank also held $3.7 million of common stock in the FHLB of New York as a
condition of membership. The Bank benefits from its investment in common and
preferred stock due to a tax deduction the Bank receives with regard to
dividends paid by domestic corporate issuers on equity securities held by other
corporate entities, such as the Bank. The Bank's policy limit for aggregate
equity investments (other than FHLB stock) is $5.0 million and the amount
invested in any single issuer may not exceed $2.5 million. The Bank's current
policies permit the purchase of preferred stock of U.S. Government-sponsored or
quasi-government agencies such as those described above.
MORTGAGE-BACKED SECURITIES. The Bank purchases mortgage-backed securities
in order to: (i) generate positive interest rate spreads with minimal
administrative expense; (ii) lower credit risk as a result of the guarantees
provided by Freddie Mac, Fannie Mae and Ginnie Mae; and (iii) increase
liquidity. The Bank invests primarily in mortgage-backed securities issued or
sponsored by Fannie Mae, Freddie Mac, and Ginnie Mae. The Bank also invests to
a lesser extent in securities backed by the Small Business Administration, or
agencies of the U.S. government.
Mortgage-backed securities are created by pooling mortgages and issuing a
security collateralized by the pool of mortgages with an interest rate that is
less than the interest rate on the underlying mortgages. Mortgage-backed
securities typically represent a participation interest in a pool of single-
family or multi-family mortgages, although most of the Bank's mortgage-backed
securities investments are collateralized by single-family mortgages. The
issuers of such securities (generally U.S. Government agencies and government
sponsored enterprises, including Fannie Mae, Freddie Mac and Ginnie Mae) pool
and resell the participation interests in the form of securities to investors,
such as the Bank, and guarantee the payment of principal and interest to these
investors. Mortgage-backed securities generally yield less than the loans that
underlie such securities because of the cost of payment guarantees, credit
enhancements and servicing fees. However, mortgage-backed securities are
usually more liquid than individual mortgage loans and may be used to
collateralize certain liabilities and obligations of the Bank. Investments in
mortgage-backed securities involve a risk that actual prepayments will be
greater than the estimated life of the security, which may require adjustments
to the amortization of any premium or accretion of any discount relating to such
instruments, thereby reducing the net yield on such securities. There is also
reinvestment risk associated with cash flows from and redemptions of such
securities. In addition, the market value of such securities may be adversely
affected by changes in interest rates. The Bank reviews prepayment estimates for
its mortgage-backed securities at purchase to ensure that prepayment assumptions
are reasonable considering the underlying collateral for the securities at issue
and current interest rates, and to determine the yield and estimated maturity of
the mortgage-backed securities portfolio.
90
<PAGE>
The following table sets forth the composition of the Bank's mortgage-
backed securities portfolio at the dates indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------------------------------------
JUNE 30, 1998 1997 1996 1995
-------------------- -------------------- -------------------- --------------------
AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE COST VALUE COST VALUE
--------- --------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY:
Pass-through securities:
Ginnie Mae................... $ 6,901 $ 6,983 $ 7,971 $ 8,114 $ 3,284 $ 3,362 $ 3,669 $ 3,634
Fannie Mae................... 28,810 28,784 29,674 29,565 35,604 34,806 28,588 28,007
Freddie Mac.................. 38,050 38,393 49,158 49,497 58,091 57,518 39,263 39,329
Other........................ 2,173 2,279 2,222 2,282 2,257 2,237 2,274 2,344
CMOs and REMICs............... 13,400 13,624 15,046 15,166 13,627 13,596 6,941 6,992
-------- -------- -------- -------- -------- -------- -------- --------
89,334 90,063 104,071 104,624 112,863 111,519 80,735 80,306
-------- -------- -------- -------- -------- -------- -------- --------
SECURITIES AVAILABLE FOR SALE:
Pass-through securities:
Fannie Mae................... 11,514 11,616 13,172 13,335 14,851 14,822 12,001 12,385
Freddie Mac.................. 5,736 5,876 7,364 7,571 12,355 12,489 14,525 14,685
Other........................ 4,145 4,151 4,584 4,567 4,896 4,882 3,151 3,147
CMOs and REMICs............... 22,092 22,132 10,665 10,680 9,334 9,289 112 112
-------- -------- -------- -------- -------- -------- -------- --------
43,487 43,775 35,785 36,153 41,436 41,482 29,789 30,329
-------- -------- -------- -------- -------- -------- -------- --------
Total mortgage-backed
securities................ $132,821 $133,838 $139,856 $140,777 $154,299 $153,001 $110,524 $110,635
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
The following table summarizes the activity in the mortgage-backed
securities portfolio for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JUNE 30, YEARS ENDED SEPTEMBER 30,
------------------- ------------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Amortized cost at beginning of period... $139,856 $154,299 $154,299 $110,524 $ 97,780
-------- -------- -------- -------- --------
Purchases:
Pass-through securities:
Fixed-rate........................... 9,465 2,920 8,085 27,881 13,105
Adjustable-rate...................... -- -- -- 25,673 7,540
CMOs and REMICs........................ 16,033 1,986 3,986 18,716 8,344
-------- -------- -------- -------- --------
Total purchases................... 25,498 4,906 12,071 72,270 28,989
-------- -------- -------- -------- --------
Principal repayments.................... (32,421) (19,401) (26,397) (28,450) (16,152)
Premium amortization and
discount accretion, net................ (112) (97) (117) (45) (93)
-------- -------- -------- -------- --------
Amortized cost at end of period......... $132,821 $139,707 $139,856 $154,299 $110,524
======== ======== ======== ======== ========
</TABLE>
Pass-Through Securities. At June 30, 1998, $97.6 million of the Bank's
mortgage-backed securities consisted of pass-through securities, which totaled
14.4% of total assets. In compliance with SFAS No. 115, $21.6 million of these,
or 3.2% of total assets, were classified as available for sale, while $75.9
million, or 11.2% of total assets, were classified as held to maturity. The
estimated fair value of these held to maturity securities at June 30, 1998 was
$76.4 million, which was $505,000 greater than the amortized cost of $75.9
million.
On the basis of amortized cost at June 30, 1998, the Bank's mortgage-backed
pass-through securities portfolio totaled $97.3 million, of which $3.1 million
had a weighted average yield of 5.60% and contractual maturities within one
year; $10.1 million had a weighted average yield of 6.23% and contractual
maturities within five years; $23.8 million had a weighted average yield of
6.41% and contractual maturities of five to ten years; and $60.3 million had a
weighted average yield of 6.87% and contractual maturities of over ten years.
However, the actual maturity of a mortgage-backed security may be less than its
stated contractual maturity due to prepayments of the underlying mortgages.
Prepayments that are faster than anticipated may shorten the life of the
security and may result in a loss of any premiums paid and thereby reduce the
net yield on such securities. Although prepayments of underlying mortgages
depend on many factors, the difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates generally is the
most significant determinant of the rate of
91
<PAGE>
prepayments. During periods of declining mortgage interest rates, refinancing
generally increases and accelerates the prepayment of the underlying mortgages
and the related security. Under such circumstances, the Bank may be subject to
reinvestment risk because, to the extent that the mortgage-backed securities
prepay faster than anticipated, the Bank may not be able to reinvest the
proceeds of such repayments and prepayments at a comparable rate of return.
Conversely, in a rising interest rate environment prepayments may decline,
thereby extending the estimated life of the security and depriving the Bank of
the ability to reinvest cash flows at the increased rates of interest.
CMOs and REMICs. In addition to mortgage-backed pass-through securities,
the Bank invests in CMOs or collateralized mortgage obligations, including
REMICs. This portfolio is limited to CMOs and REMICs backed by Fannie Mae and
Freddie Mac. CMOs are a type of debt security issued by a special-purpose entity
that aggregates pools of mortgages and mortgage-backed securities and creates
different classes of CMO securities with varying maturities and amortization
schedules, as well as a residual interest, with each class possessing different
risk characteristics. The cash flows from the underlying collateral are
generally divided into "tranches" or classes whereby tranches have descending
priorities with respect to the distribution of principal and interest repayment
of the underlying mortgages and mortgage-backed securities, as opposed to pass-
through mortgage-backed securities where cash flows are distributed pro rata to
all security holders. In contrast to mortgage-backed securities from which cash
flow is received (and hence, prepayment risk is shared) pro rata by all
securities holders, the cash flow from the mortgages or mortgage-backed
securities underlying CMOs is paid in accordance with a predetermined priority
to investors holding various tranches of such securities or obligations. A
particular tranche of CMOs may, therefore, carry prepayment risk that differs
from that of both the underlying collateral and other tranches. Investments in
CMOs involve a risk that actual prepayments will differ from those estimated in
pricing the security, which may result in adjustments to the net yield on such
securities. Additionally, the market value of such securities may be adversely
affected by changes in market interest rates. Management believes these
securities may represent attractive alternatives relative to other investments
due to the wide variety of maturity, repayment and interest rate options
available.
At June 30, 1998, the Bank's CMO portfolio totaled $35.5 million, or 5.2%
of total assets, and consisted of CMOs issued by government sponsored agencies
such as Fannie Mae and Freddie Mac. Overall, the CMO portfolio at June 30, 1998
had a weighted average yield of 6.23%. The Bank owns both fixed-rate and
floating-rate CMOs. At June 30, 1998, $22.1 million of the CMO portfolio, or
3.3% of total assets, was classified as available for sale and $13.4 million, or
2.0% of total assets, was classified as held-to-maturity. The estimated fair
value of the Bank's held-to-maturity CMO portfolio at June 30, 1998 was $13.6
million, or $224,000 more than the amortized cost. The Bank's CMO portfolio at
June 30, 1998 included securities of $23.3 million for which the underlying
mortgage collateral had contractual maturities of over ten years. However, as
with mortgage-backed pass-through securities, the actual maturity of a CMO may
be less than its stated contractual maturity due to prepayments of the
underlying mortgages.
The Bank's practice is to limit fixed-rate CMO investments primarily in the
early to intermediate tranches, which have the greatest cash flow stability.
Floating rate CMOs are purchased with emphasis on the relative trade-offs
between life rate caps, prepayment risk, and interest rates. The Bank's current
policy with respect to CMOs limits investments to non-high risk securities
unless approval is given by the Board of Directors and an analysis is provided
on how a high-risk CMO will improve the overall interest rate risk of the Bank.
High-risk CMOs are defined as those securities exhibiting significantly greater
volatility of estimated average life and price relative to interest rates
compared to 30-year, fixed-rate securities.
SOURCES OF FUNDS
GENERAL. Deposits, repayments and prepayments of loans and securities,
proceeds from sales of loans and securities, proceeds from maturing securities
and cash flows from operations, are the primary sources of the Bank's funds for
use in lending, investing and for other general purposes. To a lesser extent,
the Bank uses borrowed funds (primarily FHLB advances) to fund its operations.
92
<PAGE>
DEPOSITS. The Bank offers a variety of deposit accounts with a range of
interest rates and terms. Its deposit accounts consist of savings accounts, NOW
accounts, checking accounts, money market accounts, school savings and club
accounts, and certificates of deposit. It offers certificates of deposit with
balances in excess of $100,000, as well as Individual Retirement Accounts
("IRAs") and other qualified plan accounts. The Bank provides commercial
checking accounts for small to moderately-sized businesses, as well as low-cost
checking account services for low-income customers. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Management Strategy" for a discussion of the Bank's intentions regarding new
products following the Offering.
At June 30, 1998, the Bank's deposits totaled $580.1 million. Interest-
bearing deposits totaled $525.0 million, and non-interest bearing demand
deposits totaled $55.1 million. NOW, savings and money market deposits totaled
$281.7 million at June 30, 1998. Also at that date, the Bank had a total of
$243.3 million in certificates of deposit, of which $180.5 million had
maturities of one year or less. Although the Bank has a significant portion of
its deposits in shorter-term certificates of deposit, management monitors
activity on these accounts and, based on historical experience and the Bank's
current pricing strategy, believes it will retain a large portion of such
accounts upon maturity.
The flow of deposits is influenced significantly by general economic
conditions, changes in money market rates, prevailing interest rates and
competition. The Bank's deposits are obtained predominantly from the areas in
which its branch offices are located. It relies primarily on competitive
pricing of its deposit products, customer service and long-standing
relationships with customers to attract and retain these deposits; however,
market interest rates and rates offered by competing financial institutions
significantly affect the Bank's ability to attract and retain deposits. The Bank
uses traditional means of advertising its deposit products, including radio and
print media, and generally does not solicit deposits from outside its market
area. While certificates of deposit in excess of $100,000 are accepted by the
Bank, and may be subject to preferential rates, it does not actively solicit
such deposits as they are more difficult to retain than core deposits.
Historically, the Bank has not used brokers to obtain deposits.
The following table summarizes the deposit activity of the Bank for the
periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JUNE 30, YEARS ENDED SEPTEMBER 30,
-------------------------- ---------------------------------------
1998 1997 1997 1996 1995
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Balance at beginning of period.................. $ 546,846 $ 545,286 $ 545,286 $ 443,667 $ 419,808
Deposits........................................ 1,397,782 1,194,785 1,621,185 1,303,205 1,010,258
Withdrawals..................................... (1,378,661) (1,195,933) (1,638,170) (1,323,389) (1,000,617)
Deposit liabilities assumed in connection with
purchase of branch offices..................... -- -- -- 104,477 --
Interest credited............................... 14,108 13,796 18,545 17,326 14,218
----------- ----------- ----------- ----------- -----------
Balance at end of period........................ $ 580,075 $ 557,934 $ 546,846 $ 545,286 $ 443,667
=========== =========== =========== =========== ===========
Net increase during the period:
Amount......................................... $ 33,229 $ 12,648 $ 1,560 $ 101,619 $ 23,859
Percent........................................ 6.1% 2.3% 0.3% 22.9% 5.7%
</TABLE>
93
<PAGE>
The following table sets forth the distribution of the Bank's deposit
accounts, by account type, at the dates indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------
JUNE 30, 1998 1997
------------------------------ --------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AMOUNT PERCENT RATE AMOUNT PERCENT RATE
-------- --------- --------- -------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits............ $ 55,072 9.5% --% $ 49,221 9.0% --%
NOW deposits............... 40,969 7.1 1.25 32,985 6.0 1.25
Savings deposits........... 161,263 27.8 2.25 153,171 28.0 2.25
Money market deposits...... 79,436 13.7 2.96 75,339 13.8 2.96
-------- ----- -------- -----
336,740 58.1 1.93 310,716 56.8 1.96
Certificates of deposit.... 243,335 41.9 5.22 236,130 43.2 5.31
-------- ----- -------- -----
Total deposits............. $580,075 100.0% 3.31% $546,846 100.0% 3.40%
======== ===== ==== ======== ===== ====
<CAPTION>
SEPTEMBER 30,
-----------------------------------------------------
1996 1995
------------------------- --------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AMOUNT PERCENT RATE AMOUNT PERCENT RATE
-------- -------- ----- -------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits............ $ 42,700 7.8% --% $ 28,153 6.3% --%
NOW deposits............... 30,950 5.7 1.25 25,664 5.9 1.25
Savings deposits........... 153,565 28.2 2.25 143,722 32.4 2.25
Money market deposits...... 77,111 14.1 2.97 59,149 13.3 3.20
-------- ----- -------- -----
304,326 55.8 2.02 256,688 57.9 2.12
Certificates of deposit.... 240,960 44.2 5.10 186,979 42.1 5.37
-------- ----- -------- -----
Total deposits............. $545,286 100.0% 3.38% $443,667 100.0% 3.49%
======== ===== ==== ======== ===== ====
</TABLE>
94
<PAGE>
The following table sets forth, by interest rate ranges, information
concerning the Bank's certificates of deposit at the dates indicated.
<TABLE>
<CAPTION>
AT JUNE 30, 1998
------------------------------------------------------------------- TOTAL AT
PERIOD TO MATURITY SEPTEMBER 30,
------------------------------------------------------------------- -----------------------
LESS THAN ONE TO TWO TO MORE THAN PERCENT
INTEREST RATE RANGE ONE YEAR TWO YEARS THREE YEARS THREE YEARS TOTAL OF TOTAL 1997 1996
- -------------------- --------- --------- ----------- ----------- -------- --------- -------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4.00% and below...... $ 719 $ -- $ -- $ -- $ 719 0.3% $ 716 $ 925
4.01% to 5.00%....... 79,264 7,728 1,590 7 88,589 36.4 68,707 136,272
5.01% to 6.00%....... 90,720 31,519 5,340 5,116 132,695 54.5 151,729 74,627
6.01% to 7.00%....... 9,715 6,705 12 400 16,832 6.9 9,557 24,819
7.01% and above...... 97 4,051 146 206 4,500 1.9 5,421 4,317
-------- ------- ------ ------ -------- ----- -------- --------
Total.......... $180,515 $50,003 $7,088 $5,729 $243,335 100.0% $236,130 $240,960
======== ======= ====== ====== ======== ===== ======== ========
</TABLE>
The following table sets forth the amount of the Bank's certificates of
deposit by time remaining until maturity as of June 30, 1998.
<TABLE>
<CAPTION>
MATURITY
--------------------------------------------
3 MONTHS OVER 3 TO 6 OVER 6 TO 12 OVER 12
OR LESS MONTHS MONTHS MONTHS TOTAL
-------- ----------- ------------ ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Certificates of deposit less than $100,000........ $59,149 $39,836 $64,074 $54,496 $217,555
Certificates of deposit of $100,000 or more/(1)/.. 7,692 3,215 6,549 8,324 25,780
------- ------- ------- ------- --------
Total of certificates of deposit................. $66,841 $43,051 $70,623 $62,820 $243,335
======= ======= ======= ======= ========
- -----------------------
</TABLE>
/(1)/ The weighted average interest rates for these accounts, by maturity
period, are 4.90% for 3 months or less; 4.88% for 3 to 6 months; 5.38% for
6 to 12 months; and 5.76% for over 12 months. The overall weighted average
interest rate for accounts of $100,000 or more was 5.30%.
BORROWINGS. At June 30, 1998, the Bank had $25.0 million of borrowings,
all of which consisted of FHLB advances. FHLB advances were $24.0 million as of
September 30, 1997 and $13.0 million as of September 30, 1996. At June 30,
1998, the Bank had access to additional FHLB borrowings of up to $178.7 million.
The following table sets forth information concerning balances and interest
rates on the Bank's FHLB advances at the dates and for the periods indicated.
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS AT OR FOR THE
ENDED JUNE 30, YEARS ENDED SEPTEMBER 30,
---------------- -----------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at end of period.......................... $25,048 $13,000 $24,000 $13,000 $ 13,900
Average balance during period. 29,009 25,451 23,730 22,686 9,139
Maximum outstanding at any month end............. 33,000 38,000 38,000 56,400 20,300
Weighted average interest rate at end of period... 6.13% 6.88% 6.69% 6.61% 7.15%
Average interest rate during period............... 5.96% 6.20% 6.27% 6.49% 6.83%
</TABLE>
SUBSIDIARY ACTIVITIES
Provest Services Corp. I is a wholly-owned subsidiary of the Bank holding
an investment in a limited partnership which operates an assisted-living
facility. A percentage of the units in the facility are for low-income
individuals. Provest Services Corp. II is a wholly-owned subsidiary of the Bank
which has engaged a third-party
95
<PAGE>
provider to sell annuities and mutual funds to the Bank's customers. Through
June 30, 1998, the activities of these subsidiaries have had an insignificant
effect on the Bank's consolidated financial condition and results of operations.
COMPETITION
The Bank faces significant competition in both originating loans and
attracting deposits. The New York metropolitan area has a high concentration of
financial institutions, most of whom are significantly larger institutions that
have greater financial resources than the Bank, and all of which are competitors
of the Bank to varying degrees. The Bank's competition for loans comes
principally from commercial banks, savings banks, mortgage banking companies,
credit unions and insurance companies and other financial service companies.
Its most direct competition for deposits has historically come from commercial
banks, savings banks and credit unions. The Bank faces additional competition
for deposits from non-depository competitors such as the mutual fund industry,
securities and brokerage firms and insurance companies. Further competition may
arise as restrictions on the interstate operations of financial institutions are
removed.
96
<PAGE>
PROPERTIES
The Bank currently conducts its business through eleven full-service
banking offices. The following table sets forth information concerning each of
the Bank's offices as of June 30, 1998.
<TABLE>
<CAPTION>
NET BOOK VALUE
ORIGINAL OF PROPERTY OR
LEASED YEAR DATE OF LEASEHOLD
OR LEASED OR LEASE IMPROVEMENTS AT
LOCATION OWNED ACQUIRED EXPIRATION JUNE 30, 1998
- ----------------------------- --------- --------- ---------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ADMINISTRATIVE/HOME OFFICE:
Corporate Office Leased 1994 2009 $398
400 Rella Boulevard
Montebello, NY 10901
BRANCH OFFICES:
Haverstraw Office Leased 1995 2014 52
38-40 New Main Street
Haverstraw, NY 10927
Orangeburg Office Owned 1972 N/A 173
Route 303 at Kings Highway
Orangeburg, NY 10962
Stony Point Office Owned 1973 N/A 179
Route 9W
Stony Point, NY 10980
New City Office Owned 1966 N/A 915
179 South Main Street
New City, NY 10956
Nanuet Office (1) Leased 1996 2025 966
Route 59
Nanuet, NY 10954
Spring Valley Office Owned 1996 N/A 85
72 West Eckerson Road
Spring Valley, NY 10977
Congers Office Leased 1984 1999 202
1 Lake Road West
Congers, NY 10920
Mount Ivy Office Leased 1988 2009 144
120 Route 202
Mount Ivy, NY 10970
Suffern Office Owned 1981 N/A 263
71 Lafayette Avenue
Suffern, NY 10901
Airmont Office Owned 1975 N/A 202
196 Route 59
Airmont, NY 10901
Pearl River Office Leased 1994 1999 66
Shop-Rite Supermarket
26 North Middletown Road
Pearl River, NY 10965
</TABLE>
______________________________
(1) The Bank owns the building and leases the land.
97
<PAGE>
LEGAL PROCEEDINGS
The Bank is a defendant in a lawsuit, Patrick Gawrysiak a/k/a Patrick Gray
------------------------------------
v. Provident Bank, brought by a prospective purchaser of REO property, alleging
- -----------------
breach of contract, negligence, consumer fraud and civil conspiracy. The
plaintiff brought the lawsuit in the Superior Court of New Jersey, Bergen County
Law Division, and is seeking compensatory damages of $500,000, exemplary damages
of $1.0 million, "nominal" damages of $1.0 million and punitive damages of $1.0
million. Although there can be no certainty as to the outcome of this matter,
management believes the claim is baseless and has retained counsel to vigorously
contest the claim.
The Bank is not involved in any other pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business which, in
the aggregate, involved amounts which are believed by management to be
immaterial to the financial condition and operations of the Bank.
PERSONNEL
As of June 30, 1998, the Bank had 167 full-time employees and 46 part-time
employees. The employees are not represented by a collective bargaining unit
and the Bank considers its relationship with its employees to be good. See
"Management of the Bank--Benefit Plans" for a description of certain
compensation and benefit programs offered to the Bank's employees.
TAXATION
FEDERAL TAXATION
GENERAL. The following is a discussion of material federal income tax
matters and does not purport to be a comprehensive description of the federal
income tax rules applicable to the Bank or the Company. For federal income tax
purposes, after the Reorganization, the Company and the Bank will file
consolidated income tax returns and report their income on a fiscal year basis
using the accrual method of accounting and will be 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.
Historically, savings associations, such as the Bank, were permitted to
compute bad debt deductions using either the experience method or the percentage
of taxable income method. However, for years beginning after December 31, 1995,
no savings association may use the percentage of taxable income method of
computing its allowable bad debt deduction for tax purposes. Instead, all
savings associations are required to compute their allowable deduction using
either the experience method or the specific charge-off method. As a result of
the repeal of the percentage of taxable income method, reserve additions (tax
bad debt deductions) made after 1987 using the percentage of taxable income
method generally must be included in future taxable income (or "recaptured")
over a six-year period, although a two-year delay may be permitted for
associations meeting a residential mortgage loan origination test. The Bank has
established a deferred tax liability for the amount of taxes to be paid under
this recapture rule. In addition, the pre-1988 reserve, for which a deferred
tax liability has not been recorded, need not be recaptured into income unless:
(i) the Bank's retained earnings represented by the pre-1988 reserve are used
for purposes other than to absorb losses from bad debts, including excess
dividend distributions or distributions in liquidation; (ii) the Bank redeems
its stock; (iii) the Bank fails to meet the definition provided by the Code for
a bank; or (iv) there is a change in the federal tax law. See Note 10 of the
Notes to Consolidated Financial Statements for a discussion of the Bank's tax
bad debt reserves.
DISTRIBUTIONS. If the Bank makes "non-dividend distributions" to the
Company, such distribution will be considered to have been made from the Bank's
unrecaptured tax bad debt reserves (including the balance of its reserves as of
December 31, 1987) and then from the Bank's supplemental reserve for losses on
loans, to the extent thereof, and an amount based on the amount distributed (but
not in excess of the amount of such reserves) will be included in the Bank's
income. Non-dividend distributions include distributions in excess of the
Bank's current and accumulated earnings and profits, as calculated for federal
income tax purposes, distributions in redemption of stock,
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and distribution in partial or complete liquidation. Dividends paid out of the
Bank's current or accumulated earnings and profits will not be so included in
the Bank's income.
The amount of additional taxable income created from a non-dividend
distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution. Thus, if, after the
Reorganization, the Bank makes a non-dividend distribution to the Company,
approximately one and one-half times the amount of such distribution (but not in
excess of the amount of such reserves) would be includable in income for federal
income tax purposes, assuming a 34% federal corporate income tax rate. See
"Regulation" and "Dividend Limitations" for limits on the payment of dividends
by the Bank. The Bank does not intend to pay dividends that would result in a
recapture of any portion of its tax bad debt reserves.
Depending on the composition of its items of income and expense, a savings
association may be subject to the alternative minimum tax. A savings association
must pay an alternative minimum tax on the amount (if any) by which 20% of
alternative minimum taxable income ("AMTI"), as reduced by an exemption varying
with AMTI, exceeds the regular tax due. AMTI equals regular taxable income
increased or decreased by certain tax preferences and adjustments, including
depreciation deductions in excess of that allowable for alternative minimum tax
purposes, tax-exempt interest on most private activity bonds issued after August
7, 1986 (reduced by any related interest expense disallowed for regular tax
purposes), and 75% of the excess of adjusted current earnings over AMTI (before
this adjustment and before any alternative tax net operating loss). AMTI may be
reduced only up to 90% by net operating loss carryovers, but alternative minimum
tax paid can be credited against regular tax due in later years. Under pending
legislative proposals, for taxable years beginning after December 31, 1997 and
before January 1, 2009, an environmental tax of 0.12% of the excess of AMTI
(with certain modification) over $2 million would be imposed on corporations,
including the Bank, whether or not an AMT is paid.
For federal income tax purposes, the Bank files fiscal year tax returns and
reports its income and expenses on the accrual method. The Bank's federal income
tax returns have been audited for tax years through fiscal 1995, and all tax
deficiencies have been satisfied.
NEW YORK STATE TAXATION
The Company and the Bank will report income on a combined fiscal year basis
to New York State. The New York State Franchise Tax on corporations is imposed
in an amount equal to the greater of (a) 9% of "entire net income" allocable to
New York State, (b) 3% of "alternative entire net income" allocable to New York
State, (c) 0.01% of the average value of assets allocable to New York State or
(d) a nominal minimum tax. Entire net income is based on federal taxable
income, subject to certain modifications. Alternative entire net income is
equal to entire net income without certain modifications.
A temporary Metropolitan Transportation Business Tax Surcharge on banking
corporations doing business in the Metropolitan District has been applied since
1982. The Bank transacts a significant portion of its business within this
District and is subject to this surcharge. The current surcharge rate is 17% of
the State franchise tax liability.
In July 1996, New York State enacted legislation to preserve the use of the
percentage of taxable income bad debt deduction for state tax purposes. In
general, the legislation provides for a deduction equal to 32% of the Bank's New
York State taxable income, which is comparable to the deductions permitted under
the prior tax law. The legislation also provides for a floating base year, which
allows the Bank to change from the percentage of taxable income method to the
experience method without recapture of any reserve. Previously, the Bank had
established a deferred New York State tax liability for the excess of its New
York State tax bad debt reserves over the amount of its base-year New York State
reserves. Since the new legislation effectively eliminated the reserves in
excess of the base-year balances, the Bank reduced its deferred tax liability by
$500,000 (with a corresponding reduction in income tax expense) during the year
ended September 30, 1996.
Generally, New York State tax law has requirements similar to federal
requirements regarding the recapture of base-year tax bad debt reserves. One
notable exception is that, after the 1996 legislation, New York continues
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to require that at least 60% of the Bank's assets consist of specified assets
(generally, loans secured by residential real estate or deposits, educational
loans, cash and certain government obligations). The Bank expects to continue to
meet the 60% requirement and does not anticipate engaging in any of the
transactions which would require recapture of its base-year reserves (such as
changing to a commercial bank charter). Accordingly, under SFAS No. 109, it has
not provided any deferred tax liability on such reserves. See also Note 10 of
the Notes to Consolidated Financial Statements.
For further information relating to the tax consequences of the
Reorganization, see "The Reorganization--Principal Effects of Reorganization--
Tax Effects."
REGULATION
GENERAL
As a federally chartered, SAIF-insured savings bank, the Bank is subject to
examination, supervision and extensive regulation by the OTS and the FDIC. This
regulation and supervision establishes a comprehensive framework of activities
in which an institution can engage and is intended primarily for the protection
of the insurance fund and depositors. The Bank also is subject to regulation by
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") governing reserves to be maintained against deposits and certain other
matters. The OTS examines the Bank and prepares reports for the consideration
of the Bank's Board of Directors. The FDIC also has examination authority over
the Bank in its role as the administrator of the SAIF. The Bank's relationship
with its depositors and borrowers also is regulated to a great extent by both
federal and state laws, especially in such matters as the ownership of savings
accounts and the form and content of the Bank's mortgage documents. Any change
in such regulation, whether by the FDIC, OTS, or Congress, could have a material
adverse impact on the Company and the Bank and their operations.
FEDERAL REGULATION OF SAVINGS INSTITUTIONS
BUSINESS ACTIVITIES. The activities of savings institutions are governed
by the Home Owners' Loan Act, as amended (the "HOLA") and, in certain respects,
the Federal Deposit Insurance Act (the "FDI Act") and the regulations issued by
the agencies to implement these statutes. These laws and regulations delineate
the nature and extent of the activities in which savings association may engage.
The description of statutory provisions and regulations applicable to savings
associations set forth herein does not purport to be a complete description of
such statutes and regulations and their effect on the Bank.
LOANS TO ONE BORROWER. Under the HOLA, savings institutions are generally
subject to the national bank limits on loans to a single or related group of
borrowers. Generally, this limit is 15% of the Bank's unimpaired capital and
surplus, and an additional 10% of unimpaired capital and surplus if such loan is
secured by readily-marketable collateral, which is defined to include certain
financial instruments and bullion. The OTS by regulation has amended the loans
to one borrower rule to permit savings associations meeting certain requirements
to extend loans to one borrower in additional amounts under circumstances
limited essentially to loans to develop or complete residential housing units.
QUALIFIED THRIFT LENDER TEST. In general, savings associations are
required to maintain at least 65% of their portfolio assets in certain qualified
thrift investments (which consist primarily of loans and other investments
related to residential real estate and certain other assets). A savings
association that fails the qualified thrift lender test is subject to
substantial restrictions on activities and to other significant penalties.
Recent legislation also expands the QTL test to provide savings
associations with greater authority to lend and diversify their portfolios. In
particular, credit card and education loans may now be made by savings
associations without regard to any percentage-of-assets limit, and commercial
loans may be made in an amount up to 10% of total assets, plus an additional 10%
for small business loans. Loans for personal, family and household purposes
(other than credit card, small business and educational loans) are now included
without limit with other
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assets that, in the aggregate, may account for up to 20% of total assets. The
Bank exceeded the applicable requirements at June 30, 1998.
A savings association that fails to meet the QTL test must either convert
to a bank (but its deposit insurance assessments and payments will be those of
and paid to the SAIF) or be subject to the following penalties: (i) it may not
enter into any new activity except for those permissible for a national bank and
for a savings association; (ii) its branching activities will be limited to
those of a national bank; (iii) it will not be eligible for any new FHLB
advances; and (iv) it will be bound by regulations applicable to national banks
regarding the payment of dividends. Three years after failing the QTL test, the
association must (i) dispose of any investment or activity not permissible for a
national bank and a savings association, and (ii) repay all outstanding FHLB
advances. If such a savings association is controlled by a savings and loan
holding company, then such holding company must, within a prescribed time
period, become registered as a bank holding company and become subject to all
rules and regulations applicable to bank holding companies (including
restrictions as to the scope of permissible business activities).
LIMITATIONS ON CAPITAL DISTRIBUTIONS. OTS regulations impose limitations
upon all capital distributions by savings institutions, 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. The rule establishes three tiers of institutions, which are
based primarily on an institution's capital level. An institution that exceeds
all fully phased-in capital requirements before and after a proposed capital
distribution ("Tier 1 Bank") and has not been advised by the OTS that it is in
need of more than normal supervision, could, after prior notice but without the
approval of the OTS, make capital distributions during a calendar year equal to
the greater of: (i) 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 (ii) 75% of its net earnings for the previous four
quarters; provided that the institution would not be undercapitalized, as that
term is defined in the OTS Prompt Corrective Action regulations, following the
capital distribution. Any additional capital distributions would require prior
regulatory approval. In the event the savings institution's capital fell below
its fully-phased in requirement or the OTS notified it that it was in need of
more than normal supervision, the institution's ability to make capital
distributions could be restricted. In addition, the OTS could prohibit a
proposed capital distribution by any institution, which would otherwise be
permitted by the regulation, if the OTS determines that such distribution would
constitute an unsafe or unsound practice.
LIQUIDITY. The Bank is required to maintain an average daily balance of
specified liquid assets equal to a monthly average of not less than a specified
percentage (currently 4%) of its net withdrawable deposit accounts plus
borrowings payable in one year or less. Monetary penalties may be imposed for
failure to meet these liquidity requirements. The Bank's average liquidity
ratio at June 30, 1998 exceeded the then applicable requirements.
COMMUNITY REINVESTMENT ACT AND FAIR LENDING LAWS. Savings association
share a responsibility under the Community Reinvestment Act ("CRA") and related
regulations of the OTS to help meet the credit needs of their communities,
including low- and moderate-income neighborhoods. In addition, the Equal Credit
Opportunity Act and the Fair Housing Act (together, the "Fair Lending Laws")
prohibit lenders from discriminating in their lending practices on the basis of
characteristics specified in those statutes. An institution's failure to comply
with the provisions of CRA could, at a minimum, result in regulatory
restrictions on its activities, and failure to complete with the Fair Lending
Laws could result in enforcement actions by the OTS, as well as other federal
regulatory agencies and the Department of Justice. The Bank received an
outstanding CRA rating under the current CRA regulations in its most recent
federal examination by the OTS.
TRANSACTIONS WITH AFFILIATES. The Bank's authority to engage in
transactions with related parties or "affiliates" (i.e., any company that
controls or is under common control with an institution, including the Company
and any nonsavings institution subsidiaries) or to make loans to certain
insiders, is limited by Sections 23A and 23B of the Federal Reserve Act ("FRA").
Section 23A limits the aggregate amount of transactions with any individual
affiliate to 10% of the capital and surplus of the savings institution and also
limits the aggregate amount of transactions with all affiliates to 20% of the
savings institution's capital and surplus. Certain transactions with 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
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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 institution as those prevailing at the time for
comparable transactions with nonaffiliated companies.
ENFORCEMENT. Under the FDI Act, the OTS has primary enforcement
responsibility over savings institutions and has the authority to bring
enforcement action against all "institution-related parties," including
stockholders, and attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on an
insured institution. Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of officers and/or
directors of the institutions, receivership, conservatorship or the termination
of deposit insurance. Civil penalties cover a wide range of violations and
actions, and range up to $25,000 per day, unless a finding of reckless disregard
is made, in which case penalties may be as high as $1 million per day. 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 institution.
If action is not taken by the Director, the FDIC has authority to take such
action under certain circumstances.
STANDARDS FOR SAFETY AND SOUNDNESS. The FDI Act requires each federal
banking agency to prescribe for all insured depository institutions standards
relating to, among other things, internal controls, information systems and
audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, compensation, and such other operational and managerial
standards as the agency deems appropriate. The federal banking agencies adopted
Interagency Guidelines Prescribing Standards for Safety and Soundness
("Guidelines") to implement the safety and soundness standards required under
the FDI Act. The Guidelines set forth the safety and soundness standards that
the federal banking agencies use to identify and address problems at insured
depository institutions before capital becomes impaired. The Guidelines address
internal controls and information systems; internal audit systems; credit
underwriting; loan documentation; interest rate risk exposure; asset growth; and
compensation, fees and benefits. If the appropriate federal banking agency
determines that an institution fails to meet any standard prescribed by the
Guidelines, the agency may require the institution to submit to the agency an
acceptable plan to achieve compliance with the standard, as required by the FDI
Act. If an institution fails to meet these standards, the appropriate federal
banking agency may require the institution to submit a compliance plan.
CAPITAL REQUIREMENTS. The OTS capital regulations require savings
institutions to meet three capital standards: a 1.5% tangible capital standard,
a 3.0% leverage (core capital) standard, and an 8.0% risk-based capital
standard. Core capital is defined as common stockholders' equity (including
retained earnings), certain noncumulative perpetual preferred stock and related
surplus, minority interests in equity accounts of consolidated subsidiaries less
intangibles other than certain mortgage servicing rights ("MSRs") and purchased
credit card relationships. The OTS regulations require that, in meeting the
tangible, core and risk-based capital standards, institutions generally must
deduct investments in and loans to subsidiaries engaged in activities not
permissible for a national bank. In addition, the OTS prompt corrective action
regulation provides that a savings institution that has a leverage capital ratio
of less than 4.0% (3.0% for institutions receiving the highest CAMELS
examination rating) will be deemed to be "undercapitalized" and may be subject
to certain restrictions. See "--Prompt Corrective Regulatory Action."
The risk-based capital standard for savings institutions requires the
maintenance of total capital (which is defined as core capital and supplementary
capital) to risk-weighted assets of 8.0%. In determining the amount of risk-
weighted assets, assets and certain off-balance sheet assets items are
multiplied by a risk-weight of 0% to 100%, as assigned by the OTS capital
regulation based on the risks OTS believes are inherent in the type of asset.
The components of core capital are equivalent to those discussed earlier under
the 3.0% leverage standard. The components of supplementary capital currently
include cumulative preferred stock, long-term perpetual preferred stock,
mandatory convertible securities, subordinated debt and intermediate preferred
stock and, within specified limits, the allowance for loan losses. Overall, the
amount of supplementary capital included as part of total capital cannot exceed
100% of core capital.
The OTS has incorporated an interest rate risk component into its
regulatory capital rule. The final interest rate risk rule also adjusts the
risk-weighting for certain mortgage derivative securities. Under the rule,
savings associations with "above normal" interest rate risk exposure would be
subject to a deduction from total capital for
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purposes of calculating their risk-based capital requirements. 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)
that would result from a hypothetical 200-basis point increase or decrease in
market interest rates divided by the estimated economic value of the
association's assets, as calculated in accordance with guidelines set forth by
the OTS. A savings association whose measured interest rate risk exposure
exceeds 2% must deduct an interest rate component in calculating its total
capital under the risk-based capital rule. The interest rate risk component is
an amount equal to one-half of the difference between the institution'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. Under
the rule, there is a two quarter lag between the reporting date of an
institution's financial data and the effective date for the new capital
requirement based on that data. The rule also provides that the Director of the
OTS may waive or defer an association's interest rate risk component on a case-
by-case basis. The OTS has postponed the effective date of the capital component
in order to provide it with an opportunity to review the interest rate risk
approaches taken by the other federal banking agencies.
At June 30, 1998, the Bank met each of its capital requirements, in each
case on a fully phased-in basis. See "Regulatory Capital Compliance" for a table
which sets forth in terms of dollars and percentages (i) the OTS tangible, core
and risk-based capital requirements, compared to the Bank's historical amounts
and percentages at June 30, 1998 and (ii) pro forma amounts and percentages
based upon the issuance of the shares within the Offering Range and assuming
that a portion of the net proceeds are retained by the Company.
THRIFT CHARTER. Congress has been considering legislation in various forms
that would require federal thrifts, such as the Bank, to convert their charters
to national or state bank charters. Legislation enacted in 1996 required the
Treasury Department to prepare for Congress a comprehensive study on development
of a common charter for federal savings associations and commercial banks; and
provided for the merger of the BIF and the SAIF into a single deposit insurance
fund on January 1, 1999 provided the thrift charter was eliminated. The Bank
cannot determine whether, or in what form, such legislation may eventually be
enacted and there can be no assurance that any legislation that is enacted would
not adversely affect the Bank and the Company.
PROMPT CORRECTIVE REGULATORY ACTION
Under the OTS Prompt Corrective Action regulations, the OTS is required to
take certain supervisory actions against undercapitalized institutions, the
severity of which depends upon the institution's degree of capitalization.
Generally, a savings institution that has total risk-based capital of less than
8.0% or a leverage ratio or a Tier 1 core capital ratio that is less than 4.0%
is considered to be undercapitalized. A savings institution that has total
risk-based capital of less than 6.0%, a Tier 1 core risk-based capital ratio of
less than 3.0% or a leverage ratio that is less than 3.0% is considered to be
"significantly undercapitalized," and a savings institution that has a tangible
capital to assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." Subject to a narrow exception, the banking regulator is
required to appoint a receiver or conservator for an institution that is
"critically undercapitalized." The regulation also provides that a capital
restoration plan must be filed with the OTS within 45 days of the date an
institution receives notice that it is "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized." In addition, numerous
mandatory supervisory actions become immediately applicable to the institution,
including, but not limited to, restrictions on growth, investment activities,
capital distributions, and affiliate transactions. The OTS may also take any
one of a number of discretionary supervisory actions, including the issuance of
a capital directive and the replacement of senior executive officers and
directors.
At June 30, 1998, the Bank was categorized as "well capitalized," meaning
that the Bank's total risk-based capital ratio exceeded 10.0%, Tier I risk-based
capital ratio exceeded 6.0%, leverage capital ratio exceeded 5.0%, and the Bank
was not subject to a regulatory order, agreement or directive to meet and
maintain a specific capital level for any capital measure.
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INSURANCE OF DEPOSIT ACCOUNTS
The FDIC has adopted a risk-based deposit insurance 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, consisting of (1) well capitalized,
(2) adequately capitalized or (3) undercapitalized, and 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 which 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. The FDIC is authorized to raise the assessment rates in certain
circumstances. The FDIC has exercised this authority several times in the past
and may raise insurance premiums in the future. If such action is taken by the
FDIC, it could have an adverse effect on the earnings of the Bank.
FEDERAL HOME LOAN BANK SYSTEM
The Bank, as a federal association, is required to be a member of the FHLB
System, which consists of 12 regional FHLBs. The FHLB provides a central credit
facility primarily for member institutions. The Bank, as a member of the FHLB
of New York, is required to acquire and hold shares of capital stock in that
FHLB in an amount at least equal to 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, whichever is
greater. As of June 30, 1998, the Bank was in compliance with this requirement.
The FHLBs 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 dividends that the FHLBs pay to their members and
could also result in the FHLBs imposing a higher rate of interest on advances to
their members.
FEDERAL RESERVE SYSTEM
The Federal Reserve Board regulations require savings institutions to
maintain noninterest-earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). At June 30, 1998, the Bank was
in compliance with these reserve requirements. The balances maintained to meet
the reserve requirements imposed by the FRB may be used to satisfy liquidity
requirements imposed by the OTS.
HOLDING COMPANY REGULATION
GENERAL. The Mutual Holding Company and the Company are nondiversified
mutual savings and loan holding companies within the meaning of the HOLA. As
such, the Mutual Holding Company and the Company are registered with the OTS and
are subject to OTS regulations, examinations, supervision and reporting
requirements. In addition, the OTS has enforcement authority over the Mutual
Holding Company and the Company and any nonsavings 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 subsidiary savings
institution. As federal corporations, the Company and the Mutual Holding
Company are generally not subject to state business organizations law.
PERMITTED ACTIVITIES. Pursuant to Section 10(o) of the HOLA and OTS
regulations and policy, a Mutual Holding Company and a federally chartered mid-
tier holding company such as the Company may engage in the following activities:
(i) investing in the stock of a savings association; (ii) acquiring a mutual
association through the merger of such association into a savings association
subsidiary of such holding company or an interim savings association subsidiary
of such holding company; (iii) merging with or acquiring another holding
company, one of whose subsidiaries is a savings association; (iv) investing in a
corporation, the capital stock of which is available for purchase by a savings
association under federal law or under the law of any state where the subsidiary
savings association or associations share their home offices; (v) furnishing or
performing management services for a savings association subsidiary of such
company; (vi) holding, managing or liquidating assets owned or acquired from a
savings subsidiary of such company; (vii) holding or managing properties used or
occupied by a savings association subsidiary of such company properties used or
occupied by a savings association subsidiary of such company; (viii) acting as
trustee under deeds of trust; (ix) any other activity (A) that the Federal
Reserve Board, by regulation, has determined to be permissible for bank holding
companies under Section 4(c) of the Bank Holding Company Act
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of 1956, unless the Director, 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 savings and loan holding company is approved by the Director. 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 invest in assets and engage in activities listed in
(i) through (x) above, and has a period of two years to cease any nonconforming
activities and divest of any nonconforming investments.
The HOLA prohibits a savings and loan holding company, including the
Company and the Mutual Holding Company, directly or indirectly, or through one
or more subsidiaries, from acquiring another savings institution or holding
company thereof, without prior written approval of the OTS. It also prohibits
the acquisition or retention of, with certain exceptions, more than 5% of a
nonsubsidiary savings institution, a nonsubsidiary holding company, or a
nonsubsidiary company engaged in activities other than those permitted by the
HOLA; or acquiring or retaining control of an institution that is not federally
insured. In evaluating applications by holding companies to acquire savings
institutions, the OTS must consider the financial and managerial resources,
future prospects of the company and institution involved, the effect of the
acquisition on the risk to the insurance fund, the convenience and needs of the
community and competitive factors.
The OTS is prohibited from approving any acquisition that would result in a
multiple savings and loan holding company controlling savings institutions in
more than one state, subject to two exceptions: (i) the approval of interstate
supervisory acquisitions by savings and loan holding companies, and (ii) the
acquisition of a savings institution in another state if the laws of the state
of the target savings institution specifically permit such acquisitions. The
states vary in the extent to which they permit interstate savings and loan
holding company acquisitions.
WAIVERS OF DIVIDENDS BY THE MUTUAL HOLDING COMPANY. OTS regulations
require the Mutual Holding Company to notify the OTS of any proposed waiver of
its right to receive dividends. The OTS reviews dividend waiver notices on a
case-by-case basis, and, in general, does not object to any such waiver if:
(i) the Mutual Holding Company's board of directors determines that such waiver
is consistent with such directors' fiduciary duties to the Mutual Holding
Company's members; (ii) for as long as the savings association subsidiary is
controlled by the Mutual Holding Company, the dollar amount of dividends waived
by the Mutual Holding Company are considered as a restriction to the retained
earnings of the savings association, which restriction, if material, is
disclosed in the public financial statements of the savings association as a
note to the financial statements; (iii) the amount of any dividend waived by the
Mutual Holding Company is available for declaration as a dividend solely to the
Mutual Holding Company, and, in accordance with SFAS No. 5, where the savings
association determines that the payment of such dividend to the Mutual Holding
Company is probable, an appropriate dollar amount is recorded as a liability;
(iv) the amount of any waived dividend is considered as having been paid by the
savings association in evaluating any proposed dividend under OTS capital
distribution regulations; and (v) in the event the Mutual Holding Company
converts to stock form, the appraisal submitted to the OTS in connection with
the conversion application takes into account the aggregate amount of the
dividends waived by the Mutual Holding Company.
CONVERSION OF THE MUTUAL HOLDING COMPANY TO STOCK FORM. OTS regulations
and the Plan permit the Mutual Holding Company to undertake a Conversion
Transaction. There can be no assurance when, if ever, a Conversion Transaction
will occur, and the Board of Directors has no current intention or plan to
undertake a Conversion Transaction. In a Conversion Transaction a new holding
company would be formed as the successor to the Company (the "New Holding
Company"), the Mutual Holding Company's corporate existence would end, and
certain customers of the Bank would receive the right to subscribe for
additional shares of the New Holding Company. In a Conversion Transaction, each
share of Common Stock held by Minority Stockholders would be automatically
converted into a number of shares of common stock of the New Holding Company
determined pursuant an exchange ratio that ensures that after the Conversion
Transaction, subject to the Dividend Waiver Adjustment described below and any
adjustment to reflect the receipt of cash in lieu of fractional shares, the
percentage of the to-be outstanding shares of the New Holding Company issued to
Minority Stockholders in exchange for their Common Stock would be equal to the
percentage of the outstanding shares of Common Stock held by Minority
Stockholders immediately prior to the Conversion Transaction. The total number
of shares held by Minority
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Stockholders after the Conversion Transaction would also be affected by any
purchases by such persons in the offering that would be conducted as part of the
Conversion Transaction.
The Dividend Waiver Adjustment would decrease the percentage of the to-be
outstanding shares of common stock of the New Holding Company issued to Minority
Stockholders in exchange for their shares of Common Stock to reflect (i) the
aggregate amount of dividends waived by the Mutual Holding Company and (ii)
assets other than Common Stock held by the Mutual Holding Company. Pursuant to
the Dividend Waiver Adjustment, the percentage of the to-be outstanding shares
of the New Holding Company issued to Minority Stockholders in exchange for their
shares of Common Stock would be equal to the percentage of the outstanding
shares of Common Stock held by Minority Stockholders multiplied by the Dividend
Waiver Fraction. The Dividend Waiver Fraction is equal to the product of (a) a
fraction, of which the numerator is equal to the Company's stockholders' equity
at the time of the Conversion Transaction less the aggregate amount of dividends
waived by the Mutual Holding Company and the denominator is equal to the
Company's stockholders' equity at the time of the Conversion Transaction, and
(b) a fraction, of which the numerator is equal to the appraised pro forma
market value of the New Holding Company minus the value of the Mutual Holding
Company's assets other than Common Stock and the denominator is equal to the pro
forma market value of the New Holding Company.
FEDERAL SECURITIES LAW
The Common Stock to be issued in the Offering will be registered with the
SEC under the Securities Exchange Act of 1934 (the "Exchange Act"). The Company
will be subject to the information, proxy solicitation, insider trading
restrictions and other requirements of the SEC under the Exchange Act. Common
Stock held by persons who are affiliates (generally officers, directors and
principal stockholders) of the Company may not be resold without registration or
unless sold in accordance with certain resale restrictions. If the Company
meets specified current public information requirements, each affiliate of the
Company is able to sell in the public market, without registration, a limited
number of shares in any three-month period.
MANAGEMENT OF THE COMPANY
DIRECTORS OF THE COMPANY
The Board of Directors of the Company will initially consist of the nine
persons who are currently directors of the Bank. Directors of the Company will
serve three-year staggered terms so that approximately one third of the
Directors will be elected at each annual meeting of stockholders. The class of
directors whose term of office expires at the first annual meeting of
shareholders following completion of the Reorganization consists of Directors
Helmer, Strayton, Coyle and Ward. The class of directors whose term expires at
the second annual meeting of shareholders following completion of the
Reorganization consists of Directors Korn, McNelis and Nozell. The class of
directors whose term of office expires at the third annual meeting of
shareholders following the completion of the Reorganization consists of
Directors Sichol and Zeh.
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EXECUTIVE OFFICERS OF THE COMPANY
The following individuals will be executive officers of the Company and
hold the offices set forth below opposite their names. The biographical
information for each executive officer is set forth under "Management of the
Bank--Directors and Executive Officers of the Bank."
<TABLE>
<CAPTION>
NAME AGE* POSITION
- -------------------- ---- -------------------------------------------------------
<S> <C> <C>
George Strayton 54 President, Chief Executive Officer and Director
Daniel G. Rothstein 51 Executive Vice President, Chief Credit Officer
and Regulatory Counsel
Robert J. Sansky 51 Executive Vice President and Director of Human
Resources
Katherine A. Dering 50 Senior Vice President and Chief Financial Officer
Stephen G. Dormer 47 Senior Vice President and Director of Business Activity
John F. Fitzpatrick 46 Senior Vice President and Director of Support Services
- -------------------------
*As of June 30, 1998
</TABLE>
None of the executive officers has received remuneration from the Company.
It is not anticipated that the executive officers of the Company will initially
receive any remuneration in his capacity as an executive officer. For
information concerning compensation of executive officers of the Bank, see
"Management of the Bank."
BOARD OF DIRECTORS AND COMMITTEES OF THE COMPANY AFTER THE REORGANIZATION
Following the Reorganization, the Board of Directors of the Company is
expected to meet quarterly, or more often as may be necessary. The directors of
the Company will not initially receive fees for serving on the Company's Board
of Directors.
The Board of Directors initially is expected to have, among others, a
standing Executive Committee and Audit Committee. The Company's full Board of
Directors will act as the Nominating Committee, or may appoint a Nominating
Committee. The Company does not intend initially to have a compensation
committee, as it is not anticipated that the officers of the Company will
initially be compensated as such.
The Executive Committee initially will consist of Chairman Helmer (who will
serve as Chairman), President and Chief Executive Officer Strayton, and
Directors Coyle, McNelis and Sichol. The Executive Committee is expected to
meet as necessary when the Board is not in session to exercise general control
and supervision in all matters pertaining to the interests of the Company,
subject at all times to the direction of the Board of Directors.
The Audit Committee initially will consist of Directors Korn (who will
serve as Chairman), Ward and Nozell. The Audit Committee is expected to meet at
least quarterly. Activities of the Audit Committee will include reviewing and
approving audit reports prepared by the internal auditors and independent
auditors; reviewing and recommending the independent auditors to be engaged by
the Company; and reviewing and approving internal audit policies and programs.
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MANAGEMENT OF THE BANK
DIRECTORS AND EXECUTIVE OFFICERS OF THE BANK
Upon completion of the Reorganization, the directors of the Bank will
consist of those persons who currently serve on the Board of Directors of the
Bank. The directors of the Bank will have three year terms which will be
staggered to provide for the election of approximately one-third of the board
members each year. Directors of the Bank will be elected by the Company as sole
stockholder of the Bank. The directors and executive officers of the Bank as of
June 30, 1998 are as follows:
<TABLE>
<CAPTION>
AGE AT CURRENT
NAME JUNE 30, 1998 POSITION DIRECTOR SINCE TERM EXPIRES
- ------------------------------------------- ------------- ---------------------------- -------------- ------------
<S> <C> <C> <C> <C>
DIRECTORS:
William F. Helmer 64 Chairman of the Board 1974 1999
George Strayton 54 President, Chief Executive 1991 1999
Officer and Director
Dennis L. Coyle 62 Vice Chairman 1984 1999
Murray L. Korn 73 Director 1966 2000
Dr. Donald T. McNelis 65 Director 1987 2000
Richard A. Nozell 64 Director 1990 2000
William R. Sichol, Jr. 58 Director 1990 2001
Wilbur C. Ward 72 Director 1990 1999
F. Gary Zeh 60 Director 1979 2001
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS:
Daniel G. Rothstein 51 Executive Vice President,
Chief Credit Officer
and Regulatory Counsel
Robert J. Sansky 51 Executive Vice President and
Director of Human Resources
Katherine A. Dering 50 Senior Vice President and
Chief Financial Officer
Stephen G. Dormer 47 Senior Vice President and
Director of Business Activity
John F. Fitzpatrick 46 Senior Vice President and
Director of Support Services
</TABLE>
The business experience for the past five years for each of the Bank's
directors and executive officers is as follows:
WILLIAM F. HELMER has served as the Chairman of the Board of Directors
since 1994, and is the President of Helmer-Cronin Construction, Inc., a
construction company.
GEORGE STRAYTON has been employed by the Bank since 1982, and was named
President and Chief Executive Officer of the Bank in 1986.
DENNIS L. COYLE has served as Vice Chairman of the Board of Directors since
1994. Mr. Coyle is the owner of the Coyle Insurance Agency, the owner and
President of Delco Realty and the owner of Dennis L. Coyle Rental Properties.
MURRAY L. KORN was the Senior and Managing Partner of Korn, Rosenbaum,
Phillips and Jauntig, an accounting firm, prior to his retirement in 1986.
Mr. Korn also served as Chairman of the Board of Directors of the Bank from 1984
until his retirement from that position in 1994.
DR. DONALD T. MCNELIS served as President of St. Thomas Aquinas College in
Sparkill, New York from 1974 until his retirement in 1995.
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RICHARD A. NOZELL is the owner of Richard Nozell Building Construction, and
serves as a general building contractor.
WILLIAM R. SICHOL, JR. is a principal of Sichol & Hicks, P.C., a private
law firm.
WILBUR C. WARD is currently retired. Prior to his retirement, Mr. Ward was
the President of Ward Bulldozers.
F. GARY ZEH is the President of Haverstraw Transit Inc., a bus contracting
company, and President and Owner of Quality Bus Sales and Service.
DANIEL G. ROTHSTEIN has been employed by the Bank since 1983, and was named
Executive Vice President of the Bank in 1989. Mr. Rothstein has served as the
Bank's Chief Credit Officer and Regulatory Counsel since 1996.
ROBERT J. SANSKY has been employed by the Bank since 1985, and was named
Executive Vice President in 1989. Mr. Sansky has served as the Bank's Director
of Human Resources since 1995.
KATHERINE A. DERING has served as the Bank's Chief Financial Officer since
1994. Ms. Dering previously served as the Chief Financial Officer of a
community bank located in Connecticut.
STEPHEN G. DORMER has served as Senior Vice President and Director of
Business Development of the Bank since 1996, and was previously Senior Vice
President and Manager of the Bank's Commercial Loan Department from 1994 until
1996. Prior to joining the Bank in 1994, Mr. Dormer was Senior Vice President
of a commercial bank located in New Jersey.
JOHN F. FITZPATRICK has been employed by the Bank since 1986, and was named
Senior Vice President and Director of Support Services in 1997.
MEETINGS OF THE BOARD OF THE BANK
The Board of Directors of the Bank meets monthly and may have additional
special meetings as may be called by the Chairman or as otherwise provided by
law. During the fiscal year ended September 30, 1997, the Board held 16
meetings. No director attended fewer than 75% in the aggregate of the total
number of meetings of the Board or Board Committees on which such Director
served during fiscal 1997.
COMPENSATION OF DIRECTORS
FEES. During the fiscal year ended September 30, 1997, non-employee
Directors of the Bank received a retainer fee of $12,000, plus a fee of $700 per
Board meeting attended, and $400 per month for other committee meetings. The
Chairman of each committee received an additional $2,000 per year. The Chairman
of the Board received a retainer fee of $47,600 for the fiscal year ended
September 30, 1997.
DEFERRED COMPENSATION AGREEMENTS. The Bank has entered into nonqualified
deferred compensation agreements ("DCA") for the benefit of all of the Bank's
Directors. The DCAs comprise a non-qualified deferred compensation plan into
which a non-employee director can defer up to 100% of his board fees earned
during the calendar year. In connection with the Reorganization and Offering,
the DCA has been amended to permit each Director to determine whether to invest
all or a portion of his account in Common Stock, in accordance with the tax law
limitations. Prior to the amendment, amounts credited to a Director's deferral
account earn interest at a rate equal to the ten-year FHLB of New York advance
rate determined on December 1st of the previous calendar year. Upon a Director's
attainment of the board's mandatary retirement age, the Director's account will
be paid to him in generally equal quarterly installments beginning on the first
day of the first calendar quarter after the director becomes entitled to such
payments and continuing for 5 years. If a Director files a timely election, the
Director's distributions from the plan may commence prior to a director's
attainment of mandatory retirement age and may be
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<PAGE>
paid over a longer period of time. In the event of the Director's death, the
balance of the Director's account will be paid to the Director's designated
beneficiary on the first day of the first calendar quarter after the Director's
death. A Director may also request a distribution from his account in the event
the Director suffers a hardship, defined as a sudden or unexpected illness,
accident or similar event affecting the Director, his beneficiary or family
member. Whether to grant a hardship distribution is within the sole discretion
of the Board.
If a Director elects to invest all or a portion of his account in Common
Stock, the amount so invested will be credited with earnings and appreciation
(or depreciation) equivalent to that which would be earned on such investment
and the amount not so invested in Common Stock will continue to earn interest at
the rate set forth above, or at another rate established by the committee which
administers the DCAs. The DCA is an unfunded plan for tax purposes and for
purposes of ERISA. All obligations arising under the DCAs are payable from the
general assets of the Bank, however, the Bank has established a trust to ensure
that sufficient assets will be available to pay the benefits under the DCAs and
to hold any stock purchased under the DCAs.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth for the year
ended September 30, 1997, certain information as to the total remuneration paid
by the Bank to the Chief Executive Officer of the Bank, as well as to the four
most highly compensated executive officers of the Bank at September 30, 1997,
other than the Chief Executive Officer, who received total annual compensation
in excess of $100,000 (together, "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION/(1)/ LONG-TERM COMPENSATION
------------------------------ --------------------------------------------------------
AWARDS PAYOUTS
------------------------ --------------------------------
OTHER
YEAR ANNUAL RESTRICTED ALL OTHER
NAME AND ENDED COMPENSATION STOCK OPTIONS/ LTIP COMPENSATION
PRINCIPAL POSITION 9/30/(1)/ SALARY BONUS /(2)/ AWARDS SARS PAYOUTS /(3)/
- ------------------------------ --------- ---------- ------- ------------ ---------- -------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George Strayton, President, 1997 $259,665 $83,125 -- -- -- -- $32,655
Chief Executive Officer
and Director
Daniel G. Rothstein, 1997 $157,425 $41,316 -- -- -- -- $18,155
Executive Vice President,
Chief Credit Officer
and Regulatory Counsel
Robert J. Sansky 1997 $141,473 $41,219 -- -- -- -- $17,387
Executive Vice President and
Director of Human Resources
Katherine A. Dering 1997 $120,731 $37,641 -- -- -- -- $10,224
Senior Vice President and
Chief Financial Officer
Stephen G. Dormer 1997 $127,868 $32,259 -- -- -- -- $ 2,887
Senior Vice President and
Director of Business Activity
</TABLE>
- -----------------------------------------------
/(1)/ In accordance with the rules on executive officer and director
compensation disclosure adopted by the SEC, Summary Compensation
information is excluded for the fiscal years ended September 30, 1996 and
1995, as the Bank was not a public company during such periods.
/(2)/ The Bank provides certain members of senior management with certain other
personal benefits, the aggregate value of which did not exceed the lesser
of $50,000 or 10% of the total annual salary and bonus reported for each
officer. The value of such persons/benefits is not included in this table.
/(3)/ Includes employer contributions to the Bank's 401(k) Plan on behalf of
Named Executive Officers, as well as the payment of premiums for life
insurance policies.
EMPLOYMENT AGREEMENTS. In January 1996, the Bank entered into an employment
agreement with George Strayton, the President and Chief Executive Officer of the
Bank which agreement was amended in 1998 (as amended,
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<PAGE>
the "agreement"). On each day during the term of the agreement, the term of the
agreement automatically renews so that the agreement shall continually be for a
three-year term unless notice of non-renewal is provided within 60 days prior to
any anniversary of the date on which the agreement was entered into (the
"Anniversary Date"). In the event that notice of non-renewal is given, the
agreement will expire at the end of its then three-year term. Under the
agreement, Mr. Strayton will be paid $262,000 (the current annual rate of
salary). For each calendar year beginning after a change in control (as defined
in the agreement) of the Bank or Company, Mr. Strayton's annual rate of salary
shall be increased by the greater of (i) 1.06 percent, (ii) the quotient of (A)
the U.S. City Average All Items Consumer Price Index for All Urban Consumers for
October of the immediately preceding calendar year divided by the same economic
indicator, as determined for the second preceding calendar year; and (iii) the
quotient of the average annual rate of salary determined as of the first day of
the calendar quarter of the officers of the Bank (other than Mr. Strayton) who
are assistant vice presidents or above over the average annual rate of salary of
such persons for the immediately preceding calendar year. In addition to his
annual rate of salary, Mr. Strayton shall be entitled to participate in all tax-
qualified plans and other incentive programs of the Bank, and the group life,
health, dental and short and long term disability plans maintained by the Bank
from time to time.
In the event of Mr. Strayton's termination of employment by the Bank for
any reason other than for cause (as defined in the agreement) or in the event of
his voluntary resignation within one year following (i) his failure to be re-
appointed or re-elected as President or Chief Executive Officer of the Bank,
(ii) the failure to re-elect him as a director of the Bank, (iii) a material
adverse change in his functions, duties or responsibilities which is not cured
within 30 days of notice thereof from Mr. Strayton, (iv) a change in control of
the Bank or the Company, or in the event of termination of his employment due to
total and permanent disability, then Mr. Strayton shall be entitled to certain
benefits payable by the Bank. First, Mr. Strayton shall be entitled to his
earned but unpaid salary, any benefits to which he would become entitled as a
former employee, and continuation of his group life, health, prescription drug,
dental, short and long term disability insurance benefits for the remaining
unexpired employment period under the agreement. In addition, Mr. Strayton and
his spouse shall be entitled to continued health coverage for their remaining
lifetimes. Mr. Strayton shall also be entitled to certain lump sum payments
under the agreement. For example, Mr. Strayton shall be entitled to a lump sum
payment equal to the present value of any salary that he would have earned for
the remaining unexpired employment period under the agreement and the present
value of any fees that he would have earned as a director during that period.
Within 60 days of his termination of employment, Mr. Strayton shall also be
entitled to payments equal to the present value of (i) the additional amount to
which he would have been entitled as a participant in the Bank's defined benefit
pension plan, (ii) the additional amount to which he would have been entitled
under the Bank's 401(k) Plan and ESOP, and (iii) the additional amount to which
he would have been entitled under the SERP, in each case, assuming he had
continued in the employment of the Bank for the remaining unexpired employment
period under the agreement, and making certain assumptions (regarding salary
increases, etc.) as set forth in the agreement. The amounts provided to Mr.
Strayton under "(i)" and "(ii)" of the preceding sentence shall be increased by
a factor which takes into consideration the fact that such payments will be
currently taxable to Mr. Strayton. Mr Strayton will also be entitled to
immediate vesting of any unearned options or shares of restricted stock awarded
to him under any stock benefit plan maintained by the Company. Finally, Mr.
Strayton shall be entitled to the payments that would have been made to him
under all incentive compensation plans and programs adopted by the Bank,
including the Management Incentive Program as if he had continued to work for
the Bank during the remaining unexpired employment period under the agreement
and had earned an incentive award in each such calendar year equal to an amount
determined by formula set forth in the agreement. In the event that the Bank
gives Mr. Strayton a notice of non-renewal or if the Bank does not extend the
employment period at least 60 days prior to any renewal date set forth under the
agreement, Mr. Strayton may resign from the Bank at any time and shall receive a
lump sum cash benefit within 30 days equal to the amounts set forth above.
Also, in such event the Bank shall provide the continuing group life, health,
prescription drug, dental, short and long term disability insurance benefits set
forth above. In the event that Mr. Strayton becomes subject to an excise tax on
payments made under the agreement in connection with a change in control, the
agreement provides that Mr. Strayton shall be reimbursed an amount for payment
of such excise taxes by the Bank (determined pursuant to a formula set forth in
the agreement), so long as during the six-month period prior to such change in
control the Bank was in compliance with all applicable minimum capital
requirements imposed under federal or state regulatory authority. The
employment agreement provides that for a period of one year following the date
of his termination with the Bank for reasons other than for cause, Mr. Strayton
shall not compete with the Bank.
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<PAGE>
The Bank intends to enter into employment agreements with five other
officers, including Messrs. Rothstein, Sansky, Dormer, and Ms. Dering. The new
employment agreements shall be for terms of up to two years and shall renew on a
daily basis so that the remaining term under said agreements shall be for up to
two years unless notice of non-renewal is given. Each executive covered by an
employment agreement will receive an annual rate of salary, as specified in the
employment agreement, and will be entitled to participate in all tax-qualified
plans and other incentive programs of the Bank, and any group life, health,
dental and short and long term disability plans maintained by the Bank from time
to time. In the event of a covered executive's termination of employment by the
Bank for any reason other than for cause (as defined) or in the event of his or
her voluntary resignation within one year following (i) his or her failure to
be re-appointed to his or her current position, (ii) a material adverse change
in his or her functions, duties or responsibilities which is not cured within 30
days of notice thereof from the executive, (iii) a change in control of the Bank
or the Company, (iv) a liquidation or dissolution of the Bank or the Company
other than one that does not affect the status of the executive, or in the event
of termination of his or her employment due to total and permanent disability,
then the executive shall be entitled to the certain benefits payable by the
Bank. First, the executive shall be entitled to his or her earned but unpaid
salary, any benefits to which he or she would become entitled as a former
employee, and continuation of his or her group life, health, prescription drug,
dental, short and long term disability insurance benefits for the remaining
unexpired employment period under the agreement at a coverage level that he or
she would have been entitled to during such period. In addition, the executive
shall also be entitled to certain lump sum payments under the agreement. For
example, the executive shall be entitled to a lump sum payment equal to the
present value of any salary that he or she would have earned for the remaining
unexpired employment period under the agreement. Within 60 days of his or her
termination of employment, the executive shall also be entitled to payments
equal to the present value of (i) the additional amount to which he or she would
have been entitled as a participant in the Bank's defined benefit pension plan,
(ii) the additional amount to which he or she would have been entitled under the
Bank's 401(k) Plan and ESOP, and (iii) the additional amount to which he or she
would have been entitled under the SERP, in each case assuming he or she had
continued in the employment of the Bank for the remaining unexpired employment
period under the agreement and making certain assumptions (regarding salary
increases, etc.) as set forth in the agreement. The amounts provided to the
executive under "(i)" and "(ii)" of the preceding sentence shall be increased by
a factor which takes into consideration the fact that such payments will be
currently taxable to the executive. The executive will also be entitled to
immediate vesting of any unearned options on shares of restricted stock awarded
to him or her under any stock benefit plan maintained by the Company which would
have vested in the executive during the remaining unexpired term of the
agreement. Finally, the executive shall be entitled to the payments that would
have been made to him under all incentive compensation plans and programs
adopted by the Bank as if he or she had continued to work for the Bank during
the remaining unexpired employment period under the agreement and had earned an
incentive award in each such calendar year equal to an amount determined by
formula set forth in the agreement. Also, in such event the Bank shall provide
the continuing group life, health, prescription drug, dental, short and long
term disability insurance benefits set forth above. In the event the
executive's termination of employment occurs in connection with a change in
control of the Bank or Company, the payments made to or on behalf of the
executive shall be made as if the remaining unexpired term of the agreement
includes one additional year. In the event that the Bank gives an executive
covered by an agreement a notice of non-renewal or if the Bank does not extend
the employment period at least 60 days prior to any renewal date set forth under
the agreement, the executive may resign from the Bank at any time and shall
receive a lump sum cash payment within 30 days equal to the amounts set forth
above. The employment agreement provides that for a period of one year
following the date of his or her termination with the Bank for reasons other
than for cause, the executive shall not compete with the Bank.
MANAGEMENT INCENTIVE PROGRAM. The Bank sponsors a management incentive
program for certain officers at the vice president level and higher. In 1998,
the management incentive program provides current compensation to participating
officers upon the attainment of certain earnings goals set by the Bank.
Department heads and other managers at the level of vice president will be
entitled to receive incentive compensation of up to 15% of base salary if
earnings goals are attained, increased to up to 22-1/2% of base salary if
earnings goals are exceeded. Persons at the senior vice president and executive
vice president levels will be entitled to incentive compensation of up to 25% of
base salary if earnings goals are attained, increased to up to 37-1/2% of base
salary if earnings goals are exceeded. The Bank's President will be entitled to
receive incentive compensation of up to 30% of base salary if earnings goals are
attained and up to 45% of base salary if earnings goals are exceeded. Under the
program, incentive awards may also be given to persons below the level of vice
president in the event of extraordinary performance. Participants
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<PAGE>
normally receive their incentive award within three months of the Bank's fiscal
year end. For the fiscal year ended September 30, 1997, approximately $468,000
was distributed to persons participating in the management incentive program.
1996 LONG TERM INCENTIVE PLAN FOR OFFICERS AND DIRECTORS. In 1996, the
Bank adopted a long-term incentive plan ("Long-Term Plan") for the benefit of
certain senior officers and all non-employee directors of the Bank. Six
officers, including Messrs. Strayton, Rothstein, Sansky and Dormer and Ms.
Dering are participating under the Long-Term Plan. The Long-Term Plan has an
initial cycle of three years commencing October 1996 and running through
September 1999. The ability to earn incentive compensation under the Long-Term
Plan is based on the Bank's attainment of certain return on equity ("ROE")
ratios. It is intended that equal payment pools will be available for officers
and directors under the Long-Term Plan, however, the maximum amount that may be
credited to any officer participant is 30% of his or her average base salary
during the initial cycle and the maximum amount that may be credited to any non-
employee director is 100% of his or her annual retainer fee (up to a maximum of
$12,000 per year) for each year of the cycle. Amounts credited shall be
allocated in direct proportion to officers relative compensation levels and in
equal amounts to all non-employee directors. A participant may earn one-third of
his or her incentive compensation in each year of the cycle. At the end of each
such year, one half of the amount earned during the year will be paid to the
participant, the other half will be deferred until the end of the cycle and
shall be paid upon the successful completion of the three year goal. In the
event that a participant dies during the earnings cycle, a pro-rata share of the
amount the participant would have earned shall be paid to his or her estate. In
the event of (i) a sale of shares in an offering registered with the SEC, (ii)
the consolidation or merger of the Bank with another Bank, (iii) the sale of all
or substantially all of the assets of the Bank or any of its significant
subsidiaries, or (iv) the acquisition by more than 50% of the total combined
voting power of all classes of stock of the Bank entitled to vote for directors,
the Long-Term Plan states the current cycle shall be prematurely closed. In
such event, each participant will receive the maximum benefit to which the
participant would have been entitled if the Bank had attained the ROE goal for
the year in which the cycle closed. It is expected that the Bank will achieve
its ROE goal for each of the first two years. Therefore, assuming the cycle is
prematurely closed in 1998 or early 1999 as a result of the Reorganization,
participants will receive the maximum benefit to which they would be entitled
under the Long-Term Plan (i.e., 30% of base salary for employees and $36,000 for
directors, minus amounts previously paid to such persons under the Long-Term
Plan).
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank maintains a non-qualified
supplemental executive retirement plan ("SERP") for certain executives of the
Bank to compensate those executive participants in the Bank's tax-qualified
benefit plans whose benefits are limited by any of Sections 401(a)(17), 401(k),
401(m) 402(g) or 415 of the Code (the "Applicable Limitations"). The SERP
provides executives with retirement benefits generally equal to the difference
between (i) the annual benefit the executive would have received under the
Bank's Retirement Plan if such benefits were computed without giving effect to
the limitations on benefits imposed by application of Section 401(a)(17) and
Section 415 of the Internal Revenue Code and (ii) the amounts actually payable
to the executive under the terms of the Retirement Plan. In addition, the
executive is entitled to a 401(k) benefit under the SERP equal to the product of
(i) Bank contributions that could not be credited to his or her account in the
401(k) Plan due to the Applicable Limitations plus earnings deemed to accrue
each year at the one-year Treasury rate for the first auction in January
multiplied by (ii) his or her vested percentage in the 401(k) Plan. For these
purposes, the executive will be deemed to have made the maximum salary deferrals
possible without regard to sections 401(k), 401(m) or 402(g) of the Code. The
SERP has been amended in connection with the adoption of the ESOP so that an
executive who does not receive the maximum contribution under the ESOP due to
one of the Applicable Limitations will be entitled to an ESOP benefit under the
SERP, credited in units of the Company's Common Stock, equal to the difference
between the fair market value of the number of shares of common stock of the
Company that would have been allocated to the account of the executive under the
ESOP had the limitations of Section 401(a)(17) and 415 of the Internal Revenue
Code not been applicable, and the fair market value of the number of shares of
Common Stock actually allocated to the account of the executive. The Retirement
Plan and ESOP benefits under the SERP are payable in the same form as benefits
in the Retirement Plan and ESOP, respectively. See the descriptions of
Retirement Plan and ESOP for timing and form of payment for benefits under the
Retirement Plan and ESOP. The 401(k) Plan benefits under the SERP are payable
in 10 annual installments commencing on the first business day of the year
following the year in which the executive's employment is terminated.
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The SERP is considered an unfunded plan for tax and ERISA purposes. All
obligations arising under the SERP are payable from the general assets of the
Bank, however, the Bank has set up a trust, to ensure that sufficient assets
will be available to pay the benefits under the SERP. The trust shall be
entitled to purchase Common Stock in order to fund the ESOP benefit under the
SERP.
DEFINED BENEFIT PENSION PLAN. The Bank maintains the Provident Savings
Bank, F.A. Defined Benefit Pension Plan (the "Retirement Plan") which is a
qualified, tax-exempt defined benefit plan. Employees age 21 or older who have
worked at the Bank for a period of one year and have been credited with 1,000 or
more hours of service with the Bank during the year are eligible to accrue
benefits under the Retirement Plan. The Bank contributes each year, if
necessary, an amount to the Retirement Plan to satisfy the actuarially
determined minimum funding requirements in accordance with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). For the plan year
ended September 30, 1997, a contribution of approximately $651,000 was made to
the Retirement Plan. At September 30, 1997, the total market value of the
Retirement Plan trust fund assets was approximately $4.9 million.
In the event of retirement at normal retirement age (i.e., the later of age
65 or the 5th anniversary of participation in the Retirement Plan), the plan is
designed to provide a single life annuity. For a married participant, the
normal form of benefit is an actuarially reduced joint and survivor annuity
where, upon the participant's death, the participant's spouse is entitled to
receive a benefit equal to 50% of that paid during the participant's lifetime.
Alternatively, a participant may elect (with proper spousal consent, if
necessary) a joint and 100% survivor annuity, a joint and 75% survivor annuity,
a different form of annuity, or installments payable over a period of nor more
than the life of the participant (and spouse, if applicable). Payment may be
made in a lump sum in cash, provided the participant has completed 20 years of
service and attained age 55 or has attained normal retirement age. All forms in
which a participant's benefit may be paid will be actuarially equivalent to the
single life annuity. The monthly retirement benefit provided is an amount equal
to the greater of a participant's frozen accrued benefit (as provided for in the
Retirement Plan) or 1.6% of a participant's average monthly compensation
multiplied by the participant's years of service (up to a maximum of 35 years)
plus 0.5% of the participant's average monthly compensation in excess of one-
twelfth of the participant's Covered Compensation (as defined in the Retirement
Plan) multiplied by the participant's months of service (up to a maximum of
35 years), computed to the nearest dollar. Retirement benefits are also payable
upon retirement due to early and late retirement or death and disability. A
reduced benefit is payable upon early retirement at or after age 55 and the
completion of 10 years of vested service with the Bank. No reduction in benefit
will occur as a result of special early retirement on or after age 62 and the
completion of 20 years of vested service, if payment is made at the time of
retirement. Upon termination of employment other than as specified above, a
participant who has five years of vested service after age 18 is eligible to
receive his or her accrued benefit commencing on such participant's retirement
date, death or disability.
The following table indicates the annual retirement benefit that would be
payable under the Retirement Plan upon retirement at age 65 in calendar year
1998, expressed in the form of a single life annuity for the average monthly
salary and benefit service classifications specified below.
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE AND ANNUAL BENEFIT PAYABLE AT RETIREMENT
MONTHLY ---------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$4,167 $13,416 $17,892 $22,356 $26,832 $ 31,306
6,250 21,288 28,392 35,484 42,576 49,678
8,333 29,160 38,880 48,612 58,332 68,050
10,417 37,044 49,392 61,740 74,088 86,431
13,333 and above 48,060 64,080 80,112 96,132 112,150
</TABLE>
As of October 1, 1997, Messrs. Strayton, Rothstein, Sansky, and Dormer, and
Ms. Dering had 15, 15, 12, 3 and 3 years of credited service (i.e., benefit
service) under the Retirement Plan, respectively.
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401(K) PLAN. The Bank maintains the Provident Savings Bank 401(k) Plan
(the "401(k) Plan") which is a qualified, tax-exempt profit sharing plan with a
salary deferral feature under Section 401(k) of the Code. All employees who
have completed six months of employment are eligible to participate. Eligible
employees are entitled to enter the 401(k) Plan the first day of January or July
coincident with or following completion of the eligibility requirements.
Under the 401(k) Plan, participants are permitted to make salary reduction
contributions (in whole percentages) of not less than 2% or more than 10% of
compensation, up to $10,000 (as indexed annually). For these purposes,
"compensation" means a participant's total compensation received from the Bank,
including salary reduction contributions, but does not include compensation in
excess of the Code Section 401(a)(17) limits (i.e., $160,000 in 1998). The Bank
may match up to the first 6% of salary that a participant contributes to the
401(k) Plan. All employee salary reduction contributions and earnings are fully
and immediately vested. A participant is vested in all other contributions as
follows: 50% after 2 years of service, 75% after 3 years of service and 100%
after 4 years of service. A participant may withdraw salary reduction
contributions (and earnings), or may take a loan of up to 50% of the
participant's vested account balance, in the event the participant suffers a
financial hardship.
The 401(k) Plan permits employees to direct the investment of his or her
own accounts into various investment options. In connection with the Offering,
the 401(k) Plan intends to offer participants the opportunity to invest in an
employer stock fund which intends to purchase Common Stock in the Offering.
Each participant who directs the trustee to invest all or part of his or her
account in the employer stock fund will have assets in his or her account
applied to the purchase of shares of Common Stock. Participants will be
entitled to direct the trustee as to how to vote his or her allocated shares of
Common Stock.
Plan benefits will become 100% vested and will be paid in a lump sum to
each participant or beneficiary upon retirement, death or disability. Normal
retirement age under the plan is age 65. If a participant terminates employment
for reasons other than retirement, disability or death, the participant will be
entitled to receive only the vested portion of his or her account balance and
the remainder will be forfeited.
At December 31, 1997, the total market value of the assets in the 401(k)
Plan was approximately $3.3 million. The Bank's matching contributions to the
401(k) Plan for the plan year ended December 31, 1997 were approximately
$267,000.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Bank intends to implement the
ESOP in connection with the Reorganization. Employees with at least one year of
employment with the Bank and who have attained age 21 are eligible to
participate. As part of the Reorganization, the ESOP intends to borrow funds
from the Company and use those funds to purchase a number of shares equal to up
to 8% 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 discretionary contributions to the ESOP over a
period of not more than ten years. It is anticipated that the interest rate for
the loan will be a floating rate equal to the Prime Rate. Shares purchased by
the ESOP will be held in a suspense account for allocation among participants as
the loan is repaid.
Contributions to the ESOP and shares released from the suspense account in
an amount proportional to the repayment of the ESOP loan will be allocated among
ESOP participants on the basis of compensation in the year of allocation.
Participants in the ESOP will receive credit for vesting purposes for each
calendar year of continuous employment with the Bank in which the employee
completed 1,000 hours of service prior to the effective date of the ESOP. A
participant is 100% vested in his benefits after five years of service or upon
normal retirement (as defined in the ESOP), early retirement, disability or
death. A participant who terminates employment for reasons other than death,
retirement, or disability prior to five years of credited service will forfeit
his or her benefits under the ESOP. Benefits will be payable in the form of
Common Stock and cash or, at the election of the participant, in Common Stock
only, upon death, retirement, early retirement, disability or separation from
service. The Bank's contributions to the ESOP are discretionary, subject to the
loan terms and tax law limits, and, therefore, benefits payable under the ESOP
cannot be estimated. Under generally accepted accounting principles, the Bank
will be required to record compensation expense in an amount equal to the fair
market value of the shares committed to be released to participants from the
suspense account.
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In connection with the establishment of the ESOP, the Bank will establish a
committee of non-employee directors to administer the ESOP. The Bank will
appoint an independent financial institution to serve as trustee of the ESOP.
The ESOP trustee, subject to its fiduciary duty, must vote all allocated shares
held in the ESOP in accordance with the instructions of participating employees.
Under the ESOP, nondirected shares, and shares held in the suspense account,
will be voted in a manner calculated to most accurately reflect the instructions
it has received from participants regarding the allocated stock so long as such
vote is in accordance with the provisions of ERISA.
STOCK OPTION PLAN. 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 intends to submit for shareholder approval a stock option plan for
directors, officers and employees of the Bank and of the Company (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 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 245,650 shares, 289,000 shares, 332,350 shares or 382,202 shares at the
minimum, midpoint, maximum and adjusted maximum of the Offering Range,
respectively. Recipients of stock options realize value only in the event of an
increase in the price of the Common Stock (in comparison to the grant or
exercise price) following the date options are exercisable. 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 non-
qualified 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 of
grant of the stock options. 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 Bank after the date of grant, subject
to early vesting in the event of death or disability. Options granted under the
Stock Option Plan would be adjusted for capital changes such as stock splits and
stock dividends. Notwithstanding the foregoing, awards will be 100% vested upon
termination of employment due to death or disability, and if the Stock Option
Plan is adopted more than 12 months after the Offering, awards would be 100%
vested upon normal retirement or a change in control of the Bank or the 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 than 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. No determination has
been made as to the specific terms of the Stock Option Plan or as to the awards
thereunder.
The Stock Option Plan would be administered by a Committee of nonemployee
members of the Company's Board of Directors. Options granted under the Stock
Option Plan to employees could be "incentive" stock options designed to result
in a beneficial tax treatment to the employee but no tax deduction to the
Company. Nonqualified stock options could also be granted under the Stock
Option Plan, and will be granted to the nonemployee directors who receive grants
of stock options. In the event an option recipient terminated his or her
employment or service as an employee or director, the options would terminate
during certain specified periods.
RECOGNITION PLAN. 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 a restricted stock plan (the "Recognition
Plan") for shareholder approval. The Recognition Plan will provide the
directors, officers and employees of the Company and the Bank with an ownership
interest in the Company in a manner designed to encourage them to continue their
service with the Bank or the Company. Should the Board of Directors implement
the Recognition Plan earlier than one year after the completion of the
Offering, OTS regulations limit the shares that may be awarded to up to 4% of
the number of shares issued in the Offering, depending on the Bank's level of
tangible capital following the Offering. Four percent of the shares issued in
the Offering would amount to 98,260 shares, 115,600 shares, 132,940 shares
or 152,881 shares at the minimum, midpoint, maximum and adjusted maximum of
the Offering Range, respectively. Assuming shares are granted at $10.00 per
share and the shares are sold at the midpoint of the Offering Range, the dollar
value of the shares to be granted pursuant to the Recognition Plan would be
$1,156,000. If the Recognition Plan is implemented more than one year after the
completion of the Offering, the Plan permits awards of up to 5% of the number of
shares issued in the Offering. Shares awarded under the Recognition Plan would
be acquired, from time to time, either directly from the Company or in open
market
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purchases. In the event that additional authorized but unissued shares would be
acquired by the Recognition Plan after the Offering, the interests of existing
shareholders would be diluted. The executive officers and directors will be
awarded Common Stock under the Recognition Plan without having to pay cash for
the shares. No awards under the Recognition Plan would be made until the date
the Recognition Plan is approved by the Company's shareholders.
Awards under the Recognition Plan would be nontransferable, nonassignable
and, during the lifetime of the recipient, could only be earned by him or her.
If the Recognition Plan is adopted within one year following the Offering, the
shares which are subject to an award would vest and be earned by the recipient
at a rate of 20% of the shares awarded at the end of each full 12 months of
service with the Bank after the date of grant of the award. Awards would be
adjusted for capital changes such as stock dividends and stock splits.
Notwithstanding the foregoing, awards would be 100% vested upon termination of
employment or service due to death or disability, and if the Recognition Plan is
adopted more than 12 months after the Offering, awards would be 100% vested upon
normal retirement or a change in control of the Bank or the Company. If
employment or service were to terminate for other reasons, the award recipient
would forfeit any nonvested award. If employment or service is terminated for
cause (as would be defined in the Recognition Plan), shares not already
delivered under the Recognition Plan would be forfeited. Under OTS rules, if
the Recognition Plan is adopted within the first 12 months after the Offering,
no individual officer can receive more than 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. No determination has been made as to the specific
terms of the plan or as to the awards thereunder. The Recognition Plan would be
administered by a committee of non-employee members of the Company's board of
directors.
When shares become vested under the Recognition Plan, the participant will
recognize income equal to the fair market value of the Common Stock earned,
determined as of the date of vesting, unless the recipient makes an election
under (S) 83(b) of the Code to be taxed earlier. The amount of income recognized
by the participant would be a deductible expense for tax purposes for the
Company. If the Recognition Plan is adopted within one year following the
Offering, dividends and other earnings will accrue and be payable to the award
recipient when the shares vest. If the Recognition Plan is adopted within one
year following the Offering, shares not yet vested under the Recognition Plan
will be voted by the trustee of the Recognition Plan, taking into account the
best interests of the recipients of the Recognition Plan awards. If the
Recognition Plan is adopted more than one year following the Offering, dividends
declared on nonvested shares will be distributed to the participant when paid,
and the participant will be entitled to vote the nonvested shares.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Bank offers to directors, officers, and employees real estate mortgage
loans secured by their principal residence. All loans to the Bank's directors,
officers and employees have been made on substantially the same terms, including
interest rates and collateral as those prevailing at the time for comparable
transactions, and do not involve more than minimal risk of collectibility.
RESTRICTIONS ON ACQUISITION OF THE COMPANY
The following discussion is a general summary of certain 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 Company and the Bank and certain regulatory provisions that may be deemed to
have an "anti-takeover" effect.
THE MUTUAL HOLDING COMPANY STRUCTURE
Under OTS regulations, the Plan, and the charter of the Company, at least a
majority of the Company's voting shares must be owned by the Mutual Holding
Company. The Mutual Holding 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 Company. The Mutual Holding Company
will be able to elect all members of the Board of Directors of the Company, and
as a general matter, will be able to control the outcome of all matters
presented to
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the stockholders of the Company for resolution by vote, except for matters that
require a vote greater than a majority. The Mutual Holding Company, acting
through its Board of Directors, will be able to control the business, and
operations of the Company and the Bank, and will be able to prevent any
challenge to the ownership or control of the Company by Minority Stockholders.
Accordingly, a change in control of the Company and the Bank cannot occur unless
the Mutual Holding Company first converts to the stock form of organization.
Although OTS regulations and policy and the Plan permit the Mutual Holding
Company to convert from the mutual to the capital stock form of organization,
the Board of Directors has no current plan to do so.
PROVISIONS OF THE COMPANY'S CHARTER AND BYLAWS
In addition to the anti-takeover aspects of the mutual holding company
structure, the following discussion is a general summary of certain provisions
of the Company's charter and bylaws and certain other regulatory provisions
which will restrict the ability of stockholders to influence management
policies, and which may be deemed to have an "anti-takeover" effect. The
following description of certain of these provisions is necessarily general and,
with respect to provisions contained in the Company's and the Bank's proposed
charter and bylaws and the Bank's proposed stock charter and bylaws, reference
should be made in each case to the document in question, each of which is part
of the Bank's application to the OTS and the Company's Registration Statement
filed with the SEC. See "Additional Information."
CLASSIFIED BOARD OF DIRECTORS AND RELATED PROVISIONS. The Company's
Charter provides that the Board of Directors is to be divided into three classes
which shall be as nearly equal in number as possible. The directors in each
class hold office for terms of three years and until their successors are
elected and qualified. One class is elected annually. Management of the
Company believes that the staggered election of directors tends to promote
continuity and stability of management 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.
ABSENCE OF CUMULATIVE VOTING. The Company's Charter provides that there
shall be no cumulative voting rights in the election of directors.
AUTHORIZATION OF PREFERRED STOCK. The Company's Charter authorizes shares
of serial preferred stock, without par value. The Company is authorized to
issue preferred stock from time to time in one or more series subject to
applicable provisions of law; and the Board of Directors is authorized to fix
the designations, and relative preferences, limitations, voting rights, if any,
including without limitation, conversion rights of such shares (which could be
multiple or as a separate class). In the event of a proposed merger, tender
offer or other attempt to gain control of the Company that the Board of
Directors does not approve, it might be possible for the Board of Directors to
authorize the issuance of a series of preferred stock with rights and
preferences that would impede the completion of such a transaction. An effect
of the possible issuance of preferred stock, therefore, may be to deter a future
takeover attempt. The Board of Directors has no present plans or understandings
for the issuance of any preferred stock but it may issue any preferred stock on
terms which the Board deems to be in the best interests of the Company and its
stockholders.
RESTRICTIONS ON ACQUISITIONS OF SECURITIES. The Company's Charter provides
that for a period of five years from the effective date of the charter, no
person other than the Mutual Holding Company, may directly or indirectly offer
to acquire or acquire the beneficial ownership of more than 10% of any class of
equity security of the Company. In addition, for a period of five years
following the effective date of the Charter each share beneficially owned in
violation of the foregoing percentage limitation shall not be counted as shares
entitled to vote, shall not be voted by any person or counted as voting shares
in connection with any matter submitted to stockholders for a vote, and shall
not be counted as outstanding for purposes of determining a quorum or the
affirmative vote necessary to approve any matter submitted to the stockholders
for a vote.
SPECIAL MEETING OF STOCKHOLDERS. The Company's Charter provides that for
five years after the effective date of the Charter, special meetings of
stockholders relating to changes in control of the Company or amendments to the
Charter may be called only by the Board of Directors.
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CHANGE IN BANK CONTROL ACT AND SAVINGS AND LOAN HOLDING COMPANY PROVISIONS OF
THE HOLA
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 and loan holding company unless the OTS has been given 60
days' prior written notice. The Home Owners' Loan Act provides that no company
may acquire "control" of a savings and loan holding company without the prior
approval of the OTS. Any company that acquires such control becomes a "savings
and loan holding company" subject to registration, examination, and regulation
by the OTS. Pursuant to federal regulations, control of a savings and loan
holding company 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 the 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
and loan holding company, 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 the Company'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 Company.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
The 30,000,000 shares of capital stock authorized by the Company's Charter
are divided into two classes, consisting of 20,000,000 shares of common stock
($0.10 par value) and 10,000,000 shares of serial preferred stock. The aggregate
stated value of the issued shares will constitute the capital account of the
Company on a consolidated basis. The balance of the Subscription Price of
Common Stock, less expenses of the Reorganization and Offering, will be
reflected as paid-in capital on a consolidated basis. See "Capitalization."
Upon payment of the Subscription Price for the Common Stock, in accordance with
the Plan, all such stock will be duly authorized, fully paid, validly issued and
nonassessable.
COMMON STOCK. Each share of the Common Stock will have the same relative
rights and will be identical in all respects with each other share of the Common
Stock. THE COMMON STOCK OF THE COMPANY WILL REPRESENT NON-WITHDRAWABLE CAPITAL,
WILL NOT BE OF AN INSURABLE TYPE AND WILL NOT BE INSURED BY THE FDIC. The
holders of the Common Stock will possess exclusive voting power in the Company.
Each stockholder will be entitled to one vote for each share held on all matters
voted upon by stockholders, subject to the limitation discussed under
"Restrictions on Acquisition of the Company--Provisions of the Company's Charter
and Bylaws." If the Company issues preferred stock subsequent to the
Reorganization, holders of the preferred stock may also possess voting powers.
NO PREEMPTIVE RIGHTS. Holders of the Common Stock will not be entitled to
preemptive rights with respect to any shares which may be issued. The Common
Stock will not be subject to call for redemption, and, upon receipt by the
Company of the full purchase price therefor, each share of the Common Stock will
be fully paid and nonassessable.
PREFERRED STOCK. After the Reorganization, the Board of Directors of the
Company will be authorized to issue preferred stock in series and to fix and
state the voting powers, designations, preferences and relative, participating,
optional or other special rights of the shares of each such series and the
qualifications, limitations and restrictions thereof. Preferred stock may rank
prior to the Common Stock as to dividend rights, liquidation preferences, or
both, and may have full or limited voting rights. The holders of preferred
stock will be entitled to vote as a separate class or series under certain
circumstances, regardless of any other voting rights which such holders may
have.
Except as discussed herein, the Company has no present plans for the
issuance of the additional authorized shares of Common Stock or for the issuance
of any shares of preferred stock. In the future, the authorized but
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unissued and unreserved shares of Common Stock will be available for general
corporate purposes including but not limited to possible issuance as stock
dividends or stock splits, in future mergers or acquisitions, under a cash
dividend reinvestment and stock purchase plan, in a future underwritten or other
public offering or under an employee stock ownership plan, stock option or
restricted stock plan. The authorized but unissued shares of preferred stock
will similarly be available for issuance in future mergers or acquisitions, in a
future underwritten public offering or private placement or for other general
corporate purposes. Except as described above or as otherwise required to
approve the transaction in which the additional authorized shares of Common
Stock or authorized shares of preferred stock would be issued, no stockholder
approval will be required for the issuance of these shares. Accordingly, the
Board of Directors of the Company, without stockholder approval, can issue
preferred stock with voting and conversion rights which could adversely affect
the voting power of the holders of Common Stock.
DIVIDENDS. Upon consummation of the formation of the Company, the
Company's only assets will be the Bank's common stock and up to 50% of the net
proceeds of the Offering. Although it is anticipated that the Company will
retain up to 50% of the net proceeds of the Offering, dividends from the Bank
will be an important source of income for the Company. Should the Bank elect to
retain its income, the ability of the Company to pay dividends to its own
shareholders may be adversely affected. Furthermore, if at any time in the
future the Company owns less than 100% of the outstanding stock of the Bank,
certain tax benefits under the Code as to inter-company distributions will not
be fully available to the Company and it will be required to pay federal income
tax on a portion of the dividends received from the Bank, thereby reducing the
amount of income available for distribution to the shareholders of the Company.
TRANSFER AGENT AND REGISTRAR
Register & Transfer Company, Cranford, New Jersey will act as the transfer
agent and registrar for the Common Stock.
LEGAL AND TAX MATTERS
The legality of the Common Stock and the federal income tax consequences of
the Reorganization and Offering will be passed upon for the Bank and the Company
by the firm of Luse Lehman Gorman Pomerenk & Schick, P.C., Washington, D.C.
KPMG Peat Marwick LLP has issued an opinion concerning certain state income tax
aspects of the Reorganization. Luse Lehman Gorman Pomerenk & Schick, P.C. and
KPMG Peat Marwick LLP have consented to the references herein to their opinions.
Certain legal matters relating to the Offering may be passed upon for Ryan Beck
by Thacher Proffitt & Wood, Washington, D.C.
CHANGE IN ACCOUNTANTS
On May 30, 1996, the Audit Committee of the Bank's Board of Directors
appointed KPMG Peat Marwick LLP as the Bank's independent auditors in place of
Deloitte & Touche LLP. The report of Deloitte & Touche LLP on the financial
statements as of and for the fiscal year ended September 30, 1995, did not
contain an adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
Bank's two most recent fiscal years preceding such change in accountants, there
were no disagreements with Deloitte & Touche LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope of
procedure, nor were there any other events that required reporting under SEC
regulations.
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EXPERTS
The Bank's consolidated financial statements as of September 30, 1997 and
1996 and for the years then ended, included in this Prospectus, have been
audited by KPMG Peat Marwick LLP, independent auditors, as stated in their
report appearing herein, and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The Bank's consolidated financial statements for the year ended September
30, 1995, included in this Prospectus, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
RP Financial has consented to the publication herein of the summary of its
report to the Bank and the Company setting forth its opinion as to the estimated
pro forma market value of the Common Stock upon Reorganization and its valuation
with respect to Subscription Rights.
ADDITIONAL INFORMATION
The 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 necessarily
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 Company will register the Common Stock
with the SEC under Section 12(g) of the Exchange Act; and, upon such
registration, the 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 Company has undertaken that it will
not terminate such registration for a period of at least three years following
the Reorganization.
A copy of the charter and bylaws of the Company are available without
charge from the Bank.
121
<PAGE>
PROVIDENT BANK
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Reports.................................................. F-2
Consolidated Statements of Financial Condition at September 30, 1997 and
1996 (audited) and at June 30, 1998 (unaudited).............................. F-4
Consolidated Statements of Income for the Years Ended September 30, 1997,
1996 and 1995 (audited) and for the nine-month periods ended
June 30, 1998 and 1997 (unaudited)........................................... 53
Consolidated Statements of Changes in Equity for the Years Ended
September 30, 1997, 1996 and 1995 (audited) and for the nine months
ended June 30, 1998 (unaudited).............................................. F-5
Consolidated Statements of Cash Flows for the Years Ended September 30, 1997,
1996 and 1995 (audited) and for the nine-month periods ended
June 30, 1998 and 1997 (unaudited)........................................... F-6
Notes to Consolidated Financial Statements..................................... F-8
</TABLE>
The financial statements of Provident Bancorp, Inc. (the "Company") are omitted
because the Company has not yet issued any stock, has no assets or liabilities,
and has not conducted any business other than that of an organizational nature.
All schedules are omitted because the required information is not applicable or
is included in the Consolidated Financial Statements and related Notes.
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Provident Bank:
We have audited the accompanying consolidated statements of financial condition
of Provident Bank and subsidiaries as of September 30, 1997 and 1996, and the
related consolidated statements of income (page 53), changes in equity, and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Provident Bank and
subsidiaries as of September 30, 1997 and 1996, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
October 31, 1997, except
as to Note 18 which is
as of April 23, 1998
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Provident Bank:
We have audited the accompanying consolidated statement of income (page 53) and
consolidated statements of changes in equity and cash flows of Provident Bank
and subsidiaries for the year ended September 30, 1995. These consolidated
financial statements are the responsibility of the Bank's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and the significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and the cash flows
of Provident Bank and subsidiaries for the year ended September 30, 1995 in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
November 17, 1995
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands)
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT JUNE 30, -------------------
1998 1997 1996
------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks........................................ $ 7,785 $ 9,191 $ 8,669
Federal funds sold............................................. 5,000 -- 5,000
------- ------- -------
Total cash and cash equivalents............................ 12,785 9,191 13,669
------- ------- -------
Investment securities (Note 2):
Held to maturity, at amortized cost (fair value of $20,179,
$22,091 and $21,800 at the respective dates)................. 20,197 22,195 22,138
Available for sale, at fair value (amortized cost of $48,271,
$48,290 and $47,215 at the respective dates)................. 48,629 48,517 47,313
------- ------- -------
Total investment securities................................ 68,826 70,712 69,451
------- ------- -------
Mortgage-backed securities (Note 3):
Held to maturity, at amortized cost (fair value of $90,063,
$104,624 and $111,519 at the respective dates)............... 89,334 104,071 112,863
Available for sale, at fair value (amortized cost of $43,487,
$35,785 and $41,436 at the respective dates)................. 43,775 36,153 41,482
------- ------- -------
Total mortgage-backed securities........................... 133,109 140,224 154,345
------- ------- -------
Loans receivable, net of allowance for loan losses of $4,548,
$3,779 and $3,357 at the respective dates (Note 4)............. 440,360 404,497 369,487
Accrued interest receivable, net (Note 5)....................... 4,625 4,262 4,096
Federal Home Loan Bank stock, at cost (Note 9).................. 3,690 3,641 3,211
Premises and equipment, net (Note 6)............................ 6,762 7,047 7,594
Real estate owned, net (Note 7)................................. 366 186 1,307
Deferred income taxes (Note 10)................................. 2,353 1,783 2,459
Other assets (Note 8)........................................... 6,228 7,199 8,631
------- ------- -------
Total assets............................................... $679,104 $648,742 $634,250
======= ======= =======
LIABILITIES AND EQUITY
Liabilities:
Deposits (Note 8).............................................. $580,075 $546,846 $545,286
Borrowings (Note 9)............................................ 25,048 24,000 13,000
Bank overdraft................................................. 147 17,623 17,157
Mortgage escrow funds (Note 4)................................. 14,471 4,559 4,996
Other liabilities.............................................. 5,484 5,315 8,275
------- ------- -------
Total liabilities.......................................... 625,225 598,343 588,714
------- ------- -------
Commitments and contingencies (Notes 13 and 14)
Equity (Note 11):
Retained earnings.............................................. 53,493 50,049 45,451
Net unrealized gain on securities available for sale,
net of income taxes of $260, $245 and $59
at the respective dates...................................... 386 350 85
------- ------- -------
Total equity............................................... 53,879 50,399 45,536
------- ------- -------
Total liabilities and equity............................... $679,104 $648,742 $634,250
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands)
<TABLE>
<CAPTION>
NET
UNREALIZED
RETAINED GAIN ON TOTAL
EARNINGS SECURITIES EQUITY
-------- ----------- --------
<S> <C> <C> <C>
Balance at September 30, 1994........................... $ 38,551 $ -- $ 38,551
Net income for the year................................ 4,803 -- 4,803
Cumulative effect of accounting change
at October 1, 1994 for net unrealized
gain on securities available for sale, net
of income taxes of $27............................... -- 39 39
Change in net unrealized gain on securities
available for sale, net of income taxes
of $303.............................................. -- 435 435
----- ------
Balance at September 30, 1995........................... 43,354 474 43,828
Net income for the year................................ 2,097 -- 2,097
Change in net unrealized gain on securities available
for sale, net of income taxes of $271................ -- (389) (389)
------ ----- ------
Balance at September 30, 1996........................... 45,451 85 45,536
Net income for the year................................ 4,598 -- 4,598
Change in net unrealized gain on securities available
for sale, net of income taxes of $185................ -- 265 265
------ ----- ------
Balance at September 30, 1997........................... 50,049 350 50,399
Net income for the period (unaudited).................. 3,444 -- 3,444
Change in net unrealized gain on securities
available for sale, net of income taxes of
$15 (unaudited)...................................... -- 36 36
------ ----- ------
Balance at June 30, 1998 (unaudited).................... $ 53,493 $ 386 $ 53,879
====== ===== ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
NINE
MONTHS ENDED YEARS ENDED
JUNE 30, SEPTEMBER 30,
------------------- -----------------------------------
1998 1997 1997 1996 1995
-------- --------- -------- --------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 3,444 $ 3,464 $ 4,598 $ 2,097 $ 4,803
Adjustments to reconcile net income to net cash
provided by operating activities:
Net amortization of premiums and discounts
on securities...................................... 193 132 177 184 433
Depreciation and amortization of premises and
equipment........................................... 1,044 1,084 1,462 1,297 975
Provision for loan losses............................ 1,347 875 1,058 911 760
Amortization of branch purchase premiums............. 1,200 1,129 1,506 691 --
Originations of loans held for sale.................. (14,619) (197) (197) (433) (1,605)
Proceeds from sales of loans held for sale........... 17,163 197 197 433 1,605
Deferred income tax (benefit) expense................ (586) 485 496 (2,551) 163
Net changes in accrued interest receivable
and payable......................................... (241) (751) (245) 13 (658)
Net increase (decrease) in other liabilities......... 47 (2,397) (2,881) 4,947 (510)
Other adjustments, net............................... (459) 280 (175) (790) 19
------- ------- ------- -------- -------
Net cash provided by operating activities.......... 8,533 4,301 5,996 6,799 5,985
------- ------- ------- -------- -------
Cash flows from investing activities:
Purchases of securities:
Investment securities held to maturity................. (2,977) (4,999) (4,999) (13,277) (10,939)
Investment securities available for sale............... (19,093) (8,204) (8,204) (29,122) (18,165)
Mortgage-backed securities held to maturity............ (12,398) (4,906) (10,071) (56,666) (23,109)
Mortgage-backed securities available for sale.......... (13,100) -- (2,000) (15,604) (5,880)
Proceeds from maturities, calls and principal payments:
Investment securities held to maturity................. 5,010 10 5,012 29,021 15,008
Investment securities available for sale............... 13,000 6,000 7,000 3,000 --
Mortgage-backed securities held to maturity............ 26,979 13,426 18,667 17,933 4,066
Mortgage-backed securities available for sale.......... 5,442 5,975 7,730 10,517 12,086
Proceeds from sales of investment securities
available for sale..................................... 6,007 -- -- -- 2,014
Loan originations, net of principal repayments........... (40,165) (20,936) (36,829) (39,814) (17,799)
Branch purchase premiums paid............................ -- -- -- (7,532) --
(Redemption) purchase of Federal Home Loan
Bank stock............................................. (49) (430) (430) (242) 21
Proceeds from sales of real estate owned................. 451 1,406 2,029 200 754
Purchases of premises and equipment...................... (761) (805) (1,260) (3,775) (1,593)
Proceeds from sales of premises and equipment............ 2 292 292 192 842
------- -------- ------- -------- -------
Net cash used in investing activities............... (31,652) (13,171) (23,063) (105,169) (42,694)
------- -------- ------- -------- -------
</TABLE>
(Continued)
F-6
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(In thousands)
<TABLE>
<CAPTION>
NINE
MONTHS ENDED YEARS ENDED
JUNE 30, SEPTEMBER 30,
------------------- -----------------------------------
1998 1997 1997 1996 1995
-------- --------- -------- --------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Net increase in deposits, including an increase of
$104,477 in 1996 from branch purchases................... $ 33,229 $ 12,648 $ 1,560 $ 101,619 $ 23,859
Net increase (decrease) in borrowings...................... 1,048 -- 11,000 (900) 3,733
Net (decrease) increase in bank overdraft.................. (17,476) (14,653) 466 1,970 13,090
Net increase (decrease) in mortgage escrow funds........... 9,912 8,166 (437) (1,497) 254
------- ------- ------- -------- -------
Net cash provided by financing activities.............. 26,713 6,161 12,589 101,192 40,936
------- ------- ------- -------- -------
Net increase (decrease) in cash and cash equivalents........ 3,594 (2,709) (4,478) 2,822 4,227
Cash and cash equivalents at beginning of period............ 9,191 13,669 13,669 10,847 6,620
------- ------- ------- -------- -------
Cash and cash equivalents at end of period.................. $ 12,785 $ 10,960 $ 9,191 $ 13,669 $ 10,847
======= ======= ======= ======== =======
Supplemental information:
Interest paid.............................................. $ 15,487 $ 15,106 $ 20,100 $ 18,758 $ 15,082
Income taxes paid.......................................... 3,122 389 1,808 3,140 3,277
Non-cash investing activities:
Transfers of loans receivable to real estate owned....... 597 694 715 1,362 255
Transfer of mortgage-backed securities from held to
maturity to available for sale.......................... -- -- -- 6,519 --
======= ======= ======= ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Provident Bank (the "Bank") is a community bank that offers financial
services to individuals and businesses primarily in Rockland County, New
York and its contiguous communities. The Bank's principal business is
accepting deposits and, together with funds generated from operations and
borrowings, investing in various types of loans and securities. The Bank's
deposits are insured up to applicable limits by the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC") and, as a federally-chartered savings bank, its primary regulator
is the Office of Thrift Supervision ("OTS"). As discussed in Note 18, the
Bank's Board of Directors has adopted a Plan of Reorganization and Stock
Issuance Plan pursuant to which the Bank will convert from mutual to stock
form of ownership under a two-tier mutual holding company structure and
shares of common stock will be sold in an initial public offering.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements include the accounts of the Bank and
its wholly-owned subsidiaries -- Provest Services Corp. I which became
active in fiscal 1996 and invests in a low-income housing partnership, and
Provest Services Corp. II which became active in fiscal 1997 and has engaged
a third-party provider to sell mutual funds and annuities to the Bank's
customers. Financial statement amounts for these subsidiaries have been
insignificant. Intercompany transactions and balances are eliminated in
consolidation.
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets, liabilities, income
and expense. A material estimate that is particularly susceptible to near-
term change is the allowance for loan losses, which is discussed below.
The consolidated statement of financial condition as of June 30, 1998, and
the related consolidated statements of income and cash flows for the nine-
month periods ended June 30, 1998 and 1997 and the consolidated statement of
changes in equity for the nine-month period ended June 30, 1998 are
unaudited but, in the opinion of management, reflect all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of financial condition, results of operations and cash flows.
For purposes of reporting cash flows, cash equivalents consist of overnight
Federal funds sold.
SECURITIES
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," requires entities to
classify securities among three categories -- held to maturity, trading, and
available for sale. Management determines the appropriate classification of
the Bank's securities at the time of purchase.
F-8
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
Held-to-maturity securities are limited to those debt securities for which
management has the intent and the Bank has the ability to hold to maturity.
These securities are reported at amortized cost.
Trading securities are those debt and equity securities bought and held
principally for the purpose of selling them in the near term. These
securities are reported at fair value, with unrealized gains and losses
included in earnings. The Bank does not engage in security trading
activities.
All other debt and equity securities are classified as available for sale.
These securities are reported at fair value, with unrealized gains and
losses (net of the related income tax effect) excluded from earnings and
reported in a separate component of equity. Available-for-sale securities
include securities that management intends to hold for an indefinite period
of time, such as securities to be used as part of the Bank's asset/liability
management strategy or securities that may be sold in response to changes in
interest rates, changes in prepayment risks, the need to increase capital,
or similar factors.
Federal Home Loan Bank stock is a non-marketable security held in accordance
with regulatory requirements and, accordingly, is carried at cost.
Premiums and discounts on debt securities are recognized in interest income
on a level-yield basis over the period to maturity. The cost of securities
sold is determined using the specific identification method. Unrealized
losses are charged to earnings when the decline in fair value of a security
is judged to be other than temporary.
LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans, other than those classified as held for sale, are carried at
amortized cost less the allowance for loan losses. Mortgage loans
originated and held for sale in the secondary market are carried at the
lower of aggregate cost or estimated market value. Net unrealized losses,
if any, are recognized in a valuation allowance by a charge to earnings.
Effective October 1, 1995, the Bank prospectively adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan -- Income
Recognition and Disclosures." Under SFAS No. 114, a loan is considered
impaired when, based on current information and events, it is probable that
a creditor will be unable to collect all principal and interest due
according to the contractual terms of the loan. Impaired loans are measured
and reported based on one of three approaches -- 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. If the approach used results in a
measurement that is less than the recorded investment in an impaired loan,
an impairment loss is recognized as part of the allowance for loan losses.
SFAS No. 118 allows creditors to continue to use existing methods for
recognizing interest income on impaired loans. The adoption of these
statements did not affect the Bank's overall allowance for loan losses or
income recognition policies.
F-9
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
The allowance for loan losses is established through provisions for losses
charged to earnings. Loan losses are charged against the allowance when
management believes that the collection of principal is unlikely.
Recoveries of loans previously charged-off are credited to the allowance
when realized.
The allowance for loan losses is an amount that management believes will be
adequate to absorb probable losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of the loans.
Management's evaluations, which are subject to periodic review by the Bank's
regulators, take into consideration such factors as the Bank's past loan
loss experience, changes in the nature and volume of the loan portfolio,
overall portfolio quality, review of specific problem loans and collateral
values, and current economic conditions that may affect the borrowers'
ability to pay. Future adjustments to the allowance for loan losses may be
necessary based on changes in economic and real estate market conditions,
further information obtained regarding known problem loans, regulatory
examinations, the identification of additional problem loans, and other
factors.
INTEREST AND FEES ON LOANS
A loan is placed on non-accrual status when management has determined that
the borrower may be unable to meet contractual principal or interest
obligations, or when interest and principal is 90 days or more past due.
Accrual of interest ceases and, in general, uncollected past due interest
(including interest applicable to prior years, if any) is reversed and
charged against current income. Interest payments received on non-accrual
loans (including impaired loans under SFAS No. 114, as amended by SFAS
No. 118) are not recognized as income unless warranted based on the
borrower's financial condition and payment record. Interest on loans that
have been restructured is accrued in accordance with the renegotiated terms.
The Bank defers non-refundable loan origination and commitment fees and
certain direct loan origination costs, and amortizes the net amount as an
adjustment of the yield over the contractual term of the loan. If a loan is
prepaid or sold, the net deferred amount is recognized in income at that
time.
REAL ESTATE OWNED
Real estate properties acquired through loan foreclosure are recorded
initially at estimated fair value less expected sales costs, with any
resulting writedown charged against the allowance for loan losses.
Subsequent valuations are periodically performed by management, and the
carrying value of a real estate owned property is adjusted by a charge to
expense to reflect any subsequent declines in estimated fair value. Fair
value estimates are based on recent appraisals and other available
information. Routine holding costs are charged to expense as incurred,
while significant improvements are capitalized. Gains and losses on sales
of real estate owned are recognized upon disposition.
F-10
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
PREMISES AND EQUIPMENT
Premises and equipment are carried at cost, less accumulated depreciation
and amortization. Depreciation is computed using the straight-line method
over the estimated useful lives of the related assets ranging from 3 to
40 years. Leasehold improvements are amortized on a straight-line basis over
the terms of the respective leases or the estimated useful lives of the
improvements, whichever is shorter. Routine holding costs are charged to
expense as incurred, while significant improvements are capitalized.
BRANCH PURCHASE PREMIUMS
Premiums attributable to the acquisition of core deposits in branch purchase
transactions are amortized using the straight-line method over periods not
exceeding the estimated average remaining life of the acquired customer base
(initial five-year periods for the Bank's 1996 branch purchases). The
weighted average remaining amortization period for these premiums was
approximately 2.5 years at June 30, 1998. The unamortized premiums are
reviewed for impairment if events or changes in circumstances indicate that
the carrying amount may not be fully recoverable.
TRANSFERS AND SERVICING OF FINANCIAL ASSETS
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," establishes financial reporting
standards for a broad range of transactions including sales of loans with
servicing retained, loan securitizations, loan participations, repurchase
agreements, securities lending and in-substance defeasances of debt. Among
other things, the standard requires recognition of servicing rights as an
asset when loans are sold with servicing retained. SFAS No. 125 is
generally effective for transactions entered into on or after January 1,
1997 and superseded SFAS No. 122, "Accounting for Mortgage Servicing
Rights," which became effective for the Bank on October 1, 1996.
In accordance with these standards, the Bank recognizes mortgage servicing
rights as an asset when loans are sold with servicing retained, by
allocating the cost of an originated mortgage loan between the loan and the
servicing right based on estimated relative fair values. The cost allocated
to the servicing right is capitalized as a separate asset which is amortized
thereafter in proportion to, and over the period of, estimated net servicing
income. Asset recognition of servicing rights on sales of originated loans
was not permitted under previous accounting standards. Capitalized mortgage
servicing rights are assessed for impairment based on the fair value of
those rights, and any impairment loss is recognized in a valuation allowance
by charges to income. SFAS No. 125 has not had a significant impact on the
Bank's consolidated financial statements through June 30, 1998.
F-11
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
INCOME TAXES
In accordance with SFAS No. 109, "Accounting for Income Taxes," deferred
taxes are recognized for the estimated future tax effects attributable to
"temporary differences" between the financial statement carrying amounts and
the tax bases of existing assets and liabilities. A deferred tax liability
is recognized for all temporary differences that will result in future
taxable income. A deferred tax asset is recognized for all temporary
differences that will result in future tax deductions, subject to reduction
of the asset by a valuation allowance in certain circumstances. This
valuation allowance is recognized if, based on an analysis of available
evidence, management determines that it is more likely than not that some
portion or all of the deferred tax asset will not be realized. The
valuation allowance is subject to ongoing adjustment based on changes in
circumstances that affect management's judgment about the realizability of
the deferred tax asset. Adjustments to increase or decrease the valuation
allowance are charged or credited, respectively, to income tax expense.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which the temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax laws or rates is recognized in
income tax expense in the period that includes the enactment date of the
change.
INTEREST RATE CAP AGREEMENTS
The Bank uses the accrual method of accounting for interest rate cap
agreements entered into for interest rate risk management purposes.
Interest payments (if any) due from the counterparties are recognized in the
consolidated statements of income as an adjustment to interest income or
expense on the assets or liabilities designated in the Bank's interest rate
risk management strategy. Premiums paid by the Bank at inception of the
agreements are included in other assets and amortized on a straight-line
basis as an adjustment to interest income or expense over the term of the
agreements.
F-12
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
(2) INVESTMENT SECURITIES
---------------------
The following are summaries of investment securities:
<TABLE>
<CAPTION>
JUNE 30, 1998
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Securities Held to Maturity
U.S. Government and Agency securities due:
Within one year..................................... $10,009 $ -- $ (4) $10,005
After one year, but within five years............... 9,477 7 (21) 9,463
Municipal and other securities....................... 711 -- -- 711
------- ---- ----- -------
20,197 7 (25) 20,179
------- ---- ----- -------
SECURITIES AVAILABLE FOR SALE
U.S. Government and Agency securities due:
Within one year..................................... 9,995 4 (7) 9,992
After one year, but within five years............... 34,261 170 (48) 34,383
Corporate debt securities............................ 1,998 -- (2) 1,996
Equity securities.................................... 2,017 241 -- 2,258
------- ---- ----- -------
48,271 415 (57) 48,629
------- ---- ----- -------
Total investment securities........................ $68,468 $422 $ (82) $68,808
======= ==== ===== =======
<CAPTION>
SEPTEMBER 30, 1997
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
U.S. Government and Agency securities due:
Within one year..................................... $ 1,025 $ 2 $ -- $ 1,027
After one year, but within five years............... 20,448 1 (106) 20,343
Municipal and other securities....................... 722 -- (1) 721
------- ---- ----- -------
22,195 3 (107) 22,091
------- ---- ----- -------
SECURITIES AVAILABLE FOR SALE
U.S. Government and Agency securities due:
Within one year..................................... 16,028 49 -- 16,077
After one year, but within five years............... 27,238 128 (108) 27,258
Corporate debt securities............................ 3,007 1 (3) 3,005
Equity securities.................................... 2,017 182 (22) 2,177
------- ---- ----- -------
48,290 360 (133) 48,517
------- ---- ----- -------
Total investment securities....................... $70,485 $363 $(240) $70,608
======= ==== ===== =======
</TABLE>
F-13
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
U.S. Government and Agency securities due
after one year, but within five years............ $21,402 $ -- $(332) $21,070
Municipal and other securities....................... 736 -- (6) 730
------- ---- ----- -------
22,138 -- (338) 21,800
------- ---- ----- -------
SECURITIES AVAILABLE FOR SALE
U.S. Government and Agency securities due
after one year, but within five years............ 41,161 -- (301) 40,860
Corporate debt securities............................ 4,037 -- (4) 4,033
Equity securities.................................... 2,017 403 -- 2,420
------- ---- ----- -------
47,215 403 (305) 47,313
------- ---- ----- -------
Total investment securities....................... $69,353 $403 $(643) $69,113
======= ==== ===== =======
</TABLE>
Equity securities available for sale at each of the foregoing dates consist
of Freddie Mac and Fannie Mae preferred stock.
The following is an analysis, by type of interest rate, of the amortized
cost and weighted average yield of the debt securities in the Bank's
investment securities portfolio:
<TABLE>
<CAPTION>
FIXED ADJUSTABLE
RATE RATE TOTAL
--------- ---------- ---------
<S> <C> <C> <C>
JUNE 30, 1998
Amortized cost..................... $63,930 $2,521 $66,451
Weighted average yield............. 5.83% 5.29% 5.81%
SEPTEMBER 30, 1997
Amortized cost..................... $65,950 $2,518 $68,468
Weighted average yield............. 6.08% 5.65% 6.06%
SEPTEMBER 30, 1996
Amortized cost..................... $64,822 $2,514 $67,336
Weighted average yield............. 5.92% 5.96% 5.92%
</TABLE>
Proceeds from sales of investment securities available for sale were $6,007
in the nine months ended June 30, 1998 (resulting in gross realized gains of
$10) and $2,014 in the year ended September 30, 1995 (resulting in gross
realized gains of $14). These gains are included in other non-interest
income. There were no sales of investment securities in the years ended
September 30, 1997 and 1996.
F-14
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
U.S. Government securities with a carrying value of $1,500 and $1,350 were
pledged to secure public funds on deposit at June 30, 1998 and
September 30, 1997, respectively.
(3) MORTGAGE-BACKED SECURITIES
--------------------------
The Bank's mortgage-backed securities are principally Freddie Mac
participation certificates, and pass-through certificates guaranteed by
Fannie Mae or Ginnie Mae. Certain Freddie Mac and Fannie Mae collateralized
mortgage obligations are also held in the portfolio. The Bank's other
mortgage-backed securities are primarily Small Business Administration
participation certificates. Mortgage-backed securities are collateralized
by one- to four-family residential loans which contractually may be
prepaid.
The following are summaries of mortgage-backed securities:
<TABLE>
<CAPTION>
JUNE 30, 1998
---------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
Freddie Mac................................... $ 41,915 $ 440 $ (3) $ 42,352
Fannie Mae.................................... 38,345 159 (55) 38,449
Ginnie Mae.................................... 6,901 82 -- 6,983
Other......................................... 2,173 106 -- 2,279
-------- ------ ---- --------
89,334 787 (58) 90,063
-------- ------ ---- --------
SECURITIES AVAILABLE FOR SALE
Freddie Mac................................... 16,123 168 (15) 16,276
Fannie Mae.................................... 23,219 150 (21) 23,348
Other......................................... 4,145 6 -- 4,151
-------- ------ ---- --------
43,487 324 (36) 43,775
-------- ------ ---- --------
Total mortgage-backed securities......... $132,821 $1,111 $(94) $133,838
======== ====== ==== ========
</TABLE>
F-15
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
Freddie Mac................................... $ 55,950 $ 436 $ (59) $ 56,327
Fannie Mae.................................... 37,928 121 (148) 37,901
Ginnie Mae.................................... 7,971 143 -- 8,114
Other......................................... 2,222 60 -- 2,282
-------- ------ ----- --------
104,071 760 (207) 104,624
-------- ------ ----- --------
SECURITIES AVAILABLE FOR SALE
Freddie Mac................................... 10,289 224 (5) 10,508
Fannie Mae.................................... 20,912 219 (53) 21,078
Other......................................... 4,584 -- (17) 4,567
-------- ------ ----- --------
35,785 443 (75) 36,153
-------- ------ ----- --------
Total mortgage-backed securities......... $139,856 $1,203 $(282) $140,777
======== ====== ===== ========
<CAPTION>
SEPTEMBER 30, 1996
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
Freddie Mac................................... $ 62,977 $194 $ (846) $ 62,325
Fannie Mae.................................... 44,345 48 (798) 43,595
Ginnie Mae.................................... 3,284 78 -- 3,362
Other......................................... 2,257 -- (20) 2,237
-------- ---- ------- --------
112,863 320 (1,664) 111,519
-------- ---- ------- --------
SECURITIES AVAILABLE FOR SALE
Freddie Mac................................... 13,844 196 (29) 14,011
Fannie Mae.................................... 22,696 136 (243) 22,589
Other......................................... 4,896 -- (14) 4,882
-------- ---- ------- --------
41,436 332 (286) 41,482
-------- ---- ------- --------
Total mortgage-backed securities......... $154,299 $652 $(1,950) $153,001
======== ==== ======= ========
</TABLE>
F-16
<PAGE>
The following is an analysis, by type of interest rate, of the amortized
cost and weighted average yield of the Bank's mortgage-backed securities
portfolio:
<TABLE>
<CAPTION>
FIXED ADJUSTABLE
RATE RATE TOTAL
--------- ---------- ---------
<S> <C> <C> <C>
JUNE 30, 1998
Amortized cost.................. $86,234 $46,587 $132,821
Weighted average yield.......... 6.49% 6.50% 6.49%
SEPTEMBER 30, 1997
Amortized cost.................. $86,702 $53,154 $139,856
Weighted average yield.......... 6.65% 6.66% 6.65%
SEPTEMBER 30, 1996
Amortized cost.................. $94,204 $60,095 $154,299
Weighted average yield.......... 6.44% 6.57% 6.49%
</TABLE>
In November 1995, the Financial Accounting Standards Board ("FASB") issued a
special report concerning SFAS No. 115 which provided an opportunity to
reclassify debt securities from the held-to-maturity category to the
available-for-sale category prior to December 31, 1995, without calling into
question the intent to hold other debt securities to maturity. On
December 19, 1995, the Bank reclassified mortgage-backed securities with an
amortized cost of $6,519 and a fair value of $6,582 from the held-to-
maturity category to the available-for-sale category. An after-tax net
unrealized gain of $37 was recorded as an increase in equity at the time of
transfer.
There were no sales of mortgage-backed securities in the nine months ended
June 30, 1998 or the years ended September 30, 1997, 1996 and 1995.
F-17
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
(4) LOANS RECEIVABLE
----------------
Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ----------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
First mortgage loans:
One- to four-family residential:
Fixed rate........................ $ 188,779 $ 158,596 $ 137,987
Adjustable rate................... 82,814 83,299 81,881
Multi-family residential............ 7,108 7,358 7,743
Commercial real estate.............. 63,712 55,747 58,640
Construction and land............... 27,785 31,740 28,035
--------- --------- ---------
370,198 336,740 314,286
--------- --------- ---------
Other loans:
Home equity lines of credit......... 28,362 31,456 31,306
Homeowner loans..................... 25,418 18,678 12,575
Other consumer loans................ 8,855 10,670 10,916
Commercial business loans........... 24,036 21,651 15,263
--------- --------- ---------
86,671 82,455 70,060
--------- --------- ---------
Total loans receivable............ 456,869 419,195 384,346
Loans in process...................... (12,732) (11,424) (11,775)
Allowance for loan losses............. (4,548) (3,779) (3,357)
Deferred loan origination costs, net.. 771 505 273
--------- --------- ---------
Total loans receivable, net....... $ 440,360 $ 404,497 $ 369,487
========= ========= =========
</TABLE>
The Bank originates mortgage loans secured by existing one- to four-family
residential properties. The Bank also originates multi-family and
commercial real estate loans, construction and land loans, consumer loans
and commercial business loans. A substantial portion of the loan portfolio
is secured by residential and commercial real estate located in Rockland
County, New York. The ability of the Bank's borrowers to make principal and
interest payments is dependent upon, among other things, the level of
overall economic activity and the real estate market conditions prevailing
within the Bank's concentrated lending area.
The Bank originated commercial real estate loans and construction and land
loans totaling $25,361 in the nine months ended June 30, 1998, and $23,884,
$32,371 and $16,896 in the years ended September 30, 1997, 1996 and 1995,
respectively. These loans are considered by management to be of somewhat
greater credit risk than loans to fund the
F-18
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
purchase of a primary residence due to the generally larger loan amounts
and dependency on income production or sale of the real estate.
Substantially all of these loans are collateralized by real estate located
in the Bank's primary market area.
The principal balances of non-accrual loans were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ----------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
First mortgage loans:
One- to four-family................ $ 3,323 $ 2,549 $ 2,731
Commercial real estate............. 848 1,375 2,087
Construction and land.............. 1,142 276 920
Consumer loans....................... 230 234 503
Commercial business loans............ 194 243 109
------- ------- -------
Total non-accrual loans.............. $ 5,737 $ 4,677 $ 6,350
======= ======= =======
</TABLE>
The allowance for uncollected interest, representing the amount of interest
on non-accrual loans that has not been recognized in interest income, was
$505, $433 and $540 at June 30, 1998, September 30, 1997 and September 30,
1996, respectively. For the year ended September 30, 1997 and for the nine
months ended June 30, 1998, gross interest income that would have been
recorded had the non-accrual loans at the end of the period remained on
accrual status throughout the period amounted to $411 and $523,
respectively. Interest income actually recognized on such loans totaled
$147 for the year ended September 30, 1997 and $241 for the nine months
ended June 30, 1998.
SFAS No. 114, as amended by SFAS No. 118, applies to loans that are
individually evaluated for collectibility in accordance with the Bank's
ongoing loan review procedures (principally commercial real estate loans,
construction and land loans, and commercial business loans). The standard
does not generally apply to smaller-balance homogeneous loans that are
collectively evaluated for impairment, such as residential mortgage loans
and consumer loans. The Bank's recorded investment in impaired loans, as
defined by SFAS No. 114, is summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ----------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Loans with an allowance for loan impairment
under SFAS No. 114 (allowance of $168 and
$25 at September 30, 1997 and 1996,
respectively).............................. $ $ 615 $ 675
Loans for which an allowance for loan
impairment was not required................ 2,184 1,279 2,441
------- ------- -------
Total impaired loans..................... $ 2,184 $ 1,894 $ 3,116
======= ======= =======
</TABLE>
F-19
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
Substantially of all of these impaired loans were collateral-dependent
loans measured based on the fair value of the collateral in accordance with
SFAS No. 114. The Bank determines the need for an allowance for loan
impairment under SFAS No. 114 on a loan-by-loan basis. The Bank's recorded
investment in impaired loans averaged $3,047 and $2,315 in the nine months
ended June 30, 1998 and 1997, respectively, and $2,210 and $3,663 in the
years ended September 30, 1997 and 1996, respectively.
Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
ENDED JUNE 30, SEPTEMBER 30,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period......... $3,779 $3,357 $3,357 $ 3,472 $2,837
Provision for losses................... 1,347 875 1,058 911 760
Charge-offs............................ (611) (396) (759) (1,076) (152)
Recoveries............................. 33 41 123 50 27
------ ------ ------ ------- ------
Balance at end of period............... $4,548 $3,877 $3,779 $ 3,357 $3,472
====== ====== ====== ======= ======
</TABLE>
Certain residential mortgage loans originated by the Bank are sold in the
secondary market. Other non-interest income for the nine months ended
June 30, 1998 includes a net gain of $185 on sales of residential mortgage
loans held for sale (net gains in fiscal 1997, 1996 and 1995 were
insignificant). Fixed-rate residential mortgage loans include loans held
for sale with a carrying value of $486 at September 30, 1997 and $745 at
September 30, 1996, which approximated market value at those dates. There
were no loans held for sale at June 30, 1998. Other assets at June 30, 1998
include capitalized mortgage servicing rights with an amortized cost of
$163, which approximated fair value.
The Bank generally retains the servicing rights on loans sold. Servicing
loans for others generally consists of collecting mortgage payments,
maintaining escrow accounts, disbursing payments to investors and, if
necessary, processing foreclosures. Loans serviced for others totaled
approximately $128,500, $127,600 and $143,000 at June 30, 1998, September
30, 1997 and September 30, 1996, respectively. These amounts include loans
sold with recourse ($2,900 at June 30, 1998) for which management does not
expect the Bank to incur any significant losses. Loan servicing income
includes servicing fees from investors and certain charges collected from
borrowers, such as late payment fees. Mortgage escrow funds include amounts
held in connection with loans serviced for others of $5,271, $1,873 and
$2,076 at June 30, 1998, September 30, 1997 and September 30, 1996,
respectively.
F-20
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
(5) Accrued Interest Receivable
---------------------------
The components of accrued interest receivable were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ----------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Loans receivable........................... $ 2,997 $ 2,933 $ 2,910
Allowance for uncollected interest......... (505) (433) (540)
------- ------- -------
2,492 2,500 2,370
Investment securities...................... 1,311 868 787
Mortgage-backed securities................. 822 894 939
------- ------- -------
Total accrued interest receivable, net.. $ 4,625 $ 4,262 $ 4,096
======= ======= =======
</TABLE>
(6) PREMISES AND EQUIPMENT
----------------------
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ----------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Land and land improvements................. $ 1,088 $ 1,082 $ 1,006
Buildings.................................. 3,159 3,348 3,136
Leasehold improvements..................... 2,893 2,642 2,614
Furniture and fixtures..................... 6,510 5,820 5,310
------- ------- -------
13,650 12,892 12,066
Accumulated depreciation and amortization.. (6,888) (5,845) (4,472)
------- ------- -------
Total premises and equipment, net....... $ 6,762 $ 7,047 $ 7,594
======= ======= =======
</TABLE>
Depreciation and amortization expense, which is included in occupancy and
office operations expense, amounted to $1,044 and $1,084 in the nine months
ended June 30, 1998 and 1997, respectively, and $1,462, $1,297 and $975 in
the years ended September 30, 1997, 1996 and 1995, respectively.
F-21
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
(7) Real Estate Owned
-----------------
Real estate owned consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ----------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
One- to four-family properties........... $ 92 $ 212 $ 347
Commercial properties.................... 274 -- 1,010
Allowance for losses..................... -- (26) (50)
----- ----- -------
Real estate owned, net................ $ 366 $ 186 $ 1,307
===== ===== =======
</TABLE>
Activity in the allowance for losses on real estate owned is summarized as
follows:
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
ENDED JUNE 30, SEPTEMBER 30,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period............. $ 26 $ 50 $ 50 $ -- $ --
Provision for losses....................... -- -- 75 64 90
Losses charged to allowance................ (26) (50) (99) (14) (90)
----- ----- ----- ----- -----
Balance at end of period................... $ -- $ -- $ 26 $ 50 $ --
===== ===== ===== ===== =====
</TABLE>
Foreclosed real estate expense (income) consisted of the following:
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
ENDED JUNE 30, SEPTEMBER 30,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Holding costs.............................. $ 100 $ 145 $ 164 $ 382 $ 66
Provision for losses....................... -- -- 75 64 90
Income from operations..................... -- -- (11) (4) (9)
Net gain on sales of properties............ (34) (254) (268) (1) (47)
----- ----- ----- ----- -----
Expense (income), net................... $ 66 $(109) $ (40) $ 441 $ 100
===== ===== ===== ===== =====
</TABLE>
F-22
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)arized as
(Dollars in thousands)
(8) DEPOSITS
--------
Deposit accounts and weighted average interest rates are summarized as
follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
AMOUNT RATE AMOUNT RATE AMOUNT RATE
-------- ----- -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Demand deposits....................... $ 55,072 --% $ 49,221 --% $ 42,700 --%
NOW deposits.......................... 40,969 1.25 32,985 1.25 30,950 1.25
Savings deposits...................... 161,263 2.25 153,171 2.25 153,565 2.25
Money market deposits................. 79,436 2.96 75,339 2.96 77,111 2.97
Certificates of deposit............... 243,335 5.22 236,130 5.31 240,960 5.10
-------- -------- --------
Total deposits..................... $580,075 3.31% $546,846 3.40% $545,286 3.38%
======== ==== ======== ==== ======== ====
</TABLE>
Certificates of deposit had remaining periods to contractual maturity as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ----------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Remaining period to maturity:
Less than one year..................... $ 180,515 $ 185,557 $ 186,737
One to two years....................... 50,003 24,075 29,721
Two to three years..................... 7,088 19,086 10,328
Over three years....................... 5,729 7,412 14,174
--------- --------- ---------
Total certificates of deposit.......... $ 243,335 $ 236,130 $ 240,960
========= ========= =========
</TABLE>
Certificate of deposit accounts with a denomination of $100 or more totaled
$25,780, $25,137 and $26,263 at June 30, 1998, September 30, 1997 and
September 30, 1996, respectively. The FDIC generally insures depositor
accounts up to $100, as defined in the applicable regulations.
The Bank purchased two branch offices in separate transactions consummated
in March and May 1996. In these transactions, the Bank assumed deposit
liabilities of $104,477; received cash of $96,165 and other assets of $780;
and recorded a core deposit purchase premium of $7,532. Premium
amortization charged to expense amounted to $1,200 and $1,129 in the nine
months ended June 30, 1998 and 1997, respectively, and $1,506 and $691 in
the years ended September 30, 1997 and 1996, respectively. Unamortized
premiums of $4,091, $5,280 and $6,841 are included in other assets at
June 30, 1998, September 30, 1997 and September 30, 1996, respectively.
F-23
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
Interest expense on deposits is summarized as follows:
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
ENDED JUNE 30, SEPTEMBER 30,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Savings deposits........................... $ 2,731 $ 2,713 $ 3,670 $ 3,592 $ 3,741
Money market and NOW deposits 2,016 1,992 2,675 2,480 2,136
Certificates of deposit.................... 9,568 9,184 12,347 11,041 8,563
------- ------- ------- ------- -------
Total interest expense.................. $14,315 $13,889 $18,692 $17,113 $14,440
======= ======= ======= ======= =======
</TABLE>
(9) BORROWINGS
----------
The Bank's borrowings consist of Federal Home Loan Bank ("FHLB") advances
with weighted average interest rates and remaining periods to maturity as
follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
AMOUNT RATE AMOUNT RATE AMOUNT RATE
-------- ----- -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Remaining period to maturity:
Less than one year.................. $ -- --% $ -- --% $ 5,000 5.44%
One to two years.................... 10,000 6.20 11,000 7.16 5,000 7.81
Two to three years.................. 5,000 6.35 3,000 6.58 3,000 6.58
Three to four years................. -- -- 5,000 6.12 -- --
Four to five years.................. 10,048 5.94 5,000 6.28 -- --
------- ------- -------
Total borrowings.................. $25,048 6.13% $24,000 6.69% $13,000 6.61%
======= ==== ======= ==== ======= ====
</TABLE>
As a member of the FHLB of New York, the Bank may have outstanding FHLB
borrowings of up to 30% of its total assets, or approximately $203,700 at
June 30, 1998 and $194,600 at September 30, 1997, in a combination of term
advances and overnight funds. The Bank's unused FHLB borrowing capacity was
approximately $178,700 at June 30, 1998 and $170,600 at September 30, 1997.
Borrowings are secured by the Bank's investment in FHLB stock and by a
blanket security agreement. This agreement requires the Bank to maintain
as collateral certain qualifying assets (principally securities and
residential mortgage loans) not otherwise pledged. The Bank satisfied
this collateral requirement at June 30, 1998, September 30, 1997 and
September 30, 1996.
F-24
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
(10) Income Taxes
------------
Income tax expense consists of the following components:
<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
ENDED JUNE 30, SEPTEMBER 30,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Current tax expense:
Federal.................................. $2,075 $1,549 $1,898 $ 2,743 $2,431
State.................................... 506 336 435 498 645
------ ------ ------ ------- ------
2,581 1,885 2,333 3,241 3,076
------ ------ ------ ------- ------
Deferred tax (benefit) expense:
Federal.................................. (435) 348 356 (1,662) (78)
State.................................... (151) 137 140 (889) 241
------ ------ ------ ------- ------
(586) 485 496 (2,551) 163
------ ------ ------ ------- ------
Total income tax expense................... $1,995 $2,370 $2,829 $ 690 $3,239
====== ====== ====== ======= ======
</TABLE>
The Bank's actual income tax expense differs from the amounts determined
by applying the statutory Federal income tax rate to income before income
taxes for the following reasons:
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
--------------------------------------------------------------------
1998 1997
--------------------------------- ---------------------------------
AMOUNT Percent Amount Percent
---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Tax at Federal statutory rate............. $1,849 34.0% $1,984 34.0%
State income taxes, net of
Federal tax effect.... 234 4.3 312 5.3
Other, net................................ (88) (1.6) 74 1.3
------ ---- ------ ----
Actual income tax expense................. $1,995 36.7% $2,370 40.6%
====== ==== ====== ====
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------------------------------------
1997 1996 1995
------------------------ ----------------------- ------------------------
AMOUNT Percent Amount Percent Amount PERCENT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Tax at Federal statutory rate............. $2,525 34.0% $ 948 34.0% $2,734 34.0%
State income taxes, net of
Federal tax effect.... 380 5.1 (258) (9.2) 585 7.3
Other, net................................ (76) (1.0) (80) (1.0)
------ ---- ------ ----
Actual income tax expense................. $2,829 38.1% $ 690 24.8% $3,239 40.3%
====== ==== ===== ==== ====== ====
</TABLE>
F-25
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
Deferred tax assets and liabilities have been recognized for temporary
differences between the financial statement carrying amounts and the tax
bases of assets and liabilities. The sources of these temporary differences
and their deferred tax effects are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, -----------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Deferred tax assets:
Allowance for loan losses............... $1,777 $ 1,470 $ 1,112
Deferred compensation................... 846 789 681
Deposit premium amortization............ 899 594 --
Depreciation of premises and equipment.. 135 122 175
Accrued SAIF special assessment......... -- -- 1,351
Other................................... 83 65 -
----- ----- -----
Total deferred tax assets............. 3,740 3,040 3,319
----- ----- -----
Deferred tax liabilities:
Federal tax bad debt reserve in excess
of base-year amount................... 444 444 476
Prepaid pension expense................. 354 355 253
Deferred loan origination costs, net.... 329 213 72
Net unrealized gain on securities
available for sale.................... 260 245 59
----- ----- -----
Total deferred tax liabilities........ 1,387 1,257 860
----- ----- -----
Net deferred tax asset.................... $2,353 $ 1,783 $ 2,459
===== ===== =====
</TABLE>
Based on recent historical and anticipated future pre-tax earnings,
management believes it is more likely than not that the Bank will realize
its deferred tax assets.
As a savings institution, the Bank is subject to special provisions in the
Federal and New York State tax laws regarding its allowable tax bad debt
deductions and related tax bad debt reserves. These deductions historically
were determined using methods based on loss experience or a percentage of
taxable income. Tax bad debt reserves represent the excess of allowable
deductions over actual bad debt losses and other reserve reductions. These
reserves consist of a defined base-year amount, plus additional amounts
("excess reserves") accumulated after the base year. SFAS No. 109 requires
recognition of deferred tax liabilities with respect to such excess
reserves, as well as any portion of the base-year amount which is expected
to become taxable (or "recaptured") in the foreseeable future.
F-26
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
Certain amendments to the Federal and New York State tax laws regarding bad
debt deductions were enacted in the quarter ended September 30, 1996. The
Federal amendments eliminated the percentage-of-taxable-income method for
tax years beginning after December 31, 1995 and imposed a requirement to
recapture into taxable income (over a six-year period) the bad debt reserves
in excess of the base-year amounts. The Bank previously established, and has
continued to maintain, a deferred tax liability with respect to such excess
Federal reserves. The New York State amendments redesignated all then-
existing State bad debt reserves as the base-year amount and provide for
future additions to that base-year reserve using the percentage-of-taxable-
income method. These changes effectively eliminated the Bank's excess New
York State reserves for which a deferred tax liability had been recognized
and, accordingly, such liability was reversed in the quarter ended September
30, 1996 and a $500 reduction in income tax expense was recognized.
The Bank's Federal and State base-year reserves were approximately $4,600
and $24,500, respectively, at June 30, 1998 ($4,600 and $22,800,
respectively, at September 30, 1997). In accordance with SFAS No. 109,
deferred tax liabilities have not been recognized with respect to these
reserves, since the Bank does not expect that these amounts will become
taxable in the foreseeable future. Under the tax laws as amended, events
that would result in taxation of certain of these reserves include failure
to maintain a specified qualifying-assets ratio or meet other thrift
definition tests for New York State tax purposes. At June 30, 1998 and
September 30, 1997, the Bank's unrecognized deferred tax liabilities with
respect to its base-year reserves totaled approximately $3,300 and $3,200,
respectively.
(11) Regulatory Matters
------------------
CAPITAL REQUIREMENTS
OTS regulations require savings institutions to maintain a minimum ratio of
tangible capital to total adjusted assets of 1.5%; a minimum ratio of Tier 1
(core) capital to total adjusted assets of 3.0%; and a minimum ratio of
total (core and supplementary) capital to risk-weighted assets of 8.0%.
Under its prompt corrective action regulations, the OTS is required to take
certain supervisory actions (and may take additional discretionary actions)
with respect to an undercapitalized institution. Such actions could have a
direct material effect on the institution's financial statements. The
regulations establish a framework for the classification of savings
institutions into five categories -- well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, and
critically undercapitalized. Generally, an institution is considered well
capitalized if it has a Tier 1 (core) capital ratio of at least 5.0%; a Tier
1 risk-based capital ratio of at least 6.0%; and a total risk-based capital
ratio of at least 10.0%.
F-27
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
The foregoing capital ratios are based in part on specific quantitative
measures of assets, liabilities and certain off-balance-sheet items as
calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by the OTS about
capital components, risk weightings and other factors.
Management believes that, as of June 30, 1998, September 30, 1997 and
September 30, 1996, the Bank met all capital adequacy requirements to which
it was subject. Further, the most recent OTS notification categorized the
Bank as a well-capitalized institution under the prompt corrective action
regulations. There have been no conditions or events since that
notification that management believes have changed the Bank's capital
classification.
The following is a summary of the Bank's actual capital amounts and ratios,
compared to the OTS minimum capital adequacy requirements and the OTS
requirements for classification as a well-capitalized institution:
<TABLE>
<CAPTION>
OTS Requirements
-----------------------------------------------------
MINIMUM CAPITAL CLASSIFICATION
BANK ACTUAL ADEQUACY AS WELL CAPITALIZED
------------------------- -------------------------- --------------------------
Amount RATIO AMOUNT RATIO AMOUNT RATIO
------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
JUNE 30, 1998
Tangible capital........... $49,402 7.3% $10,120 1.5% $ %
Tier 1 (core) capital...... 49,402 7.3 20,239 3.0 33,732 5.0
Risk-based capital:
Tier 1................. 49,402 13.0 22,748 6.0
Total.................. 53,950 14.2 30,331 8.0 37,913 10.0
======= ==== ======= === ======= ====
SEPTEMBER 30, 1997
Tangible capital........... $44,769 7.0% $ 9,650 1.5% $ %
Tier 1 (core) capital...... 44,769 7.0 19,299 3.0 32,165 5.0
Risk-based capital:
Tier 1................. 44,769 12.7 21,168 6.0
Total.................. 48,336 13.7 28,224 8.0 35,280 10.0
======= ==== ======= === ======= ====
SEPTEMBER 30, 1996
Tangible capital........... $38,610 6.2% $ 9,410 1.5% $ %
Tier 1 (core) capital...... 38,610 6.2 18,820 3.0 31,366 5.0
Risk-based capital:
Tier 1................. 38,610 11.5 20,149 6.0
Total.................. 41,326 12.3 26,865 8.0 33,582 10.0
======= ==== ======= === ======= ====
</TABLE>
F-28
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
The following is a reconciliation of the Bank's equity under generally
accepted accounting principles and its regulatory capital amounts:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, -------------------
1998 1997 1996
--------- ------- -------
<S> <C> <C> <C>
Equity under generally accepted
accounting principles...................... $ 53,879 $ 50,399 $ 45,536
Core deposit purchase premiums............... (4,091) (5,280) (6,841)
Net unrealized gain on securities available
for sale, net of income taxes.............. (386) (350) (85)
------ ------ ------
Tangible capital, Tier 1 (core) capital
and Tier 1 risk-based capital.............. 49,402 44,769 38,610
Allowance for loan losses includable
in total risk-based capital................ 4,548 3,567 2,716
------ ------ ------
Total risk-based capital..................... $ 53,950 $ 48,336 $ 41,326
====== ====== ======
</TABLE>
SAIF SPECIAL ASSESSMENT
The Deposit Insurance Funds Act of 1996 (the "Act") was signed into law on
September 30, 1996. Among other things, the Act required depository
institutions to pay a one-time special assessment of 65.7 basis points on
their SAIF-assessable deposits, in order to recapitalize the SAIF to the
reserve level required by law. The Bank's consolidated financial statements
for the year ended September 30, 1996 reflect a separate expense charge of
$3,298 for this special assessment.
(12) EMPLOYEE BENEFITS
-----------------
PENSION PLANS
The Bank has a noncontributory defined benefit pension plan covering
substantially all of its employees. Employees who are twenty-one years of
age or older and have worked for the Bank for one year are eligible to
participate in the plan. The Bank's funding policy is to contribute
annually an amount sufficient to meet statutory minimum funding
requirements, but not in excess of the maximum amount deductible for Federal
income tax purposes. Contributions are intended to provide not only for
benefits attributed to service to date, but also for those expected to be
earned in the future.
F-29
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
The following is a reconciliation of the funded status of the plan and the
prepaid pension costs recognized in the consolidated statements of financial
condition at September 30:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Accumulated benefit obligation, including vested benefits
of $2,768 in 1997 and $2,301 in 1996...................... $ 3,099 $ 2,439
===== =====
Projected benefit obligation for service rendered to date... $ 4,411 $ 3,522
Plan assets at fair value................................... 4,906 3,821
----- -----
Plan assets in excess of projected benefit obligation....... 495 299
Transition obligation....................................... 190 216
Unrecognized prior service cost............................. (138) (151)
Unrecognized net loss....................................... 319 254
----- -----
Prepaid pension cost........................................ $ 866 $ 618
===== =====
</TABLE>
Pension plan assets at September 30, 1997 and 1996 were invested principally
in a managed growth fund and certificates of deposit with the Bank.
The components of the net periodic pension expense were as follows for the
years ended September 30:
<TABLE>
<CAPTION>
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
Service cost (benefits earned during the year)............ $ 348 $ 292 $ 307
Interest cost on projected benefit obligation............. 329 273 248
Return on plan assets..................................... (306) (227) (221)
Amortization:
Transition obligation................................... 26 26 26
Unrecognized prior service cost.......................... (14) (14) (14)
Unrecognized net loss.................................... 21 7 --
----- ----- -----
Net periodic pension expense.............................. $ 404 $ 357 $ 346
===== ===== =====
</TABLE>
Net periodic pension expense was $325 and $317 in the nine months ended June
30, 1998 and 1997, respectively.
The actuarial present values of the projected benefit obligation at
September 30, 1997 and 1996 were determined using a discount rate of 7.75%
and a rate of increase in future compensation of 6.0% (8.5% and 6.75%,
respectively, at September 30, 1995). The expected long-term rate of return
on plan assets was 8.0%, 7.5% and 7.5% for the years ended September 30,
1997, 1996 and 1995, respectively.
F-30
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
The Bank also has established a non-qualified Supplemental Executive
Retirement Plan to provide certain executives with supplemental retirement
benefits in addition to the benefits provided by the pension plan. The
periodic pension expense related to the supplemental plan amounted to $32
and $31 in the nine months ended June 30, 1998 and 1997, respectively, and
$40 and $34 in the years ended September 30, 1997 and 1996, respectively.
The actuarial present value of the accumulated benefit obligation was
approximately $74 at September 30, 1997, all of which is unfunded. This
amount was determined using a discount rate of 7.75% and a rate of increase
in future compensation of 4.5%.
Other Postretirement Benefits
The Bank's postretirement health care plan, which is unfunded, provides
optional medical, dental and life insurance benefits to retirees. The Bank
adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions", effective October 1, 1995. SFAS No. 106 requires
accrual of the cost of postretirement benefits over the years in which
employees provide services to the date of their full eligibility for such
benefits. In accordance with SFAS No. 106, the Bank elected to amortize the
transition obligation for accumulated benefits (which amounted to $237 at
the adoption date) as an expense over a 20-year period. The total periodic
expense recognized under SFAS No. 106 amounted to $30 and $32 in the nine
months ended June 30, 1998 and 1997, respectively, and $37 and $42 in the
years ended September 30, 1997 and 1996, respectively.
401(k) Savings Plan
The Bank also sponsors a defined contribution plan established under Section
401(k) of the Internal Revenue Code, pursuant to which eligible employees
may elect to contribute up to 10% of their compensation. The Bank makes
contributions equal to 100% of the participant's contributions up to a
maximum contribution equal to 6% of the participant's compensation.
Voluntary and matching contributions are invested, in accordance with the
participant's direction, in one or a number of investment options.
Compensation and employee benefits expense includes 401(k) savings plan
expense of $225 and $200 in the nine months ended June 30, 1998 and 1997,
respectively, and $276, $234 and $228 in the years ended September 30, 1997,
1996 and 1995, respectively.
(13) COMMITMENTS AND CONTINGENCIES
-----------------------------
Certain premises and equipment are leased under operating leases with
terms expiring through 2025. The Bank has the option to renew certain of
these leases for terms of up to five years. Future minimum rental payments
due under non-cancelable operating leases with initial or remaining terms of
more than one year at September 30, 1997 are $834 for fiscal 1998; $823 for
fiscal 1999; $748 for fiscal 2000; $782 for fiscal 2001; $800 for fiscal
2002; and $7,683 for later years. There were no significant changes in
future minimum lease rentals during the nine months ended June 30, 1998.
Net rent expense, which is
F-31
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS UNAUDITED)
(Dollars in thousands)
included in occupancy and office operations expense, amounted to $716 and
$672 in the nine months ended June 30, 1998 and 1997, respectively, and
$951, $941 and $858 in the years ended September 30, 1997, 1996 and 1995,
respectively.
The Bank is a defendant in certain claims and legal actions arising in the
ordinary course of business. Management, after consultation with legal
counsel, does not anticipate losses on any of these claims or actions which
would have a material adverse effect on the Bank's consolidated financial
statements.
(14) OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
---------------------------------------
In the normal course of business, the Bank is a party to off-balance-sheet
financial instruments that involve, to varying degrees, elements of credit
risk and interest rate risk in addition to the amounts recognized in the
consolidated financial statements. The contractual or notional amounts of
these instruments, which reflect the extent of the Bank's involvement in
particular classes of off-balance-sheet financial instruments, are
summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, -----------------
1998 1997 1996
-------- --------- --------
<S> <C> <C> <C>
LENDING-RELATED INSTRUMENTS:
Commitments to extend credit:
Fixed-rate loans............... $ 9,694 $ 8,610 $ 3,925
Adjustable-rate loans........... 20,086 14,503 10,393
Unused lines of credit........... 27,574 25,883 29,373
Standby letters of credit........ 3,893 4,222 2,470
INTEREST RATE RISK MANAGEMENT:
Interest rate cap agreement..... 20,000 -- --
======= ======== ========
</TABLE>
LENDING-RELATED INSTRUMENTS
The contractual amounts of the lending-related instruments set forth above
represent the Bank's maximum potential exposure to credit loss, assuming (i)
the instruments are fully funded at a later date, (ii) the borrower does not
meet the contractual payment obligations and (iii) any collateral or other
security proves to be worthless. The contractual amounts of these
instruments do not necessarily represent future cash requirements since
certain of these instruments may expire without being funded and others may
not be fully drawn upon. Substantially all of these lending-related
instruments have been entered into with customers located in the Bank's
primary market area described in Note 4.
F-32
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS NAUDITED)
(Dollars in thousands)
Commitments to extend credit are legally-binding agreements to lend to a
customer as long as there is no violation of any condition established in
the contract. Commitments have fixed expiration dates (generally ranging up
to 45 days) or other termination clauses, and may require payment of a fee
by the customer. The Bank evaluates each customer's credit worthiness on a
case-by-case basis. The amount of collateral, if any, obtained by the Bank
upon extension of credit, is based on management's credit evaluation of the
borrower. Collateral held varies but may include mortgages on residential
and commercial real estate, deposit accounts with the Bank, and other
property. The Bank's fixed-rate loan commitments at June 30, 1998 provide
for interest rates ranging from 6.125% to 10.25%.
Unused lines of credit are legally-binding agreements to lend to a customer
as long as there is no violation of any condition established in the
contract. Lines of credit generally have fixed expiration dates or other
termination clauses. The amount of collateral obtained, if deemed necessary
by the Bank, is based on management's credit evaluation of the borrower.
Standby letters of credit are conditional commitments issued by the Bank to
assure the performance of financial obligations of a customer to a third
party. These commitments are primarily issued in favor of local
municipalities to support the obligor's completion of real estate
development projects. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending loan facilities to
customers.
INTEREST RATE CAP AGREEMENT
At June 30, 1998, the Bank was a party to an interest rate cap agreement
with a notional amount of $20,000 and a five-year term ending in March 2003.
This agreement was entered into to reduce the Bank's exposure to potential
increases in interest rates on a portion of its certificate of deposit
accounts. The counterparty in the transaction has agreed to make interest
payments to the Bank, based on the notional amount, to the extent that the
three-month LIBOR rate exceeds 6.50% over the term of the cap agreement. No
payments were due from the counterparty through June 30, 1998. The carrying
amount of the cap agreement at June 30, 1998 represented the unamortized
premium of $286, which is included in other assets. Premium amortization of
$20 is included in deposit interest expense for the nine months ended June
30, 1998. The estimated fair value of the interest rate cap agreement at
June 30, 1998 was approximately $158, representing the estimated amount the
Bank would receive to terminate the contract at that date.
(15) RELATED PARTY TRANSACTIONS
--------------------------
The Bank was indebted to its directors for deferred directors fees (and
accrued interest thereon) totaling $1,964, $1,859 and $1,663 at June 30,
1998, September 30, 1997 and September 30, 1996, respectively. The interest
rates on these amounts were 6.53%, 6.64% and 6.41% at the respective dates.
F-33
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS NAUDITED)
(Dollars in thousands)
The Bank has had, and expects to have in the future, banking transactions in
the ordinary course of business with its directors, senior officers and
their affiliates. Loans are made to these individuals on the same terms as
those prevailing for comparable transactions with other borrowers and do not
involve more than normal collection risk. Loans receivable from related
parties totaled $378, $426 and $456 at June 30, 1998, September 30, 1997 and
September 30, 1996, respectively. Repayments on related party loans were
$48 in the nine months ended June 30, 1998 and $30 in the year ended
September 30, 1997. No new loans were granted to such related parties
during these periods.
(16) FAIR VALUES OF FINANCIAL INSTRUMENTS
------------------------------------
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information about financial instruments
for which it is practicable to estimate fair value, whether or not such
financial instruments are recognized in the consolidated statements of
financial condition. Fair value is the amount at which a financial
instrument could be exchanged in a current transaction between willing
parties, other than in a forced sale or liquidation.
Quoted market prices are used to estimate fair values when those prices are
available. However, active markets do not exist for many types of financial
instruments. Consequently, fair values for these instruments must be
estimated by management using techniques such as discounted cash flow
analysis and comparison to similar instruments. These estimates are highly
subjective and require judgments regarding significant matters, such as the
amount and timing of future cash flows and the selection of discount rates
that appropriately reflect market and credit risks. Changes in these
judgments often have a material effect on the fair value estimates. Since
these estimates are made as of a specific point in time, they are
susceptible to material near-term changes. Fair values disclosed in
accordance with SFAS No. 107 do not reflect any premium or discount that
could result from the sale of a large volume of a particular financial
instrument, nor do they reflect possible tax ramifications or estimated
transaction costs.
F-34
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS NAUDITED)
(Dollars in thousands)
The following is a summary of the carrying amounts and estimated fair values
of financial assets and liabilities (none of which were held for trading
purposes):
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
-------------------- --------------------- ---------------------
CARRYING ESTIMATED CARRYING ESTIMATED CARRYING ESTIMATED
Amount Fair Value Amount Fair Value Amount Fair Value
--------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Financial assets:
Cash and due from banks.......... $ 7,785 $ 7,785 $ 9,191 $ 9,191 $ 8,669 $ 8,669
Federal funds sold............... 5,000 5,000 5,000 5,000
Investment securities............ 68,826 68,808 70,712 70,608 69,451 69,113
Mortgage-backed securities....... 133,109 133,838 140,224 140,777 154,345 153,001
Loans receivable................. 440,360 446,624 404,497 410,382 369,487 373,068
Accrued interest receivable...... 4,625 4,625 4,262 4,262 4,096 4,096
Federal Home Loan Bank stock..... 3,690 3,690 3,641 3,641 3,211 3,211
======== ======== ======== ======== ======== ========
Financial liabilities:
Deposits......................... $580,075 $579,437 $546,846 $547,557 $545,286 $546,039
Borrowings....................... 25,048 24,139 24,000 24,071 13,000 13,299
Bank overdraft................... 147 147 17,623 17,623 17,157 17,157
Mortgage escrow funds............ 14,471 14,471 4,559 4,559 4,996 4,996
======== ======== ======== ======== ======== ========
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
INVESTMENT SECURITIES AND MORTGAGE-BACKED SECURITIES
Fair values were estimated for portfolios of loans with similar financial
characteristics. For valuation purposes, the total loan portfolio was
segregated into performing and non-
performing categories. Performing loans were segregated by adjustable-rate
and fixed-rate loans; fixed-rate loans were further segmented by type, such
as residential mortgage, commercial mortgage, commercial business and
consumer loans. Residential loans were also segmented by maturity.
F-35
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS NAUDITED)
(Dollars in thousands)
Fair values were estimated by discounting scheduled future cash flows
through estimated maturity using a discount rate equivalent to the rate at
which the Bank would currently make loans which are similar with regard to
collateral, maturity and the type of borrower. The discounted value of the
cash flows was reduced by a credit risk adjustment based on loan categories.
Based on the current composition of the Bank's loan portfolio, as well as
both past experience and current economic conditions and trends, the future
cash flows were adjusted by prepayment assumptions which shortened the
estimated remaining time to maturity and therefore impacted the fair value
estimates.
Estimated fair values of loans held for sale were based on contractual sale
prices for loans covered by forward sale commitments. Any remaining loans
held for sale were valued based on current secondary market prices and
yields.
DEPOSITS
In accordance with SFAS No. 107, deposits with no stated maturity (such as
savings, demand and money market deposits) were assigned fair values equal
to the carrying amounts payable on demand. Certificates of deposit were
segregated by account type and original term, and fair values were estimated
based on the discounted value of contractual cash flows. The discount rate
for each account grouping was equivalent to the then-current rate offered by
the Bank for deposits of similar type and maturity.
These fair values do not include the value of core deposit relationships
which comprise a significant portion of the Bank's deposit base. Management
believes that the Bank's core deposit relationships provide a relatively
stable, low-cost funding source which has a substantial unrecognized value
separate from the deposit balances.
BORROWINGS
Estimated fair values of FHLB advances were based on the discounted value of
contractual cash flows. A discount rate was utilized for each outstanding
advance equivalent to the then-current rate offered by the FHLB on
borrowings of similar type and maturity.
OTHER FINANCIAL INSTRUMENTS
The other financial assets and liabilities listed in the preceding table
have estimated fair values that approximate the respective carrying amounts
because the instruments are payable on demand or have short-term maturities
and present relatively low credit risk and interest rate risk.
The carrying amount and estimated fair value of the Bank's interest rate cap
agreement at June 30, 1998 is set forth in Note 14. The fair values of the
Bank's lending-related off-balance-sheet financial instruments described in
Note 14 were estimated based on the
F-36
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS NAUDITED)
(Dollars in thousands)
interest rates and fees currently charged to enter into similar agreements,
considering the remaining terms of the agreements and the present credit
worthiness of the counterparties. At June 30, 1998, September 30, 1997 and
September 30, 1996, the estimated fair values of these instruments
approximated the related carrying amounts which were not significant.
(17) ACCOUNTING STANDARDS
--------------------
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which establishes standards for the reporting and display of
comprehensive income (and its components) in financial statements. The
standard does not, however, specify when to recognize or how to measure
items that make up comprehensive income. Comprehensive income represents
net income and certain amounts reported directly in equity, such as the net
unrealized gain or loss on available-for-sale securities. While SFAS No.
130 does not require a specific reporting format, it does require that an
enterprise display in the financial statements an amount representing total
comprehensive income for the period. SFAS No. 130 is effective for fiscal
years beginning after December 15, 1997 and, accordingly, will be adopted by
the Bank in the fiscal year beginning October 1, 1998. Management does not
anticipate that the adoption of this standard will significantly affect the
Bank's financial reporting.
In February 1998, the FASB issued SFAS No. 132 "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which standardizes the
disclosure requirements for pensions and other postretirement benefits;
requires additional information on changes in the benefit obligations and
fair values of plan assets; and eliminates certain present disclosure
requirements. The standard does not change the recognition or measurement
requirements for postretirement benefits. SFAS No. 132 is effective for
fiscal years beginning after December 15, 1997 and, accordingly, will be
adopted by the Bank in the fiscal year beginning October 1, 1998.
Management does not anticipate that the adoption of this standard will
significantly affect the Bank's financial reporting.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires entities to recognize
all derivatives as either assets or liabilities in the statement of
financial condition at fair value. If certain conditions are met, a
derivative may be specifically designated as a fair value hedge, a cash flow
hedge, or a foreign currency hedge. A specific accounting treatment applies
to each type of hedge. Entities may reclassify securities from the held-to-
maturity category to the available-for-sale category at the time of adopting
SFAS No. 133. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999, although early adoption is permitted.
The Bank has not yet selected an adoption date or decided whether it will
reclassify securities between categories. The Bank has engaged in limited
derivatives and hedging activities covered by the new standard and,
accordingly, SFAS No. 133 is not expected to have a material impact on the
Bank's consolidated financial statements.
F-37
<PAGE>
PROVIDENT BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(INFORMATION WITH RESPECT TO JUNE 30, 1998 AND THE NINE-MONTH
PERIODS ENDED JUNE 30, 1998 AND 1997 IS NAUDITED)
(Dollars in thousands)
(18) MUTUAL HOLDING COMPANY REORGANIZATION AND OFFERING
--------------------------------------------------
On April 23, 1998, the Board of Directors of the Bank adopted a Plan of
Reorganization and Stock Issuance Plan ("the Plan") pursuant to which the
Bank will convert from mutual to stock form of ownership under a two-tier
mutual holding company structure and shares of common stock will be sold in
an initial public offering. As part of the Plan, the Bank will establish a
federally-chartered mutual holding company known as Provident Bancorp, MHC
(the "Mutual Holding Company") and a capital stock holding company known as
Provident Bancorp, Inc. (the "Company"). The Bank will become a federally-
chartered capital stock savings bank, wholly owned by the Company.
The Company plans to offer for sale 46.6% of its common shares in a
subscription offering (the "Offering") initially to eligible Bank
depositors; tax-qualified employee benefit plans of the Bank; certain other
Bank depositors and borrowers; and employees, officers and directors of the
Bank. Any shares of common stock not sold in the Offering will be offered
to certain members of the general public in a community offering, with
preference given to natural persons residing in Rockland County, New York.
The Mutual Holding Company will own the remaining 53.4% of the Company's
issued common shares.
Following the completion of the reorganization, all depositors who had
liquidation rights with respect to the Bank as of the effective date of the
reorganization will continue to have such rights solely with respect to the
Mutual Holding Company so long as they continue to hold deposit accounts
with the Bank. In addition, all persons who become depositors of the Bank
subsequent to the reorganization will have such liquidation rights with
respect to the Mutual Holding Company.
The Bank will be subject to OTS regulations concerning capital distributions
it makes to the Company subsequent to the reorganization and Offering. The
Bank may not declare or pay cash dividends on or repurchase any of its
common stock if the effect thereof would cause its stockholder's equity to
be reduced below applicable regulatory capital requirements. The OTS
regulations applicable to institutions (such as the Bank) that meet their
regulatory capital requirements, generally limit dividend payments in any
year to the greater of (i) 100% of year-to-date net income plus an amount
that would reduce surplus capital by one-half or (ii) 75% of net income for
the most recent four quarters. Surplus capital is the excess of actual
capital at the beginning of the year over the institution's minimum
regulatory capital requirement.
Offering costs will be deferred and reduce the proceeds from the shares sold
in the Offering. If the Offering is not completed, these costs will be
charged to expense. At June 30, 1998, offering costs of $49 had been
incurred and are included in other assets.
F-38
<PAGE>
GLOSSARY
<TABLE>
<S> <C>
Acting in Concert "Acting in concert" means: (i) knowing participation in a
joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant
to an express agreement, or (ii) a combination or
pooling of voting or other interests in the securities
of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or
other arrangement whether written or otherwise. A
person 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 or company who
is also acting in concert with that other party,
except that any tax-qualified employee stock benefit
plan as defined in 12 C.F.R. (S) 563b.2(a)(39) 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.
Associate "Associate" of a person means: (i) any corporation or
organization (other than the Bank or its subsidiaries
or the Company) of which such person is a director,
officer, partner or 10% shareholder; (ii) any trust or
other estate in which such person has a substantial
beneficial interest or serves as trustee or in a
similar fiduciary capacity; provided, however that such
term shall not include any employee stock benefit plan
of the Company or the Bank in which such a person has a
substantial beneficial interest or as a trustee or in a
similar fiduciary capacity; and (iii) any relative or
spouse of such person, or relative of such spouse, who
either has the same home as such person or who is a
director or officer of the Bank or its subsidiaries or
the Company
Bank Provident Bank prior to completion of the
Reorganization, or after the conclusion of the
Reorganization, as indicated by the context
BIF The Bank Insurance Fund of the FDIC
Code The Internal Revenue Code of 1986, as amended
Common Stock Common Stock, par value of $0.10 per share, of
Provident Bancorp, Inc.
Community Offering The offering for sale to the general public of shares
of Common Stock not subscribed for in the Subscription
Offering, with preference given to natural persons
residing in Rockland County, New York
Company Provident Bancorp, Inc., the parent holding company for
Provident Bank, and the issuer of the shares of Common
Stock in the Offering
Conversion Transaction A mutual-to-stock conversion of the Mutual Holding Company
Eligible Account Holders Depositors of the Bank with aggregate account balances
of at least $50 as of the close of business on December
31, 1996
ERISA Employee Retirement Income Security Act of 1974, as
amended
ESOP The Provident Bancorp, Inc. Employee Stock Ownership
Plan and Trust
</TABLE>
G-1
<PAGE>
<TABLE>
<S> <C>
Estimated Valuation Range The estimated pro forma market value of the Common
Stock to be issued in the Reorganization, or
$52,700,000 to $71,300,000. The maximum of the
Estimated Valuation Range may be increased to
$81,995,000 without a resolicitation of subscribers
Exchange Act Securities Exchange Act of 1934, as amended
Expiration Date 12:00 noon, New York time, on December 17, 1998
FASB Financial Accounting Standards Board
FDIC Federal Deposit Insurance Corporation
FDICIA Federal Deposit Insurance Corporation Improvement Act
of 1991, as amended
FHLB The Federal Home Loan Bank
FNMA Federal National Mortgage Association
Independent Valuation The appraisal of the pro forma market value of the
Common Stock to be issued in the Reorganization, as
determined by RP Financial, LC., Arlington, VA.
IRA Individual retirement account or arrangement
IRS Internal Revenue Service
Minority Stockholders Stockholders of the Company other than the Mutual
Holding Company
MMDA Money market demand account
Mutual Holding Company Provident Bancorp, MHC, a federal mutual holding
company
NASD National Association of Securities Dealers, Inc.
NOW account Negotiable order of withdrawal account
NPV Net portfolio value
Offering The offer and sale of between 2,456,500 and 3,323,500
shares of Common Stock, subject to adjustment to
3,822,025 shares of Common Stock to depositors and
others in the Subscription Offering and the Community
Offering pursuant to the Prospectus
Offering Range Between 2,456,500 and 3,323,500 shares (subject to
adjustment to 3,822,025 shares) of Common Stock in the
Offering
Offering The offer and sale of between 2,575,000 and 3,484,500
shares of Common Stock, subject to adjustment to
4,007,175 shares of Common Stock to depositors and
others in the Subscription Offering and the Community
Offering pursuant to the Prospectus
Offering Range The offer and sale by the Company of between 2,575,500
and 3,484,500 shares (subject to adjustment to
4,007,175 shares) of Common Stock in the Offering
pursuant to the Prospectus
Order Form The form for ordering Common Stock accompanied by a
certification concerning certain matters
Other Members Depositors of the Bank as of October 30, 1998 and
borrowers of the Bank as of July 9, 1998 whose
borrowings remained outstanding as of October 30,
1998, who are not Eligible Account Holders or
Supplemental Eligible Account Holders
</TABLE>
G-2
<PAGE>
<TABLE>
<S> <C>
OTS Office of Thrift Supervision
Plan of Reorganization Provident Bank Plan of Reorganization from a Mutual
Savings Bank to a Mutual Holding Company and Stock
Issuance Plan
Qualifying Deposits Deposit accounts with aggregate balances of $50.00 or
more as of specified dates
Recognition Plan The restricted stock plan to be submitted for approval
at a meeting of the Company's shareholders to be held
no earlier than six months after the completion of the
Offering
REO Real estate owned
Reorganization The reorganization of the Bank from the mutual to the
stock form of organization, the organization of the
Company, the issuance of all of the Bank's common
stock to the Company, the issuance of a majority of
the Common Stock to the Mutual Holding Company, and
the offer and sale of a minority of the Common Stock
in the Offering pursuant to the Prospectus
SAIF The Savings Association Insurance Fund of the FDIC
SEC Securities and Exchange Commission
Special Meeting The Special Meeting of members of the Bank called for
the purpose of approving the Plan
Stock Option Plan The stock option plan for directors, officers and
employees to be submitted for approval at a meeting of
the Company's shareholders to be held no earlier than
six months after the completion of the Offering
Subscription Offering The offering of non-transferable rights to subscribe
for the Common Stock, in order of priority, to
Eligible Account Holders, the ESOP, Supplemental
Eligible Account Holders and Other Member s
Subscription Price The $10.00 price per share at which the Common Stock
will be sold in the Offering
Supplemental Eligible Depositors of the Bank with aggregate account balances
Account Holders of at least $50 on September 30, 1998, who are not
Eligible Account Holders
Voting Record Date The close of business on October 30, 1998, the date
for determining depositors entitled to vote at the
Special Meeting
</TABLE>
G-3
<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 PROVIDENT BANCORP, INC. OR PROVIDENT BANK. 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.
PROVIDENT BANCORP, INC.
(Proposed Holding Company for
Provident Bank)
UP TO 3,323,500 SHARES
Common Stock
($0.10 par value per share)
SUBSCRIPTION AND
COMMUNITY OFFERING
PROSPECTUS
RYAN BECK & CO., INC.
November __, 1998
THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS
AND ARE NOT FEDERALLY INSURED OR GUARANTEED
Until December __, 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 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
Amount
------
<S> <C> <C>
* Legal Fees and Expenses (including Blue Sky fees)...... $180,000
** Underwriter's fees..................................... 470,000
* Printing, Postage, EDGAR and Mailing................... 225,000
* Appraisal and Business Plan Fees and Expenses.......... 52,500
* Accounting Fees and Expenses........................... 125,000
* Underwriter's Counsel Fees............................. 42,000
* Filing Fees (NASD, NASDAQ, OTS and SEC)................ 95,900
* Conversion Agent/Transfer Agent........................ 25,000
* Other Expenses......................................... 34,000
----------
* Total.................................................. $1,250,000
==========
</TABLE>
_____________
* Estimated
** Provident Bancorp, Inc. has retained Ryan, Beck & Co., Inc. ("Ryan, Beck")
to assist in the sale of common stock on a best efforts basis in the
Offerings. Ryan, Beck will receive fees of approximately $450,000,
exclusive of estimated expenses of $20,000.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF PROVIDENT BANK AND
PROVIDENT BANCORP, INC.
Generally, federal regulations define areas for indemnity coverage for
federal savings associations, and proposed federal regulations define areas for
indemnity coverage for federal MHC subsidiary holding companies, as follows:
(a) Any person against whom any action is brought or threatened
because that person is or was a director or officer of the savings association
shall be indemnified by the savings association for:
(i) Any amount for which that person becomes liable under a
judgment in such action; and
(ii) 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 section if he or she attains a
favorable judgement in such enforcement action.
(b) Indemnification shall be made to such person under paragraph (b)
of this Section only if:
(i) Final judgement on the merits is in his or her favor; or
(ii) In case of:
a. Settlement,
b. Final judgement against him or her, or
c. Final judgement in his or her favor, other than on the
merits, if a majority of the disinterested directors of
the savings association determine that he or she was
acting in good faith within the scope of his or her
employment or authority as he or she could reasonably
have perceived it under the circumstances and for a
purpose he or she could reasonably have believed under
the circumstances was in the best interest of the
savings association or its members. However, no
II-1
<PAGE>
indemnification shall be made unless the association
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
action by a court. Such notice, a copy thereof, and a
certified copy of the resolution containing the
required determination by the board of directors shall
be sent to the Regional Director, 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 OTS advises the
association in writing, within such notice period, of
its objection thereto.
(c) As used in this paragraph:
(i) "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" includes, without limitation, any court to which or
in which any appeal or any proceeding for review is brought;
(iii) "Final Judgment" means a judgment, decree, or order which
is not appealable or as to which the period for appeal has expired
with no appeal taken;
(iv) "Settlement" includes the entry of a judgment by consent or
confession or a plea of guilty or of nolo contendere.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Not Applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES:
See the Exhibit Index which immediately preceeds the Exhibits to the
Form S-1.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to:
(1) File, during any period in which it offers or sales are being
made, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
II-2
<PAGE>
(2) For the purpose of determining liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering.
(3) Remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The registrant will provide to the underwriter at the closing specified
in the Underwriting Agreement certificates in such documentation and registered
in such names as required by the underwriter to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the village of Montebello, State of
New York on November 2, 1998.
PROVIDENT BANCORP, INC. (IN FORMATION)
By: \s\ George Strayton
------------------------------------
George Strayton
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors and officers of Provident Bancorp, Inc. (the
"Company") hereby severally constitute and appoint George Strayton as our true
and lawful attorney and agent, to do any and all things in our names in the
capacities indicated below which said George Strayton may deem necessary or
advisable to enable the Company to comply with the Securities Act of 1933, and
any rules, regulations and requirements of the Securities and Exchange
Commission, in connection with the registration statement on Form S-1 relating
to the offering of the Company's Common Stock, including specifically, but not
limited to, power and authority to sign for us in our names in the capacities
indicated below the registration statement and any and all amendments (including
post-effective amendments) thereto; and we hereby approve, ratify and confirm
all that said George Strayton shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
----------- ------ -----
<S> <C> <C>
\s\ George Strayton President, Chief Executive November 2, 1998
- ------------------------- Officer and Director
George Strayton (Principal Executive Officer)
\s\ Katherine A. Dering Senior Vice President and November 2, 1998
- ------------------------- Chief Financial Officer
Katherine A. Dering (Principal Financial and
Accounting Officer)
\s\ William F. Helmer Chairman of the Board November 2, 1998
- -------------------------
William F. Helmer
\s\ Dennis L. Coyle Vice Chairman of the Board November 2, 1998
- -------------------------
Dennis L. Coyle
\s\ Murray L. Korn Director November 2, 1998
- -------------------------
Murray L. Korn
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- -----
<S> <C> <C>
\s\ Donald T. McNelis Director November 2, 1998
- --------------------------
Donald T. McNelis
\s\ Richard A. Nozell Director November 2, 1998
- --------------------------
Richard A. Nozell
\s\ William R. Sichol, Jr. Director November 2, 1998
- --------------------------
William R. Sichol, Jr.
\s\ Wilbur C. Ward Director November 2, 1998
- --------------------------
Wilbur C. Ward
\s\ F. Gary Zeh Director November 2, 1998
- --------------------------
F. Gary Zeh
</TABLE>
<PAGE>
As filed with the Securities and Exchange Commission on November 6, 1998
Registration No. 333-63593
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
EXHIBITS
TO
PRE-EFFECTIVE AMENDMENT NO. 1
TO THE
REGISTRATION STATEMENT
ON
FORM S-1
___________________
PROVIDENT BANCORP, INC.
MONTEBELLO, NEW YORK
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
1.1 Engagement Letter between Provident Bank and Ryan, Beck & Co., Inc.*
1.2 Agency Agreement among Provident Bancorp, Inc., Provident Bank and Ryan,
Beck & Co., Inc.
2 Plan of Reorganization from Mutual Savings Association to Mutual Holding
Company and Stock Issuance Plan
3.1 Proposed Federal Holding Company Charter of Provident Bancorp, Inc.
(contained in Exhibit 2)*
3.2 Proposed Bylaws of Provident Bancorp, Inc (contained in Exhibit 2)*
4 Form of Common Stock Certificate of Provident Bancorp, Inc*
5 Opinion of Luse Lehman Gorman Pomerenk & Schick, P.C. regarding legality
of securities being registered*
8.1 Federal Tax Opinion of Luse Lehman Gorman Pomerenk & Schick, P.C.
8.2 Letter of RP Financial, LC with respect to Subscription Rights*
10.1 Form of Employee Stock Ownership Plan*
10.2 Employment Agreement with George Strayton, as amended
10.3 Form of Employment Agreement
10.4 Deferred Compensation Agreement*
10.5 Supplemental Executive Retirement Plan, as amended*
10.6 Management Incentive Program
10.7 1996 Long-Term Incentive Plan for Officers and Directors, as amended
16 Letter regarding change in accountants
21 Subsidiaries of the Registrant*
23.1 Consent of Luse Lehman Gorman Pomerenk & Schick, P.C. (contained in
Opinions included on Exhibits 5 and 8.1)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of RP Financial, LC
23.5 Consent of Gaber, Nyman & Co., LLP
24 Power of Attorney (set forth on signature page)
27 EDGAR Financial Data Schedule*
99.1 Appraisal Agreement between Provident Bank and RP Financial, LC.*
99.2 Business Plan Agreement between Provident Bank and RP Financial, LC.*
</TABLE>
<PAGE>
<TABLE>
<S> <C>
99.3 Appraisal Report of RP Financial, LC**
99.4 Proxy Statement*
99.5 Marketing Materials
99.6 Order Form
99.7 401(k) Supplement
99.8 Updated Appraisal Report of RP Financial, LC**
</TABLE>
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* Previously filed.
** Separately bound.
<PAGE>
EXHIBIT 1.2
PROVIDENT BANCORP, INC.
(a Federal Corporation - in Formation)
3,484,500 Shares
(Subject to Increase Up to 4,007,175 Shares)
COMMON STOCK ($.10 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
----------------
October ____, 1998
Ryan, Beck & Co., Inc.
220 South Orange Avenue
Livingston, New Jersey 07039-5817
Ladies and Gentlemen:
Provident Bancorp, Inc., a federal corporation in formation (the "Holding
Company"), Provident Bancorp, MHC, a federal mutual holding company in formation
(the "MHC") and Provident Bank (the "Bank") (collectively, the "Primary
Parties") hereby confirm, jointly and severally their agreement with Ryan, Beck
& Co., Inc. (the "Agent"), as follows:
SECTION 1. THE OFFERING. On April 23, 1998, the Board of Directors of the
------------
Bank adopted a Plan of Reorganization (the "Plan") which provides for the
reorganization of the Bank into a two-tier mutual holding company structure, the
issuance of all of the Bank's outstanding Common Stock to the Holding Company
(the "Reorganization"), and the issuance of a majority of the outstanding common
stock to the MHC. Upon completion of the Reorganization, the Bank will be a
wholly owned subsidiary of the Holding Company and the Holding Company will be a
majority owned subsidiary of the MHC. The Holding Company is offering up to
3,484,500 shares of common stock, par value $.10 per share (the "Common Stock")
(subject to an increase up to 4,007,175 shares), in (i) a subscription offering
(the "Subscription Offering"), and, if necessary, (ii) a direct community
offering (the "Direct Community Offering") and (iii) a syndicated community
offering (the "Syndicated Community Offering"), in connection with the
conversion and reorganization of the Bank from a mutual savings association to a
stock savings association and wholly-owned subsidiary of the Holding Company
(the "Reorganization"), all pursuant to the Plan of Reorganization from a Mutual
Savings Association to Mutual Holding Company and Stock Issuance Plan (the
"Plan"). References to the Bank herein shall include the Bank in its current
mutual form or post-Reorganization stock form as a wholly-owned subsidiary of
the Holding Company.
Pursuant to the Plan, the Holding Company will offer and sell shares of its
Common Stock (the "Conversion Shares" or "Shares") in the Subscription Offering,
Direct Community Offering, and Syndicated Community Offering (collectively, the
"Conversion Offerings" or "Offering") so that, upon completion of the Conversion
Offerings, the purchasers of Conversion Shares in the Conversion Offerings will
own 46.6% of the outstanding Common Stock and the MHC will own 53.4% of the
outstanding Common Stock. The Holding Company will issue the Shares at a
purchase price of $10.00 per share (the "Purchase Price"). If the number of
Conversion Shares is increased
<PAGE>
or decreased in accordance with the Plan, the term "Shares" shall mean such
greater or lesser number, where applicable.
In the Subscription Offering, non-transferable rights to subscribe for
between 2,575,500 and 3,484,500 shares (subject to an increase up to 4,007,175
shares) of the Common Stock ("Subscription Rights") will be granted, in the
following priority: (1) the Bank's depositors with account balances of $50.00 or
more as of December 31, 1996 ("Eligible Account Holders"); (2) the Bank's tax-
qualified Employee Stock Ownership Plan ("ESOP"); (3) the Bank's depositors with
account balances of $50.00 or more as of September 30, 1998 ("Supplemental
Eligible Account Holders"); and (4) depositors (other than Eligible Account
Holders and Supplemental Eligible Account Holders) as of the date for
determining if members entitled to vote on the approval of the Plan (the "Voting
Record Date") and borrowers of the Bank as of July 9, 1998, whose borrowings
remain outstanding as of the Voting Record Date (collectively, "Other Members"),
subject to the priorities and purchase limitations set forth in the Plan. The
Holding Company may offer shares of Common Stock offered but not subscribed for
in the Subscription Offering to members of the general public, with first
preference given to residents of the Bank's local community of the New York
county of Rockland. In the event a Direct Community Offering is held, it may be
held at any time during or immediately after the Subscription Offering.
Depending on market conditions, shares not subscribed for in the Subscription
Offering or purchased in the Direct Community Offering may be offered in the
Syndicated Community Offering to eligible members of the general public on a
best efforts basis by approved broker-dealer firms ("Assisting Brokers") which
are members of the National Association of Securities Dealers, Inc. ("NASD").
It is acknowledged that the number of Shares to be sold in the Offering may
be increased or decreased as described in the Prospectus (as hereinafter
defined); that the purchase of Shares in the Offering is subject to maximum and
minimum purchase limitations as described in the Prospectus; and that the
Company and Holding Company may reject, in whole or in part, any subscription
received in the Community Offering. If the number of Shares is increased or
decreased in accordance with the Plan, the term "Shares" shall mean such greater
or lesser number where applicable.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (File
No.__________) in order to register the Shares under the Securities Act of 1933,
as amended (the "1933 Act"), and has filed such amendments thereto as have been
required to the date hereof (the "Registration Statement"). The prospectus, as
amended, included in the Registration Statement at the time it initially became
effective is hereinafter called the "Prospectus", except that if any prospectus
is filed by the Holding Company pursuant to Rule 424(b) or (c) of the
regulations of the Commission under the 1933 Act differing from the prospectus
included in the Registration Statement at the time it initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission and shall include any supplements and amendments thereto from and
after their dates of effectiveness or use, respectively.
In connection with the Reorganization, the Bank filed with the Office of
Thrift Supervision (the "OTS"), pursuant to Title 12, Parts 575 and 563b of the
Code of Federal Regulations (the "Conversion Regulations"), a Notice of Mutual
Holding Company Reorganization and Application for Approval of an Issuance by a
Subsidiary of a Mutual Holding Company, including exhibits and
-2-
<PAGE>
the Prospectus, and has filed amendments thereto as required by the OTS (as so
amended, the "MHC Notice and Application"). The Holding Company filed with the
OTS its application on Form H-(e)1 (the "Holding Company Application") to
acquire the Bank under the Home Owners Loan Act and the regulations promulgated
thereunder ("HOLA"). The Bank's application with the OTS for approval of the
formation of an interim stock savings bank and the merger of the interim stock
savings bank with and into the Bank (the "Merger Application") was filed as an
exhibit to the Holding Company Application. The MHC Notice and Application and
the Holding Company Application (including the Merger Application) shall
collectively be hereinafter referred to as the "OTS Applications."
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus dated __________ of the Holding
Company to be used in the Subscription Offering and Community Offering (if any),
and, if necessary, will deliver copies of the Prospectus or prospectus
supplement for use in a Syndicated Community Offering and/or Public Offering, as
defined in the Prospectus (as hereinafter defined).
SECTION 2. APPOINTMENT OF AGENT. Subject to the terms and conditions of
--------------------
this Agreement, the Primary Parties hereby appoint Agent as their financial
advisor and marketing agent to utilize its best efforts to solicit subscriptions
for the Conversion Shares and to advise and assist the Primary Parties with
respect to the sale of the Conversion Shares in the Conversion Offerings.
On the basis of the representations and warranties of the Primary Parties
contained in, and subject to the terms and conditions of, this Agreement the
Agent accepts such appointment and agrees to consult with and advise the MHC,
the Holding Company and the Bank as to the matters set forth in the letter
agreement ("Letter Agreement"), dated June 12, 1998, between the Bank and Agent
(a copy of which is attached hereto as Exhibit A). It is acknowledged by the
---------
Primary Parties that the Agent shall not be obligated to purchase any Shares and
shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order. Subscriptions for Conversion
Shares will be offered by means of order forms as described in the Prospectus.
Except as provided in the last paragraph of this Section 2, the appointment of
the Agent hereunder shall terminate upon consummation of the Offerings.
If selected broker-dealers are used to assist in the sale of Conversion
Shares in the Syndicated Community Offering, the Primary Parties hereby appoint,
subject to the terms and conditions of this Agreement, Agent to manage such
broker-dealers in this Syndicated Community Offering. On the basis of the
representations and warranties of the Primary Parties contained in, and subject
to the terms and conditions of, this Agreement, Agent accepts such appointment
and agrees to manage the selling group of broker-dealers in the Syndicated
Community Offering.
-3-
<PAGE>
Agent agrees to make available to the Bank, MHC and the Holding Company for
a period of 12 months following the consummation of the Reorganization its
Strategic Advisory Services ("STARS") program. If the Bank elects to participate
in the STARS program, the Agent will meet with the Bank at its request and will
render general advice on the financial matters listed in Section 9 of the Letter
Agreement (but not including (i) any in-depth merger and acquisition analyses or
studies which are available under Agent's normal fee schedule, or (ii) advice
with respect to a specific acquisition transaction by, or sale of, the Bank or
the Holding Company). If the Bank elects to participate in the STARS program,
the Agent will waive the regular retainer fee and hourly charges for the first
12 months of such participation. The Bank would be required, however, to
reimburse Agent for its reasonable out-of-pocket expenses incurred in
conjunction with the performance of these services. Such out-of-pocket expenses
include travel, legal and other miscellaneous expenses. Agent would not be
permitted to incur any single expense in excess of $1,000 pursuant to this
paragraph without the prior approval of the Bank. If negotiations for a
transaction conducted during the 12-month participation period result in the
execution of a definitive agreement and/or consummation of a transaction for
which Agent customarily would be entitled to a fee for its advisory or other
investment banking services, Agent shall receive a contingent advisory fee in
accordance with the terms of a separate engagement letter to be entered into
with respect to such transaction. Nothing in this Agreement shall require the
Holding Company or the Bank to obtain such financial advisory services from
Agent. After the completion of such 12-month participation period, if the
parties wish to continue the relationship, a fee will be negotiated and an
agreement with respect to specific advisory services will be entered into at
this time.
SECTION 3. REFUND OF PURCHASE PRICE. In the event that the Reorganization
------------------------
is not consummated for any reason, including but not limited to the inability to
sell the Conversion Shares during the Offerings (including any permitted
extension thereof), this Agreement shall terminate and any persons who have
subscribed for any of the Conversion Shares shall have refunded to them the full
amount which has been received from such person, together with interest at the
Bank's current annual passbook rate, from the date payment is received to the
date said refund is made as provided in the Prospectus. Upon termination of this
Agreement, neither the Agent nor the Primary Parties shall have any obligation
to the other except that (i) the Primary Parties shall remain liable for any
amounts due pursuant to Sections 4(a), 8, 10 and 11 hereof, unless the
transaction is not consummated due to the breach by the Agent of a warranty,
representation or covenant; and (ii) the Agent shall remain liable for any
amount due pursuant to Sections 10 and 11 hereof, unless the transaction is not
consummated due to the breach by the Primary Parties of a warranty,
representation or covenant.
SECTION 4. FEES. In addition to the expenses specified in Section 8
----
hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Primary Parties:
(a) An advisory and marketing fee in the amount of $450,000.
(b) A fee not to exceed 5.5% of the aggregate Purchase Price of the
Conversion Shares sold by Assisting Brokers in any Syndicated Community
Offering. The Agent will pay the Assisting Brokers that assist in the purchase
of Conversation Shares in the Syndicated Community Offering a fee competitive
gross underwriting discounts charged at such time for comparable amounts of
stock sold at a comparable price per share in a similar market environment.
Assisting
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<PAGE>
Brokers will not be utilized without the prior approval of the Primary Parties,
and it is agreed that Agent will manage the Assisting Brokers in the Syndicated
Offering.
The fees specified in clauses (a) and (b) above shall be payable to the
Agent by wire transfer of immediately available funds or a check in next-day
funds, as agreed to by the parties hereto, at the time so indicated above.
Notwithstanding anything to the contrary contained in this Agreement (but
subject to Section 10 hereof) the Agent reserves the right to renegotiate the
amount of fees (but only in those circumstances where the conduct of the Company
or the Bank triggers the need for renegotiations pursuant to this paragraph) and
expenses payable or reimbursable, as the case may be, by the Company and the
Bank in the event that (i) the Company and/or the Bank are required to resolicit
subscribers for Shares in the Subscription and Community Offering, or (ii) the
regulations governing the Reorganization are changed in a manner that materially
affects the ability of the Agent to perform its duties as set forth in this
Agreement. Until any renegotiation called for by this paragraph is completed,
the Agent shall not accrue expenses relating to any resolicitation or change in
regulations in an amount that would cause the total expenses incurred by the
Agent, that are reimbursable by the Bank pursuant to Section 6 hereof, to be
greater than without the prior written consent of the Company or the Bank, which
consent shall not be unreasonably withheld.
SECTION 5. CLOSING. If the minimum number of Conversion Shares permitted
-------
to be sold in the Reorganization on the basis of the most recently updated
Appraisal (as defined in Section 6(h)) are subscribed for at or before the
termination of the Offerings, and the other conditions to the completion of the
Reorganization are satisfied, the Holding Company agrees to issue the Shares on
the Closing Date (as hereinafter defined) against payment therefor by the means
authorized by the Plan and to deliver certificates evidencing ownership of the
Conversion Shares in such authorized denominations and registered in such names
as may be indicated on the subscription order forms directly to the purchasers
thereof as promptly as practicable after the Closing Date. The Closing shall be
held at the offices of special counsel to the Primary Parties, or at such other
place as shall be agreed upon among the Primary Parties and the Agent, at 10:00
a.m., Eastern Standard Time, on the business day selected by the Holding Company
which business day shall be no less than two business days following the giving
of prior notice by the Holding Company to the Agent or at such other time as
shall be agreed upon by the Primary Parties and the Agent. At the Closing, the
Primary Parties shall deliver to the Agent in same-day funds the commissions,
fees and expenses owing to the Agent as set forth in Sections 4 and 8 hereof and
the opinions required hereby and other documents deemed reasonably necessary by
the Agent shall be executed and delivered to effect the sale of the Shares as
contemplated hereby and pursuant to the terms of the Prospectus. The Holding
Company shall notify the Agent when funds shall have been received for the
minimum number of shares of the Common Stock. The hour and date upon which the
Holding Company shall release the Conversion Shares for delivery in accordance
with the terms hereof is referred to herein as the "Closing Date."
The Company and the Bank (or their respective agents) shall advise the
Agent whenever an allocation of the Shares does not strictly correspond to all
subscriptions for Shares, as to the allocation of the Shares. The Agent shall
have no liability to any party for the records or other information provided by
the Company and the Bank (or their respective agents) to the Agent for use in
allocating the Shares. The Company and the Bank shall indemnify and hold
harmless The Agent
-5-
<PAGE>
for any liability arising out of the allocation of the Shares in accordance with
the Plan of Conversion generally and the records or other information provided
to the Agent by the Company and the Bank (or their respective agents).
SECTION 6.A. REPRESENTATIONS AND WARRANTIES OF THE PRIMARY PARTIES. The
-----------------------------------------------------
Primary Parties jointly and severally represent and warrant to the Agent that:
(a) The Bank has, and as of the Closing Date, the MHC and the Holding
Company will have, all such power, authority, authorizations, approvals and
orders as may be required to enter into this Agreement, to carry out the
provisions and conditions hereof and to issue and sell the Shares as provided
herein and as described in the Prospectus. The consummation of the
Reorganization, the execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated have been duly and
validly authorized by all necessary corporate action on the part of the Bank
and, as of the Closing Date, will have been duly and validly authorized by all
necessary corporate action on the part of the MHC and the Holding Company. This
Agreement had been validly executed and delivered by the Holding Company, the
MHC and the Bank, and is a valid, legal and binding obligation of the Bank, the
Holding Company and the MHC, in each case enforceable in accordance with its
terms, except to the extent, if any, that the provisions of Sections 10 and 11
hereof may be unenforceable as against public policy, and except to the extent
that such enforceability may be limited by bankruptcy laws, insolvency laws, or
other laws affecting the enforcement of creditors' rights generally, or the
rights of creditors of savings institutions insured by the FDIC (including the
laws relating to the rights of the contracting parties to equitable remedies).
(b) The Plan has been approved by the OTS.
(c) The Registration Statement was declared effective by the
Commission on ___________, 1998; and no stop order has been issued with respect
thereto and no proceedings therefor have been initiated or to the best knowledge
of the Primary Parties threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the 1933 Act and the
regulations promulgated thereunder and the Registration Statement, including the
Prospectus contained therein (including any amendment or supplement thereto),
any Blue Sky Application or any Sales Information (as such terms are defined in
Section 10 hereof) authorized by the Primary Parties for use in connection with
the Offerings did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and at the time any Rule 424(b) or (c) Prospectus was filed with
the Commission and at the Closing Date referred to in Section 5, the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), and any Blue Sky Application or any Sales
Information authorized by the Primary Parties for use in connection with the
Offerings will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section 6(c) shall not
apply to statements or omissions made in reliance upon and in conformity with
written information furnished to the Primary Parties by the Agent expressly
regarding the Agent for use under the captions "Market for the Common Stock" and
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<PAGE>
"The Reorganization and Offering -- Plan of Distribution and Selling
Commissions" or written statements or omissions from any sales information or
information filed pursuant to state securities or blue sky laws or regulations
regarding the Agent.
(d) The MHC Notice and Application, including the Prospectus, was
approved by the OTS on ___________; and the Proxy Statement of the Bank relating
to the special meeting of the members of the Bank at which the Plan shall be
considered for approval by the Bank's eligible voting members (the "Proxy
Statement"), was authorized for use by the Notice and Application, including the
Prospectus, by the OTS (including any amendment or supplement thereto) and at
all times subsequent thereto until the Closing Date, the MHC Notice and
Application, including the Prospectus, did and will comply as to form in all
material respects with the Conversion Regulations and any other applicable rules
and regulations of the OTS (except as modified or waived in writing by the OTS).
At the time of the approval of the MHC Notice and Application, including the
Prospectus (including any amendment or supplement thereto), did not and does not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that representations or warranties in this subsection
(d) shall not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Primary Parties by the
Agent expressly regarding the Agent for use in Prospectus contained in the MHC
Notice and Application under the captions "Market for the Common Stock" and "The
Reorganization and Offering -- Plan of Distribution and Selling Commissions" or
written statements or omissions from any sales information or information filed
pursuant to state securities or blue sky laws or regulations regarding the
Agent.
(e) No order has been issued by the OTS, the Commission, or any state
regulatory authority, preventing or suspending the use of the Prospectus and no
action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Reorganization is pending
or, to the best knowledge of the Primary Parties, threatened.
(f) The Plan has been duly adopted by the Board of Directors of the
Bank. To the best knowledge of the Primary Parties, no person has, or at the
Closing Date will have, sought to obtain review of the final action of the OTS
in approving the Plan, the Reorganization, or the OTS Applications, pursuant to
the HOLA or any other statute or regulation.
(g) The Holding Company has filed with the OTS the Holding Company
Application (including the Merger Application) and as of the Closing Date the
OTS will have approved of the Holding Company's acquisition of the Bank.
(h) RP Financial, which prepared the appraisal of the aggregate pro
forma market value of the Holding Company and the Bank on which the Offerings
were based (the "Appraisal"), has advised the Primary Parties in writing that it
is independent with respect to each of the Primary Parties within the meaning of
the Conversion Regulations.
(i) KPMG Peat Marwick, LLP, which certified the financial statements
filed as part of the Registration Statement and the MHC Notice and Application,
has advised the Primary Parties that it is, with respect to each of the Primary
Parties, an independent certified public
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<PAGE>
accountant within the meaning of 12 C.F.R. Sections 563c.3 and 571.2(c)(3) and
under the 1933 Act and the Regulations promulgated thereunder.
(j) The financial statements and the notes thereto which are included
in the Registration Statement and which are a part of the Prospectus present
fairly the financial condition and retained earnings of the Bank as of the dates
indicated and the results of operations and cash flows for the periods
specified. The financial statements comply in all material respects with the
applicable accounting requirements of Title 12 of the Code of Federal
Regulations, Regulation S-X of the Commission and generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods presented
except as otherwise noted therein, and present fairly in all material respects
the information required to be stated therein. The other financial, statistical
and pro forma information and related notes included in the Prospectus present
fairly the information shown therein on a basis consistent with the audited and
unaudited financial statements included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly applied on
the basis described therein.
(k) Since the respective dates as of which information is given in the
Registration Statement, including the Prospectus; (i) there has not been any
material adverse change in the financial condition or in the earnings, capital,
properties or business affairs of any of the Primary Parties or of the Primary
Parties considered as one enterprise, whether or not arising in the ordinary
course of business; (ii) there has not been any change in total assets of the
Bank in an amount greater than $50.0 million, any material increase in the
aggregate amount of loans past due ninety (90) days or more, or any real estate
acquired by foreclosure or loans characterized as "in substance foreclosure";
nor has the Bank issued any securities or incurred any liability or obligation
for borrowings other than in the ordinary course of business; (iii) there have
not been any material transactions entered into by any of the Primary Parties,
other than those in the ordinary course of business; and (iv) the
capitalization, liabilities, assets, properties and business of the Primary
Parties conform in all material respects to the descriptions thereof contained
in the Prospectus and, none of the Primary Parties has any material liabilities
of any kind, contingent or otherwise, except as disclosed in Registration
Statement or the Prospectus.
(l) As of the Closing Date, the Holding Company will be a corporation
duly organized and in good standing under the federal laws of the United States,
with corporate power authority to own its properties and to conduct its business
as described in the Prospectus, and will be qualified to transact business and
in good standing in each jurisdiction in which the conduct of business requires
such qualification unless the failure to qualify in one or more of such
jurisdictions would not have a material adverse effect on the financial
condition, earnings, capital, properties or business affairs of the Primary
Parties. As of the Closing Date, the Holding Company will have obtained all
licenses, permits and other governmental authorizations required for the conduct
of its business, except those that individually or in the aggregate would not
materially adversely affect the financial condition, earnings, capital, assets
or properties of the Primary Parties taken as a whole; and as of the Closing
Date, all such licenses, permits and governmental authorizations will be in full
force and effect, and the Holding Company will be in compliance therewith in all
material respects.
(m) As of the Closing Date, the MHC will be duly organized and will be
validly existing as a federally chartered mutual holding company under the laws
of the United States, duly authorized to conduct its business and own its
property as described in the Registration Statement
-8-
<PAGE>
and the Prospectus; as of the Closing Date, the MHC will have obtained all
licenses, permits and other governmental authorizations required for the conduct
of its business except those that individually or in the aggregate would not
materially adversely affect the financial condition, earnings, capital, assets
or properties of the Primary Parties taken as a whole; as of the Closing Date,
all such licenses, permits and governmental authorizations will be in full force
and effect and the MHC will be in compliance therewith in all material respects;
as of the Closing Date, the MHC will be duly qualified as a foreign corporation
to transact business in each jurisdiction in which the failure to be so
qualified in one or more of such jurisdictions would have a material adverse
effect on the financial condition, earnings, capital, assets properties or
business of the Primary Parties.
(n) The MHC does not, and as of the Closing Date, will not own any
equity securities or any equity interest in any business enterprise except as
described in the Prospectus.
(o) The MHC is not authorized to issue any shares of capital stock.
(p) The Bank is duly organized and validly existing federally
chartered savings association in mutual form, duly authorized to conduct its
business as described in the Prospectus; the activities of the Bank are
permitted by the rules, regulations and practices of the OTS; the Bank has
obtained all licenses, permits and other governmental authorizations currently
required for the conduct of its business except those that individually or in
the aggregate would not materially adversely affect the financial condition of
the Primary Parties taken as a whole; all such licenses, permits and other
governmental authorizations are in full force and effect and the Bank is in good
standing under the laws of the United States and is duly qualified as a foreign
corporation to transact business in each jurisdiction in which failure to so
qualify would have a material adverse effect upon the financial condition,
earnings, capital, properties or business affairs of the Bank; all of the issued
and outstanding capital stock of the Bank after the Reorganization will be duly
and validly issued and fully paid and nonassessable; and the Holding Company
will directly own all of such capital stock free and clear of any mortgage,
pledge, lien, encumbrance, claim or restriction. The Bank does not own equity
securities or any equity interest in any other business enterprise except as
otherwise described in the Prospectus.
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<PAGE>
(q) The Bank is a member of the Federal Home Loan Bank of New York
("FHLB of New York"); the deposit accounts of the Bank are insured by the FDIC
up to applicable limits. Upon consummation of the Reorganization, the rights of
the members of the Bank in its mutual form shall be transferred to MHC in
accordance with the Plan and the requirements of the Conversion Regulations.
(r) The Bank is not authorized to issue any shares of capital stock.
(s) Upon consummation of the Reorganization, the authorized, issued
and outstanding equity capital of the Holding Company will be within the range
set forth in the Prospectus under the caption "Capitalization" and, except for
the shares of Common Stock held by MHC, no shares of Common Stock have been or
will be issued and outstanding prior to the Closing Date; and the shares of
Common Stock to be subscribed for in the Offering have been duly and validly
authorized for issuance and, when issued and delivered by the Holding Company
pursuant to the Plan against payment of the consideration calculated as set
forth in the Plan and the Prospectus, will be duly and validly issued and fully
paid and nonassessable; the issuance of the Shares is not subject to preemptive
rights, except for the Subscription Rights granted pursuant to the Plan; and the
terms and provisions of the shares of Common Stock will conform in all material
respects to the description thereof contained in the Prospectus. Upon issuance
of the Shares, good title to the Shares will be transferred from the Holding
Company to the purchasers of Shares against payment therefor in the Offering as
set forth in the Plan and the Prospectus.
(t) The Bank is not, and as of the Closing Date neither the Holding
Company nor the MHC will be, in violation of their respective articles of
incorporation or charter or their respective bylaws, or in material default in
the performance or observance of any obligation, agreement, covenant, or
condition contained in any contract, lease, loan agreement, indenture or other
instrument to which they are a party or by which they, or any of their
respective property, may be bound which would result in a material adverse
change in the condition (financial or otherwise), earnings, capital, properties
or assets. The consummation of the transactions herein contemplated will not
(i) conflict with or constitute a breach of, or default under, the Articles of
Incorporation, charter or bylaws of the Bank or, as of the Closing Date, the
Holding Company or the MHC, or materially conflict with or constitute a material
breach of, or default under, any material contract, lease or other instrument to
which any of the Primary Parties has a beneficial interest, or any applicable
law, rule, regulation or order that is material to the financial condition of
the Bank; (ii) violate any authorization, approval, judgment, decree, order,
statute, rule or regulation applicable to the Primary Parties except for such
violations which would not have a material adverse effect on the financial
condition and results of operations of the Bank; or (iii) result in the creation
of any material lien, charge or encumbrance upon any property of the Primary
Parties.
(u) No material default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a material default on the
part of any of the Primary Parties, in the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust, note,
bank loan or credit agreement or any other material instrument or agreement to
which any of the Primary
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Parties is a party or by which any of them or any of their property is bound or
affected in any respect which, in any such case, is material to the Primary
Parties individually or considered as one enterprise, and such agreements are in
full force and effect; and no other party to any such agreements has instituted
or, to the best knowledge of the Primary Parties, threatened any action or
proceeding wherein any of the Primary Parties is alleged to be in default
thereunder under circumstances where such action or proceeding, if determined
adversely to any of the Primary Parties, would have a material adverse effect
upon the Primary Parties individually or considered as one enterprise.
(v) The Primary Parties have good and marketable title to all assets
which are material to the businesses of the Primary Parties and to those assets
described in the Prospectus as owned by them, free and clear of all material
liens, charges, encumbrances, restrictions or other claims, except such as are
described in the Prospectus or which do not have a material adverse effect on
the businesses of the Primary Parties taken as a whole; and all of the leases
and subleases which are material to the businesses of the Primary Parties, as
described in the Registration Statement or Prospectus, are in full force and
effect.
(w) The Primary Parties are not in material violation of any directive
from the OTS, the FDIC, the Commission or any other agency to make any material
change in the method of conducting their respective businesses; the Primary
Parties have conducted and are conducting their respective businesses so as to
comply in all respects with all applicable statutes and regulations (including,
without limitation, regulations, decisions, directives and orders of the OTS,
the Commission and the FDIC), except where the failure to so comply would not
reasonably be expected to result in any material adverse change in the financial
condition, results of operations, capital, properties or business affairs of the
Primary Parties considered as one enterprise and, there is no charge,
investigation, action, suit or proceeding before or by any court, regulatory
authority or governmental agency or body pending or, to the best knowledge any
of the Primary Parties, threatened, which would reasonably be expected to
materially and adversely affect the Reorganization, the performance of this
Agreement, or the consummation of the transactions contemplated in the Plan as
described in the Registration Statement, or which would reasonably be expected
to result in any material adverse change in the financial condition results of
operations, capital, properties or business affairs of the Primary Parties
considered as one enterprise.
(x) Prior to the Closing Date, the Primary Parties will have received
an opinion of their special counsel, Luse Lehman Gorman Pomerenk & Schick ("Luse
Lehman"), with respect to the federal income tax consequences of the
Reorganization, as described in the Registration Statement and the Prospectus,
and an opinion from KPMG Peat Marwick, LLP with respect to the tax consequences
of the proposed transaction under the laws of the State of New York; and the
facts and representations upon which such opinions are based are truthful,
accurate and complete, and none of the Primary Parties will take any action
inconsistent therewith.
(y) The Bank has timely filed all required federal and state tax
returns, has paid all taxes that have become due and payable in respect of such
returns, except where permitted to be extended, has made adequate reserves for
similar future tax liabilities, and no deficiency has been asserted with respect
thereto by any taxing authority.
(z) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by the Primary Parties of this Agreement, or the issuance
of the Shares, except for the approval of the OTS and the Commission (which have
been received) and any necessary qualification, notification, or registration
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or exemption under the securities or blue sky laws of the various states in
which the Shares are to be offered.
(aa) None of the Primary Parties has: (i) issued any securities within
the last 18 months (except for (a) notes to evidence bank loans or other
liabilities in the ordinary course of business or as described in the
Prospectus, and (b) shares of Common Stock issued with respect to the initial
capitalization of the Holding Company); (ii) had any dealings with respect to
sales of securities within the 12 months prior to the date hereof with any
member of the NASD, or any person related to or associated with such member,
other than discussions and meetings relating to the Offering and purchases and
sales of U.S. government and agency and other securities in the ordinary course
of business; (iii) entered into a financial or management consulting agreement
except for the Letter Agreement and as contemplated hereunder; or (iv) engaged
any intermediary between the Agent and the Primary Parties in connection with
the Offering or the offering of shares of the common stock of the Bank, and no
person is being compensated in any manner for such services.
(ab) Neither the Primary Parties nor, to the best knowledge of the
Primary Parties, any employee of the Primary Parties has made any payment of
funds of the Primary Parties as a loan to any person for the purchase of
Conversion Shares, except for the Holding Company's loan to the ESOP the
proceeds of which will be used to purchase Conversion Shares, or has made any
other payment of funds prohibited by law, and no funds have been set aside to be
used for any payment prohibited by law.
(ac) The Bank complies in all material respects with the applicable
financial record keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the regulations and rules
thereunder.
(ad) The Primary Parties have not relied upon Agent or its counsel for
any legal, tax or accounting advice in connection with the Reorganization.
(ae) The records of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are accurate and complete in all material
respects.
(af) The Primary Parties comply with all laws, rules and regulations
relating to environmental protection, and none of them has been notified or is
otherwise aware that any of them is potentially liable, or is considered
potentially liable, under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any other Federal, state or local
environmental laws and regulations; no action, suit, regulatory investigation or
other proceeding is pending, threatened against the Primary Parties relating to
environmental protection, nor do the Primary Parties have any reason to believe
any such proceedings may be brought against any of them; and no disposal,
release or discharge of hazardous or toxic substances, pollutants or
contaminants, including petroleum and gas products, as any of such terms may be
defined under federal, state or local law, has occurred on, in, at or about any
facilities or properties owned or leased by any of the Primary Parties or, to
the best knowledge of the Bank, in which the Bank has a security interest.
(ag) All of the loans represented as assets on the most recent
financial statements or selected financial information of the Bank included in
the Prospectus meet or are exempt from
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all requirements of federal, state and local law pertaining to lending,
including, without limitation, truth in lending (including the requirements of
Regulations Z and 12 C.F.R. Part 226), real estate settlement procedures,
consumer credit protection, equal credit opportunity and all disclosure laws
applicable to such loans, except for violations which, if asserted, would not
result in a material adverse effect on the financial condition, results of
operations or business of the Primary Parties taken as a whole.
(ah) None of the Primary Parties are required to be registered as an
investment company under the Investment Company Act of 1940.
(ai) As of the date hereof, the charters of the Holding Company and
the MHC have been filed with the OTS, but neither charter is effective or
otherwise in force.
Any certificates signed by an officer of any of the Primary Parties and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Primary Parties to the Agent
as to the matters covered thereby with the same effect as if such representation
and warranty were set forth herein.
Section 6.B. REPRESENTATIONS AND WARRANTIES OF THE AGENT. Agent
-------------------------------------------
represents and warrants to the Primary Parties that:
(a) Agent is a corporation and is validly existing in good standing
under the laws of the State of New Jersey with full power and authority to
provide the services to be furnished to the Primary Parties hereunder.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
all necessary action on the part of Agent, and this Agreement and is the legal,
valid and binding agreement of Agent, enforceable in accordance with its terms
except as the legality, validity, binding nature and enforceability thereof may
be limited by (i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) general equity principles
regardless of whether such enforceability is considered in a proceeding in
equity or at law, and (iii) the extent, if any, that the provisions of Sections
10 or 11 hereof may be unenforceable as against public policy.
(c) Except for licenses, approvals and permits required by the State
of ________ or required by another jurisdiction solely because the Offering is
being made in such jurisdiction, each of Agent and its employees, agents and
representatives who shall perform any of the services hereunder shall have, and
until the Reorganization is completed or terminated shall maintain all licenses,
approvals and permits necessary to perform such services.
(d) No action, suit, charge or proceeding before the Commission, the
NASD, any state securities commission or any court is pending, or to the
knowledge of Agent threatened, against Agent which, if determined adversely to
Agent, would have a material adverse effect upon the ability of Agent to perform
its obligations under this Agreement.
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<PAGE>
(e) Agent is registered as a broker/dealer pursuant to Section 15(b)
of the 1934 Act and is a member of the National Association of Securities
Dealers, Inc.
(f) Any funds received in the Offering by the Agent will be handled by
the Agent in accordance with Rule 15c2-4 under the 1934 Act to the extent
applicable.
SECTION 7. COVENANTS OF THE PRIMARY PARTIES. The Primary Parties hereby
--------------------------------
jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or supplement
to the Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or file any amendment or supplement to
which amendment the Agent or its counsel shall reasonably object.
(b) The Primary Parties will not, at any time after the date any OTS
Application is approved, file any amendment or supplement to such OTS
Application without providing the Agent and its counsel an opportunity to review
such amendment or supplement or file any amendment or supplement to which
amendment or supplement the Agent or its counsel shall reasonably object.
(c) The Primary Parties will use their best efforts to cause the OTS
to approve the Holding Company's acquisition of the Bank, and will use their
best efforts to cause any post-effective amendment to the Registration Statement
to be declared effective by the Commission and any post-effective amendment to
the OTS Applications to be approved by the OTS, and will immediately upon
receipt of any information concerning the events listed below notify the Agent
(i) when the Registration Statement, as amended, has become effective; (ii) when
the MHC Notice and Application, as amended, has been approved by the OTS;
(iii) when the Holding Company Application, as amended, has been approved by
the OTS; (iv) when the Merger Application has been approved by the OTS; (v) of
the receipt of any comments from the Commission, the OTS, or any other
governmental entity with respect to the Reorganization or the transactions
contemplated by this Agreement; (vi) of any request by the Commission, the OTS,
any other governmental entity for any amendment or supplement to the
Registration Statement or the OTS Applications or for additional information;
(vii) of the issuance by the Commission, the OTS, or any other governmental
agency of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Conversion Regulations or other applicable law, or the threat
of any such action; (viii) of the issuance by the Commission, the OTS, the FDIC
or any state authority of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or threat of
any proceedings for that purpose; or (ix) of the occurrence of any event
mentioned in paragraph (f) below. The Primary Parties will make every reasonable
effort to prevent the issuance by the Commission, the OTS, the FDIC or any state
authority of any order referred to in (vii) and (viii) above and, if any such
order shall at any time be issued, to obtain the lifting thereof at the earliest
possible time.
(d) The Primary Parties will deliver to the Agent and to its counsel
conformed copies of each of the following documents, with all exhibits: each of
the OTS Applications as originally filed and of each amendment or supplement
thereto, and the Registration Statement, as originally filed and each amendment
thereto. Further, the Primary Parties will deliver such additional
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copies of the foregoing documents to counsel to the Agent as may be required for
any NASD filings. In addition, the Primary Parties will also deliver to the
Agent such number of copies of the Prospectus, as amended or supplemented, as
the Agent may reasonably request.
(e) The Primary Parties will comply in all material respects with any
and all terms, conditions, requirements and provisions with respect to the
Reorganization and the transactions contemplated thereby imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations of the Commission promulgated under such statutes, to be complied
with prior to or subsequent to the Closing Date; and when the Prospectus is
required to be delivered, the Primary Parties will comply in all material
respects, at their own expense, with all material requirements imposed upon them
by the OTS, the Conversion Regulations (except as modified or waived in writing
by the OTS), the Commission, by applicable state law and regulations and by the
1933 Act, the 1934 Act and the rules and regulations of the Commission
promulgated under such statutes, in each case as from time to time in force, so
far as necessary to permit the continuance of sales or dealing in shares of
Common Stock during such period in accordance with the provisions hereof and the
Prospectus.
(f) Each of the Primary Parties will inform the Agent of any event or
circumstances of which it is or becomes aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended, would
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading. If it is
necessary, in the reasonable opinion of counsel for the Primary Parties, to
amend or supplement the Registration Statement or the Prospectus in order to
correct such untrue statement of a material fact or to make the statements
therein not misleading in light of the circumstances existing at the time of
their use, the Primary Parties will, at their expense, prepare, file with the
Commission and the OTS, and furnish to the Agent, a reasonable number of copies
of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement and the Prospectus (in form and substance reasonably
satisfactory to counsel for the Agent after a reasonable time for review) which
will amend or supplement the Registration Statement and/or the Prospectus so
that as amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time, not
misleading. For the purpose of this subsection, each of the Primary Parties will
furnish such information with respect to itself as the Agent may from time to
time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company will
endeavor in good faith, in cooperation with the Agent, to register or to qualify
the Shares for offering and sale or to exempt such Shares from registration and
to exempt the Holding Company and its officers, directors and employees from
registration as broker-dealers, under the applicable securities laws of the
jurisdictions in which the Offering will be conducted; provided, however, that
the Holding Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation to do business in any
jurisdiction in which it is not so qualified. In each jurisdiction where any of
the Shares shall have been registered or qualified as above provided, the
Holding Company will make and file such statements and reports in each year as
are or may be required by the laws of such jurisdictions.
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(h) The Holding Company will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the date hereof, without the
Agent's prior written consent, which consent shall not be unreasonably withheld,
any shares of Common Stock other than in connection with any plan or arrangement
described in the Prospectus.
(i) For the period of three years from the date of this Agreement, the
Holding Company will furnish to the Agent upon request (i) a copy of each report
of the Holding Company furnished to or filed with the Commission under the 1934
Act or any national securities exchange or system on which any class of
securities of the Holding Company is listed or quoted, (ii) a copy of each
report of the Holding Company mailed to holders of Common Stock or non-
confidential report filed with the Commission or the OTS or any other
supervisory or regulatory authority or any national securities exchange or
system on which any class of the securities of the Holding Company is listed or
quoted, (iii) each press release and material news item and article released by
the Holding Company and/or Bank, and (iv) from time-to-time, such other publicly
available information concerning the Primary Parties as the Agent may reasonably
request.
(j) The Primary Parties will use the net proceeds from the sale of the
Common Stock in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(k) The Holding Company and the Bank will distribute the Prospectus or
other offering materials in connection with the offering and sale of the Common
Stock only in accordance with the Conversion Regulations, the 1933 Act and the
1934 Act and the rules and regulations promulgated under such statutes, and the
laws of any state in which the shares are qualified for sale.
(l) Prior to the Closing Date, the Holding Company shall register its
Common Stock under Section 12(g) of the 1934 Act, as amended, and will request
that such registration statement be effective upon completion of the
Reorganization. The Holding Company shall maintain the effectiveness of such
registration for not less than three years or such shorter period as permitted
by the OTS.
(m) For so long as the Common Stock is registered under the 1934 Act,
the Holding Company will furnish to its stockholders as soon as practicable
after the end of each fiscal year such reports and other information as are
required to be furnished to its stockholders under the 1934 Act (including
consolidated financial statements of the Holding Company and its subsidiaries,
certified by independent public accountants).
(n) The Holding Company will report the use of proceeds of the
Offering in accordance with Rule 463 under the 1933 Act, and apply the proceeds
from the sale of the shares in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(o) The Primary Parties will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Conversion Shares on an interest bearing basis at the rate described
in the Prospectus until the Closing Date and satisfaction of all conditions
precedent to the release of the Holding Company's obligation to refund payments
received from persons subscribing for or ordering Conversion Shares in the
Conversion Offerings, in accordance with the Plan as described in the
Prospectus, or until refunds of such funds have been made to the persons
entitled thereto or withdrawal authorizations canceled in accordance
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<PAGE>
with the Plan and as described in the Prospectus. The Primary Parties will
maintain such records of all funds received to permit the funds of each
subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Primary Parties to make the appropriate refunds of
such funds in the event that such refunds are required to be made in accordance
with the Plan and as described in the Prospectus.
(p) Within 90 days following the Closing Date, the MHC and the Holding
Company will each register as a savings and loan holding company under the HOLA.
(q) The Primary Parties will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the "Interpretation of the Board of Governors of the NASD
on Free Riding and Withholding."
(r) The Primary Parties will conduct their businesses in compliance in
all material respects with all applicable federal and state laws, rules,
regulations, decisions, directives and orders including, all decisions,
directives and orders of the Commission, the OTS and the FDIC.
(s) The Holding Company and the Bank shall comply with any and all
terms, conditions, requirements and provisions with respect to the
Reorganization and the transactions contemplated thereby imposed by the OTS, the
HOLA, the Commission, the 1933 Act, the Regulations, the Exchange Act and the
regulations promulgated by the Commission pursuant to the Exchange Act to be
complied with subsequent to the Closing Date. The Company will comply with all
provisions of all undertakings contained in the Registration Statement. The
liquidation account for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders (as defined in the Prospectus) of the Bank shall be
duly established and maintained in accordance with the requirements of the OTS.
(t) The Primary Parties will not amend the Plan without notifying, the
Agent prior thereto.
(u) The Holding Company shall provide the Agent with any information
necessary to carry out the allocation of the Conversion Shares in the event of
an oversubscription, and such information shall be accurate and reliable in all
material respects.
(v) The Holding Company will not deliver the Shares until the Primary
Parties have satisfied or caused to be satisfied each condition set forth in
Section 9 hereof, unless such condition is waived in writing by the Agent.
(w) Immediately upon completion of the sale by the Holding Company of
the Shares contemplated by the Plan and the Prospectus, (i) the MHC shall have
been formed pursuant to the Plan and shall own at all times more than 50% of the
issued and outstanding shares of Common Stock, (ii) all of the issued and
outstanding shares of capital stock of the Bank shall be owned by the Holding
Company, (iii) the Holding Company shall have no direct subsidiaries other than
the Bank, and (iv) the Reorganization shall have been effected in accordance
with all applicable statutes, regulations, decisions and orders; and all terms,
conditions, requirements and provisions with respect to the Reorganization
(except those that are conditions subsequent) imposed by the Commission, the OTS
or any other governmental agency, if any, shall have been complied with by
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the Primary Parties in all material respects or appropriate waivers shall have
been obtained and all notice and waiting periods shall have been satisfied,
waived or elapsed.
(x) Prior to the Closing Date, the Plan shall have been approved by
the eligible voting members of the Bank in accordance with the Conversion
Regulations and the provisions of the Bank's charter and bylaws.
(y) As of the Closing Date, the Primary Parties shall have completed
all conditions precedent to the Reorganization in accordance with the Plan and
shall have complied in all material respects with applicable laws, regulations
(except as modified or waived in writing by the OTS), decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Reorganization imposed upon it by the OTS as set forth in correspondence
received from the OTS.
(z) On or before the Closing Date, the Primary Parties will have
completed all conditions precedent to the Reorganization specified in the Plan
and the offer and sale of the Shares will have been conducted in all material
respects in accordance with the Plan, the Conversion Regulations (except as
modified or waived in writing by the OTS) and with all other applicable laws,
regulations, decisions and orders, including all terms, conditions, requirements
and provisions precedent to the Reorganization imposed upon any of the Primary
Parties by the OTS, the Commission or any other regulatory authority and in the
manner described in the Prospectus.
SECTION 8. PAYMENT OF EXPENSES. Whether or not the Reorganization is
-------------------
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the OTS Applications; (b) the preparation, printing, filing,
delivery and shipment of the Registration Statement, including the Prospectus,
and all amendments and supplements thereto; (c) all filing fees and expenses in
connection with the qualification or registration of the Shares for offer and
sale by the Holding Company or the Bank under the securities or "blue sky" laws,
including without limitation filing fees, reasonable legal fees and
disbursements of counsel in connection therewith, and in connection with the
preparation of a blue sky law survey; (d) the filing fees of the NASD; (e) fees
and expenses related to the preparation of the independent appraisal; and
(f) the reasonable expenses of the Agent. Notwithstanding the foregoing, the
Primary Parties shall not be required to reimburse Agent for more than $40,000
in legal fees (other than such fees as shall be related to "blue sky" matters)
and $20,000 in non-legal out-of-pocket expenses, except in the event of any
material delay in the Offering that would require an update of the financial
information in tabular form contained in the Registration Statement, as amended
or supplemented, to reflect a period later than that set forth in the original
Registration Statement. Not later than three days prior to the Closing Date, the
Agent will provide the Bank with a detailed accounting of all reimbursable
expenses to be paid at the Closing.
SECTION 9. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of the
-------------------------------------
Agent hereunder and the occurrence of the Closing and the Reorganization are
subject to the condition that all representations and warranties and other
statements of the Primary Parties herein contained are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and
correct, the condition that the Primary Parties shall have performed all of
their obligations hereunder to be performed on or before such dates and to the
following further conditions:
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(a) The Registration Statement shall have been declared effective by
the Commission and the prospectus and proxy statement contained in the MHC
Notice and Application shall have been approved by the OTS for mailing prior to
the commencement of the Offering, the Holding Company Application shall have
been approved, and no stop order or other action suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or, to any of the Primary Parties' best
knowledge, threatened by the Commission or any state authority and no order or
other action suspending the authorization for use of the Prospectus or the
consummation of the Reorganization shall have been issued or proceedings
therefor initiated or, to any of the Primary Parties' best knowledge, threatened
by the OTS, the Commission, or any other governmental body.
(b) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date, of Luse
Lehman, and/or local counsel acceptable to the Agent in form and substance
satisfactory to counsel for the Agent to the effect that:
(i) The Holding Company is a corporation duly organized and
validly existing and in good standing under the federal laws of the United
States of America, with corporate power and authority to own its properties and
to conduct its business as described in the Prospectus, and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business requires such qualification and in which the failure to
qualify would have a material adverse effect on the financial condition,
earnings, capital, properties or business affairs of the Primary Parties.
(ii) The Bank is a duly organized and validly existing
federally chartered mutual savings association with full power and authority to
own its properties and to conduct its business as described in the Prospectus
and to enter into this Agreement and perform its obligations hereunder; the
activities of the Bank as described in the Prospectus are permitted by the
rules, regulations and practices of the OTS; the issuance and sale of the
capital stock of the Bank to the Holding Company in the Reorganization has been
duly and validly authorized by all necessary corporate action on the part of the
Holding Company and the Bank and, upon payment therefor in accordance with the
terms of the Plan, will be validly issued, fully paid and nonassessable; and
will be owned of record and beneficially by the Holding Company, free and clear
of any mortgage, pledge, lien, encumbrance, claim or restriction.
(iii) The Bank is a member of the FHLB of New York and the
Bank is an insured depository institution under the provisions of the Federal
Deposit Insurance Act, as amended, and to such counsel's knowledge no
proceedings for the termination or revocation of such insurance are pending or
threatened.
(iv) Upon consummation of the Reorganization, the MHC will
have been duly organized and will be validly existing as a federally chartered
mutual holding company, duly authorized to conduct its business and own its
properties as described in the Registration Statement and Prospectus.
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(v) Upon consummation of the Reorganization, (a) the
authorized, issued and outstanding capital stock of the Holding Company will be
within the range set forth in the Prospectus under the caption "Capitalization,"
and no shares of Common Stock have been or will be issued and outstanding prior
to the Closing Date (except for the shares issued upon incorporation of the
Holding Company); (b) the shares of Common Stock of the Holding Company issued
to the MHC will have been duly and validly authorized for issuance and will be
fully paid and nonassessable; (c) the shares of Common Stock of the Holding
Company to be subscribed for in the Offering will have been duly and validly
authorized for issuance, and when issued and delivered by the Holding Company
pursuant to the Plan against payment of the consideration calculated as set
forth in the Plan, will be fully paid and nonassessable; and (d) the issuance of
the shares of Common Stock is not subject to preemptive rights under the
charter, articles of incorporation or bylaws of any of the Primary Parties, or
arising or outstanding by operation of law or, to the best knowledge of such
counsel, under any contract, indenture, agreement, instrument or other document,
except for the subscription rights under the Plan.
(vi) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Primary Parties; and this
Agreement constitutes a valid, legal and binding obligation of each of the
Primary Parties, enforceable in accordance with its terms, except to the extent
that the provisions of Sections 10 and 11 hereof may be unenforceable as against
public policy, and except to the extent that such enforceability may be limited
by bankruptcy laws, insolvency laws, or other laws affecting the enforcement of
creditors' rights generally, or the rights of creditors of savings institutions
insured by the FDIC (including the laws relating to the rights of the
contracting parties to equitable remedies).
(vii) The Plan has been duly adopted by the board of
directors of the Bank and by the members of the Bank, in the manner required by
the Conversion Regulations and the Bank's charter and bylaws.
(viii) The OTS Applications have been approved by the OTS and
the Prospectus and the Proxy Statement have been authorized for use by the OTS,
and subject to the satisfaction of any conditions set forth in such OTS
approvals, no further approval, registration, authorization, consent or other
order of any federal or state regulatory agency, public board or body is
required in connection with the execution and delivery of this Agreement, the
offer, sale and issuance of the Shares and the consummation of the
Reorganization.
(ix) The purchase by the Holding Company of all of the
issued and outstanding capital stock of the Bank has been authorized by the OTS
and no action has been taken, or, to such counsel's knowledge, is pending or
threatened, to revoke any such authorization or approval.
(x) The Registration Statement has become effective under the
1933 Act, no stop order suspending the effectiveness of the Registration
Statement has been issued, and, to the best of such counsel's knowledge, no
proceedings for that purpose have been instituted or threatened.
(xi) The material tax consequences of the Reorganization are
set forth in the Prospectus under the caption "The Reorganization and Offering -
- - Tax Effects of the
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Reorganization." The information in the Prospectus under the caption "The
Reorganization and Offering -- Tax Effects of the Reorganization" has been
reviewed by such counsel and fairly describes such opinions rendered by such
counsel and KPMG Peat Marwick, LLP to the Primary Parties with respect to such
matters.
(xii) The terms and provisions of the shares of Common Stock
conform to the description thereof contained in the Registration Statement and
the Prospectus, and the forms of certificates proposed to be used to evidence
the shares of Common Stock are in due and proper form.
(xiii) At the time the MHC Notice and Application was
approved, the MHC Notice and Application (as amended or supplemented) including
the Prospectus contained therein, complied as to form in all material respects
with the requirements of the Conversion Regulations and all applicable laws,
rules and regulations and decisions and orders of the OTS, except as modified or
waived in writing by the OTS (other than the financial statements, notes to
financial statements, financial tables and other financial and statistical data
included therein and the appraisal valuation as to which counsel need express no
opinion). To such counsel's knowledge, no person has sought to obtain regulatory
or judicial review of the final action of the OTS approving the OTS
Applications.
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<PAGE>
(xiv) At the time that the Registration Statement became
effective the Registration Statement, including the Prospectus contained therein
(as amended or supplemented) (other than the financial statements, notes to
financial statements, financial tables or other financial and statistical data
included therein and the appraisal valuation as to which counsel need express no
opinion), complied as to form in all material respects with the requirements of
the 1933 Act and the rules and regulations promulgated thereunder.
(xv) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending, or threatened (i) asserting the
invalidity of this Agreement or (ii) seeking to prevent the Reorganization or
the offer, sale or issuance of the Shares.
(xvi) The information in the Prospectus under the captions
"Regulation," "Taxation," "Restrictions on the Acquisition of the Company and
the Bank -- Provisions of the Company's Charter and Bylaws -- Authorization of
Preferred Stock," "Description of Capital Stock of the Company," and "The
Reorganization and Offering," to the extent that it constitutes matters of law,
summaries of legal matters, documents or proceedings, or legal conclusions, has
been reviewed by such counsel and is accurate in all material respects (except
as to the financial statements and other financial data included therein as to
which such counsel need express no opinion).
(xvii) None of the Primary Parties are required to be
registered as an investment company under the Investment Company Act of 1940.
(xviii) The Bank has duly adopted a federal stock charter and
bylaws effective upon consummation of the Reorganization, and none of the
Primary Parties is in violation of its articles of incorporation or its charter,
as the case may be, or its bylaws or, to the best of such counsel's knowledge,
any material obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note, lease or other
instrument filed as an exhibit to, or incorporated by reference in, the
Registration Statement, which violation would have a material adverse effect on
the financial condition of the Primary Parties considered as one enterprise, or
on the earnings, capital, properties or business affairs of the Primary Parties
considered as one enterprise. In addition, the execution and delivery of and
performance under this Agreement by the Primary Parties, the incurrence of the
obligations set forth herein and the consummation of the transactions
contemplated herein will not result in any material violation of the provisions
of the articles of incorporation or charter, as the case may be, or the bylaws
of any of the Primary Parties or any material violation of any applicable law,
act, regulation, or to such counsel's knowledge, order or court order, writ,
injunction or decree.
The opinion may be limited to matters governed by the laws of the United
States, and in the case of local counsel, the State of New York. In rendering
such opinion, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the United States, to the extent such
counsel deems proper and specified in such opinion, upon the opinion of other
counsel of good standing, as long as such other opinion indicates that the Agent
may rely on the opinion, and (B) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Primary
Parties and public officials; provided copies of any such opinion(s) or
certificates of public officials are delivered to Agent together with the
opinion to be rendered
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<PAGE>
hereunder by special counsel to the Primary Parties. The opinion of such counsel
for the Primary Parties shall state that it has no reason to believe that the
Agent is not justified in relying thereon.
(2) The letter of Luse Lehman in form and substance to the effect
that during the preparation of the Registration Statement and the Prospectus,
Luse Lehman participated in conferences with certain officers of and other
representatives of the Primary Parties, counsel to the Agent, representatives of
the independent public accountants for the Primary Parties and representatives
of the Agent at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and has considered the matters
required to be stated therein and the statements contained therein and, although
(without limiting the opinions provided pursuant to Section 9(b)(1)) Luse Lehman
has not independently verified the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus, on the basis
of the foregoing, nothing has come to the attention of Luse Lehman that caused
Luse Lehman to believe that the Registration Statement at the time it was
declared effective by the SEC and as of the date of such letter, contained or
contains any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that counsel need express no comment or opinion
with respect to the financial statements, schedules and other financial and
statistical data included, or statistical or appraisal methodology employed, in
the Registration Statement or Prospectus).
(3) The favorable opinion, dated as of the Closing Date, of
Thacher Proffitt & Wood, counsel for the Agent, with respect to such matters as
the Agent may reasonably require; such opinion may rely, as to matters of fact,
upon certificates of officers and directors of the Primary Parties delivered
pursuant hereto or as such counsel may reasonably request.
(c) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from KPMG Peat Marwick, LLP, dated the date hereof and
addressed to the Agent, such letter confirming that KPMG Peat Marwick, LLP is a
firm of independent public accountants within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants,
the 1933 Act and the regulations promulgated thereunder and 12 C.F.R. Section
571.2(c)(3), and no information concerning its relationship with or interests in
the Primary Parties is required by the OTS Applications or Item 13 of the
Registration Statement, and stating in effect that in KPMG Peat Marwick, LLP's
opinion the financial statements of the Bank included in the Prospectus comply
as to form in all material respects with the applicable accounting requirements
of the 1933 Act, the 1934 act and the related published rules and regulations of
the Commission thereunder and the Conversion Regulations and generally accepted
accounting principles consistently applied; (ii) stating in effect that, on the
basis of certain agreed upon procedures (but not an audit examination in
accordance with generally accepted auditing standards) consisting of a reading
of the latest available unaudited interim financial statements of the Bank
prepared by the Bank, a reading of the minutes of the meetings of the Board of
Directors of the Bank and the members of the Bank, a review of interim financial
information in accordance with Statement on Auditing Standards No. 71, and
consultations with officers of the Bank responsible for financial and accounting
matters, nothing came to their attention which caused them to believe that:
(A) such unaudited financial statements, including recent developments, if any,
are not in conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial statements
included in the Prospectus; or (B) during the period from the date of the
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<PAGE>
latest unaudited consolidated financial statements included in the Prospectus to
a specified date not more than three business days prior to the date hereof,
there was any increase in borrowings (defined as advances from the FHLB of New
York, securities sold under agreements to repurchase and any other form of debt
other than deposits) of the Bank or in nonperforming loans of the Bank; or
(C) there was any decrease in retained earnings of the Bank at the date of such
letter as compared with amounts shown in the latest unaudited statement of
condition included in the Prospectus or there was any decrease in net income or
net interest income of the Bank for the number of full months commencing
immediately after the period covered by the latest unaudited income statement
included in the Prospectus and ended on the latest month end prior to the date
of the Prospectus or in such letter as compared to the corresponding period in
the preceding year; and (iii) stating that, in addition to the audit examination
referred to in its opinion included in the Prospectus and the performance of the
procedures referred to in clause (ii) of this subsection (c), they have compared
with the general accounting records of the Bank, which are subject to the
internal controls of the accounting system of the Bank and other data prepared
by the Primary Parties directly from such accounting records, to the extent
specified in such letter, such amounts and/or percentages set forth in the
Prospectus as the Agent may reasonably request, and they have found such amounts
and percentages to be in agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent shall receive a letter from KPMG
Peat Marwick, LLP dated the Closing Date, addressed to the Agent, confirming the
statements made by its letter delivered by it pursuant to subsection (c) of this
Section 9, the "specified date" referred to in clause (ii)(B) thereof to be a
date specified in such letter, which shall not be more than three business days
prior to the Closing Date.
(e) At the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as counsel for the Agent may require
for the purpose of enabling them to advise the Agent with respect to the
issuance and sale of the Common Stock as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and Chief Financial Officer of each of the Primary
Parties, dated the Closing Date, to the effect that: (i) they have examined the
Prospectus and at the time the Prospectus became authorized for final use, the
Prospectus did not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) there has not been, since the respective dates as of which information is
given in the Prospectus, any material adverse change in the financial condition
or in the earnings, capital, properties, business prospects or business affairs
of the Primary Parties, considered as one enterprise, whether or not arising in
the ordinary course of business; (iii) the representations and warranties
contained in Section 6 of this Agreement are true and correct with the same
force and effect as though made at and as of the Closing Date; (iv) the Primary
Parties have complied in all material respects with all material agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Date including the conditions contained in this Section 9; (v) no
stop order has been issued or, to the best of their knowledge, is threatened, by
the Commission or any other governmental body; (vi) no order suspending the
Offering, the Reorganization, the acquisition of all of the shares of the Bank
by the Holding Company, the acquisition by the MHC of shares of the Common Stock
or the effectiveness
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<PAGE>
of the Prospectus has been issued and to the best of their knowledge, no
proceedings for any such purpose have been initiated or threatened by the OTS,
the Commission, or any other federal or state authority; (vii) to the best of
their knowledge, no person has sought to obtain regulatory or judicial review of
the action of the OTS in approving the Plan or to enjoin the Reorganization.
(g) The activities of the Bank described in the Prospectus are
permitted under federal law to subsidiaries of a savings bank holding company
that is a federal corporation. To the best of such counsel's knowledge, each of
the Holding Company and the Bank has obtained all licenses, permits, and other
governmental authorizations that are material for the conduct of its business,
and all such licenses, permits and other governmental authorization are in full
force and effect, and to the best of such counsel's knowledge the Holding
Company and the Bank are complying therewith in all material respects.
(h) At the Closing Date, the Agent shall receive a letter from RP
Financial, dated as of the Closing Date, (i) confirming that said firm is
independent of the Primary Parties and is experienced and expert in the area of
corporate appraisals within the meaning of the Conversion Regulations,
(ii) stating in effect that the Appraisal complies in all material respects
with the applicable requirements of the Conversion Regulations, and
(iii) further stating that its opinion of the aggregate pro forma market value
of the Primary Parties, as converted, expressed in the Appraisal as most
recently updated, remains in effect.
(i) None of the Primary Parties shall have sustained, since the date
of the latest audited financial statements included in the Registration
Statement and Prospectus, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in the Registration Statement and the
Prospectus, and since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been any
material change, or any development involving a prospective material change in,
or affecting the general affairs of, management, financial position, retained
earnings, long-term debt, stockholders' equity or results of operations of any
of the Primary Parties, otherwise than as set forth or contemplated in the
Registration Statement and the Prospectus, the effect of which, in any such case
described above, is in the Agent's reasonable judgment sufficiently material and
adverse as to make it impracticable or inadvisable to proceed with the Offering
or the delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
(j) Prior to and at the Closing Date: (i) in the reasonable opinion of
the Agent there shall have been no material adverse change in the financial
condition or in the earnings, capital, properties or business affairs of any of
the Primary parties independently, or the Primary Parties considered as one
enterprise, from and as of the latest dates as of which such condition is set
forth in the Prospectus, except as referred to therein; (ii) there shall have
been no material transaction entered into by the Primary Parties, independently
or considered as one enterprise, from the latest date as of which the financial
condition of the Primary Parties is set forth in the Prospectus, other than
transactions referred to or contemplated therein; (iii) none of the Primary
Parties shall have received from the OTS or the FDIC any direction (oral or
written) to make any material change in the method of conducting their business
with which it has not complied in all material respects (which direction, if
any, shall have been disclosed to the Agent) and which would reasonably be
expected to have a material and adverse effect on the condition (financial or
otherwise) or on the
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<PAGE>
earnings, capital, properties or business affairs of the Primary Parties
considered as one enterprise; (iv) none of the Primary Parties shall have been
in default (nor shall an event have occurred which, with notice or lapse of time
or both, would constitute a default) under any provision of any agreement or
instrument relating to any material outstanding indebtedness; (v) no action,
suit or proceeding, at law or in equity or before or by any federal or state
commission, board or other administrative agency, shall be pending or, to the
knowledge of the Primary Parties, threatened against any of the Primary Parties
or affecting any of their properties wherein an unfavorable decision, ruling or
finding would reasonably be expected to have a material and adverse effect on
the financial condition or on the earnings, capital, properties or business
affairs of the Primary Parties, considered as one enterprise; and (vi) the
Shares shall have been qualified or registered for offering and sale under the
securities or "blue sky" laws of the jurisdictions requested by the Agent.
(k) At or prior to the Closing Date, the Agent shall receive (i) a
copy of the letter from the OTS authorizing the use of the Prospectus and
approving the MHC Notice and Application, (ii) a copy of the order from the
Commission declaring the Registration Statement effective, (iii) a copy of a
certificate of existence for the Bank, (iv) a certificate of other writing, in
form and substance reasonably satisfactory to Agent evidencing the valid
existence, from the appropriate federal authority of the Holding Company as of
the Closing Date, (v) a copy of the letter from the OTS approving the Holding
Company Application, (vi) a certificate from the FDIC evidencing the Bank's
insurance of accounts, (vii) a certificate of the FHLB of New York evidencing
the Bank's membership therein, (viii) a certificate or other writing from the
OTS, in form and substance reasonably satisfactory to Agent, evidencing the
valid existence of the MHC as of the Closing Date, (ix) a copy of the letters
from the OTS approving the Merger Application and (x) any other documents that
Agent shall reasonably request.
(l) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the Commission or any other governmental authority
other than temporary trading halts (A) imposed as a result of intraday changes
in the Dow Jones Industrial Average, (B) lasting no longer than until the
regularly scheduled commencement of trading on the next succeeding business-day,
and (C) which, when combined with all other such halts occurring during the
previous five business days, total less than three; (ii) a general moratorium on
the operations of commercial banks or other federally-insured financial
institutions or general moratorium on the withdrawal of deposits from commercial
banks or other federally-insured financial institutions declared by either
federal or state authorities; (iii) the engagement by the United States in
hostilities which have resulted in the declaration, on or after the date hereof,
of a national emergency or war; or (iv) a material decline in the price of
equity or debt securities if the effect of any of (i) through (iv) herein, in
the Agent's reasonable judgment, makes it impracticable or inadvisable to
proceed with the offering or the delivery of the Shares on the terms and in the
manner contemplated in the Registration Statement and the Prospectus.
(m) All such options, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Agent and of counsel for the Agent. Any
certificate signed by an officer of the Holding Company or the
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<PAGE>
Bank and delivered to the Agent or to counsel for the Agent shall be deemed a
representation and warranty by the Holding Company or the Bank, as the case may
be, to the Agent as to the statements made herein. If any condition to the
Agent's obligations hereunder to be fulfilled prior to or at the Closing Date is
not fulfilled, the Agent may terminate this Agreement (provided that if this
Agreement is so terminated but the sale of Shares is nevertheless consummated,
the Agent shall be entitled to the compensation provided for in Section 3
hereof) or, if the Agent so elects, may waive any such conditions which have not
been fulfilled or may extend the time of their fulfillment.
SECTION 10. INDEMNIFICATION.
---------------
(a) The Primary Parties jointly and severally agree to indemnify and
hold harmless the Agent, its officers, directors, agents, attorneys, servants
and employees and each person, if any, who controls the Agent within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever (including but not
limited to settlement expenses, subject to the limitation set forth in the last
sentence of paragraph (c) below), joint or several, that the Agent or any of
such officers, directors, agents, attorneys, servants, employees and controlling
Persons (collectively, the "Related Persons") may suffer or to which the Agent
or the Related Persons may become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the Agent and any Related Persons
upon written demand for any reasonable expenses (including reasonable fees and
disbursements of counsel) incurred by the Agent or any Related Persons in
connection with investigating, preparing or defending any actions, proceedings
or claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement thereto), the OTS Applications,
or any blue sky application or other instrument or document of the Primary
Parties or based upon written information supplied by any of the Primary Parties
filed in any state or jurisdiction to register or qualify any or all of the
Shares under the securities laws thereof (collectively, the "Blue Sky
Applications"), or any application or other document, advertisement, or
communication ("Sales Information") prepared, made or executed by or on behalf
of any of the Primary Parties with its consent or based upon written information
furnished by or on behalf of any of the Primary Parties, whether or not filed in
any Jurisdiction in order to qualify or register the Shares under the securities
laws thereof, (ii) arise out of or are based upon the omission or alleged
omission to state in any of the foregoing documents or information, a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(iii) arise from any theory of liability whatsoever relating to or arising
from or based upon the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the OTS Applications, any Blue Sky Applications or Sales Information
or other documentation distributed in connection with the Reorganization; or
(iv) result from any claims made with respect to the accuracy, reliability and
completeness of the records of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members or for any denial or reduction of a
subscription or order to purchase Common Stock, whether as a result of a
properly calculated allocation pursuant to the Plan or otherwise, based upon
such records; provided, however, that no indemnification is required under this
paragraph (a) to the extent such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue material statements or alleged untrue
material statements in, or material omission or alleged material omission from,
the Registration Statement (or any amendment or supplement thereto) or the
preliminary or final Prospectus (or any amendment or supplement thereto), the
OTS Applications, the Blue Sky Applications or Sales Information or other
documentation distributed in connection with the Reorganization made in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent or its representatives (including counsel) with respect to the
Agent expressly for use in the Registration
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Statement (or any amendment or supplement thereto) or Prospectus (or any
amendment or supplement thereto) under the captions "Market for the Common
Stock" and "The Reorganization and Offering Plan of Distribution and Selling
Commissions" or statistical information regarding the Holding Company prepared
by the Agent for use in the Sales Information, except for information derived
from the Prospectus. Provided further, that the Primary Parties will not be
responsible for any loss, liability, claim, damage or expense to the extent they
result primarily from material oral misstatements by the Agent to a purchaser of
Shares which are not based upon information in the Registration Statement or
Prospectus, or from actions taken or omitted to be taken by the Agent in bad
faith or from the Agent's gross negligence or willful misconduct, and the Agent
agrees to repay to the Primary Parties any amounts advanced to it by the Primary
Parties in connection with matters as to which it is found not to be entitled to
indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the Primary
Parties, their directors and officers, agents, servants and employees and each
person, if any, who controls any of the Primary Parties within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of paragraph (c) below), joint or several which they, or any of them, may suffer
or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Primary
Parties and any such persons upon written demand for any reasonable expenses
(including fees and disbursements of counsel) incurred by them in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment of supplement thereto), the OTS Applications or any
Blue Sky Applications or Sales Information or are based upon the omission or
alleged omission to state in any of the foregoing documents a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Agent's obligations under this Section 10(b) shall
exist only if and only to the extent that such untrue statement or alleged
untrue statement was made in, or such material fact or alleged material fact was
omitted from, the Registration Statement (or any amendment or supplement
thereto) or the Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent or its representatives (including counsel) expressly for use under
the captions "Market for the Common Stock" and "The Reorganization and Offering
- -- Plan of Distribution and Selling Commissions" or statistical information
regarding the Holding Company prepared by the Agent for use in the Sales
information (except for statistical information derived from the Prospectus).
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 10,
Section
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11 or otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (unless an indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or in addition to those of other indemnified parties)
for all indemnified parties in connection with any one action, proceeding or
claim or separate but similar or related actions, proceedings or claims in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party, shall be liable for any settlement of any action,
proceeding or suit, which settlement is effected without its prior written
consent.
(d) The agreements contained in this Section 10 and in Section I I
hereof and the representations and warranties of the Primary Parties set forth
in this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of the Agent or its officers,
directors, controlling persons, agents or employees or by or on behalf of any of
the Primary Parties or any officers, directors, controlling persons, agents or
employees of any of the Primary Parties; (ii) delivery of and payment hereunder
for the Shares; or (iii) any termination of this Agreement.
SECTION 11. CONTRIBUTION.
------------
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 10 is due in
accordance with its terms but is for any reason held by a court to be
unavailable from the Primary Parties or the Agent, the Primary Parties and the
Agent shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by such indemnification in such proportion so that
(i) the Agent is responsible for that portion represented by the percentage that
the fees paid to the Agent pursuant to Section 4 of this Agreement (not
including expenses) ("Agent's Fees"), less any portion of Agent's Fees paid by
Agent to Assisting Brokers, bear to the total proceeds received by the Primary
Parties from the sale of the Conversion Shares in the Conversion Offerings, net
of all expenses of the Offerings except Agent's Fees, and (ii) the Primary
Parties shall be responsible for the balance. If, however, the allocation
provided above is not permitted by applicable law or if the indemnified party
failed to give the notice required under Section 10 above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Primary Parties on the one hand and the Agent on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof), but also the relative benefits received by the Primary Parties on the
one hand and the Agent on the other from the Offering, as well as any other
relevant equitable considerations. The relative benefits received by the Primary
Parties on the one hand and the Agent on the other hand shall be deemed to be in
the same proportion as the total
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proceeds from the Conversion Offerings, net of all expenses of the Conversion
Offerings except Agent's Fees, received by the Primary Parties bear, with
respect to the Agent, to the total fees (not including expenses) received by the
Agent less the portion of such fees paid by the Agent to Assisting Brokers. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Primary Parties on the one hand or the Agent on the other and the parties
relative intent, good faith, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Primary Parties and the Agent
agree that it would not be just and equitable if contribution pursuant to this
Section 11 were determined by pro-rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 11. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages or liabilities (or action,
proceedings or claims in respect thereof) referred to above in this Section 11
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action, proceeding or claim. It is expressly agreed that the Agent shall not be
liable for any loss, liability, claim, damage or expense or be required to
contribute any amount which in the aggregate exceeds the amount paid (excluding
reimbursable expenses) to the Agent under this Agreement less the portion of
such fees paid by the Agent to Assisting Brokers. It is understood and agreed
that the above-stated limitation on the Agent's liability is essential to the
Agent and that the Agent would not have entered into this Agreement if such
limitation had not been agreed to by the parties to this Agreement. No person
found guilty of any fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation. The duties, obligations
and liabilities of the Primary Parties and the Agent under this Section 11 and
under Section 10 shall be in addition to any duties, obligations and liabilities
which the Primary Parties and the Agent may otherwise have. For purposes of this
Section 11, each of the Agent's and the Primary Parties' officers and directors
and each person, if any, who controls the Agent or any of the Primary Parties
within the meaning of the 1933 Act and the 1934 Act shall have the same rights
to contribution as the Primary Parties and the Agent. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action,
suit, claim or proceeding against such party in respect of which a claim for
contribution may be made against another party under this Section 11, will
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relive the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 11.
SECTION 12. REPRESENTATIONS, WARRANTIES AND INDEMNITIES TO SURVIVE
------------------------------------------------------
DELIVERY. All representations, warranties and indemnities and other statements
- --------
contained in this Agreement, or contained in certificates of officers of the
Primary Parties or the Agent submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any termination or cancellation of
this Agreement or any investigation made by or on behalf of the Agent or its
controlling persons, or by or on behalf of the Primary Parties and shall survive
the issuance of the Shares, and any legal representative, successor or assign of
the Agent, any of the Primary Parties, and any indemnified person shall be
entitled to the benefit of the respective agreements, indemnities, warranties
and representations.
SECTION 13. TERMINATION. Agent may terminate this Agreement by giving the
-----------
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
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<PAGE>
(a) In the event the Holding Company fails to sell the minimum number
of the Conversion Shares within the period specified in accordance with the
provisions of the Plan or as required by the Conversion Regulations and
applicable law, this Agreement shall terminate upon refund by the Primary
Parties to each person who has subscribed for or ordered any of the Conversion
Shares the full amount which it may have received from such person, together
with interest in accordance with Section 3, and no party to this Agreement shall
have any obligation to the other hereunder, except as set forth in Sections 3,
4, 8, 10 and 11 hereof.
(b) If any of the conditions specified in Section 9 shall not have
been fulfilled when and as required by this Agreement, or by the Closing Date,
or waived in writing by the Agent, this Agreement and all of the Agent's
obligations hereunder may be canceled by the Agent by notifying the Bank of such
cancellation in writing at any time at or prior to the Closing Date, and any
such cancellation shall be without liability of any party to any other party
except as otherwise provided in Sections 3, 4, 8, 10 and 11 hereof.
(c) If Agent elects to terminate this Agreement as provided in this
Section, the Bank shall be notified by the Agent as provided in Section 14
hereof.
(d) If this Agreement is terminated in accordance with the provisions
of Sections 3, 9, or 13, the Primary Parties shall pay the Agent the fees earned
pursuant to Section 4 and will reimburse the Agent for its reasonable expenses
pursuant to Section 8, including without limitation accounting, communication,
legal and travel expenses.
SECTION 14. NOTICES. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall be
directed to Ryan, Beck & Co., 150 Monument Road, Suite 106, Bala Cynwyd, PA
19004, Attention: Richard Weiss (with a copy to V. Gerard Comizio, Thacher
Proffitt & Wood, 1700 Pennsylvania Avenue, N.W., Suite 800, Washington, D.C.
20006; notices to the Primary Parties shall be directed to Provident Bank,
400 Rella Blvd., Montebello, NY 10901 Attention: George Strayton, President and
Chief Executive Officer (with a copy to Kenneth R. Lehman, Esquire, Luse Lehman
Gorman Pomerenk & Schick, P.C., 5335 Wisconsin Avenue, N.W., Suite 400,
Washington, D.C. 20015).
SECTION 15. PARTIES. This Agreement shall inure to the benefit of and be
-------
binding upon the Agent and the Primary Parties, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the parties hereto
and their respective successors and the controlling persons and officers and
directors referred to in Sections 10 and 11 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties.
SECTION 16. PARTIAL INVALIDITY. In the event that any term, provision or
------------------
covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
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<PAGE>
SECTION 17. CONSTRUCTION. This Agreement shall be construed in
------------
accordance with the laws of the State of New Jersey.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
PROVIDENT BANCORP, INC.
(In Formation)
By:
George Strayton
President and
Chief Executive Officer
PROVIDENT BANCORP, MHC
(In Formation)
By:
George Strayton
President and
Chief Executive Officer
PROVIDENT BANK
By:
George Strayton
President and
Chief Executive Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set and above written.
RYAN, BECK & CO., INC.
By:
Ben A. Plotkin
President and Chief Executive Officer
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<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you and us
in accordance with its terms.
Very truly yours,
PROVIDENT BANCORP, INC.
(In Formation)
By:
George Strayton
President and
Chief Executive Officer
PROVIDENT BANCORP, MHC
(In Formation)
By:
George Strayton
President and
Chief Executive Officer
PROVIDENT BANK
By:
George Strayton
President and
Chief Executive Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set and above written.
RYAN, BECK & CO., INC.
By:
Ben A. Plotkin
President and Chief Executive Officer
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<PAGE>
PROVIDENT BANCORP, INC.
(A Federal Corporation)
Up to 3,484,500,000 Shares
(Par Value $.10 Per Share)
______________, 1998
Ladies and Gentlemen:
We have agreed to assist Provident Bancorp, Inc. (the "Holding Company"), a
federal corporation, and Provident Bank ("Provident" or the "Bank"), a federally
chartered mutual savings association, in connection with the offer and sale by
the Holding Company of up to 3,484,500 shares of the common stock, $.10 par
value per share (the "Common Stock"). These shares are to be issued in
connection with the reorganization of the Bank from a mutual savings association
to a stock savings association and wholly owned subsidiary of the Holding
Company (the "Reorganization"), in accordance with the Plan of Reorganization
from a Mutual Savings Association to Mutual Holding Company and Stock Issuance
Plan (the "Plan"). Under the Plan, the Holding Company will become, upon
consummation of the Reorganization, a majority-owned subsidiary of Provident
Bancorp, MHC, a federally chartered mutual holding company. The offering price
per share of the Common Stock has been fixed at $10.00. The Common Stock and
certain of the terms on which it is being offered are more fully described in
the enclosed prospectus dated ______________, 1998 (the "Prospectus").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Prospectus.
In connection with the Reorganization, the Holding Company is offering the
Common Stock in a Subscription Offering to the Eligible Account Holders, the
ESOP, the Supplemental Eligible Account Holders and the Other Members. The
Holding Company is also offering all shares of Common Stock offered but not
subscribed for in the Subscription Offering in the Community Offering to members
of the general public, with preference given first to residents of the Bank's
local community of the New York county of Rockland. The Common Stock is also
being offered in accordance with the Plan by a selling group of broker-dealers
in the Syndicated Community Offering.
We are offering the selected dealers (of which you are one) the opportunity
to participate in the solicitation of offers to buy the Common Stock and we will
pay you a fee in the amount of _______ percent (_______%) of the dollar amount
of the Common Stock sold on behalf of the Holding Company by you, as evidenced
by the authorized designation of your firm on the order form or forms for such
Common Stock accompanying the funds transmitted for payment therefor to the
special account established by the Bank for the purpose of holding such funds.
Any purchase of Common Stock made pursuant to this Agreement is subject to the
maximum purchase limitations provided for in the Plan and described in the
Prospectus. It is understood, of course, that payment of your fee will be made
to you directly by the Holding Company for the Common Stock sold on behalf of
the Holding Company by you, as evidenced in accordance with the preceding
sentence. As soon as practicable after the closing date of the Offering, the
Holding Company will remit to you the fees to which you are entitled hereunder.
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<PAGE>
Each order form for the purchase of Common Stock must set forth the identity
and address of each person to whom the certificates for such Common Stock should
be issued and delivered. Such order form should clearly identify your firm. You
shall instruct any subscriber who elects to send his order form to you to make
any accompanying check payable to the Bank.
This offer is made subject to the terms and conditions herein set forth and
contained in the Plan and is made only to selected dealers who are (i) members
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD") who are to comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation With Respect to Free-Riding and
Withholding and Section 24 of Article III of the NASD's Rules of Fair Practice,
or (ii) foreign dealers not eligible for membership in the NASD who agree
(A) not to sell any Common Stock within the United States, its territories or
possessions or to persons who are citizens thereof or resident therein and
(B) in making other sales to comply with the above-mentioned NASD
Interpretation, Sections 8, 24 and 36 of the above-mentioned Article III as if
they were NASD members and Section 2S of such Article III as it applies to non-
member brokers or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and we,
acting on behalf of the Holding Company, reserve the right in our unrestricted
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
other person is authorized by the Holding Company or by us to give any
information or make any representations other than those contained in the
Prospectus in connection with the sale of any of the Common Stock. No selected
dealer is authorized to act as agent for us when soliciting offers to buy the
Common Stock from the public or otherwise. No selected dealer shall engage in
any stabilizing (as defined in Regulation M promulgated under the Securities
Exchange Act of 1934) with respect to the Common Stock during the offering.
We and each selected dealer assisting in selling Common Stock pursuant hereto
agree to comply with the applicable requirements of the Securities Exchange Act
of 1934 and applicable state rules and regulations. In addition, we and each
selected dealer confirm that the Securities and Exchange Commission interprets
Rule 15c2-8 promulgated under the Securities Exchange Act of 1934 as requiring
that a Prospectus be supplied to each person who is expected to receive a
confirmation of sale 48 hours prior to delivery of such person's order form.
We and each selected dealer within the meaning of Rule 15c3-1(a)(1) further
agree to the extent that our customers desire to pay for shares with funds held
by or to be deposited with us, in accordance with the interpretation of the
Securities and Exchange Commission of Rule 15c2-4 promulgated under the
Securities Exchange Act of 1934, either (a) upon receipt of an executed order
form or direction to execute an order form on behalf of a customer to forward
the offering price for the Common Stock ordered on or before twelve noon of the
business day following receipt or execution of an order form by us to the
Holding Company for deposit in a segregated account or (b) to solicit
indications of interest in which event (i) we will subsequently contact any
customer indicating interest to confirm the interest and give instructions to
execute and return an order form or to receive authorization to execute the
order form on the customer's behalf, (ii) we will mail acknowledgments of
receipt of orders to each customer confirming interest on the business day
following such confirmation, (iii) we will debit accounts of such customers on
the third business day (the "Debit Date") following receipt of the confirmation
referred to in (i), and (iv) we will forward
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<PAGE>
completed order forms together with such funds to the Holding Company on or
before twelve noon on the next business day following the Debit Date for deposit
in a segregated account. We and each selected dealer acknowledge that if the
procedure in (b) is adopted, our customers' funds are not required to be in
their accounts until the Debit Date.
Unless earlier terminated by us, this Agreement shall terminate upon the
closing date of the Offering. We may terminate this Agreement or any provisions
hereof at any time by written or telegraphic notice to you. Of course, our
obligations hereunder are subject to the successful completion of the Offering.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Holding Company by you under this Agreement.
We shall have full authority to take such actions as we may deem advisable in
respect of all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Common Stock has been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if mailed,
telephoned, or telegraphed to you at the address to which this Agreement is
mailed.
This Agreement shall be construed in accordance with the laws of the State of
New Jersey.
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<PAGE>
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Ryan, Beck & Co., Inc.,
220 South Orange Avenue, Livingston, New Jersey 07039. The enclosed duplicate
copy will evidence the agreement between us.
RYAN, BECK & CO., INC.
By:
----------------------------------------
Ben A. Plotkin
President and Chief Executive Officer
Agreed and accepted as of , 1998
----------------------
- --------------------------------------
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<PAGE>
EXHIBIT 2
PROVIDENT BANK
PLAN OF REORGANIZATION
FROM MUTUAL SAVINGS BANK
TO MUTUAL HOLDING COMPANY
AND STOCK ISSUANCE PLAN
<PAGE>
TABLE OF CONTENTS
Page
----
1. Introduction......................................................... 1
2. Definitions.......................................................... 1
3. The Reorganization................................................... 6
4. Conditions to Implementation of the Reorganization................... 8
5. Special Meeting of Members........................................... 9
6. Rights of Members of the MHC......................................... 9
7. Conversion of MHC to Stock Form...................................... 9
8. Timing of the Reorganization and Sale of Capital Stock............... 10
9. Number of Shares to be Offered....................................... 11
10. Independent Valuation and Purchase Price of Shares................... 11
11. Method of Offering Shares and Rights to Purchase Stock............... 12
12. Additional Limitations on Purchases of Common Stock.................. 15
13. Payment for Stock.................................................... 17
14. Manner of Exercising Subscription Rights Through Order Forms......... 18
15. Undelivered, Defective or Late Order Form; Insufficient Payment...... 19
16. Completion of the Stock Offering..................................... 19
17. Market for Common Stock.............................................. 19
18. Stock Purchases by Management Persons After the Offering............. 19
19. Resales of Stock by Management Persons............................... 20
20. Stock Certificates................................................... 20
21. Restriction on Financing Stock Purchases............................. 20
22. Stock Benefit Plans.................................................. 20
23. Post-Reorganization Filing and Market Making......................... 21
24. Payment of Dividends and Repurchase of Stock......................... 21
25. Reorganization and Stock Offering Expenses........................... 21
26. Employment and Other Severance Agreements............................ 21
27. Interpretation....................................................... 22
28. Amendment or Termination of the Plan................................. 22
Exhibits
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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 Provident Bank (the "Bank") has adopted this
Plan of Reorganization from Mutual Savings Association to Mutual Holding Company
and Stock Issuance Plan (the "Plan") pursuant to which the Bank proposes to
reorganize from a federally-chartered mutual savings association into the mutual
holding company structure (the "Reorganization") under the laws of the United
States of America and the regulations of the Office of Thrift Supervision
("OTS"). The mutual holding company (the "MHC") will be a mutually-owned
federal corporation, and all of the current ownership and voting rights of the
Members of the Bank will be transferred to the MHC. As part of the
Reorganization and the Plan, the Bank will convert to a federal stock savings
bank (the "Stock Bank") and will establish a stock holding company (the "Holding
Company") which will be a majority-owned subsidiary of the MHC at all times so
long as the MHC remains in existence. Concurrently with the Reorganization, the
Holding Company intends to offer for sale up to 49.9% of its Common Stock in the
Stock Offering. The Common Stock will be offered on a priority basis to
depositors and certain borrower members and Tax-Qualified Employee Plans of the
Bank, with any remaining shares offered to the public in a Community Offering.
The primary purpose of the Reorganization is to establish a holding
company and to convert the Bank to the stock form of ownership, which will
enable the Bank to compete and expand more effectively in the financial services
marketplace. The Reorganization will permit the Holding Company to issue
Capital Stock, which is a source of capital not available to mutual savings
associations. Since the Holding Company will not be offering all of its Common
Stock for sale to depositors and certain borrower members and the public in the
Stock Offering, the Reorganization will result in less capital raised in
comparison to a standard mutual-to-stock conversion. The Reorganization,
however, will also offer the Bank the opportunity to raise additional capital
since a majority of the Holding Company's Common Stock will be available for
sale in the future. It will also provide the Bank with greater flexibility to
structure and finance the expansion of its operations, including the potential
acquisition of other financial institutions. Lastly, the Reorganization will
enable the Bank to better manage its capital by (i) providing broader
acquisition and investment opportunities through the holding company structure,
and (ii) enabling the Bank to distribute capital to stockholders of the Holding
Company in the form of dividends and (iii) by enabling the Holding Company to
repurchase its common stock as market conditions warrant. Although the
Reorganization and Stock Offering will create a stock savings bank and stock
holding company, only a minority of the Common Stock will be offered for sale in
the Stock Offering. As a result, the Bank's 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. The Reorganization is subject to the approval of the OTS, and must
be adopted by the affirmative vote of a majority of the total votes eligible to
be cast by Voting Members.
2. DEFINITIONS
As used in this Plan, the terms set forth below have the following
meanings:
ACTING IN CONCERT: The term "acting in concert" shall have the
definition given in 12 C.F.R. (S)574.2(c). The determination of whether a group
is acting in concert shall be made by the Board of Directors of the Bank or
officers delegated by such Board and may be based on any evidence upon which the
Board or such delegatee chooses to rely.
AFFILIATE: An "affiliate" of, or a Person "affiliated" with, a
specified Person, is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
the Person specified.
<PAGE>
ASSOCIATE: The term "Associate," when used to indicate a relationship
with any Person, means: (i) any corporation or organization (other than the
Bank, the Holding Company, the MHC or a majority-owned subsidiary of any
thereof) 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, the MHC, the Holding Company or any subsidiary
of the MHC or the Holding Company or any affiliate thereof; and (iv) any person
acting in concert with any of the persons or entities specified in clauses (i)
through (iii) above; provided, however, that any Tax-Qualified or Non-Tax-
Qualified Employee Plan shall not be deemed to be an associate of any director
or officer of the MHC, the Holding Company or the Bank, to the extent provided
in Sections 11-13 hereof. When used to refer to a Person other than an officer
or director of the Bank, the Bank in its sole discretion may determine the
Persons that are Associates of other Persons.
BANK: Provident Bank in its pre-Reorganization mutual form or post-
Reorganization stock form as indicated by the context.
CAPITAL STOCK: Any and all authorized stock of the Bank or the
Holding Company.
COMMON STOCK: Common stock issuable by the Holding Company in
connection with the Reorganization, including securities convertible into Common
Stock, pursuant to its stock charter.
COMMUNITY: Rockland County.
COMMUNITY OFFERING: The offering to certain members of the general
public of any unsubscribed shares in the Subscription Offering which may be
effected pursuant to Section 11 of this Plan. The Community Offering may
include a Syndicated Community Offering or public offering.
DEPOSIT ACCOUNT(S): Any withdrawable deposit(s) offered by the Bank,
including NOW account deposits, certificates of deposit, savings accounts,
demand deposits and IRA accounts and Keogh plans for which the Bank acts as
custodian or trustee.
EFFECTIVE DATE: The date upon which all necessary approvals have been
obtained to complete the Reorganization, and the Reorganization and Stock
Offering have been completed.
ELIGIBLE ACCOUNT HOLDER: Any person holding a Qualifying Deposit
on the Eligibility Record Date.
ELIGIBILITY RECORD DATE: December 31, 1996, the date for
determining who qualifies as an Eligible Account Holder.
EMPLOYEE PLANS: The Tax-Qualified and Non-Tax Qualified Employee
Plans of the Bank.
ESOP: The Bank's employee stock ownership plan.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
2
<PAGE>
FDIC: The Federal Deposit Insurance Corporation.
HOLA: The Home Owners' Loan Act, as amended.
HOLDING COMPANY: Provident Bancorp, Inc. the federal corporation
which will be majority-owned by the MHC and which will own 100% of the common
stock of the Bank.
HOLDING COMPANY APPLICATION: The Holding Company Application on Form
H(e)-1 to be submitted by the Bank to the OTS to have the Holding Company
acquire the common stock of the Bank.
INDEPENDENT APPRAISER: The appraiser retained by the Bank to prepare
an appraisal of the pro forma market value of the Bank and the Holding Company.
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.
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 the dealer's quoted
prices with other brokers or dealers.
MEMBERS: Any person or entity who qualifies as a member of the
Bank pursuant to its charter and bylaws.
MHC: Provident Bancorp, MHC, the mutual holding company resulting from
the Reorganization.
MINORITY OWNERSHIP INTEREST: The shares of the Holding Company's
Common Stock owned by persons other than the MHC, expressed as a percentage of
the total shares of Holding Company Common Stock issued and outstanding.
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 STOCKHOLDER: Any owner of the Holding Company's Common
Stock, other than the MHC.
NON-VOTING STOCK: 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 Holding Company or the Bank,
including the Chief Executive Officer, President, Senior Vice Presidents in
charge of principal business functions, Secretary, Treasurer and any other
person performing similar functions.
3
<PAGE>
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
Supplemental Eligible Account Holder, or Tax-Qualified Employee Plan.
OTS: The Office of Thrift Supervision, and any successor thereto.
PARENT: A company that controls another company, either directly or
indirectly through one or more subsidiaries.
PERSON: An individual, corporation, partnership, association, joint-
stock company, trust (including Individual Retirement Accounts and KEOGH
Accounts), unincorporated organization, government entity or political
subdivision thereof or any other entity.
PLAN: This Plan of Reorganization from Mutual Savings Bank to Mutual
Holding Company and Stock Issuance Plan.
PURCHASE PRICE: The price per share, determined as provided in this
Plan, at which the Common Stock will be sold in the Stock Offering.
QUALIFYING DEPOSIT: The aggregate balance of all Deposit Accounts of
an Eligible Account Holder as of the close of business on the Eligibility Record
Date or of a Supplemental Eligible Account Holder as of the close of business on
the Supplemental Eligibility Record Date, as the case may be, provided such
aggregate balance is not less than $50.
REGULATIONS: The regulations of the OTS regarding mutual holding
companies.
REORGANIZATION: The reorganization of the Bank into the mutual
holding company structure including the organization of the MHC, the Holding
Company and the Bank in stock form pursuant to this Plan.
RESIDENCE: The terms "residence," "reside," "resided" or "residing"
as used herein with respect to any person shall mean any Person who occupied a
dwelling within the Bank's Community, has an intent to remain with 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, 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.
SEC: The Securities and Exchange Commission.
SPECIAL MEETING: The Special Meeting of Members called for the purpose
of voting on the Plan.
4
<PAGE>
STOCK BANK: The federally chartered stock savings bank that will
succeed to the Bank upon completion of the Reorganization.
STOCK OFFERING: The offering of Common Stock of the Holding Company
to persons other than the MHC, in a Subscription Offering and, to the extent
shares remain available, in a Community Offering.
SUBSCRIPTION OFFERING: The offering of Common Stock of the Holding
Company for subscription and purchase pursuant to Section 11 of this Plan.
SUBSIDIARY: A company that is controlled by another company, either
directly or indirectly through one or more subsidiaries.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER: Any Person holding a Qualifying
Deposit on the Supplemental Eligibility Record Date, who is not an Officer or
director of the Bank, or an Associate of an Officer or director of the Bank.
SUPPLEMENTAL ELIGIBILITY RECORD DATE: The last day of the calendar
quarter preceding approval of the Plan by the OTS.
SYNDICATED COMMUNITY OFFERING: The offering of Common Stock following
or contemporaneously with the Community Offering through a syndicate of broker-
dealers.
TAX-QUALIFIED EMPLOYEE PLAN: Any defined benefit plan or defined
contribution plan (including any employee stock ownership plan, stock bonus
plan, profit-sharing plan, or other plan) of the Bank, the Holding Company, the
MHC or any of their affiliates, which, with its related trusts, meets the
requirements to be qualified under Section 401 of the Internal Revenue Code.
The term Non-Tax-Qualified Employee Plan means any defined benefit plan or
defined contribution plan which is not so qualified.
VOTING MEMBERS: Those Members of the Bank as of the Voting Record
Date.
VOTING RECORD DATE: The date established by the Bank for determining
which Members are entitled to vote on the Plan.
VOTING STOCK:
(1) 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 the
Holding Company; and
(ii) To vote on or to direct the conduct of the operations or
other significant policies of the Bank or the Holding
Company.
(2) Notwithstanding anything in paragraph (1) above, preferred
stock is not "Voting Stock" if:
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(i) Voting rights associated with the preferred stock are
limited solely to the type customarily provided by statute
with regard to matters that would significantly and
adversely affect the rights or preferences of the preferred
stock, such as the issuance of additional amounts or classes
of senior securities, the modification of the terms of the
preferred stock, the dissolution of the Bank, or the payment
of dividends by the Bank when preferred dividends are in
arrears;
(ii) The preferred stock represents an essentially passive
investment or financing device and does not otherwise
provide the holder with control over the issuer; and
(iii) The preferred stock does not at the time entitle the holder,
by statute, charter, or otherwise, to select or to vote for
the selection of directors of the Bank or the Holding
Company.
(3) Notwithstanding anything in paragraphs (1) and (2) above, "Voting
Stock" shall be deemed to include preferred stock and other securities that,
upon transfer or otherwise, are convertible into Voting Stock or exercisable to
acquire Voting Stock where the holder of the stock, convertible security or
right to acquire Voting Stock has the preponderant economic risk in the
underlying Voting Stock. Securities immediately convertible into Voting Stock
at the option of the holder without payment of additional consideration shall be
deemed to constitute the Voting Stock into which they are convertible; other
convertible securities and rights to acquire Voting Stock shall not be deemed to
vest the holder with the preponderant economic risk in the underlying Voting
Stock if the holder has paid less than 50% of the consideration required to
directly acquire the Voting Stock and has no other economic interest in the
underlying Voting Stock.
3. 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 the pro forma market value of the
Holding Company and the Bank. Upon consummation of the Reorganization,
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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 and 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 be 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 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 the 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 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 (other than
the assets of the Bank retained by or distributed to the Holding Company or the
MHC), undivided profits, and general loss reserves that the Bank had prior to
the Reorganization. Such 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 the persons who
purchase Common Stock in the Stock Offering and any subsequent Minority 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.
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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 the existing Board of Directors of 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 Capital
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 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 the 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 rights 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. 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.
4. CONDITIONS TO IMPLEMENTATION OF THE REORGANIZATION
Consummation of the Reorganization is expressly conditioned upon the
following:
A. Approval of the Plan by a majority of the Board of Directors of the
Bank.
B. The filing of a Reorganization Notice, including the Plan, with the
OTS and either:
(i) The OTS has given written notice of its intent not to disapprove
the Reorganization; or
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(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 filing of a holding company application with and approval by the
OTS pursuant to the HOLA for the Holding Company and MHC to become
savings and loan holding companies by owning or acquiring 100% of the
common stock of the Stock Bank and the Holding Company, respectively,
to be issued in connection with the Reorganization.
D. Submission of the Plan to the Voting Members for approval pursuant to
a Proxy Statement and form of proxy cleared in advance by the OTS, and
such Plan is approved by a majority of the total votes of the Voting
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.
E. All necessary approvals have been obtained from the OTS in connection
with the adoption of the charter and bylaws of the MHC, the Holding
Company and the Stock Bank, the conversion of the Bank to a stock
charter, and any transfer of assets and liabilities of the Bank to the
Stock Bank pursuant to the Plan; 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.
5. 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 Voting
Members. The proxy solicitation materials shall include a proxy statement, and
other documents authorized for use by the regulatory authorities. A copy of the
Plan will be made available to Voting Members upon request. Pursuant to the
Regulations, an affirmative vote of not less than a majority of the total
outstanding votes of the Voting Members is required for approval of the Plan.
Voting may be in person or by proxy. The OTS shall be notified promptly of the
actions of the Voting Members.
6. RIGHTS OF MEMBERS OF THE MHC
Following the Reorganization, all persons who had membership 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. In addition, all
persons who become depositors of the Stock Bank subsequent to the Reorganization
also will have membership 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
after the Reorganization shall have any membership or 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.
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7. 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.
In a Conversion Transaction, the MHC would merge with and into the
Stock Bank or the Holding Company, with the Stock Bank or the Holding Company as
the resulting entity, and the members of the MHC would receive the right to
subscribe for a number of shares of common stock of the Holding Company, as
determined by the formula set forth in the following paragraphs. The additional
shares of Common stock of the Holding Company issued in the Conversion
Transaction would be sold at their aggregate pro forma market value as
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 without additional consideration to maintain the same
percentage ownership interest in the Holding Company after the Conversion
Transaction as their percentage 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 (expressed as a
percentage) 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 Minority Ownership Interest (expressed as a percentage) shall also
be adjusted to reflect any assets of the MHC (other than Common Stock of the
Holding Company) by multiplying it by the following fraction:
(pro forma market value of Holding Company) - (market value of assets of MHC
----------------------------------------------------------------------------
other than Holding Company common stock)
----------------------------------------
pro forma market value of 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.
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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.
8. 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 4 of the Plan.
Subject to the approval of the OTS, the Holding Company intends to commence the
Stock Offering concurrently with the proxy solicitation of Members. The Holding
Company 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's proxy solicitation
materials may permit certain Members to return to the Bank by a reasonable date
certain a postage paid card or other written communication requesting receipt of
the prospectus if the prospectus is not mailed concurrently with the proxy
solicitation materials. The Stock Offering shall be conducted in compliance
with the securities offering regulations of the SEC. The Bank will not finance
or loan funds to any person to purchase Common Stock.
9. 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 shall be determined initially
by the Board of Directors of the Bank and 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 less than 50% of the issued and
outstanding shares of Common Stock of the Holding Company.
10. INDEPENDENT VALUATION AND PURCHASE PRICE OF SHARES
All shares of Common Stock sold in the Stock Offering shall be sold at
a uniform price per share, which shall be the Purchase Price. The Purchase
Price and number of shares to be outstanding shall be determined by the Board of
Directors of the Holding Company on the basis of the estimated pro forma market
value of the Holding Company and the Bank. The aggregate purchase price for the
Common Stock will not be inconsistent with such market value of the Holding
Company and the Bank. The pro forma market value of the Holding Company and the
Bank will be determined for such purposes by the Independent Appraiser.
Prior to the commencement of the Stock Offering, an estimated
valuation range will be established, which range may vary within 15% above to
15% below the midpoint of such range, and up to 15% greater than the maximum of
such range, as determined by the Board of Directors at the time of the Stock
Offering and consistent with OTS regulations. The Holding Company intends to
sell up to 49.9% of its common in the Stock Offering. The number of shares of
Common Stock to be issued and the ownership interest of the MHC may be increased
or decreased by the Holding Company, taking into consideration any change in the
independent valuation and other factors, at the discretion of the Board of
Directors of the Bank and the Holding Company.
Based upon the independent valuation as updated prior to the
commencement of the Stock Offering, the Board of Directors may establish the
minimum and maximum percentage of shares of the Holding
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Company Common Stock that will be offered for sale in the Stock Offering, or it
may fix the percentage of shares of Common Stock that will be offered for sale
in the Stock Offering. In the event the percentage of shares offered for sale is
not fixed in the Stock Offering, the Minority Ownership Interest resulting from
the Stock Offering will be determined as follows: (a) the product of (x) the
total number of shares of Common Stock sold by the Holding Company and (y) the
Purchase Price, divided by (b) the aggregate pro forma market value of the Bank
and the Holding Company upon the closing of the Stock Offering as determined by
the Independent Appraiser.
Notwithstanding the foregoing, no sale of Common Stock may be
consummated unless, prior to such consummation, the Independent Appraiser
confirms to the Holding Company, 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 value of the Common Stock
at the Purchase Price is incompatible with its estimate of the aggregate
consolidated pro forma market value of the Holding Company and the Bank. If
such confirmation is not received, the Holding Company may cancel the Stock
Offering, extend the Stock Offering and establish a new price range and/or
estimated price range, extend, reopen or hold a new Stock Offering or take such
other action as the OTS may permit.
The estimated market value of the Holding Company and the Bank shall
be determined for such purpose by an Independent Appraiser on the basis of such
appropriate factors as are not inconsistent with OTS regulations. The Common
Stock to be issued in the Stock Offering shall be fully paid and nonassessable.
The aggregate amount of outstanding Common Stock that may be owned or
controlled by persons other than the MHC parent at the close of the Stock
Offering shall be less than 50% of the Holding Company's total outstanding
Common Stock.
If there is a Community Offering and/or Syndicated Community Offering
of shares of Common Stock not subscribed for in the Subscription Offering, the
price per share at which the Common Stock is sold in such Community Offering or
Syndicated Community Offering shall be equal to the Purchase Price at which the
Common Stock is sold to persons in the Subscription Offering.
11. 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; (4) Other Members; and (5) directors, officers and employees of the
Bank. Any shares of Common Stock that are not subscribed for in the Subscription
Offering may at the discretion of the Bank and the Holding Company be offered
for sale in a Community Offering or a Syndicated Community Offering. The
minimum purchase by any 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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<PAGE>
In addition to the priorities set forth below, the Board of Directors
may establish other priorities for the purchase of Common Stock, subject to the
approval of the OTS. The priorities for the purchase of shares in the Stock
Offering are as follows:
A. SUBSCRIPTION OFFERING
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder
shall be given the opportunity to purchase up to the greater of $200,000 of
Common Stock offered in the Stock Offering or 15 times the product (rounded
down to the next whole number) obtained by multiplying the total number of
shares to be issued in the Stock Offering by a fraction of which the numerator
is the amount of the Eligible Account Holder's Qualifying Deposit and the
denominator is the total amount of Qualifying Deposits of all Eligible Account
Holders, in each case on the Supplemental Eligibility Record Date; 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 .1% of the
maximum number of shares offered in the Stock Offering, subject to the overall
purchase limitation set forth in Section 12. Subscription rights to purchase
Common Stock received by Officers and Directors and their Associates based on
their increased deposits in the Bank in the one year period preceding the
Eligibility Record Date shall be subordinated to all other subscriptions
involving the exercise of subscription rights by Eligible Account Holders in
their capacity as such. 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.
PRIORITY 2: TAX-QUALIFIED EMPLOYEE PLANS. The Tax-Qualified Employee
Plans shall be given the opportunity to purchase in the aggregate up to 10% 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 12, 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. 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.
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 the greater of $200,000 of Common Stock offered in the Stock Offering or 15
times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares to be issued in the Stock Offering by a
fraction of which the numerator is the amount of the Supplemental Eligible
Account Holder's Qualifying Deposit and the denominator is the total amount of
Qualifying Deposits of all Supplemental Eligible Account Holders, in each case
on the Supplemental Eligibility Record Date, provided that the Bank
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<PAGE>
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 0.1% of the maximum number of
shares offered in the Stock Offering subject to the overall purchase limitations
set forth in Section 12. 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 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. To
ensure proper allocation of stock, each Supplemental Eligible Account Holder
must list on his subscription order form all accounts in which he had an
ownership interest as of the Supplemental Eligibility Record Date.
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 $200,000
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 .1% of the maximum number of shares offered in
the Stock Offering, subject to the overall purchase limitations set forth in
Section 12. 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.
PRIORITY 5: DIRECTORS, OFFICERS AND EMPLOYEES. To the extent that
shares remain available for purchase after satisfaction of all subscriptions of
the Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental
Eligible Account Holders, and Other Members, employees, officers and directors
of the Bank shall have the opportunity to purchase up to $200,000 of the 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 .1% of the maximum number of shares offered in
the Stock Offering, subject to the overall purchase limitations set forth in
Section 12. In the event that directors, officers and employees subscribe for a
number of shares, which, when added to the shares subscribed for by Eligible
Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account
Holders, and Other Members is in excess of the total shares offered in the Stock
Offering, the subscriptions of such Persons will be allocated among directors,
officers and employees on a pro rata basis based on the size of each Person's
orders.
B. COMMUNITY 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
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<PAGE>
general public with a preference to those natural persons residing in the
counties in which the Bank maintains its offices. The Community Offering, if
any, shall 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 sold 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
$400,000 of Common Stock offered in the Community Offering. Further, the Bank
may limit total subscriptions under this Section 11(B) so as to assure that the
number of shares available for the Syndicated Community Offering may be up to a
specified percentage of the number of shares of Common Stock. Any order received
from natural persons residing in the Bank's community will be given preference
in any Community Offering that is conducted currently with the Subscription
Offering. If a Community Offering is conducted, or continues, following the
conclusion of the Subscription Offering in order to sell the minimum number of
shares required to complete the Offering, the Bank may reserve shares offered in
such additional or continuing Community Offering for sales to institutional
investors.
In the event of an oversubscription for shares in the Community
Offering, shares may be allocated (to the extent shares remain available) first
to cover any reservation of shares for a Syndicated Community Offering or
institutional orders, next to cover orders of natural persons residing in the
counties in which the Bank maintains its offices, then to cover the orders of
any other person subscribing for shares in the Community Offering 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
11(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 order 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 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.
If for any reason a Syndicated Community Offering of unsubscribed
shares of Common Stock cannot be effected or is inadvisable and any shares
remain unsold after the Subscription Offering and the Community Offering, if
any, the Boards of Directors of the Holding Company and the Bank will seek to
15
<PAGE>
make other arrangements for the sale of the remaining shares. Such other
arrangements will be subject to the approval of the OTS and to compliance with
applicable securities laws.
12. 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.
A. No Person, together with Associates thereof, or group of persons
acting in concert, may purchase more than $400,000 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 prospective
purchasers, increase such maximum purchase limitation to 5% of the
number of shares sold in the Stock Offering; (ii) Tax-Qualified
Employee Plans may purchase up to 10% of the shares sold in the Stock
Offering; and (iii) for purposes of this subsection 12(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 25%
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 or under the provisions of paragraph D
of this section, shares held by any Tax-Qualified Employee Plans of
the Bank that are attributable to such persons shall not be counted.
D. The aggregate amount of Common Stock acquired in the Stock Offering by
all Management Persons and their Associates, exclusive of any Common
Stock acquired by such plans or persons in the secondary market, shall
not exceed 25% of the stockholders' equity of the Holding Company
other than the MHC at the close of the Stock Offering.
E. The Boards of Directors of the Bank and the Holding Company may, in
their sole discretion, increase the maximum purchase limitation set
forth in paragraph 12(B) hereof to up to 9.9%, provided that orders
for Common Stock in excess of 5% of the number of shares of Common
Stock sold in the Stock Offering shall not in the aggregate exceed 10%
of the total shares of Common Stock offered in the Stock Offering
(except that this limitation shall not apply to purchases by Tax-
Qualified Employee Plans). If such 5% limitation is increased,
subscribers for the maximum amount will be, and certain other large
subscribers in the sole discretion of the Holding Company and the Bank
may be, given the opportunity to increase their subscriptions up to
the then applicable limit. Requests to purchase additional shares of
Common Stock under this provision will be determined by the Board of
Directors of the Holding Company, in its sole discretion.
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F. Notwithstanding any other provision 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 Association 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.
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 SUCH 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 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.
13. 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, or by such other procedure in the case of
the Syndicated Community Offering, on or prior to the expiration date specified
on the order form, as the case may be, unless such date is extended by the
Bank; provided, that if the Tax Qualified 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 upon consummation of the Stock Offering. The
Holding Company or the Bank may make scheduled discretionary contributions to
Employee Plans 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 shall be made either by check or money order,
or if a purchaser has a Deposit Account in the Bank, such purchaser may pay for
the shares subscribed for by authorizing the Bank to make a withdrawal from the
purchaser's passbook or certificate account at the Bank in an amount equal to
the aggregate Purchase Price of such shares. Such authorized withdrawal,
whether from a savings or certificate account, shall be without penalty as to
premature withdrawal. If the authorized withdrawal is from a certificate
account, and the remaining balance does not meet the applicable minimum balance
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<PAGE>
requirements, the certificate shall be canceled at the time of withdrawal,
without penalty, and the remaining balance will earn interest at the passbook
rate. Funds for which a withdrawal is authorized will remain in the purchaser's
Deposit Account but may not be used by the purchaser during the Stock
Offering. 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. Interest will continue to be earned on any amounts authorized
for withdrawal until such withdrawal is given effect. Interest will be paid by
the Bank at a rate established by the Bank on payment for Common Stock received
by check or money order. Such interest will be paid from the date payment is
received by the Bank until consummation or termination of the Stock Offering.
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.
14. 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 OTS and the SEC, copies
of the prospectus and order forms will be distributed to all Eligible Account
Holders, Supplemental Eligible Account Holders, the Employee Plans and
employees, officers and directors at their last known addresses appearing on the
records of the Bank for the purpose of subscribing for shares of Common Stock in
the Subscription Offering and 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 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
elects 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
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<PAGE>
and executed order form, together with 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 authorizing on the order
form that the Bank withdraw said amount from the subscriber's Deposit
Account at the Bank); 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.
15. 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 Deposit 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.
16. 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.
17. 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.
18. 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
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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.
19. 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.
20. STOCK CERTIFICATES
Each stock certificate shall bear a legend giving appropriate notice
of the restrictions set forth in Section 19 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.
21. 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.
22. 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 an 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 on a priority basis as 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 10% 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 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 (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 (and in an amount
equal to up to 5% of the Common Stock issued in the Stock Offering if the
Recognition Plans are adopted more than one year after the completion
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<PAGE>
of the Stock Offering), (ii) options 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 and shares of Common Stock
issuable upon exercise of such options, and (iii) 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 if the Recognition Plans
award Common Stock sooner than one year after the completion of the Stock
Offering, and up to 10% of the number of shares of Common Stock issued in the
Stock Offering if the Recognition Plans are adopted more than one year after the
completion of 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 the Holding Company's 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.
23. 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.
24. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
The Holding Company may not declare or pay a cash dividend on its
Common Stock if the effect thereof would cause the regulatory capital of the
Bank to be reduced below the amount required under ' 567.2 of the OTS rules and
regulations. Otherwise, the Holding Company may declare dividends or make other
capital distributions in accordance with applicable laws and regulations.
Following completion of the Stock Offering, the Holding Company may repurchase
its Common Stock subject to ' 563b.3(g) of the OTS rules and regulations, as
long as such repurchases do not cause the regulatory capital of the Bank to be
reduced below the amount required under 12 C.F.R. ' 567.2. The MHC may from
time to time purchase Common Stock of the Holding Company. Subject to the
approval of the OTS, the MHC may waive its right to receive dividends declared
by the Holding Company.
25. REORGANIZATION AND STOCK OFFERING EXPENSES
The 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.
26. EMPLOYMENT AND OTHER SEVERANCE AGREEMENTS
Following or contemporaneously with the Reorganization, the Bank
and/or the Holding Company may enter into employment and/or severance
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 Bank and/or the
Holding Company also may enter into severance arrangements with one or more
21
<PAGE>
executive officers which provide for the payment of severance compensation in
the event of a change in control of the Bank and/or the Holding Company. The
terms of such employment and severance 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.
27. INTERPRETATION
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Bank
shall be final, subject to the authority of the OTS.
28. 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. Terms of the Plan relating
to the Stock Offering including, without limitation, Sections 8 through 20, 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.
Dated: April 23, 1998.
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EXHIBIT 8.1
[LETTERHEAD OF LUSE LEHMAN GORMAN POMERENK & SCHICK]
September 14, 1998
Board of Directors
Provident Bank
400 Rella Boulevard
Montebello, NY 10901
RE: MHC FORMATION AND STOCK ISSUANCE
--------------------------------
Gentlemen:
We have been requested as special counsel to Provident Bank ("Bank") to
express our opinion concerning the Federal income tax consequences relating to
the proposed conversion of the Bank from a federally chartered mutual savings
association to a federally chartered stock savings association ("Stock Bank")
and the formation of Provident Bancorp, MHC, a federal MHC ("MHC") which will
acquire the outstanding stock of Stock Bank and subsequently contribute Stock
Bank's stock to Provident Bancorp, Inc. ("Holding Company").
In connection therewith, we have examined the Plan of Reorganization from a
Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan, which
was adopted by the Board of Directors of the Bank on April 23, 1998 (the "Plan
of Reorganization"), and certain other documents of or relating to the
Reorganization (as defined below), some of which are described or referred to in
the Plan of Reorganization and which we deemed necessary to examine in order to
issue the opinions set forth below. Unless otherwise defined, all terms used
herein have the meanings given to such terms in the Plan of Reorganization.
In our examination, we have assumed the authenticity of original documents,
the accuracy of copies and the genuineness of signatures. We have further
assumed the absence of adverse facts not apparent from the face of the
instruments and documents we examined.
In issuing our opinions, we have assumed that the Plan of Reorganization
has been duly and validly authorized and has been approved and adopted by the
Board of Directors of the Bank at a meeting duly called and held; that the Bank
will comply with the terms and conditions of the Plan of Reorganization, and
that the various representations and warranties, which have been provided to us
by the Bank and which are set forth below, are accurate, complete, true and
correct. Accordingly, we express no opinion concerning the effect, if any, of
variations from the foregoing. We specifically express no opinion concerning tax
matters relating to the Plan of Reorganization
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 2
under state and local tax laws and under Federal income tax laws except on the
basis of the documents and assumptions described above.
In issuing the opinions set forth below, we have referred solely to
existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed Treasury Regulations thereunder, current
administrative rulings, notices and procedures and court decisions. Such laws,
regulations, administrative rulings, notices and procedures and court decisions
are subject to change at any time. Any such change could affect the continuing
validity of the opinions set forth below. This opinion is as of the date
hereof, and we disclaim any obligation to advise you of any change in any matter
considered herein after the date hereof.
We emphasize that the outcome of litigation cannot be predicted with
certainty and, although we have attempted in good faith to opine as to the
probable outcome of the merits of each tax issue with respect to which an
opinion was requested, there can be no assurance that our conclusions are
correct or that they would be adopted by the IRS or a court.
PROPOSED TRANSACTION
--------------------
On April 23, 1998, the Board of Directors of the Bank adopted the Plan of
Reorganization. For what are represented to be valid business purposes, the
Bank's Board of Directors has decided to convert to a mutual holding company
structure pursuant to statutes. The following steps are proposed:
(i) The Bank will organize an interim stock savings Bank (Interim One) as
its wholly-owned subsidiary;
(ii) Interim One will organize a federal mid-tier holding company as its
wholly-owned subsidiary (Holding Company); and
(iii) Interim One will also organize another interim stock savings Bank
as its wholly-owned subsidiary (Interim Two).
The following transactions will occur simultaneously:
(iv) The Bank will exchange its charter for a federal stock savings Bank
charter and become a stock savings Bank that will constructively
issue its common stock to members of the Bank;
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 3
(v) Interim One will cancel its outstanding stock and exchange its
charter for a federal MHC charter and thereby become the MHC;
(vi) Interim Two will merge with and into the Bank with the Bank as the
surviving entity, the former members of the Bank who constructively
hold stock in the Bank will exchange their stock in the Bank for
membership interests in the MHC; and
(vii) The MHC will contribute the Bank's stock to the Holding Company ,
a wholly-owned subsidiary of the MHC for additional shares of Bank
stock.
(viii) Contemporaneously, with the contribution set forth in "(vii)" the
Stock Holding Company will offer to sell up to 49% of its Common
Stock in the Subscription Offering and, if applicable, the Community
Offering.
These transactions are referred to herein collectively as the
"Reorganization."
Those persons who, as of the date of the Bank Conversion (the "Effective
Date"), hold depository rights with respect to the Bank will thereafter have
such rights solely with respect to the Stock Bank. Each deposit account with
the Bank at the time of the exchange will become a deposit account in the Stock
Bank in the same amount and upon the same terms and conditions. Following the
completion of the Reorganization, all depositors and borrowers who had
membership rights with respect to the Bank immediately prior to the
Reorganization will continue to have such rights solely with respect to the MHC
so long as they continue to hold deposit accounts or borrowings with the Stock
Bank. All new depositors of the Stock Bank after the completion of the
Reorganization will have ownership rights solely with respect to the MHC so long
as they continue to hold deposit accounts with the Stock Bank.
The shares of Interim Two common stock owned by the MHC prior to the
Reorganization shall be converted into and become shares of common stock of the
Stock Bank on the Effective Date. The shares of Stock Bank common stock
constructively received by the Stock Bank stockholders (formerly the members
holding liquidation rights of the Bank) will be transferred to the MHC by such
persons in exchange for liquidation rights in the MHC.
The Holding Company will have the power to issue shares of capital stock
(including common and preferred stock) to persons other than the MHC. So long
as the MHC is in existence, however, it must own a majority of the voting stock
of Holding Company. Holding Company may
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 4
issue any amount of non-voting stock to persons other than MHC. No such non-
voting stock will be issued as of the date of the Reorganization.
The Bank has made the following representations to us concerning this
transaction:
1. The fair market value of the Stock Bank stock constructively received by
the depositors of the Bank in exchange for their equity interest in the
Bank will be approximately equal to the fair market value of the equity
interest in the Bank constructively surrendered in the exchange.
2. There is no plan or intention by the depositors of the Bank, to sell,
exchange, or otherwise dispose of any of the shares of Stock Bank stock
constructively received in the transaction, other than as described herein
(i.e., the transfer to MHC).
3. Immediately following the Bank Conversion, the depositors of the Bank will
own all of the outstanding Stock Bank stock and will own such stock solely
by reason of their ownership of all of the equity interests in Bank
immediately prior to the transaction.
4. Stock Bank has no present plan or intention to issue additional shares of
its stock following the Bank Conversion.
5. Immediately following Bank Conversion, Stock Bank will possess the same
assets and liabilities, except for assets used to pay expenses incurred in
connection with the transaction, as those possessed by Bank immediately
prior to the transaction. Depositors will not have dissenters rights in
connection with the Bank Conversion. Also there will be no property
distributed to any shareholder in connection with the Bank Conversion and
no distributions other than the regular distributions (i.e., interest
credited to accounts).
6. At the time of the Bank Conversion, Bank will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock of Bank.
7. Stock Bank has no plan or intention to reacquire any of its stock issued in
the Bank Conversion.
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 5
8. Stock Bank has no plan or intention to sell or otherwise dispose of any of
the assets of Bank acquired in the Bank Conversion, except for dispositions
made in the ordinary course of business.
9. The liabilities of Bank assumed by Stock Bank plus the liabilities, if any,
to which the transferred assets are subject were incurred by Bank in the
ordinary course of its business and are associated with the assets
transferred.
10. Following the Bank Conversion, Stock Bank will continue the historic
business of Bank or use a significant portion of Bank's historic business
assets in a business.
11. The shareholders will pay their respective expenses, if any, incurred in
connection with the Bank Conversion.
12. Bank is not under the jurisdiction of a court in a Title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the Internal Revenue Code.
13. No stock or securities will be issued for services rendered to or for the
benefit of the MHC in connection with the 351 Transaction, and no stock or
securities will be issued for indebtedness of the MHC that is not
evidenced by a security, or for interest on indebtedness of the MHC which
accrued on or after the beginning of the holding period for the debt.
14. None of the assets to be transferred were received by the Stock Bank
shareholders as part of a plan of liquidation of another corporation.
15. The property to be transferred to the MHC will not include accounts
receivable, loans receivable, or commissions. Solely stock of Stock Bank
will be transferred.
16. None of the stock to be transferred is "Section 306 stock" within the
meaning of Section 306(c) of the Code.
17. The Stock Bank depositors did not incur any acquisition indebtedness with
respect to stock of Stock Bank that is part of the property being
transferred to the MHC.
18. The transfer is not the result of the solicitation by a promoter, broker,
or investment firm.
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 6
19. The Stock Bank depositors will not retain any right or continuing interest
in the property being transferred to the MHC.
20. The adjusted basis and the fair market value of the assets to be
transferred to MHC by Stock Bank depositors will, in each instance, equal
or exceed the sum of the liabilities to be assumed by MHC plus the
liabilities to which the transferred assets are subject.
21. The MHC will assume no liabilities of the Stock Bank shareholders in
connection with the 351 Transaction.
22. There is no indebtedness between the MHC and Stock Bank depositors, and
there will be no indebtedness created as a result of the 351 Transaction.
23. The transfers and exchanges will occur pursuant to the Plan which was
agreed upon before the 351 Transaction and under which the rights of the
parties are defined.
24. All exchanges will occur on approximately the same date.
25. There is no plan or intention on the part of the MHC to redeem or
otherwise reacquire any stock or securities to be issued in the 351
Transaction.
26. Taking into account any issuance of additional shares of MHC's equity, any
issuance of stock for services, the exercise of any stock rights, warrants
or subscriptions; a public offering of stock; and the sale, exchange,
transfer by gift, or other disposition of any equity of the MHC to be
received in the 351 Transaction, the Stock Bank depositors will be in
"control" of MHC within the meaning of Section 368(c) of the Code.
27. The Stock Bank depositors will receive ownership interests in the MHC
approximately equal to the fair market value of the property transferred to
the MHC.
28. MHC will remain in existence and retain and use the property transferred
to it in a trade or business.
29. There is no plan or intention by MHC to dispose of the transferred
property other than in the normal course of business operations.
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 7
30. Each of the parties to the 351 Transaction will pay its own expenses, if
any, incurred in connection with the proposed transaction.
31. MHC will not be an investment company within the meaning of Section
351(e)(1) and Section 1.351-1(c)(1)(ii) of the Income Tax Regulations.
32. MHC will not be a "personal service corporation" within the meaning of
Section 269A of the Code.
33. The Bank is not a "loss corporation" within the meaning of Section 382(k)
of the Code.
34. No stock or securities will be issued for services rendered to or for the
benefit of the Holding Company in connection with the transfer of Stock
Bank stock in the Secondary 351 transaction and cash by the MHC and
Minority Stockholders (the "Transferor Group"), and no stock or securities
will be issued for indebtedness of the Holding Company that is not
evidenced by a security, or for interest on indebtedness of the Holding
Company which accrued on or after the beginning of the holding period for
the debt.
35. None of the assets to be transferred in the Secondary 351 Transaction were
received by the MHC as part of a plan of liquidation of another
corporation.
36. The property to be transferred to the Holding Company in the Secondary 351
Transaction will not include accounts receivable, loans receivable, or
commissions. Solely stock of Stock Bank and cash will be transferred.
37. None of the stock to be transferred is "Section 306 stock" within the
meaning of Section 306(c) of the Code.
38. The transfer in the Secondary 351 Transaction is not the result of the
solicitation by a promoter, broker, or investment firm.
39. The Transferor Group will not retain any right or continuing interest in
the property being transferred to the Holding Company.
40. The adjusted basis and the fair market value of the assets to be
transferred to Holding Company by the Transferor Group will, in each
instance, equal or exceed the sum of the liabilities to be assumed by
Holding Company plus the liabilities to which the transferred assets are
subject.
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 8
41. The Holding Company will assume no liabilities of any member of the
Transferor Group in connection with the Secondary 351 Transaction.
42. There is no indebtedness between the Holding Company and the Transferor
Group, and there will be no indebtedness created as a result of the
Secondary 351 Transaction.
43. The transfers and exchanges will occur pursuant to the Plan which was
agreed upon before the Secondary 351 Transaction and under which the rights
of the parties are defined.
44. All exchanges will occur on approximately the same date.
45. There is no plan or intention on the part of the Holding Company to redeem
or otherwise reacquire any stock or securities to be issued in the
Secondary 351 Transaction.
46. Taking into account any issuance of additional shares of Holding Company 's
equity, any issuance of stock for services, the exercise of any stock
rights, warrants or subscriptions; a public offering of stock; and the
sale, exchange, transfer by gift, or other disposition of any equity of the
Holding Company to be received in the Secondary 351 Transaction, the
Transferor Group will be in "control" of Holding Company within the
meaning of Section 368(c) of the Code.
47. Holding Company will remain in existence and retain and use the property
transferred to it in a trade or business.
48. There is no plan or intention by Holding Company to dispose of the
transferred property other than in the normal course of business
operations.
49. Each member of the Transferor Group will pay its own expenses, if any,
incurred in connection with the Secondary 351 Transaction.
50. Holding Company will not be an investment company within the meaning of
Section 351(e)(1) and Section 1.351-1(c)(1)(ii) of the Income Tax
Regulations.
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 9
51. The MHC is not under the jurisdiction of a court in a Title 11 or similar
case (within the meaning of Section 368(a)(3)(A) of the Code) and the
equity interests in Holding Company received in the Exchange will not be
used to satisfy any indebtedness.
52. Holding Company will not be a "personal service corporation" within the
meaning of Section 269A of the Code.
53. The Stock Bank is not a "loss corporation" within the meaning of Section
382(k) of the Code.
SUMMARY OF OPINIONS
-------------------
Based on the facts, representations and assumptions set forth above, we are
of the opinion that:
WITH RESPECT TO THE EXCHANGE OF THE BANK'S CHARTER FOR A STOCK CHARTER
("BANK CONVERSION"):
1. Bank's exchange of its charter for a federal stock savings association
charter is a mere change in identity and form and therefore qualifies as a
reorganization within the meaning of Section 368(a)(1)(F) of the Internal
Revenue Code ("Code").
2. No gain or loss will be recognized by Bank upon the transfer of its
assets to Stock Bank solely in exchange for shares of Stock Bank stock and the
assumption by Stock Bank of the liabilities of Bank. (Code Sections 361(a) and
357(a)).
3. No gain or loss will be recognized by Stock Bank upon the receipt of
the assets of Bank in exchange for shares of Stock Bank common stock. (Code
Section 1032(a)).
4. Stock Bank's holding period in the assets received from Bank will
include the period during which such assets were held by the Bank. (Code
Section 1223(2)).
5. Stock Bank's basis in the assets of Bank will be the same as the basis
of such assets in the hands of Bank immediately prior to the Bank Conversion.
(Code Section 362(b)).
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 10
6. Bank members will recognize no gain or loss upon the constructive
receipt of Stock Bank common stock solely in exchange for their membership
interests in Bank. (Code Section 354(a)(1)).
7. The basis of the Stock Bank common stock to be constructively received
by the Bank's members (which basis is -0-) will be the same as their basis in
their membership interests in the Bank surrendered in exchange therefor. (Code
Section 358(a)(1)).
8. The holding period of the Stock Bank common stock constructively
received by the members of the Bank will include the period during which the
Bank members held their membership interests, provided that the membership
interests were held as capital assets on the date of the exchange. (Code
Section 1223(1)).
9. The Stock Bank will succeed to and take into account the Bank's
earnings and profits or deficit in earnings and profits, as of the date of the
proposed transaction. (Code Section 381).
WITH RESPECT TO THE TRANSFER OF STOCK BANK STOCK TO MHC FOR MEMBERSHIP
INTERESTS (THE "351 TRANSACTION"):
10. The exchange of Stock Bank stock by the Stock Bank depositors in
exchange for membership interests in the MHC will constitute a tax-free exchange
of property solely for voting "stock" pursuant to Section 351 of the Internal
Revenue Code.
11. Stock Bank's depositors will recognize no gain or loss upon the
transfer of the Stock Bank stock they constructively received in the Bank
conversion to the MHC solely in exchange for membership interests in the MHC.
(Code Section 351).
12. Stock Bank depositor's basis in the MHC membership interests received
in the transaction (which basis is -0-) will be the same as the basis of the
property transferred in exchange therefor. (Code Section 358(a)(1)).
13. Stock Bank depositor's holding period for the membership interests in
MHC received in the 351 Transaction will include the period during which the
property exchanged was held by Stock Bank depositors, provided that such
property was a capital asset on the date of the exchange. (Code Section
1223(1)).
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 11
14. MHC will recognize no gain or loss upon the receipt of property from
Stock Bank depositors in exchange for membership interests in the MHC. (Code
Section 1032(a)).
15. MHC's basis in the property received from Stock Bank depositors (which
basis is -0-) will be the same as the basis of such property in the hands of
Stock Bank depositors immediately prior to the transaction. (Code Section
362(a)).
16. MHC's holding period for the property received from Stock Bank's
depositors will include the period during which such property was held by Stock
Bank depositors. (Code Section 1223(2)).
WITH RESPECT TO THE TRANSFERS TO THE HOLDING COMPANY IN EXCHANGE FOR
COMMON STOCK IN THE HOLDING COMPANY (THE "SECONDARY 351 TRANSACTION"):
17. The MHC and the persons who purchased Common Stock of the Holding
Company in the Subscription and Community Offering ("Minority Stockholders")
will recognize no gain or loss upon the transfer of Stock Bank stock and cash,
respectively, to the Holding Company in exchange for stock in the Holding
Company. Code Sections 351(a).
18. Holding Company will recognize no gain or loss on its receipt of Stock
Bank stock and cash in exchange for Holding Company Stock. (Code Section
1032(a)).
19. The basis of the Holding Company Common Stock to the Minority
Stockholders will be the actual purchase price thereof, and a shareholders
holding period for Common Stock acquired through the exercise of subscription
rights will begin on the date the rights are exercised.
* * * * *
The opinions set forth above represent our conclusions as to the
application of existing Federal income tax law to the facts of the instant
transaction, and we can give no assurance that changes in such law, or in the
interpretation thereof, will not affect the opinions expressed by us. Moreover,
there can be no assurance that contrary positions may not be taken by the IRS,
or that a court considering the issues would not hold contrary to such opinions.
All of the opinions set forth above are qualified to the extent that the
validity of any provision of any agreement may be subject to or affected by
applicable Bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. We do not
<PAGE>
Board of Directors
Provident Bank
September 14, 1998
Page 12
express any opinion as to the availability of any equitable or specific remedy
upon any breach of any of the covenants, warranties or other provisions
contained in any agreement. We have not examined, and we express no opinion with
respect to the applicability of, or liability under, any Federal, state or local
law, ordinance, or regulation governing or pertaining to environmental matters,
hazardous wastes, toxic substances, asbestos, or the like.
It is expressly understood that the opinions set forth above represent our
conclusions based upon the documents reviewed by us and the facts presented to
us. Any material amendments to such documents or changes in any significant
fact would affect the opinions expressed herein.
We have not been asked to, and we do not, render any opinion with respect
to any matters other than those expressly set forth above.
We hereby consent to the filing of the opinion as an exhibit to the Bank's
combined Form MHC-1/MHC-2 Notice of MHC Reorganization and Application for
Approval of a Minority Stock Issuance by a Subsidiary of MHC as filed with the
OTS and to the Holding Company's Registration Statement on Form S-1 as filed
with the SEC. We also consent to the references to our firm in the Prospectus
contained in the Forms MHC-1/MHC-2 and S-1 under the captions "The
Reorganization and Offering - Tax Effects of the Reorganization" and "Legal and
Tax Matters," and to the summarization of our opinion in such Prospectus.
Very truly yours,
\s\ LUSE LEHMAN GORMAN POMERENK & SCHICK
LUSE LEHMAN GORMAN POMERENK & SCHICK
A Professional Corporation
<PAGE>
EXHIBIT 10.2
AMENDMENT NUMBER ONE
TO THE
EMPLOYMENT AGREEMENT
BETWEEN
PROVIDENT BANK
AND
GEORGE STRAYTON
WHEREAS, Provident Bank ("Bank") and George Strayton ("Mr. Strayton")
entered into an employment agreement ("Agreement") on the 25th day of January,
1996; and
WHEREAS, in connection with the reorganization of the Bank into the mutual
holding company form as the subsidiary of Provident Bancorp, Inc., a mid-tier
stock holding company ("Company"), the Bank and Mr. Strayton wish to amend the
Agreement in certain respects; and
WHEREAS, Section 24 of the Agreement provides that no modification of the
Agreement shall be valid unless in writing and signed by the parties to the
Agreement.
NOW THEREFORE, BE IT RESOLVED, that the Agreement shall be amended in
accordance with this Amendment Number One, signed by all parties to the
Agreement as modified, in the manner set forth below:
1. All references to "Bank" shall refer to "Provident Bank."
2. The introductory Paragraph to the Agreement shall be revised by adding the
following sentence to the end thereof:
"Provident Bancorp, Inc. ("Company") is a party to this Agreement for the
sole purpose of guaranteeing the Bank's performance hereunder."
3. Section 2 entitled "Employment Period" shall be amended by revising sub-
section "(a)" to read as follows:
"Except as otherwise provided in this Agreement to the contrary, the terms
and conditions of this Agreement shall be and remain in effect during the
period of employment ("Employment Period") established under this Section
2. The Employment Period shall be for a term commencing on the date of
this Agreement and ending on the third anniversary of the date of this
Agreement provided, however, that on each day after the date of this
Agreement, the Agreement shall automatically renew so that the remaining
term shall be thirty-six (36) months, and; provided, further, that
commencing on each annual anniversary of the date of this Agreement (the
date of each annual anniversary hereof shall be hereinafter referred to as
the "Anniversary Date"), unless the Employment Period has been previously
<PAGE>
terminated, the Board shall, at least 60 days prior to each such
Anniversary Date, conduct a comprehensive performance evaluation and review
of Mr. Strayton's performance for purposes of determining whether to
extend the Agreement and the results thereof shall be included in the
minutes of the Board meeting. The Board shall give Mr. Strayton notice of
its decision whether or not to extend the Employment Period at least 60
days prior to the Anniversary Date, and if such notice is that the
Employment Period shall not be extended (a "Non-Renewal Notice"), the
Employment Period shall not be extended. In such case, Mr. Strayton's
employment shall cease at the end of thirty-six (36) months following such
Anniversary Date.
4. The Agreement shall be modified to replace the term "Renewal Date" with the
term "Anniversary Date" in each place that it appears therein.
5. Section 8(b)(vi) shall be amended by adding the following language to the
end of the last sentence thereof:
"and provided that the lump sum payment determined above shall be increased
by an amount necessary to satisfy any federal, state and local income taxes
or Medicare taxes which become due as a result of such payment, in
accordance with Section 8(c) below;"
6. Section 8(b)(vii) shall be amended by adding the following language to the
end of the last sentence thereof:
"and provided that the lump sum payment determined above shall be increased
by an amount necessary to satisfy any federal, state and local income taxes
or Medicare taxes which become due as a result of such payment, in
accordance with Section 8(c) below;"
7. Section 8(b)(viii) shall be amended by adding the following language to the
end of the last sentence thereof:
"and provided that the lump sum payment determined above shall be increased
by an amount necessary to satisfy any federal, state and local income taxes
or Medicare taxes which become due as a result of such payment, in
accordance with Section 8(c) below;"
8. Section 8(b)(ix) shall be amended by deleting the language set forth
therein and replacing it with the following:
"(ix) within 60 days (or within such shorter period to the extent
that information can reasonably be obtained) following his
termination of employment with the Bank, a lump sum payment in
an amount equal to three times the average of the prior three
years incentive compensation earned or received by him
2
<PAGE>
under all incentive compensation plans or programs adopted by
the Bank, including but not limited to, the Management Incentive
Program; and"
9. Section 8 shall be amended by adding new sub-section 8(b)(x) to the end
thereof:
"(ix) if a stock option plan and management recognition plan are
adopted one year or more after the date on which the Bank
converts from mutual to stock form, then the vesting of all
remaining options awarded to Mr. Strayton under any stock option
plan and/or stock awards under any management recognition plan
adopted by the Bank or the Company. If a stock option plan and
management recognition plan are adopted within one year of the
date on which the Bank converts from mutual to stock form this
Subsection 8(b)(ix) shall be null and void"
10. Section 8 (b) shall be amended by removing the flush language at the end
thereof (which begins "Notwithstanding the foregoing, to the extent
required...") and inserting such language in new Sub-section 8(e)."
11. Sub-section 8(c) shall be amended by substituting "three years" for "two
years" in the next to the last line thereof.
12. New Sub-section 8(d) shall be added to the Agreement, which shall read as
follows:
"(c) In the event that Mr. Strayton becomes entitled to a benefit under
Sections 8(b)(vi), (vii) or (viii) (collectively, the "Retirement Plan
Replacement Benefit"), the Bank shall pay Mr. Strayton an additional
payment under such Sections, as set forth therein, in order to compensate
for the additional income and Medicare taxes that become due and owing as a
result of such Retirement Plan Replacement Benefit. The additional amount,
subject to applicable withholding requirements under state or federal law,
shall equal:
(i) the sum of the highest marginal federal, state and local income
tax rate and Medicare tax rate multiplied by the Retirement Plan
Replacement Benefit, and
(ii) such additional amount (tax allowance) as may be necessary to
compensate Mr. Strayton for the payment of federal, state and
local income taxes and Medicare taxes on the payment provided
under Clause (i) and on any payments under this Clause (ii). In
computing such tax allowance, the payments to be made under
Clause (i) shall be multiplied by the "gross up percentage"
("GUP"). The GUP shall be determined as follows:
Tax Rate
GUP = ------------------
1 - Tax Rate
3
<PAGE>
The "Tax Rate" for purposes of computing the GUP shall be the
highest marginal federal, state and local income tax rate and the highest
Medicare tax rate, applicable to Mr. Strayton in the year in which the
payment made under Clause (i) is made."
13. Section 9 shall be amended by deleting the language contained therein and
replacing it with the following:
"The Bank's Board may terminate Mr. Strayton's employment at anytime, but
any termination by the Bank's Board other than termination for "cause," as
defined herein, shall not prejudice Mr. Strayton's right to compensation or
other benefits under the Agreement. Mr. Strayton shall have no right to
receive compensation or other benefits for any period after termination for
"cause." Termination for "cause" shall include termination because of Mr.
Strayton's 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
routine traffic violations or similar offenses) or final cease-and-desist
order, or material breach of any provision of the contract.
"Termination for "cause" shall require the affirmative vote of a majority
of the member's of the Bank's Board, acting in good faith with respect to
such termination, provided however, that on or after the earliest date on
-------- -------
which a Change in Control Date as defined in Section 10 occurs, such a
determination shall require the affirmative vote of at least three fourths
of the members of the Board acting in good faith and such vote shall not be
made prior to the expiration of a 60 day period following the date on which
the Board shall by written notice to Mr. Strayton, furnish to him or her a
statement of its grounds for proposing to make such determination, during
which period Mr. Strayton shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his or her legal counsel at such presentations, or to refute
the grounds for the proposed determination;
"For purposes of this Section 9, no act or failure to act, on the part of
Mr. Strayton, shall be considered "willful" unless it is done, or omitted
to be done, by Mr. Strayton in bad faith or without reasonable belief that
Mr. Strayton's action or omission was in the best interests of the Company
and the Bank. 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 Company or the Bank shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith
and in the best interests of the Company and the Bank. The cessation of
employment of Mr. Strayton shall not be deemed to be for "Cause" within the
meaning of Section 9(a) unless and until there shall have been delivered to
Mr. Strayton a copy of a resolution duly adopted by the affirmative vote of
three-fourths of the members of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to Mr.
Strayton and Mr. Strayton is given an opportunity, together with counsel,
to be heard before the Board), finding that in the good faith opinion of
the Board, Mr. Strayton is guilty of the conduct described in Section 9(a)
above, and specifying the particulars thereof in detail."
4
<PAGE>
14. Section 10(a) of the Agreement shall be deleted and the following
substituted therefor:
"(a) For purposes of this Agreement, the term "Change in Control" shall
mean a change in control of a nature that: (i) would be required to be reported
in response to Item 1(a) of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"); or (ii) results in a Change in Control of the Bank or
the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"),
and applicable rules and regulations promulgated thereunder, as in effect at the
time of the Change in Control; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (a) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner"(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership plan or trust; or
(b) individuals who constitute the Board on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election
was approved by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (b), considered as though
he were a member of the Incumbent Board; or (c) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the Bank
or the Company or similar transaction in which the Bank or Company is not the
surviving institution occurs; or (d) a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the plan are to be exchanged for or converted into
cash or property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror."
2. New Section 26 shall be added to the end of the Agreement and shall state
as follows:
"Section 26. Source of Payments
------------------
"All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. The Company, however, guarantees
payment and provision of all amounts and benefits due hereunder to Mr.
Strayton and, if such amounts and benefits due from the Bank are not timely
paid or provided by the Bank, such amounts and benefits shall be paid or
provided by the Company.
3. In all other respects the Agreement shall remain in full force and effect.
5
<PAGE>
IN WITNESS WHEREOF, the parties to the Agreement and the Company have
caused this Amendment Number One to be executed as of the _______ day of
___________, 1998.
<TABLE>
<CAPTION>
<S> <C>
WITNESS EXECUTIVE
- ------------------------------------ --------------------------------------
(Name) (Name)
ATTEST: PROVIDENT BANK
By: By:
--------------------------------- ------------------------------------
Secretary President
ATTEST: PROVIDENT BANCORP, INC.
By: By:
--------------------------------- ------------------------------------
Secretary President
</TABLE>
6
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
by and between
PROVIDENT BANK
And
___________________
____________________________________
Made and Entered Into As Of
__________, 1998
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is made and entered into as of the
____ day of _________, 1998, by and between PROVIDENT BANK, a savings bank
organized and existing under the laws of the United States of America and
having its executive offices at 400 Rella Boulevard, Montebello, New York 10901
("Bank"), and ____________________ ("Executive"). Provident Bancorp, Inc.
("Company") is a party to this Agreement for the sole purpose of guaranteeing
the Bank's performance hereunder.
WITNESSETH:
WHEREAS, Executive is currently serving as _____________________________of
the Bank; and
WHEREAS, the Board of Directors of the Bank ("Board") considers the
continued availability of Executive's services to be important to the successful
management and conduct of the Bank's business and desires to secure for itself
the continued availability of his or her services; and
WHEREAS, for purposes of securing Executive's services for the Bank, the
Board has approved and authorized the execution of the Agreement with Executive
on the terms and conditions set forth herein; and
WHEREAS, Executive is willing to continue to make his or her services
available to the Bank on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the Bank and Executive hereby agree as
follows:
SECTION 1. EMPLOYMENT
----------
The Bank hereby agrees to continue the employment of the Executive and the
Executive hereby agrees to continue such employment, during the period and upon
the terms and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD
-----------------
(a) Except as otherwise provided in this Agreement to the contrary, the
terms and conditions of this Agreement shall be and remain in effect during the
period of employment ("Employment Period") established under this Section 2. The
Employment Period shall be for a term commencing on the date of this Agreement
and ending on the [second] anniversary of the date of this Agreement; provided,
however, that on each day after the date of this Agreement, the Agreement shall
automatically renew so that the remaining term shall be [twenty-four (24)]
months, and provided, further that commencing on each annual anniversary of the
date of this Agreement (the
<PAGE>
date of each annual anniversary hereof shall be hereinafter referred to as the
"Anniversary Date"), unless the Employment Period has been previously
terminated, the Board shall, at least 60 days prior to each such Anniversary
Date, conduct a comprehensive performance evaluation and review of the Executive
for purposes of determining whether to extend the Agreement and the results
thereof shall be included in the minutes of the Board meeting. The Board shall
give the Executive notice of its decision whether or not to extend the
Employment Period at least 60 days prior to the Anniversary Date, and if such
notice is that the Employment Period shall not be extended (a "Non-Renewal
Notice"), the Employment Period shall not be extended. In such case, the
Executive's employment shall cease at the end of [twenty-four (24)] months
following such Anniversary Date.
(b) Notwithstanding anything herein contained to the contrary: (i) the
Executive's employment with the Bank may be terminated by the Bank or the
Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
continuation of the Executive's employment following the expiration of the
Employment Period upon such terms and conditions as the Board and the Executive
may mutually agree.
(c) If the Executive's employment with the Bank is terminated under
circumstances described in Section 8(a), the term "unexpired Employment Period"
in Section 8(b) shall mean the period of time commencing on the date of such
termination and ending on the last day of the Employment Period.
(d) Notwithstanding anything continued in this Section 2 to the contrary,
in the event of a Change in Control of the Bank as defined in Section 10, the
Employment Period shall be extended until the third anniversary of the Change in
Control Date; provided, however, that commencing on the date one year after the
Change in Control Date and on each anniversary of such date (such date and each
annual anniversary thereof shall also be hereinafter referred to as the
"Anniversary Date"), unless the Employment Period has been previously
terminated, the Board shall, at least 60 days prior to each Anniversary Date,
review and determine whether or not to approve a one-year extension of the
Employment Period so that the Employment Period terminates three years from such
Anniversary Date, and the Bank shall give the Executive notice of the Board's
decision whether or not to extend the Employment Period at least 60 days prior
to the Anniversary Date, and if such notice is that the Employment Period shall
not be extended (a "Non-Renewal Notice"), the Employment Period shall not be
extended.
SECTION 3. DUTIES
------
The Executive shall: (a) devote his or her full business time and attention
(other than during weekends, holidays, vacation periods, and periods of illness,
disability or approved leave of absence) to the business and affairs of the Bank
and use his or her best efforts to advance the Bank's interests; (b) if duly
appointed or elected, serve as [______________________________________] of the
Bank; and (c) perform such duties not inconsistent with his or her title and
office as may be assigned to him or her by or under the authority of the Board.
The Executive shall have such authority as is
2
<PAGE>
necessary or appropriate to carry out his or her assigned duties. The Executive
shall be entitled to a minimum of four weeks of vacation time each year during
the Employment Period.
SECTION 4. COMPENSATION
------------
In consideration for the services rendered by the Executive under this
Agreement, the Bank shall pay to the Executive a salary at an annual rate equal
to the greatest of:
(a) $__________;
(b) such higher annual rate as may be prescribed by or under the
authority of the Board;
(c) for each calendar year that begins on or after the date on which
a change in Control Date, as defined in Section 10, occurs, the
product of the Executive's annual rate of salary in effect
immediately prior to such calendar year, multiplied by the
greatest of:
(i) 1.06; or
(ii) the quotient of (A) the average annual rate of salary,
determined as of the first day of such calendar year, of the
officers of the Bank (other than the Executive ) who are
assistant vice presidents or more senior officers, divided
by (B) the average annual rate of salary, determined as of
the first day of the immediately preceding calendar year, of
the officers of the Bank (other than the Executive) who are
assistant vice presidents or more senior officers;
provided, however, that in no event shall the Executive's annual rate of salary
- -------- -------
under this Agreement in effect at a particular time be reduced without the
Executive's prior written consent. The annual rate of salary payable under this
Section 4 shall be paid in approximately equal installments in accordance with
the Bank's customary payroll practices.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS
-----------------------------------
Except as otherwise provided in this Agreement, the Executive shall, during
the Employment Period, be treated as an employee of the Bank, and be entitled to
participate in and receive benefits under the Bank's Defined Benefit Pension
Plan, 401(k) Plan, Management Incentive Program, Supplemental Executive
Retirement Plan, group life, health (including hospitalization, medical and
major medical), prescription drug, dental, short and long term disability
insurance plans, and such other employee benefit plans and programs, including
but not limited to any other incentive compensation plans or programs (whether
or not employee benefit plans or programs), stock option plans and stock award
plans, if any, as the Bank may maintain from time to time, in accordance with
3
<PAGE>
the terms and conditions of such employee benefit plans and programs and
compensations plans and programs and in accordance with the Bank's customary
practices to the extent maintained by the Bank, provided that he or she is a
member of the class of employees authorized to participate in such plans or
programs.
SECTION 6. OUTSIDE ACTIVITIES AND BOARD MEMBERSHIPS
----------------------------------------
During the term of this Agreement, the Executive shall not, directly or
indirectly, provide services on behalf of any competitive financial
institutions, any insurance company or agency, any mortgage or loan broker or
any other competitive entity or on behalf of any subsidiary or affiliate of any
such competitive entity, as an employee, consultant, independent contractor,
agent, sole proprietor, partner, joint venturer, corporate officer or director;
nor shall the Executive acquire by reason of purchase during the term of this
Agreement the ownership of more than 5% of the outstanding equity interest in
any such competitive entity. In addition, during the term of this Agreement,
the Executive shall not, directly or indirectly, acquire a beneficial interest,
or engage in any joint venture in real estate with the Bank. Subject to the
foregoing, and to the Executive's right to continue to serve as an officer
and/or director or trustee of any business organization as to which he or she
was so serving on the effective date of this Agreement, the Executive may serve
on boards of directors of unaffiliated corporations, subject to Board approval,
which shall not be unreasonably withheld, and such services shall be presumed
for these purposes to be for the benefit of the Bank. Except as specifically set
forth herein, the Executive may engage in personal business and investment
activities, including real estate investments and personal investments in the
stocks, securities and obligations of other financial institutions.
Notwithstanding the foregoing, in no event shall the Executive's outside
activities, services, personal business and investments materially interfere
with the performance of his or her duties under this Agreement.
SECTION 7. WORKING FACILITIES AND EXPENSES
-------------------------------
The Executive's principal place of employment shall be at the Bank's
principal executive office at the address first above written, or at such other
office of the Bank in Rockland County as the Board shall, in its sole
discretion, deem to be in the best interest of the Bank, or at such other
location upon which the Board and the Executive may mutually agree. The Bank
shall reimburse the Executive for his or her ordinary and necessary business
expenses and travel and entertainment expenses, incurred in connection with the
performance of his or her duties under this Agreement, upon presentation to the
Bank of an itemized account of such expenses in such form as the Bank may
reasonably require.
SECTION 8. TERMINATION OF EMPLOYMENT WITH BANK LIABILITY
---------------------------------------------
(a) In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
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<PAGE>
(i) The Executive's voluntary resignation from employment with the
Bank within one year following:
(A) the failure of the Bank's President or the Bank's Board to
re-appoint the Executive to the position set forth under
Section 3;
(B) a material change in Executive's functions, duties, or
responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance,
or scope, which the Bank fails to cure within 30 days
following written notice thereof from the Executive;
(C) liquidation or dissolution of the Bank or the Company other
than liquidations or dissolutions that are caused by
reorganizations that do not affect the status of the
Executive;
(D) a material breach of this Agreement by the Bank, which the
Bank fails to cure within 30 days following written notice
thereof from the Executive; or
(E) a Change in Control Date of the Bank as defined in Section
10; or
(ii) the discharge of the Executive by the Bank for any reason other
than for "Cause" as defined in Section 9(a); or
(iii) the termination of the Executive's employment with the Bank as a
result of the Executive's "total and permanent disability"
which, for purposes of this Agreement, shall apply only if a
majority of the members of the Board acting in good faith
determine that, based upon competent and independent medical
evidence presented by a physician or physicians agreed upon by
the parties, the Executive's physical or mental condition is
such that he or she is totally and permanently incapable of
engaging in any substantial gainful employment based upon his or
her education, training and experience;
then the Bank shall provide the benefits and pay to the Executive the amounts
provided for under Section 8(b).
(b) Upon the termination of the Executive's employment with the Bank under
circumstances described in Section 8(a) of this Agreement, the Bank shall pay
and provide or credit to the Executive (or, in the event of his or her death, to
his or her surviving spouse or such other beneficiary as the Executive may
designate in writing, or if there is neither, to his or her estate):
5
<PAGE>
(i) his earned but unpaid salary as of the date of the termination
of his or her employment with the Bank;
(ii) the benefits, if any, to which he or she is entitled as a former
employee under the Bank's employee benefit plans and programs
and compensation plans and programs;
(iii) continued group, life, health (including hospitalization,
medical and major medical), prescription drug, dental, short and
long term disability insurance benefits, in addition to those
provided pursuant to Section 8(b)(ii), if and to the extent
necessary to provide the Executive for the remaining unexpired
Employment Period, coverage equivalent to the coverage to which
he or she would have been entitled if he or she had continued
working for the Bank during the remaining unexpired Employment
Period at the highest annual rate of salary achieved during the
Employment Period;
(iv) within thirty (30) days following his or her termination of
employment with the Bank, a lump sum payment, as liquidated
damages, in an amount equal to the present value of the salary
that the Executive would have earned (but offset by any payments
made under any short-term or long-term disability plan or
program maintained by the Bank) if he or she had continued
working for the Bank for the remaining unexpired Employment
Period at the highest annual rate of salary achieved during the
Employment Period, where such present value shall be determined
using a discount rate of 6%, and shall be paid in lieu of all
other payments of salary provided for under this Agreement in
respect of the period following any such termination and to be
payable without proof of damages and without regard to the
Executive's efforts, if any, to mitigate damages;
(v) within 60 days (or within such shorter period to the extent that
information can reasonably be obtained) following his or her
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 benefits to which he or she would be entitled under the
Bank's Defined Benefit Pension Plan if he or she had the
additional years of service that he or she would have had if he
or she were 100% vested thereunder and had continued working for
the Bank during the remaining unexpired Employment Period
following his or her termination earning the salary that would
have been paid during the remaining unexpired Employment Period,
determined as if the plan had continued in effect without change
in accordance with its terms as of the day prior to his or her
actual date of termination and as if such benefits were payable
beginning on the first day of the month coincident with or next
following the actual date of his or her termination, over
(B) the present value of the benefits to which he or she
6
<PAGE>
is actually entitled under the Bank's Defined Benefit Pension
Plan as of the date of his or her termination, where such
present value is to be determined using a discount rate of 6%
and the mortality tables prescribed under Section 72 of the
Internal Revenue Code of 1986 ("Code") and provided that the
lump sum payment determined above shall be increased by an
amount necessary to satisfy any federal, state and local income
taxes and Medicare taxes which become due as a result of such
payment, in accordance with Section 8(e) below;
(vi) within 60 days (or within such shorter period to the extent that
information can be reasonably be obtained) following his or her
termination of employment with the Bank, a lump sum payment in
an amount equal to the present value of the Bank's contributions
that would have been made on his or her behalf under the Bank's
401(k) Plan and Employee Stock Ownership Plan (and any other
defined contribution plan maintained by the Bank) if he or she
had continued working for the Bank for the remaining unexpired
Employment Period following his or her termination earning the
salary that would have been achieved during the remaining
unexpired Employment Period and making the maximum amount of
employee contributions permitted, if any, under such plan or
plans, where such present values are to be determined using a
discount rate of 6% and provided that the lump sum payment
determined above shall be increased by an amount necessary to
satisfy any federal, state and local income taxes and Medicare
taxes which become due as a result of such payment, in
accordance with Section 8(e) below;
(vii) within 60 days (or within such shorter period to the extent
that information can be reasonably be obtained) following his or
her 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 benefits to which he or she would be entitled under
the Supplemental Executive Retirement Plan (and any other excess
benefit plan within the meaning of Section 3(36) of the
Employment Retirement Income Security Act of 1974, as amended,
or any deferred compensation plan for management or highly
compensated employees that are maintained by the Bank), if he or
she had continued working for the Bank for the remaining
unexpired Employment Period following his or her termination
earning the salary that would have been achieved during the
remaining unexpired Employment Period, determined as if each
such plan had continued in effect without change in accordance
with its terms as of the day prior to his or her actual date of
termination and as if such benefits were payable beginning on
the first day of the month coincident with or next following his
or her actual date of termination, over (B) the present value of
the benefits to which he or she is actually entitled under any
7
<PAGE>
such plan, as of the date of his or her termination of
employment with the Bank, where such present values are to be
determined using a discount rate of 6% and the mortality tables
prescribed under Section 72 of the Code and provided that the
lump sum payment determined above shall be increased by an
amount necessary to satisfy any federal, state and local income
taxes and Medicare taxes which become due as a result of such
payment, in accordance with Section 8(e) below;
(viii) within 60 days (or within such shorter period to the extent
that information can reasonably be obtained) following his or
her termination of employment with the Bank, a lump sum payment
in an amount equal to [two times] the average of the prior two
years incentive compensation earned or received by him or her
under all incentive compensation plans or programs adopted and
maintained by the Bank, including but not limited to, the
Management Incentive Program; and
(ix) if a stock option plan and management recognition plan are
adopted one year or more after the date on which the Bank
converts from mutual to stock form, then the lesser of [two (2)]
additional years of vesting or the vesting of all remaining
options awarded to Executive under any stock option plan and/or
stock awards under any management recognition plan adopted by
the Bank or the Company. If a stock option plan and management
recognition plan are adopted within one year of the date on
which the Bank converts from mutual to stock form this
Subsection 8(b)(ix) shall be null and void.
(c) Notwithstanding the foregoing, upon the termination of the Executive's
employment with the Bank under circumstances described in Section 8(a)(i)(E) of
this Agreement, the Bank shall pay and provide or credit to the Executive (or in
the event of his or her death, to his or her surviving spouse or such other
beneficiary as the Executive may designate in writing, or if there is neither,
to his or her estate), a benefit under Sections 8(b)(iii) through 8(b)(ix) above
as if the "remaining unexpired Employment Period" under the Agreement is
[thirty-six] rather than [twenty-four] months.
(d) If the Bank gives Executive a Non-Renewal Notice, or if the Bank does
not extend the Employment Period at least 60 days prior to any Renewal Date as
described in Section 2 of the Agreement, Executive may resign from the
employment of the Bank at any time after such an event. In such case, (i) the
Bank shall pay to Executive severance benefits in a lump sum in cash within 30
days after such resignation equal to the amounts described in Section 8(b) of
the Agreement, and (ii) the Bank shall provide the benefits described in Section
8(b)(ii), (iii) and (iv).
(e) In the event that the Executive becomes entitled to a benefit under
Sections 8(b)(v), (vi) or (vii) (collectively, the "Retirement Plan Replacement
Benefit"), the Bank shall pay the Executive an additional payment under such
Sections, as set forth therein, in order to compensate for the additional income
and Medicare taxes that become due and owing as a result of such
8
<PAGE>
Retirement Plan Replacement Benefit. The additional amount, subject to
applicable withholding requirements under state or federal law, shall equal:
(i) the sum of the highest marginal federal, state and local income
tax rate and Medicare tax rate multiplied by the Retirement Plan
Replacement Benefit, and
(ii) such additional amount (tax allowance) as may be necessary to
compensate the Executive for the payment by the Executive of
federal, state and local income taxes and Medicare taxes on the
payment provided under Clause (i) and on any payments under this
Clause (ii). In computing such tax allowance, the payments to be
made under Clause (i) shall be multiplied by the "gross up
percentage" ("GUP"). The GUP shall be determined as follows:
Tax Rate
GUP = ------------------
1 - Tax Rate
The "Tax Rate" for purposes of computing the GUP shall be the
highest marginal federal, state and local income tax rate and the highest
Medicare tax rate, applicable to the Executive in the year in which the
payment made under Clause (i) is made.
(f) Notwithstanding the foregoing, to the extent required by regulations or
interpretations of the Office of Thrift Supervision, all payments under the
Agreement shall not exceed three times the Executive's average annual
compensation over the most recent five taxable years. The Bank and the
Executive hereby stipulate that the damages which may be incurred by the
Executive following any such termination of employment are not capable of
accurate measurement as of the date first written and that such liquidated
damages constitute reasonable damages under the circumstances.
SECTION 9. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY
---------------------------------------------
(a) "The Bank's Board may terminate the Executive's employment at anytime,
but any termination by the Bank's Board other than termination for "cause," as
defined herein, shall not prejudice the Executive's right to compensation or
other benefits under the Agreement. The Executive shall have no right to
receive compensation or other benefits for any period after termination for
"cause." Termination for "cause" shall include termination because of the
Executive's 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 routine
traffic violations or similar offenses) or final cease-and-desist order,
or material breach of any provision of the contract.
9
<PAGE>
"Termination for "cause" shall require the affirmative vote of a majority
of the member's of the Bank's Board, acting in good faith with respect to such
termination, provided however, that on or after the earliest date on which a
-------- -------
Change in Control Date as defined in Section 10 occurs, such a determination
shall require the affirmative vote of at least three fourths of the members of
the Board acting in good faith and such vote shall not be made prior to the
expiration of a 60 day period following the date on which the Board shall by
written notice to the Executive, furnish to him or her a statement of its
grounds for proposing to make such determination, during which period the
Executive shall be afforded a reasonable opportunity to make oral and written
presentations to the members of the Board, and to be represented by his or her
legal counsel at such presentations, or to refute the grounds for the proposed
determination;
"For purposes of this Section 9, no act or failure to act, on the part of
the Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Bank. 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 Company or the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Company and the Bank. The cessation of employment of the Executive shall
not be deemed to be for "Cause" within the meaning of Section 9(a) unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of three-fourths of the members of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in Section 9(a) above, and specifying the particulars thereof in
detail."
(b) In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
(i) The Executive's voluntary resignation from employment with the
Bank for reasons other than those specified in Section 8(a)(i)
or 8(c); or
(ii) The Executive's death;
then the Bank shall have no further obligations under this Agreement, other than
the payment to the Executive of his or her earned but unpaid salary as of the
date of the termination of his or her employment, and the provision of such
benefits, if any, to which he or she is entitled as a former employee under the
Bank's employee benefit plans and programs and compensation plans and programs.
For purposes of this Section 9, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Bank. 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 Company
10
<PAGE>
or the Bank shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company and the
Bank. The cessation of employment of the Executive shall not be deemed to be for
"Cause" within the meaning of Section 9(a) unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of three-fourths of the members of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive is guilty of the conduct described in Section 9(a)
above, and specifying the particulars thereof in detail.
SECTION 10. CHANGE IN CONTROL
-----------------
(a) For purposes of this Agreement, the term "Change in Control" shall mean
a change in control of a nature that: (i) would be required to be reported in
response to Item 1(a) of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"); or (ii) results in a Change in Control of the Bank or
the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"),
and applicable rules and regulations promulgated thereunder, as in effect at the
time of the Change in Control; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (a) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner"(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership plan or trust; or
(b) individuals who constitute the Board on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election
was approved by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (b), considered as though
he or she were a member of the Incumbent Board; or (c) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the Bank
or the Company or similar transaction in which the Bank or Company is not the
surviving institution occurs; or (d) a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the plan are to be exchanged for or converted into
cash or property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror.
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(b) For purposes of this Agreement, the term "Change in Control Date"
shall mean the first date during the Employment Period on which a Change in
Control occurs. Anything in this Agreement to the contrary notwithstanding,
if the Executive's employment with the Bank is terminated and if it is
reasonably demonstrated by the Executive that such termination of Employment
(i) was at the request of a third party who has taken steps reasonably
calculated to effect a Change in Control or (ii) otherwise arose in connection
with or anticipation of a Change in Control, then for all purposes of this
Agreement the "Change in Control Date" shall mean the date immediately prior
to the date such termination of employment.
SECTION 11. COVENANT NOT TO COMPETE
-----------------------
The Executive hereby covenants and agrees that for a period of one (1) year
following the date of his or her termination of employment with the Bank, if
such termination occurs prior to the end of the Employment Period, he or she
shall not, without the written consent of the Board, become an officer,
employee, consultant, director, independent contractor, agent, sole proprietor,
partner or trustee of any savings bank, savings and loan association, savings
and loan holding company, bank or bank holding company, insurance company or
agency, any mortgage or loan broker or any other entity competing with the Bank
or its affiliates if such position entails working in (or providing services in)
Rockland or Orange Counties; provided, however, that this Section 11 shall not
-------- -------
apply if the Executive's employment is terminated for the reasons set forth in
Section 8(a) or 8(d).
SECTION 12. ADDITIONAL TERMINATION AND SUSPENSION PROVISIONS
------------------------------------------------
(a) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended
(12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of the Bank under this
Agreement shall be suspended as of the date of service unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all of the compensation withheld
while the Bank's obligations under this Agreement were suspended and
(ii) reinstate (in whole) any of the Bank's obligations which were suspended,
and in exercising such discretion, the Bank shall consider the facts and make
a decision promptly following such dismissal of charges and act in good faith
in deciding whether to pay any withheld compensation to the Executive and to
reinstate any suspended obligations of the Bank.
(b) 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 (g)(1) of the Federal Deposit Insurance Act, as amended (12
U.S.C. 1818 (e)(4) or (g)(1)), all obligations of the bank under this Agreement
shall terminate as of the effective date of the order, but vested rights of the
parties shall not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, as amended (12 U.S.C. 1813 (x)(1)), all
obligations under this Agreement shall terminate as of the date of default, but
this provision shall not affect any vested rights of the parties.
12
<PAGE>
(d) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank, (i) by the Director of the OTS (the "Director")
or his or her designee, 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 Federal Deposit Insurance Act, as amended; or (ii) by the Director
or his or her designee, at the time the Director or his or her designee approves
a supervisory merger to resolve problems related to operation of the Bank or
when the Bank is determined by the Director to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
(e) If any regulation applicable to the Bank shall hereafter be adopted,
amended or modified, or if any new regulation applicable to the Bank and
effective after the date of this Agreement:
(i) shall require the inclusion in this Agreement of a provision not
presently included in this Agreement, then the foregoing
provisions of this Section 12 shall be deemed amended to the
extent necessary to give effect in this Agreement to any such
amended, modified or new regulation; and
(ii) shall permit the exclusion of a limitation in this Agreement on
the payment to the Executive of an amount or benefit provided for
presently in this Agreement, then the foregoing provisions of
this Section 12 shall be deemed amended to the extent permissible
to exclude from this Agreement any such limitation previously
required to be included in this Agreement by a regulation prior
to its amendment, modification or repeal.
SECTION 13. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS
-----------------------------------------------
Except as expressly provided in this Agreement, the termination of the
Executive's employment during the term of this Agreement or thereafter, whether
by the Board or by the Executive, shall have no effect on the rights and
obligations of the parties hereto under the Bank's Defined Benefit Pension Plan,
401(k) Plan, Supplemental Executive Retirement Plan, Management Incentive
Program, group life, health (including basic hospitalization and major medical),
prescription drug, dental, short and long term disability insurance plans or
such other employee benefit plans or programs, including but not limited to any
incentive compensation plans or program (whether or not employee benefit plans
or programs) as the Bank may maintain from time to time.
SECTION 14. SUCCESSORS AND ASSIGNS
----------------------
This Agreement will inure to the benefits of and be binding upon the
Executive, his or her legal representatives and estate and intestate
distributees, and the Bank, its successors and assigns, including any successor
by merger or consolidation or conversion to stock form 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. Any
such successor of the Bank shall be deemed to have assumed this Agreement and to
have become obligated hereunder to the same extent as the Bank, and the
Executive's obligations hereunder shall continue in favor of such successor.
13
<PAGE>
SECTION 15. NOTICES
-------
Any communication to a party required or permitted 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 received by overnight carrier, or
five 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 the Executive:
[to come]
If to the Bank:
Provident Bank
400 Rella Boulevard
Montebello, New York 10901
Attention: President.
With a copy to:
Luse Lehman Gorman Pomerenk & Schick, LLP
5335 Wisconsin Avenue, NW, Suite 400
Washington, DC 20015
Attention: Eric Luse, Esq.
SECTION 16. SETTLEMENT, INDEMNIFICATION AND ATTORNEY'S FEES
-----------------------------------------------
(a) The Bank's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
14
<PAGE>
(b) Unless it is determined that a claim made by the Executive was either
frivolous or made in bad faith, the Bank agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of or in connection with his or her consultation
with legal counsel or arising out of any action, suit, proceeding or contest
(regardless of the outcome thereof) by the Bank, the Executive or others
regarding the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.
(c) The Bank shall indemnify, hold harmless and defend the Executive for
all acts or omissions taken or not taken by him or her in good faith while
performing services for the Bank to the same extent and upon the same terms and
conditions as other similarly situated officers and directors of the Bank. If
and to the extent that the Bank maintains, at any time during the Employment
Period, an insurance policy covering the other officers and directors of the
Bank against lawsuits, the Bank shall use its best efforts to cause the
Executive to be covered under such policy upon the same terms and conditions as
other similarly situated officers and directors.
SECTION 17. 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 18. WAIVER
------
Failure to insist upon strict compliance with any 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 or 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 19. COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
Agreement.
SECTION 20. GOVERNING LAW
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to
conflicts of law principles, except to the extent governed by federal law in
which case federal law shall govern.
SECTION 21. 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
specified.
15
<PAGE>
SECTION 22. ARBITRATION
-----------
Any dispute or controversy arising out of, under, in connection with, or
relating to this Agreement and any amendment hereof shall be submitted to
binding arbitration before three arbitrators in Rockland County in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
for expedited arbitration, and any judgement upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
SECTION 23. ENTIRE AGREEMENT: MODIFICATIONS
-------------------------------
This instrument contains the entire agreement of the parties relating to
the subject matter hereof, and supercedes in its entirety any and all prior
agreements, understandings or representations 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 24. SOURCE OF PAYMENTS
------------------
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. The Company, however, guarantees
payment and provision of all amounts and benefits due hereunder to Executive
and, if such amounts and benefits due from the Bank are not timely paid or
provided by the Bank, such amounts and benefits shall be paid or provided by the
Company.
SECTION 25. COMPLIANCE WITH LAW
-------------------
Any payments made to the Executive pursuant to this Agreement, or otherwise
are subject to and conditioned upon their compliance with 12 U.S.C. 1828(i) and
any regulations promulgated thereunder.
[Remainder of Page Intentionally Blank]
16
<PAGE>
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed
and the Executive has hereunto set his or her hand, all as of the day and year
first above written.
<TABLE>
<CAPTION>
<S> <C>
WITNESS EXECUTIVE
- ---------------------------------- ---------------------------------------
(Name) (Name)
ATTEST: PROVIDENT BANK
By: By:
------------------------------- ------------------------------------
Secretary President
[Seal]
ATTEST: PROVIDENT BANCORP, INC.
By: By:
------------------------------- ------------------------------------
Secretary President
</TABLE>
17
<PAGE>
state of new york )
: ss.:
county of rockland )
On this ____day of __________, 1998, before me personally came
______________, 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 or she resides at the address set forth in said instrument, and that he or
she signed his or her name to the foregoing instrument.
---------------------------------------
Notary Public
state of new york )
: ss.:
county of rockland )
On this ____day of __________, 1998, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he or she resides at _________________________________________; that he
or she is a member of the Board of Directors of PROVIDENT BANK, the savings
bank described in and which executed the foregoing instrument; that he or she
knows the seal of said savings bank; that the seal affixed to said instrument
is such seal; that it was so affixed by authority of the Board of Directors of
said savings bank; and that he or she signed his or her name thereto by like
authority.
----------------------------------------
Notary Public
18
<PAGE>
EXHIBIT 10.6
Provident Savings Bank, F.A.
Management Incentive Program
<PAGE>
Page (2) of 14
Provident Savings Bank
----------------------
Management Incentive Program
----------------------------
Objectives
- ----------
To motivate participants in achieving annual business and individual
performance objectives.
To provide competitive amounts of compensation to participants for the
achievement of annual performance improvements.
Eligibility
- -----------
Participation in the Plan is determined by the Board of Directors in
conjunction with the recommendations of the President. The minimum
requirement for participating in the incentive program is the attainment
of grade level 11 with the title of Vice President.
Incentive Program Trigger
- -------------------------
The incentive program will be activated if at the end of any fiscal
period the bank's earnings exceed 50 basis points ROA (Return on
Assets).
I. Statement of Policy
- -- -------------------
I. The policy of Provident Savings Bank, F.A. is to provide to members of
management a total compensation program comprise of three elements:
A. A pay for performance program which rewards employees for the
performance of their normal job responsibilities within a sound wage
scale that reflects the value of each job in the competitive
marketplace. Performance levels are measured by the use of objective
job standards established in advance. It also includes a level of
improvement in current operating systems and procedures. This
performance program is embodied in the bank's general salary
administration program.
B. An incentive program for accomplishments clearly beyond the normal
parameters of the normal job. This incentive program is tuned to the
value of the accomplishments and the level of contribution made by
participating managers. Eligibility for such incentive awards would
be based on predetermined values given to each goal and is
predicated on at least satisfactory performance of normal job
<PAGE>
Page (3) of 14
activities. This incentive program is the focus of this document.
C. A special system of performance recognition for achievements that
either were necessitated by/or resulted from extraordinary changes
in the business environment, or due to unexpected activities and
operation of the bank. Such special awards would be determined by
the President upon approval by the Board of Directors after analysis
is made of the nature, importance and total impact of the
accomplishments.
II. Overall Description of the Incentive Program: (Policy B)
- --- ---------------------------------------------
Policy B- Management Incentives- Goal Attainment
1. Amount of total incentive allocation:
The payment of an incentive reflects achievements of great value to
then bank, thus, it is desirable that the amount of potential reward
any individual can receive is at a higher level since the greater the
payout the greater the value of the contribution made. The design of
the structure of payment insures that any awards made are paid for by
the accomplishments themselves. Concern that payments are "too large"
is mitigated by the fact that such payments are only a percentage of
the return provided to the bank. (It is estimated that the ratio of
return on the suggested incentive plan will be a minimum of 6 to 1).
Because the essential focus and nature of Managers jobs will vary, the
size the total incentive allocation will be greater at the higher
levels of management. The amount of the incentive tied to criteria also
will vary with the nature of the job. As a general rule, the
performance of the President and Executive Vice Presidents will have a
greater impact on the total operating experience of the bank. In
contrast, the proportion of incentives that can be earned by Managers
at lower levels will be weighted toward individual efforts. The
rationale behind this distinction is that high levels of management are
responsible for the coordination and total performance, largely
determined by the contributions and efforts of the lower level
Managers. A Department Head has less impact on the
<PAGE>
Page (4) of 14
overall performance of the bank but his/her accomplishments on the
individual goals contributes to overall bank performance.
2. General Criteria
- -------------------
In following the rationale stated above the following criteria will be
established for awarding incentive payments.
a. Departments Heads and other Officers;
-------------------------------------
Each Manager will have an opportunity to identify goals, outside
normal job responsibilities, which are tuned to assisting the
bank obtain its overall business goals.
Each of these goals will be evaluated (EXHIBIT I) by the
Executive Vice President in consultation with the President.
Using this system it is conceivable that a Manager may suggest a
number of goals for the year which have a total value less than
the amount to which he or she may have been eligible. The
formula to be used would recognize the value of each goal up to
a maximum amount.
In addition, the amount received for the attainment of each goal
will be effected by the total performance of the bank as a
whole. In other words, a goal that is worth a predetermined
amount based on the anticipation of the banks performance during
the year could either be raised or lowered (by a specific amount
covered in later section in this presentation) depending upon
whether the bank met or exceeded this target. This builds in a
factor of concern for overall operation.
b. Officers at the level of Executive Vice President:
--------------------------------------------------
The formula for awarding incentive awards to Executive Vice
Presidents takes into account the primary responsibilities for
the total performance of the bank as opposed to carrying out of
specific objectives.
<PAGE>
Page (5) of 14
However, it is important that officers at this level are
concerned with the fulfillment of the business plans made by
subordinate managers; therefore, part of the Executive Vice
Presidents overall incentive potential is tied to the
accomplishments of subordinates.
Accordingly, the formula for awarding incentives to Executive
Vice Presidents would consider two components:
A percentage (Exhibit II, supplemental performance) of
each's potential incentive target would be equivalent to
the percent of success of subordinate managers.
Individual projects undertaken by an EVP may be counted
and scored by the President in his sole discretion. This
score may represent 25% of the total supplemental score
of the Executive Vice President. The total supplemental
score of the EVP's may be adjusted up or down by 25% of
the target score at the sole discretion of the
President. This is to allow the President to take other
issues such as teamwork, leadership, independence,
creativity, unforeseen events, etc. into consideration.
The larger part of the incentive target would be
determined by the operating performance of the bank.
c. The President:
--------------
As the individual most responsible for the overall performance
of the bank the incentive award allocated for the President
would primarily reflect the bank's overall performance. Only a
small percentage (25%) of the potential incentive would be tied
to the achievement of individual goals by subordinate managers.
C. The Nature of Incentive Goals and Objectives and How they are
-- -------------------------------------------------------------
determined (essential and supplemental performance)
---------------------------------------------------
<PAGE>
Page (6) of 14
a. The bank's annual planning process will be the vehicle that will
embody the overall bank goals and strategies. Department Managers
and other Officers that may participate in the incentive program
will be required to develop operating plans that support the bank-
wide goals. These operating plans will be used as the basis for the
supplemental incentive awards. The annual plan is developed by
Senior Management with the support from all other officers in the
association. The plan is presented to the Board of Directors for
discussion/modification and final agreement.
b. The annual planning process incorporates the following steps.
1-Senior management requests staff input in the process of
developing corporate goals.
2-Corporate goals are established and provided to incentive program
participants and other managers. In addition to the financial and
non-financial goals the participants are provided the bank's mission
statement, rationale for expected attainment of financial goals,
suggested strategies or tactics for achieving all goals and a
overall bank business strategy statement.
3-Each manager is given time to develop his or her ideas and plans,
stated in the form of department operating plans. Each objective
developed by a Manager would be a component of the banks overall
efforts to achieve its corporate goals for the year.
c. An analysis of each goal recommended and approved for inclusion by a
Manager will be made by the Senior Management group and rated for
overall value to the organization.
d. Based upon the value of each objective a total potential score is
determined. At the conclusion of the plan, each objective is rated
for overall
<PAGE>
Page (7) of 14
performances with one of the following grades: 0, .5, 1, 1.5. The
performance is then multiplied by the value of each objective to
determine a weighted score. For any distribution to occur, the total
score must exceed a specified minimum indicated on exhibit I.
e. Each Executive Vice President and the President would establish
goals that would be framed within the scope of work identified as
objectives for Department Heads and other Managers. Thus, it is not
necessary (although possible) to establish special goals for the
Executive Vice Presidents and the President since their efforts will
be to provide the environment and assistance to subordinate
managers. By its nature, the efforts of subordinate managers should
total the attainment of the corporate goals.
Essential performance will be a ratio of annual net earnings divided
by annual average assets. The level of earnings to attain the target
payout is the earnings reflected in the plan adopted by the Board of
Directors. With the target level established, a scale will be
developed that will govern incentive payout when the earnings are
above or below the target. The parameters of the scale will be 6
basic points above and below the target level. If the lowest rung of
essential performance is not attained supplemental payout will not
be triggered. There may come a time when bank priorities change and
a different essential performance index is desired. The change
should be agreed upon before the annual planning process begins in
April of each year. This allows the new priority to be given new
attention in the planning process.
D. Amount of Total Incentive Allocation:
- -----------------------------------------
a. Department Heads and Other Managers
-----------------------------------
<PAGE>
Page (8) of 14
Each manager will be eligible to receive total incentive
compensation of up to 10% of base salary (target incentive). The
target incentive (10%) payout will be allocated between two
performance indices: bank-wide earnings (essential performance) and
operating plan completion (supplemental performance). 75% of the
targeted incentive payout (10% of salary base) is predicated on
supplemental performance as reflected in exhibit I. Whether this
level can be reached will be determined by the value of each
individual goal approved and the level of attainment. A review of
that exhibit reflects that there is a potential to earn 150% of
target. The remaining 25% (essential performance) of the target
incentive level is based on the overall earning performance of the
bank. Target for essential performance is the level of earnings
represented in the annual plan approved by the Board of Directors.
b. Should the earnings performance of the bank be at its "targeted"
amount then the participant would receive that portion of the
essential performance at the incentive target level of 10%. Should
the bank's earnings level (essential performance) exceed that
"targeted" amount, a scale will be developed each year to calculate
the incentive above and below the target level. The maximum
incentive payout will be 150% of the target payout and zero if
earnings are below the bottom end of the scale. In no case will a
payout take place if earnings for the fiscal year fall below 50bp
ROA.
c. The total incentive allocation for the Executive Vice Presidents
will be 15%, 60% will be based on earnings of the bank against the
"targeted" amount. The remaining 40% will be a reflection of the
accomplishments of subordinate Department Heads and Managers. The
formula for determining the amount of incentive paid for the
accomplishments of managers is:
75% of goal attainment by managers=full
40% allocation
<PAGE>
Page (9) of 14
50% of the goals attained by subordinate managers = 75% of the 40%
target 100% of the goals attained by subordinate managers = 150% of
40% allocation. The President in his sole discretion may increase or
decrease the supplemental score by 25% of the target level.
d. The total incentive allocation for the President will be 25%. 75% of
this allocation will be tied to the targeted performance of the bank
as a whole. Should the overall performance be higher or lower there
will be a corresponding increase or decrease in this 75% factor (of
the 25% total allocation).
The remaining 25% of the incentive allocation for the President will
be tied to the attainment of goals by subordinate managers
throughout the bank, using the same formula for actual payments as
used with the Executive Vice Presidents. The Board of Directors may
in their sole discretion increase or decrease the supplemental score
by 25% of the target level.
III. Incentive Awards for Extraordinary Performance: (Policy c)
- -----------------------------------------------------
In an unpredictable fast changing business climate there will be events
that occur and circumstances that arise that might give a manager operating
challenges that could not have been anticipated or there may be an unexpected
assignment requested by top management which will demand a major commitment of
time. Though these unexpected occurrences may actually be part of the normal
range of responsibilities the extraordinary nature may require an effort that is
clearly beyond what could be coped with as part of normal routine. The effort
that would be expended and the level of leadership over subordinate employees
clearly will require a total level of performance that deserves recognition as
part of the banks overall philosophy of regarding employees within an
environment of responsiveness for unusual and superior performance.
The unpredictability of the events and the difficulty in anticipating
their value precludes a predetermination of parameters for the size of the
reward; however, the following general guidelines would be used:
a. the size of any incentive would be no more than 15% of base salary
for any three month period in which this extraordinary performance
is maintained.
<PAGE>
Page (10) of 14
b. In determining the value of the performance consideration would be
given to the potential financial impact on the bank if the
achievement cannot be made, the possible impact on customer service,
and the reputation of the bank.
c. The recommended amount of performance incentive award should be
documented with an explanation of the causes, and potential impact.
The recommendation and its justification should be provided to the
Board of Directors for final approval.
Schedule of Performance Goals
- -----------------------------
Management will present to the Board of Directors an annual plan in
early September or approximately two weeks before the "Annual Plan
Meeting" (generally during the second or third week of September). The
Board will respond to management with an approval of the plan or
modification of the plan by October 31. At that time the essential
performance index will be developed and approved by the Board of
Directors at the next Bank Administration Committee meeting.
Form and Timing of Payment
- --------------------------
Plan participants will normally receive their incentive awards in cash
within one month of the receipt of the final annual audit or at a time
the Board of Directors are reasonably sure of the fiscal year results.
Participant's Right to an Award
- -------------------------------
Plan participants employed by the institution throughout the Plan year
and at the end of the Plan year will have a vested right to receive any
incentive awards due them based on the performance results for that
year.
Participants who die, become disabled, or retire before the payment date
will be eligible for a pro rata incentive award based on the months they
worked during the year, from the first month of eligibility in the Plan
to the date of death, disability, or retirement. In the case of death,
the payment will be made to the estate.
Participants who voluntarily or involuntarily terminate employment with
the institution prior to the payment date will be ineligible for an
incentive payment. However, with the recommendation of the President,
the Board may make a discretionary pro rata payment to the terminated
employee.
<PAGE>
Page (11) of 14
Participants who join the institution during the plan year, on the
recommendation of the President, may be awarded pro rata incentive
awards at the discretion of the Board.
Supplemental performance payout is triggered if the lowest rung of
essential performance is attained. If the Board of Directors believes
that some activity carried out during the year was worthy of an
incentive it would be governed by the special incentive provision on
page 2 paragraph C.
<PAGE>
Page (12) of 14
EXHIBIT I
Described below are the numerical criteria for determining incentive
awards for the supplemental segment of the incentive program. The purpose is to
set forth a clear delineation between performance of sound job description
duties versus incentive performance levels. Each objective for a Department Head
or Manager will be given a weighting commensurate with its value to the
association. The President and Executive Vice Presidents will determine these
weights based upon the following criteria:
<TABLE>
<CAPTION>
================================================================================
WEIGHTING DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C>
1 An objective that deals with day-to-day
operations but is characterized by more
complexity, duration, or unpredictable
factors that clearly are outside of
normal performance and deserving
recognition as an objective.
- --------------------------------------------------------------------------------
2,3 An objective that is clearly beyond
normal progress, based on job
description, representing intermediate
value to the association. To accomplish
requires creativity, significant
internal, external contacts and
managerial or technical expertise.
- --------------------------------------------------------------------------------
4,5 A major objective of the association
representing significant value. To
accomplish this requires creativity,
dealing in complex areas, and demands
decisions that are undirected and
involve unpredictable events.
================================================================================
</TABLE>
<PAGE>
Page (13) of 14
At the end of the year, the performance on each objective will be rated
on a scale of 0, .5, 1, 1.5 in accordance with the incentive performance
program. Standards for the supplemental scores are as follows:
<TABLE>
<CAPTION>
Achievement of Payout Factor
Supplemental Performance Goals
- --------------------------------------------------------------------------------
<S> <C>
Results reflect Plan not completed 0
Results reflect Competently completed .5
Results reflect Fully and Independently completed 1.00
Results reflect Exceptionally completed (independently) 1.50
</TABLE>
(evaluation criteria on operating plans should support the evaluation)
Each Department Head will receive a total score which represents the weight of
the objective multiplied by the performance level and summed for all the
objectives. The Executive Vice Presidents may exercise sole discretion and alter
the score up or down by 25% of the target score.
The following payout scale will be used to determine the payout levels
for supplemental performance.
<TABLE>
<CAPTION>
Total Score Payout Level
----------- ------------
<S> <C>
12-13 50% of target
13-14 75% of target
14-16 target score 100% of target
----------------------------------------------------------------------
16-18 125% of target
18 150% of target
</TABLE>
Thus, each Department Head or Manager must add significant value to the
association before any payout will be made.
Example:
Suppose a Department Head or Manager has objectives valued at
2,3,4,5 and performs these all to a satisfactory level thereby
earning a score of 1 for performance on each objective, The
Department Head's or Manager's final score will be 1x2 + 1x3 +
1x4 + 1x5 = 14. This would earn the Department Head a target
payout
<PAGE>
Page (14) of 14
Exhibit II
Illustrative Example
--------------------
Target Incentive Award Percentages
----------------------------------
<TABLE>
<CAPTION>
=========================================================================
ESSENTIAL SUPPLEMENTAL
PERFORMANCE PERFORMANCE
Total TARGET TARGET Award TARGET Award
Award (% of (% of Base (% of Base
Base Salary) Salary) Salary)
=========================================================================
<S> <C> <C> <C>
LEVEL I 25% 18.75% 6.25%
- -President
- -------------------------------------------------------------------------
LEVEL II 15% 9 % 6 %
- -EVP's
- -------------------------------------------------------------------------
LEVEL III
- -SVP's 10% 2.5 % 7.5 %
- -VP's 10% 2.5 % 7.5 %
=========================================================================
</TABLE>
Program allows for the maximum payout to be 150% of the target award.
<PAGE>
EXHIBIT 10.7
FIRST AMENDMENT
TO THE
1996 INCENTIVE PLAN FOR OFFICERS AND DIRECTORS
OF PROVIDENT BANK
WHEREAS, Provident Bank ("Bank") adopted the 1996 Incentive Plan for
Officers and Directors, effective January 1, 1996 (the "Plan"); and
WHEREAS, Section 12.1 of the Plan permits the Plan to be amended from time
to time.
WHEREAS, the Plan has been operated pursuant to certain amendments which
the Board hereby desires to formalize.
NOW THEREFORE, BE IT RESOLVED, that the amendments to the Plan, effective
as of January 1, 1996, shall be formalized, in accordance with tbe following:
1. Section 6.3 of the Plan shall be amended to read as follows:
"6.3 Notwithstanding the intention to have an equal payment pool available
for the Director Participants in the aggregate, and the Officer Participants in
the aggregate, the maximum amount that may be credited on behalf of and paid to
a Director Participant for the Initial Cycle shall be the sum of one hundred
percent (100%) of his annual retainer fee (up to a maximum of $12,000 per year)
for each year of the cycle."
2. Section 6.6 of the Plan shall be amended to read as follows:
"6.6 In order to have any amount paid or credited with respect to a year
in the Initial Cycle and to be classified as an "eligible" Officer Participant
or eligible "Director Participant" during each year or with respect to amounts
credited and accrued to the final year of the Initial Cycle, an Officer
Participant or Director Participant must generally be employed by Provident or
be a member of its Board, as the case may be, on the last day (i.e., September
30) of each year during the Initial Cycle. Any amounts forfeited under the Plan
due to a Participant not being employed by Provident or not being a member of
its Board, as the case may be, on the last day of a cycle will not be
reallocated to the other Participants and will therefore reduce the payments
required to be made by Provident under the Plan. If the Initial Cycle, or any
subsequent cycle, is prematurely closed, as contemplated by Section 10.1, then a
Participant must be employed on the day such cycle is closed in order to have an
amount paid or credited for such year in which the cycle is closed."
3. Section 9.1 of the Plan shall be amended to read as follows:
"9.1 Any amount credited to a Participant for each year during the Initial
Cycle shall be paid to him no later than November 29, 1999, provided, however,
that one-half of the amount earned during each of the first two years of the
Initial Cycle shall be paid at the end of each such year. Any
<PAGE>
amount credited to a Participant for any subsequent cycle shall be paid to him
within sixty (60) days of the end of such cycle."
4. Section 10.1 of the Plan shall be amended to read as follows:
"10.1 In the event of a "Sale or Public Offering" of Provident as
hereinafter defined, the then current cycle shall be prematurely closed and each
eligible Participant employed with Provident or serving on its Board on the
effective date of the Sale or Public Offering shall receive the maximum benefit
to which the Participant would have been entitled if the goals for such year had
been obtained. For example, if a Sale or Public Offering occurs and the Initial
Cycle is closed in the second year of the cycle, the Participant will be deemed
to have attained the goals for the second year of the Initial Cycle. If the
Participant had previously attained the goal for the first year of the Initial
Cycle then the participant would be entitled to receive two-thirds of the
maximum amount available to him under the Plan, reduced by any amounts
previously paid to the Participant. Similarly, if a sale or Public Offering
occurs in the third year of the Initial Cycle, the Participant will be deemed to
have attained the goals for the third year of the Initial Cycle and will be
entitled to payment of all amounts to which he would be entitled upon attainment
of such goal, reduced by any amounts previously paid to the Participant.
5. In all other respects the Plan shall remain in full force and effect.
2
<PAGE>
PROVIDENT SAVINGS BANK, F.A.
1996 INCENTIVE PLAN FOR OFFICERS AND DIRECTORS
----------------------------------------------
1 PURPOSE AND EFFECTIVE DATE
1.1 The Provident Savings Bank, F.A. 1996 Incentive Plan for Officers and
Directors (the "Plan") is intended to (i) reinforce organizational and business
development goals of Provident Savings Bank, F.A. ("Provident"); (ii) promote
the achievement of year-to-year and long-range financial and other business
objectives such as high quality of service and product and improved productivity
and efficiencies for the benefit of our customers' satisfaction: and (iii)
reward the performance of officers and non-employee directors in fulfilling
their personal responsibilities for achievement and for helping Provident
achieve its objectives.
1.2 The Plan shall be effective as of October 1, 1996.
2. ADMINISTRATION
2.1 The Plan shall be administered by the Board or by a Committee
designated by it.
2.2 The Board may make such rules and establish such procedures for the
administration of the Plan as it deems appropriate to carry out the purposes of
the Plan, including such rules and procedures as are appropriate for the
maintenance and operation of any additional cycle(s) beyond the Initial Cycle
provided for in Section 3.1 hereof. The interpretation and application of the
Plan or of any rule or procedure, and any other matter relating to or necessary
to the administration of the Plan, shall be determined in the sole discretion of
the Board, and any such determination shall be final and binding on all persons.
All determinations of the Board shall be made by a majority of its members at a
meeting duly called pursuant to the provisions of the Bylaws of Provident. The
Board may delegate to one or more of its members or to one or more agents or
Committees such administrative duties as it may deem advisable.
2.3 All costs and expenses involved in administering the Plan shall be
borne by Provident.
3. TERM
3.1 The Plan shall consist of an initial cycle of three years commencing
on October 1, 1996 and continuing through September 30, 1999 (the "Initial
Cycle") and such additional cycle(s), if any, of three years each or such other
lengths as may be designated by the Board in its discretion.
<PAGE>
4. ELIGIBILITY AND PARTICIPATION
4.1 All nonemployee members of the Board of Directors (the "Board") of
Provident on September 30, 1996 shall be eligible to participate in the Plan as
of its effective date. Such individuals shall hereinafter be referred to as the
"Director Participants".
4.2 Provident's Human Resources Committee shall propose to the Board those
officers who shall be eligible to participate in the Plan as of its effective
date and at any time in the future. The Board shall have final authority to
designate the officers who shall be eligible to participate in the Plan. Such
designated officers may but need not be individuals who were initially proposed
for participation by the Human Resources Committee to the Board. Such designated
individuals shall hereinafter be referred to as the "Officer Participants".
4.3 To the extent appropriate throughout the Plan, Director Participants
and Officer Participants shall be referred to individually, as a "Participant"
and collectively, as "Participants".
5. CREDITING OF AMOUNTS UNDER THE PLAN
5.1 As set forth in Exhibit "A" attached hereto.
6. ALLOCATION OF AMOUNT CREDITED AMONG PARTICIPANTS
6.1 Subject to the limitations contained in Sections 6.2 and 6.3 below,
the maximum amount payable to the Officer Participants in the aggregate for the
Initial Cycle, and the Director Participants in the aggregate for the Initial
Cycle, shall be the same.
6.2 Notwithstanding the intention to have an equal payment pool available
for the Officer Participants in the aggregate, and the Director Participants in
the aggregate, the maximum amount that may be credited on behalf of and paid to
an Officer Participant for the Initial Cycle shall be thirty percent (30%) of
his average base salary from Provident during the Initial Cycle .
6.3 Notwithstanding the intention to have an equal payment pool available
for the Director Participants in the aggregate, and the Officer Participants in
the aggregate, the maximum amount that may be credited on behalf of and paid to
a Director Participant for the Initial Cycle shall be the sum of ninety percent
(90%) of his annual retainer fee for each year of the cycle.
6.4 Any amounts credited to Officer Participants for the Initial Cycle
shall be allocated among the eligible Officer Participants in direct proportion
to their relative compensation levels.
-2-
<PAGE>
6.5 Any amounts credited to Director Participants for the Initial Cycle
shall be allocated in an equal amount to each eligible Director Participant.
6.6 In order to have any amount credited on his behalf for the Initial
Cycle and to be classified as an "eligible" Officer Participant or "eligible"
Director Participant, an Officer Participant or Director Participant must
generally be employed by Provident or be a member of its Board, as the case may
be, on the last day of the Initial Cycle. Any amounts forfeited under the Plan
due to a Participant not being employed by Provident or not being a member of
its Board, as the case may be, on the last day of a cycle will not be
reallocated to the other Participants and will therefore reduce the payments
required to be made by Provident under the Plan.
7. TERMINATION WITHOUT CAUSE, DISABILITY AND DEATH
7.1 In the event an Officer Participant or Director Participant is
terminated without "cause" as hereinafter defined, or as a result of his total
and permanent disability, such Officer Participant or Director Participant shall
be entitled to a pro-rata share of the amount, if any, he would have otherwise
been entitled to receive had employment or service on the Board continued
through the last day of the cycle. Such amount shall be paid to the terminated
Participant or his duly authorized representative at such time when payments are
made to other eligible Participants for the cycle in which termination
occurred.
7.2 For purposes of the Plan, "cause" shall include, without limitation,
(a) 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; (b) the willful commission
of an act that causes or may cause substantial damage to Provident; (c) the
commission of an act of fraud in the performance of duty on behalf of Provident;
(d) the conviction for commission of a felony in connection with the performance
of duty on behalf of Provident; (e) the failure to perform the duties of his
position after written notice thereof and a reasonable opportunity to cure such
failure has been given; or (f) excessive use of alcohol or controlled substances
which impair or interfere with the ability of a participant to perform his
duties after written notice thereof and a reasonable opportunity to cure have
been given.
7.3 In the event a Participant dies during a cycle and in the absence of
his employment or service on the Board having previously been terminated, in the
Board's discretion there shall be paid to the Participant's estate a pro-rata
share of the amount the Participant would have received had he remained employed
with Provident or remained as a Board member through the last day of the cycle.
In such event, such amount shall be paid to the duly authorized representative
of the deceased Participant at such time when payments are made to the other
eligible Participants for the cycle in which the Participant died.
-3-
<PAGE>
8. ADDITIONAL TERMINATION AND SUSPENSION PROVISIONS
8.1 If a Participant is suspended and/or temporarily prohibited from
participating in the conduct of Provident's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended (12
U.S.C. 1818(e)(3) and (g)(1)), all obligations of Provident with respect to such
Participant under this Plan shall be suspended as of the date of service unless
stayed by appropriate proceedings. If the charges in the notice are dismissed,
Provident may in its discretion (i) pay the Participant all of the compensation
withheld while Provident's obligations under this Plan were suspended and (ii)
reinstate (in whole) any of Provident's obligations which were suspended, and in
exercising such discretion, Provident shall consider the facts and make a
decision promptly following such dismissal of charges and act in good faith in
deciding whether to pay any withheld compensation to the Participant and to
reinstate any suspended obligations.
8.2 If a Participant is removed and/or permanently prohibited from
participating in the conduct of Provident's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended (12
U.S.C. 1818(e)(4) or (g)(l)), all obligations of Provident under this Plan shall
terminate as of the effective date of the order, but vested rights of the
Participants shall not be affected.
8.3 If Provident is in default, as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, as amended (12 U.S.C. 1813(x)(1)), all
obligations under this Plan shall terminate as of the date of default, but this
provision shall not affect any vested rights of the parties.
8.4 All obligations under this Plan shall be terminated, except to the
extent determined that continuation of this Plan is necessary for the continued
operation of Provident, (i) by the Director of the OTS (the "Director") or his
or her designee, at the time the FDIC enters into an agreement to provide
assistance to or on behalf of Provident under the authority contained in Section
13(c) of the Federal Deposit Insurance Act, as amended; or (ii) by the Director
or his or her designee, at the time the Director or his or her designee
approves a supervisory merger to resolve problems related to operation of
Provident or when Provident is determined by the Director to be in an unsafe or
unsound condition. Any rights of the Participants that have already vested,
however, shall not be affected by such action.
8.5 If any regulation applicable to Provident shall hereafter be adopted,
amended or modified, or if any new regulation applicable to Provident and
effective after the date of this Plan.
(a) shall require the inclusion in this Plan of a provision not
presently included in this Plan, then the foregoing provisions of this Section 8
shall be deemed amended to the extent necessary to give effect in this Plan to
any such amended, modified or new regulation: and
-4-
<PAGE>
(b) shall permit the exclusion of a limitation in this Plan on the
payment to any Participant of an amount or benefit provided for presently in
this Plan, then the foregoing provisions of this Section 8 shall be deemed
amended to the extent permissible to exclude from this Plan any such limitation
previously required to be included in this Plan by a regulation prior to its
amendment, modification or repeal.
9. TIME OF PAYMENT
9.1 Any amount credited to a Participant for the Initial Cycle shall be
paid to him by November 29, 1999. Any amount credited to a Participant for any
subsequent cycle shall be paid to him within sixty (60) days of the end of such
cycle.
10. SALE OR PUBLIC OFFERING
10.1 In the event of a "Sale or Public Offering" of Provident as
hereinafter defined, the then current cycle shall be prematurely closed and each
eligible Participant employed with Provident or serving on its Board on the
effective date of the Sale or Public Offering shall receive a pro-rata portion
of the maximum amount he could have otherwise received for the entire cycle in
the absence of a Sale or Public Offering.
10.2 For purposes of this Plan, a "Sale or Public Offering" shall mean
(a) a sale of shares by Provident in an offering of shares registered with the
Securities and Exchange Commission, (b) the consolidation or merger of
Provident with another bank (other than with an affiliate of Provident) (c) the
sale of all or substantially all of the property or assets (as determined at the
time of such sale, without regard to any prior sales or series of sales) of
(i) Provident, or (ii) all of the Significant subsidiaries (as such term is
defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended) of Provident, or (d) the acquisition of more than fifty percent (50%)
of the total combined voting power of all classes of stock of Provident normally
entitled to vote for the election of its directors.
11. WITHHOLDING TAXES
11.1 Provident shall have the right to make such provisions as it deems
necessary or appropriate to satisfy any obligations it may have to withhold
federal, state, or local income or other taxes incurred by reason of payments
pursuant to the Plan. In lieu thereof, Provident shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
Provident to any Participant upon such terms and conditions as Provident may
prescribe.
12. AMENDMENT; TERMINATION
12.1 The Board may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part; provided, however, no such
action shall adversely impact
-5-
<PAGE>
upon the rights of any Participant hereunder in the absence of his prior written
consent to such action.
13. MISCELLANEOUS
13.1 Nothing in this Plan shall be construed as conferring any right upon
any Participant to continuance of employment or as a member of the Board.
13.2 A Participant's rights and interests under the Plan may not be sold,
assigned, transferred, pledged or alienated and any attempted sale, assignment,
transfer, pledge or alienation shall be of no effect.
13.3 This Plan and all rights hereunder shall be construed in accordance
with and governed by the procedural and substantive laws of the State of New
York.
13.4 This Plan shall not be construed to require Provident to fund or
credit interest on any amount payable under the Plan, to create a trust of any
kind or to set aside or earmark any monies or other assets specifically for
payments under the Plan.
-6-
<PAGE>
PROVIDENT SAVINGS BANK, F.A.
1996 INCENTIVE PLAN FOR OFFICERS AND DIRECTORS
EXHIBIT A
---------
Performance criteria to be inserted in this Exhibit upon determination of
such criteria by the Board of Directors and senior management of Provident
Savings Bank, F.A.
-7-
<PAGE>
Exhibit 16
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
November 6, 1998
Securities and Exchange commission
Mail Stop 9-5
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs/Madams:
We have read and agree with the comments under the heading "Change in
Accountants" in the Prospectus, which is part of Amendment No. 1 to Registration
Statement No. 333-63593 of Provident Bancorp, Inc. on Form S-1 dated November 6,
1998.
Yours truly,
/s/ Deloitte & Touche LLP
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
-------------------------------
The Board of Directors
Provident Bank:
We consent to the inclusion in this Amendment No. 1 to Registration Statement
No. 333-63593 of Provident Bancorp, Inc. on Form S-1 of our report dated
October 31, 1997 relating to the consolidated statements of financial condition
of Provident Bank and subsidiaries as of September 30, 1997 and 1996, and the
related consolidated statements of income, changes in equity, and cash flows for
the years then ended. We further consent to the use of our opinion dated
September 14, 1998, which is included herein as an exhibit, regarding certain
state income tax consequences of the proposed reorganization and offering.
We consent to the references to our firm under the headings "THE REORGANIZATION
AND OFFERING - Federal and State Tax Consequences of the Reorganization",
"PROVIDENT BANK CONSOLIDATED STATEMENTS OF INCOME", "LEGAL AND TAX MATTERS", and
"EXPERTS" in the prospectus which is part of the Registration Statement.
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
November 4, 1998
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 1 of Registration Statement No.
333-63593 of Provident Bancorp, Inc. on Form S-1 of our report dated November
17, 1995 relating to the consolidated statements of income, changes in equity,
and cash flows of Provident Bank and subsidiaries for the year ended September
30, 1995, appearing in the Prospectus, which is part of this Registration
Statement.
We also consent to the reference to us under the headings "Provident Bank
Consolidated Statements of Income", "Change in Accountants" and "Experts" in
such Prospectus.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
November 3, 1998
<PAGE>
EXHIBIT 23.4
[LETTERHEAD OF RP FINANCIAL, LC. APPEARS HERE]
November 5, 1998
Board of Directors
Provident Bank
400 Rella Boulevard
Montebello, New York 10901
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 Provident Bank, Montebello, New York,
and any amendments thereto, and in the Form S-1 Registration Statement and any
amendments thereto for Provident Bancorp, Inc. We also hereby consent to the
inclusion of, summary of and references to our Appraisal Report and our
statement concerning subscription rights in such filings including the
Prospectus of Provident Bancorp, Inc.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ James P. Hennessey
James P. Hennessey
Senior Vice President
<PAGE>
Exhibit 23.5
[LETTERHEAD OF GABER, NYMAN & CO., LLP]
Consent of Independent Auditors
Board of Trustees
Provident Bank 401(k) Plan
400 Rella Blvd.
Montebello, NY 10901
We consent to the inclusion in the registration statement our report dated
September 17, 1998 relating to the statements of net assets available for plan
benefits of the Provident Bank 401(k) Plan as of December 31, 1997 and 1996 and
the related statements of changes in net assets available for plan benefits for
the years then ended.
/s/ Gaber, Nyman & Co., LLP
Bardonia, New York
November 4, 1998
<PAGE>
Exhibit 99.3
---------------------------------------------------------------------
| |
| PRO FORMA VALUATION REPORT |
| MUTUAL HOLDING COMPANY |
| STOCK OFFERING |
| |
| PROVIDENT BANK |
| MONTEBELLO, NEW YORK |
| |
| |
| |
| DATED AS OF: |
| SEPTEMBER 4, 1998 |
| |
---------------------------------------------------------------------
PREPARED BY:
RP FINANCIAL, LC.
1700 NORTH MOORE STREET
SUITE 2210
ARLINGTON, VIRGINIA 22209
<PAGE>
[RP FINANCIAL LETTERHEAD APPEARS HERE]
September 4, 1998
Board of Directors
Provident Bank
400 Rella Boulevard
Montebello, New York 10901
Members of the Board:
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 conversion regulations
promulgated by the Office of Thrift Supervision ("OTS"). This Appraisal has
been prepared in accordance with the written valuation guidelines promulgated by
the OTS, most recently updated as of October 21, 1994. Specifically, this
Appraisal has been prepared in accordance with the "Guidelines for Appraisal
Reports for the Valuation of Savings and Loan Associations Converting from
Mutual to Stock Form of Organization" of the OTS, as successor to the Federal
Home Loan Bank Board ("FHLBB"), dated 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 Provident Bank, Montebello,
New York ("Provident" or the "Bank") has adopted a Plan of Conversion,
incorporated herein by reference, in which the Bank will reorganize from the
mutual form of organization to the mutual holding company form of organization.
In the reorganization process, to become effective concurrent with the
completion of the stock sale, Provident will become a wholly-owned subsidiary of
Provident Bancorp, Inc. (the "Holding Company"), and Provident Bancorp, Inc.
will issue a majority of its common stock to Provident Bancorp, M.H.C. (the
"MHC"), and sell a minority of its common stock to the public. The above
structure reflects 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. The
number of shares of common stock sold to the public will equal 46.62 percent of
the shares issued in the offering, and the number of shares issued to the MHC
will equal 53.38 percent of the shares issued in the offering.
<PAGE>
RP Financial, LC.
Board of Directors
September 4, 1998
Page 2
It is anticipated that the public shares will be issued to the Bank's
Eligible Account Holders, the ESOP, Supplemental Eligible Account Holders,
Other Members and employees, officers, and directors of the MHC and the Bank.
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 50 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.
RP Financial, LC.
- -----------------
RP Financial, LC. ("RP Financial") is a financial consulting firm serving
the financial services industry nationwide that, among other things, specializes
in financial valuations and analyses of business enterprises and securities,
including the pro forma valuation for savings institutions converting from
mutual-to-stock form. The background and experience of RP Financial is detailed
in Exhibit V-1. We believe that, except for the fee we will receive for our
appraisal and assisting 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 prospectus 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, 1993 through 1997 and
various unaudited information and internal financial reports through June 30,
1998 and due diligence related discussions with the Bank's management; KPMG Peat
Marwick, the Bank's independent auditor; Luse Lehman Gorman Pomerenk & Schick,
the Bank's stock issuance counsel; and Ryan Beck and Company, 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.
<PAGE>
RP Financial, LC.
Board of Directors
September 4, 1998
Page 3
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.
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 Provident'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.
<PAGE>
RP Financial, LC.
Board of Directors
September 4, 1998
Page 4
Valuation Conclusion
- --------------------
It is our opinion that, as of September 4, 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 $65,000,000 at
the midpoint, equal to 6,500,000 shares issued at a per share value of $10.00.
Pursuant to conversion guidelines, the 15 percent offering range indicates a
minimum value of $55,250,000, and a maximum value of $74,750,000. Based on the
$10.00 per share offering price determined by the Boards, this valuation range
equates to an offering of 6,500,000 shares at the minimum to 7,475,000 shares at
the maximum. In the event that the appraised value is subject to an increase,
up to 8,596,250 shares may be issued at an issue price of $10.00 per share, for
an aggregate market value of $85,962,500, 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 46.62 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
$25,755,000 at the minimum, $30,300,000 at the midpoint, $34,845,000 at the
maximum and $40,071,750 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.
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.
<PAGE>
RP Financial, LC.
Board of Directors
September 4, 1998
Page 5
Should any such new developments or changes be material, in our opinion, to the
valuation of the shares, appropriate adjustments to the estimated pro forma
market value will be made. The reasons for any such adjustments will be
explained in the update at the date of the release of the update.
Respectfully submitted,
RP FINANCIAL, LC.
/s/Ronald S. Riggins
--------------------
Ronald S. Riggins
President
/s/James P. Hennessey
---------------------
James P. Hennessey
Senior Vice President
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
PROVIDENT BANK
MONTEBELLO, NEW YORK
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
- ------------ --------
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
- ------------
<S> <C>
Introduction 1.1
Strategic Overview 1.2
Balance Sheet Trends 1.6
Income and Expense Trends 1.11
Interest Rate Risk Management 1.15
Lending Activities and Strategy 1.16
Asset Quality 1.20
Funding Composition and Strategy 1.20
Subsidiaries 1.21
Year 2000 Compliance 1.21
Legal Proceedings 1.22
CHAPTER TWO MARKET AREA
- -----------
Introduction 2.1
Market Area Demographics 2.2
Local Economy 2.4
Market Area Deposit Characteristics 2.5
CHAPTER THREE PEER GROUP ANALYSIS
- -------------
Peer Group Selection 3.1
Basis of Comparison 3.2
Selection of Peer Group 3.3
Financial Condition 3.6
Income and Expense Components 3.9
Loan Composition 3.12
Credit Risk 3.12
Interest Rate Risk 3.15
Summary 3.17
</TABLE>
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
PROVIDENT BANK
MONTEBELLO, NEW YORK
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
- ----------- --------
CHAPTER FOUR VALUATION ANALYSIS
- ------------
<S> <C>
Introduction 4.1
Appraisal Guidelines 4.1
RP Financial Approach to the Valuation 4.1
Valuation Analysis 4.2
1. Financial Condition 4.3
2. Profitability, Growth and Viability of Earnings 4.4
3. Asset Growth 4.5
4. Primary Market Area 4.5
5. Dividends 4.7
6. Liquidity of the Shares 4.8
7. Marketing of the Issue 4.8
A. The Public Market 4.8
B. The New Issue Market 4.16
C. The Acquisition Market 4.21
8. Management 4.22
9. Effect of Government Regulation and Regulatory Reform 4.22
Summary of Adjustments 4.23
Basis of Valuation Fully-Converted Pricing Ratios 4.23
Valuation Approaches 4.24
1. Price-to-Book ("P/B") 4.28
2. Price-to-Earnings ("P/E") 4.28
3. Price-to-Assets ("P/A") 4.30
Valuation Conclusion 4.30
</TABLE>
<PAGE>
RP Financial, LC.
LIST OF TABLES
PROVIDENT BANK
MONTEBELLO, NEW YORK
<TABLE>
<CAPTION>
TABLE
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
<S> <C> <C>
1.1 Historical Balance Sheets 1.7
1.2 Historical Income Statements 1.12
1.3 Net Interest Income and Market Value Summary Performance 1.16
2.1 Summary Demographic Data 2.3
2.2 Unemployment Trends 2.5
2.3 Deposit Summary 2.6
2.4 Deposit Market Share 2.7
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 3.10
3.4 Loan Portfolio Composition and Related Information 3.13
3.5 Credit Risk Measures and Related Information 3.14
3.6 Interest Rate Risk Measures and Net Interest Income Volatility 3.16
4.1 Peer Group Market Area Comparative Analysis 4.6
4.2 Pricing Characteristics and After-Market Trends of Recent
Conversions Completed 4.18
4.3 Market Pricing Comparatives 4.19
4.4 Calculation of Implied Per Share Data 4.25
4.5 Public Market Pricing 4.29
4.6 Market Pricing of Mutual Holding Companies 4.32
</TABLE>
<PAGE>
RP Financial, LC.
Page 1.1
I. OVERVIEW AND FINANCIAL ANALYSIS
Introduction
- ------------
Provident Bank ("Provident" or the "Bank") is a federally-chartered mutual
savings bank which conducts operations out of its executive offices in
Montebello, New York, and a total of 11 retail office facilities including its
main office in Haverstraw, New York. Provident's markets in Rockland County,
New York, are located approximately 20 miles north of New York City. Rockland
County is a suburban market with a broad employment base, but it also serves as
a bedroom community for nearby New York City as well as other suburban areas
including Westchester County and northern New Jersey. Residents of the Bank's
markets are typically middle to upper middle class as the number of individuals
with incomes below the poverty level in the County is limited.
Provident was organized in 1888 and has a long history of service to its
primary market. Currently, Provident is a member of the Federal Home Loan Bank
("FHLB") system, with its deposits insured up to the regulatory maximums by the
Federal Deposit Insurance Corporation ("FDIC") under the Savings Association
Insurance Fund ("SAIF"). The Bank's primary regulator is the Office of Thrift
Supervision ("OTS"). At June 30, 1998, Provident had total assets of $679.1
million, total deposits of $580.1 million, and total equity of $53.9 million,
equal to 7.93 percent of total assets. For the twelve months ended June 30,
1998, the Bank reported net income of $4.6 million for a return of 0.70 percent
of average assets.
The Board of Directors recently adopted a plan to reorganize from the
mutual form of organization to the mutual holding company form of organization.
As part of the reorganization, Provident will become a wholly-owned subsidiary
of Provident Bancorp, Inc. ("the Holding Company"), and Provident Bancorp, Inc.
will issue a majority of its common stock to Provident Bancorp, MHC, a
federally-chartered mutual holding company, 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 up to
50 percent of the net conversion proceeds. Immediately after consummation of
the Reorganization, it is not
<PAGE>
RP Financial, LC.
Page 1.2
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 Provident prior to the reorganization. The MHC will own
a controlling interest in the Holding Company, 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.
Strategic Overview
- ------------------
Throughout much of its corporate history, Provident's strategic focus has
been that of a community oriented financial institution with a primary focus on
meeting the borrowing and savings needs of its local customers in the Rockland
County area of southern New York. In this regard, Provident has historically
pursued a residential lending strategy typical of a thrift institution with a
moderate level of diversification into residential construction lending,
commercial real estate lending and some secondary market loan sales. However,
based on extensive market research conducted by an independent research firm on
a periodic basis, management perceives there is ample opportunity for a
community-oriented institution with a full-line of commercial and consumer
products to grow and prosper. Accordingly, since the early 1990s, Provident has
sought to emphasize a community bank operating strategy, emphasizing service,
its local orientation and a relatively broad array of products and services.
Accordingly, Provident has implemented a three-prong lending strategy which has
focused on: (1) residential mortgage lending for portfolio; (2) commercial
lending, including commercial and multi-family mortgage loans as well as
commercial and industrial loans ("C&I loans"); and (3) longer term fixed rate
residential mortgage loans originated for resale into the secondary market.
Importantly, since Provident has historically been a residential lender and
most of the balance of its interest-earning assets have been deployed into
either investment securities or mortgage-backed securities ("MBS"), Provident
has been required to develop the infrastructure required to undertake such
lending. In this regard, management has developed extensive policies and
procedures pertaining to credit standards and the administration of commercial
accounts. Additionally, Provident has employed a total of seven loan officers
with commercial lending experience to build the Bank's commercial lending
business. Other steps taken to facilitate the
<PAGE>
RP Financial, LC.
Page 1.3
development of commercial accounts include more intensive marketing and a
conversion to a commercial bank data processing system which will provide for
superior management of commercial accounts. The data processing conversion is
expected to provide the added benefit of enhancing customer information
including customer profitability analysis in the future. Although management
will be seeking to grow commercial loans (and commercial checking accounts) in
the future, the growth of such accounts to date has been limited as commercial
and multi-family real estate loans and C&I loans totaled $94.9 million, or 20.8
percent of total loans as of June 30, 1998.
Management believes that the future growth of the commercial portfolio and
preservation of asset quality will be maintained by several unusual qualities of
Provident relative to other savings institutions. First, three members of
Provident's senior management were formerly commercial loan officers at New York
area commercial banks. Second, Provident has separated the credit and loan
administration function from the loan department. It is management's belief
that the five person group managing the credit and loan administration
department will be better able to assess and minimize the credit-related risks
of commercial lending.
Provident will also be seeking to increase revenues in non-traditional
areas which will enable the Bank to build on its extensive customer base in
Rockland County and surrounding areas. In this regard, Provident has recently
submitted an application to the OTS to institute a trust department, which it
expects to be operational by early in the fourth calendar quarter of 1998.
Similarly, management is examining the feasibility of offering insurance
products and financial planning services with the objective of developing
comprehensive relationships with its customers.
Notwithstanding the recent efforts to diversify the loan portfolio and
overall revenues, residential mortgage loans continue to comprise more than one-
half of the total loan portfolio ($271.6 million, or 59.4 percent of total loans
as of June 30, 1998). The Bank's general philosophy is to seek to originate
adjustable rate loans and/or shorter-term fixed rate loans for portfolio (15
year maturities or less and bi-weekly loans) and sell longer-term fixed rate
loans through various secondary market conduits (primarily FHLMC) on a servicing
retained basis. Recently, given the Bank's strong capital position, which will
be strengthened with the conversion and minority stock offering, coupled with
modest demand for adjustable rate loans,
<PAGE>
RP Financial, LC.
Page 1.4
management decided to retain a portion of the Bank's recent long term fixed rate
loan originations.
To supplement its lending activities and in order to maintain ample
liquidity and manage the Bank's interest rate risk and credit risk exposure,
Provident maintains a large portfolio of investments and MBS. The Bank's
investment securities portfolio is largely comprised of U.S. Government and
federal agency obligations. MBS primarily consist of pass-through securities
issued by all the major secondary market agencies and collateralized mortgage
obligations ("CMOs"). As of June 30, 1998, Provident's cash and investments
portfolio totaled $81.6 million, or 12.0 percent of total assets, while the MBS
portfolio equaled $133.1 million, or 19.6 percent of total assets.
Coupled with the reorientation of Provident's operations towards that of a
traditional community bank, Provident has been seeking to expand its retail
franchise, both internally through growth of loans and deposits and externally
through acquisitions. Provident seeks to grow internally based on service, by
offering a wide array of products, and through intensive marketing. At the same
time, the Bank faces significant competition from many competitors, most of
which are substantially larger than Provident and internal growth has been
relatively modest over the last five years. As a result, management has sought
to supplement internal growth by pursuing branch deposit acquisitions as they
arise. In this regard, Provident purchased two branch offices in separate
transactions consummated in March and May 1996. Through these two transactions,
Provident assumed $104.5 million of deposits and paid an aggregate deposit
premium of $7.5 million. While the Bank has explored several other acquisition
opportunities over the last several years, Provident has been unable to
consummate any other transaction. Management believes that the additional
capital raised in the mutual holding company reorganization and minority stock
offering will enhance the Bank's ability to consummate branch or whole
institution acquisitions in the future.
Retail deposits have consistently served as the primary funding liability
for the Bank, while borrowings have been used to a limited degree, primarily for
asset-liability management purposes. The majority of Provident's depositors
reside in Rockland County, New York.
<PAGE>
RP Financial, LC.
Page 1.5
Management expects that the future activities of the Bank will continue to
focus on products and services which have facilitated growth of the Bank's
capital and earnings to date. Specifically, the largest segment of Provident's
business will continue to be traditional, with an orientation towards retail
deposit products and retail banking services, funding one-to-four family
residential mortgage loans and building commercial account relationships while
continuing to leverage equity by purchasing high quality short-term or
adjustable rate investment and mortgage-backed securities.
A key reason for the conversion is that the Board and management of
Provident believe that the Bank is uniquely postured among the many other
competing and/or significantly larger financial institutions with which it
competes, particularly those headquartered in New York City. Importantly,
management believes that it is one of the few banks in the market that can
originate both commercial real estate loans and C&I loans through a single
officer relationship. Against this backdrop, the Bank has successfully
positioned itself as the community-oriented alternative to the New York based
banks.
Management believes that the conversion will support Provident's efforts to
broaden its product line and pursue long term growth. The near-term deployment
of the net conversion proceeds is as follows:
Provident Bancorp. Provident Bancorp is expected to retain up to 50
-----------------
percent of the net conversion proceeds. At present, the Holding Company
funds, net of the loan to the ESOP, are expected to be invested initially
into short- and intermediate-term investment securities with maturities
ranging up to three years. Over time, the Holding Company funds are
anticipated to be utilized for various corporate purposes, possibly
including acquisitions, infusing additional equity into the Bank,
repurchases of common stock, and the payment of regular and/or special cash
dividends.
Provident. At least 50 percent of the net conversion proceeds will be
---------
infused into the Bank in exchange for all of the Bank's newly issued stock.
The increase in Bank capital will be less, as the amount to be borrowed by
the ESOP to fund an 8 percent stock purchase will be accounted for as a
contra-equity. Cash proceeds (i.e., net proceeds less deposits withdrawn
to fund stock purchases) infused into the Bank are anticipated to become
part of general operating funds, and are expected to initially be invested
in short-term investments, used to repay short-term borrowings and/or to
fund loan commitments or loans in the pipeline.
<PAGE>
RP Financial, LC.
Page 1.6
On a pro forma basis, Provident will be in an overcapitalized position.
The Board of Directors has determined to pursue a strategy of controlled growth
in its southern New York markets in order to leverage capital. The Bank also
will continue to evaluate potential de novo branching opportunities and will
consider purchasing branches and branch deposits should such become available as
large competitors restructure their retail networks. Asset growth is expected
to be funded through internal deposit growth, branching and borrowings. The
Board recognizes that asset growth is a long term strategy, however, and that
the Bank will operate in the near term in an overcapitalized position. The
Holding Company may also consider various capital management strategies, if
appropriate, to assist in the long-run objective of increasing return on equity.
Balance Sheet Trends
- --------------------
Growth Trends
-------------
Table 1.1 shows the Bank's historical balance sheets from September 30,
1993 to June 30, 1998. Over this period, Provident's asset base increased at a
compounded annual rate of approximately 8.1 percent. As discussed previously,
the Bank's growth has been fostered through the acquisition of two branches
consummated in fiscal 1996. Excluding growth through acquisition, Provident's
internal growth has been relatively limited primarily as a result of
competition, both from other financial institutions as well as non-traditional
financial services providers. Over this period, asset growth was relatively
evenly distributed between loans and investments. Loans increased from $295.1
million as of the end of fiscal 1993 to $440.4 million as of June 30, 1998,
reflecting an 8.8 percent compounded annual growth rate while the total of
investments and MBS increased from $155.7 million as of September 30, 1993, to
$201.9 million as of June 30, 1998, reflecting a 5.6 percent compounded annual
growth rate.
The Bank's assets are funded through a combination of deposits,
borrowings and retained earnings. Although deposits realized the most
significant growth in dollar terms, borrowings increased most rapidly on a
percentage basis albeit from a relatively low starting point. In the future,
Provident may utilize FHLB advances more heavily in several ways as follows:
(1) in order to "pre-fund" the offering proceeds (i.e., invest the anticipated
funds to be
<PAGE>
RP Financial, LC.
Table 1.1
Provident Bank
Historical Balance Sheets
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
For the Fiscal Year Ended September 30,
---------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997
----------------- ----------------- ----------------- ----------------- -----------------
Amount Pct Amount Pct Amount Pct Amount Pct Amount Pct
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
($000) (%) ($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Amount of:
Assets $470,021 100.00% $480,478 100.00% $526,593 100.00% $634,250 100.00% $648,742 100.00%
Loans Receivable (net) 295,077 62.78% 315,154 65.59% 331,947 63.04% 369,487 58.26% 404,497 62.35%
Mortgage-Backed Securities - HTM 0 0.00% 0 0.00% 80,735 15.33% 112,863 17.79% 104,071 16.04%
Mortgage-Backed Securities - AFS 0 0.00% 0 0.00% 30,329 5.76% 41,482 6.54% 36,153 5.57%
MBS - Held for Investment 97,554 20.76% 97,780 20.35% 0 0.00% 0 0.00% 0 0.00%
Investment Securities - HTM 0 0.00% 0 0.00% 37,920 7.20% 22,138 3.49% 22,195 3.42%
Investment Securities - AFS 0 0.00% 0 0.00% 21,456 4.07% 47,313 7.46% 48,517 7.48%
Investment Sec. (Held for Invest.) 58,155 12.37% 47,356 9.86% 0 0.00% 0 0.00% 0 0.00%
Deposits 413,816 88.04% 419,808 87.37% 443,667 84.25% 545,282 85.97% 546,846 84.29%
Borrowed Funds 9,800 2.09% 10,100 2.10% 13,900 2.64% 13,000 2.05% 24,000 3.70%
Total Equity 33,746 7.18% 38,551 8.02% 43,828 8.32% 45,536 7.18% 50,399 7.77%
Memo:
Loans/Deposits 71.31% 75.07% 74.82% 67.76% 73.97%
IEA/IBL (Average) 108.31% 109.80% 111.20% 111.33% 111.80%
Non-Performing Assets/Assets 1.17% 0.94% 1.29% 1.21% 0.75%
Allow. for Loan Losses as a % of:
Loans Receivable, Net 0.87% 0.90% 1.05% 0.91% 0.93%
Non-Performing Loans 59.49% 75.55% 52.59% 52.87% 80.80%
Full Service Offices 9 9 9 11 11
<CAPTION>
Compounded
As of Annual
June 30, 1998 Growth Rate
----------------- -------------
Amount Pct Pct
-------- ------- -------------
($000) (%) (%)
Total Amount of:
Assets $679,104 100.00% 8.06%
Loans Receivable (net) 440,360 64.84% 8.79%
Mortgage-Backed Securities - HTM 89,334 13.15% 3.75%(1)
Mortgage-Backed Securities - AFS 43,775 6.45% 14.28%(1)
MBS - Held for Investment 0 0.00% N.M.
Investment Securities - HTM 20,197 2.97% -20.47%(1)
Investment Securities - AFS 48,629 7.16% 34.65%(1)
Investment Sec. (Held for Invest.) 0 0.00% N.M.
Deposits 580,075 85.42% 7.37%
Borrowed Funds 25,048 3.69% 21.84%
Total Equity 53,879 7.93% 10.35%
Memo:
Loans/Deposits 75.92%
IEA/IBL (Average) 114.95%
Non-Performing Assets/Assets 0.90%
Allow. for Loan Losses as a % of:
Loans Receivable, Net 1.03%
Non-Performing Loans 79.27%
Full Service Offices 11
</TABLE>
(1) Reflects compounded annual growth since the end of fiscal 1995.
Source: Provident's audited and unaudited financial reports.
<PAGE>
RP Financial, LC.
Page 1.8
received in the offering over a period of time leading up to the offering) and
repay such advances with the offering proceeds; and (2) in connection with
potential leveraging and/or interest rate risk management strategies.
Equity has increased steadily since the end of fiscal 1993, reflecting
the retention of Provident's earnings. Equity has been maintained in the 7.2
percent to 8.3 percent range the last five fiscal years, and, as of June 30,
1998, the equity/assets ratio approximated 7.9 percent. The Bank's equity
contained a small amount of intangibles as of June 30, 1998, resulting from
prior branch acquisition, and tangible equity equaled $49.8 million, or 7.3
percent of assets as of June 30, 1998.
Loans Receivable
----------------
Loans receivable totaled $440.4 million, or 64.8 percent of total assets,
as of June 30, 1998, which reflects growth since the end of fiscal 1993,
although the loans/assets ratio has fluctuated between 58 percent and 64 percent
of assets. Currently, 1-4 family mortgage loans comprise the largest segment of
the loan portfolio, equal to 59 percent of total loans. The residential
mortgage loan portfolio consists primarily of adjustable rate mortgage loans and
shorter term fixed rate mortgage loans (i.e., maturities of less than 15 years
or bi-weekly payment loans). The Bank's general philosophy is to seek to
originate adjustable rate loans and/or shorter-term fixed rate loans for
portfolio (15 year maturities or less and bi-weekly loans) and sell longer-term
fixed rate loans through various secondary market conduits (primarily FHLMC) on
a servicing retained basis. Recently, given the Bank's strong capital position,
which will be strengthened with the conversion and minority stock offering,
coupled with modest demand for adjustable rate loans, management is retaining a
portion of the Bank's fixed rate loan originations.
Notwithstanding the reorientation of Provident's operations to a more
"bank like" operating strategy, mortgage loans including loans secured by one-
to-four family properties, multi-family and commercial mortgages and properties
under construction continue to comprise in excess of 81.0 percent of total
loans. Commercial business loans currently approximate 5.3 percent of total
loans which represents an increase from a balance of 2.7 percent of loans at the
<PAGE>
RP Financial, LC.
Page 1.9
end of fiscal 1993, while consumer loans have remained stable approximating 14
percent of total loans.
Investment and Mortgage Backed Securities
-----------------------------------------
The intent of the Bank's investment policy is to provide adequate
liquidity, to generate a favorable return on excess investable funds and to
support the overall credit and interest rate risk objectives of the Bank. In
order to accomplish the foregoing objective, the level of investments and MBS
has been maintained at approximately 30 to 35 percent over the last five fiscal
years. The Bank anticipates initially reinvesting the net offering proceeds
into investments with short-term maturities, pending longer-term deployment into
other investments and loans. Provident anticipates that the future composition
of the liquidity portfolio will consist of similar types of investment
securities as are currently held.
As of June 30, 1998, the Bank's portfolio of cash and cash equivalents
totaled $12.8 million, equal to 1.9 percent of assets. Investment securities
available for sale ("AFS") totaled $48.6 million, equal to 7.2 percent of
assets, while the balance of securities held to maturity ("HTM") was lower,
equal to $20.2 million, or 3.0 percent of assets, as of June 30, 1998 (see
Exhibit I-3). In the aggregate, HTM and AFS investment securities equaled 10.1
percent of total assets as of June 30, 1998, which is relatively consistent with
the proportion of investments over the last five fiscal years.
Mortgage-backed securities comprise the largest segment of the investment
and MBS portfolio, totaling $133.1 million, or 19.6 percent of assets as of June
30, 1998. Management views the MBS portfolio as an adjunct to the loan
portfolio and as such, most MBS are classified as HTM. MBS primarily consist of
pass-through securities issued by all the major secondary market agencies and
CMOs.
No major changes to the composition and practices with respect to the
management of the investment portfolio are anticipated over the near term and,
accordingly, the level of cash and investments is expected to remain at levels
approximating historical averages. The level of cash and investments may,
however, increase initially following conversion, although it is management's
expectation that such funds at the Bank level will gradually be redeployed into
lending activities.
<PAGE>
RP Financial, LC.
Page 1.10
Funding Structure
-----------------
Deposits are comprised of a large base of savings and transaction
accounts (or "core" deposits) with the balance of funds consisting of CDs.
Growth of the Bank's deposit base has been significantly enhanced by the
acquisition of two branch offices with $104 million of deposits in fiscal 1996.
Since the end of fiscal 1996, deposit balances have increased at a 3.6 percent
compounded annual growth rate, underscoring the impact of the local competition
and the moderate growth nature of the local market. As future prospects for in-
market deposit growth are expected to remain moderate, the Bank has been
intensifying the cross-selling strategy to stimulate deposit growth from
existing customers, as well as expanding products and services in order to gain
market share. Additionally, Provident expects to open two supermarket branches
in Orange County, New York, during fiscal 1999. Moreover, management will
continue to evaluate other potential growth or acquisition opportunities as they
arise.
Borrowings have been increasingly utilized since the end of fiscal 1993,
primarily FHLB advances, as Provident has sought to avail itself to favorably
priced long term funds. Although it is not reflected in the historical
financial statements, Provident expects to increase the utilization of borrowed
funds in the near term in order to ladder the purchase of investments and MBS in
anticipation of the completion of the minority stock offering. Such borrowings
are expected to be retired with the infusion of cash in the offering.
Capital
-------
Earnings since the end of fiscal 1993 have led to annual equity growth of
10.4 percent. As a result of the completion of two branch acquisitions in
fiscal 1996, a $7.5 million core deposit intangible was created, which is being
amortized over 5 years on a straight-line basis. The balance of the core
deposit intangible equaled $4.1 million as of June 30, 1998. The Bank
maintained capital surpluses relative to all of its regulatory capital
requirements at June 30, 1998, as summarized in the table below. The addition
of offering proceeds will serve to further strengthen Provident's capital
position.
<PAGE>
RP Financial, LC.
Page 1.11
<TABLE>
<CAPTION>
Required Actual
Capital Capital Excess
--------- -------- --------
($000) ($000) ($000)
<S> <C> <C> <C>
Tangible Capital $10,120 $49,238 $39,118
Core Capital 20,239 49,238 28,999
Risk-Based Capital 30,331 53,786 23,455
Source: Prospectus.
</TABLE>
Income and Expense Trends
- -------------------------
Table 1.2 shows the Bank's historical income statements for the fiscal
years from 1993 through 1997 and for the twelve months ended June 30, 1998.
Overall, Provident's net income before extraordinary items ranged from a low of
$2.1 million, equal to 0.36 percent of average assets, to a high of $5.3
million, equal to 1.15 percent of average assets. Earnings for the most recent
twelve months ended June 30, 1998, equaled $4.6 million, or 0.70 percent of
average assets. As Provident's recurring earnings have remained relatively flat
over the last several fiscal years, the core profitability ratio declined due to
the growth in the operating expense ratio (reflecting branching and
diversification strategies), higher loan loss provisions (reflecting growth in
proportion of higher risk weight loans) and the net interest income ratio
compression. These trends are explained more fully below.
Net Interest Income
-------------------
Provident's ratio of net interest income to average assets increased
modestly between fiscal 1993 and 1995, from 4.22 percent to 4.39 percent,
respectively, partially as a result of an improving capital ratio. In fiscal
1996, the ratio of net interest income to average assets diminished as the cash
received in the two branch acquisitions consummated during the year diluted
asset yields and the acquired deposits increased the average deposit costs.
Subsequently, in fiscal 1997 and fiscal 1998 to date, net interest income has
continued to increase in dollar terms but has reduced as a percent of average
assets, reflective of a less favorable interest rate environment including a
flattened yield curve.
<PAGE>
RP Financial, LC.
Table 1.2
Provident Bank
Historical Income Statements
(Amount and Percent of Average Assets)(1)
<TABLE>
<CAPTION>
For the Fiscal Year Ended 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>
Interest Income $33,543 7.23% $32,175 6.76% $37,030 7.40% $42,566 7.31%
Interest Expense (13,945) -3.00% (11,556) -2.43% (15,064) -3.01% (18,585) -3.19%
------- ----- ------- ----- ------- ----- ------- -----
Net Interest Income $19,598 4.22% $20,619 4.33% $21,966 4.39% $23,981 4.12%
Provision for Loan Losses (760) -0.16% (452) -0.10% (760) -0.15% (911) -0.16%
------- ----- ------- ----- ------- ----- ------- -----
Net Interest Income
after Provisions $18,838 4.06% $20,167 4.24% $21,206 4.24% $23,070 3.96%
Other Income 2,247 0.48% 2,120 0.45% 2,077 0.42% 2,451 0.42%
Operating Expense (12,154) -2.62% (13,518) -2.84% (15,264) -3.05% (19,436) -3.34%
------- ----- ------- ----- ------- ----- ------- -----
Net Operating Income $ 8,931 1.92% $ 8,769 1.84% $ 8,019 1.60% $ 6,085 1.04%
Gain on Sale of AFS Securities $ - 0.00% $ 48 0.01% $ 23 0.00% $ - 0.00%
Special SAIF Assessment - 0.00% - 0.00% - 0.00% (3,298) -0.57%
------- ----- ------- ----- ------- ----- ------- -----
Total Non-Operating
Income/(Expense) $ - 0.00% $ 48 0.01% $ 23 0.00% $(3,298) -0.57%
Net Income Before Tax $ 8,931 1.92% $ 8,817 1.85% $ 8,042 1.61% $ 2,787 0.48%
Income Taxes (3,593) -0.77% (3,611) -0.76% (3,239) -0.65% (690) -0.12%
------- ----- ------- ----- ------- ----- ------- -----
Net Income Before
Extraordinary Items $ 5,338 1.15% $ 5,206 1.09% $ 4,803 0.96% $ 2,097 0.36%
Cumulative Effect of Change in
Accounting for Income Taxes - 0.00% (401) -0.08% - 0.00% - 0.00%
------- ----- ------- ----- ------- ----- ------- -----
Net Income $ 5,338 1.15% $ 4,805 1.01% $ 4,803 0.96% $ 2,097 0.36%
Estimated Core Earnings
- -----------------------
Net Income Before
Extraordinary Items $ 5,338 1.15% $ 5,206 1.09% $ 4,803 0.96% $ 2,097 0.36%
Addback(Deduct): Non-Recurring
(Inc)/Exp - 0.00% (48) -0.01% (23) 0.00% 3,298 0.57%
Tax Effect (4) - 0.00% 20 0.00% 9 0.00% (817) -0.14%
------- ----- ------- ----- ------- ----- ------- -----
Estimated Core Income $ 5,338 1.15% $ 5,178 1.09% $ 4,789 0.96% $ 4,578 0.79%
Memo:
Expense Coverage Ratio (2) 161.25% 152.53% 143.91% 123.38%
Efficiency Ratio (3) 55.64% 59.45% 63.49% 73.53%
Effective Tax Rate 40.23% 40.95% 40.28% 24.76%
<CAPTION>
For the Fiscal
Year Ended
September 30,
----------------- For the 12 Months
1997 Ended June 30, 1998
----------------- -------------------
Amount Pct Amount Pct
-------- ------ ---------- ------
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Interest Income $46,555 7.29% $47,539 7.25%
Interest Expense (20,179) -3.16% (20,718) -3.16%
------- ----- ------- -----
Net Interest Income $26,376 4.13% $26,821 4.09%
Provision for Loan Losses (1,058) -0.17% (1,530) -0.23%
------- ----- ------- -----
Net Interest Income
after Provisions $25,318 3.96% $ 25,291 3.85%
Other Income 2,711 0.42% 2,797 0.43%
Operating Expense (20,602) -3.23% (21,056) -3.21%
------- ----- -------- -----
Net Operating Income $ 7,427 1.16% $ 7,032 1.07%
Gain on Sale of AFS Securities $ - 0.00% $ - 0.00%
Special SAIF Assessment - 0.00% - 0.00%
------- ----- -------- -----
Total Non-Operating
Income/(Expense) $ - 0.00% $ - 0.00%
Net Income Before Tax $ 7,427 1.16% $ 7,032 1.07%
Income Taxes (2,829) -0.44% (2,454) -0.37%
------- ----- -------- -----
Net Income Before
Extraordinary Items $ 4,598 0.72% $ 4,578 0.70%
Cumulative Effect of Change
Accounting for Income Taxes - 0.00% - 0.00%
------- ----- -------- -----
Net Income $ 4,598 0.72% $ 4,578 0.70%
Estimated Core Earnings
- -----------------------
Net Income Before
Extraordinary Items $ 4,598 0.72% $ 4,578 0.70%
Addback(Deduct): Non-Recurring
(Inc)/Exp - 0.00% - 0.00%
Tax Effect (4) - 0.00% - 0.00%
------- ----- -------- -----
Estimated Core Income $ 4,598 0.72% 4,578 0.70%
Memo:
Expense Coverage Ratio 128.03% 127.38%
Efficiency Ratio (3) 70.83% 71.09%
Effective Tax Rate 38.09% 34.90%
</TABLE>
(1) Ratios are as a percent of average assets.
(2) Net interest income divided by operating expenses.
(3) Operating expenses (excluding the special SAIF assessment but including
the amortization of intangible assets) as a percent of the sum of net
interest income and other income (excluding gains on sale).
(4) Based on the effective tax rate for each period.
Source: Provident's prospectus.
<PAGE>
RP Financial, LC.
Page 1.13
Provident's spreads and margins have decreased modestly since the end of
fiscal 1995, reflecting the influx of cash from the branch acquisitions
consummated in fiscal 1996 and the impact of the flattened yield curve in fiscal
1997 and the first nine months of fiscal 1998 (see Exhibit I-4). Specifically,
Provident's fiscal 1995 interest rate spread of 4.19 percent declined modestly
to below 4 percent in fiscal 1996 and 1997 and to 3.80 percent for the nine
months ended June 30, 1998.
Non-Interest Income
-------------------
Other income has shown a gradual upward trend in dollar terms since
fiscal 1993, from $2.2 million to $2.8 million for the twelve months ended June
30, 1998, reflecting Provident's balance sheet growth and expansion of overall
business volumes. At the same time, non-interest income as a percent of assets
has generally declined over the period, from 0.48 percent in fiscal 1993 and
0.42 percent of average assets for the last 12 months. Provident's management
is targeting to increase the level of non-interest fee income in the future by
continuing to develop fee generating commercial loan and deposit relationships
and by implementing non-traditional products such as trust services. However,
any growth in the level of non-interest operating income is expected to be
gradual.
Operating Expenses
------------------
Operating expenses increased in dollar terms for the period from fiscal
1993 to 1996, although asset growth modestly outstripped the rate of growth of
expenses in fiscal 1997 and the twelve months ended June 30, 1998, resulting in
modest diminishment of the operating expense ratio. For the twelve months ended
June 30, 1998, operating expenses totaled $21.1 million, equal to 3.21 percent
of average assets. In comparison, the operating expense ratio steadily rose
from 2.62 percent in fiscal 1993 to 3.34 percent in fiscal 1996, before easing
with asset growth funded by increases in deposits and borrowings.
Operating expenses increased significantly in fiscal 1996 as a result of
the acquisition of two branch offices and, while operating expenses have
subsequently increased in dollar terms, the operating expense ratio has
diminished modestly. Additionally, Provident's operating expense ratio is
relatively high in comparison to industry averages as: (1) the Bank has a
deposit base heavily weighted toward transaction accounts which entail a higher
cost to service but
<PAGE>
RP Financial, LC.
Page 1.14
provide the Bank with a source of low-cost funds; (2) management continues to
build the infrastructure (i.e., personnel, fixed assets, technology, etc.) to
enable Provident to be competitive with the local commercial banks and grow to a
larger size; and (3) Provident emphasizes its commitment to service with such
features as extended hours and weekend service (all branches are open on
Saturday and three are open on Sunday). With regard to the latter
characteristic, Provident seeks to build a service-oriented customer base to
minimize customer attrition in the event of significant rate competition by the
larger money center banks.
Operating expenses are expected to increase following the conversion as a
result of: (1) the ESOP and recognition plan amortization expense; (2) public
company legal, accounting and printing/mailing costs; (3) continued expansion of
products and services including the introduction of trust services; (4)
conversion of the data processing function to a commercial bank system which
will enhance Provident's ability to service commercial accounts; and (5) due to
continued branch expansion which will result in additional staffing, lease and
operating costs.
Loan Loss Provisions
--------------------
The Bank has historically maintained strong asset quality and loan losses
have been limited. However, as a result of the increased emphasis on high risk-
weight lending (i.e., commercial mortgage and non-mortgage loans) and overall
expansion of the loan portfolio, loan loss provisions increased in the most
recent fiscal year to equal $1.530 million, or 0.23 percent of average assets.
Going forward, management of the Bank intends to continue to evaluate the
adequacy of the level of general valuation allowances ("GVAs") on a regular
basis, establishing additional loan loss provisions in accordance with the
Bank's asset classification and loss reserve policies. Currently, Provident's
budget indicates that the Bank is accruing $750,000 of loan loss provisions
quarterly.
Non-Operating Items
-------------------
Non-operating income and expenses have not been a material factor in
Provident's operations over the last five fiscal years, except in fiscal 1996
when the Bank incurred the expense of the special SAIF assessment, which equaled
$3.3 million, or 0.57 percent of average assets.
<PAGE>
RP Financial, LC.
Page 1.15
Taxes
-----
The Bank's tax rate has ranged from approximately 25 to 40 percent over
the last 5 years. Provident is in a fully taxable position with respect to both
federal and state income taxes and the effective tax rate for the twelve months
ended June 30, 1998, equaled 34.90 percent.
Efficiency Ratio
----------------
The Bank's efficiency ratio has generally deteriorated over the last
several years largely due to a reduction in both the net interest income ratio
and other operating income ratios, coupled with an increase in the operating
expense, although there has been slight improvement since fiscal 1996.
Specifically, the efficiency ratio increased from 55.6 percent in fiscal 1993 to
73.5 percent in fiscal 1996, and has since improved to approximately 71.0
percent. On a post-offering basis, the efficiency ratio is expected to show
some improvement as the net interest income ratio increases with the
reinvestment of proceeds, although the increased operating expenses (reflecting
the public company expense and stock plans expense and expected data processing
conversion, diversification and branching) will limit the improvement. As the
intangible assets are fully amortized in three years, the efficiency ratio could
experience some improvement.
Interest Rate Risk Management
- -----------------------------
Provident manages interest rate risk primarily from the asset side of the
balance sheet. To control interest rate risk, Provident has implemented several
strategies, including: (1) diversifying the loan portfolio into shorter-term
loans, most notably commercial real estate and C&I loans; (2) selling the
majority of long term residential mortgages originated into the secondary market
on a servicing retained basis to generate fee income; (3) striving to fund
operations through comparatively low cost retail deposits; (4) by building the
balance of lower-rate/fee-generating transaction accounts; and (5) by using
interest rate caps to lengthen the duration of liabilities on a limited basis.
These strategies have generally served to increase the sensitivity of the
Bank's assets to changes in interest rates and lengthen the duration of
liabilities. Furthermore, the sale of fixed rate loans into the secondary
market enhances the Bank's non-interest revenues, thereby
<PAGE>
RP Financial, LC.
Page 1.16
reducing the reliance on net interest income for overall earnings. The rate
shock analysis set forth in Table 1.3 indicates a moderate liability sensitive
position. Based on financial and interest rate information as of June 30, 1998,
a 200 basis point increase in interest rates is projected to result in a modest
positive increase to net interest income and an 11 percent reduction in the
Market Value of Portfolio Equity.
Overall, the Market Value data suggests the Bank's long-term earnings would
be negatively impacted by rising interest rates, although the short term impact
is projected to be small. At the same time, there are numerous limitations
inherent in such analyses, such as the credit risk of the Bank's loans and the
impact to secondary market loan sales under a higher interest rate environment.
Table 1.3
Net Interest Income and Market Value
Summary Performance
<TABLE>
<CAPTION>
Projected Net Interest Income Current Market Value
----------------------- -----------------------
Interest Rate Estimated % Change Estimated % Change
Scenario Income From Base Value From Base
- -------------------------- ---------- ----------- ---------- -----------
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
+400 $24,466 2.70% $52,274 (29.51)%
+300 24,496 2.83 59,095 (20.32)
+200 24,526 2.96 65,916 (11.12)
+100 24,173 1.48 70,039 (5.56)
BASE 23,821 0.00 74,162 0.00
-100 23,315 (2.12) 76,736 3.47
-200 22,809 (4.25) 79,310 6.94
-300 22,319 (6.30) 80,281 8.25
-400 21,830 (8.36) 81,252 9.56
Source: OTS simulations.
</TABLE>
Lending Activities and Strategy
- -------------------------------
Provident's lending strategy has been developed to take advantage of (1)the
Bank's historical strengths in the areas of permanent residential mortgage and
residential construction
<PAGE>
RP Financial, LC.
Page 1.17
lending; (2)the relatively strong economy prevailing in its markets; and (3) the
recent trend toward consolidation of the banking sector in its market which has
alienated some customers of several of Provident's largest competitors and
provided the Bank with the opportunity to employ experienced commercial bankers.
Provident's lending operations consist of four major segments as follows:
(1) portfolio mortgage lending; (2) commercial and consumer lending in
conjunction with the intensified efforts to become a full-service community
bank; and (3) secondary market operations in which Provident originates loans
for resale generally on a servicing retained basis. Such strategy is consistent
with Provident's community bank orientation, as evidenced in the Bank's loan
portfolio composition (see Exhibit I-6). As of June 30, 1998, permanent
mortgage loans secured by 1-4 family properties totaled $271.6 million, or 59.4
percent of total loans, while home equity lines of credit and fixed rate, fixed
term homeowner loans totaled an additional $28.4 million and $25.4 million,
respectively.
Consistent with the Bank's community banking strategy, the Bank offers a
wide array of products and services and has diversified its loan portfolio with
mortgages secured by multi-family and commercial properties totaling $70.8
million, equal to 15.5 percent of loans while commercial business loans, which
represent a rapidly growing segment of the loan portfolio equaled $24.0 million,
or 5.3 percent of total loans, as of June 30, 1998. Consumer loans, including
primarily home equity lines of credit and homeowner loans, equaled $62.6
million, or 13.7 percent of total loans.
In the future, Provident will seek further diversification consistent with
community bank operations, including efforts to originate and service small
business lending and deposit relationships. Accordingly, management anticipates
that the future lending emphasis will be on building the portfolio of commercial
real estate mortgage loans and commercial and industrial loans ("C&I loans").
Residential mortgage lending is expected to remain an important component of the
Bank's lending emphasis while management will continue to seek to build the
consumer loan portfolio. It is management's belief that the continued
development of the commercial lending business along with its traditional
business lines, including mortgage and construction lending, will enhance the
Bank's profitability and consistency of earnings.
<PAGE>
RP Financial, LC.
Page 1.18
Furthermore, it is believed that the ability to service commercial accounts will
be facilitated through the upcoming data processing conversion to a commercial
bank system.
Provident originates both fixed rate and adjustable rate 1-4 family loans;
the Bank's general philosophy is to seek to originate adjustable rate loans
and/or shorter-term fixed rate loans for portfolio (15 year maturities or less
and bi-weekly loans) and sells a portion of longer-term fixed rate loans through
various secondary market conduits (primarily FHLMC) on a servicing retained
basis.
The Bank originates one-to-four family loans up to a loan-to-value ("LTV")
ratio of 95.0 percent, with private mortgage insurance ("PMI") being required
for loans in excess of an 80.0 percent LTV ratio. The substantial portion of 1-
4 family mortgage loans originated by Provident are secured by residences in the
defined normal lending territory.
As a complement to the 1-4 family permanent mortgage lending activities,
the Bank also offers home equity loans including fixed rate amortizing term
loans as well as variable rate lines of credit.
Construction, development and land acquisition lending has been subject to
growth over the last several years as the Bank has sought to more fully develop
its community banking orientation and participate in the strengthened real
estate market of Rockland County as other nearby areas. Furthermore,
construction, development and land acquisition lending has enabled the Bank to
more actively participate in the growth occurring in its market, shorten the
average duration of assets, and has helped to support the Bank's yields, albeit
at the expense of accepting a somewhat higher level of credit risk. The
majority of the Bank's construction lending is in Rockland County.
In conjunction with its construction lending, the Bank has also made land
development loans. Development loans are typically limited to local developers
with whom the Bank has established relationships for the purpose of developing
residential subdivisions (i.e., installing roads, sewers, water and other
utilities), as well as loans to individuals to build lots. Development loans
are secured by a lien on the property and made with a variety of fixed and
adjustable terms. The Bank may also finance land acquisition for very strong
borrowers secured
<PAGE>
RP Financial, LC.
Page 1.19
by the underlying property and generally obtains personal guarantees from the
principals of its corporate borrowers.
Provident has made and will continue to make loans for the purchase or
financing of various types of multi-family and commercial real estate.
Provident's commercial real estate and multi-family loan portfolios are
comprised of loans originated in-house and secured by properties in the primary
market of Rockland County and, to a more limited extent, Westchester and Orange
Counties. At June 30, 1998, the balance of multi-family and commercial mortgage
loans equaled $70.8 million, 15.5 percent of net loans. Multi-family and
commercial real estate loans are secured by apartments and other structures such
as strip malls, retail shops and various other properties. Most income
producing property loans are for the purpose of financing existing structures
rather than new construction. Consistent with the broad product line
appropriate for a community bank, Provident's lending activity is expected to
continue to include multi-family and commercial real estate lending with the
proportion of such loans increasing over time.
Commercial business loans comprise a growing segment of the loan portfolio
and equaled approximately 5.3 percent of total loans as of June 30, 1998.
Provident intensified its efforts to increase the business loan portfolio
beginning in the 1980s and has employed the staff and developed the other
necessary infrastructure in order to undertake such lending. The Bank offers
commercial loans to sole proprietorships, professional partnerships and various
other small businesses. The types of commercial loans offered include lines of
credit and business term loans. The Bank carefully analyzes the capacity of the
borrower to repay before granting a commercial loan. In addition, the liquidity
and adequacy of the collateral, if any, is considered.
Exhibit I-9, which shows the Bank's loan originations, repayments and sales
over the past three fiscal years, highlights Provident's recent emphasis on
commercial and home equity lending. In this regard, originations excluding 1-4
permanent residential mortgage loans (but including home equity loans) equaled
$39.9 million in fiscal 1995 but increased to $81.6 million for the twelve
months ended June 30, 1998. The increase has been realized through increased
staffing and marketing for the origination and processing of non-residential
loans. Additionally, residential mortgage loan volume has been subject to
significant growth in fiscal 1998 as long term interest rates have increased
refinancing activity.
<PAGE>
RP Financial, LC.
Page 1.20
While residential mortgage loan volumes have increased, loan sales were
comparatively modest as the Bank's strong capital position, earnings level, as
well as the anticipated proceeds from the offering have led Provident's
management to retain a portion of its recent longer term fixed rate monthly
payment loans. In this regard, management believes the incremental interest
rate risk exposure of retaining a portion of the long term fixed rate mortgage
loans originated is mitigated by the foregoing factors and the yield benefits
that the retention of such loans provides. It is expected that secondary market
loan sales will increase in the future, as asset-liability management models
dictate.
Asset Quality
- -------------
Provident's asset quality has been relatively good over the last five
fiscal years, notwithstanding the Bank's increasing emphasis on higher risk
weight lending. Specifically, as reflected in Exhibit I-10, the balance of NPAs
in Provident's portfolio has diminished since the end of fiscal 1995 and equaled
$6.1 million, or 0.90 percent of assets, as of June 30, 1998. As of June 30,
1998, Provident's NPAs consisted of $5.7 million of non-performing loans (0.90
percent of total loans) and real estate owned ("REO") equal to $366,000, or 0.05
percent of assets. At that date, the Bank's loan loss reserves equaled $4.548
million, or 1.03 percent of the net loan portfolio and reserve coverage as a
percent of NPAs and total loans equaled 74.52 percent and 1.03 percent,
respectively. These credit quality ratios, coupled with the strong local
economy, reflect relatively good credit quality and low risk of credit losses at
the Bank. At the same time, the relatively rapid growth of the commercial loan
portfolio (both mortgage and non-mortgage loans) and the resultant lack of
seasoning may increase the Bank's relative risk exposure in comparison to other
savings institutions with a more traditional operating strategy or higher levels
of valuation allowances.
Funding Composition and Strategy
- --------------------------------
Deposits have consistently been the Bank's primary source of funds, and, as
of June 30, 1998, totaled $580.1 million, which reflects 7.4 percent compounded
annual growth since the end of fiscal 1993. As discussed previously, the
majority of deposit growth achieved since 1993
<PAGE>
RP Financial, LC.
Page 1.21
is attributable to two branch acquisitions consummated in 1996 which increased
deposits by $105 million; growth at the existing offices has been comparatively
modest.
Lower costing savings and transaction accounts comprised approximately 58
percent of Provident's deposits, totaling $336.7 million at June 30, 1998. The
proportion of savings and transaction accounts reflects a modest increase since
fiscal 1995 partially as a result of the ongoing reorientation of the Bank's
operations to a community bank strategy. The balance of the deposit base is
comprised of CDs, the majority of which have remaining maturities of one year or
less.
As of June 30, 1997, borrowed funds totaled only $25.0 and consisted solely
of FHLB advances. The Bank utilizes borrowings primarily for the purpose of
generating additional liquidity and typically employs either FHLB advances or
reverse repurchase agreements. Although it is not reflected in the historical
financial statements, Provident expects to increase the utilization of borrowed
funds in the near term in order to ladder the purchase of investments and MBS in
anticipation of the completion of the minority stock offering. Such borrowings
are expected to be retired with the infusion of cash in the offering.
Additionally, the Bank may utilize borrowed funds in connection with leverage
strategies which may be employed following the minority stock offering.
Subsidiaries
- ------------
Provident has two wholly-owned subsidiaries, Provest Services, Corp. I and
Provest Services Corp. II. Provest Services Corp. I is a limited partner in a
low income housing assisted living facility. Provest Services Corp. II has
entered into a contract with outside parties to sell mutual funds and annuities
to Bank customers.
Year 2000 Compliance
- --------------------
Provident is reliant on third party vendors for its data processing needs
as well as certain other significant functions and services. Additionally,
Provident has various systems in-house which are at risk of malfunction as a
result of the Year 2000 issue. Management believes it and its third party
vendors are taking the appropriate steps to address the Year 2000 problem on a
<PAGE>
RP Financial, LC.
Page 1.22
timely basis. While Provident currently has no reason to believe that the cost
of addressing such issues will materially affect the Bank's products, services
or ability to compete effectively, no assurance can be made that Provident or
the third party vendors on which it relies will become Year 2000 compliant in a
successful and timely fashion. Nevertheless, the Bank does not believe that the
cost of addressing the Year 2000 issues will be a material event or uncertainty
that would cause reported financial information not to be necessarily indicative
of future operating results or financial conditions, nor does it believe that
the costs or the consequences of incomplete or untimely resolution of its Year
2000 issues represent a known material event or uncertainty that is reasonably
likely to affect its future financial results, or cause its reported financial
information not to be necessarily indicative of future operating results or
future financial condition.
Legal Proceedings
- -----------------
The Bank is a defendant in a lawsuit brought by a prospective purchase of a
REO property. The plaintiff is seeking in excess of $1 million in total
damages. Although there is no certainty as to the outcome of this matter,
management believes the claim is baseless and is vigorously contesting the case.
The Bank is not involved in any other pending legal proceedings, other than
the routine legal proceedings that occur in the Bank's ordinary course of
business, which are 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
- ------------
Chartered in 1888 and operating continuously since that time in Rockland
County, New York, Provident currently conducts operations out of its executive
offices in Montebello, New York and a total of 11 retail office facilities
including its main office in Haverstraw, New York. Provident's markets in
Rockland County, New York are located approximately 20 miles north of New York
City. Rockland County is a suburban market with a broad employment base but it
also serves as a bedroom community for nearby New York City as well as other
suburban areas including Westchester County and northern New Jersey. Residents
of the Bank's markets are typically middle to upper middle class as the number
of individuals with incomes below the poverty level in the County is limited.
Provident's markets in Rockland County, New York are located approximately
20 miles north of New York City. Rockland County is a suburban market with a
broad employment base but it also serves as a bedroom community for nearby New
York City as well as other suburban areas including Westchester County and
northern New Jersey. Residents of the Bank's markets are typically middle to
upper middle class as the number of individuals with incomes below the poverty
level in the County is limited.
The Rockland County economy has improved significantly since the early
1990s, having lagged behind the improvement in the national economy through the
middle part of the decade. Unemployment rates are relatively low and housing
prices appear to be rising modestly. The favorable economic environment in the
New York metropolitan area has led to an increase in residential and commercial
construction activity. In this regard, there appears to be strong housing
growth with a notable increase in the development of upscale homes.
The economy in the Bank's primary market area is based on a mixture of
service, manufacturing and wholesale/retail trade. Other employment is provided
by a variety of industries and state and local government. The diversity of the
employment base is evidenced by the major employers which include the State of
New York, Rockland County, Wyeth Ayerst, NYNEX Mobile Communications, Novartics
Pharmaceuticals, Orange and Rockland Utilities,
<PAGE>
RP Financial, LC.
Page 2.2
Nyack and Good Samaritan Hospital, Chromalloy, and Helen Hayes Hospital.
Additionally, Rockland County has numerous small employers, many of which are
located in the new industrial and industrial/office parks which have been
constructed.
Future growth opportunities for Provident depend largely on the future
growth in the market area, which has been measured by indicators such as
demographic growth trends, the health and stability of the regional and local
economy, and the nature and intensity of the competitive environment for
financial institutions. These factors have been briefly examined to help
determine the growth potential that exists for the Bank, and the relative
economic health of the Bank's market area.
Market Area Demographics
- ------------------------
Demographic growth trends for Rockland County have been measured by changes
in population, number of households and median household income, with trends in
those areas summarized by the data presented in Table 2.1 on the following page.
The Bank's market area exhibits generally less favorable growth characteristics
than U.S. averages, but more attractive measures in terms of income --
characteristics that are typical of the more mature market areas of the
Northeast U.S. Overall, Rockland County appears to provide relatively
attractive growth potential for a community banking concern like Provident: (1)
the county posted positive growth in population and number of households during
1990 through 1997, and is projected to continue to grow through 2002; (2)
Rockland County exhibits higher than national average measures in terms of
income and median home value, reflecting a relatively high degree of wealth in
the economy; and (3) Residents of Provident's markets possess income levels well
in excess of the state and national average. Notwithstanding the positive
attributes of some of Rockland County's demographic measures, the attractiveness
of the Bank's market area is somewhat diminished by the significant competition
from other financial institutions -- which is expected to intensify as other
competing institutions seek growth to increase earnings per share in a market
that is forecasted to grow at only 0.7 percent annually through 2002.
<PAGE>
Table 2.1
Provident Bank
Summary Demographic Data
<TABLE>
<CAPTION>
Year
------------------------------------ Growth Rate Growth Rate
POPULATION (000) 1990 1997 2002 1990-97 1997-2002
- ---------------- --------- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
United States 248,710 267,805 281,209 1.1% 1.0%
New York 17,990 18,191 18,332 0.2% 0.2%
Rockland County 265 280 290 0.7% 0.7%
HOUSEHOLDS (000)
- ----------------
United States 91,947 99,020 104,001 1.1% 1.0%
New York 6,693 6,700 6,744 0.0% 0.1%
Rockland County 85 89 93 0.8% 0.7%
MEDIAN HOUSEHOLD INCOME ($000)
- ------------------------------
United States $29,199 $36,961 $42,042 3.4% 2.6%
New York 31,044 36,341 38,815 2.3% 1.3%
Rockland County 53,242 54,851 59,001 0.4% 1.5%
PER CAPITA INCOME ($)
- ---------------------
United States $13,179 $18,100 - 4.6% N/A
New York 14,413 18,504 - 3.6% N/A
Rockland County 19,159 21,294 - 1.5% N/A
<CAPTION>
1997 AGE DISTRIBUTION (%) 0-14 Years 15-24 Years 25-44 Years 45-64 Years 65+ Years Median Age
- ------------------------- ---------- ----------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
United States 21.7 13.6 31.4 20.5 12.7 34.8
New York 20.6 13.0 32.3 20.9 13.2 35.3
Rockland County 22.4 12.3 30.9 23.1 11.3 34.9
<CAPTION>
Less Than $15,000 to $25,000 to $50,000 to $100,000 to
1997 HH INCOME DIST. (%) $15,000 $25,000 $50,000 $100,000 $150,000 $150,000+
- ------------------------ --------- ---------- ----------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
United States 17.7 14.4 33.5 26.5 5.4 2.6
New York 20.2 13.9 31.3 25.9 5.5 3.2
Rockland County 10.4 8.2 25.8 38.9 11.5 5.2
Source: CACI.
</TABLE>
<PAGE>
RP Financial, LC.
Page 2.4
Local Economy
- -------------
The work force in Rockland County continues to shift towards office/store
type and service employment and away from manufacturing employment (Office/store
type refers to professional, technical, managerial, sales and clerical jobs).
In this regard, in 1980, office/store jobs represented 64 percent of the total
employment in Rockland County while manufacturing employment represented 21
percent of total employment. By 1990, office/store employment represented 69
percent of the total employment while manufacturing sector represented 18
percent. The increase is the result of a rise in employment at new office parks
both within and outside of Rockland County. As referenced earlier, Rockland
County is a suburban community and many of its residents commute outside the
County. The most recent census data shows that 55 percent of Rockland County
residents worked within the County while 45 percent commuted to jobs outside the
County (primarily northern New Jersey, Westchester County and New York City).
Rockland County maintains a relatively diversified economic base with a
wide range of manufacturing, services, and government employers. The largest
employers in Rockland County include New York State, Rockland County, Wyeth
Ayerst, NYNEX Mobile Communications, Novartics Pharmaceuticals, Orange and
Rockland Utilities, Nyack and Good Samaritan Hospital, Chromalloy, and Helen
Hayes Hospital. The approximately 45 percent of workers who commute outside of
Rockland County are employed in a wide variety of sectors consistent with the
mix prevailing in the New York metropolitan area.
Unemployment trends in the market area and New York are displayed in Table
2.2. The Rockland County unemployment rates were lower than New York and
national averages as of May 1997 and May 1998, evidence of the relatively stable
and generally healthy economy of the market area served by the Bank.
<PAGE>
RP Financial, LC.
Page 2.5
Table 2.2
Provident Bank
Unemployment Trends(1)
<TABLE>
<CAPTION>
May 1997 May 1998
Region Unemployment Unemployment
- ------ ------------ ------------
<S> <C> <C>
United States 4.7% 4.2%
New York 6.3% 5.5%
Rockland County 3.9% 3.6%
Unemployment rates are not seasonally adjusted.
</TABLE>
Source: U.S. Bureau of Labor Statistics.
Market Area Deposit Characteristics
- -----------------------------------
Competition among financial institutions in the Bank's market is
significant, and, as larger institutions compete for market share to achieve
economies of scale, the market environment for the Bank's products and services
is expected to become increasingly competitive in the future. Smaller
institutions such as Provident will be forced to either compete with larger
institutions on pricing, or to identify and operate in a "niche" that will allow
for operating margins to be maintained at profitable levels.
The Bank's retail deposit base is closely tied to the economic fortunes of
the New York metropolitan area and Rockland County. Table 2.3 displays deposit
market trends over the past several years for Rockland County, with additional
data presented for the State of New York. The data indicates that deposit
growth in the Bank's primary market area between 1995 and 1997 was moderate and
that deposits at savings institutions actually shrank over this time period.
The relatively low deposit growth in Rockland County, notwithstanding the
relatively favorable economic conditions, is a reflection of disintermediation
as funds continue to flow directly to the stock and bond markets. In contrast to
savings institution deposits which diminished, commercial bank deposits in
Rockland County increased by 5.0 percent, resulting in an increased market share
of 75 percent.
<PAGE>
Table 2.3
Provident Bank
Deposit Summary
<TABLE>
<CAPTION>
As of June 30,
-----------------------------------------------------------------------------------
1995 1997 Annualized
------------------------------------------ --------------------------------------- Deposit
Market # of Market # of Growth Rate
Deposits Share Branches Deposits Share Branches 1994-1996
-------------- -------- ----------- ------------- --------- ---------- ------------
(Dollars in Thousands) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
State of New York $ 346,085,264 100.0% 4,771 $ 395,395,035 100.0% 4,503 6.9%
Commercial Banks 247,109,439 71.4% 3,620 312,581,238 79.1% 3,492 12.5%
Savings Institutions 98,975,825 28.6% 1,151 82,813,797 20.9% 1,011 -8.5%
Rockland County $ 4,198,690 100.0% 90 $ 4,424,447 100.0% 92 2.7%
Commercial Banks 3,013,084 71.8% 76 3,323,803 75.1% 71 5.0%
Savings Institutions 1,185,606 28.2% 14 1,100,644 24.9% 21 -3.6%
Provident Bank (1) 443,662 37.4% 9 557,352 50.6% 11 12.1%
Provident Bank (2) 10.6% 12.6%
</TABLE>
(1) Percent of thrift deposits.
(2) Percent of total deposits.
Source: FDIC, OTS.
<PAGE>
RP Financial, LC.
Page 2.7
Competition for deposits in New York in general is intense, as the overall
size and stability of the New York market makes it very attractive to financial
institutions. In fact, New York is home to several very large superregional
banks, is populated by most money center banks, and includes the requisite
number of community banks consistent with the mature and affluent nature of much
of New York. Provident recorded annual deposit growth of 12.1 percent during
the period covered in Table 2.3, which was a function primarily of the Bank's
acquisition of $104 million of deposits in 1996. Absent the impact of this
deposit acquisition, the balance of Provident's deposits was relatively stable
over this period. Importantly, Provident has subsequently sought to increase
its deposit base through more aggressive marketing and pricing and has achieved
growth in its deposit base as a result.
The level of competition in Rockland County is evidenced by deposit market
share data set forth in Table 2.4. As of June 30, 1997, Provident ranked fourth
in total deposits with a 12.2 percent market share, and trailed Bank of New
York, Union State Bank and the Bank of New York. Other major competitors
include such well-known names as Chase Manhattan, Dime Savings Bank and
Citibank.
Table 2.4
Provident Bank
Deposit Market Share in Rockland County
<TABLE>
<CAPTION>
Deposits as of
Institution June 30, 1997 Market Share
- ----------- -------------- ------------
<S> <C> <C>
($000) (%)
Bank of New York $902,034 19.80%
Union State Bank 588,215 12.91
Marine Midland Bank 579,937 12.73
Provident Bank 557,352 12.24
Chase Manhattan Bank 435,368 9.56
Dime Savings Bank 299,529 6.58
M&T Bank 267,644 5.88
Citibank 264,477 5.81
Source: FDIC.
</TABLE>
<PAGE>
RP Financial, LC.
Page 2.8
The conversion proceeds will enhance the Bank's competitiveness by
providing increased operating flexibility. The Bank also benefits from its
favorable image as a locally-owned and community-oriented institution. However,
the Bank's prospects for deposit growth will be somewhat mitigated by the
continuing intense competition for customers in the market area, which is likely
to become more significant as the market area is projected to have slow
population growth for the balance of the decade. Accordingly, given the
projected limited demographic growth for Rockland County, Provident's future
deposit growth will be somewhat dependent upon increasing market share or
expanding into new markets, both of which management believes will be
facilitated through the capital raised in the conversion.
<PAGE>
RP Financial, LC.
Page 3.1
III. PEER GROUP ANALYSIS
This chapter presents an analysis of Provident'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 Provident 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 Provident and the
Peer Group, will then be used as a basis for the valuation of Provident'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 Provident's valuation should be
comprised of the subsidiary institutions of mutual holding companies. The Peer
Group is consistent with the regulatory
<PAGE>
RP Financial, LC.
Page 3.2
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-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 Provident. The differences between the Peer Group's reported
financial data and the financial data of Provident as a mutual institution are
not significant enough to distort the conclusions of the comparison (in fact,
such differences are greater in a
<PAGE>
RP Financial, LC.
Page 3.3
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 at least
ten publicly-traded New York-based MHC institutions with capital, earnings,
credit quality and interest rate risk comparable to Provident. However, the
universe of 22 publicly-traded MHC institutions only includes three institutions
headquartered in New York. Out of the 22 public MHCs, 19 were included for the
Peer Group. Pulaski Bank of Missouri, Community Savings of Florida and First
FSB of Siouxland, Iowa were excluded from the group, as the result of announced
plans to complete a second-step conversion and, thus, their pricing ratios have
become distorted in anticipation of the second-step offering and the different
characteristics of fully-converted stocks.
Unlike the universe of public companies, which includes approximately 360
public companies, the universe of public MHC institutions is relatively 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 (excluding the three companies announcing
second steps) 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
continue to concur with this selection procedure of the Peer Group for MHC
valuations.
<PAGE>
RP Financial, LC.
Page 3.4
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 Provident 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 Provident,
we believe such companies form a good basis for the valuation of Provident,
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 (14.03 percent of
assets versus 13.56 percent for the all public average), generate lower core
earnings (0.79 percent ROA versus 0.89 percent average for the all public
average), and generate a lower core ROE (6.11 percent core ROE versus 7.67
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).
<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
October 9, 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. 9,105 111 12-31 07/88 23.19 1,487
NWSB Northwest Bcrp MHC of PA (30.8 OTC Northwest PA Thrift 2,547 67 06-30 11/94 10.88 510
HARS Harris Fin. MHC of PA (24.9) OTC Harrisburg PA M.B. 2,326 33 12-31 01/94 13.88 471
FFFL Fidelity Bcsh MHC of FL (47.9) OTC Southeast FL Thrift 1,468 20 12-31 01/94 24.00 163
NBCP Niagara Bancorp of NY MHC(45.4 (3) OTC Northern NY Thrift 1,296 P 15 12/31 04/98 11.25 335
BRKL Brookline Bncp MHC of MA(47.0) OTC Brookline Thrift 817 M 5 08-31 03/98 10.88 317
LFED Leeds Fed Bksr MHC of MD (36.3 OTC Baltimore MD Thrift 299 M 1 06-30 05/94 15.75 82
ALLB Alliance Bank MHC of PA (19.9) OTC Southeast PA Thrift 277 7 12-31 03/95 15.25 50
BCSB BCSB Bankcorp MHC of MD (38.6) OTC Baltimore Thrift 274 P 6 12-31 07/98 10.44 64
WAYN Wayne Svgs Bks MHC of OH (48.2 OTC Central OH Thrift 259 6 03-31 06/93 21.25 53
SBFL SB Fngr Lakes MHC of NY (33.1) OTC Western NY Thrift 258 5 12-31 11/94 14.50 52
LIBB Liberty Bancorp MHC of NJ (47) OTC Northeast NJ Thrift 255 4 12-31 07/98 10.19 40
PHSB Ppls Home SB, MHC of PA (45.0) OTC Western PA Thrift 227 9 12-31 07/97 14.75 41
GBNK Gaston Fed Bncp MHC of NC(47.0 OTC Southwest NC Thrift 203 4 9-30 04/98 11.25 51
PBHC Pathfinder BC MHC of NY (45.2) (3) OTC Upstate NY Thrift 198 5 12-31 11/95 13.25 38
PLSK Pulaski SB, MHC of NJ (47.0) OTC New Jersey Thrift 188 6 12-31 04/97 13.00 27
JXSB Jcksnville SB,MHC of IL (45.6) OTC Central IL Thrift 170 4 12-31 04/95 15.25 29
SKBO First Carnegie MHC of PA(45.0) OTC Western PA Thrift 146 3 03-31 04/97 11.00 25
WCFB Wbstr Cty FSB MHC of IA (45.6) OTC Central IA Thrift 97 1 12-31 08/94 15.25 32
</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: 10/09/98
<PAGE>
RP Financial, LC.
Page 3.6
<TABLE>
<CAPTION>
Publicly-Traded MHCs
(Excluding Announced
Second Steps)
-------------
Fully
All MHC Converted
Publicly-Traded Reported Basis
(Excluding MHCs) Basis (Pro Forma)
---------------- --------- -------------
<S> <C> <C> <C>
Financial Characteristics (Averages)
-----------------------------------
Assets ($Mil) $ 1,186 $ 1,074 $1,180
Equity/Assets (%) 13.56% 14.03% 22.13%
Core Return on Assets (%) 0.89 0.79 1.01
Core Return on Equity (%) 7.67 6.11 4.62
Pricing Ratios (Averages)(1)
----------------------------
Core Price/Earnings (x) 17.83x 25.52x 19.66x
Price/Book (%) 128.54% 162.73% 87.35%
Price/Assets (%) 16.05% 21.11% 18.94%
(1) Based on market prices as of September 4, 1998.
</TABLE>
The following sections present a comparison of Provident'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.
Financial Condition
- -------------------
Table 3.2 shows comparative balance sheet measures for Provident and the
Peer Group. Provident's ratios reflect June 30, 1998 figures, and the Peer
Group's, unless otherwise indicated for the Peer Group companies. Provident's
net worth base of 7.9 percent was below the Peer Group's average net worth ratio
of 13.1 percent; however, with the addition of stock proceeds, the Bank's pro
forma capital position (consolidated with the Holding Company) is expected to be
relatively comparable to the Peer Group's ratio. Provident's capital base
contained a small amount of intangibles, equal to 0.6 percent of assets, which
reduced tangible equity to 7.3 percent of assets. Likewise, the Peer Group also
had a modest level of intangible assets equal to 0.3 percent of assets. 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
<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 June 30, 1998
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
-----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref. Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- -----------
Provident Bank
- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
June 30, 1998 12.0 64.8 19.6 85.4 3.7 0.0 7.9 0.6 7.3 0.0
SAIF-Insured Thrifts 18.9 67.5 10.3 68.6 15.9 0.1 13.5 0.3 13.2 0.0
All Public Companies 19.5 66.7 10.4 69.1 15.7 0.1 13.3 0.3 13.0 0.0
State of NY 21.4 57.4 17.8 67.7 17.1 0.0 13.0 0.6 12.4 0.0
Comparable Group Average 24.4 59.5 12.9 74.0 10.0 0.1 13.1 0.3 12.9 0.0
Mid-Atlantic Companies 26.4 55.0 15.5 74.4 10.8 0.0 11.4 0.3 11.1 0.0
Mid-West Companies 18.8 70.5 7.5 81.7 2.6 0.0 14.5 0.0 14.5 0.0
New England Companies 30.2 64.0 1.7 65.3 11.1 0.8 21.3 0.7 20.7 0.0
Other Comparative Companies 15.3 65.4 16.3 69.0 15.1 0.0 13.2 0.1 13.1 0.0
Comparable Group
- ----------------
Florida Companies
- -----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 7.1 62.2 27.0 69.0 21.2 0.0 6.2 0.2 6.0 0.0
Mid-Atlantic Companies
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 37.7 54.5 4.7 77.0 11.9 0.0 10.7 0.0 10.7 0.0
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 33.7 53.6 10.9 69.5 0.0 0.0 8.0 0.0 8.0 0.0
SKBO First Carnegie MHC of PA (45.0) 14.5 47.0 35.3 52.6 28.2 0.0 16.8 0.0 16.8 0.0
HARS Harris Fin. MHC of PA (24.9) 56.1 40.5 0.1 49.1 41.3 0.0 8.1 0.8 7.3 0.0
LFED Leeds Fed Bksr MHC of MD (36.3)(1) 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) 12.9 65.2 20.5 81.8 0.0 0.0 13.1 0.0 13.1 0.0
NBCP Niagara Bancorp of NY MHC (45.4)(1) 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) 21.0 74.9 1.3 78.8 11.4 0.0 8.6 0.9 7.7 0.0
PBHC Pathfinder BC MHC of NY (45.2) 16.6 65.6 10.0 79.5 7.6 0.0 11.9 1.7 10.1 0.0
PHSB Ppls Home SB, MHC of PA (45.0) 21.2 42.4 33.4 78.1 8.3 0.0 12.7 0.0 12.7 0.0
PLSK Pulaski SB, MHC of NJ (47.0) 14.2 53.0 29.8 87.2 0.3 0.0 11.8 0.0 11.8 0.0
SBFL SB Fngr Lakes MHC of NY (33.1) 26.4 51.5 18.2 72.6 17.9 0.0 8.5 0.0 8.5 0.0
Mid-West Companies
- ------------------
JXSB Jcksnville SB,MHC of IL (45.6) 14.2 74.4 7.1 87.2 0.1 0.0 10.5 0.0 10.5 0.0
WAYN Wayne Svgs Bks MHC of OH (48.2) 13.8 79.6 2.7 83.8 6.2 0.0 9.5 0.0 9.5 0.0
WCFB Wbstr Cty FSB MHC of IA (45.6) 28.3 57.4 12.8 74.2 1.4 0.0 23.4 0.0 23.4 0.0
New England Companies
_____________________
BRKL Brookline Bncp MHC of MA (47.0)(1) 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) 26.6 63.2 3.2 73.0 14.6 1.6 9.4 1.3 8.1 0.0
South-East Companies
- --------------------
GBNK Gaston Fed Bncp MHC of NC (47.0) 23.5 68.6 5.6 69.0 9.1 0.0 20.3 0.0 20.3 0.0
</TABLE>
(1) Financial information is for the quarter ending March 31, 1998.
(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.
<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.
------ ----------- ------ -------- -------- -------- ------- -------- ------ --------
Provident Bank
- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
June 30, 1998 6.24 2.85 7.04 8.10 5.82 9.21 13.80 7.30 7.30 14.19
SAIF-Insured Thrifts 14.64 10.22 12.12 9.57 13.19 3.45 3.23 11.35 11.39 22.97
All Public Companies 14.64 9.93 12.67 9.40 12.86 4.08 3.67 11.40 11.25 22.51
State of NY 18.98 -0.11 21.09 5.49 34.64 4.26 4.03 11.81 11.01 23.90
Comparable Group Average 15.11 22.31 9.60 6.38 -7.05 8.65 5.97 12.09 12.45 25.09
Mid-Atlantic Companies 15.00 11.17 9.65 6.30 -5.23 8.06 6.05 11.69 11.29 25.59
Mid-West Companies 2.96 34.42 -1.74 2.28 -18.55 4.24 4.24 16.52 14.51 28.57
New England Companies 18.04 31.71 12.40 7.39 -2.88 28.45 10.80 8.20 17.20 13.00
Other Comparative Companies 31.12 78.53 23.55 12.04 NM 7.94 5.62 11.60 11.60 22.91
Comparable Group
- ----------------
Florida Companies
- -----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 46.94 78.53 44.33 29.94 NM 7.94 5.62 7.60 7.60 15.20
Mid-Atlantic Companies
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 13.55 27.57 7.33 13.64 21.53 4.84 4.84 NM 10.79 26.12
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 55.91 NM 11.59 0.48 NM 9.55 NM 7.71 7.71 16.58
SKBO First Carnegie MHC of PA (45.0) -1.04 -6.34 -0.36 -1.66 -3.17 1.08 1.08 16.80 16.80 52.20
HARS Harris Fin. MHC of PA (24.9) 13.76 20.65 6.35 -1.85 38.65 15.31 19.13 6.99 6.99 12.99
LFED Leeds Fed Bksr MHC of MD (36.3)(1) 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) 18.08 NM 7.37 6.86 -100.00 NM NM 9.47 9.47 23.98
NBCP Niagara Bancorp of NY MHC (45.4)(1) 17.88 54.04 8.64 16.02 NM 16.42 16.42 9.10 19.10 35.63
NWSB Northwest Bcrp MHC of PA (30.8) 21.81 23.17 21.28 22.34 29.65 9.77 4.76 NM 7.82 15.91
PBHC Pathfinder BC MHC of NY (45.2) 3.77 -24.17 11.80 -0.77 76.33 5.18 -10.22 8.34 8.34 14.22
PHSB Ppls Home SB, MHC of PA (45.0) 5.58 -9.41 10.44 -2.06 NM NM NM 12.25 12.25 29.66
PLSK Pulaski SB, MHC of NJ (47.0) 5.88 9.83 5.09 9.55 -90.51 5.15 5.15 11.83 11.83 28.08
SBFL SB Fngr Lakes MHC of NY (33.1) 18.72 8.91 22.19 7.51 NM 5.22 5.22 8.41 8.41 19.12
Mid-West Companies
- ------------------
JXSB Jcksnville SB, MHC of IL (45.6) 4.30 81.50 -2.85 3.79 -37.02 4.77 4.77 NM 10.49 15.70
WAYN Wayne Svgs Bks MHC of OH (48.2) 2.03 -4.37 2.17 2.16 -0.07 5.15 5.15 9.63 9.63 17.50
WCFB Wbstr Cty FSB MHC of IA (45.6) 2.53 26.12 -4.55 0.89 NM 2.80 2.80 23.41 23.41 52.50
New England Companies
- ---------------------
BRKL Brookline Bncp MHC of MA (47.0)(1) 20.39 47.73 10.17 -4.12 -4.32 NM NM NM 26.20 NM
PBCT Peoples Bank, MHC of CT (41.2) 15.70 15.68 14.63 18.91 -1.44 28.45 10.80 8.20 8.20 13.00
South-East Companies
- --------------------
GBNK Gaston Fed Bncp MHC of NC (47.0) 15.29 NM 2.76 -5.86 NM NM NM 15.59 15.59 30.61
</TABLE>
(1) Financial information is for the quarter ending March 31, 1998.
(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
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 Provident and the Peer Group. Provident's asset composition
reflects a modestly higher ratio of loans, which equaled 64.8 percent of assets
versus an average of 59.5 percent of assets for the Peer Group. Comparatively,
the Bank's cash and investments ratio was lower than the comparable ratio for
Peer Group (12.0 percent of assets versus 24.4 percent for the Peer Group) while
MBS exceeded the Peer Group average (19.6 percent of assets for the Bank versus
an average of 12.9 percent for the Peer Group). Overall, Provident's interest-
earning assets amounted to 96.4 percent of assets, which was below the
comparative Peer Group ratio of 96.8 percent.
Provident's funding liabilities reflected a funding strategy more dependent
upon retail deposits. Specifically, the Bank's deposits equaled 85.4 percent of
assets, which was above the Peer Group average of 74.0 percent. Borrowings were
utilized to a lesser degree by Provident, with the Bank and the Peer Group
posting borrowings-to-assets ratios of 3.7 percent and 10.0 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 89.1 and 84.1 percent, respectively, with the Peer Group's lower ratio
being supported by maintenance of a higher capital position. This differential
should be addressed with the Bank's offering.
A key measure of balance sheet strength for a thrift institution is its
ratio of interest-earning assets ("IEA") to interest-bearing liabilities
("IBL"). Presently, the Peer Group's IEA/IBL ratio is higher than the Bank's
ratio, based on respective ratios of 115.1 percent and 108.2 percent. The
additional capital realized from stock proceeds should serve to provide
Provident with an IEA/IBL ratio that is comparable to the level currently
maintained by the Peer Group, as the interest-free capital realized in
Provident's stock offering is expected to be deployed primarily into interest-
earning assets.
<PAGE>
RP Financial, LC.
Page 3.9
The growth rate section of Table 3.2 shows annual growth rates for key
balance sheet items. Provident'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 June 30, 1998, or the most recent
period available. Provident reported comparatively weaker growth of 6.2 percent
as compared to the Peer Group average of 15.1 percent. Although the Bank's loan
portfolio continued to expand, reduction in the level of MBS coupled with
nominal growth in the investment portfolio contributed to the Bank's relatively
modest growth levels.
Deposit growth of 8.10 percent funded most of Provident's asset growth,
which exceeded the Peer Group's deposit growth rate of 6.38 percent. The level
of borrowings increased modestly for the Bank while borrowings diminished for
most of the Peer Group companies.
Capital growth rates posted by the Bank and the Peer Group equaled positive
9.2 percent and positive 8.7 percent, respectively, as the impact of stronger
reported earnings of the Peer Group were offset by the payment of dividends.
Following the increase in capital realized from stock offering proceeds, the
Bank's capital growth rate may be diminished modestly as the enhanced earnings
levels are offset by the sharply increased equity.
Income and Expense Components
- -----------------------------
Provident and the Peer Group reported net income to average assets ratios
of 0.70 percent and 0.85 percent, respectively (see Table 3.3), based on
earnings for the most recent twelve months. The higher return posted by the
Peer Group was due to the Bank's relatively high level of operating expenses, as
Provident outperformed the Peer Group in other key areas of core operations.
Furthermore, non-operating items were not a significant factor in the operations
of either Provident or the Peer Group.
The Bank net interest income ratio is highly favorable relative to the Peer
Group, as Provident reported net interest income equal to 4.09 percent of
average assets versus an average of 3.14 percent for the Peer Group,
notwithstanding its lower pre-offering capital ratio, due to the following.
First, the Bank's higher interest income ratio is supported by the loan
composition
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended June 30, 1998
Net Interest Income Other Income G&A/Other Exp.
---------------------------- ------------------- ----------------
Loss NII Total
Net Provis. After Loan R.E. Other Other G&A Goodwill
Income Income Expense NII on IEA Provis. Fees Oper. Income Income Expense Amort.
------ ------ ------- ------ ------- ------- ---- ----- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
--------------
June 30, 1998 0.70 7.25 3.16 4.09 0.23 3.85 0.00 0.00 0.43 0.43 2.97 0.24
SAIF-Insured Thrifts 0.91 7.40 4.14 3.26 0.13 3.13 0.10 0.01 0.31 0.43 2.20 0.02
All Public Companies 0.93 7.39 4.08 3.32 0.13 3.19 0.10 0.01 0.32 0.44 2.23 0.03
State of NY 0.85 7.08 3.66 3.41 0.14 3.28 0.09 -0.01 0.29 0.37 2.19 0.05
Comparable Group Average 0.85 7.09 3.94 3.14 0.11 3.03 0.15 0.00 0.25 0.39 2.22 0.02
Mid-Atlantic Companies 0.75 7.03 3.98 3.05 0.09 2.96 0.05 0.00 0.20 0.25 2.13 0.03
Mid-West Companies 0.90 7.44 4.09 3.35 0.07 3.28 0.07 0.00 0.26 0.32 2.30 0.00
New England Companies 1.57 7.10 3.52 3.58 0.25 3.32 0.92 -0.01 0.46 1.38 2.67 0.03
Other Comparable Companies 0.69 6.88 3.92 2.96 0.12 2.83 0.06 0.01 0.30 0.00 2.22 0.02
Comparable Group
----------------
Florida Companies
-----------------
FFFL Fidelity Bcsh
MHC of FL (47.9) 0.64 7.09 4.39 2.70 0.00 2.70 0.03 0.01 0.38 0.42 2.17 0.03
Mid-Atlantic Companies
----------------------
ALLB Alliance Bank
MHC of PA (19.9) 0.77 7.25 3.86 3.39 0.07 3.32 0.00 0.01 0.23 0.24 2.41 0.00
BCSB BCSB Bankcorp
MHC of MD (38.6)(3) 0.83 6.97 3.56 3.41 0.11 3.30 0.06 0.00 0.13 0.19 2.15 0.01
SKBO First Carnegie
MHC of PA(45.0) 0.56 6.84 4.19 2.66 0.03 2.63 0.00 0.00 0.05 0.05 1.88 0.00
HARS Harris Fin.
MHC of PA (24.9) 0.83 7.10 4.71 2.38 0.08 2.31 0.07 0.04 0.24 0.35 1.76 0.11
LFED Leeds Fed Bksr
MHC of MD (36.3(1) 1.19 7.00 4.15 2.86 0.01 2.85 0.00 0.00 0.11 0.11 1.08 0.00
LIBB Liberty Bancorp
MHC of NJ (47)(3) 0.49 6.13 3.84 2.29 0.02 2.26 0.08 0.00 0.10 0.19 1.69 0.00
NBCP Niagara Bancorp of NY
MHC(45.4(1) 0.87 6.49 3.54 2.95 0.12 2.83 0.16 0.00 0.32 0.48 2.03 0.00
NWSB Northwest Bcrp
MHC of PA (30.8 0.94 7.67 4.18 3.50 0.18 3.32 0.14 -0.01 0.17 0.31 2.09 0.08
PBHC Pathfinder BC
MHC of NY (45.2) 0.75 7.35 3.63 3.72 0.14 3.58 0.03 0.00 0.42 0.44 3.06 0.16
PHSB Ppls Home SB,
MHC of PA (45.0) 0.80 7.12 3.70 3.42 0.20 3.23 0.00 0.00 0.35 0.35 2.76 0.00
PLSK Pulaski SB,
MHC of NJ (47.0) 0.54 7.23 4.18 3.05 0.07 2.98 0.07 0.00 0.05 0.12 2.15 0.00
SBFL SB Fngr Lakes
MHC of NY (33.1) 0.41 7.20 4.26 2.94 0.06 2.88 0.03 -0.07 0.23 0.20 2.52 0.00
Mid-West Companies
------------------
JXSB Jcksnville SB,
MHC of IL (45.6) 0.60 7.68 4.33 3.34 0.17 3.17 0.20 0.00 0.29 0.49 2.96 0.00
WAYN Wayne Svgs Bks
MHC of OH (48.2 0.71 7.55 4.35 3.20 0.02 3.17 0.00 0.00 0.25 0.25 2.45 0.00
WCFB Wbstr Cty FSB
MHC of IA (45.6) 1.40 7.10 3.58 3.52 0.02 3.50 0.00 -0.01 0.24 0.23 1.50 0.00
New England Companies
---------------------
BRKL Brookline Bncp
MHC of MA(47.0)(1) 1.93 7.69 3.68 4.01 0.00 4.01 0.01 0.01 0.15 0.17 1.22 0.00
PBCT Peoples Bank,
MHC of CT (41.2) 1.22 6.50 3.36 3.14 0.51 2.63 1.83 -0.02 0.78 2.58 4.12 0.07
South-East Companies
--------------------
GBNK Gaston Fed Bncp
MHC of NC(47.0 0.73 6.66 3.45 3.21 0.24 2.97 0.09 0.00 0.21 0.30 2.26 0.00
<CAPTION>
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended June 30, 1998
Non-Op. Items Yields, Costs, and Spreads
-------------- --------------------------
MEMO: MEMO:
Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------- ------- --------- -------- -------- ------- --------
Provident Bank
--------------
<S> <C> <C> <C> <C> <C> <C> <C>
June 30, 1998 0.00 0.00 7.63 3.83 3.80 3,574 34.90
SAIF-Insured Thrifts 0.07 0.00 7.51 4.75 2.76 4,316 36.77
All Public Companies 0.07 0.00 7.49 4.67 2.82 4,288 36.81
State of NY -0.14 0.00 7.66 4.23 3.43 4,700 39.19
Comparable Group Average 0.11 0.00 7.02 4.41 2.61 4,450 37.02
Mid-Atlantic Companies 0.04 0.00 6.77 4.27 2.51 4,646 36.86
Mid-West Companies 0.15 0.00 7.68 4.85 2.84 3,079 37.58
New England Companies 0.45 0.00 7.42 4.27 3.15 5,916 35.81
Other Comparable Companies 0.15 0.00 7.09 4.73 2.36 3,869 38.23
Comparable Group
----------------
Florida Companies
-----------------
FFFL Fidelity Bcsh
MHC of FL (47.9) 0.19 0.00 7.35 4.88 2.47 4,183 41.28
Mid-Atlantic Companies
----------------------
ALLB Alliance Bank
MHC of PA (19.9) 0.00 0.00 7.50 4.37 3.13 3,700 33.58
BCSB BCSB Bankcorp
MHC of MD (38.6)(3) 0.00 0.00 6.76 4.35 2.41 4,164 37.98
SKBO First Carnegie
MHC of PA(45.0) -0.18 0.00 7.07 5.14 1.93 7,663 65.46
HARS Harris Fin.
MHC of PA (24.9) 0.22 0.00 7.36 5.20 2.16 4,168 36.07
LFED Leeds Fed Bksr
MHC of MD (36.3(1) 0.00 0.00 7.14 5.08 2.06 11,074 36.81
LIBB Liberty Bancorp
MHC of NJ (47)(3) 0.00 0.00 0.00 0.00 0.00 5,804 NM
NBCP Niagara Bancorp of NY
MHC(45.4(1) 0.07 0.00 7.37 4.43 2.94 3,548 35.04
NWSB Northwest Bcrp
MHC of PA (30.8 0.05 0.00 7.90 4.66 3.24 2,962 37.87
PBHC Pathfinder BC
MHC of NY (45.2) 0.19 0.00 7.92 4.16 3.76 2,751 31.15
PHSB Ppls Home SB,
MHC of PA (45.0) 0.10 0.00 7.34 4.30 3.04 2,983 12.72
PLSK Pulaski SB,
MHC of NJ (47.0) -0.07 0.00 7.45 4.77 2.68 3,995 38.97
SBFL SB Fngr Lakes
MHC of NY (33.1) 0.12 0.00 7.47 4.73 2.74 2,936 39.81
Mid-West Companies
------------------
JXSB Jcksnville SB,
MHC of IL (45.6) 0.33 0.00 8.01 4.94 3.07 2,021 41.57
WAYN Wayne Svgs Bks
MHC of OH (48.2 0.11 0.00 7.83 4.84 2.99 2,594 33.99
WCFB Wbstr Cty FSB
MHC of IA (45.6) 0.00 0.00 7.21 4.76 2.45 4,624 37.20
New England Companies
---------------------
BRKL Brookline Bncp
MHC of MA(47.0)(1) 0.01 0.00 7.80 4.79 3.01 9,182 35.07
PBCT Peoples Bank,
MHC of CT (41.2) 0.89 0.00 7.04 3.75 3.29 2,650 36.55
South-East Companies
--------------------
GBNK Gaston Fed Bncp
MHC of NC(47.0 0.12 0.00 6.82 4.57 2.25 3,555 35.18
</TABLE>
(1) Financial information is for the quarter ending March 31, 1998.
(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 3.11
which includes a higher level of high risk-weight loans. As a result, the yield
on assets was 7.63 percent for the Bank versus an average of 7.02 percent for
the Peer Group. Likewise, Provident's favorable deposit composition including a
high proportion of low-cost transaction and savings accounts contributes to the
Bank's relatively low cost of funds (3.83 percent for Provident versus an
average of 4.41 percent for the Peer Group).
While the Bank's strategy has favorably impacted the net interest income
ratio, operating expenses are above the Peer Group and industry averages. For
the period covered in Table 3.3, the Bank's and the Peer Group's operating
expense to average assets ratios approximated 2.97 percent and 2.22 percent,
respectively, before including the amortization of intangible assets.
Additionally, intangible amortization was higher for Provident, equal to 0.24
percent of assets versus an average of 0.02 for the Peer Group, reflecting
faster amortization for the Bank as well as a higher level of intangible assets.
As discussed in Section I, Provident's operating expense ratio is relatively
high in comparison to industry averages as: (1) the Bank has a deposit base
heavily weighted toward transaction accounts which are costly to attract and
service but which favorably influence the cost of funds; (2) management
continues to invest in the infrastructure it believes is required to effectively
compete with the local commercial banks; and (3) the Bank maintains a service-
oriented customer base and offers extended and weekend hours at its branches.
Operating expenses are expected to increase in the future as a result of: (1)
benefit plan expenses; (2) the costs of being a public company; (3) the expense
of on-going expansion of products and services including the introduction of
trust services; (4) the expense (initial and on-going) of converting to a
commercial bank data processing system; and (5) due to continued branch
expansion which will result in additional staffing, lease, and operating costs.
Sources of non-interest operating income were a higher contributor to the
Bank's earnings in comparison to the Peer Group, with such income amounting to
0.43 percent and 0.39 percent of Provident's and the Peer Group's average
assets. Taking non-interest operating income into account in comparing the
Bank's and the Peer Group's earnings, Provident's efficiency ratio (operating
expenses, as a percent of the sum of non-interest operating income and net
interest income) of 71.0 percent was less favorable than the Peer Group's
efficiency ratio of 63.5 percent.
<PAGE>
RP Financial, LC.
Page 3.12
Loss provisions were a larger factor in the Bank's earnings, amounting to
0.23 percent and 0.11 percent of average assets for Provident and the Peer
Group, respectively. The Bank's higher provisions reflect the growth in higher
risk weight lending.
Provident did not report any non-operating items for the most recent
trailing twelve month period while non-operating income for the Peer Group
approximated 11 basis points on average assets.
The Bank's and the Peer Group's pre-tax earnings were similarly impacted by
taxes, with Provident and the Peer Group posting effective tax rates of 34.9
percent and 37.0 percent, respectively.
Loan Composition
- ----------------
Table 3.4 presents data related to the loan composition of Provident and
the Peer Group. In broad terms, Provident's loan portfolio composition compared
closely to the Peer Group's portfolio. Specifically, residential mortgages and
MBS comprised 70.57 percent of loans and MBS for Provident and 70.90 percent of
loans and MBS for the Peer Group. In this regard, the Bank's lower ratio of
residential mortgage loans was substantially offset by the comparatively higher
ratio of MBS.
The Bank has diversified its loan portfolio to include high risk-weight
loans to a modestly greater extent than has the Peer Group. Provident's lending
diversification has consisted primarily of commercial real estate/multi-family
loans and home equity/consumer loans. The Peer Group companies reflect a
similar pattern of diversification. Overall, the Bank maintains a higher ratio
of risk-weighted assets to total assets in comparison to the Peer Group, equal
to 56.20 percent and 52.84 percent, respectively.
Credit Risk
- -----------
Table 3.5 reflects the relative credit risk factors of Provident and the
Peer Group companies. In the financial analysis of the Bank included in Section
One, we noted that Provident's asset quality has been relatively favorable as
the level of non-performing assets has been moderate and the level of credit
related losses has been low over the last several years. The
<PAGE>
RP FINANCIAL, LC.
- --------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of June 30, 1998
Portfolio Composition as a Percent of MBS and Loans
----------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/
Institution MBS Family & Land Comm RE Business Consumer Assets
----------- ------ ------ ------ ------- -------- -------- ------
(%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
Provident Bank 23.21% 47.36% 4.85% 12.35% 4.19% 10.92% 56.20%
Comparable Group Average 16.67% 54.23% 2.06% 13.93% 4.58% 8.69% 52.84%
--------------
ALLB Alliance Bank MHC of PA (19.9) 13.61% 69.80% 0.59% 13.82% 0.16% 2.62% 42.86
BRKL Brookline Bncp MHC of MA (47.0)(1) 0.00% 18.64% 2.73% 70.68% 7.95% 0.30% 71.31
SKBO First Carnegie MHC of PA (45.0) 44.34% 16.82% 0.39% 20.65% 17.23% 0.36% 32.91
GBNK Gaston Fed Bncp MHC of NC (47.0) 5.64% 77.88% 2.39% 8.73% 4.26% 1.58% 59.96
HARS Harris Fin. MHC of PA (24.9) 38.74% 45.82% 1.30% 6.01% 1.19% 6.93% 54.44
JXSB Jcksnville SB, MHC of IL (45.6) 9.10% 56.67% 1.03% 8.55% 8.10% 16.57% 69.58
LIBB Liberty Bancorp MHC of NJ (47) 0.91% 81.28% 8.93% 7.21% 0.66% 0.93% 41.44
NBCP Niagara Bancorp of NY MHC (45.4)(1) 31.83% 44.47% 0.17% 16.49% 0.51% 6.55% 49.51
NWSB Northwest Bcrp MHC of PA (30.8) 10.11% 69.85% 4.17% 1.18% 5.39% 10.35% 51.94
PBCT Peoples Bank, MHC of CT (41.2) 5.72% 44.33% 3.54% 15.77% 13.16% 17.48% 81.55
PHSB Ppls Home SB, MHC of PA (45.0) 23.50% 36.79% 0.23% 1.07% 2.01% 36.52% 44.56
SBFL SB Fngr Lakes MHC of NY (33.1) 27.70% 48.94% 1.26% 9.07% 2.04% 11.19% 42.11
WAYN Wayne Svgs Bank MHC of OH (48.2) 1.90% 84.53% 1.52% 5.69% 1.46% 4.69% 54.02
WCFB Wbstr Cty FSB MHC of IA (45.6) 20.26% 63.43% 0.56% 10.14% 0.00% 5.66% 43.62
</TABLE>
(1) Financial information is for the quarter ending March 31, 1998.
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.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 3.5
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of June 30, 1998 or Most Recent Date Available
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>
Provident Bank 0.05 0.90 1.30 1.03 79.27 74.52 859 0.20
SAIF-Insured Thrifts 0.25 0.63 0.67 0.80 203.72 148.06 270 0.10
All Public Companies 0.23 0.63 0.69 0.87 207.24 158.07 304 0.09
State of NY 0.09 0.71 1.02 1.02 157.93 121.97 534 0.11
Comparable Group Average 0.17 0.52 0.58 0.88 190.77 157.33 518 0.15
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)(1) 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(1) 0.00 0.03 0.05 0.29 560.82 560.82 0 0.00
LIBB Liberty Bancorp MHC of NJ (47) 0.05 0.35 0.47 0.45 95.89 82.98 0 0.00
NBCP Niagara Bancorp of NY MHC (45.4(1) 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 0.82 169.80 123.26 827 0.00
PBHC Pathfinder BC MHC of NY (45.2) 0.58 1.30 1.09 0.63 57.58 32.06 129 0.40
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 1.31 199.84 173.78 134 0.54
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 March 31, 1998.
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
Bank's asset quality is relatively favorable although the level of non-
performing assets, chargeoffs, and coverage ratios are modestly less favorable
than those reported by the Peer Group. As shown in Table 3.5, Bank's ratio of
non-performing assets and accruing loans that are more than 90 days past due
equaled 0.90 percent of assets, versus a comparative ratio of 0.52 percent for
the Peer Group. Similarly, the Bank and the Peer Group's ratio of non-
performing loans to total loans was also above the Peer Group average, equal to
1.30 percent and 0.58 percent of loans, respectively. While the reserve ratio
as a percent of loans outstanding was above the Peer Group average (1.03 percent
versus 0.88 percent for the Peer Group), the reserve coverage ratios as a
percent of non-performing loans and assets were below the Peer Group average,
owing to the Bank's comparatively higher delinquency ratios. As of June 30,
1998, reserves as a percent of NPAs equaled 74.52 percent, which was well below
the Peer Group average of 157.33 percent. Moreover, Provident's chargeoffs were
also modestly above the Peer Group average.
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, Provident's interest rate risk characteristics were
considered to be slightly less favorable than the Peer Group's. In particular,
Provident'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, Provident'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 Provident 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
Provident or the Peer Group were viewed as having significant interest rate risk
exposure in their respective
<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 June 30, 1998 or Most Recent Date Available
<TABLE>
<CAPTION>
Balance Sheet Measures
--------------------------
Non-Earn.
Equity/ IEA/ Assets/
Institution Assets IBL Assets
- ----------- ------ ------ ------
(%) (%) (%)
<S> <C> <C> <C>
Provident Bank 7.3 108.2 3.6
SAIF-Insured Thrifts 13.1 114.3 3.3
All Public Companies 12.8 113.7 3.4
State of NY 12.4 114.6 3.4
Comparable Group Average 12.9 116.1 3.3
Comparable Group
- ----------------
ALLB Alliance Bank MHC of PA (19.9) 10.7 109.0 3.1
BCSB BCSB Bankcorp MHC of MD (38.6) 8.0 141.5 1.7
BRKL Brookline Bncp MHC of MA(47.0)(1) 33.2 151.7 1.3
FFFL Fidelity Bcsh MHC of FL (47.9) 6.0 106.9 3.7
SKBO First Carnegie MHC of PA(45.0) 16.8 119.7 3.2
GBNK Gaston Fed Bncp MHC of NC(47.0 20.3 125.1 2.3
HARS Harris Fin. MHC of PA (24.9) 7.3 106.9 3.4
JXSB Jcksnville SB,MHC of IL (45.6) 10.5 109.7 4.3
LFED Leeds Fed Bksr MHC of MD (36.3(1) 16.5 119.9 2.4
LIBB Liberty Bancorp MHC of NJ (47) 13.1 120.5 1.4
NBCP Niagara Bancorp of NY MHC(45.4(1) 10.1 110.6 2.7
NWSB Northwest Bcrp MHC of PA (30.8 7.7 107.7 2.8
PBHC Pathfinder BC MHC of NY (45.2) 10.1 106.1 7.7
PBCT Peoples Bank, MHC of CT (41.2) 8.1 104.2 7.0
PHSB Ppls Home SB, MHC of PA (45.0) 12.7 112.2 3.0
PLSK Pulaski SB, MHC of NJ (47.0) 11.8 110.9 3.0
SBFL SB Fngr Lakes MHC of NY (33.1) 8.5 106.3 3.9
WAYN Wayne Svgs Bks MHC of OH (48.2 9.5 106.8 3.9
WCFB Wbstr Cty FSB MHC of IA (45.6) 23.4 130.3 1.5
<CAPTION>
Quarterly Change in Net Interest Income
----------------------------------------------------------
Institution 06/30/98 03/31/98 12/31/97 09/30/97 06/30/97 03/31/97
- ----------- -------- -------- -------- -------- -------- --------
(change in net interest income is annualized in basis points)
<S> <C> <C> <C> <C> <C> <C>
Provident Bank -2 -7 -4 -11 10 14
SAIF-Insured Thrifts -4 -0 -3 -4 2 3
All Public Companies -3 -1 -3 -4 1 3
State of NY -7 -5 -1 -4 -3 -3
Comparable Group Average -4 -5 -9 1 -3 9
Comparable Group
- ----------------
ALLB Alliance Bank MHC of PA (19.9) 8 -24 11 -2 11 14
BCSB BCSB Bankcorp MHC of MD (38.6) -13 -12 NA NA NA NA
BRKL Brookline Bncp MHC of MA(47.0)(1) NA -4 -1 4 -41 NA
FFFL Fidelity Bcsh MHC of FL (47.9) -29 -13 -25 -6 -13 1
SKBO First Carnegie MHC of PA(45.0) -4 1 2 -4 14 34
GBNK Gaston Fed Bncp MHC of NC(47.0 43 -72 -8 6 12 NA
HARS Harris Fin. MHC of PA (24.9) -8 40 -28 -8 1 -9
JXSB Jcksnville SB,MHC of IL (45.6) 0 17 -22 11 -30 6
LFED Leeds Fed Bksr MHC of MD (36.3(1) NA -5 -1 -11 4 13
LIBB Liberty Bancorp MHC of NJ (47) NA NA -32 6 -2 NA
NBCP Niagara Bancorp of NY MHC(45.4(1) NA -12 -2 -8 -3 8
NWSB Northwest Bcrp MHC of PA (30.8 -6 8 -13 -19 7 8
PBHC Pathfinder BC MHC of NY (45.2) 7 -14 -12 5 4 25
PBCT Peoples Bank, MHC of CT (41.2) -24 18 -34 23 -30 20
PHSB Ppls Home SB, MHC of PA (45.0) -9 -17 4 28 0 NA
PLSK Pulaski SB, MHC of NJ (47.0) 1 -1 -2 9 19 -10
SBFL SB Fngr Lakes MHC of NY (33.1) -7 -7 2 -5 -3 -11
WAYN Wayne Svgs Bks MHC of OH (48.2 2 -4 -5 4 6 -6
WCFB Wbstr Cty FSB MHC of IA (45.6) -18 7 4 -9 -9 30
</TABLE>
(1) Financial information is for the quarter ending March 31, 1998.
NA=Change is greater than 100 basis points during the quarter.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources
we believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.17
net interest margins. 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 Provident'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
Provident. 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 Provident.
<PAGE>
RP Financial, LC.
Page 4.1
IV. VALUATION ANALYSIS
Introduction
- ------------
This chapter presents the valuation analysis and methodology used to
determine Provident'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) a peer group of comparable publicly-traded institutions is
selected; (2) a financial and operational comparison of the subject company to
the peer group is conducted to discern key differences; and (3) the 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
<PAGE>
RP Financial, LC.
Page 4.2
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 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 Provident, the market value of the stocks of public MHC
institutions, or Provident'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
<PAGE>
RP Financial, LC.
Page 4.3
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 Provident 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 condition are noted as follows:
. Overall A/L Composition. While both fund lending primarily with retail
-----------------------
deposits, the Bank's IEA composition reflects a higher concentration of
loans and MBS and lower proportion of investments. Provident maintains a
modestly higher level of diversification in to higher risk-weight assets
and as a result, maintains a higher risk-weighted assets to total assets
ratio. The Peer Group is currently supplementing deposits with higher
borrowings utilization, while the Bank currently relies more heavily on
deposits. Overall, as a percent of assets, the Bank maintained a higher
IEA level and IBL level, 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 disadvantage.
. Credit Quality. Credit quality measures are less favorable for the Bank
--------------
based on its higher ratio of NPAs, modestly greater level of
diversification into higher risk-weight assets and lower reserve
coverage ratio as a percent of NPAs. As a result of the foregoing, the
Bank's credit risk profile appears to be unfavorable relative to the
Peer Group.
. Balance Sheet Liquidity. Provident currently maintains a lower level
-----------------------
of cash and investments but a higher level of MBS. A portion of
Provident's MBS and investments are classified as available for sale.
The infusion of the stock proceeds will initially increase the Bank's
level of liquid assets pending investment of the proceeds into loans and
other longer-term investments. Provident appears to have greater current
borrowings capacity than the Peer Group due to the smaller balance of
borrowed funds as of the most recent period.
<PAGE>
RP Financial, LC.
Page 4.4
. Equity Capital. The Bank operates with a lower pre-offering equity
--------------
capital ratio than the Peer Group; even with the pro forma level of
equity capital, the Bank will have less capitalization and resulting
leverage capacity.
On balance, we believe a slight downward adjustment for the Bank is
warranted.
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.
. Reported Earnings. Provident reported lower profitability than the Peer
-----------------
Group, primarily reflecting the Bank's comparatively higher operating
expenses.
. Core Earnings. On a core basis, adjusting for non-operating items for
-------------
the Peer Group (Provident had no non-operating items), the Bank remains
at a disadvantage. While management believes the infrastructure is in
place to generate higher yielding loans and growth, the Bank will also be
incurring some additional expenses related to being a public company and
its branching and diversification strategies.
. Interest Rate Risk. Provident's perceived comparable interest rate risk
------------------
posture should be partially moderated by the anticipated redeployment of
the stock proceeds into interest-earning assets.
. Credit Risk. Provident is believed to have greater credit risk exposure
-----------
based on the higher level of NPAs and lower reserve coverage, and higher
proportion of high risk-weight loans.
. 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 may diminish the foregoing benefits. The full amortization of
the Bank's intangible assets in three years should provide some increased
earnings benefit.
. Return on Equity. Following the infusion of stock proceeds, the Bank's
----------------
pro forma capital position will be comparable to the Peer Group's
equity-to-assets ratio.
<PAGE>
RP Financial, LC.
Page 4.5
Provident's pro forma core ROE is anticipated to be consistent with the
Peer Group average on a fully-converted basis.
Overall, Provident's lower profitability and the expected growth in
operating expenses, coupled with a higher credit risk profile, led to a slight
downward valuation adjustment for profitability, growth and viability of
earnings.
3. Asset Growth
------------
Provident exhibited lower asset growth rate relative to the Peer Group
during the period covered in our comparative analysis (positive 6.2 percent
versus positive 15.1 percent for the Peer Group). The Bank will be seeking to
sustain the historical growth trends through branching and possible
acquisitions. While the Bank's current capacity to sustain a higher growth rate
than the Peer Group is somewhat limited by its lower capital position,
Provident's pro forma capital position will provide the Bank with increased
leverage capacity, although at a lesser degree than for 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 greater New
York 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. Provident's primary market area for deposits and loans is considered to
be in Rockland County and contiguous areas. Demographic and economic trends and
characteristics in the Bank's primary market area are relatively favorable to
the primary market areas served by the Peer Group companies (see Table 4.1).
Additionally, Provident maintains a relatively strong share of the deposit
market in comparison to the Peer Group, indicating a competitive advantage for
the Bank in terms of the degree of competition faced for deposits.
On balance, we concluded that a slight upward adjustment was warranted for
the Bank's primary market area.
<PAGE>
RP Financial, LC.
<TABLE>
<CAPTION>
Table 4.1
Peer Group Market Area Comparative Analysis
Per Capita Incom
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%
Provident Savings Bank Rockland 265 280 290 5.4% 3.5% 34.9 21,294 115.1% 12.2%
(1) Total institution deposits in headquarters county as percent of total county deposits.
</TABLE>
Sources: CACI, SNL Securities
<PAGE>
RP Financial, LC.
Page 4.7
5. Dividends
---------
While the Board has not indicated its intention to commence payment of a
cash dividend following the stock offering, Provident'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. Thirteen
out of the nineteen institutions in the Peer Group pay regular cash dividends,
with implied dividend yields ranging from 1.47 percent to 4.17 percent. Peer
Group companies which completed stock offerings during 1998 accounted for four
out of the six companies that did not reflect payment of a cash dividend. The
average dividend yield on the stocks of the Peer Group institutions was 1.65
percent as of September 4, 1998, representing an average earnings payout ratio
of 30.31 percent (see Table 4.6). As of September 4, 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 2.40 percent
and an average payout ratio of 36.28 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 Provident 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 Provident MHC may require
the minority stockholders' ownership interest to be reduced in a "second step"
conversion to reflect the cumulative waived dividend account. The majority of
public MHC institutions in the Peer Group waive their rights to the dividends.
The Peer Group includes three "grandfathered" institutions, i.e., those subject
to OTS oversight who formed MHCs prior to February 1, 1995, and thus are not
subject to the current dividend waiver policy, except in the case of special or
"excessive" regular dividends. Provident has indicated that the MHC may likely
also waive its right to the dividend, thus minority shareholders would become
subject to the dilutive impact of the dividend waiver policy in a subsequent
second step conversion.
<PAGE>
RP Financial, LC.
Page 4.8
On balance, we concluded that a slight downward adjustment was warranted
for purposes of dividends relative to the Peer Group.
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 $9.9
million to $640.8 million as of September 4, 1998, with average and median
market values of $80.6 million and $23.8 million, respectively. The public
shares issued and outstanding to the public shareholders of the Peer Group
members ranged from approximately 0.65 to 27.6 million, with average and median
shares outstanding of approximately 5.2 million and 1.8 million, respectively.
The Bank's minority stock offering is expected to result in shares outstanding
and market capitalization will be in the range exhibited by the Peer Group
average and median. Overall, we concluded no 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, i.e., those which are
listed on an exchange or on NASDAQ, is easily measurable, and is tracked by
investment firms, related organizations and by electronic means. Exhibit IV-1
provides pricing and financial data on all
<PAGE>
RP Financial, LC.
Page 4.9
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 performance
of the overall stock market has been highly mixed over the past year.
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
<PAGE>
RP Financial, LC.
Page 4.10
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 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
<PAGE>
RP Financial, LC.
Page 4.11
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 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
<PAGE>
RP Financial, LC.
Page 4.12
news of a loss of jobs in the manufacturing sector and stocks moved higher as
technology issues rallied. Both bond and stock prices benefited 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.
Stocks recovered in early-May 1998, as first quarter economic data
reflected a strong pace of economic expansion with declining inflation. The
favorable economic data powered the DJIA to a new high in early-May, while the
yield on the 30-year bond move back below 6.0 percent. Uncertainty over the
possibility of a rate increase by the Federal Reserve provided for a narrow
trading range through mid-May, while the announced merger between Chrysler and
Daimler-Benz had little impact on the overall market. The stock market reacted
positively to the Federal's decision to leave interest rates at its mid-May
meeting, although the rally was stalled by earnings concerns in the technology
sector. Economic turmoil in Asia and Russia's faltering economy caused stocks
to slide further at the end of May.
Stocks traded in a narrow range in early-June 1998, while bond prices
moved higher following remarks by the Federal Reserve Chairman that indicated an
increase in interest rates was not imminent. Anxiety over Asia's financial woes
caused a 207 point one-day sell-off in the Dow Jones Industrial Average ("DJIA")
on June 15, 1998, while bond prices moved
<PAGE>
RP Financial, LC.
Page 4.13
higher as investors moved funds out of stocks and into dollar-denominated U.S.
bonds. The rally in the bond market pushed the 30-year Treasury bond yield down
to 5.58 percent on June 15, 1998, which was the lowest yield recorded since the
Treasury Department began issuing 30-year fixed maturity securities in 1977.
Stocks rebounded on news that the U.S. intervened in the currency market to
support the yen; however, the upturn was cut-short by ongoing concerns about
Asia's financial problems. In late-June, money flowing into mutual funds and a
rebound in technology stocks provided for a generally positive stock market
environment.
Second quarter earnings dominated stock market activity through most
of July. In general, stocks moved higher during the first half of July on the
strength of some favorable second quarter earnings, particularly among the
financial and technology stocks. Reflecting the positive outlook for earnings
during the balance of 1998, both the DJIA and NASDAQ established new highs in
mid-July. However, the stock market rally was not sustained during the latter
part of July, as stocks declined sharply following warnings by the Federal
Reserve Chairman of relatively high trading levels for stocks in general and
disappointing second quarter earnings posted by some of the blue chip stocks.
Slower than expected GDP growth for the second quarter of 1998 and
economic turmoil in Asia and Russia negatively impacted the stock market in
early-August 1998, which culminated with a 288 point decline in the DJIA on
August 4, 1998. Stocks rebounded briefly in mid-August, which was attributed to
bargain hunting by investors and the Federal Reserve's decision to leave
interest rates unchanged. Ongoing negative new in foreign financial markets,
most notably with respect to economic instability in Russia, pulled the market
lower in late-August. The sell-off peaked on August 31, 1998, with a 513 point
decline in the DJIA which served to wipe the gains for the year in the DJIA.
While the DJIA rebounded strongly on September 1, 1998, with a gain of more than
200 points, much of this recovery evaporated in the sell-off which continued for
the balance of the week. On September 4, 1998, the DJIA closed at 7,640.25,
which represents a decline of 268.0 points or 3.4 percent from the beginning of
the year.
Similar to the overall stock market, the market for thrift stocks has
been mixed during the past twelve months. Stable interest rates and acquisition
news sustained provided for
<PAGE>
RP Financial, LC.
Page 4.14
a positive market for thrift issues in early-September 1997. 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, 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
<PAGE>
RP Financial, LC.
Page 4.15
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 prices drifted lower during the first half of June 1998,
despite lower interest rates and the ongoing trend of consolidation occurring
among banks and thrifts. In late-June, the positive trend in the overall stock
market lifted thrift prices higher as well. Thrift stocks continued to move
higher during the first half of July, reflecting generally favorable second
quarter earnings and the strength of the overall stock market. Thrift stocks
followed the general stock market lower in late-July, with the sell-off in
thrift issues becoming more pronounced following congressional testimony by the
Federal Reserve Chairman that indicated inflation was
<PAGE>
RP Financial, LC.
Page 4.16
more of a concern than a recession. Accordingly, expectations of a near term
interest rate cut by the Federal Reserve were substantially eliminated.
The decline in thrift issues sharpened during August 1998, as
financial stocks fell out of favor with investors. A continued flattening of
the yield curve and the possibility that the economic turmoil in foreign markets
would translate into a slow down in domestic lending were noted as reasons for
the unloading of financial stocks. In late-August, many of the money-center
banks disclosed losses on investments in foreign markets, particularly with
respect to Russia, which indiscriminately pushed financial stocks in general
lower. A 5.2 percent decline was recorded in the SNL Index for all publicly-
traded thrifts on August 31, 1998, versus a comparative 6.4 percent decline
recorded in the DJIA. Although thrift stock recovered somewhat the following
day, thrift issues trended lower for the balance of the week. On September 4,
1998, the SNL Index for all publicly-traded thrifts closed at 622.5, a decline
of 10.1 percent from one year ago and a decline of 23.5 percent year-to-date.
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.
<PAGE>
RP Financial, LC.
Page 4.17
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. During the first
half of 1998, the positive market environment for converting thrift issues
remained intact. In recent months, the sell-off in thrift stocks has been
experienced by converting issues as well. The negative investor sentiment for
converting thrifts has intensified in recent weeks, as four of the seven
conversions completed during the past three months are currently trading below
their IPO prices. As shown in Table 4.2, the average one week change in price
for conversion offerings completed during the latest three month period ending
September 4, 1998 equaled positive 15 percent. However, the one week prices
shown for the recent conversions is not representative of their current trading
levels, as those issues have generally declined in price in subsequent trading
activity. The average pro forma price/tangible book and core price/earnings
ratios of the recent conversions was 84.01 percent and 20.32 times,
respectively.
In examining the current pricing characteristics of institutions
completing their conversions during the last three months (see Table 4.3), we
note there exists a considerable difference in 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
84.01 percent reflects a discount of 35 percent from the average P/B ratio of
all publicly-traded thrifts (equal to 128.54 percent), and the average core P/E
ratio of 20.32 times reflects a premium of 14 percent from the all public
average core P/E ratio of 17.83 times. The pricing ratios of the higher
capitalized but lower earning recently converted thrifts (with resulting lower
return on equity measures) suggest that the investment community has determined
to discount their stocks on a book basis until the earnings improve through
redeployment and leveraging of the proceeds over the longer term.
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, although
all of the recent MHC offerings completed their transactions well before the
steep market sell-off in August and many are trading
<PAGE>
RP Financial, LC.
Table 4.2
Pricing Characteristics and After-Market Trends
Recent Conversions Completed (Last Three Months)
<TABLE>
<CAPTION>
Pre-Conversion Data
------------------------------------
Institutional Information Financial Info. Asset Quality Offering Information
- ------------------------------------------------------ ------------------------------------ -----------------------------
Conversion Equity/ NPAs/ Res. Gross % of Exp./
State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc.
----- ---------- ------ ------ ------- ------ ---- ------- ----- ------
Institution ($Mil) (%) (%)(2) (%) ($Mil.) (%) (%)
- --------------------------- ----- ---------- ------ ------ ------- ------ ---- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
- --------------------
CFS Bancorp, Inc. IN* 07/24/98 CITZ $1,267 7.68% 0.97% 43% $178.5 132% 1.8%
Carnegie Financial Corp. PA 07/13/98 Pink 17 7.05% 3.12% 233% 2.4 132% 10.9%
United Community Financial OH 07/09/98 UCFC 1,049 13.73% 0.98% 59% 334.7 132% 1.3%
PCB Holding Company IN 07/02/98 Pink 22 9.51% 0.00% N.M. 4.0 132% 7.9%
Hudson River Bancorp NY* 07/01/98 HRBT 665 10.13% 2.66% 46% 173.4 132% 1.7%
First Kansas Financial Corp KS 06/29/98 FKAN 94 7.36% 0.05% 398% 15.5 132% 3.2%
Anson Bancorp, Inc. NC 06/26/98 Pink 21 18.46% 1.25% 37% 5.9 89% 8.3%
Averages - Standard Conversions: $448 10.56% 1.29% 136% $102.0 126% 5.0%
Medians - Standard Conversions: $ 94 9.51% 0.98% 53% $ 15.5 132% 3.2%
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. LA* 07/20/98 HSTD $ 62 9.72% 0.97% 43% $ 11.2 132% 4.1%
PSB Bancorp PA* 07/17/98 PSBI 134 11.58% 1.97% 9% 16.1 115% 3.0%
Thistle Group Holdings PA 07/14/98 THTL 281 10.41% 0.27% 133% 78.6 100% 1.7%
Averages - 2nd Step Conversions: $159 10.57% 1.07% 62% $ 35.3 116% 2.9%
Medians - 2nd Step Conversions: $134 10.41% 0.97% 43% $ 16.1 115% 3.0%
Averages - All Conversions: $361 10.56% 1.22% 111% $ 82.0 123% 4.4%
Medians - All Conversions: $114 9.93% 0.98% 46% $ 15.8 132% 3.1%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pro Forma Data
Contribution to ------------------------------------------
Institutional Information Charitable Found Insider Purchases Pricing Ratios(4) Financial Charac.
- ---------------------------- ---------------- --------------------- --------------------- ------------------
Benefit Plans
------------- Initial
% of Recog. Mgmt & Dividend Core
Institution Form Offering ESOP Plans Dirs. Yield P/TB P/E(5) P/A ROA TE/A ROE
- --------------------------- ----- --------- ---- ----- ------ -------- ------ ------ ----- ---- ----- ----
(%) (%) (%) (%)(3) (%) (%) (x) (%) (%) (%) (%)
- --------------------------- ----- --------- ---- ----- ------ -------- ------ ------ ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
- --------------------
CFS Bancorp, Inc. Stock 1.70% 8.0% 4.0% 3.3% 0.00% 91.9% 28.0x 16.0% 0.6% 16.3% 3.6%
Carnegie Financial Corp. N.A. N.A. 8.0% 4.0% 12.8% 0.00% 79.2% N.M. 12.9% N.M. 16.3% N.M.
United Community Financial Stock 5.00% 8.0% 4.0% 0.1% 0.00% 80.2% 17.4 25.9% 1.5% 32.3% 4.6%
PCB Holding Company N.A. N.A. 0.0% 4.0% 6.7% 0.00% 71.0% 22.2 15.6% 0.7% 21.9% 3.2%
Hudson River Bancorp N.A. N.A. 8.0% 4.0% 1.6% 0.00% 82.0% 21.4 21.9% 0.9% 26.7% 3.3%
First Kansas Financial Corp N.A. N.A. 8.0% 4.0% 5.7% 0.00% 77.2% 16.3 14.4% 0.9% 18.7% 4.7%
Anson Bancorp, Inc. N.A. N.A. 0.0% 4.0% 9.2% 0.00% 64.7% 19.9 22.2% 1.1% 34.3% 3.3%
Averages - Standard Conversions: N.A. N.A. 5.7% 4.0% 5.6% 0.00% 78.0% 20.9x 18.4% 1.0% 23.8% 3.8%
Medians - Standard Conversions: N.A. N.A. 8.0% 4.0% 5.7% 0.00% 79.2% 20.7x 16.0% 0.9% 21.9% 3.5%
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. N.A. N.A. 8.0% 4.0% 2.9% 2.00% 96.1% 28.2x 20.8% 0.7% 21.7% 3.4%
PSB Bancorp N.A. N.A. 8.0% 4.0% 3.3% 0.00% 106.3% 27.1 21.1% 0.8% 19.8% 3.9%
Thistle Group Holdings N.A. N.A. 8.0% 4.0% 5.6% 0.00% 92.7% 19.0 25.8% 1.4% 27.8% 4.9%
Averages - 2nd Step Conversions: N.A. N.A. 8.0% 4.0% 3.9% 0.67% 98.4% 24.8x 22.6% 1.0% 23.1% 4.1%
Medians - 2nd Step Conversions: N.A. N.A. 8.0% 4.0% 3.3% 0.00% 96.1% 27.1x 21.1% 0.8% 21.7% 3.9%
Averages - All Conversions: N.A. N.A. 6.4% 4.0% 5.1% 0.20% 84.1% 22.2x 19.7% 1.0% 23.6% 3.9%
Medians - All Conversions: N.A. N.A. 8.0% 4.0% 4.4% 0.00% 81.1% 21.4x 20.9% 0.9% 21.8% 3.6%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Post-IPO Pricing Trends
--------------------------------------------------------
Institutional Information Closing Price:
- ---------------------------- --------------------------------------------------------
First After After
IPO Trading % First % First %
Institution Price Day Change Week(6) Change Month(7) Change
- --------------------------- ------ ------- ------ ------- ------ -------- ------
($) ($) (%) ($) (%) ($) (%)
- --------------------------- ------ ------- ------ ------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
- --------------------
CFS Bancorp, Inc. $10.00 $11.44 14.4% $10.81 8.1% $10.00 0.0%
Carnegie Financial Corp. 10.00 11.81 18.1% 10.25 2.5% 10.94 9.4%
United Community Financial 10.00 15.00 50.0% 16.00 60.0% 15.75 57.5%
PCB Holding Company 10.00 11.50 15.0% 12.12 21.2% 10.88 8.7%
Hudson River Bancorp 10.00 12.56 25.6% 13.50 35.0% 13.38 33.8%
First Kansas Financial Corp 10.00 12.31 23.1% 12.25 22.5% 11.63 16.3%
Anson Bancorp, Inc. 10.00 12.00 20.0% 12.06 20.6% 12.37 23.7%
Averages - Standard Conversions: 10.00 $12.37 23.7% $12.43 24.3% $12.13 21.3%
Medians - Standard Conversions: 10.00 $12.00 20.0% $12.12 21.2% $11.63 16.3%
Second-Step Conversions
- -----------------------
Homestead Financial, Inc. 10.00 $ 9.31 -6.9% $ 9.25 -7.5% $ 8.44 -15.6%
PSB Bancorp 10.00 9.19 -8.1% 9.13 -8.8% 7.81 -21.9%
Thistle Group Holdings 10.00 9.94 -0.6% 9.81 -1.9% 9.00 -10.0%
Averages - 2nd Step Conversions: 10.00 $ 9.48 -5.2% $ 9.40 -6.1% $ 8.42 -15.8%
Medians - 2nd Step Conversions: 10.00 $ 9.31 -6.9% $ 9.25 -7.5% $ 8.44 -15.6%
Averages - All Conversions: 10.00 $11.51 15.1% $11.52 15.2% $11.02 10.2%
Medians - All Conversions: 10.00 $11.66 16.6% $11.44 14.4% $10.91 -15.6%
- ------------------------------------------------------------------------------------------------------
</TABLE>
Note: * - Appraisal performed by RP Financial; "NT" -Not Traded;
"NA" - Not Applicable, Not Available.
(1) Non-OTS regulated thrift.
(2) As reported in summary pages of prospectus.
(3) As reported in prospectus.
(4) Does not take into account the adoption of SOP 93-6.
(5) Excludes impact of special SAIF assessment on earnings.
(6) Latest price if offering less than one week old.
(7) Latest price if offering more than one week but less
than one month old.
(8) Simultaneously converted to commercial bank charter.
September 4, 1998
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.3
Market Pricing Comparatives
Prices As of September 4, 1998
<TABLE>
<CAPTION>
Per Share Data
Market ---------------
Capitalization Core Book Pricing Ratios(3) Dividends(4)
---------------- --------------- -----------------------------------------------------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
- --------------------- -------- ------- ------- ------- ------- ------- ------- ------- -------- -------- ------ --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 16.07 135.28 0.89 13.33 17.49 126.88 16.12 131.22 18.13 0.30 1.86 29.39
All Public Companies 16.34 153.38 0.94 13.30 17.02 128.54 16.05 133.58 17.83 0.31 1.87 29.26
Special Selection Grouping(8) 9.57 141.26 0.47 11.30 21.15 84.01 20.20 84.01 20.32 0.11 1.54 0.00
State of MA 18.03 77.11 1.29 14.05 13.57 137.50 14.47 142.38 15.95 0.36 2.12 28.63
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CITZ CFS Bancorp, Inc. of IN 9.13 207.50 0.40 10.88 25.36 83.92 14.61 83.92 22.83 0.00 0.00 0.00
FKAN First Kansas
Financial of KS 10.13 15.74 0.61 12.95 16.61 78.22 14.62 78.22 16.61 0.00 0.00 0.00
HSTD Homestead
Bancorp, Inc. of LA 7.44 11.00 0.36 10.40 20.67 71.54 15.49 71.54 20.67 0.80 10.75 NM
HRBT Hudson River
Bancorp Inc of NY 10.56 183.09 0.47 12.20 25.76 86.56 23.14 86.56 22.47 0.00 0.00 0.00
PSBI PSB Bancorp Inc. of PA 7.13 22.11 0.37 9.41 19.27 75.77 15.01 75.77 19.27 0.00 0.00 0.00
THTL Thistle Group
Holdings of PA 8.50 76.50 0.53 10.79 16.04 78.78 21.90 78.78 16.04 0.00 0.00 0.00
UCFC United Community
Fin. of OH 14.13 472.86 0.58 12.47 24.36 113.31 36.62 113.31 24.36 0.00 0.00 0.00
<CAPTION>
Financial Characteristics(6)
--------------------------------------------------------
Reported Core
Total Equity/ NPAs/ ---------------- ---------------
Financial Institution Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------ ------- ------ ------- ------- ------- --------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,095 13.81 0.63 0.90 7.73 0.86 7.24
All Public Companies 1,186 13.56 0.63 0.93 8.21 0.89 7.67
Special Selection Grouping(8) 600 23.49 0.56 0.96 4.05 0.99 4.17
State of MA 630 11.46 0.42 1.17 12.18 1.07 10.76
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CITZ CFS Bancorp, Inc. of IN 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 0.51 1.50 4.65 1.50 4.65
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month earnings and average equity and assets balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
(8) Includes Converted Last 3 Mths (no MHC);
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 4.20
well below their highs achieved shortly after conversion. Based on September 4,
1998 market prices, the trading prices of these five MHC offerings have
appreciated by only an average of 7.9 percent since the completion of their
conversion offerings and prices have diminished significantly from their post-
conversion highs. Furthermore, there has been a broad sell-off in MHC issues,
as the SNL MHC index has declined by 37.5 percent since June 30, 1998 (from
1123.2 at June 30, 1998 to 781.4 at September 4, 1998). As a result of the
sell-off and the comparatively weak market, overall investor interest is
expected to be low, particularly as institutions such as mutual funds appear
reticent to invest in thrift issues with limited liquidity in the face of
possible redemptions by investors as a result of market volatility.
As a result of the significant market sell-off in MHC issues, we have
seen the emergence of a new issue discount in the market for MHC stocks.
Specifically, the five recently converted MHCs currently trade at an average P/B
of 79.28 percent (fully converted basis), which is at a discount of 9.2 percent
from the average of all publicly-traded MHCs. Importantly, it should be noted
that the foregoing discount implies a much greater percentage reduction in
market value given the mathematics of pro forma conversion pricing. The new
issue discount is required to reflect the risk of purchasing a new issue on a
pro forma basis with no trading and financial history as a public company.
Additionally, the new issue price must reflect the price required to attract
investors to purchase all the shares offered while the trading price of an
existing issue reflects the transaction price of a small fraction of the shares
outstanding.
Price Performance of MHC Offerings Completed in 1998
(Includes Publicly Traded Institutions Only)
<TABLE>
IPO IPO 9/4/98 Pct.
Issue Date P/B(1) Price Price Change
---------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
BRKL-Brookline Bancorp March 1998 76.55% $10.00 $10.88 8.88%
NBCP-Niagara Bancorp April 1998 78.68% 10.00 11.19 11.90
GBNK-Gaston Federal Bancorp April 1998 74.76 10.00 11.25 12.50
BCSB-BCSB Bancorp July 1998 79.21 10.00 10.44 4.40
LIBB-Liberty Bancorp July 1998 78.49 10.00 10.19 1.90
(1) Based on fully converted value.
</TABLE>
Source: Public filings and RP Financial calculations.
<PAGE>
RP Financial, LC.
Page 4.21
In determining our valuation adjustment for marketing of the issue, we
considered trends in both the overall thrift market and the new issue market,
including the new issue market. The pricing of thrift stocks remains relatively
strong in comparison to historical averages but the significant sell off has
adversely affected market sentiment, particularly for new issues. Additionally,
we expect investors to be wary of MHC stocks given the relatively greater
deflation of prices in this sector of the market.
C. The Acquisition Market
----------------------
Also considered in the valuation was the potential impact on
Provident's stock price of recently completed and pending acquisitions of other
savings institutions operating in New York. As shown in Exhibit IV-4, there
were 9 New York thrifts acquired during 1997 and year-to-date 1998, and there
are currently 6 acquisitions pending of New York 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 Provident's market was deemed to
have a minimal valuation impact for three reasons. First, Provident'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, Provident 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 MHC market, 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.
<PAGE>
RP Financial, LC.
Page 4.22
8. Management
----------
Provident'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
Provident's Board of Directors and executive management. While the Bank has
sought to build management, there is limited depth below the senior staff given
Provident's asset size and the impact it would have on operating expenses.
Management and the Board appear to have been effective in implementing an
operating strategy that can be well managed by current resources.
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.
9. Effect of Government Regulation and Regulatory Reform
-----------------------------------------------------
In summary, as a SAIF-insured savings institution operating in the MHC form
of ownership, Provident 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 Provident 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.
<PAGE>
RP Financial, LC.
Page 4.23
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:
Key Valuation Parameters Valuation Adjustment
------------------------ --------------------
Financial Condition Slight Downward
Profitability, Growth and Viability of Earnings Slight Downward
Asset Growth No Adjustment
Primary Market Area Slight Upward
Dividends Slight Downward
Liquidity of the Shares No Adjustment
Marketing of the Issue Moderate Downward
Management No Adjustment
Effect of Government Regulations and Regulatory Reform No Adjustment
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 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
<PAGE>
RP Financial, LC.
Page 4.24
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 Provident 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 September 4, 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 Provident. 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 Provident'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
Provident's offering circular for reinvestment rate, the effective tax rate and
stock benefit plan assumptions (summarized in Exhibits IV-7 and IV-8). Pursuant
to the minority stock offering, we have also incorporated the valuation
parameters disclosed in Provident's offering circular for offering
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Calculation of Implied Per Share Data -- Incorporating MHC Second Step Conversion
Comparable Institution Analysis
For the Twelve Months Ended June 30, 1998
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 0.61 0.61 9.05 9.05 84.78
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 1.15 0.92 13.28 12.90 215.87
GBNK Gaston Fed Bncp MHC of NC (47.0) 4,497 2,113 2,384 0.33 0.30 9.14 9.14 45.06
HARS Harris Fin. MHC of PA (24.9) 33,965 8,442 25,523 0.54 0.44 5.56 5.02 68.47
JXSB Jcksnville SB, MHC of IL (45.6) 1,908 869 1,039 0.52 0.33 9.38 9.38 88.96
LFED Leeds Fed Bksr MHC 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 0.40 0.38 8.59 8.59 65.46
NBCP Niagara Bancorp of 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 0.46 0.44 4.65 4.18 54.38
PBCT Peoples Bank, MHC of CT (41.2) 64,130 27,633 36,497 1.60 0.83 13.37 11.52 141.98
PBHC Pathfinder BC MHC of NY (45.2) 2,831 1,279 1,552 0.52 0.43 8.32 7.10 69.97
PHSB Ppls Home SB, MHC of PA (45.0) 2,760 1,242 1,518 0.63 0.58 10.41 10.41 82.15
PLSK Pulaski SB, MHC of NJ (47.0) 2,108 990 1,118 0.47 0.51 10.53 10.53 89.08
SBFL SB Fngr Lakes MHC of NY (33.1) 3,570 1,180 2,390 0.28 0.22 6.12 6.12 72.38
SKBO First Carnegie MHC of PA (45.0) 2,300 1,035 1,265 0.36 0.43 10.63 10.63 63.30
WAYN Wayne Svgs Bks MHC of OH (48.2) 2,486 1,197 1,289 0.73 0.66 9.94 9.94 104.35
WCFB Wbstr Cty FSB MHC of IA (45.6) 2,114 962 1,152 0.63 0.63 10.75 10.75 45.93
<CAPTION>
Share Gross Net Incr. Net Incr. Core Book Tangible
Price Procds(1) Capital(2) Income(3) EPS EPS Value Book Assets
------ ------ ------- -------- ---- ---- ----- -------- ------
($) (000) (000) (000) ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Publicly-Traded MHC Institutions
- --------------------------------
ALLB Alliance Bank MHC of PA (19.9) 15.25 40,001 34,401 1,053 0.93 0.93 19.56 19.56 95.29
BCSB Bankcorp MHC of MD (38.6) 10.44 39,213 33,723 1,033 0.53 0.53 12.79 12.79 50.25
BRKL Brookline Bncp MHC of MA (47.0) 10.88 167,770 144,282 4,418 0.62 0.62 14.29 14.29 33.05
FFFL Fidelity Bcsh MHC of FL (47.9)) 24.00 85,008 73,107 2,239 1.48 1.25 24.03 23.65 226.62
GBNK Gaston Fed Bncp MHC of NC (47.0) 11.25 26,820 23,065 706 0.49 0.46 14.27 14.27 50.19
HARS Harris Fin. MHC of PA (24.9) 13.88 354,259 304,663 9,329 0.81 0.71 14.53 13.99 77.44
JXSB Jcksnville SB, MHC of IL (45.6) 15.25 15,845 13,626 417 0.74 0.55 16.52 16.52 96.10
LFED Leeds Fed Bksr MHC of MD (36.3) 15.75 51,959 44,685 1,368 0.92 0.92 18.14 18.14 66.32
LIBB Liberty Bancorp MHC of NJ (47) 10.19 21,063 18,114 555 0.54 0.52 13.23 13.23 70.10
NBCP Niagara Bancorp of NY MHC (45.4) 11.25 182,858 157,257 4,815 0.64 0.62 13.59 13.59 48.84
NWSB Northwest Bcrp MHC of PA (30.8) 10.88 352,545 303,188 9,284 0.66 0.64 11.12 10.65 60.85
PBCT Peoples Bank, MHC of CT (41.2) 23.19 846,365 727,874 22,288 1.95 1.18 24.72 22.87 153.33
PBHC Pathfinder BC MHC of NY (45.2) 13.25 20,564 17,685 542 0.71 0.62 14.57 13.35 76.22
PHSB Ppls Home SB, MHC of PA (45.0) 14.75 22,391 19,256 590 0.84 0.79 17.39 17.39 89.13
PLSK Pulaski SB, MHC of NJ (47.0) 13.00 14,534 12,499 383 0.65 0.69 16.46 16.46 95.01
SBFL SB Fngr Lakes MHC of NY (33.1) 14.50 34,655 29,803 913 0.54 0.48 14.47 14.47 80.73
SKBO First Carnegie MHC of PA (45.0) 11.00 13,915 11,967 366 0.52 0.59 15.83 15.83 68.50
WAYN Wayne Svgs Bks MHC of OH (48.2) 21.25 27,391 23,556 721 1.02 0.95 19.42 19.42 113.83
WCFB Wbstr Cty FSB MHC of IA (45.6) 15.25 17,568 15,108 463 0.85 0.85 17.90 17.90 53.08
</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.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 4.26
expenses. The assumptions utilized in the pro forma analysis in calculating the
Bank's full conversion value are described more fully below.
. Conversion Expenses. Have been assumed to equal 3 percent of the
-------------------
offering amount pursuant to a standard conversion offering. This
assumption approximates the average for standard conversion offerings
completed in 1998 to date in the range of the size of the Bank's offering
pursuant to a full stock conversion.
. 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 40 percent based on
the statutory Federal and state tax rate.
. 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. This calculated rate is
reasonably similar to the blended reinvestment rate in the first 12
months of the business plan post-conversion, reflecting the current
anticipated use of conversion proceeds, incorporating a flat to declining
interest rate scenario and the estimated impact of deposit withdrawals to
fund stock purchases.
. 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 (we also considered the impact of the issuance of
Recognition Plan shares from authorized but unissued shares at a price
equivalent to the initial public offering price), with the Recognition
Plan cost expensed on a straight line basis in conjunction with the 5
year vesting schedule.
. Capitalization of the MHC. Pursuant to the proposed transaction
-------------------------
structure, the MHC will be capitalized with $100,000 of cash.
In our estimate of value, we assessed the relationship of the pro forma
pricing ratios relative to the Peer Group and the recent conversions.
<PAGE>
RP Financial, LC.
Page 4.27
RP Financial's valuation placed an emphasis on the following:
. 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 Bank and 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.
. 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 less meaningful P/E ratios).
. 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 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 full conversion offering was $65,000,000 at
the midpoint, equal to 6,500,000 shares issued at a per share value of $10.00
for the public shares. Pursuant to conversion guidelines, the 15 percent
offering range indicates a minimum value of $55,250,000, and a maximum value of
<PAGE>
RP Financial, LC.
Page 4.28
$74,750,000. Based on the $10.00 per share offering price determined by the
Board, this valuation range equates to an offering of 5,525,000 shares at the
minimum to 7,475,000 shares at the maximum. In the event that the appraised
value is subject to an increase, up to 8,596,250 shares may be sold at an issue
price of $10.00 per share, for an aggregate market value of $85,962,500, without
a resolicitation.
1. 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 Provident's pro forma book value (fully
converted basis). In applying the P/B approach, we also considered tangible
book value (i.e., book value net of goodwill and other intangible assets)
because historically the market has not generally given credit to an institution
for intangible assets.
Since the valuation has been discounted to reflect financial condition and
earnings, which are the relevant adjustments applicable to the P/B approach,
valuation discounts of 31.5 and 30.2 percent has been applied to the reported
and tangible P/B ratio (fully converted basis) for Provident at the midpoint
versus the Peer Group average. At the midpoint value, Provident exhibited pro
forma reported and tangible P/B ratios (fully converted basis) equaled 59.56
percent and 61.88 percent, respectively, compared to the Peer Group's average
reported and tangible P/B ratios (fully converted basis) of 88.69 (see Table
4.5). RP Financial considered these discounts to be appropriate in light of the
downward adjustments indicated above and, particularly, the current weak market
for thrift stocks and new issues in particular, as well as the pricing ratios at
the upper end of the range of value (for example, the pro forma supermaximum
P/TB ratio of 69.97 percent reflects a discount of 21.10 percent).
2. 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. Provident's reported earnings were $4,578,000 for the
<PAGE>
RP FINANCIAL, L.C.
- --------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.5
MHC INSTITUTIONS -- IMPLIED PRICING RATIOS FULL CONVERSION BASIS
Provident Bank and the Comparables
As of September 4, 1998
<TABLE>
<CAPTION>
Fully Converted
Implied Value Per Share (8)
---------------- -----------------
Implied Core Book Pricing Ratios(3)
Price/ Market 2-Mth Value/ ------------------------------------
Share(1) Val(8) PS (2) Share P/E P/B P/A P/TB PCORE
---------------- ----------------- ------------------------------------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
- --------------
Superrange 10.00 85.96 0.71 14.77 14.08 67.72 11.43 69.97 14.08
Range Maximum 10.00 74.75 0.79 15.71 12.65 63.66 10.07 65.96 12.65
Range Midpoint 10.00 65.00 0.88 16.79 11.34 59.56 8.85 61.88 11.34
Range Minimum 10.00 55.25 1.01 18.25 9.94 54.79 7.61 57.11 9.94
SAIF-Insured Thrifts(7)
- -----------------------
Averages 16.07 135.28 0.89 13.33 17.48 126.92 16.12 131.27 18.12
Medians --- --- --- --- 16.65 113.70 15.20 117.62 17.59
All Non-MHC State of NY(7)
- --------------------------
Averages 16.36 301.06 1.00 15.82 17.70 101.29 13.61 112.64 18.93
Medians --- --- --- --- 16.22 109.00 15.74 112.87 17.49
Publicly-Traded MHC Institutions,
- ---------------------------------
Full Conversion Basis
- ----------------------
Averages 14.48 203.44 0.73 16.46 18.71 87.35 18.94 88.69 19.66
Medians --- --- --- --- 17.94 85.20 17.88 85.20 19.02
Publicly-Traded MHC Institutions,
- ---------------------------------
Full Conversion Basis
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 15.25 49.91 0.93 19.56 16.40 77.97 16.00 77.97 16.40
BCSB BCSB Bankcorp MHC of MD (38.6) 10.44 63.86 0.53 12.79 19.70 81.63 20.78 81.63 19.70
BRKL Brookline Bncp MHC of MA (47.0) 10.88 316.55 0.62 14.29 17.55 76.14 32.92 76.14 17.55
FFFL Fidelity Bcsh MHC of FL (47.9) 24.00 163.25 1.25 24.03 16.22 99.88 10.59 101.48 19.20
SKBO First Carnegie MHC of PA (45.0) 11.00 25.30 0.59 15.83 21.15 69.49 16.06 69.49 18.64
GBNK Gaston Fed Bncp MHC of NC (47.0) 11.25 50.59 0.46 14.27 22.96 78.84 22.41 78.84 24.46
HARS Harris Fin. MHC of PA (24.9) 13.88 471.43 0.71 14.53 17.14 95.53 17.92 99.21 19.55
JXSB Jcksnville SB, MHC of IL (45.6) 15.25 29.10 0.55 16.52 20.61 92.31 15.87 92.31 27.73
LFED Leeds Fed Bksr MHC of MD (36.3) 15.75 81.62 0.92 18.14 17.12 86.82 23.75 86.82 17.12
LIBB Liberty Bancorp MHC of NJ (47) 10.19 39.75 0.52 13.23 18.87 77.02 14.54 77.02 19.60
NBCP Niagra Bancorp of NY MHC (45.4) 11.25 334.76 0.62 13.59 17.58 82.78 23.03 82.78 18.15
NWSB Northwest Bcrp MHC of PA (30.8) 10.88 509.63 0.64 11.12 16.48 97.84 17.88 102.16 17.00
PBHC Pathfinder BC MHC of NY (45.2) 13.25 37.51 0.62 14.57 18.66 90.94 17.38 99.25 21.37
PBCT Peoples Bank, MHC of CT (41.2) 23.19 1487.17 1.18 24.72 11.89 93.81 15.12 101.40 19.65
PHSB Ppls Home SB, MHC of PA (45.0) 14.75 40.71 0.79 17.39 17.56 84.82 16.55 84.82 18.67
PLSK Pulaski SB, MHC of NJ (47.0) 13.00 27.40 0.69 16.46 20.00 78.98 13.68 78.98 18.84
SBFL SB Fngr Lakes MHC of NY (33.1) 14.50 51.77 0.48 14.47 26.85 100.21 17.96 100.21 NM
WAYN Wayne Svgs Bks MHC of OH (48.2) 21.25 52.83 0.95 19.42 20.83 109.42 18.67 109.42 22.37
WCFB Wbstr Cty FSB MHC of IA (45.6) 15.25 32.24 0.85 17.90 17.94 85.20 28.73 85.20 17.94
<CAPTION>
-------------------------- -----------------------------------------------
Amount/ Payout Total Equity/ NPAs/ Reported Core
---------- ----------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
-------------------------- ------------------------------------------------
($) (%) (%) ($M11) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
- --------------
Superrange 0.00 0.00 0.00 752 16.88 0.81 0.81 4.81 0.81 4.81
Range Maximum 0.00 0.00 0.00 743 15.81 0.82 0.80 5.03 0.80 5.03
Range Midpoint 0.00 0.00 0.00 734 14.86 0.83 0.78 5.25 0.78 5.25
Range Minimum 0.00 0.00 0.00 726 13.89 0.84 0.77 5.51 0.77 5.51
SAIF-Insured Thrifts(7)
- -----------------------
Averages 0.30 1.86 29.37 1,095 13.80 0.63 0.90 7.73 0.86 7.24
Medians --- --- --- --- --- --- --- --- --- ---
All Non-MHC State of NY(7)
- --------------------------
Averages 0.25 1.26 20.47 2,464 13.66 0.76 0.54 5.11 0.79 6.41
Medians --- --- --- --- --- --- --- --- --- ---
Publicly-Traded MHC Institutions,
- ---------------------------------
Full Conversion Basis
- ----------------------
Averages 0.27 1.65 30.31 1,180 22.13 0.52 1.08 5.04 1.01 4.62
Medians --- --- --- --- --- --- --- --- --- ---
Publicly-Traded MHC Institutions,
- ---------------------------------
Full Conversion Basis
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 0.00 0.00 0.00 312 20.53 1.06 1.03 4.80 1.03 4.80
BCSB BCSB Bankcorp MHC of MD (38.6) 0.00 0.00 0.00 307 25.45 NA 1.05 4.14 1.05 4.14
BRKL Brookline Bncp MHC of MA (47.0) 0.20 1.84 32.26 962 43.24 0.60 2.11 6.04 2.11 6.04
FFFL Fidelity Bcsh MHC of FL (47.9) 1.00 4.17 NM 1,541 10.60 0.27 0.78 6.28 0.66 5.31
SKBO First Carnegie MHC of PA (45.0) 0.30 2.73 50.85 158 23.11 0.59 0.76 3.28 0.86 3.72
GBNK Gaston Fed Bncp MHC of NC (47.0) 0.20 1.78 43.48 226 28.43 0.50 0.97 4.58 0.91 4.30
HARS Harris Fin. MHC of PA (24.9) 0.22 1.59 30.99 2,630 18.76 0.66 1.10 5.70 0.97 5.00
JXSB Jcksnville SB, MHC of IL (45.6) 0.30 1.97 54.55 183 17.19 0.68 0.78 4.54 0.58 3.37
LFED Leeds Fed Bksr MHC of MD (36.3) 0.56 3.56 60.87 344 27.35 0.03 1.43 5.17 1.43 5.17
LIBB Liberty Bancorp MHC of NJ (47) 0.00 0.00 0.00 273 18.87 0.35 0.77 4.08 0.74 3.93
NBCP Niagra Bancorp of NY MHC (45.4) 0.00 0.00 0.00 1,453 27.83 0.29 1.31 4.71 1.27 4.56
NWSB Northwest Bcrp MHC of PA (30.8) 0.16 1.47 25.00 2,850 18.27 0.50 1.20 6.05 1.16 5.87
PBHC Pathfinder BC MHC of NY (45.2) 0.20 1.51 32.26 216 19.12 1.30 0.95 4.93 0.83 4.30
PBCT Peoples Bank, MHC of CT (41.2) 0.84 3.62 71.19 9,833 16.12 0.70 1.37 8.43 0.83 5.10
PHSB Ppls Home SB, MHC of PA (45.0) 0.28 1.90 35.44 246 19.51 0.32 0.98 5.09 0.92 4.79
PLSK Pulaski SB, MHC of NJ (47.0) 0.30 2.31 43.48 200 17.32 0.63 0.70 4.01 0.74 4.25
SBFL SB Fngr Lakes MHC of NY (33.1) 0.00 0.00 0.00 288 17.92 0.32 0.71 3.76 0.63 3.34
WAYN Wayne Svgs Bks MHC of OH (48.2) 0.62 2.92 65.26 283 17.06 0.49 1.91 5.32 0.85 4.95
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.00 0.00 0.00 112 33.72 0.07 1.63 4.79 1.63 4.79
</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 effecte 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 equity) are indicated ratios based
on trailing twelve month earnings and average equity 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.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 4.30
twelve months ended June 30, 1998, all of which were determined to be from
recurring earnings sources (see Table 1.1).
Based on Provident's trailing twelve month core earnings, and incorporating
the impact of the pro forma assumptions discussed previously, the Bank's pro
forma P/E multiple (fully converted basis) at the $65,000,000 midpoint value was
11.34 times, which is at a discount of 42.3 percent relative to the Peer Group
average (fully converted basis) of 19.66 times core earnings. At the
supermaximum of the range, the Bank's core P/E multiple is discounted by 28.4
percent relative to the Peer Group average.
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, Provident's full
conversion value equaled 8.85 percent (fully converted basis) of pro forma
assets. Comparatively, the Peer Group companies exhibited an average P/A ratio
(fully converted basis) of 18.94 percent, which implies a 53.3 percent discount
being applied to the Bank's pro forma P/A ratio (fully converted basis).
* * * * * * * * * *
Valuation Conclusion
- --------------------
Based on the foregoing, it is our opinion that, as of September 4, 1998,
the estimated aggregate pro forma market value of the offering shares in a full
stock conversion was $65,000,000 at the midpoint, equal to 6,500,000 shares
offered at a per share value of $10.00. Pursuant to conversion guidelines, the
15 percent offering range indicates a minimum offering value of $55,250,000, and
a maximum offering value of $74,750,000. Based on the $10.00 per share offering
price determined by the Board, this valuation range equates to an offering of
5,525,000 shares at the minimum to 7,475,000 shares at the maximum. In the
event that the appraised value is subject to an increase, up to 8,596,250 shares
may be sold in the offering at an
<PAGE>
RP Financial, LC.
Page 4.31
issue price of $10.00 per share, for an aggregate market value of $85,962,500,
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 46.62 percent
ownership interest. Accordingly, the offering range to the public of the
minority stock will range from $25,755,000 at the minimum, to $30,300,000 at the
midpoint, $34,845,000 at the maximum and $40,071,750 at the supermaximum of the
valuation range, all based on a $10.00 per share offering price. The pro forma
valuation calculations relative to the Peer Group (fully converted basis) are
shown in Table 4.5 and are detailed in Exhibit IV-6 and Exhibit IV-7; the pro
forma valuation calculations relative to the Peer Group based on reported
financials are shown in Table 4.6 and are detailed in Exhibits IV-10 and IV-11.
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.6
Public Market Pricing
Provident Bank and the Comparables
As of September 4, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization -------------- Pricing Ratios(3)
---------------- Core Book ___________________________________
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------ ------ ------ ----- ----- ----- ------ ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
- --------------
Superrange 10.00 85.96 0.62 10.22 16.25 97.80 12.05 102.58 16.25
Range Maximum 10.00 74.75 0.69 11.14 14.40 89.74 10.55 94.38 14.40
Range Midpoint 10.00 65.00 0.79 12.20 12.73 81.97 9.23 86.43 12.73
Range Minimum 10.00 55.25 0.91 13.63 11.00 73.38 7.89 77.60 11.00
SAIF-Insured Thrifts(7)
_______________________
Averages 16.07 135.28 0.89 13.33 17.48 126.92 16.12 131.27 18.12
Medians --- --- --- --- 16.65 113.70 15.20 117.62 17.59
All Non-MHC State of PA(7)
__________________________
Averages 19.64 465.68 1.22 16.10 17.57 114.78 16.00 128.49 18.62
Medians --- --- --- --- 16.22 109.00 15.74 112.87 17.49
Comparable Group Averages
_________________________
Averages 14.48 80.56 0.51 9.17 24.62 162.73 21.11 168.72 25.52
Medians --- --- --- --- 24.60 159.25 20.01 162.58 25.43
Comparable Group
________________
ALLB Alliance Bank MHC of PA (19.9) 15.25 9.91 0.61 9.05 25.00 168.51 17.99 168.51 25.00
BCSB BCSB Bankcorp MHC of MD (38.6) 10.44 24.65 0.36 7.28 29.00 143.41 23.33 143.41 29.00
BRKL Brookline Bncp MHC of MA(47.0) 10.88 148.78 0.47 9.33 23.15 116.61 38.73 116.61 23.15
FFFL Fidelity Bcsh MHC of FL (47.9) 24.00 78.24 0.92 13.28 20.87 180.72 11.12 186.05 26.09
SKBO First Carnegie MHC of PA(45.0) 11.00 11.39 0.43 10.63 NM 103.48 17.38 103.48 25.58
GBNK Gaston Fed Bncp MHC of NC(47.0 11.25 23.77 0.30 9.14 NM 123.09 24.97 123.09 NM
HARS Harris Fin. MHC of PA (24.9) 13.88 117.17 0.44 5.56 25.70 249.64 20.27 276.49 NM
JXSB Jcksnville SB,MHC of IL (45.6) 15.25 13.25 0.33 9.38 29.33 162.58 17.14 162.58 NM
LFED Leeds Fed Bksr MHC of MD (36.3 15.75 29.66 0.66 9.52 23.86 165.44 27.30 165.44 23.86
LIBB Liberty Bancorp MHC of NJ (47) 10.19 18.69 0.38 8.59 25.48 118.63 15.57 118.63 26.82
NBCP Niagara Bancorp of NY MHC(45.4 11.25 151.90 0.46 8.31 23.44 135.38 25.83 135.38 24.46
NWSB Northwest Bcrp MHC of PA (30.8 10.88 157.09 0.44 4.65 23.65 233.98 20.01 260.29 24.73
PBHC Pathfinder BC MHC of NY (45.2) 13.25 16.95 0.43 8.32 25.48 159.25 18.94 186.62 NM
PBCT Peoples Bank, MHC of CT (41.2) 23.19 640.81 0.83 13.37 14.49 173.45 16.33 201.30 27.94
PHSB Ppls Home SB, MHC of PA (45.0) 14.75 18.32 0.58 10.41 23.41 141.69 17.95 141.69 25.43
PLSK Pulaski SB, MHC of NJ (47.0) 13.00 12.87 0.51 10.53 27.66 123.46 14.59 123.46 25.49
SBFL SB Fngr Lakes MHC of NY (33.1) 14.50 17.11 0.22 6.12 NM 236.93 20.03 236.93 NM
WAYN Wayne Svgs Bks MHC of OH (48.2 21.25 25.44 0.66 9.94 29.11 213.78 20.36 213.78 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 15.25 14.67 0.63 10.75 24.21 141.86 33.20 141.86 24.21
<CAPTION>
Dividends(4) Financial Characteristics(6)
_________________________ _____________________________________________________
Reported Core
Amount/ Payout Total Equity/ NPAs/ ____________ ______________
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------ -------- ------ ------- ------ ----- ----- ------ ------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
------- ------ -------- ------ ------- ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
- --------------
Superrange 0.00 0.00 0.00 713 12.33 0.86 0.74 6.02 0.74 6.02
Range Maximum 0.00 0.00 0.00 709 11.76 0.86 0.73 6.23 0.73 6.23
Range Midpoint 0.00 0.00 0.00 705 11.25 0.87 0.72 6.44 0.72 6.44
Range Minimum 0.00 0.00 0.00 701 10.75 0.87 0.72 6.67 0.72 6.67
SAIF-Insured Thrifts(7)
_______________________
Averages 0.30 1.86 29.37 1,095 13.80 0.63 0.90 7.73 0.86 7.24
Medians --- --- --- --- --- --- --- --- --- ---
All Non-MHC State of PA(7)
__________________________
Averages 0.40 1.77 30.71 3,090 14.00 0.72 0.79 6.85 0.96 7.46
Medians --- --- --- --- --- --- --- --- --- ---
Comparable Group Averages
_________________________
Averages 0.27 1.65 12.62 1,074 14.03 0.52 0.87 6.96 0.79 6.11
Medians --- --- --- --- --- --- --- --- --- ---
Comparable Group
________________
ALLB Alliance Bank MHC of PA (19.9) 0.00 0.00 0.00 277 10.67 1.06 0.77 6.87 0.77 6.87
BCSB BCSB Bankcorp MHC of MD (38.6) 0.00 0.00 0.00 274 16.27 NA 0.80 4.95 0.80 4.95
BRKL Brookline Bncp MHC of MA(47.0) 0.20 1.84 20.00 817 33.21 0.60 1.92 8.85 1.92 8.85
FFFL Fidelity Bcsh MHC of FL (47.9) 1.00 4.17 NM 1,468 6.15 0.27 0.65 8.98 0.52 7.18
SKBO First Carnegie MHC of PA(45.0) 0.30 2.73 31.40 146 16.79 0.59 0.57 3.37 0.68 4.03
GBNK Gaston Fed Bncp MHC of NC(47.0 0.20 1.78 31.32 203 20.28 0.50 0.73 5.92 0.66 5.39
HARS Harris Fin. MHC of PA (24.9) 0.22 1.59 12.43 2,326 8.12 0.66 0.84 10.33 0.68 8.41
JXSB Jcksnville SB,MHC of IL (45.6) 0.30 1.97 NM 170 10.54 0.68 0.59 5.68 0.38 3.60
LFED Leeds Fed Bksr MHC of MD (36.3 0.56 3.56 NM 299 16.50 0.03 1.18 7.20 1.18 7.20
LIBB Liberty Bancorp MHC of NJ (47) 0.00 0.00 0.00 255 13.12 0.35 0.61 4.66 0.58 4.42
NBCP Niagara Bancorp of NY MHC(45.4 0.00 0.00 0.00 1,296 19.08 0.29 1.10 5.78 1.06 5.54
NWSB Northwest Bcrp MHC of PA (30.8 0.16 1.47 11.21 2,547 8.55 0.50 0.95 10.36 0.90 9.91
PBHC Pathfinder BC MHC of NY (45.2) 0.20 1.51 21.01 198 11.89 1.30 0.75 6.37 0.62 5.27
PBCT Peoples Bank, MHC of CT (41.2) 0.84 3.62 NM 9,105 9.42 0.70 1.22 13.58 0.63 7.05
PHSB Ppls Home SB, MHC of PA (45.0) 0.28 1.90 21.72 227 12.67 0.32 0.80 6.62 0.73 6.09
PLSK Pulaski SB, MHC of NJ (47.0) 0.30 2.31 27.63 188 11.82 0.63 0.54 4.57 0.59 4.96
SBFL SB Fngr Lakes MHC of NY (33.1) 0.00 0.00 0.00 258 8.46 0.32 0.42 4.65 0.33 3.65
WAYN Wayne Svgs Bks MHC of OH (48.2 0.62 2.92 NM 259 9.53 0.49 0.71 7.52 0.64 6.80
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.00 0.00 0.00 97 23.41 0.07 1.40 5.95 1.40 5.95
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data,
adjusted to omit the impact of non-operating items (including the SAIF
assessment) on a tax effected basis, and is shown on a pro forma basis
where appropriate
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets;
P/TB = Price to Tangible Book; and P/CORE = Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and total assets balances.
(7) Excludes from averages and medians those companies the subject of actual
or rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS
Exhibit
Number Description
- -------- -----------
I-1 Provident Bank's Audited Financial Statements
I-2 Key Operating Ratios
I-3 Investment Portfolio Composition
I-4 Yields and Costs
I-5 Net Portfolio Value Analysis
I-6 Loan Portfolio Composition
I-7 Contractual Maturity by Loan Type
I-8 Fixed Rate and Adjustable Rate Loans
I-9 Loan Originations, Purchases, and Sales
I-10 Non-Performing Assets
I-11 Loan Loss Allowance Activity
I-12 Deposit Composition
I-13 Time Deposit Rate/Maturity
I-14 Borrowed Funds
II-1 List of Branch Offices
II-2 Historical Interest Rates
<PAGE>
LIST OF EXHIBITS
(continued)
Exhibit
Number Description
- -------- -----------
III-1 General Characteristics of Publicly-Traded Institutions
IV-1 Stock Prices: September 4, 1998
IV-2 Historical Stock Price Indices
IV-3 Historical Thrift Stock Indices
IV-4 Market Area Acquisition Activity
IV-5 Directors and Senior Management Summary Resumes
IV-6 Pro Forma Analysis Sheet: Fully-Converted Basis
IV-7 Pro Forma Effect of Conversion Proceeds: Fully-Converted Basis
IV-8 Peer Group Core Earnings Analysis
IV-9 Pro Forma Regulatory Capital Ratios
IV-10 Pro Forma Analysis Sheet: Minority Stock Offering
IV-11 Pro Forma Effects: Minority Stock Offering
V-1 Firm Qualifications Statement
<PAGE>
EXHIBIT I-1
Provident Bank
Audited Financial Statements
[Incorporated by Reference]
<PAGE>
EXHIBIT I-2
Provident Bank
Key Operating Ratios
<PAGE>
Exhibit I-2
Provident Bank
Key Operating Ratios
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS
ENDED JUNE 30, AT OR FOR THE YEARS ENDED SEPTEMBER 30,
-------------- -------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:
PERFORMANCE RATIOS (3):
Return on assets (ratio of net income to
average total assets) (2)(4)............... 0.70% 0.73% 0.72% 0.36% 0.96% 1.01% 1.15%
Return on equity (ratio of net income
to average equity) (2)(4).................. 8.72 9.72 9.51 4.60 11.77 13.37 17.54
Average interest rate spread (4)(5)......... 3.80 3.95 3.92 3.88 4.15 4.19 4.06
Net interest margin (4) (6)................. 4.30 4.37 4.36 4.30 4.53 4.46 4.35
Efficiency ratio (7)........................ 69.74 69.36 70.83 73.53 63.43 59.32 55.64
Non-interest expense to average total
assets (4) (8)............................. 3.19 3.20 3.24 3.91 3.06 2.83 2.62
Average interest-earning assets to average
interest-bearing liabilities................ 114.95 112.75 113.07 112.60 112.38 110.86 109.35
ASSET QUALITY RATIOS:
Non-performing assets to total assets....... 0.90 0.67 0.75 1.21 1.29 0.94 1.17
Non-performing loans to total loans......... 1.30 0.89 1.16 1.72 1.99 1.19 1.46
Allowance for loan losses to
non-performing loans....................... 79.27 112.08 80.80 52.87 52.59 75.55 59.49
Allowance for loan losses to total loans
receivable, net............................ 1.03 1.00 0.93 0.91 1.05 0.90 0.87
CAPITAL RATIOS:
Equity to total assets at end of period..... 7.93 7.66 7.77 7.18 8.32 8.02 7.18
Average equity to average assets............ 8.05 7.51 7.59 7.83 8.17 7.53 6.56
OTHER DATA:
Number of full-service offices.............. 11 11 11 11 9 9 9
</TABLE>
_______________________________
(1) The Bank has classified its securities as "held to maturity" or "available
for sale" since October 1, 1994, when it adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." Prior thereto, substantially all securities were
classified as "held for investment."
(2) The SAIF special assessment in fiscal 1996 represents the Bank's share of
an assessment imposed on all financial institutions with deposits insured
by the Savings Association Insurance Fund (the "SAIF"). On an after-tax
basis, the special assessment reduced net income for fiscal 1996 by
approximately $2.0 million. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Comparison of Operating
Results for the Years Ended September 30, 1997 and 1996" and Note 8 of the
Notes to Consolidated Financial Statements.
(3) Ratios for the nine-month periods have been annualized.
(4) Ratio is based on average monthly balances during the indicated periods.
(5) The average interest rate spread represents the difference between the
weighted-average yield on interest-earning assets and the weighted-average
cost of interest-bearing liabilities for the period.
(6) The net interest margin represents net interest income as a percent of
average interest-earning assets for the period.
(7) The efficiency ratio represents non-interest expense (other than the SAIF
special assessment in fiscal 1996) divided by the sum of net interest
income and non-interest income.
(8) Excluding the SAIF special assessment, the ratio of non-interest expense
to average total assets for fiscal 1996 was 3.34%.
<PAGE>
EXHIBIT I-3
Provident Bank
Investment Portfolio Composition
<PAGE>
Exhibit I-3
Provident Bank
Investment Portfolio Composition
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------------------------------------
JUNE 30, 1998 1997 1996 1995
---------------- ---------------- ---------------- ----------------
AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE COST VALUE COST VALUE
------- ------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY:
U.S. Government securities........... $ 8,979 $ 8,975 $ 8,952 $ 8,913 $13,888 $13,763 $23,945 $23,774
Federal agency obligations........... 10,507 10,493 12,521 12,457 7,514 7,307 13,506 13,521
Municipal and other securities....... 711 711 722 721 736 730 469 469
------- ------- ------- ------- ------- ------- ------- -------
Total investment securities held
to maturity................. 20,197 20,179 22,195 22,091 22,138 21,800 37,920 37,764
------- ------- ------- ------- ------- ------- ------- -------
SECURITIES AVAILABLE FOR SALE:
U.S. Government securities........... 27,227 27,372 27,273 27,387 24,185 24,046 7,123 7,144
Federal agency obligations........... 17,029 17,003 15,993 15,948 16,976 16,814 9,974 10,166
Corporate debt securities............ 1,998 1,996 3,007 3,005 4,037 4,033 4,078 4,045
Equity securities.................... 2,017 2,258 2,017 2,177 2,017 2,420 17 101
------- ------- ------- ------- ------- ------- ------- -------
Total investment securities
available for sale.......... 48,271 48,629 48,290 48,517 47,215 47,313 21,192 21,456
------- ------- ------- ------- ------- ------- ------- -------
Total investment securities...... $68,468 $68,808 $70,485 $70,608 $69,353 $69,113 $59,112 $59,220
======= ======= ======= ======= ======= ======= ======= =======
Weighted average term to maturity...... 2 years 2 years 2 years 2 years
</TABLE>
<PAGE>
EXHIBIT I-4
Provident Bank
Yields and Costs
<PAGE>
Exhibit 1-4
Provident Bank
Yields and Costs
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
------------------------------------------------------------------------
AT JUNE 30, 1998 1998 1997
----------------------- ----------------------------------- -----------------------------------
AVERAGE AVERAGE
ACTUAL AVERAGE OUTSTANDING AVERAGE OUTSTANDING AVERAGE
BALANCE YIELD/RATE BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE
----------- ---------- ----------- ---------- ---------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans receivable (1)...... $440,360 8.22% $420,683 $25,962 8.25% $381,695 $24,249 8.49%
Mortgage-backed
securities (2)........... 133,109 6.49 138,328 6,748 6.52 146,094 7,118 6.51
Investment securities (2). 68,826 5.81 63,164 2,806 5.94 70,480 3,223 6.11
Other..................... 8,690 5.43 4,194 223 7.11 3,457 165 6.38
-------- -------- ------- -------- -------
Total interest-earning
assets.................. 650,985 7.57 626,369 35,739 7.63 601,726 34,755 7.72
------- -------
Non-interest-earning assets 28,119 29,733 32,675
-------- -------- --------
Total assets............ $679,104 $656,102 $634,401
======== ======== ========
INTEREST-BEARING
LIABILITIES:
Savings deposits (3)...... $174,502 2.23 $163,407 2,731 2.23 $162,418 2,713 2.23
Money market and
NOW deposits........... 120,405 2.38 112,301 2,016 2.40 108,646 1,992 2.45
Certificates of deposit... 243,335 5.22 240,210 9,568 5.33 237,175 9,184 5.18
Borrowings................ 25,048 6.13 29,009 1,294 5.96 25,451 1,181 6.20
-------- -------- ------- -------- -------
Total interest-bearing
liabilities............ 563,290 3.73 544,927 15,609 3.83 533,690 15,070 3.77
------- -------
Non-interest-bearing
liabilities............... 61,935 58,373 53,041
-------- -------- --------
Total liabilities........ 625,225 603,300 586,731
Equity..................... 53,879 52,802 47,670
-------- -------- --------
Total liabilities and
equity.................. $679,104 $656,102 $634,401
======== ======== ========
Net interest income........ $20,130 $19,685
======= =======
Net interest rate
spread (4)................ 3.84% 3.80% 3.95%
Net earning assets (5)..... 87,695 $ 81,442 $ 68,036
======== ======== ========
Net interest margin (6).... 4.30% 4.37%
Ratio of interest-earning
assets to interest-bearing
liabilities.............. 115.57% 114.95% 112.75%
</TABLE>
<PAGE>
Exhibit I-4 (continued)
Provident Bank
Yields and Costs
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------------------------------
1997 1996 1995
--------------------------------- --------------------------------- ---------------------------------
AVERAGE AVERAGE AVERAGE
OUTSTANDING AVERAGE OUTSTANDING AVERAGE OUTSTANDING AVERAGE
BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE
----------- -------- ---------- ----------- -------- ---------- ----------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans receivable (1)...... $385,355 $32,544 8.45% $348,155 $29,210 8.39% $321,727 $26,740 8.31%
Mortgage-backed
securities (2)........... 144,252 9,398 6.52 137,772 9,008 6.54 102,314 6,687 6.54
Investment securities (2). 71,826 4,385 6.11 66,554 4,020 6.04 56,821 3,309 5.82
Other..................... 3,526 228 6.47 5,681 328 5.77 4,101 294 7.17
-------- ------- -------- ------- -------- -------
Total interest-earning
assets.................. 604,959 46,555 7.70 558,162 42,566 7.63 484,963 37,030 7.64
------- ------- -------
Non-interest-earning assets 31,861 24,009 14,541
-------- -------- --------
Total assets............. $636,820 $582,171 $499,504
======== ======== ========
INTEREST-BEARING
LIABILITIES:
Savings deposits (3)...... $164,726 3,670 2.23 $161,215 3,592 2.23 $167,910 3,741 2.23
Money market and
NOW deposits............. 109,289 2,675 2.45 99,344 2,480 2.50 83,763 2,136 2.55
Certificates of deposit... 237,262 12,347 5.20 212,476 11,041 5.20 170,737 8,563 5.02
Borrowings................ 23,730 1,487 6.27 22,686 1,472 6.49 9,139 624 6.83
-------- ------- -------- ------- -------- -------
Total interest-bearing
liabilities............. 535,007 20,179 3.78 495,721 18,585 3.75 431,549 15,064 3.49
------- ------- -------
Non-interest-bearing
liabilities............... 53,489 40,880 27,150
-------- -------- --------
Total liabilities........ 588,496 536,601 458,699
Equity..................... 48,324 45,570 40,805
-------- -------- --------
Total liabilities and
equity.................. $636,820 $582,171 $499,504
======== ======== ========
Net interest income........ $26,376 $23,981 $21,966
======= ======= =======
Net interest rate
spread (4)................ 3.92% 3.88% 4.15%
Net earning assets (5)..... $ 69,952 $ 62,441 $ 53,414
======== ======== ========
Net interest margin (6).... 4.36% 4.30% 4.53%
Ratio of interest-earning
assets to interest-bearing
liabilities.............. 113.07% 112.60% 112.38%
</TABLE>
- ---------------
(1) Balances include the effect of net deferred loan origination fees and
costs, loans in process and the allowance for loan losses.
(2) Average outstanding balances are based on amortized cost.
(3) Includes club accounts and interest-bearing mortgage escrow balances.
(4) Net interest rate spread represents the difference between the yield on
average interest-earning assets and the cost of average interest-bearing
liabilities.
(5) Net earning assets represents total interest-earning assets less total
interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total
interest-earning assets.
51
<PAGE>
EXHIBIT I-5
Provident Bank
Net Portfolio Value Analysis
<PAGE>
Exhibit I-5
Provident Bank
Net Portfolio Value Analysis
<TABLE>
<CAPTION>
NPV Net Interest Income
--------------------------------------------- ----------------------------------------------
Estimated Increase Estimated Increase (Decrease)
Change in (Decrease) in NPV Estimated in Net Interest Income
Interest Rates Estimated ------------------------ Net Interest -----------------------------
(basis points) NPV Amount Percent Income Amount Percent
-------------- -------------- ----------- ----------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
+300 $59,095 $(15,067) (20)% $24,496 $ 675 3%
+200 65,916 (8,246) (11) 24,526 705 3
+100 70,039 (4,123) (6) 24,173 352 1
0 74,162 --- --- 23,821 --- ---
-100 76,736 2,574 3 23,315 (506) (2)
-200 79,310 5,148 7 22,809 (1,012) (4)
-300 80,281 6,119 8 22,319 (1,502) (6)
</TABLE>
<PAGE>
EXHIBIT I-6
Provident Bank
Loan Portfolio Composition
<PAGE>
Exhibit I-6
Provident Bank
Loan Portfolio Composition
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------------------
JUNE 30, 1998 1997 1996
------------------- ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FIRST MORTGAGE LOANS
One- to four-family...................... $271,593 59.4% $241,895 57.7% $219,868 57.2%
Multi-family............................. 7,108 1.6 7,358 1.8 7,743 2.0
Commercial real estate................... 63,712 13.9 55,747 13.3 58,640 15.4
Construction and land.................... 27,785 6.1 31,740 7.6 28,035 7.3
-------- ------ -------- ----- -------- -----
Total first mortgage loans......... 370,198 81.0 336,740 80.4 314,286 81.9
-------- ------ -------- ----- -------- -----
OTHER LOANS
Consumer loans:
Home equity lines of credit............. 28,362 6.2 31,456 7.4 31,306 8.1
Homeowner loans......................... 25,418 5.6 18,678 4.5 12,575 3.3
Other consumer loans.................... 8,855 1.9 10,670 2.5 10,916 2.8
-------- ------ -------- ----- -------- -----
Total consumer loans.............. 62,635 13.7 60,804 14.4 54,797 14.2
Commercial business loans............... 24,036 5.3 21,651 5.2 15,263 3.9
-------- ------ -------- ----- -------- -----
Total other loans................. 86,671 19.0 82,455 19.6 70,060 18.1
-------- ------ -------- ----- -------- -----
Total loans receivable................... 456,869 100.0% 419,195 100.0% 384,346 100.0%
====== ===== =====
Loans in process........................ (12,732) (11,424) (11,775)
Allowance for loan losses............... (4,548) (3,779) (3,357)
Deferred loan origination costs, net.... 771 505 273
-------- -------- --------
Total loans receivable, net............. $440,360 $404,497 $369,487
======== ======== ========
<CAPTION>
SEPTEMBER 30,
------------------------------------------------------------
1995 1994 1993
------------------ ------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FIRST MORTGAGE LOANS
One- to four-family...................... $199,078 59.0% $194,425 60.8% $191,168 63.9%
Multi-family............................. 6,903 2.0 7,408 2.3 7,869 2.6
Commercial real estate................... 60,186 17.9 55,053 17.3 44,194 14.8
Construction and land.................... 8,553 2.5 8,455 2.6 5,863 1.9
-------- ----- -------- -------- -------- --------
Total first mortgage loans......... 274,720 81.4 265,341 83.0 249,094 83.2
-------- ----- -------- -------- -------- --------
OTHER LOANS
Consumer loans:
Home equity lines of credit............. 31,550 9.4 27,711 8.6 23,498 8.0
Homeowner loans......................... 9,937 2.9 7,939 2.5 7,739 2.6
Other consumer loans.................... 9,917 2.9 8,124 2.5 10,527 3.5
-------- ----- -------- -------- -------- --------
Total consumer loans.............. 51,404 15.2 43,774 13.6 41,764 14.1
Commercial business loans............... 11,144 3.4 10,595 3.4 7,949 2.7
-------- ----- -------- -------- -------- --------
Total other loans................. 62,548 18.6 54,369 17.0 49,713 16.8
-------- ----- -------- -------- -------- --------
Total loans receivable................... 337,268 100.0% 319,710 100.0% 298,807 100.0%
===== ======== ========
Loans in process........................ (2,240) (2,083) (1,173)
Allowance for loan losses............... (3,472) (2,837) (2,565)
Deferred loan origination costs, net.... 391 364 8
-------- -------- --------
Total loans receivable, net............. $331,947 $315,154 $295,077
======== ======== ========
</TABLE>
64
<PAGE>
EXHIBIT I-7
Provident Bank
Contractual Maturity by Loan Type
<PAGE>
Exhibit I-7
Provident Bank
Contractual Maturity by Loan Type
<TABLE>
<CAPTION>
MULTI-FAMILY AND
ONE- TO FOUR-FAMILY COMMERCIAL REAL ESTATE CONSTRUCTION AND LAND
------------------------- ------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE AMOUNT RATE
------------ ----------- ------------ ----------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Due During the Years
Ending June 30,
- ---------------------------
1999 (1)................... $ 236 9.10% $ 4,047 8.52% $18,429 9.19%
2000....................... 366 9.08 3,650 8.77 8,144 8.79
2001....................... 761 9.15 1,547 8.39 750 8.50
2002 and 2003.............. 3,206 8.25 4,214 8.90 -- --
2004 to 2008............... 21,917 8.00 17,168 8.80 462 8.00
2009 to 2023............... 148,115 7.70 39,879 8.51 -- --
2024 and following......... 96,992 7.57 315 8.67 -- --
-------- ------- -------
Total................. $271,593 7.69% $70,820 8.62% $27,785 9.04%
======== ==== ======= ==== ======= ====
<CAPTION>
CONSUMER COMMERCIAL BUSINESS TOTAL
------------------------- ------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE AMOUNT RATE
------------ ----------- ------------ ----------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Due During the Years
Ending June 30,
- ---------------------------
1999 (1)................... $ 1,149 10.18% $14,494 9.04% $ 38,355 9.09%
2000....................... 3,188 10.78 1,455 9.05 16,803 9.19
2001....................... 4,391 10.49 2,258 8.73 9,707 9.49
2002 and 2003.............. 12,043 9.47 2,731 9.31 22,194 9.16
2004 to 2008............... 32,979 9.04 2,234 8.73 74,760 8.67
2009 to 2023............... 8,885 9.32 864 9.72 197,743 7.95
2024 and following......... -- -- -- -- 97,307 7.58
------- ------- --------
Total................. $62,635 9.37% $24,036 9.04% $456,869 8.22%
======= ===== ======= ==== ======== ====
</TABLE>
___________________
(1) Includes demand loans, loans having no stated maturity, and overdraft
loans.
65
<PAGE>
EXHIBIT I-8
Provident Bank
Fixed Rate and Adjustable Rate Loans
<PAGE>
Exhibit I-8
Provident Bank
Fixed Rate and Adjustable Rate Loans
<TABLE>
<CAPTION>
Due After June 30, 1999
----------------------------------------
Fixed Adjustable Total
-------- ---------- --------
(In Thousands)
<S> <C> <C> <C>
First mortgage loans:
One- to four-family.......................... $188,543 $ 82,814 $271,357
Multi-family and commercial real estate...... -- 66,773 66,773
Construction and land........................ -- 9,356 9,356
-------- -------- --------
Total first mortgage loans................. 188,543 158,943 347,486
Consumer loans................................. 32,017 29,469 61,486
Commercial business loans...................... 316 9,226 9,542
-------- -------- --------
Total loans................................ $220,877 $197,638 $418,514
======== ======== ========
</TABLE>
<PAGE>
EXHIBIT I-9
Provident Bank
Loan Originations, Purchases, and Sales
<PAGE>
Exhibit I-9
Provident Bank
Loan Originations, Purchases, and Sales
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JUNE 30, YEAR ENDED SEPTEMBER 30,
------------------- ------------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Unpaid principal balances at
beginning of period................. $419,195 $384,346 $384,346 $337,268 $319,710
-------- -------- -------- -------- --------
Originations by Type
- --------------------
Adjustable-rate:
First mortgage loans:
One- to four-family............... 12,424 7,919 11,299 7,814 9,350
Multi-family...................... 388 325 325 778 225
Commercial real estate............ 11,541 7,825 7,932 5,108 7,528
Construction and land............. 9,338 12,213 14,240 25,235 7,717
Other loans:
Consumer.......................... 8,038 10,321 14,166 12,315 4,866
Commercial business............... 12,329 5,115 8,140 6,595 4,803
-------- -------- -------- -------- --------
Total adjustable-rate........... 54,058 43,718 56,102 57,845 34,489
-------- -------- -------- -------- --------
Fixed-rate:
First mortgage loans:
One- to four-family............... 65,462 16,122 33,214 41,022 16,974
Commercial real estate............ 3,919 585 710 385 512
Construction and land............. 563 859 1,002 1,643 1,139
Other loans:
Consumer.......................... 16,072 12,143 16,954 4,489 10,008
Commercial business............... 3,512 3,008 4,788 3,397 3,071
-------- -------- -------- -------- --------
Total fixed-rate................ 89,528 32,717 56,668 50,936 31,704
-------- -------- -------- -------- --------
Total loans originated.......... 143,586 76,435 112,770 108,781 66,193
-------- -------- -------- -------- --------
Sales
- -----
First mortgage loans................ (16,932) (197) (197) (433) (1,605)
-------- -------- -------- -------- --------
Principal Repayments
- --------------------
First mortgage loans................ (52,067) (33,833) (45,021) (39,146) (32,034)
Other loans......................... (35,738) (23,561) (31,352) (19,736) (14,616)
-------- -------- -------- -------- --------
Total principal
repayments........................ (87,805) (57,394) (76,373) (58,882) (46,650)
-------- -------- -------- -------- --------
Net charge-offs...................... (578) (355) (636) (1,026) (125)
Transfers to real estate
owned............................... (597) (694) (715) (1,362) (255)
-------- -------- -------- -------- --------
Unpaid principal balances
at end of period.................... 456,869 402,141 419,195 384,346 337,268
Loans in process..................... (12,732) (9,505) (11,424) (11,775) (2,240)
Allowance for loan losses............ (4,548) (3,877) (3,779) (3,357) (3,472)
Deferred loan origination
costs, net.......................... 771 454 505 273 391
-------- -------- -------- -------- --------
Net loans at end of period........... $440,360 $389,213 $404,497 $369,487 $331,947
======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT I-10
Provident Bank
Non-Performing Assets
<PAGE>
Exhibit I-10
Provident Bank
Non-Performing Asssets
<TABLE>
<CAPTION>
SEPTEMBER 30,
JUNE 30, ------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans:
One- to four-family.................... $3,323 $2,549 $2,731 $1,972 $1,158 $1,416
Commercial real estate................. 848 1,375 2,087 3,346 1,222 1,465
Construction and land/(1)/............. 1,142 276 920 209 209 30
Consumer............................... 230 234 503 421 329 390
Commercial business.................... 194 243 109 654 837 1,011
------ ------ ------ ------ ------ ------
Total non-performing loans.......... 5,737 4,677 6,350 6,602 3,755 4,312
------ ------ ------ ------ ------ ------
Real estate owned:
One- to four-family.................... 92 186 347 50 508 773
Commercial real estate................. 274 -- 960 160 242 401
------ ------ ------ ------ ------ ------
Total real estate owned............. 366 186 1,307 210 750 1,174
------ ------ ------ ------ ------ ------
Total non-performing assets.............. $6,103 $4,863 $7,657 $6,812 $4,505 $5,486
====== ====== ====== ====== ====== ======
Ratios:
Non-performing loans to total loans.... 1.30% 1.16% 1.72% 1.99 % 1.19% 1.46%
Non-performing assets to total assets.. 0.90 0.75 1.21 1.29 0.94 1.17
</TABLE>
- ---------------
/(1)/ Non-accrual construction and land loans at June 30, 1998 include a loan
with a balance of $962,000 which was current in accordance with its
contractual terms. Management placed this loan on non-accrual status
during the nine months ended June 30, 1998 due to concerns about the
borrower's ability to continue making contractual payments.
<PAGE>
EXHIBIT I-11
Provident Bank
Loan Loss Allowance Activity
<PAGE>
Exhibit I-11
Provident Bank
Loan Loss Allowance Activity
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JUNE 30, YEARS ENDED SEPTEMBER 30,
------------------- ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning of period.................. $3,779 $ 3,357 $3,357 $ 3,472 $2,837 $2,565 $1,963
------ ------- ------ ------- ------ ------ ------
Charge-offs:
One- to four-family........................... (3) (83) (114) (33) (85) (86) (79)
Commercial real estate........................ (87) (84) (301) (840) - (56) (47)
Construction and land......................... (350) - - - - - -
Consumer...................................... (161) (136) (171) (203) (67) (59) (52)
Commercial business........................... (10) (93) (173) - - - -
------ ------- ------ ------- ------ ------ ------
Total charge-offs....................... (611) (396) (759) (1,076) (152) (201) (178)
------ ------- ------ ------- ------ ------ ------
Recoveries:
One- to four-family........................... - - 42 3 - - -
Commercial real estate........................ - 4 32 14 - - -
Consumer...................................... 33 37 49 33 27 21 19
Commercial business........................... - - - - - - 1
------ ------- ------ ------- ------ ------ ------
Total recoveries........................ 33 41 123 50 27 21 20
------ ------- ------ ------- ------ ------ ------
Net charge-offs................................. (578) (355) (636) (1,026) (125) (180) (158)
Provision for loan losses....................... 1,347 875 1,058 911 760 452 760
------ ------- ------ ------- ------ ------ ------
Balance at end of period........................ $4,548 $ 3,877 $3,779 $ 3,357 $3,472 $2,837 $2,565
====== ======= ====== ======= ====== ====== ======
Ratios:
Net charge-offs to average loans outstanding.. 0.14% 0.09% 0.17% 0.29% 0.04% 0.06% 0.05%
Allowance for loan losses to non-performing
loans...................................... 79.27 112.08 80.80 52.87 52.59 75.55 59.49
Allowance for loan losses to total loans
receivable, net............................ 1.03 1.00 0.93 0.91 1.05 0.90 0.87
</TABLE>
<PAGE>
EXHIBIT I-12
Provident Bank
Deposit Composition
<PAGE>
Exhibit I-12
Provident Bank
Deposit Composition
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------
JUNE 30, 1998 1997
------------------------------ --------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AMOUNT PERCENT RATE AMOUNT PERCENT RATE
-------- --------- --------- -------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits............ $ 55,072 9.5% --% $ 49,221 9.0% --%
NOW deposits............... 40,969 7.1 1.25 32,985 6.0 1.25
Savings deposits........... 161,263 27.8 2.25 153,171 28.0 2.25
Money market deposits...... 79,436 13.7 2.96 75,339 13.8 2.96
-------- ----- -------- -----
336,740 58.1 1.93 310,716 56.8 1.96
Certificates of deposit.... 243,335 41.9 5.22 236,130 43.2 5.31
-------- ----- -------- -----
Total deposits............. $580,075 100.0% 3.31% $546,846 100.0% 3.40%
======== ===== ==== ======== ===== ====
<CAPTION>
SEPTEMBER 30,
-----------------------------------------------------
1996 1995
------------------------- --------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AMOUNT PERCENT RATE AMOUNT PERCENT RATE
-------- -------- ----- -------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits............ $ 42,700 7.8% --% $ 28,153 6.3% --%
NOW deposits............... 30,950 5.7 1.25 25,664 5.9 1.25
Savings deposits........... 153,565 28.2 2.25 143,722 32.4 2.25
Money market deposits...... 77,111 14.1 2.97 59,149 13.3 3.20
-------- ----- -------- -----
304,326 55.8 2.02 256,688 57.9 2.12
Certificates of deposit.... 240,960 44.2 5.10 186,979 42.1 5.37
-------- ----- -------- -----
Total deposits............. $545,286 100.0% 3.38% $443,667 100.0% 3.49%
======== ===== ==== ======== ===== ====
</TABLE>
<PAGE>
EXHIBIT I-13
Provident Bank
Time Deposit Rate/Maturity
<PAGE>
Exhibit I-13
Provident Bank
Time Deposit Rate/Maturity
<TABLE>
<CAPTION>
At June 30, 1998
---------------------------------------------------------------------------- Total at
Period to Maturity September 30,
---------------------------------------------------------------------------- --------------------
LESS THAN ONE TO TWO TO MORE THAN PERCENT
INTEREST RATE RANGE ONE YEAR TWO YEARS THREE YEARS THREE YEARS TOTAL OF TOTAL 1997 1996
- ------------------- --------- --------- ----------- ----------- -------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4.00% and below....... $ 719 $ -- $ -- $ -- $ 719 0.3% $ 716 $ 925
4.01% to 5.00%........ 79,264 7,728 1,590 7 88,589 36.4 68,707 136,272
5.01% to 6.00%........ 90,717 31,522 5,340 5,116 132,695 54.5 151,729 74,627
6.01% to 7.00%........ 9,715 6,705 12 400 16,832 6.9 9,557 24,819
7.01% and above....... 97 4,051 146 206 4,500 1.9 5,421 4,317
--------- --------- ----------- ----------- -------- -------- -------- --------
Total............. $ 180,512 $ 50,006 $ 7,088 $ 5,729 $243,335 100.0% $236,130 $240,960
========= ========= =========== =========== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT I-14
Provident Bank
Borrowed Funds
<PAGE>
Exhibit I-14
Provident Bank
Borrowed Funds
<TABLE>
<CAPTION>
At or for the
Nine Months At or for the
Ended June 30, Years Ended September 30,
---------------------- ---------------------------------------
1998 1997 1997 1996 1995
------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance at end of period............................. $25,048 $13,000 $24,000 $13,000 $13,900
Average balance during period........................ 29,009 25,451 23,730 22,686 9,139
Maximum outstanding at any month end................. 33,000 38,000 38,000 56,400 20,300
Weighted average interest rate at end of period...... 6.13% 6.88% 6.69% 6.61% 7.15%
Average interest rate during period.................. 5.96% 6.20% 6.27% 6.49% 6.83%
</TABLE>
<PAGE>
EXHIBIT II-1
Provident Bank
List of Branch Offices
<PAGE>
Exhibit II-1
Provident Bank
List of Branch Offices
<TABLE>
<CAPTION>
NET BOOK VALUE
ORIGINAL OF PROPERTY OR
LEASED YEAR DATE OF LEASEHOLD
OR LEASED OR LEASE IMPROVEMENTS AT
LOCATION OWNED ACQUIRED EXPIRATION JUNE 30, 1998
- ----------------------------- --------- --------- ---------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ADMINISTRATIVE/HOME OFFICE:
Corporate Office Leased 1994 2009 $1,112
400 Rella Boulevard
Montebello, NY 10901
BRANCH OFFICES:
Haverstraw Office Leased 1995 2014 87
38-40 New Main Street
Haverstraw, NY 10927
Orangeburg Office Owned 1972 N/A 220
Route 303 at Kings Highway
Orangeburg, NY 10962
Stony Point Office Owned 1973 N/A 218
Route 9W
Stony Point, NY 10980
New City Office Owned 1966 N/A 1,164
179 South Main Street
New City, NY 10956
Nanuet Office (1) Leased 1996 2025 1,222
Route 59
Nanuet, NY 10954
Spring Valley Office Owned 1996 N/A 144
72 West Eckerson Road
Spring Valley, NY 10977
Congers Office Leased 1984 1999 349
1 Lake Road West
Congers, NY 10920
Mount Ivy Office Leased 1988 2009 213
120 Route 202
Mount Ivy, NY 10970
Suffern Office Owned 1981 N/A 319
71 Lafayette Avenue
Suffern, NY 10901
Airmont Office Owned 1975 N/A 266
196 Route 59
Airmont, NY 10901
Pearl River Office Leased 1994 1999 105
Shop-Rite Supermarket
26 North Middletown Road
Pearl River, NY 10965
</TABLE>
______________________________
(1) The Bank owns the building and leases the land.
<PAGE>
EXHIBIT II-2
Historical Interest Rates
<PAGE>
EXHIBIT II-2
HISTORICAL INTEREST RATES(1)
<TABLE>
<CAPTION>
Prime 90 Day One Year 30 Year
Year/Qtr. Ended Rate T-Bill T-Bill T-Bond
- --------------- ----- ------ ------- -------
<S> <C> <C> <C> <C>
1991: Quarter 1 8.75% 5.92% 6.24% 8.26%
Quarter 2 8.50% 5.72% 6.35% 8.43%
Quarter 3 8.00% 5.22% 5.38% 7.80%
Quarter 4 6.50% 3.95% 4.10% 7.47%
1992: Quarter 1 6.50% 4.15% 4.53% 7.97%
Quarter 2 6.50% 3.65% 4.06% 7.79%
Quarter 3 6.00% 2.75% 3.06% 7.38%
Quarter 4 6.00% 3.15% 3.59% 7.40%
1993: Quarter 1 6.00% 2.95% 3.18% 6.93%
Quarter 2 6.00% 3.09% 3.45% 6.67%
Quarter 3 6.00% 2.97% 3.36% 6.03%
Quarter 4 6.00% 3.06% 3.59% 6.34%
1994: Quarter 1 6.25% 3.56% 4.44% 7.09%
Quarter 2 7.25% 4.22% 5.49% 7.61%
Quarter 3 7.75% 4.79% 5.94% 7.82%
Quarter 4 8.50% 5.71% 7.21% 7.88%
1995: Quarter 1 9.00% 5.86% 6.47% 7.43%
Quarter 2 9.00% 5.57% 5.63% 6.63%
Quarter 3 8.75% 5.42% 5.68% 6.51%
Quarter 4 8.50% 5.09% 5.14% 5.96%
1996: Quarter 1 8.25% 5.14% 5.38% 6.67%
Quarter 2 8.25% 5.16% 5.68% 6.87%
Quarter 3 8.25% 5.03% 5.69% 6.92%
Quarter 4 8.25% 5.18% 5.49% 6.64%
1997: Quarter 1 8.50% 5.32% 6.00% 7.10%
Quarter 2 8.50% 5.17% 5.66% 6.78%
Quarter 3 8.50% 5.10% 5.44% 6.40%
Quarter 4 8.50% 5.34% 5.48% 5.92%
1998: Quarter 1 8.50% 5.12% 5.39% 5.93%
Quarter 2 8.50% 4.99% 5.37% 5.63%
September 4, 1998 8.50% 4.86% 4.89% 5.29%
</TABLE>
(1) End of period data.
Source: SNL Securities.
<PAGE>
EXHIBIT III-1
General Characteristics of Publicly-Traded Institutions
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit III-1
Characteristics of Publicly-Traded Thrifts
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
California Companies
- --------------------
AHM Ahmanson and Co. H.F. of CA NYSE Nationwide M.B. 52,826 371 12-31 10/72 51.75 5,835
GDW Golden West Fin. Corp. of CA NYSE Nationwide M.B. 39,067 249 12-31 05/59 77.06 4,438
GSB Golden State Bancorp of CA NYSE California Div. 18,117 178 06-30 10/83 17.75 985
DSL Downey Financial Corp. of CA NYSE Southern CA Thrift 5,832 85 12-31 01/71 23.31 655
BVCC Bay View Capital Corp. of CA OTC San Francisco CA M.B. 5,720 37 12-31 05/86 17.00 345
BPLS Bank Plus Corp. of CA OTC Los Angeles CA R.E. 4,286 37 12-31 / 7.25 141
FED FirstFed Fin. Corp. of CA NYSE Los Angeles CA R.E. 4,010 24 12-31 12/83 14.88 316
WES Westcorp Inc. of Orange CA NYSE California Div. 3,664 26 12-31 05/86 9.00 237
PFFB PFF Bancorp of Pomona CA OTC Southern CA Thrift 3,008 23 03-31 03/96 14.38 233
HTHR Hawthorne Fin. Corp. of CA OTC Southern CA Thrift 1,201 6 12-31 / 14.25 45
HEMT HF Bancorp of Hemet CA OTC Southern CA Thrift 1,046 19 06-30 06/95 14.13 90
ITLA ITLA Capital Corp of CA (3) OTC Los Angeles CA R.E. 1,021 6 12-31 10/95 15.75 121
QCBC Quaker City Bancorp of CA OTC Los Angeles CA R.E. 887 8 06-30 12/93 14.75 86
PROV Provident Fin. Holdings of CA OTC Southern CA M.B. 816 10 06-30 06/96 14.75 72
HBNK Highland Bancorp of CA OTC Los Angeles CA R.E. 573 7 12-31 / 38.00 89
LFCO Life Financial Corp of CA OTC Southern CA Thrift 472 5 12-31 / 5.00 33
MBBC Monterey Bay Bancorp of CA OTC West Central CA Thrift 436 7 12-31 02/95 16.00 63
SGVB SGV Bancorp of W. Covina CA OTC Los Angeles CA Thrift 408 8 06-30 06/95 11.75 28
BYFC Broadway Fin. Corp. of CA OTC Los Angeles CA Thrift 128 M 3 12-31 01/96 8.25 8
Florida Companies
- -----------------
BANC BankAtlantic Bancorp of FL OTC Southeastern FL M.B. 3,757 60 12-31 11/83 9.31 341
BKUNA BankUnited Fin. Corp. of FL OTC Miami FL Thrift 3,584 16 09-30 12/85 9.50 169
OCN Ocwen Financial Corp. of FL NYSE Southeast FL Div. 3,505 1 12-31 / 14.44 878
FFPB First Palm Beach Bancorp of FL OTC Southeast FL Thrift 1,764 47 09-30 09/93 31.00 159
FFFL Fidelity Bcsh MHC of FL (47.9) OTC Southeast FL Thrift 1,468 20 12-31 01/94 24.00 163
HARB Harbor Florida Bancshrs of FL OTC Eastern FL Thrift 1,319 23 09-30 03/98 10.50 323
CMSV Commty. Svgs, MHC of FL (48.5) OTC Southeast FL Thrift 766 21 12-31 10/94 22.00 112
FFLC FFLC Bancorp of Leesburg FL OTC Central FL Thrift 412 9 12-31 01/94 17.50 65
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DME Dime Bancorp, Inc. of NY (3) NYSE NY,NJ,FL M.B. 20,914 91 12-31 08/86 22.75 2,583
SVRN Sovereign Bancorp, Inc. of PA OTC PA,NJ,DE M.B. 18,848 150 12-31 08/86 13.13 2,001
GPT GreenPoint Fin. Corp. of NY (3) NYSE New York City NY Thrift 12,853 74 12-31 01/94 28.94 2,413
ASFC Astoria Financial Corp. of NY OTC New York City NY Thrift 11,575 61 12-31 11/93 37.88 1,005
LISB Long Island Bancorp, Inc of NY OTC Long Island NY M.B. 6,484 35 09-30 04/94 42.88 1,037
ICBC Independence Comm Bnk Cp of NY OTC New York City Thrift 4,786 34 March 03/98 12.81 974
ALBK ALBANK Fin. Corp. of Albany NY OTC Upstate NY,MA,VT Thrift 4,131 108 12-31 04/92 55.63 736
ROSE T R Financial Corp. of NY (3) OTC New York City NY Thrift 4,116 15 12-31 06/93 28.00 491
RSLN Roslyn Bancorp, Inc. of NY (3) OTC Long Island NY M.B. 3,853 8 12-31 01/97 16.63 688
SIB Staten Island Bancorp of NY (3) NYSE New York City NY Thrift 3,019 16 12-31 12/97 16.81 759
NWSB Northwest Bcrp MHC of PA (30.8 OTC Northwest PA Thrift 2,547 67 06-30 11/94 10.88 510
RELY Reliance Bancorp, Inc. of NY OTC New York City NY Thrift 2,486 30 06-30 03/94 26.00 249
CMSB Commonwealth Bancorp Inc of PA OTC Philadelphia PA M.B. 2,368 56 12-31 06/96 15.00 232
HARS Harris Fin. MHC of PA (24.9) OTC Harrisburg PA M.B. 2,326 33 12-31 01/94 13.88 471
HAVN Haven Bancorp of Woodhaven NY OTC New York City NY Thrift 2,265 33 12-31 09/93 14.38 127
QCSB Queens County Bancorp of NY (3) OTC New York City NY Thrift 1,715 11 12-31 11/93 39.75 594
DCOM Dime Community Bancorp of NY (3) OTC New York City NY Thrift 1,624 15 06-30 06/96 18.00 219
RCBK Richmond County Fin Corp of NY OTC New York City Thrift 1,596 13 June 02/98 13.56 358
JSB JSB Financial, Inc. of NY (3) NYSE New York City NY Thrift 1,563 13 12-31 06/90 46.81 460
PFSB PennFed Fin. Services of NJ OTC Northern NJ Thrift 1,552 18 06-30 07/94 13.00 122
WSFS WSFS Financial Corp. of DE (3) OTC Wilmington Div. 1,552 16 12-31 11/86 16.00 200
OCFC Ocean Fin. Corp. of NJ OTC Eastern NJ Thrift 1,538 10 12-31 07/96 14.63 227
NBCP Niagara Bancorp of NY MHC(45.4 (3) OTC Northern NY Thrift 1,296 P 15 12/31 04/98 11.25 335
YFED York Financial Corp. of PA OTC PA,MD Thrift 1,229 22 06-30 02/84 18.25 164
FSLA First Source Bancorp of NJ OTC Eastern NJ Thrift 1,221 17 12-31 04/98 8.00 254
MFSL Maryland Fed. Bancorp of MD OTC Southern MD Thrift 1,192 M 27 02-28 06/87 32.88 216
PVSA Parkvale Financial Corp of PA OTC Southwestern PA Thrift 1,095 29 06-30 07/87 30.00 155
FFIC Flushing Fin. Corp. of NY (3) OTC New York City NY Thrift 1,092 7 12-31 11/95 22.00 172
ESBF ESB Financial Corp of PA OTC Western PA Thrift 946 M 11 12-31 06/90 15.75 89
TSBS Peoples Bancorp Inc of NJ (3) OTC Central NJ Thrift 874 14 12-31 04/98 8.31 302
GAF GA Financial Corp. of PA AMEX Pittsburgh PA Thrift 838 13 12-31 03/96 13.38 97
HRBT Hudson River Bancorp Inc of NY OTC Southeast NY Thrift 815 P 11 03-31 07/98 10.56 189
FBBC First Bell Bancorp of PA OTC Pittsburgh PA Thrift 757 7 12-31 06/95 16.00 104
FSNJ Bayonne Banchsares of NJ OTC Northern NJ Thrift 700 4 03-31 08/97 13.16 120
THRD TF Financial Corp. of PA OTC PA, NJ Thrift 689 14 12-31 07/94 17.75 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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
- ----------------------------------
FMCO FMS Financial Corp. of NJ OTC Southern NJ Thrift 674 20 12-31 12/88 11.25 81
SFIN Statewide Fin. Corp. of NJ OTC Northern NJ Thrift 657 16 12-31 10/95 16.75 74
LVSB Lakeview Financial of NJ OTC Northern NJ Thrift 620 M 8 07-31 12/93 21.50 107
PFNC Progress Financial Corp. of PA OTC Southeastern PA Thrift 602 10 12-31 07/83 13.75 72
AHCI Ambanc Holding Co., Inc. of NY (3) OTC East-Central NY Thrift 565 12 12-31 12/95 13.00 53
PULS Pulse Bancorp of S. River NJ OTC Central NJ Thrift 544 4 09-30 09/86 25.00 78
NEP Northeast PA Fin. Corp of PA AMEX Northeast PA Thrift 478 10 DEC 04/98 10.63 68
CNY Carver Bancorp, Inc. of NY AMEX New York, NY Thrift 437 M 7 03-31 10/94 9.50 22
RARB Raritan Bancorp of Raritan NJ (3) OTC Central NJ Thrift 435 6 12-31 03/87 25.50 61
YFCB Yonkers Fin. Corp. of NY OTC Yonkers NY Thrift 402 4 09-30 04/96 15.50 43
FSBI Fidelity Bancorp, Inc. of PA OTC Southwestern PA Thrift 396 8 09-30 06/88 18.50 37
HARL Harleysville SB of PA OTC Southeastern PA Thrift 395 4 09-30 08/87 29.63 50
PBCI Pamrapo Bancorp, Inc. of NJ OTC Northern NJ Thrift 394 10 12-31 11/89 24.13 69
FKFS First Keystone Fin. Corp of PA OTC Philadelphia PA Thrift 391 5 09-30 01/95 12.00 29
CVAL Chester Valley Bancorp of PA OTC Southeastern PA Thrift 377 7 06-30 03/87 26.00 64
FOBC Fed One Bancorp of Wheeling WV OTC Northern WV,OH Thrift 374 11 12-31 01/95 37.38 90
PHFC Pittsburgh Home Fin Corp of PA OTC Pittsburgh PA Thrift 373 9 09-30 04/96 13.50 27
WSBI Warwick Community Bncrp of NY (3) OTC Southeast NY Thrift 371 M 4 05-31 12/97 11.63 77
LFBI Little Falls Bancorp of NJ OTC New Jersey Thrift 351 6 12-31 01/96 14.63 36
EQSB Equitable FSB of Wheaton MD OTC Central MD Thrift 351 4 09-30 09/93 23.00 28
THTL Thistle Group Holdings of PA OTC Philadelphia Thrift 349 P 6 12-31 07/98 8.50 77
FIBC Financial Bancorp, Inc. of NY OTC New York City NY Thrift 341 5 09-30 08/94 31.00 53
CATB Catskill Fin. Corp. of NY (3) OTC Albany NY Thrift 310 4 09-30 04/96 12.75 57
FBER 1st Bergen Bancorp of NJ OTC Northern NJ Thrift 301 4 12-31 04/96 16.25 42
LFED Leeds Fed Bksr MHC of MD (36.3 OTC Baltimore MD Thrift 299 M 1 06-30 05/94 15.75 82
WVFC WVS Financial Corp. of PA OTC Pittsburgh PA Thrift 297 5 06-30 11/93 15.31 55
ALLB Alliance Bank MHC of PA (19.9) OTC Southeast PA Thrift 277 7 12-31 03/95 15.25 50
WYNE Wayne Bancorp, Inc. of NJ OTC Northern NJ Thrift 275 5 12-31 06/96 29.00 58
IFSB Independence FSB of DC OTC Washington DC Ret. 275 M 2 12-31 06/85 13.00 17
BCSB BCSB Bankcorp MHC of MD (38.6) OTC Baltimore Thrift 274 P 6 12-31 07/98 10.44 64
WSB Washington SB, FSB of MD AMEX Southeastern MD Thrift 274 M 5 12-31 / 4.88 22
SKAN Skaneateles Bancorp Inc of NY (3) OTC Northwest NY Thrift 267 9 12-31 06/86 14.63 21
SBFL SB Fngr Lakes MHC of NY (33.1) OTC Western NY Thrift 258 5 12-31 11/94 14.50 52
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
- ----------------------------------
LIBB Liberty Bancorp MHC of NJ (47) OTC Northeast NJ Thrift 255 4 12-31 07/98 10.19 40
HRBF Harbor Federal Bancorp of MD OTC Baltimore MD Thrift 236 9 03-31 08/94 18.00 34
ESBK Elmira Svgs Bank (The) of NY (3) OTC NY,PA Thrift 232 6 12-31 03/85 24.00 17
PHSB Ppls Home SB, MHC of PA (45.0) OTC Western PA Thrift 227 9 12-31 07/97 14.75 41
LARL Laurel Capital Group of PA OTC Southwestern PA Thrift 221 6 06-30 02/87 16.50 36
CRSB Crusader Holding Corp of PA OTC Philadephia Thrift 202 2 12-31 / 12.75 49
PEEK Peekskill Fin. Corp. of NY OTC Southeast NY Thrift 200 3 06-30 12/95 14.75 43
PBHC Pathfinder BC MHC of NY (45.2) (3) OTC Upstate NY Thrift 198 5 12-31 11/95 13.25 38
PLSK Pulaski SB, MHC of NJ (47.0) OTC New Jersey Thrift 188 6 12-31 04/97 13.00 27
SFED SFS Bancorp of Schenectady NY OTC Eastern NY Thrift 178 4 12-31 06/95 26.50 32
AFED AFSALA Bancorp, Inc. of NY OTC Central NY Thrift 166 M 5 09-30 10/96 13.50 18
PRBC Prestige Bancorp of PA OTC Southwestern PA Thrift 165 4 12-31 06/96 13.13 14
PSBI PSB Bancorp Inc. of PA (3) OTC Philadelphia Thrift 147 P 6 12-31 07/98 7.13 22
SKBO First Carnegie MHC of PA(45.0) OTC Western PA Thrift 146 3 03-31 04/97 11.00 25
USAB USABancshares, Inc of PA (3) OTC Philadelphia PA Thrift 135 1 12-31 / 8.50 17
WHGB WHG Bancshares of MD OTC Baltimore MD Thrift 132 5 09-30 04/96 11.00 15
GOSB GSB Financial Corp. of NY (3) OTC Southeast NY Thrift 129 2 09-30 07/97 11.75 26
AFBC Advance Fin. Bancorp of WV OTC Northern Neck WV Thrift 111 M 2 06-30 01/97 14.38 15
ALBC Albion Banc Corp. of Albion NY OTC Western NY Thrift 74 2 09-30 07/93 8.63 6
PWBK Pennwood Bancorp, Inc. of PA OTC Pittsburgh PA Thrift 46 3 06-30 07/96 11.00 8
Mid-West Companies
- ------------------
COFI Charter One Financial of OH OTC OH,MI,NY Div. 19,813 221 12-31 01/88 26.63 3,399
CFB Commercial Federal Corp. of NE NYSE NE,CO,KS,OK,IA M.B. 8,853 108 06-30 12/84 23.06 970
SPBC St. Paul Bancorp, Inc. of IL OTC Chicago IL Div. 4,565 52 12-31 05/87 19.88 683
MAFB MAF Bancorp, Inc. of IL OTC Chicago IL Thrift 3,570 21 12-31 01/90 22.13 500
FLGS Flagstar Bancorp, Inc of MI OTC MI Thrift 2,573 19 12/31 / 21.00 287
ABCL Alliance Bancorp, Inc. of IL OTC Chicago IL M.B. 2,068 14 12-31 07/92 17.25 197
ABCW Anchor Bancorp Wisconsin of WI OTC Wisconsin M.B. 2,058 35 03-31 07/92 22.19 396
DNFC D&N Financial Corp. of MI OTC Northern MI Ret. 1,898 37 12-31 02/85 17.50 160
STFR St. Francis Cap. Corp. of WI OTC Milwaukee WI Thrift 1,755 23 09-30 06/93 38.88 199
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
FISB First Indiana Corp. of IN OTC Central IN M.B. 1,751 26 12-31 08/83 19.75 252
FTFC First Fed. Capital Corp. of WI OTC Southern WI M.B. 1,584 49 12-31 11/89 14.25 264
CITZ CFS Bancorp, Inc. of IN OTC IN,IL Thrift 1,421 P 24 12-31 07/98 9.13 207
UCFC United Community Fin. of OH OTC Youngstown Thrift 1,291 P 14 12-31 07/98 14.13 473
JSBA Jefferson Svgs Bancorp of MO OTC St. Louis MO,TX Thrift 1,242 M 32 12-31 04/93 17.00 171
METF Metropolitan Fin. Corp. of OH OTC Northeast OH Thrift 1,059 15 12-31 / 11.75 83
OFCP Ottawa Financial Corp. of MI OTC Western MI Thrift 920 26 12-31 08/94 23.75 136
CFSB CFSB Bancorp of Lansing MI OTC Central MI Thrift 848 17 12-31 06/90 21.75 178
HMNF HMN Financial, Inc. of MN OTC Southeast MN Thrift 732 M 7 12-31 06/94 13.75 75
HOMF Home Fed Bancorp of Seymour IN OTC Southern IN Thrift 720 16 06-30 01/88 24.50 126
SFSL Security First Corp. of OH OTC Northeastern OH R.E. 696 14 03-31 01/88 19.19 151
FNGB First Northern Cap. Corp of WI OTC Northeast WI Thrift 690 19 12-31 12/83 10.75 95
FFYF FFY Financial Corp. of OH OTC Youngstown OH Thrift 652 10 06-30 06/93 29.50 118
EMLD Emerald Financial Corp. of OH OTC Cleveland OH Thrift 617 14 12-31 / 12.00 123
MSBK Mutual SB, FSB of Bay City MI OTC Michigan M.B. 614 22 12-31 07/92 6.75 29
AVND Avondale Fin. Corp. of IL OTC Chicago IL Ret. 607 M 5 12-31 04/95 12.25 37
CAFI Camco Fin. Corp. of OH OTC Eastern OH M.B. 588 11 12-31 / 16.00 88
FDEF First Defiance Fin.Corp. of OH OTC Northwest OH Thrift 582 10 12-31 10/95 11.88 97
HFFC HF Financial Corp. of SD OTC South Dakota Thrift 570 19 06-30 04/92 15.50 68
FFSX First FSB MHC Sxld of IA(46.3) OTC Western IA Thrift 552 13 06-30 07/92 28.00 80
FFOH Fidelity Financial of OH OTC Cincinnati OH Thrift 532 12 12-31 03/96 13.00 73
FCBF FCB Fin. Corp. of Neenah WI OTC Eastern WI Thrift 518 M 13 03-31 09/93 27.25 105
PERM Permanent Bancorp, Inc. of IN OTC Southwest IN Thrift 507 11 03-31 04/94 12.75 54
FBCI Fidelity Bancorp of Chicago IL OTC Chicago IL Thrift 502 5 09-30 12/93 21.13 60
CBCI Calumet Bancorp of Chicago IL OTC Chicago IL Thrift 492 5 12-31 02/92 26.50 83
HFGI Harrington Fin. Group of IN OTC Eastern IN Thrift 484 4 06-30 / 9.63 32
HALL Hallmark Capital Corp. of WI OTC Milwaukee WI Thrift 438 3 06-30 01/94 11.75 34
CASH First Midwest Fin., Inc. of OH OTC IA,SD R.E. 421 12 09-30 09/93 18.13 47
PVFC PVF Capital Corp. of OH OTC Cleveland OH R.E. 419 M 9 06-30 12/92 10.00 40
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 414 11 09-30 10/94 14.38 42
FFKY First Fed. Fin. Corp. of KY OTC Central KY Thrift 410 8 06-30 07/87 23.63 98
KNK Kankakee Bancorp, Inc. of IL AMEX Illinois Thrift 402 9 12-31 01/93 24.50 34
EFC EFC Bancorp Inc of IL AMEX Southeast IL Thrift 398 6 DEC 04/98 10.25 77
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
INBI Industrial Bancorp of OH OTC Northern OH Thrift 383 10 12-31 08/95 16.75 84
FMBD First Mutual Bancorp Inc of IL OTC Central IL Thrift 380 14 12-31 07/95 16.63 59
ASBI Ameriana Bancorp of IN OTC Eastern IN,OH Thrift 375 8 12-31 03/87 18.00 59
HBEI Home Bancorp of Elgin IL OTC Northern IL Thrift 368 4 12-31 09/96 12.50 86
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 366 M 5 09-30 10/94 27.38 61
HBFW Home Bancorp of Fort Wayne IN OTC Northeast IN Thrift 360 9 09-30 03/95 27.00 63
WOFC Western Ohio Fin. Corp. of OH OTC Western OH Thrift 357 10 12-31 07/94 20.75 48
FFFD North Central Bancshares of IA OTC Central IA Thrift 333 M 4 12-31 03/96 16.19 51
WFI Winton Financial Corp. of OH AMEX Cincinnati OH R.E. 324 S 5 09-30 08/88 11.50 46
FSFF First SecurityFed Fin of IL OTC Chicago, IL Thrift 323 M 5 12-31 10/97 12.25 78
WCBI WestCo Bancorp, Inc. of IL OTC Chicago IL Thrift 320 1 12-31 06/92 28.75 71
PFDC Peoples Bancorp of Auburn IN OTC Northeastern IN Thrift 304 7 09-30 07/87 20.50 69
GFCO Glenway Financial Corp. of OH OTC Cincinnati OH Thrift 300 M 5 06-30 11/90 19.00 43
MFBC MFB Corp. of Mishawaka IN OTC Northern IN Thrift 291 5 09-30 03/94 18.00 29
CBK Citizens First Fin.Corp. of IL AMEX Central IL Thrift 281 7 12-31 05/96 14.38 36
EBI Equality Bancorp, Inc. of MO AMEX St Louis Thrift 273 3 03-31 12/97 13.06 33
FBCV 1st Bancorp of Vincennes IN OTC Southwestern IN M.B. 260 2 06-30 04/87 42.25 46
GFED Guaranty Fed Bancshares of MO OTC Southwest MO Thrift 260 4 06-30 12/97 10.50 65
WAYN Wayne Svgs Bks MHC of OH (48.2 OTC Central OH Thrift 259 6 03-31 06/93 21.25 53
OHSL OHSL Financial Corp. of OH OTC Cincinnati, OH Thrift 248 5 12-31 02/93 14.63 37
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 238 7 12-31 01/88 14.50 26
MFFC Milton Fed. Fin. Corp. of OH OTC Southwest OH Thrift 235 3 09-30 10/94 12.75 29
LARK Landmark Bancshares, Inc of KS OTC Central KS Thrift 229 5 09-30 03/94 22.00 34
CMRN Cameron Fin. Corp. of MO OTC Northwest MO Thrift 221 3 09-30 04/95 16.00 39
BFFC Big Foot Fin. Corp. of IL OTC Chicago IL Thrift 221 3 06-30 12/96 14.00 35
LSBI LSB Fin. Corp. of Lafayette IN OTC Central IN Thrift 219 4 12-31 02/95 30.50 29
HFBC HopFed Bancorp of KY OTC Southwest KY Thrift 218 5 09-30 02/98 16.63 67
MBLF MBLA Financial Corp. of MO OTC Northeast MO Thrift 207 M 2 06-30 06/93 19.75 25
FFBZ First Federal Bancorp of OH OTC Eastern OH Thrift 207 6 09-30 07/92 10.00 32
FFWC FFW Corporation of Wabash IN OTC Central IN Thrift 203 4 06-30 04/93 15.00 22
NEIB Northeast Indiana Bncrp of IN OTC Northeast IN Thrift 203 3 12-31 06/95 18.25 30
FFED Fidelity Fed. Bancorp of IN OTC Southwestern IN Thrift 197 M 4 06-30 08/87 3.63 11
PFED Park Bancorp of Chicago IL OTC Chicago IL Thrift 197 3 12-31 08/96 14.00 34
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
MARN Marion Capital Holdings of IN OTC Central IN Thrift 194 2 06-30 03/93 23.00 39
HMLK Hemlock Fed. Fin. Corp. of IL OTC Chicago IL Thrift 192 3 12-31 04/97 14.50 28
WEFC Wells Fin. Corp. of Wells MN OTC Southcentral MN Thrift 189 8 12-31 04/95 16.75 31
PULB Pulaski Bk,SB MHC of MO (29.8) OTC St. Louis MO Thrift 184 M 5 09-30 05/94 23.88 50
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 182 3 06-30 03/95 11.13 29
EGLB Eagle BancGroup of IL OTC Central IL Thrift 174 3 12-31 07/96 15.75 19
FBSI First Bancshares, Inc. of MO OTC Southcentral MO Thrift 172 6 06-30 12/93 12.75 28
JXSB Jcksnville SB,MHC of IL (45.6) OTC Central IL Thrift 170 4 12-31 04/95 15.25 29
FFWD Wood Bancorp of OH OTC Northern OH Thrift 166 7 06-30 08/93 15.00 40
MWBI Midwest Bancshares, Inc. of IA OTC Southeast IA Thrift 159 4 12-31 11/92 11.00 12
SMBC Southern Missouri Bncrp of MO OTC Southeast MO Thrift 156 8 06-30 04/94 16.00 24
QCFB QCF Bancorp of Virginia MN OTC Northeast MN Thrift 154 M 2 06-30 04/95 28.00 38
GTPS Great American Bancorp of IL OTC East Central IL Thrift 148 3 12-31 06/95 16.75 27
CLAS Classic Bancshares, Inc. of KY OTC Eastern KY Thrift 138 3 03-31 12/95 14.13 18
MIFC Mid Iowa Financial Corp. of IA OTC Central IA Thrift 135 7 09-30 10/92 13.00 23
FKKY Frankfort First Bancorp of KY OTC Frankfort KY Thrift 134 3 06-30 07/95 14.25 23
RIVR River Valley Bancorp of IN OTC Southeast IN Thrift 134 M 6 12-31 12/96 15.00 18
HFSA Hardin Bancorp of Hardin MO OTC Western MO Thrift 133 3 03-31 09/95 16.75 14
PTRS Potters Financial Corp of OH OTC Northeast OH Thrift 128 4 12-31 12/93 14.00 13
WEHO Westwood Hmstd Fin Corp of OH OTC Cincinnati OH Thrift 126 2 12-31 09/96 10.63 27
CBES CBES Bancorp, Inc. of MO OTC Western MO Thrift 124 2 06-30 09/96 19.00 18
FFSL First Independence Corp. of KS OTC Southeast KS Thrift 123 2 09-30 10/93 11.50 11
NBSI North Bancshares of Chicago IL OTC Chicago IL Thrift 123 2 12-31 12/93 11.88 15
BDJI First Fed. Bancorp. of MN OTC Northern MN Thrift 121 5 09-30 04/95 14.75 15
CFKY Columbia Financial of KY OTC NorthCentral KY Thrift 119 5 12-31 04/98 12.00 32
MONT Montgomery Fin. Corp. of IN OTC Westcentral IN Thrift 117 4 06-30 07/97 10.38 17
ASBP ASB Financial Corp. of OH OTC Southern OH Thrift 116 1 06-30 05/95 11.50 19
DCBI Delphos Citizens Bancorp of OH OTC Northwest OH Thrift 114 1 09-30 11/96 18.53 34
AMFC AMB Financial Corp. of IN OTC Northwest IN Thrift 111 4 12-31 04/96 14.50 13
FTNB Fulton Bancorp, Inc. of MO OTC Central MO Thrift 110 M 2 06-30 10/96 16.88 29
HFFB Harrodsburg 1st Fin Bcrp of KY OTC Central KY Thrift 109 2 09-30 10/95 15.25 29
UCBC Union Community Bancorp of IN OTC W.Central IN Thrift 108 M 1 12-31 12/97 11.00 33
FKAN First Kansas Financial of KS OTC Kansas City subs Thrift 108 P 6 12-31 06/98 10.13 16
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
PSFC Peoples Sidney Fin. Corp of OH OTC WestCentral OH Thrift 106 1 06-30 04/97 18.50 33
CIBI Community Inv. Bancorp of OH OTC NorthCentral OH Thrift 102 M 3 06-30 02/95 12.94 17
FTSB Fort Thomas Fin. Corp. of KY OTC Northern KY Thrift 101 2 09-30 06/95 13.25 20
FFDF FFD Financial Corp. of OH OTC Northeast OH Thrift 100 M 1 06-30 04/96 17.00 25
THR Three Rivers Fin. Corp. of MI AMEX Southwest MI Thrift 98 M 4 06-30 08/95 16.25 13
CNSB CNS Bancorp, Inc. of MO OTC Central MO Thrift 98 5 12-31 06/96 15.13 25
WCFB Wbstr Cty FSB MHC of IA (45.6) OTC Central IA Thrift 97 1 12-31 08/94 15.25 32
NWEQ Northwest Equity Corp. of WI OTC Northwest WI Thrift 96 3 03-31 10/94 17.50 14
LXMO Lexington B&L Fin. Corp. of MO OTC West Central MO Thrift 95 1 09-30 06/96 14.00 14
HZFS Horizon Fin'l. Services of IA OTC Central IA Thrift 93 M 3 06-30 06/94 15.50 14
HHFC Harvest Home Fin. Corp. of OH OTC Southwest OH Thrift 91 M 3 09-30 10/94 12.50 11
LOGN Logansport Fin. Corp. of IN OTC Northern IN Thrift 90 1 12-31 06/95 14.75 19
SOBI Sobieski Bancorp of S. Bend IN OTC Northern IN Thrift 90 M 3 06-30 03/95 15.00 11
SFFC StateFed Financial Corp. of IA OTC Des Moines IA Thrift 90 2 06-30 01/94 10.00 16
PCBC Perry Co. Fin. Corp. of MO OTC EastCentral MO Thrift 90 1 09-30 02/95 21.50 18
PSFI PS Financial of Chicago IL OTC Chicago IL Thrift 85 1 12-31 11/96 11.13 22
PFFC Peoples Fin. Corp. of OH OTC Northeast OH Thrift 85 2 09-30 09/96 10.63 14
KYF Kentucky First Bancorp of KY AMEX Central KY Thrift 82 2 06-30 08/95 13.63 17
HLFC Home Loan Financial Corp of OH OTC Central Ohio Thrift 82 0 03/98 13.38 30
MSBF MSB Financial, Inc of MI OTC Southcentral MI Thrift 80 2 06-30 02/95 14.25 19
HCFC Home City Fin. Corp. of OH OTC Southwest OH Thrift 78 1 06-30 12/96 12.00 11
CKFB CKF Bancorp of Danville KY OTC Central KY Thrift 63 1 12-31 01/95 16.50 14
NSLB NS&L Bancorp, Inc of Neosho MO OTC Southwest MO Thrift 63 2 09-30 06/95 16.00 11
MRKF Market Fin. Corp. of OH OTC Cincinnati OH Thrift 54 2 09-30 03/97 11.00 15
FLKY First Lancaster Bncshrs of KY OTC Central KY Thrift 53 M 1 06-30 07/96 13.69 13
CSBF CSB Financial Group Inc of IL OTC Centralia IL Thrift 48 M 2 09-30 10/95 10.13 8
RELI Reliance Bancshares Inc of WI OTC Milwaukee WI Thrift 44 M 1 06-30 04/96 9.13 22
HWEN Home Financial Bancorp of IN OTC Central IN Thrift 43 1 06-30 07/96 7.75 7
New England Companies
- ---------------------
PHBK Peoples Heritage Fin Grp of ME (3) OTC ME,NH,MA Div. 9,768 141 12-31 12/86 16.75 1,467
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
- ---------------------------------
WBST Webster Financial Corp. of CT OTC Central CT Thrift 9,189 84 12-31 12/86 22.88 877
PBCT Peoples Bank, MHC of CT (41.2) (3) OTC Southwestern CT Div. 9,105 111 12-31 07/88 23.19 1,487
SISB SIS Bancorp, Inc. of MA (3) OTC Central MA Div. 1,842 25 12-31 02/95 35.06 244
ANDB Andover Bancorp, Inc. of MA (3) OTC MA,NH M.B. 1,392 12 12-31 05/86 27.50 178
FAB FirstFed America Bancorp of MA AMEX MA,RI M.B. 1,316 13 03-31 01/97 14.31 118
FESX First Essex Bancorp of MA (3) OTC MA,NH Div. 1,315 15 12-31 08/87 16.00 121
MDBK Medford Bancorp, Inc. of MA (3) OTC Eastern MA Thrift 1,135 16 12-31 03/86 35.00 156
BFD BostonFed Bancorp of MA AMEX Boston MA M.B. 1,058 10 12-31 10/95 16.75 90
FFES First Fed of E. Hartford CT OTC Central CT Thrift 980 12 12-31 06/87 25.13 69
MECH MECH Financial Inc of CT (3) OTC Hartford CT Thrift 955 14 12-31 06/96 23.88 126
MASB MassBank Corp. of Reading MA (3) OTC Eastern MA Thrift 930 15 12-31 05/86 39.75 143
PBKB People's Bancshares of MA (3) OTC Southeastern MA Thrift 858 14 12-31 10/86 16.75 56
BRKL Brookline Bncp MHC of MA(47.0) OTC Brookline Thrift 817 M 5 08-31 03/98 10.88 317
BKC American Bank of Waterbury CT (3) AMEX Western CT Thrift 686 14 12-31 12/81 20.69 97
MWBX MetroWest Bank of MA (3) OTC Eastern MA Thrift 658 12 12-31 10/86 6.38 91
NSSY NSS Bancorp of CT (3) OTC Southwest CT Thrift 652 8 12-31 06/94 41.63 99
ABBK Abington Bancorp of MA (3) OTC Southeastern MA M.B. 546 8 12-31 06/86 15.13 53
SWCB Sandwich Bancorp of MA (3) OTC Southeastern MA Thrift 531 11 12-31 07/86 58.00 118
BKCT Bancorp Connecticut of CT (3) OTC Central CT Thrift 495 3 12-31 07/86 16.25 83
WRNB Warren Bancorp of Peabody MA (3) OTC Eastern MA R.E. 378 6 12-31 07/86 10.13 80
CEBK Central Co-Op. Bank of MA (3) OTC Eastern MA Thrift 376 M 8 03-31 10/86 19.50 38
NMSB Newmil Bancorp, Inc. of CT (3) OTC Western CT Thrift 368 15 06-30 02/86 10.75 41
LSBX Lawrence Savings Bank of MA (3) OTC Northeastern MA Thrift 345 5 12-31 05/86 12.00 52
NHTB NH Thrift Bancshares of NH OTC Central NH Thrift 324 10 12-31 05/86 14.00 29
NBN Northeast Bancorp of ME (3) AMEX Eastern ME Thrift 311 M 11 06-30 08/87 11.00 25
BYS Bay State Bancorp of MA (3) NYSE Brookline Thrift 290 P 0 DEC 03/98 19.75 50
HPBC Home Port Bancorp, Inc. of MA (3) OTC Southeastern MA Thrift 260 2 12-31 08/88 19.75 36
ANE Alliance Bncp of New Eng of CT (3) AMEX Northern CT Thrift 252 7 12-31 12/86 10.94 27
HIFS Hingham Inst. for Sav. of MA (3) OTC Eastern MA Thrift 239 5 12-31 12/88 22.75 30
IPSW Ipswich SB of Ipswich MA (3) OTC Northwest MA Thrift 234 6 12-31 05/93 12.00 29
MYST Mystic Financial of MA (3) OTC Medford Thrift 199 3 06-30 01/98 11.50 31
FCME First Coastal Corp. of ME (3) OTC Southern ME Thrift 172 7 12-31 / 11.75 16
KSBK KSB Bancorp of Kingfield ME (3) OTC Western ME M.B. 155 M 8 12-31 06/93 17.25 22
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
- ---------------------------------
MFLR Mayflower Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 143 4 04-30 12/87 18.00 16
NTMG Nutmeg FS&LA of CT OTC Eastern CT M.B. 112 3 12-31 / 12.00 13
FCB Falmouth Bancorp, Inc. of MA (3) AMEX Southeast MA Thrift 111 2 09-30 03/96 16.75 24
MCBN Mid-Coast Bancorp of ME OTC Eastern ME Thrift 65 2 03-31 11/89 7.50 5
North-West Companies
- --------------------
WFSL Washington Federal, Inc. of WA OTC Western US Thrift 5,559 104 09-30 11/82 22.25 1,167
IWBK Interwest Bancorp of WA OTC Western WA Div. 2,091 M 39 09-30 / 25.38 398
STSA Sterling Financial Corp. of WA OTC WA,OR M.B. 2,077 41 12-31 / 15.88 121
FWWB First Savings Bancorp of WA OTC Central WA Thrift 1,154 M 20 03-31 11/95 20.13 236
KFBI Klamath First Bancorp of OR OTC Southern OR Thrift 1,009 33 09-30 10/95 14.00 139
HRZB Horizon Financial Corp. of WA (3) OTC Northwest WA Thrift 553 12 03-31 08/86 14.00 105
FMSB First Mutual SB of Bellevue WA (3) OTC Western WA M.B. 451 S 8 12-31 12/85 12.75 54
CASB Cascade Financial Corp. of WA OTC Seattle WA Thrift 444 11 06-30 09/92 12.75 54
HFWA Heritage Financial Corp of WA OTC NW Washington Thrift 323 M 10 06-30 01/98 11.13 109
RVSB Riverview Bancorp of WA OTC Southwest WA Thrift 269 9 03-31 10/97 12.00 74
TSBK Timberland Bancorp of WA OTC Grays Harbor Thrift 263 5 06-30 01/98 12.38 82
OTFC Oregon Trail Fin. Corp. of OR OTC Baker City Thrift 256 7 03-31 10/97 12.13 57
FBNW FirstBank Corp of Clarkston WA OTC West. WA/East ID Thrift 194 5 03-31 07/97 15.13 30
EFBC Empire Federal Bancorp of MT OTC Southern MT Thrift 111 M 3 12-31 01/97 13.13 33
South-East Companies
- --------------------
BNKU Bank United Corp. of TX OTC TX,AZ Thrift 13,096 71 09-30 08/96 35.44 1,120
FFCH First Fin. Holdings Inc. of SC OTC Charleston SC Div. 1,874 34 09-30 11/83 18.50 252
FLFC First Liberty Fin. Corp. of GA OTC Georgia M.B. 1,355 M 31 09-30 12/83 20.00 267
EBSI Eagle Bancshares of Tucker GA OTC Atlanta GA Thrift 1,120 14 03-31 04/86 17.00 99
HFNC HFNC Financial Corp. of NC OTC Charlotte NC Thrift 1,008 10 06-30 12/95 10.50 181
CNIT Cenit Bancorp of Norfolk VA OTC Southeastern VA Thrift 652 19 12-31 08/92 17.75 89
CFCP Coastal Fin. Corp. of SC OTC South Carolina Thrift 617 9 09-30 09/90 19.00 119
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-East Companies (continued)
- --------------------------------
FFBH First Fed. Bancshares of AR OTC Northern AR Thrift 578 13 12-31 05/96 19.00 93
FSPT FirstSpartan Fin. Corp. of SC OTC Northwestern SC Thrift 517 7 06-30 07/97 32.50 138
TSH Teche Holding Company of LA AMEX Southern LA Thrift 412 9 09-30 04/95 14.50 50
PFSL Pocahontas Bancorp of AR OTC Northeast AR Thrift 405 6 09-30 04/98 6.75 45
COOP Cooperative Bancshares of NC OTC Eastern NC Thrift 381 16 12-31 08/91 13.38 41
FSTC First Citizens Corp of GA OTC Western GA M.B. 352 D 9 03-31 03/86 25.50 71
CAVB Cavalry Bancorp of TN OTC Murfreesburg Thrift 340 0 Sept 03/98 18.88 142
SBAN SouthBanc Shares Inc. of SC OTC Northwest SC Thrift 335 P 6 09-30 04/98 16.25 70
SOPN First Svgs Bancorp of NC OTC Central NC Thrift 304 5 06-30 01/94 21.25 79
UFRM United FSB of Rocky Mount NC OTC Eastern NC M.B. 302 13 12-31 07/80 16.50 54
HBSC Heritage Bancorp, Inc of SC OTC Laurens Thrift 301 4 Sept 04/98 16.13 75
ANA Acadiana Bancshares, Inc of LA AMEX Southern LA Thrift 298 5 12-31 07/96 15.50 39
CFTP Community Fed. Bancorp of MS OTC Northeast MS Thrift 263 2 09-30 03/96 15.00 66
FLAG Flag Financial Corp of GA OTC Western GA M.B. 248 D 4 12-31 12/86 13.25 69
HCBB HCB Bancshares of Camden AR OTC Southern AR Thrift 222 M 7 06-30 05/97 11.00 29
ESX Essex Bancorp of Norfolk VA AMEX VA,NC M.B. 214 4 12-31 07/90 2.19 2
SSFC South Street Fin. Corp. of NC (3) OTC South Central NC Thrift 204 2 09-30 10/96 8.56 40
GBNK Gaston Fed Bncp MHC of NC(47.0 OTC Southwest NC Thrift 203 4 9-30 04/98 11.25 51
FTF Texarkana Fst. Fin. Corp of AR AMEX Southwest AR Thrift 190 5 09-30 07/95 23.00 40
CFFC Community Fin. Corp. of VA OTC Central VA Thrift 183 4 03-31 03/88 12.50 32
FFDB FirstFed Bancorp, Inc. of AL OTC Central AL Thrift 181 M 8 03-31 11/91 12.50 30
FGHC First Georgia Hold. Corp of GA OTC Southeastern GA Thrift 181 7 09-30 02/87 10.25 49
GSFC Green Street Fin. Corp. of NC OTC Southern NC Thrift 173 3 09-30 04/96 12.50 51
SZB SouthFirst Bancshares of AL AMEX Central AL Thrift 163 2 09-30 02/95 16.63 16
CCFH CCF Holding Company of GA OTC Atlanta GA Thrift 159 5 12-31 07/95 21.00 19
BFSB Bedford Bancshares, Inc. of VA OTC Southern VA Thrift 157 3 09-30 08/94 11.50 26
HBS Haywood Bancshares, Inc. of NC (3) AMEX Northwest NC Thrift 152 M 4 12-31 12/87 19.00 24
GSLA GS Financial Corp. of LA OTC New Orleans LA Thrift 145 3 12-31 04/97 12.00 39
PDB Piedmont Bancorp, Inc. of NC AMEX Central NC Thrift 131 1 06-30 12/95 9.56 26
CFNC Carolina Fincorp of NC (3) OTC Southcentral NC Thrift 114 4 06-30 11/96 8.94 17
SSM Stone Street Bancorp of NC AMEX Central NC Thrift 112 2 12-31 04/96 15.75 29
TWIN Twin City Bancorp, Inc. of TN OTC Northeast TN Thrift 111 3 12-31 01/95 13.00 16
SRN Southern Banc Company of AL AMEX Northeast AL Thrift 106 M 4 06-30 10/95 14.00 17
</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
October 7, 1998(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- --------- ------ ------- ------ ----- ----- ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-East Companies (continued)
- --------------------------------
CENB Century Bancorp, Inc. of NC OTC Charlotte NC Thrift 97 1 06-30 12/96 13.00 17
UTBI United Tenn. Bancshares of TN OTC Eastern TN Thrift 74 2 12-31 01/98 11.69 17
SCBS Southern Commun. Bncshrs of AL OTC NorthCentral AL Thrift 72 M 1 09-30 12/96 14.75 17
HSTD Homestead Bancorp, Inc. of LA OTC Tangipahoa Paris Thrift 71 P 2 12-31 07/98 7.44 11
PEDE Great Pee Dee Bancorp of SC OTC Northeast SC Thrift 69 M 1 06-30 12/97 12.00 26
SSB Scotland Bancorp, Inc. of NC AMEX S. Central NC Thrift 61 2 09-30 04/96 11.06 21
SCCB S. Carolina Comm. Bnshrs of SC OTC Central SC Thrift 46 M 3 06-30 07/94 20.50 12
MBSP Mitchell Bancorp, Inc. of NC OTC Western NC Thrift 37 M 1 06-30 07/96 16.00 15
South-West Companies
- --------------------
CBSA Coastal Bancorp of Houston TX OTC Houston TX M.B. 2,981 37 12-31 / 16.00 121
FBHC Fort Bend Holding Corp. of TX OTC Eastcentral TX M.B. 318 6 03-31 06/93 16.63 30
JXVL Jacksonville Bancorp of TX OTC East Central TX Thrift 243 6 09-30 04/96 15.13 37
ETFS East Texas Fin. Serv. of TX OTC Northeast TX Thrift 123 2 09-30 01/95 13.25 20
GUPB GFSB Bancorp, Inc of Gallup NM OTC Northwest NM Thrift 118 M 1 06-30 06/95 14.00 17
AABC Access Anytime Bancorp of NM OTC Eastern NM Thrift 117 3 12-31 08/86 7.00 9
Western Companies (Excl CA)
- ---------------------------
WSTR WesterFed Fin. Corp. of MT OTC Montana Thrift 1,022 36 06-30 01/94 18.50 103
UBMT United Fin. Corp. of MT OTC Central MT Thrift 205 4 12-31 09/86 23.50 40
HCBC High Country Bancorp of CO OTC Salida Thrift 92 M 2 12-31 12/97 12.00 16
TRIC Tri-County Bancorp of WY OTC Southeastern WY Thrift 87 2 12-31 09/93 11.50 13
CRZY Crazy Woman Creek Bncorp of WY OTC Northeast WY Thrift 61 1 09-30 03/96 13.25 12
Other Areas
- -----------
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage
Banker, R.E.=Real Estate Developer, Div.=Diversified, and
Ret.=Retail Banking.
(3) FDIC savings bank.
Source: Corporate offering circulars, SNL Securities Quarterly Thrift Report,
and financial reports of publicly Traded Thrifts.
Date of Last Update: 10/07/98
<PAGE>
EXHIBIT IV-1
Stock Prices:
As of September 4, 1998
<PAGE>
RP FINANCIAL, LC.
_________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
---------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
_____________________________________________
SAIF-Insured Thrifts(284) 16.19 7,501 140.9 23.31 14.79 16.73 -3.32 -0.94 -16.78
NYSE Traded Companies(8) 26.96 39,352 1,248.9 44.71 26.31 27.97 -4.99 -22.40 -30.57
AMEX Traded Companies(22) 13.95 3,354 43.4 20.91 13.41 14.82 -5.34 -9.51 -19.86
NASDAQ Listed OTC Companies(254) 16.11 7,053 121.0 22.98 14.62 16.61 -3.09 0.41 -16.14
California Companies(18) 19.65 14,594 456.3 30.67 18.54 20.60 -6.13 -15.17 -24.71
Florida Companies(6) 15.38 25,809 322.6 24.64 14.52 15.82 -2.15 -14.52 -29.73
Mid-Atlantic Companies(56) 16.12 10,969 163.7 23.74 14.61 16.55 -2.23 -2.02 -18.61
Mid-West Companies(131) 16.04 5,391 101.2 22.45 14.54 16.62 -3.48 1.39 -15.63
New England Companies(7) 16.08 8,374 171.7 25.13 15.07 16.89 -5.67 -11.35 -23.46
North-West Companies(11) 15.84 11,557 220.4 22.76 14.83 16.15 -1.90 -2.73 -10.97
South-East Companies(44) 16.11 4,475 88.4 23.02 14.61 16.51 -2.84 2.85 -12.32
South-West Companies(6) 13.08 2,788 40.7 19.23 12.17 14.08 -7.17 -0.23 -23.87
Western Companies (Excl CA)(5) 15.75 2,142 37.0 22.10 15.33 16.10 -2.23 -1.63 -21.26
Thrift Strategy(239) 15.87 5,138 86.3 22.56 14.54 16.38 -3.11 -0.37 -15.89
Mortgage Banker Strategy(27) 19.01 21,472 499.8 29.03 17.01 19.80 -4.30 -0.70 -22.87
Real Estate Strategy(8) 16.36 8,482 109.2 24.59 14.66 17.63 -9.37 -3.03 -13.61
Diversified Strategy(7) 18.97 46,406 974.4 29.52 17.22 18.76 -0.01 -16.70 -26.55
Retail Banking Strategy(3) 14.25 4,499 71.5 23.42 13.40 14.92 -4.15 -7.30 -27.37
Companies Issuing Dividends(216) 16.68 7,502 153.6 23.85 15.16 17.23 -3.27 -0.60 -16.81
Companies Without Dividends(68) 14.59 7,498 99.4 21.55 13.61 15.12 -3.48 -2.05 -16.68
Equity/Assets less than 6%(18) 16.01 20,754 339.7 26.06 14.47 17.04 -6.64 -10.82 -26.26
Equity/Assets 6-12%(125) 17.43 7,956 184.3 25.28 15.51 18.06 -3.95 2.78 -18.56
Equity/Assets greater than 12%(141) 15.14 5,376 77.4 21.26 14.22 15.55 -2.34 -2.83 -14.01
Converted Last 3 Mths (no MHC)(6) 9.98 14,346 161.1 12.49 8.82 9.88 1.16 -0.18 8.98
Actively Traded Companies(30) 21.93 27,211 659.2 32.90 20.19 22.65 -2.98 -5.50 -24.07
Market Value Below $20 Million(62) 13.07 1,127 14.1 18.23 12.00 13.46 -3.46 -2.94 -17.55
Holding Company Structure(256) 16.51 7,377 143.4 23.75 15.11 17.05 -3.25 -1.06 -16.58
Assets Over $1 Billion(61) 19.17 24,567 501.6 29.29 17.62 19.65 -2.28 -5.71 -21.38
Assets $500 Million-$1 Billion(36) 17.88 5,695 93.3 25.27 16.20 18.49 -3.48 0.48 -16.99
Assets $250-$500 Million(67) 16.36 3,638 54.5 23.45 14.77 17.13 -4.38 2.25 -14.99
Assets less than $250 Million(120) 14.16 1,705 23.5 19.76 13.02 14.59 -3.23 -0.66 -15.38
Goodwill Companies(116) 17.08 13,566 240.8 25.16 15.47 17.58 -2.90 -0.76 -19.16
Non-Goodwill Companies(166) 15.67 3,368 74.2 22.17 14.42 16.24 -3.60 -1.28 -15.47
Acquirors of FSLIC Cases(8) 29.45 30,789 1,217.5 43.56 28.63 30.30 -2.67 -10.21 -20.90
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
_____________________________________________
SAIF-Insured Thrifts(284) 0.98 0.92 13.60 13.15 122.89
NYSE Traded Companies(8) 2.10 1.80 18.89 18.45 247.00
AMEX Traded Companies(22) 0.79 0.76 13.95 13.67 112.83
NASDAQ Listed OTC Companies(254) 0.96 0.91 13.43 12.97 120.59
California Companies(18) 1.51 1.40 16.88 16.14 229.01
Florida Companies(6) 0.78 0.48 11.72 10.98 143.03
Mid-Atlantic Companies(56) 1.02 0.97 13.20 12.46 140.06
Mid-West Companies(131) 0.91 0.87 13.62 13.34 109.42
New England Companies(7) 1.20 1.11 13.67 13.06 186.14
North-West Companies(11) 0.95 0.87 12.79 11.72 98.82
South-East Companies(44) 0.91 0.85 13.10 12.90 95.16
South-West Companies(6) 1.15 1.13 12.64 12.24 153.68
Western Companies (Excl CA)(5) 0.84 0.84 15.73 14.88 102.66
Thrift Strategy(239) 0.94 0.90 13.76 13.40 114.45
Mortgage Banker Strategy(27) 1.22 1.17 13.33 11.94 185.20
Real Estate Strategy(8) 1.32 1.23 11.90 11.51 165.09
Diversified Strategy(7) 0.99 0.68 10.32 10.07 125.94
Retail Banking Strategy(3) 0.87 0.25 14.03 13.50 206.61
Companies Issuing Dividends(216) 1.03 0.94 13.58 13.14 119.94
Companies Without Dividends(68) 0.81 0.85 13.66 13.21 132.45
Equity/Assets less than 6%(18) 1.15 1.26 11.40 10.27 230.21
Equity/Assets 6-12%(125) 1.14 1.02 13.10 12.40 154.27
Equity/Assets greater than 12%(141) 0.81 0.79 14.31 14.18 81.82
Converted Last 3 Mths (no MHC)(6) 0.47 0.49 11.62 11.62 50.48
Actively Traded Companies(30) 1.52 1.59 15.34 14.34 189.92
Market Value Below $20 Million(62) 0.76 0.66 12.79 12.68 96.64
Holding Company Structure(256) 0.98 0.93 13.81 13.35 123.76
Assets Over $1 Billion(61) 1.31 1.26 13.99 12.72 185.79
Assets $500 Million-$1 Billion(36) 1.05 0.98 13.66 13.14 137.93
Assets $250-$500 Million(67) 0.99 0.93 14.08 13.74 122.51
Assets less than $250 Million(120) 0.78 0.72 13.14 13.07 88.07
Goodwill Companies(116) 1.08 1.00 13.46 12.34 147.94
Non-Goodwill Companies(166) 0.91 0.87 13.76 13.76 106.80
Acquirors of FSLIC Cases(8) 2.71 2.36 21.10 20.32 255.34
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public
(non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
---------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(55) 17.88 12,179 243.9 26.37 16.38 18.37 -1.91 -1.33 -21.42
NYSE Traded Companies(5) 27.01 50,883 1,253.0 38.25 24.80 26.60 1.14 8.68 -14.50
AMEX Traded Companies(5) 15.68 2,424 39.4 23.20 14.85 16.20 -3.35 0.94 -18.33
NASDAQ Listed OTC Companies(45) 17.06 8,733 148.1 25.33 15.56 17.65 -2.10 -2.79 -22.61
California Companies(1) 15.75 7,697 121.2 24.00 15.75 17.75 -11.27 -11.91 -18.18
Mid-Atlantic Companies(20) 19.64 21,084 461.7 28.07 17.34 19.65 -0.28 1.92 -20.83
New England Companies(29) 17.61 7,091 118.8 26.29 16.45 18.45 -2.58 0.87 -19.40
North-West Companies(2) 13.38 5,866 79.5 19.71 12.54 13.75 -2.61 -7.10 -26.10
South-East Companies(3) 12.17 2,611 26.9 20.96 12.09 12.48 -3.40 -34.65 -40.73
Thrift Strategy(43) 18.13 8,283 173.5 26.54 16.75 18.55 -1.73 -1.97 -20.85
Mortgage Banker Strategy(6) 18.67 28,408 596.5 28.00 15.80 19.45 -2.07 5.06 -25.04
Real Estate Strategy(2) 12.94 7,801 100.7 19.19 12.38 13.63 -2.32 -0.05 -15.05
Diversified Strategy(4) 16.25 35,884 596.0 25.50 15.15 16.90 -3.83 -6.19 -26.12
Companies Issuing Dividends(44) 18.17 14,245 287.4 26.94 16.65 18.58 -1.70 -3.00 -22.80
Companies Without Dividends(11) 16.65 3,500 61.1 23.95 15.24 17.49 -2.81 5.67 -15.62
Equity/Assets less than 6%(2) 14.38 2,853 42.1 24.25 13.25 14.00 2.34 -3.11 -26.82
Equity/Assets 6-12%(36) 19.29 13,464 293.7 27.98 17.54 20.10 -3.19 1.20 -19.87
Equity/Assets greater than 12%(17) 15.55 10,782 171.0 23.49 14.49 15.54 0.07 -6.02 -23.77
Converted Last 3 Mths (no MHC)(1) 7.13 3,101 22.1 11.27 6.50 7.13 0.00 -3.52 -36.73
Actively Traded Companies(14) 23.05 19,948 420.6 33.43 21.62 24.26 -3.42 0.43 -20.79
Market Value Below $20 Million(5) 14.24 1,379 16.7 21.54 13.21 14.95 -3.80 -0.69 -22.42
Holding Company Structure(42) 17.98 9,878 179.3 26.18 16.36 18.36 -1.18 -1.13 -20.15
Assets Over $1 Billion(16) 24.45 31,468 708.2 34.99 21.69 24.80 -1.58 1.07 -18.09
Assets $500 Million-$1 Billion(11) 17.54 9,177 114.0 25.47 16.25 18.22 -0.61 -1.47 -22.78
Assets $250-$500 Million(14) 14.81 3,672 50.2 22.32 14.11 15.54 -3.87 -2.28 -22.01
Assets less than $250 Million(14) 14.13 1,949 23.7 21.76 13.03 14.42 -1.15 -2.86 -23.50
Goodwill Companies(28) 18.34 18,989 377.8 27.01 16.62 18.89 -2.07 2.61 -21.56
Non-Goodwill Companies(26) 17.61 5,414 112.3 25.95 16.30 18.01 -1.46 -5.21 -20.88
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(55) 1.29 1.22 13.35 12.86 129.48
NYSE Traded Companies(5) 1.91 1.98 21.02 19.19 135.70
AMEX Traded Companies(5) 1.23 1.02 12.91 12.51 116.78
NASDAQ Listed OTC Companies(45) 1.22 1.15 12.49 12.15 130.26
California Companies(1) 1.79 1.79 13.85 13.81 132.69
Mid-Atlantic Companies(20) 1.18 1.22 14.53 13.90 127.48
New England Companies(29) 1.41 1.26 12.99 12.52 140.23
North-West Companies(2) 1.08 1.05 9.31 9.31 90.08
South-East Companies(3) 0.85 0.87 11.17 10.98 74.97
Thrift Strategy(43) 1.27 1.21 14.07 13.67 128.47
Mortgage Banker Strategy(6) 1.46 1.28 11.72 11.01 145.98
Real Estate Strategy(2) 1.30 1.30 9.43 9.41 90.27
Diversified Strategy(4) 1.17 1.17 9.43 7.81 136.43
Companies Issuing Dividends(44) 1.28 1.21 13.19 12.62 131.14
Companies Without Dividends(11) 1.32 1.26 14.06 13.89 122.53
Equity/Assets less than 6%(2) 1.38 0.75 7.63 7.42 178.32
Equity/Assets 6-12%(36) 1.42 1.32 12.83 12.13 152.17
Equity/Assets greater than 12%(17) 1.01 1.09 15.04 14.92 79.71
Converted Last 3 Mths (no MHC)(1) 0.37 0.37 9.41 9.41 47.49
Actively Traded Companies(14) 1.99 1.83 16.44 15.63 168.62
Market Value Below $20 Million(5) 0.97 0.95 12.11 12.06 146.16
Holding Company Structure(42) 1.25 1.21 13.62 13.26 124.14
Assets Over $1 Billion(16) 1.74 1.73 15.83 14.64 152.78
Assets $500 Million-$1 Billion(11) 1.31 1.07 13.18 12.92 142.30
Assets $250-$500 Million(14) 1.10 1.07 11.91 11.68 114.75
Assets less than $250 Million(14) 0.97 0.93 12.26 12.11 111.02
Goodwill Companies(28) 1.34 1.20 13.39 12.41 143.39
Non-Goodwill Companies(26) 1.24 1.25 13.57 13.57 115.95
</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 September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
---------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 14.22 9,807 45.1 23.38 13.46 15.05 -5.05 -9.24 -18.88
BIF-Insured Thrifts(3) 15.90 32,239 269.9 28.09 13.92 15.31 5.31 -3.30 -20.07
NASDAQ Listed OTC Companies(22) 14.48 13,349 80.6 24.12 13.53 15.09 -3.41 -8.31 -19.07
Florida Companies(2) 24.00 6,802 78.2 35.38 22.25 23.00 4.35 -14.68 -26.15
Mid-Atlantic Companies(12) 12.85 11,884 48.8 22.35 11.89 13.67 -4.12 -10.79 -20.96
Mid-West Companies(5) 17.25 2,169 17.8 25.83 16.57 17.92 -3.91 -5.22 -22.30
New England Companies(2) 17.04 46,613 394.8 29.56 15.60 16.72 1.00 -5.27 -15.09
South-East Companies(1) 11.25 4,497 23.8 18.06 11.25 12.50 -10.00 12.50 12.50
Thrift Strategy(20) 14.01 9,149 45.5 22.90 13.18 14.64 -3.41 -7.72 -17.24
Mortgage Banker Strategy(1) 13.88 33,965 117.2 27.88 12.00 15.50 -10.45 -7.22 -30.18
Diversified Strategy(1) 23.19 64,130 640.8 41.13 21.00 22.38 3.62 -19.34 -38.97
Companies Issuing Dividends(15) 15.26 15,762 99.5 25.48 14.32 15.63 -3.01 -10.56 -22.86
Companies Without Dividends(7) 12.81 8,122 39.5 21.18 11.81 13.93 -4.28 -3.43 -10.86
Equity/Assets 6-12%(12) 16.45 16,791 108.9 29.23 15.12 17.26 -4.77 -11.28 -28.78
Equity/Assets >12%(10) 12.31 9,525 49.1 18.44 11.76 12.68 -1.91 -5.01 -8.27
Holding Company Structure(4) 13.99 9,744 53.2 21.21 12.68 13.67 4.24 2.18 -9.68
Assets Over $1 Billion(5) 16.64 36,299 229.0 27.88 14.80 16.28 2.93 -9.18 -21.16
Assets $500 Million-$1 Billion(3) 10.88 29,095 148.8 17.98 10.19 11.06 -1.63 8.80 8.80
Assets $250-$500 Million(6) 14.56 4,088 20.9 23.60 13.85 15.84 -6.44 -7.86 -16.81
Assets less than $250 Million(8) 13.39 2,645 15.9 22.76 12.82 14.18 -5.60 -10.52 -23.49
Goodwill Companies(7) 15.94 26,781 172.5 26.86 14.56 16.08 -1.70 -9.51 -24.61
Non-Goodwill Companies(15) 13.81 7,150 38.1 22.85 13.05 14.63 -4.21 -7.75 -16.51
MHC Institutions(22) 14.48 13,349 80.6 24.12 13.53 15.09 -3.41 -8.31 -19.07
MHC Converted Last 3 Months(2) 10.32 5,009 21.7 12.16 9.82 10.13 2.01 3.15 3.15
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 0.54 0.50 9.01 8.92 75.67
BIF-Insured Thrifts(3) 0.87 0.57 10.00 8.98 85.17
NASDAQ Listed OTC Companies(22) 0.59 0.51 9.17 8.93 77.17
Florida Companies(2) 1.15 0.92 13.28 12.90 215.87
Mid-Atlantic Companies(12) 0.48 0.46 8.25 8.06 66.33
Mid-West Companies(5) 0.63 0.54 10.02 10.02 79.75
New England Companies(2) 1.04 0.65 11.35 10.43 85.04
South-East Companies(1) 0.33 0.30 9.14 9.14 45.06
Thrift Strategy(20) 0.53 0.49 9.13 9.01 73.87
Mortgage Banker Strategy(1) 0.54 0.44 5.56 5.02 68.47
Diversified Strategy(1) 1.60 0.83 13.37 11.52 141.98
Companies Issuing Dividends(15) 0.65 0.54 9.54 9.20 85.34
Companies Without Dividends(7) 0.46 0.44 8.35 8.35 59.48
Equity/Assets 6-12%(12) 0.69 0.54 9.02 8.57 99.02
Equity/Assets >12%(10) 0.48 0.47 9.33 9.33 52.89
Holding Company Structure(4) 0.53 0.48 8.79 8.48 70.83
Assets Over $1 Billion(5) 0.85 0.62 9.03 8.39 104.85
Assets $500 Million-$1 Billion(3) 0.47 0.47 9.33 9.33 28.09
Assets $250-$500 Million(6) 0.51 0.48 8.42 8.42 71.57
Assets less than $250 Million(8) 0.49 0.46 9.88 9.71 69.21
Goodwill Companies(7) 0.77 0.57 8.74 8.00 99.24
Non-Goodwill Companies(15) 0.51 0.48 9.36 9.36 66.98
MHC Institutions(22) 0.59 0.51 9.17 8.93 77.17
MHC Converted Last 3 Months(2) 0.38 0.37 7.94 7.94 55.10
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1996 or 1997.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public
(non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------- ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 51.75 112,748 5,834.7 82.81 51.38 52.25 -0.96 -3.83 -22.69
BYS Bay State Bancorp of MA* 19.75 2,535 50.1 32.63 19.25 20.38 -3.09 -1.25 -1.25
CFB Commercial Federal Corp. of NE 23.06 42,056 969.8 38.19 22.00 22.50 2.49 -23.87 -35.15
DME Dime Bancorp, Inc. of NY* 22.75 113,533 2,582.9 32.69 19.00 22.81 -0.26 12.68 -24.79
DSL Downey Financial Corp. of CA 23.31 28,105 655.1 35.00 21.67 23.81 -2.10 5.28 -13.92
FED FirstFed Fin. Corp. of CA 14.88 21,215 315.7 26.94 14.75 16.50 -9.82 -13.13 -23.22
GSB Golden State Bancorp of CA(8) 17.75 55,485 984.9 41.81 15.88 17.25 2.90 -41.09 -52.59
GDW Golden West Fin. Corp. of CA 77.06 57,591 4,438.0 114.25 76.13 79.06 -2.53 -10.07 -21.21
GPT GreenPoint Fin. Corp. of NY* 28.94 83,383 2,413.1 42.63 25.19 27.06 6.95 -8.13 -20.23
JSB JSB Financial, Inc. of NY* 46.81 9,833 460.3 59.69 45.00 46.00 1.76 0.00 -6.49
OCN Ocwen Financial Corp. of FL 14.44 60,772 877.5 30.38 14.44 16.31 -11.47 -34.00 -43.24
SIB Staten Island Bancorp of NY* 16.81 45,130 758.6 23.63 15.56 16.75 0.36 40.08 -19.72
WES Westcorp Inc. of Orange CA 9.00 26,374 237.4 23.50 8.88 9.63 -6.54 -58.62 -46.68
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 15.50 2,505 38.8 25.63 15.50 19.13 -18.98 -27.91 -33.70
ANE Alliance Bncp of New Eng of CT* 10.94 2,493 27.3 16.08 10.25 11.00 -0.55 -7.52 -0.55
BKC American Bank of Waterbury CT* 20.69 4,687 97.0 32.56 17.88 21.88 -5.44 10.35 -15.14
BFD BostonFed Bancorp of MA 16.75 5,393 90.3 24.88 16.75 18.50 -9.46 -10.67 -23.45
CNY Carver Bancorp, Inc. of NY 9.50 2,314 22.0 17.13 9.50 11.13 -14.65 -23.63 -41.54
CBK Citizens First Fin.Corp. of IL 14.38 2,526 36.3 22.38 14.38 16.00 -10.12 -14.15 -28.99
EFC EFC Bancorp Inc of IL 10.25 7,491 76.8 14.94 10.00 10.38 -1.25 2.50 2.50
EBI Equality Bancorp, Inc. of MO 13.06 2,518 32.9 16.00 12.50 13.81 -5.43 30.60 -9.93
ESX Essex Bancorp of Norfolk VA(8) 2.19 1,059 2.3 7.94 1.88 2.50 -12.40 12.89 -44.42
FCB Falmouth Bancorp, Inc. of MA* 16.75 1,455 24.4 23.88 16.50 17.00 -1.47 -2.90 -18.29
FAB FirstFed America Bancorp of MA 14.31 8,272 118.4 23.25 14.19 15.38 -6.96 -29.33 -34.60
GAF GA Financial Corp. of PA 13.38 7,220 96.6 22.25 13.38 15.25 -12.26 -27.44 -29.13
HBS Haywood Bancshares, Inc. of NC* 19.00 1,250 23.8 24.00 19.00 19.00 0.00 0.00 -15.56
KNK Kankakee Bancorp, Inc. of IL 24.50 1,380 33.8 37.75 24.50 26.00 -5.77 -17.31 -35.10
KYF Kentucky First Bancorp of KY 13.63 1,241 16.9 15.88 12.63 13.88 -1.80 10.10 -8.77
NBN Northeast Bancorp of ME* 11.00 2,237 24.6 19.50 10.63 12.13 -9.32 4.76 -42.11
NEP Northeast PA Fin. Corp of PA 10.63 6,427 68.3 16.00 9.88 10.19 4.32 6.30 6.30
PDB Piedmont Bancorp, Inc. of NC 9.56 2,751 26.3 11.63 9.50 10.00 -4.40 -8.95 -12.13
SSB Scotland Bancorp, Inc. of NC 11.06 1,914 21.2 19.25 8.13 11.00 0.55 -38.76 11.27
SZB SouthFirst Bancshares of AL 16.63 967 16.1 22.75 15.63 16.88 -1.48 3.94 -26.90
SRN Southern Banc Company of AL 14.00 1,230 17.2 19.13 14.00 14.00 0.00 -12.50 -21.13
SSM Stone Street Bancorp of NC 15.75 1,843 29.0 22.50 15.75 16.75 -5.97 -26.09 -29.02
TSH Teche Holding Company of LA 14.50 3,439 49.9 23.50 14.50 14.75 -1.69 -21.11 -36.26
FTF Texarkana Fst. Fin. Corp of AR 23.00 1,738 40.0 30.63 23.00 24.38 -5.66 -7.56 -8.00
THR Three Rivers Fin. Corp. of MI 16.25 825 13.4 23.50 15.13 16.50 -1.52 1.18 -25.29
WSB Washington SB, FSB of MD 4.88 4,421 21.6 9.50 4.88 5.06 -3.56 -30.29 -46.14
WFI Winton Financial Corp. of OH 11.50 4,014 46.2 20.63 7.88 12.25 -6.12 41.45 12.86
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 42.25 1,092 46.1 45.50 22.06 42.00 0.60 90.14 44.25
FBER 1st Bergen Bancorp of NJ 16.25 2,585 42.0 20.75 14.75 17.25 -5.80 -8.45 -15.05
AFED AFSALA Bancorp, Inc. of NY(8) 13.50 1,319 17.8 20.75 12.25 15.00 -10.00 -15.63 -29.87
ALBK ALBANK Fin. Corp. of Albany NY(8) 55.63 13,222 735.5 74.63 39.75 57.25 -2.83 39.49 8.15
AMFC AMB Financial Corp. of IN 14.50 916 13.3 19.38 14.50 14.75 -1.69 0.00 -8.69
ASBP ASB Financial Corp. of OH 11.50 1,655 19.0 16.75 10.88 10.88 5.70 -12.41 -13.21
ABBK Abington Bancorp of MA* 15.13 3,532 53.4 22.25 13.00 14.88 1.68 -1.63 -27.95
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 3.74 3.70 28.65 21.85 468.53
BYS Bay State Bancorp of MA* 1.05 1.05 23.66 23.66 114.26
CFB Commercial Federal Corp. of NE 1.46 1.76 15.29 13.55 210.50
DME Dime Bancorp, Inc. of NY* 1.55 0.95 11.72 9.64 184.21
DSL Downey Financial Corp. of CA 2.03 2.10 16.33 16.16 207.51
FED FirstFed Fin. Corp. of CA 1.38 1.31 11.33 11.25 189.04
GSB Golden State Bancorp of CA(8) 1.70 2.04 20.24 16.99 326.52
GDW Golden West Fin. Corp. of CA 6.99 6.84 50.76 50.76 678.36
GPT GreenPoint Fin. Corp. of NY* 1.75 1.79 15.30 8.65 154.15
JSB JSB Financial, Inc. of NY* 4.65 5.22 38.65 38.65 159.00
OCN Ocwen Financial Corp. of FL 0.45 0.04 7.03 6.43 57.68
SIB Staten Island Bancorp of NY* 0.56 0.91 15.75 15.35 66.89
WES Westcorp Inc. of Orange CA 0.28 -1.26 12.60 12.57 138.92
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 1.18 1.10 17.52 17.52 119.02
ANE Alliance Bncp of New Eng of CT* 0.93 0.45 7.90 7.73 101.20
BKC American Bank of Waterbury CT* 1.82 1.53 12.65 12.27 146.27
BFD BostonFed Bancorp of MA 1.32 1.06 15.31 14.77 196.22
CNY Carver Bancorp, Inc. of NY 0.45 0.40 15.36 14.82 189.05
CBK Citizens First Fin.Corp. of IL 0.78 0.44 15.52 15.52 111.27
EFC EFC Bancorp Inc of IL -0.44 0.53 12.56 12.56 53.08
EBI Equality Bancorp, Inc. of MO 0.56 0.01 10.40 10.40 108.56
ESX Essex Bancorp of Norfolk VA(8) -0.44 -0.44 0.04 -0.08 202.45
FCB Falmouth Bancorp, Inc. of MA* 0.75 0.57 16.24 16.24 75.96
FAB FirstFed America Bancorp of MA 0.83 0.67 14.10 14.10 159.06
GAF GA Financial Corp. of PA 1.13 1.05 14.95 14.81 116.10
HBS Haywood Bancshares, Inc. of NC* 1.76 1.76 18.06 17.49 121.60
KNK Kankakee Bancorp, Inc. of IL 2.09 2.00 28.43 24.29 291.26
KYF Kentucky First Bancorp of KY 0.74 0.73 11.61 11.61 66.11
NBN Northeast Bancorp of ME* 0.89 0.81 9.72 8.83 138.86
NEP Northeast PA Fin. Corp of PA -0.20 0.45 13.22 13.22 74.34
PDB Piedmont Bancorp, Inc. of NC 0.60 0.58 7.85 7.85 47.45
SSB Scotland Bancorp, Inc. of NC 0.44 0.44 7.96 7.96 31.91
SZB SouthFirst Bancshares of AL 0.66 0.59 16.75 16.34 168.54
SRN Southern Banc Company of AL 0.42 0.42 14.95 14.84 85.95
SSM Stone Street Bancorp of NC 0.82 0.82 16.64 16.64 60.91
TSH Teche Holding Company of LA 1.12 1.10 16.60 16.60 119.93
FTF Texarkana Fst. Fin. Corp of AR 1.82 1.77 16.23 16.23 109.07
THR Three Rivers Fin. Corp. of MI 1.01 0.94 16.08 16.02 118.86
WSB Washington SB, FSB of MD 0.44 0.30 5.21 5.21 61.87
WFI Winton Financial Corp. of OH 0.80 0.66 5.80 5.68 80.84
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 1.75 1.23 21.85 21.43 238.23
FBER 1st Bergen Bancorp of NJ 0.82 0.82 13.50 13.50 116.35
AFED AFSALA Bancorp, Inc. of NY(8) 0.91 0.93 15.26 15.26 125.80
ALBK ALBANK Fin. Corp. of Albany NY(8) 3.38 3.37 28.70 22.72 312.42
AMFC AMB Financial Corp. of IN 0.94 0.61 15.41 15.41 121.55
ASBP ASB Financial Corp. of OH 0.65 0.65 8.76 8.76 70.35
ABBK Abington Bancorp of MA* 1.28 0.97 9.85 8.98 154.65
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------- ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AABC Access Anytime Bancorp of NM 7.00 1,217 8.5 13.00 6.37 8.25 -15.15 9.89 -36.36
AFBC Advance Fin. Bancorp of WV 14.38 1,074 15.4 20.88 13.88 14.38 0.00 -8.00 -17.26
ALBC Albion Banc Corp. of Albion NY 8.63 752 6.5 14.17 7.75 9.75 -11.49 11.35 -35.26
ABCL Alliance Bancorp, Inc. of IL 17.25 11,435 197.3 29.25 16.75 18.44 -6.45 -22.47 -34.91
ALLB Alliance Bank MHC of PA (19.9) 15.25 3,273 9.9 39.00 15.25 20.00 -23.75 -38.38 -50.81
AHCI Ambanc Holding Co., Inc. of NY* 13.00 4,105 53.4 20.00 12.88 13.75 -5.45 -16.13 -30.67
ASBI Ameriana Bancorp of IN 18.00 3,253 58.6 22.00 17.75 18.75 -4.00 -17.73 -9.46
ABCW Anchor Bancorp Wisconsin of WI 22.19 17,840 395.9 23.25 13.69 22.00 0.86 62.80 21.99
ANDB Andover Bancorp, Inc. of MA* 27.50 6,481 178.2 39.88 24.60 33.00 -16.67 10.44 -14.60
ASFC Astoria Financial Corp. of NY 37.88 26,531 1,005.0 62.50 35.94 38.81 -2.40 -23.29 -32.05
AVND Avondale Fin. Corp. of IL 12.25 3,060 37.5 18.88 12.25 13.00 -5.77 -16.27 -24.62
BCSB BCSB Bankcorp MHC of MD (38.6) 10.44 6,117 24.6 12.63 10.13 10.63 -1.79 4.40 4.40
BKCT Bancorp Connecticut of CT* 16.25 5,114 83.1 25.00 14.94 14.94 8.77 1.56 -22.62
BPLS Bank Plus Corp. of CA 7.25 19,387 140.6 16.13 7.25 8.75 -17.14 -34.86 -42.60
BNKU Bank United Corp. of TX 35.44 31,596 1,119.8 56.00 32.50 32.50 9.05 -11.40 -27.58
BWFC Bank West Fin. Corp. of MI 11.13 2,624 29.2 17.50 11.13 11.75 -5.28 -7.25 -31.00
BANC BankAtlantic Bancorp of FL 9.31 36,676 341.5 17.00 8.63 9.75 -4.51 -26.29 -44.42
BKUNA BankUnited Fin. Corp. of FL 9.50 17,786 169.0 18.50 8.25 9.30 2.15 -23.63 -38.35
BVCC Bay View Capital Corp. of CA 17.00 20,276 344.7 38.00 17.00 17.75 -4.23 -34.62 -53.10
FSNJ Bayonne Banchsares of NJ(8) 13.16 9,094 119.7 17.38 10.00 12.75 3.22 9.12 -1.64
BFSB Bedford Bancshares, Inc. of VA 11.50 2,298 26.4 17.38 10.88 12.38 -7.11 -4.17 -32.35
BFFC Big Foot Fin. Corp. of IL 14.00 2,513 35.2 23.94 12.75 14.75 -5.08 -17.65 -33.33
BYFC Broadway Fin. Corp. of CA 8.25 933 7.7 12.73 8.25 9.75 -15.38 -19.04 -32.76
BRKL Brookline Bncp MHC of MA(47.0) 10.88 29,095 148.8 17.98 10.19 11.06 -1.63 8.80 8.80
CBES CBES Bancorp, Inc. of MO 19.00 940 17.9 26.00 17.38 19.00 0.00 7.04 -14.61
CCFH CCF Holding Company of GA 21.00 895 18.8 24.00 15.00 19.25 9.09 35.83 4.32
CITZ CFS Bancorp, Inc. of IN 9.13 22,727 207.5 11.44 8.38 9.13 0.00 -8.70 -8.70
CFSB CFSB Bancorp of Lansing MI 21.75 8,167 177.6 28.75 15.76 21.75 0.00 35.43 -8.84
CKFB CKF Bancorp of Danville KY 16.50 843 13.9 21.25 15.00 17.38 -5.06 -13.16 -10.81
CNSB CNS Bancorp, Inc. of MO 15.13 1,645 24.9 21.50 14.75 15.50 -2.39 -9.67 -26.20
CSBF CSB Financial Group Inc of IL 10.13 821 8.3 14.00 10.00 10.63 -4.70 -14.73 -24.96
CBCI Calumet Bancorp of Chicago IL 26.50 3,145 83.3 39.00 26.00 26.75 -0.93 -7.28 -20.30
CAFI Camco Fin. Corp. of OH 16.00 5,481 87.7 20.67 11.83 16.63 -3.79 35.25 -5.88
CMRN Cameron Fin. Corp. of MO 16.00 2,434 38.9 22.19 16.00 16.63 -3.79 -9.86 -21.95
CFNC Carolina Fincorp of NC* 8.94 1,906 17.0 18.88 8.88 9.38 -4.69 -49.29 -51.68
CASB Cascade Financial Corp. of WA 12.75 4,266 54.4 16.00 9.60 13.25 -3.77 20.28 20.28
CATB Catskill Fin. Corp. of NY* 12.75 4,486 57.2 19.13 12.75 13.75 -7.27 -21.54 -32.47
CAVB Cavalry Bancorp of TN 18.88 7,538 142.3 25.25 18.50 18.63 1.34 88.80 88.80
CNIT Cenit Bancorp of Norfolk VA 17.75 4,997 88.7 28.58 16.42 18.25 -2.74 4.66 -33.02
CEBK Central Co-Op. Bank of MA* 19.50 1,965 38.3 33.50 19.50 22.00 -11.36 -2.50 -31.58
CENB Century Bancorp, Inc. of NC(8) 13.00 1,271 16.5 39.00 12.88 14.00 -7.14 -50.94 -53.98
COFI Charter One Financial of OH 26.63 127,635 3,398.9 36.38 23.00 26.63 0.00 0.08 -15.62
CVAL Chester Valley Bancorp of PA 26.00 2,444 63.5 35.24 20.00 29.50 -11.86 21.33 -6.68
CLAS Classic Bancshares, Inc. of KY 14.13 1,300 18.4 21.50 12.00 15.25 -7.34 -0.84 -15.64
CBSA Coastal Bancorp of Houston TX 16.00 7,563 121.0 26.67 15.00 18.75 -14.67 -18.66 -31.18
CFCP Coastal Fin. Corp. of SC 19.00 6,256 118.9 20.50 14.72 19.00 0.00 8.39 3.37
CFKY Columbia Financial of KY 12.00 2,671 32.1 17.13 11.75 12.38 -3.07 20.00 20.00
CMSB Commonwealth Bancorp Inc of PA 15.00 15,474 232.1 24.25 13.38 14.00 7.14 -12.43 -24.55
CMSV Commty. Svgs, MHC of FL (48.5)(8) 22.00 5,100 54.3 40.75 22.00 24.00 -8.33 -31.25 -37.82
CFTP Community Fed. Bancorp of MS 15.00 4,398 66.0 21.00 14.50 16.00 -6.25 -17.26 -25.93
CFFC Community Fin. Corp. of VA 12.50 2,569 32.1 16.38 10.75 12.50 0.00 14.89 -9.49
CIBI Community Inv. Bancorp of OH 12.94 1,335 17.3 15.25 9.83 12.50 3.52 25.27 20.15
COOP Cooperative Bancshares of NC 13.38 3,027 40.5 25.00 12.50 14.50 -7.72 -4.43 -45.39
CRZY Crazy Woman Creek Bncorp of WY 13.25 939 12.4 20.00 12.75 13.88 -4.54 -9.43 -11.67
CRSB Crusader Holding Corp of PA 12.75 3,833 48.9 17.86 12.75 13.50 -5.56 N.A. N.A.
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AABC Access Anytime Bancorp of NM 1.23 1.12 7.62 7.62 96.07
AFBC Advance Fin. Bancorp of WV 0.89 0.84 14.52 14.52 103.04
ALBC Albion Banc Corp. of Albion NY 0.51 0.48 8.37 8.37 98.56
ABCL Alliance Bancorp, Inc. of IL 1.01 1.24 15.80 15.67 180.87
ALLB Alliance Bank MHC of PA (19.9) 0.61 0.61 9.05 9.05 84.78
AHCI Ambanc Holding Co., Inc. of NY* 0.51 0.52 14.22 14.22 137.73
ASBI Ameriana Bancorp of IN 1.17 0.98 14.03 13.78 115.37
ABCW Anchor Bancorp Wisconsin of WI 1.23 1.07 7.33 7.22 115.34
ANDB Andover Bancorp, Inc. of MA* 2.43 2.37 17.61 17.61 214.83
ASFC Astoria Financial Corp. of NY 2.99 2.71 33.64 24.10 436.30
AVND Avondale Fin. Corp. of IL -1.53 -1.10 15.07 15.07 198.25
BCSB BCSB Bankcorp MHC of MD (38.6) 0.36 0.36 7.28 7.28 44.74
BKCT Bancorp Connecticut of CT* 1.27 1.07 9.58 9.58 96.83
BPLS Bank Plus Corp. of CA 0.39 0.59 9.55 8.77 221.09
BNKU Bank United Corp. of TX 3.50 3.28 21.19 19.25 414.48
BWFC Bank West Fin. Corp. of MI 0.38 0.33 8.88 8.88 69.17
BANC BankAtlantic Bancorp of FL 0.72 0.32 6.96 5.38 102.43
BKUNA BankUnited Fin. Corp. of FL 0.36 0.21 10.29 8.60 201.51
BVCC Bay View Capital Corp. of CA 0.72 1.22 19.43 12.60 282.11
FSNJ Bayonne Banchsares of NJ(8) 0.51 0.51 10.55 10.55 77.01
BFSB Bedford Bancshares, Inc. of VA 0.77 0.76 9.02 9.02 68.11
BFFC Big Foot Fin. Corp. of IL 0.47 0.35 15.16 15.16 87.79
BYFC Broadway Fin. Corp. of CA 0.69 0.44 13.94 13.94 137.67
BRKL Brookline Bncp MHC of MA(47.0) 0.47 0.47 9.33 9.33 28.09
CBES CBES Bancorp, Inc. of MO 1.12 0.80 17.93 17.93 131.61
CCFH CCF Holding Company of GA 0.21 -0.02 12.89 12.89 177.14
CITZ CFS Bancorp, Inc. of IN 0.36 0.40 10.88 10.88 62.51
CFSB CFSB Bancorp of Lansing MI 1.42 1.27 8.08 8.08 103.80
CKFB CKF Bancorp of Danville KY 0.98 0.98 16.06 16.06 74.45
CNSB CNS Bancorp, Inc. of MO 0.53 0.45 14.76 14.76 59.57
CSBF CSB Financial Group Inc of IL 0.41 0.42 13.52 12.76 58.44
CBCI Calumet Bancorp of Chicago IL 3.04 3.06 27.74 27.74 156.43
CAFI Camco Fin. Corp. of OH 1.23 0.89 10.62 9.98 107.32
CMRN Cameron Fin. Corp. of MO 1.01 0.99 18.02 18.02 90.71
CFNC Carolina Fincorp of NC* 0.56 0.63 8.07 8.07 59.76
CASB Cascade Financial Corp. of WA 0.83 0.74 7.36 7.36 104.12
CATB Catskill Fin. Corp. of NY* 0.86 0.85 15.21 15.21 69.01
CAVB Cavalry Bancorp of TN 0.68 0.50 13.37 13.37 45.08
CNIT Cenit Bancorp of Norfolk VA 1.27 1.17 10.32 9.56 130.45
CEBK Central Co-Op. Bank of MA* 1.55 1.20 18.72 17.00 191.38
CENB Century Bancorp, Inc. of NC(8) 0.95 0.94 14.74 14.74 76.21
COFI Charter One Financial of OH 1.31 1.73 11.59 10.91 155.23
CVAL Chester Valley Bancorp of PA 1.33 1.25 13.03 13.03 154.26
CLAS Classic Bancshares, Inc. of KY 0.75 0.95 15.78 13.57 106.14
CBSA Coastal Bancorp of Houston TX 2.04 2.09 15.17 13.21 394.09
CFCP Coastal Fin. Corp. of SC 1.07 0.86 5.81 5.81 98.61
CFKY Columbia Financial of KY 0.22 0.22 14.03 14.03 44.54
CMSB Commonwealth Bancorp Inc of PA 0.86 0.61 12.91 10.17 153.05
CMSV Commty. Svgs, MHC of FL (48.5)(8) 1.01 0.93 16.29 16.29 150.10
CFTP Community Fed. Bancorp of MS 0.66 0.57 13.33 13.33 59.86
CFFC Community Fin. Corp. of VA 0.71 0.68 10.05 10.01 71.32
CIBI Community Inv. Bancorp of OH 0.68 0.68 8.37 8.37 76.21
COOP Cooperative Bancshares of NC 0.79 0.72 10.00 10.00 125.89
CRZY Crazy Woman Creek Bncorp of WY 0.79 0.79 15.34 15.34 65.47
CRSB Crusader Holding Corp of PA 0.97 0.89 6.06 5.74 52.71
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
---------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DNFC D&N Financial Corp. of MI 17.50 9,157 160.2 29.75 15.94 18.75 -6.67 -3.74 -33.96
DCBI Delphos Citizens Bancorp of OH 18.53 1,848 34.2 24.25 15.38 16.13 14.88 12.30 -10.70
DCOM Dime Community Bancorp of NY* 18.00 12,177 219.2 29.31 15.31 18.00 0.00 -7.98 -24.21
ESBF ESB Financial Corp of PA 15.75 5,665 89.2 20.00 14.21 16.25 -3.08 10.84 -10.00
EGLB Eagle BancGroup of IL 15.75 1,177 18.5 21.13 14.00 14.13 11.46 -7.35 -16.58
EBSI Eagle Bancshares of Tucker GA 17.00 5,806 98.7 27.25 16.75 18.25 -6.85 3.03 -22.73
ETFS East Texas Fin. Serv. of TX 13.25 1,539 20.4 16.25 12.67 13.25 0.00 3.92 -16.30
ESBK Elmira Svgs Bank (The) of NY* 24.00 727 17.4 32.25 23.10 25.75 -6.80 3.90 -20.00
EMLD Emerald Financial Corp. of OH 12.00 10,274 123.3 16.00 6.88 11.50 4.35 74.42 8.50
EFBC Empire Federal Bancorp of MT 13.13 2,480 32.6 18.25 12.50 12.50 5.04 -16.63 -23.35
EFBI Enterprise Fed. Bancorp of OH 27.38 2,211 60.5 35.00 19.50 28.00 -2.21 35.21 -13.08
EQSB Equitable FSB of Wheaton MD 23.00 1,223 28.1 34.00 18.75 25.75 -10.68 22.67 -13.21
FCBF FCB Fin. Corp. of Neenah WI 27.25 3,857 105.1 34.00 26.50 28.63 -4.82 1.87 -7.63
FFDF FFD Financial Corp. of OH 17.00 1,445 24.6 24.00 14.75 16.00 6.25 15.25 -5.56
FFLC FFLC Bancorp of Leesburg FL 17.50 3,742 65.5 23.50 16.50 17.00 2.94 -7.06 -19.54
FFWC FFW Corporation of Wabash IN 15.00 1,458 21.9 21.50 14.31 17.13 -12.43 2.53 -21.05
FFYF FFY Financial Corp. of OH 29.50 4,011 118.3 36.88 26.88 32.13 -8.19 6.77 -10.96
FMCO FMS Financial Corp. of NJ 11.25 7,203 81.0 16.67 9.08 11.50 -2.17 33.61 -4.90
FFHH FSF Financial Corp. of MN 14.38 2,933 42.2 21.25 13.38 15.63 -8.00 -18.99 -31.33
FOBC Fed One Bancorp of Wheeling WV(8) 37.38 2,402 89.8 45.50 20.00 36.13 3.46 86.90 35.93
FBCI Fidelity Bancorp of Chicago IL 21.13 2,833 59.9 26.00 19.38 20.25 4.35 -6.09 -17.56
FSBI Fidelity Bancorp, Inc. of PA 18.50 1,974 36.5 28.00 17.00 19.50 -5.13 10.12 -20.26
FFFL Fidelity Bcsh MHC of FL (47.9) 24.00 6,802 78.2 35.38 22.25 23.00 4.35 -14.68 -26.15
FFED Fidelity Fed. Bancorp of IN 3.63 3,127 11.4 10.50 3.63 5.00 -27.40 -57.29 -64.79
FFOH Fidelity Financial of OH 13.00 5,598 72.8 19.88 12.50 13.50 -3.70 -18.75 -16.13
FIBC Financial Bancorp, Inc. of NY(8) 31.00 1,707 52.9 37.63 22.00 34.00 -8.82 41.68 28.47
FBSI First Bancshares, Inc. of MO 12.75 2,214 28.2 17.50 11.00 13.00 -1.92 7.32 -18.43
FBBC First Bell Bancorp of PA 16.00 6,525 104.4 21.63 15.63 16.63 -3.79 -0.81 -15.79
SKBO First Carnegie MHC of PA(45.0) 11.00 2,300 11.4 21.00 11.00 13.25 -16.98 -34.33 -41.33
FSTC First Citizens Corp of GA 25.50 2,795 71.3 35.50 21.33 27.25 -6.42 15.91 -25.00
FCME First Coastal Corp. of ME* 11.75 1,361 16.0 15.75 10.25 10.50 11.90 8.00 -21.03
FDEF First Defiance Fin.Corp. of OH 11.88 8,158 96.9 16.25 11.88 12.50 -4.96 -23.35 -25.75
FESX First Essex Bancorp of MA* 16.00 7,562 121.0 26.13 15.13 16.69 -4.13 -10.51 -31.18
FFSX First FSB MHC Sxld of IA(46.3)(8) 28.00 2,840 36.8 39.00 28.00 30.25 -7.44 -6.67 -11.81
FFES First Fed of E. Hartford CT 25.13 2,743 68.9 42.25 24.75 26.00 -3.35 -28.20 -32.54
BDJI First Fed. Bancorp. of MN 14.75 998 14.7 22.00 14.00 14.50 1.72 5.36 -32.95
FFBH First Fed. Bancshares of AR 19.00 4,871 92.5 30.25 18.50 20.25 -6.17 -10.08 -20.00
FTFC First Fed. Capital Corp. of WI 14.25 18,519 263.9 18.38 11.88 14.75 -3.39 16.90 -15.88
FFKY First Fed. Fin. Corp. of KY 23.63 4,130 97.6 28.75 20.50 25.00 -5.48 8.64 3.87
FFBZ First Federal Bancorp of OH 10.00 3,151 31.5 14.50 9.13 11.13 -10.15 8.11 -5.30
FFCH First Fin. Holdings Inc. of SC 18.50 13,632 252.2 27.00 16.75 18.38 0.65 11.24 -30.35
FFHS First Franklin Corp. of OH 14.50 1,783 25.9 20.83 12.50 15.13 -4.16 10.10 -30.39
FGHC First Georgia Hold. Corp of GA 10.25 4,799 49.2 15.75 5.17 11.13 -7.91 98.26 61.93
FFSL First Independence Corp. of KS 11.50 957 11.0 15.63 11.00 11.25 2.22 -20.69 -17.86
FISB First Indiana Corp. of IN 19.75 12,781 252.4 30.00 18.54 22.13 -10.75 10.21 -21.66
FKAN First Kansas Financial of KS 10.13 1,554 15.7 12.50 10.00 10.25 -1.17 1.30 1.30
FKFS First Keystone Fin. Corp of PA 12.00 2,413 29.0 21.75 11.75 12.75 -5.88 -13.54 -32.89
FLKY First Lancaster Bncshrs of KY 13.69 947 13.0 16.38 13.19 13.25 3.32 -12.75 -14.12
FLFC First Liberty Fin. Corp. of GA 20.00 13,369 267.4 25.50 14.75 19.00 5.26 37.17 -6.24
CASH First Midwest Fin., Inc. of OH 18.13 2,614 47.4 24.88 17.75 19.00 -4.58 0.72 -19.42
FMBD First Mutual Bancorp Inc of IL(8) 16.63 3,531 58.7 25.00 15.25 17.00 -2.18 5.59 -33.48
FMSB First Mutual SB of Bellevue WA* 12.75 4,244 54.1 20.17 11.94 14.00 -8.93 -6.73 -31.08
FNGB First Northern Cap. Corp of WI 10.75 8,859 95.2 14.00 10.50 11.50 -6.52 -23.21 -23.21
FFPB First Palm Beach Bancorp of FL 31.00 5,136 159.2 44.94 30.00 32.25 -3.88 -8.82 -28.12
FWWB First Savings Bancorp of WA 20.13 11,699 235.5 25.97 19.38 19.94 0.95 -10.29 -19.48
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DNFC D&N Financial Corp. of MI 1.67 1.46 11.55 11.45 207.27
DCBI Delphos Citizens Bancorp of OH 0.91 0.91 14.84 14.84 61.46
DCOM Dime Community Bancorp of NY* 1.08 1.05 15.30 13.33 133.36
ESBF ESB Financial Corp of PA 1.03 1.03 12.01 10.72 166.91
EGLB Eagle BancGroup of IL 0.52 0.18 17.82 17.82 147.91
EBSI Eagle Bancshares of Tucker GA 1.49 1.45 13.36 13.36 192.94
ETFS East Texas Fin. Serv. of TX 0.41 0.35 13.77 13.77 79.66
ESBK Elmira Svgs Bank (The) of NY* 1.48 1.56 19.97 19.97 318.74
EMLD Emerald Financial Corp. of OH 0.67 0.61 5.11 5.05 60.09
EFBC Empire Federal Bancorp of MT 0.65 0.65 16.39 16.39 44.59
EFBI Enterprise Fed. Bancorp of OH 1.03 0.88 16.47 16.06 165.37
EQSB Equitable FSB of Wheaton MD 1.86 1.76 14.67 14.67 286.64
FCBF FCB Fin. Corp. of Neenah WI 1.51 1.12 19.42 19.42 134.24
FFDF FFD Financial Corp. of OH 1.09 0.49 15.43 15.43 69.28
FFLC FFLC Bancorp of Leesburg FL 1.06 1.00 14.11 14.11 110.22
FFWC FFW Corporation of Wabash IN 1.30 1.14 13.12 12.07 139.45
FFYF FFY Financial Corp. of OH 1.93 1.89 21.00 21.00 162.49
FMCO FMS Financial Corp. of NJ 0.73 0.73 5.69 5.64 93.53
FFHH FSF Financial Corp. of MN 1.08 1.02 14.73 14.73 141.18
FOBC Fed One Bancorp of Wheeling WV(8) 1.25 1.21 17.43 16.77 155.64
FBCI Fidelity Bancorp of Chicago IL 0.33 1.04 18.77 18.74 177.09
FSBI Fidelity Bancorp, Inc. of PA 1.45 1.42 14.23 14.23 200.70
FFFL Fidelity Bcsh MHC of FL (47.9) 1.15 0.92 13.28 12.90 215.87
FFED Fidelity Fed. Bancorp of IN -0.25 -0.19 4.28 4.28 63.14
FFOH Fidelity Financial of OH 0.85 0.82 11.79 10.49 95.02
FIBC Financial Bancorp, Inc. of NY(8) 1.69 1.64 16.83 16.76 199.77
FBSI First Bancshares, Inc. of MO 0.83 0.83 11.00 10.55 77.77
FBBC First Bell Bancorp of PA 1.16 1.15 11.78 11.78 115.96
SKBO First Carnegie MHC of PA(45.0) 0.36 0.43 10.63 10.63 63.30
FSTC First Citizens Corp of GA 2.20 1.99 12.72 10.17 126.02
FCME First Coastal Corp. of ME* 0.90 0.81 11.29 11.29 126.17
FDEF First Defiance Fin.Corp. of OH 0.66 0.63 12.66 12.66 71.36
FESX First Essex Bancorp of MA* 1.39 1.19 12.41 9.00 173.86
FFSX First FSB MHC Sxld of IA(46.3)(8) 1.20 1.17 14.80 11.92 194.22
FFES First Fed of E. Hartford CT 2.13 2.30 25.73 25.73 357.42
BDJI First Fed. Bancorp. of MN 0.81 0.82 12.71 12.71 121.56
FFBH First Fed. Bancshares of AR 1.14 1.13 17.46 17.46 118.69
FTFC First Fed. Capital Corp. of WI 1.02 0.70 6.42 6.11 85.56
FFKY First Fed. Fin. Corp. of KY 1.53 1.47 13.24 12.57 99.19
FFBZ First Federal Bancorp of OH 0.54 0.51 5.23 5.23 65.81
FFCH First Fin. Holdings Inc. of SC 1.16 1.11 8.92 8.92 137.49
FFHS First Franklin Corp. of OH 1.05 0.91 12.16 12.11 133.30
FGHC First Georgia Hold. Corp of GA 0.41 0.41 3.07 2.87 37.68
FFSL First Independence Corp. of KS 0.88 0.88 12.35 12.35 128.91
FISB First Indiana Corp. of IN 1.47 1.04 12.54 12.40 136.99
FKAN First Kansas Financial of KS 0.61 0.61 12.95 12.95 69.29
FKFS First Keystone Fin. Corp of PA 1.14 1.01 10.53 10.53 162.03
FLKY First Lancaster Bncshrs of KY 0.51 0.51 14.91 14.91 55.97
FLFC First Liberty Fin. Corp. of GA 0.74 0.77 7.45 6.81 101.35
CASH First Midwest Fin., Inc. of OH 1.09 0.98 16.41 14.65 161.15
FMBD First Mutual Bancorp Inc of IL(8) 0.39 0.30 15.72 12.23 107.49
FMSB First Mutual SB of Bellevue WA* 1.03 1.01 7.22 7.22 106.30
FNGB First Northern Cap. Corp of WI 0.74 0.68 8.49 8.49 77.93
FFPB First Palm Beach Bancorp of FL 1.56 0.83 23.53 23.04 343.46
FWWB First Savings Bancorp of WA 1.12 1.04 12.84 11.90 98.65
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
---------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FSFF First SecurityFed Fin of IL 12.25 6,408 78.5 17.25 10.69 11.44 7.08 22.50 -22.22
FSLA First Source Bancorp of NJ 8.00 31,740 253.9 13.93 7.00 7.22 10.80 7.67 -42.57
SOPN First Svgs Bancorp of NC 21.25 3,711 78.9 26.00 20.25 22.00 -3.41 1.19 -16.67
FBNW FirstBank Corp of Clarkston WA 15.13 1,984 30.0 23.75 15.00 15.88 -4.72 -12.95 -19.86
FFDB FirstFed Bancorp, Inc. of AL 12.50 2,434 30.4 15.94 8.88 12.75 -1.96 40.77 15.63
FSPT FirstSpartan Fin. Corp. of SC 32.50 4,253 138.2 47.25 32.00 33.00 -1.52 -8.45 -19.25
FLAG Flag Financial Corp of GA 13.25 5,175 68.6 19.38 9.67 13.75 -3.64 37.02 -7.54
FLGS Flagstar Bancorp, Inc of MI 21.00 13,670 287.1 28.38 17.75 25.50 -17.65 6.98 6.06
FFIC Flushing Fin. Corp. of NY* 22.00 7,810 171.8 29.88 18.88 21.75 1.15 -0.59 -7.87
FBHC Fort Bend Holding Corp. of TX(8) 16.63 1,817 30.2 28.00 16.63 18.00 -7.61 -4.32 -23.54
FTSB Fort Thomas Fin. Corp. of KY 13.25 1,474 19.5 15.75 11.75 15.75 -15.87 12.77 -13.85
FKKY Frankfort First Bancorp of KY 14.25 1,619 23.1 22.94 13.75 14.50 -1.72 -35.23 -19.17
FTNB Fulton Bancorp, Inc. of MO 16.88 1,701 28.7 26.50 15.75 17.75 -4.90 -20.56 -23.72
GUPB GFSB Bancorp, Inc of Gallup NM 14.00 1,201 16.8 17.00 12.33 13.88 0.86 12.00 -0.57
GSLA GS Financial Corp. of LA 12.00 3,267 39.2 21.00 12.00 12.25 -2.04 -23.81 -42.86
GOSB GSB Financial Corp. of NY* 11.75 2,248 26.4 18.94 8.31 10.50 11.90 -18.29 -34.94
GBNK Gaston Fed Bncp MHC of NC(47.0 11.25 4,497 23.8 18.06 11.25 12.50 -10.00 12.50 12.50
GFCO Glenway Financial Corp. of OH 19.00 2,282 43.4 24.25 12.50 20.00 -5.00 52.00 1.33
GTPS Great American Bancorp of IL 16.75 1,588 26.6 23.00 16.25 17.13 -2.22 -5.63 -11.84
PEDE Great Pee Dee Bancorp of SC 12.00 2,202 26.4 17.38 10.75 11.00 9.09 20.00 -25.60
GSFC Green Street Fin. Corp. of NC 12.50 4,083 51.0 20.75 11.94 12.88 -2.95 -32.90 -31.51
GFED Guaranty Fed Bancshares of MO 10.50 6,228 65.4 14.44 9.90 11.50 -8.70 2.04 -18.48
HCBB HCB Bancshares of Camden AR 11.00 2,645 29.1 16.13 11.00 12.50 -12.00 -19.30 -24.14
HEMT HF Bancorp of Hemet CA 14.13 6,369 90.0 18.25 12.25 13.25 6.64 -4.20 -19.26
HFFC HF Financial Corp. of SD 15.50 4,395 68.1 24.17 15.50 18.13 -14.51 0.00 -12.28
HFNC HFNC Financial Corp. of NC(8) 10.50 17,193 180.5 16.81 10.38 11.50 -8.70 -35.90 -27.59
HMNF HMN Financial, Inc. of MN 13.75 5,430 74.7 21.67 13.75 14.38 -4.38 -15.80 -36.55
HALL Hallmark Capital Corp. of WI 11.75 2,934 34.5 18.00 11.00 12.00 -2.08 8.00 -30.88
HRBF Harbor Federal Bancorp of MD 18.00 1,863 33.5 23.41 17.50 18.13 -0.72 4.23 -21.60
HARB Harbor Florida Bancshrs of FL 10.50 30,740 322.8 13.50 9.30 10.31 1.84 12.66 -4.72
HFSA Hardin Bancorp of Hardin MO 16.75 816 13.7 20.00 16.50 18.25 -8.22 -1.47 -8.22
HARL Harleysville SB of PA 29.63 1,675 49.6 35.00 25.75 29.63 0.00 15.07 7.75
HFGI Harrington Fin. Group of IN 9.63 3,276 31.5 13.75 9.63 9.88 -2.53 -20.61 -25.92
HARS Harris Fin. MHC of PA (24.9) 13.88 33,965 117.2 27.88 12.00 15.50 -10.45 -7.22 -30.18
HFFB Harrodsburg 1st Fin Bcrp of KY 15.25 1,930 29.4 18.00 14.00 15.00 1.67 0.00 -8.96
HHFC Harvest Home Fin. Corp. of OH 12.50 879 11.0 16.75 12.00 12.50 0.00 4.17 -20.63
HAVN Haven Bancorp of Woodhaven NY 14.38 8,849 127.2 28.75 14.38 17.19 -16.35 -28.10 -36.09
HTHR Hawthorne Fin. Corp. of CA 14.25 3,170 45.2 24.00 13.75 14.50 -1.72 -18.01 -29.21
HMLK Hemlock Fed. Fin. Corp. of IL 14.50 1,965 28.5 19.00 14.25 15.06 -3.72 -4.16 -15.35
HBSC Heritage Bancorp, Inc of SC 16.13 4,629 74.7 22.38 16.13 16.75 -3.70 7.53 7.53
HFWA Heritage Financial Corp of WA 11.13 9,755 108.6 15.94 9.88 10.75 3.53 11.30 11.30
HCBC High Country Bancorp of CO 12.00 1,323 15.9 15.50 12.00 12.00 0.00 20.00 -22.58
HBNK Highland Bancorp of CA 38.00 2,329 88.5 43.50 30.25 38.50 -1.30 24.59 16.03
HIFS Hingham Inst. for Sav. of MA* 22.75 1,304 29.7 37.00 22.75 24.63 -7.63 -6.19 -20.87
HBEI Home Bancorp of Elgin IL(8) 12.50 6,856 85.7 19.13 11.69 13.63 -8.29 -28.57 -30.09
HBFW Home Bancorp of Fort Wayne IN 27.00 2,351 63.5 37.63 22.38 28.00 -3.57 22.01 -8.47
HCFC Home City Fin. Corp. of OH 12.00 905 10.9 22.75 11.00 11.50 4.35 -22.58 -35.14
HOMF Home Fed Bancorp of Seymour IN 24.50 5,139 125.9 33.75 20.00 25.00 -2.00 19.51 -5.77
HWEN Home Financial Bancorp of IN 7.75 929 7.2 9.75 7.63 8.00 -3.13 -5.72 -16.22
HLFC Home Loan Financial Corp of OH 13.38 2,248 30.1 16.75 13.38 14.50 -7.72 33.80 33.80
HPBC Home Port Bancorp, Inc. of MA* 19.75 1,842 36.4 27.63 19.75 22.25 -11.24 -14.13 -14.61
HSTD Homestead Bancorp, Inc. of LA 7.44 1,478 11.0 9.31 3.41 7.50 -0.80 -25.60 29.39
HFBC HopFed Bancorp of KY 16.63 4,034 67.1 21.88 16.00 16.88 -1.48 66.30 66.30
HZFS Horizon Fin'l. Services of IA 15.50 880 13.6 16.88 9.44 15.75 -1.59 64.19 29.17
HRZB Horizon Financial Corp. of WA* 14.00 7,488 104.8 19.25 13.13 13.50 3.70 -7.47 -21.13
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FSFF First SecurityFed Fin of IL 0.46 0.72 14.59 14.55 50.45
FSLA First Source Bancorp of NJ 0.36 0.35 8.17 7.91 38.47
SOPN First Svgs Bancorp of NC 1.42 1.42 18.73 18.73 81.94
FBNW FirstBank Corp of Clarkston WA 0.97 0.55 15.32 15.32 98.00
FFDB FirstFed Bancorp, Inc. of AL 0.68 0.68 7.24 6.67 74.56
FSPT FirstSpartan Fin. Corp. of SC 1.77 1.72 29.57 29.57 121.66
FLAG Flag Financial Corp of GA 0.39 0.27 4.26 4.26 47.92
FLGS Flagstar Bancorp, Inc of MI 2.20 2.20 10.44 10.16 188.24
FFIC Flushing Fin. Corp. of NY* 1.21 1.22 17.90 17.24 139.81
FBHC Fort Bend Holding Corp. of TX(8) 1.14 0.75 12.52 11.84 175.21
FTSB Fort Thomas Fin. Corp. of KY 0.80 0.80 11.05 11.05 68.76
FKKY Frankfort First Bancorp of KY 0.98 0.98 14.02 14.02 83.07
FTNB Fulton Bancorp, Inc. of MO 0.75 0.58 15.06 15.06 64.45
GUPB GFSB Bancorp, Inc of Gallup NM 0.79 0.79 12.14 12.14 98.40
GSLA GS Financial Corp. of LA 0.46 0.40 16.01 16.01 44.43
GOSB GSB Financial Corp. of NY* 0.41 0.39 14.30 14.30 57.42
GBNK Gaston Fed Bncp MHC of NC(47.0 0.33 0.30 9.14 9.14 45.06
GFCO Glenway Financial Corp. of OH 1.11 1.12 12.60 12.49 131.66
GTPS Great American Bancorp of IL 0.63 0.63 17.07 17.07 93.41
PEDE Great Pee Dee Bancorp of SC 0.62 0.62 14.19 14.19 31.45
GSFC Green Street Fin. Corp. of NC 0.69 0.69 14.81 14.81 42.44
GFED Guaranty Fed Bancshares of MO 0.45 0.45 11.35 11.35 41.75
HCBB HCB Bancshares of Camden AR 0.25 0.25 14.45 14.28 83.79
HEMT HF Bancorp of Hemet CA 0.02 0.10 13.15 11.25 164.21
HFFC HF Financial Corp. of SD 1.47 1.28 12.88 12.88 129.71
HFNC HFNC Financial Corp. of NC(8) 0.78 0.53 9.94 9.94 58.62
HMNF HMN Financial, Inc. of MN 1.06 0.75 15.65 14.55 134.83
HALL Hallmark Capital Corp. of WI 0.95 0.89 11.40 11.40 149.41
HRBF Harbor Federal Bancorp of MD 0.94 0.91 15.94 15.94 126.53
HARB Harbor Florida Bancshrs of FL 0.53 0.50 8.41 8.32 42.90
HFSA Hardin Bancorp of Hardin MO 1.01 0.88 16.51 16.51 163.39
HARL Harleysville SB of PA 2.08 2.08 15.14 15.14 236.05
HFGI Harrington Fin. Group of IN -0.57 -0.20 6.92 6.92 147.86
HARS Harris Fin. MHC of PA (24.9) 0.54 0.44 5.56 5.02 68.47
HFFB Harrodsburg 1st Fin Bcrp of KY 0.77 0.77 14.99 14.99 56.49
HHFC Harvest Home Fin. Corp. of OH 0.73 0.63 11.73 11.73 103.39
HAVN Haven Bancorp of Woodhaven NY 1.00 1.06 13.33 12.74 255.99
HTHR Hawthorne Fin. Corp. of CA 2.91 3.40 15.06 15.06 378.97
HMLK Hemlock Fed. Fin. Corp. of IL 0.84 0.82 14.81 14.81 97.85
HBSC Heritage Bancorp, Inc of SC 0.76 0.76 20.46 20.46 65.00
HFWA Heritage Financial Corp of WA 0.37 0.19 9.53 9.53 33.09
HCBC High Country Bancorp of CO 0.53 0.53 13.64 13.64 69.73
HBNK Highland Bancorp of CA 3.15 2.77 19.37 19.37 246.21
HIFS Hingham Inst. for Sav. of MA* 2.16 2.14 17.29 17.29 183.40
HBEI Home Bancorp of Elgin IL(8) 0.36 0.36 14.00 14.00 53.63
HBFW Home Bancorp of Fort Wayne IN 1.26 1.23 18.27 18.27 153.25
HCFC Home City Fin. Corp. of OH 1.05 1.04 11.96 11.96 86.23
HOMF Home Fed Bancorp of Seymour IN 2.02 1.58 13.03 12.70 140.02
HWEN Home Financial Bancorp of IN 0.42 0.32 8.08 8.08 45.81
HLFC Home Loan Financial Corp of OH 0.41 0.41 14.04 14.04 36.44
HPBC Home Port Bancorp, Inc. of MA* 1.72 1.93 12.32 12.32 141.40
HSTD Homestead Bancorp, Inc. of LA 0.36 0.36 10.40 10.40 48.02
HFBC HopFed Bancorp of KY 0.72 0.72 14.46 14.46 54.00
HZFS Horizon Fin'l. Services of IA 0.90 0.69 9.60 9.60 105.35
HRZB Horizon Financial Corp. of WA* 1.12 1.09 11.40 11.40 73.86
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
---------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HRBT Hudson River Bancorp Inc of NY 10.56 17,854 183.1 13.69 9.81 10.38 1.73 5.60 5.60
ITLA ITLA Capital Corp of CA* 15.75 7,697 121.2 24.00 15.75 17.75 -11.27 -11.91 -18.18
ICBC Independence Comm Bnk Cp of NY 12.81 76,044 974.1 19.13 11.00 11.88 7.83 28.10 28.10
IFSB Independence FSB of DC 13.00 1,281 16.7 21.63 12.00 13.00 0.00 -1.89 -23.53
INBI Industrial Bancorp of OH 16.75 5,015 84.0 25.00 14.88 18.50 -9.46 9.84 -5.63
IWBK Interwest Bancorp of WA 25.38 15,668 397.7 31.33 23.00 23.00 10.35 -1.74 0.83
IPSW Ipswich SB of Ipswich MA* 12.00 2,390 28.7 20.75 11.50 12.00 0.00 -4.00 -27.27
JXVL Jacksonville Bancorp of TX 15.13 2,422 36.6 23.25 14.50 16.25 -6.89 -8.30 -34.92
JXSB Jcksnville SB,MHC of IL (45.6) 15.25 1,908 13.3 25.50 14.00 15.50 -1.61 1.67 -23.75
JSBA Jefferson Svgs Bancorp of MO 17.00 10,030 170.5 31.88 16.75 19.00 -10.53 2.22 -17.07
KSBK KSB Bancorp of Kingfield ME* 17.25 1,259 21.7 22.50 12.50 16.00 7.81 38.00 -23.33
KFBI Klamath First Bancorp of OR 14.00 9,917 138.8 24.25 14.00 15.50 -9.68 -30.00 -34.88
LSBI LSB Fin. Corp. of Lafayette IN 30.50 954 29.1 32.00 20.48 31.00 -1.61 48.93 12.38
LVSB Lakeview Financial of NJ 21.50 4,978 107.0 28.75 17.63 19.00 13.16 13.88 -15.69
LARK Landmark Bancshares, Inc of KS 22.00 1,549 34.1 29.25 20.25 21.63 1.71 -16.98 -11.58
LARL Laurel Capital Group of PA 16.50 2,191 36.2 23.50 15.67 19.00 -13.16 5.91 -23.86
LSBX Lawrence Savings Bank of MA* 12.00 4,327 51.9 19.31 11.00 12.38 -3.07 3.18 -26.74
LFED Leeds Fed Bksr MHC of MD (36.3 15.75 5,182 29.7 23.50 15.75 16.25 -3.08 -26.16 -27.59
LXMO Lexington B&L Fin. Corp. of MO 14.00 1,009 14.1 17.88 14.00 14.00 0.00 -12.50 -21.13
LIBB Liberty Bancorp MHC of NJ (47) 10.19 3,901 18.7 11.69 9.50 9.63 5.82 1.90 1.90
LFCO Life Financial Corp of CA(8) 5.00 6,556 32.8 25.38 5.00 6.63 -24.59 -72.60 -60.41
LFBI Little Falls Bancorp of NJ 14.63 2,478 36.3 22.25 14.00 14.50 0.90 -15.19 -28.63
LOGN Logansport Fin. Corp. of IN 14.75 1,262 18.6 19.63 13.50 15.00 -1.67 -6.35 -18.06
LISB Long Island Bancorp, Inc of NY(8) 42.88 24,183 1,037.0 67.63 37.50 43.88 -2.28 1.78 -13.60
MAFB MAF Bancorp, Inc. of IL 22.13 22,577 499.6 28.83 19.38 23.75 -6.82 4.53 -6.15
MBLF MBLA Financial Corp. of MO 19.75 1,251 24.7 30.63 19.25 19.88 -0.65 -15.05 -35.25
MECH MECH Financial Inc of CT* 23.88 5,295 126.4 31.81 21.88 25.00 -4.48 0.55 -8.37
MFBC MFB Corp. of Mishawaka IN 18.00 1,590 28.6 30.38 18.00 22.20 -18.92 -20.88 -40.75
MSBF MSB Financial, Inc of MI 14.25 1,338 19.1 17.73 12.05 16.88 -15.58 18.26 -17.49
MARN Marion Capital Holdings of IN 23.00 1,704 39.2 29.50 22.25 22.75 1.10 -2.13 -15.22
MRKF Market Fin. Corp. of OH 11.00 1,336 14.7 20.25 10.75 10.75 2.33 -22.48 -29.62
MFSL Maryland Fed. Bancorp of MD(8) 32.88 6,572 216.1 42.25 22.50 34.75 -5.38 49.86 -6.06
MASB MassBank Corp. of Reading MA* 39.75 3,593 142.8 54.25 39.28 45.13 -11.92 2.90 -16.54
MFLR Mayflower Co-Op. Bank of MA* 18.00 900 16.2 27.50 18.00 19.50 -7.69 -3.38 -32.71
MDBK Medford Bancorp, Inc. of MA* 35.00 4,455 155.9 44.25 32.00 36.75 -4.76 6.45 -10.83
MWBX MetroWest Bank of MA* 6.38 14,252 90.9 9.50 6.25 6.38 0.00 -4.63 -29.11
METF Metropolitan Fin. Corp. of OH 11.75 7,051 82.8 18.88 9.00 12.50 -6.00 29.69 -24.19
MIFC Mid Iowa Financial Corp. of IA(8) 13.00 1,735 22.6 14.00 9.25 13.00 0.00 44.44 13.04
MCBN Mid-Coast Bancorp of ME 7.50 713 5.3 14.00 7.50 9.00 -16.67 -11.76 -25.00
MWBI Midwest Bancshares, Inc. of IA 11.00 1,051 11.6 19.50 11.00 12.25 -10.20 -8.33 -39.73
MFFC Milton Fed. Fin. Corp. of OH 12.75 2,237 28.5 17.00 12.31 12.50 2.00 -7.27 -17.10
MBSP Mitchell Bancorp, Inc. of NC(8) 16.00 931 14.9 18.50 16.00 17.00 -5.88 -6.60 -5.88
MBBC Monterey Bay Bancorp of CA 16.00 3,923 62.8 21.40 13.30 16.00 0.00 20.30 2.56
MONT Montgomery Fin. Corp. of IN 10.38 1,653 17.2 13.63 9.75 10.19 1.86 -13.50 -19.41
MSBK Mutual SB, FSB of Bay City MI 6.75 4,290 29.0 14.63 6.75 7.75 -12.90 -43.18 -48.08
MYST Mystic Financial of MA* 11.50 2,711 31.2 18.56 11.00 11.75 -2.13 15.00 15.00
NHTB NH Thrift Bancshares of NH 14.00 2,095 29.3 22.75 14.00 14.75 -5.08 -29.11 -31.71
NSLB NS&L Bancorp, Inc of Neosho MO 16.00 686 11.0 19.50 16.00 16.25 -1.54 -15.79 -15.25
NSSY NSS Bancorp of CT(8)* 41.63 2,378 99.0 58.75 33.75 44.00 -5.39 12.51 10.28
NMSB Newmil Bancorp, Inc. of CT* 10.75 3,834 41.2 14.63 10.13 11.00 -2.27 -16.54 -17.31
NBCP Niagara Bancorp of NY MHC(45.4* 11.25 29,756 151.9 17.00 8.75 9.56 17.68 12.50 12.50
NBSI North Bancshares of Chicago IL 11.88 1,265 15.0 18.83 11.88 12.50 -4.96 -19.02 -33.56
FFFD North Central Bancshares of IA 16.19 3,126 50.6 24.88 15.00 15.06 7.50 -2.65 -18.56
NEIB Northeast Indiana Bncrp of IN 18.25 1,650 30.1 22.75 16.88 19.63 -7.03 4.29 -17.53
NWSB Northwest Bcrp MHC of PA (30.8 10.88 46,841 157.1 18.00 10.00 10.94 -0.55 -17.14 -23.00
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HRBT Hudson River Bancorp Inc of NY 0.41 0.47 12.20 12.20 45.63
ITLA ITLA Capital Corp of CA* 1.79 1.79 13.85 13.81 132.69
ICBC Independence Comm Bnk Cp of NY -0.53 0.45 12.63 11.93 62.94
IFSB Independence FSB of DC 2.46 0.39 15.46 13.99 214.32
INBI Industrial Bancorp of OH 1.07 1.07 12.19 12.19 76.34
IWBK Interwest Bancorp of WA 1.29 1.09 9.02 8.88 133.46
IPSW Ipswich SB of Ipswich MA* 1.09 0.87 5.46 5.46 97.77
JXVL Jacksonville Bancorp of TX 1.30 1.30 14.48 14.48 100.20
JXSB Jcksnville SB,MHC of IL (45.6) 0.52 0.33 9.38 9.38 88.96
JSBA Jefferson Svgs Bancorp of MO 0.98 0.87 11.84 9.50 123.81
KSBK KSB Bancorp of Kingfield ME* 1.33 1.33 9.56 8.31 122.83
KFBI Klamath First Bancorp of OR 0.90 0.89 14.22 13.03 101.71
LSBI LSB Fin. Corp. of Lafayette IN 1.85 1.59 19.26 19.26 229.18
LVSB Lakeview Financial of NJ 1.76 0.88 12.11 8.26 124.48
LARK Landmark Bancshares, Inc of KS 1.58 1.33 19.35 19.35 148.05
LARL Laurel Capital Group of PA 1.39 1.43 10.73 10.73 100.86
LSBX Lawrence Savings Bank of MA* 2.12 2.09 9.62 9.62 79.70
LFED Leeds Fed Bksr MHC of MD (36.3 0.66 0.66 9.52 9.52 57.70
LXMO Lexington B&L Fin. Corp. of MO 0.62 0.62 15.17 14.15 94.45
LIBB Liberty Bancorp MHC of NJ (47) 0.40 0.38 8.59 8.59 65.46
LFCO Life Financial Corp of CA(8) 2.11 2.19 9.11 9.11 72.06
LFBI Little Falls Bancorp of NJ 0.76 0.76 14.90 13.82 141.79
LOGN Logansport Fin. Corp. of IN 1.02 1.03 13.46 13.46 71.52
LISB Long Island Bancorp, Inc of NY(8) 2.31 1.88 23.88 23.68 268.12
MAFB MAF Bancorp, Inc. of IL 1.66 1.59 12.40 11.07 158.11
MBLF MBLA Financial Corp. of MO 1.54 1.53 22.38 22.38 165.83
MECH MECH Financial Inc of CT* 1.62 1.61 17.51 17.51 180.30
MFBC MFB Corp. of Mishawaka IN 1.35 1.32 20.82 20.82 182.98
MSBF MSB Financial, Inc of MI 0.91 0.79 9.95 9.95 59.77
MARN Marion Capital Holdings of IN 1.36 1.36 22.10 21.63 113.83
MRKF Market Fin. Corp. of OH 0.46 0.46 11.78 11.78 40.16
MFSL Maryland Fed. Bancorp of MD(8) 0.90 1.09 15.89 15.74 181.38
MASB MassBank Corp. of Reading MA* 3.00 2.58 30.44 30.04 258.75
MFLR Mayflower Co-Op. Bank of MA* 1.67 1.45 14.67 14.46 158.85
MDBK Medford Bancorp, Inc. of MA* 2.68 2.55 22.78 21.62 254.84
MWBX MetroWest Bank of MA* 0.54 0.54 3.39 3.39 46.20
METF Metropolitan Fin. Corp. of OH 0.93 0.80 5.61 5.20 150.18
MIFC Mid Iowa Financial Corp. of IA(8) 0.79 0.78 7.73 7.72 77.83
MCBN Mid-Coast Bancorp of ME 0.61 0.53 7.35 7.35 91.60
MWBI Midwest Bancshares, Inc. of IA 1.38 1.10 10.85 10.85 151.72
MFFC Milton Fed. Fin. Corp. of OH 0.67 0.54 11.64 11.64 105.10
MBSP Mitchell Bancorp, Inc. of NC(8) 0.54 0.54 15.60 15.60 39.67
MBBC Monterey Bay Bancorp of CA 0.33 0.33 11.97 10.95 111.19
MONT Montgomery Fin. Corp. of IN 0.59 0.59 12.14 12.14 70.88
MSBK Mutual SB, FSB of Bay City MI -1.91 -0.65 7.94 7.94 143.08
MYST Mystic Financial of MA* 0.59 0.55 13.33 13.33 73.42
NHTB NH Thrift Bancshares of NH 1.38 1.28 12.60 11.01 154.81
NSLB NS&L Bancorp, Inc of Neosho MO 0.60 0.59 16.87 16.76 91.32
NSSY NSS Bancorp of CT(8)* 2.18 1.92 23.19 22.62 274.11
NMSB Newmil Bancorp, Inc. of CT* 0.78 0.61 8.71 8.71 95.87
NBCP Niagara Bancorp of NY MHC(45.4* 0.48 0.46 8.31 8.31 43.56
NBSI North Bancshares of Chicago IL 0.36 0.32 10.55 10.55 97.48
FFFD North Central Bancshares of IA 1.41 1.37 16.42 14.29 106.47
NEIB Northeast Indiana Bncrp of IN 1.40 1.40 16.07 16.07 123.19
NWSB Northwest Bcrp MHC of PA (30.8 0.46 0.44 4.65 4.18 54.38
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
---------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
NWEQ Northwest Equity Corp. of WI 17.50 825 14.4 22.25 16.00 17.50 0.00 8.49 -15.66
NTMG Nutmeg FS&LA of CT 12.00 1,077 12.9 12.50 7.69 11.88 1.01 45.45 14.29
OHSL OHSL Financial Corp. of OH 14.63 2,496 36.5 18.38 11.75 15.50 -5.61 25.80 8.37
OCFC Ocean Fin. Corp. of NJ 14.63 15,534 227.3 20.00 13.88 15.00 -2.47 -12.97 -21.47
OTFC Oregon Trail Fin. Corp. of OR 12.13 4,695 57.0 18.50 11.00 12.75 -4.86 21.30 -30.21
OFCP Ottawa Financial Corp. of MI 23.75 5,717 135.8 30.91 21.28 23.88 -0.54 11.61 -23.16
PFFB PFF Bancorp of Pomona CA 14.38 16,214 233.2 21.50 13.94 14.06 2.28 -26.74 -27.67
PSFI PS Financial of Chicago IL 11.13 2,019 22.5 22.38 10.75 11.63 -4.30 -27.63 -50.27
PSBI PSB Bancorp Inc. of PA* 7.13 3,101 22.1 11.27 6.50 7.13 0.00 -3.52 -36.73
PVFC PVF Capital Corp. of OH 10.00 3,990 39.9 18.83 10.00 12.00 -16.67 -27.27 -25.71
PBCI Pamrapo Bancorp, Inc. of NJ 24.13 2,843 68.6 32.38 21.00 25.00 -3.48 12.86 -11.45
PFED Park Bancorp of Chicago IL 14.00 2,418 33.9 19.75 13.50 13.50 3.70 -15.81 -24.85
PVSA Parkvale Financial Corp of PA 30.00 5,173 155.2 35.00 24.10 30.88 -2.85 21.95 -12.41
PBHC Pathfinder BC MHC of NY (45.2)* 13.25 2,831 16.9 26.13 12.00 14.00 -5.36 -3.07 -33.75
PEEK Peekskill Fin. Corp. of NY 14.75 2,896 42.7 18.25 14.75 15.00 -1.67 -12.62 -11.94
PFSB PennFed Fin. Services of NJ 13.00 9,386 122.0 19.00 10.88 11.13 16.80 -12.99 -24.11
PWBK Pennwood Bancorp, Inc. of PA 11.00 697 7.7 17.44 11.00 12.31 -10.64 -12.42 -25.73
PBKB People's Bancshares of MA* 16.75 3,316 55.5 27.75 15.00 16.00 4.69 -2.22 -26.37
TSBS Peoples Bancorp Inc of NJ* 8.31 36,326 301.9 11.83 6.97 7.44 11.69 5.06 -29.75
PFDC Peoples Bancorp of Auburn IN 20.50 3,357 68.8 25.00 16.67 20.63 -0.63 19.39 -6.82
PBCT Peoples Bank, MHC of CT (41.2)* 23.19 64,130 640.8 41.13 21.00 22.38 3.62 -19.34 -38.97
PFFC Peoples Fin. Corp. of OH 10.63 1,352 14.4 19.00 10.63 13.50 -21.26 -38.38 -29.74
PHBK Peoples Heritage Fin Grp of ME* 16.75 87,565 1,466.7 26.50 15.69 17.00 -1.47 -12.99 -27.17
PSFC Peoples Sidney Fin. Corp of OH 18.50 1,785 33.0 24.38 15.50 19.13 -3.29 13.85 3.47
PERM Permanent Bancorp, Inc. of IN 12.75 4,249 54.2 18.25 11.50 12.50 2.00 10.87 -18.06
PCBC Perry Co. Fin. Corp. of MO 21.50 828 17.8 25.00 18.00 20.00 7.50 1.18 -10.90
PHFC Pittsburgh Home Fin Corp of PA 13.50 1,969 26.6 20.81 13.00 15.25 -11.48 -28.95 -25.00
PFSL Pocahontas Bancorp of AR 6.75 6,685 45.1 11.43 6.75 7.94 -14.99 -4.66 -38.97
PTRS Potters Financial Corp of OH 14.00 951 13.3 22.25 12.28 14.75 -5.08 13.09 -30.00
PHSB Ppls Home SB, MHC of PA (45.0) 14.75 2,760 18.3 22.13 14.00 14.50 1.72 -9.95 -21.88
PRBC Prestige Bancorp of PA 13.13 1,052 13.8 22.07 13.00 14.38 -8.69 -11.16 -24.50
PFNC Progress Financial Corp. of PA 13.75 5,246 72.1 21.67 13.10 15.38 -10.60 0.44 -12.48
PROV Provident Fin. Holdings of CA 14.75 4,854 71.6 24.25 14.25 16.13 -8.56 -23.38 -32.59
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 23.88 2,106 14.9 51.00 22.13 25.00 -4.48 -12.78 -23.90
PLSK Pulaski SB, MHC of NJ (47.0) 13.00 2,108 12.9 24.50 12.25 12.75 1.96 -25.71 -32.47
PULS Pulse Bancorp of S. River NJ(8) 25.00 3,120 78.0 30.50 20.50 27.00 -7.41 19.05 -4.32
QCFB QCF Bancorp of Virginia MN 28.00 1,365 38.2 31.75 25.00 29.50 -5.08 6.67 -5.88
QCBC Quaker City Bancorp of CA 14.75 5,827 85.9 21.25 14.75 16.38 -9.95 -12.72 -13.24
QCSB Queens County Bancorp of NY* 39.75 14,941 593.9 47.13 34.17 37.94 4.77 10.94 -1.85
RARB Raritan Bancorp of Raritan NJ* 25.50 2,373 60.5 30.25 22.25 27.25 -6.42 6.25 -8.93
RELY Reliance Bancorp, Inc. of NY 26.00 9,565 248.7 42.25 23.88 25.00 4.00 -18.44 -29.02
RELI Reliance Bancshares Inc of WI(8) 9.13 2,371 21.6 10.13 8.06 9.13 0.00 5.79 -3.89
RCBK Richmond County Fin Corp of NY 13.56 26,424 358.3 19.75 11.88 13.00 4.31 35.60 35.60
RIVR River Valley Bancorp of IN 15.00 1,190 17.9 20.75 13.75 15.38 -2.47 -9.09 -20.00
RVSB Riverview Bancorp of WA 12.00 6,186 74.2 19.13 10.84 12.25 -2.04 11.63 -32.39
RSLN Roslyn Bancorp, Inc. of NY* 16.63 41,400 688.5 30.50 13.75 16.00 3.94 -22.43 -28.47
SCCB S. Carolina Comm. Bnshrs of SC 20.50 580 11.9 24.50 18.50 20.25 1.23 -10.87 -8.89
SBFL SB Fngr Lakes MHC of NY (33.1) 14.50 3,570 17.1 24.75 12.00 17.00 -14.71 13.73 -9.38
SFED SFS Bancorp of Schenectady NY(8) 26.50 1,208 32.0 27.88 19.25 27.00 -1.85 39.47 -1.41
SGVB SGV Bancorp of W. Covina CA 11.75 2,348 27.6 19.38 11.75 15.00 -21.67 -22.34 -33.80
SISB SIS Bancorp, Inc. of MA(8)* 35.06 6,962 244.1 52.63 29.25 37.38 -6.21 18.33 -12.76
SWCB Sandwich Bancorp of MA(8)* 58.00 2,043 118.5 64.50 33.63 56.50 2.65 78.46 31.82
SFSL Security First Corp. of OH(8) 19.19 7,864 150.9 27.88 17.38 20.00 -4.05 9.66 -8.09
SKAN Skaneateles Bancorp Inc of NY* 14.63 1,445 21.1 22.25 14.63 14.63 0.00 -5.61 -33.89
SOBI Sobieski Bancorp of S. Bend IN 15.00 764 11.5 24.25 14.00 14.50 3.45 -8.76 -26.40
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
NWEQ Northwest Equity Corp. of WI 1.44 1.34 14.25 14.25 116.91
NTMG Nutmeg FS&LA of CT 0.87 0.46 6.31 6.31 104.10
OHSL OHSL Financial Corp. of OH 0.83 0.77 10.76 10.76 99.30
OCFC Ocean Fin. Corp. of NJ 0.88 0.88 13.57 13.51 99.03
OTFC Oregon Trail Fin. Corp. of OR 0.69 0.69 14.47 14.47 54.62
OFCP Ottawa Financial Corp. of MI 1.38 1.23 13.23 10.85 160.90
PFFB PFF Bancorp of Pomona CA 1.03 0.95 14.92 14.77 185.51
PSFI PS Financial of Chicago IL 0.42 0.73 11.27 11.27 42.10
PSBI PSB Bancorp Inc. of PA* 0.37 0.37 9.41 9.41 47.49
PVFC PVF Capital Corp. of OH 1.29 1.22 7.56 7.56 104.99
PBCI Pamrapo Bancorp, Inc. of NJ 1.65 1.59 17.30 17.21 138.68
PFED Park Bancorp of Chicago IL 0.70 0.71 16.55 16.55 81.39
PVSA Parkvale Financial Corp of PA 2.15 2.15 16.25 16.17 211.75
PBHC Pathfinder BC MHC of NY (45.2)* 0.52 0.43 8.32 7.10 69.97
PEEK Peekskill Fin. Corp. of NY 0.64 0.65 14.92 14.92 69.18
PFSB PennFed Fin. Services of NJ 1.19 1.16 11.05 9.61 165.35
PWBK Pennwood Bancorp, Inc. of PA 0.40 0.44 11.42 11.42 66.11
PBKB People's Bancshares of MA* 1.66 0.63 9.79 9.38 258.86
TSBS Peoples Bancorp Inc of NJ* 0.23 0.20 9.40 9.12 24.05
PFDC Peoples Bancorp of Auburn IN 1.28 1.28 13.57 13.57 90.65
PBCT Peoples Bank, MHC of CT (41.2)* 1.60 0.83 13.37 11.52 141.98
PFFC Peoples Fin. Corp. of OH 0.71 0.33 10.89 10.89 62.80
PHBK Peoples Heritage Fin Grp of ME* 0.76 1.02 8.26 6.86 111.55
PSFC Peoples Sidney Fin. Corp of OH 0.69 0.69 10.99 10.99 59.33
PERM Permanent Bancorp, Inc. of IN 0.62 0.59 10.23 8.35 119.26
PCBC Perry Co. Fin. Corp. of MO 1.01 1.00 20.02 20.02 108.41
PHFC Pittsburgh Home Fin Corp of PA 1.09 0.97 13.12 12.98 189.20
PFSL Pocahontas Bancorp of AR 0.40 0.40 8.74 8.47 60.52
PTRS Potters Financial Corp of OH 0.99 0.89 11.50 11.50 134.75
PHSB Ppls Home SB, MHC of PA (45.0) 0.63 0.58 10.41 10.41 82.15
PRBC Prestige Bancorp of PA 0.67 0.65 15.14 15.14 156.52
PFNC Progress Financial Corp. of PA 0.76 0.67 7.95 7.09 114.82
PROV Provident Fin. Holdings of CA 1.03 0.42 17.85 17.85 168.10
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 0.95 0.78 11.70 11.70 87.19
PLSK Pulaski SB, MHC of NJ (47.0) 0.47 0.51 10.53 10.53 89.08
PULS Pulse Bancorp of S. River NJ(8) 1.78 1.78 14.71 14.71 174.39
QCFB QCF Bancorp of Virginia MN 1.90 1.88 19.98 19.98 112.89
QCBC Quaker City Bancorp of CA 1.13 1.11 13.26 13.26 152.30
QCSB Queens County Bancorp of NY* 1.58 1.56 11.35 11.35 114.80
RARB Raritan Bancorp of Raritan NJ* 1.68 1.67 13.42 13.26 183.15
RELY Reliance Bancorp, Inc. of NY 1.96 2.06 20.37 14.21 259.88
RELI Reliance Bancshares Inc of WI(8) 0.20 0.20 9.31 9.31 18.63
RCBK Richmond County Fin Corp of NY 0.27 0.76 12.44 12.39 60.39
RIVR River Valley Bancorp of IN 1.08 0.96 15.35 15.14 112.48
RVSB Riverview Bancorp of WA 0.72 0.68 10.02 9.71 43.42
RSLN Roslyn Bancorp, Inc. of NY* 1.11 1.06 14.36 14.29 93.07
SCCB S. Carolina Comm. Bnshrs of SC 0.80 0.80 16.27 16.27 79.84
SBFL SB Fngr Lakes MHC of NY (33.1) 0.28 0.22 6.12 6.12 72.38
SFED SFS Bancorp of Schenectady NY(8) 0.95 0.92 18.14 18.14 147.43
SGVB SGV Bancorp of W. Covina CA 0.63 0.62 13.73 13.56 173.91
SISB SIS Bancorp, Inc. of MA(8)* 1.73 2.16 18.89 18.89 264.53
SWCB Sandwich Bancorp of MA(8)* 2.45 2.32 21.81 21.20 259.92
SFSL Security First Corp. of OH(8) 1.24 1.24 8.77 8.65 88.56
SKAN Skaneateles Bancorp Inc of NY* 1.09 1.06 12.69 12.39 184.59
SOBI Sobieski Bancorp of S. Bend IN 0.64 0.64 16.58 16.58 117.60
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1A (continued)
Weekly Thrift Market Line - Part One
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------------- -------------------------------------------------
52 Week (1) % Change From
Shares Market --------------- ------------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------- ---------- ------- ------ ------ ------ ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SSFC South Street Fin. Corp. of NC* 8.56 4,676 40.0 20.00 8.38 9.06 -5.52 -54.66 -54.95
SBAN SouthBanc Shares Inc. of SC 16.25 4,306 70.0 23.76 15.00 16.00 1.56 -7.78 -23.57
SCBS Southern Commun. Bncshrs of AL 14.75 1,137 16.8 20.75 14.00 16.00 -7.81 -7.12 -19.18
SMBC Southern Missouri Bncrp of MO 16.00 1,484 23.7 23.25 16.00 17.25 -7.25 -6.60 -21.95
SVRN Sovereign Bancorp, Inc. of PA 13.13 152,393 2,000.9 22.19 12.19 13.94 -5.81 1.63 -24.06
STFR St. Francis Cap. Corp. of WI 38.88 5,111 198.7 50.75 35.75 39.00 -0.31 6.87 -23.01
SPBC St. Paul Bancorp, Inc. of IL 19.88 34,357 683.0 28.50 17.25 18.59 6.94 -17.17 -24.27
SFFC StateFed Financial Corp. of IA 10.00 1,566 15.7 15.00 9.00 12.00 -16.67 -9.09 -32.20
SFIN Statewide Fin. Corp. of NJ 16.75 4,397 73.6 26.69 15.25 15.88 5.48 -12.99 -30.21
STSA Sterling Financial Corp. of WA 15.88 7,606 120.8 27.63 14.75 16.38 -3.05 -22.08 -26.99
ROSE T R Financial Corp. of NY* 28.00 17,529 490.8 44.75 20.69 27.50 1.82 5.14 -15.79
THRD TF Financial Corp. of PA 17.75 3,192 56.7 30.00 17.75 19.38 -8.41 -11.25 -40.83
THTL Thistle Group Holdings of PA 8.50 9,000 76.5 10.06 7.63 8.00 6.25 -15.00 -15.00
TSBK Timberland Bancorp of WA 12.38 6,613 81.9 18.50 11.75 13.00 -4.77 23.80 23.80
TRIC Tri-County Bancorp of WY 11.50 1,167 13.4 16.50 11.38 12.00 -4.17 -2.13 -23.33
TWIN Twin City Bancorp, Inc. of TN 13.00 1,241 16.1 15.50 12.75 13.00 0.00 -3.70 -16.13
USAB USABancshares, Inc of PA* 8.50 2,002 17.0 13.31 5.81 9.63 -11.73 37.32 13.33
UCBC Union Community Bancorp of IN 11.00 3,042 33.5 15.81 11.00 12.00 -8.33 10.00 -24.81
UCFC United Community Fin. of OH 14.13 33,465 472.9 17.94 13.69 14.00 0.93 41.30 41.30
UFRM United FSB of Rocky Mount NC(8) 16.50 3,283 54.2 21.00 10.50 14.75 11.86 40.43 -15.94
UBMT United Fin. Corp. of MT 23.50 1,698 39.9 31.50 23.50 24.25 -3.09 N.A. N.A.
UTBI United Tenn. Bancshares of TN 11.69 1,455 17.0 16.00 11.69 12.25 -4.57 16.90 16.90
WHGB WHG Bancshares of MD 11.00 1,389 15.3 19.00 11.00 11.00 0.00 -30.16 -41.33
WSFS WSFS Financial Corp. of DE* 16.00 12,525 200.4 23.88 14.63 17.00 -5.88 4.92 -20.00
WVFC WVS Financial Corp. of PA 15.31 3,617 55.4 20.13 13.75 15.56 -1.61 10.30 -13.16
WRNB Warren Bancorp of Peabody MA* 10.13 7,905 80.1 14.38 9.00 9.50 6.63 11.81 -11.91
WSBI Warwick Community Bncrp of NY* 11.63 6,607 76.8 18.00 11.50 12.38 -6.06 16.30 -33.08
WFSL Washington Federal, Inc. of WA 22.25 52,447 1,166.9 30.29 22.25 24.69 -9.88 -12.98 -22.15
WYNE Wayne Bancorp, Inc. of NJ 29.00 2,013 58.4 37.06 21.00 27.06 7.17 22.11 8.41
WAYN Wayne Svgs Bks MHC of OH (48.2 21.25 2,486 25.4 30.00 20.46 21.50 -1.16 -2.61 -19.39
WCFB Wbstr Cty FSB MHC of IA (45.6) 15.25 2,114 14.7 22.00 15.25 16.75 -8.96 -14.71 -23.75
WBST Webster Financial Corp. of CT 22.88 38,327 876.9 36.25 20.63 22.69 0.84 -15.85 -31.19
WEFC Wells Fin. Corp. of Wells MN 16.75 1,879 31.5 22.00 16.00 17.50 -4.29 6.35 -6.32
WCBI WestCo Bancorp, Inc. of IL(8) 28.75 2,486 71.5 30.50 25.75 28.25 1.77 8.49 5.50
WSTR WesterFed Fin. Corp. of MT 18.50 5,585 103.3 27.00 17.00 18.38 0.65 -14.94 -27.45
WOFC Western Ohio Fin. Corp. of OH 20.75 2,298 47.7 29.25 20.75 21.75 -4.60 -12.63 -22.81
WEHO Westwood Hmstd Fin Corp of OH 10.63 2,559 27.2 18.13 10.63 11.00 -3.36 -30.30 -37.47
FFWD Wood Bancorp of OH 15.00 2,669 40.0 27.00 12.20 15.00 0.00 22.95 -20.21
YFCB Yonkers Fin. Corp. of NY 15.50 2,772 43.0 22.00 13.75 14.50 6.90 -17.33 -19.48
YFED York Financial Corp. of PA 18.25 8,968 163.7 27.25 16.81 19.25 -5.19 -4.95 -29.13
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- -------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SSFC South Street Fin. Corp. of NC* 0.22 0.22 7.37 7.37 43.56
SBAN SouthBanc Shares Inc. of SC 0.73 0.73 17.01 17.01 77.85
SCBS Southern Commun. Bncshrs of AL 0.54 0.54 10.10 10.10 63.72
SMBC Southern Missouri Bncrp of MO 0.72 0.75 16.25 16.25 105.07
SVRN Sovereign Bancorp, Inc. of PA 0.54 0.71 6.81 6.00 123.68
STFR St. Francis Cap. Corp. of WI 2.51 2.43 25.62 22.93 343.34
SPBC St. Paul Bancorp, Inc. of IL 1.44 1.39 12.75 12.70 132.87
SFFC StateFed Financial Corp. of IA 0.65 0.65 10.27 10.27 57.34
SFIN Statewide Fin. Corp. of NJ 1.21 1.16 14.51 14.49 149.34
STSA Sterling Financial Corp. of WA 0.89 1.07 13.90 5.47 273.04
ROSE T R Financial Corp. of NY* 2.23 1.90 14.62 14.62 234.80
THRD TF Financial Corp. of PA 1.39 1.12 16.18 13.73 215.94
THTL Thistle Group Holdings of PA 0.53 0.53 10.79 10.79 38.81
TSBK Timberland Bancorp of WA 0.67 0.63 12.87 12.87 39.79
TRIC Tri-County Bancorp of WY 0.76 0.78 12.20 12.20 74.16
TWIN Twin City Bancorp, Inc. of TN 0.89 0.72 11.29 11.29 89.13
USAB USABancshares, Inc of PA* 0.26 0.32 6.55 6.51 67.28
UCBC Union Community Bancorp of IN 0.47 0.47 14.22 14.22 35.53
UCFC United Community Fin. of OH 0.58 0.58 12.47 12.47 38.59
UFRM United FSB of Rocky Mount NC(8) 0.56 0.47 7.13 7.13 91.97
UBMT United Fin. Corp. of MT 0.80 0.80 17.83 17.23 120.93
UTBI United Tenn. Bancshares of TN 0.71 0.71 13.83 13.83 51.16
WHGB WHG Bancshares of MD 0.46 0.46 14.52 14.52 95.01
WSFS WSFS Financial Corp. of DE* 1.36 1.31 7.62 7.58 123.88
WVFC WVS Financial Corp. of PA 0.97 1.05 9.12 9.12 82.13
WRNB Warren Bancorp of Peabody MA* 0.80 0.80 5.02 5.02 47.84
WSBI Warwick Community Bncrp of NY* -0.36 0.39 12.94 12.94 56.13
WFSL Washington Federal, Inc. of WA 2.12 2.06 14.73 13.68 105.99
WYNE Wayne Bancorp, Inc. of NJ 0.93 0.90 17.47 17.47 136.78
WAYN Wayne Svgs Bks MHC of OH (48.2 0.73 0.66 9.94 9.94 104.35
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.63 0.63 10.75 10.75 45.93
WBST Webster Financial Corp. of CT 1.29 1.45 14.31 12.13 239.76
WEFC Wells Fin. Corp. of Wells MN 1.27 1.18 15.43 15.43 100.41
WCBI WestCo Bancorp, Inc. of IL(8) 1.90 1.78 20.18 20.18 128.84
WSTR WesterFed Fin. Corp. of MT 1.30 1.30 19.64 16.01 183.01
WOFC Western Ohio Fin. Corp. of OH 0.12 0.10 22.57 21.11 155.48
WEHO Westwood Hmstd Fin Corp of OH 0.36 0.58 10.16 10.16 49.37
FFWD Wood Bancorp of OH 0.89 0.72 8.45 8.45 62.25
YFCB Yonkers Fin. Corp. of NY 1.07 0.97 14.91 14.91 144.86
YFED York Financial Corp. of PA 1.12 0.88 12.18 12.18 137.07
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(284) 13.78 13.51 0.91 7.80 5.74 0.86 7.31 0.64 147.07 0.80
NYSE Traded Companies(8) 8.31 7.98 0.76 10.41 6.60 0.47 7.67 1.82 107.55 1.45
AMEX Traded Companies(22) 14.22 14.10 0.76 5.84 5.34 0.79 5.66 0.58 180.30 0.76
NASDAQ Listed OTC Companies(254) 13.88 13.60 0.92 7.91 5.75 0.88 7.45 0.61 145.68 0.79
California Companies(18) 7.84 7.50 0.60 8.40 7.08 0.51 7.69 1.45 104.33 1.33
Florida Companies(6) 10.56 9.93 0.79 8.40 5.13 0.51 5.02 1.56 101.49 0.83
Mid-Atlantic Companies(56) 11.28 10.89 0.81 8.65 6.20 0.82 8.28 0.66 111.69 0.93
Mid-West Companies(131) 14.47 14.27 0.92 7.13 5.27 0.89 6.83 0.54 154.34 0.68
New England Companies(7) 7.44 7.12 0.72 9.86 7.58 0.62 8.56 0.48 185.95 0.99
North-West Companies(11) 18.17 17.59 1.18 8.86 5.86 1.05 7.94 0.61 211.29 0.80
South-East Companies(44) 17.21 17.05 1.07 7.83 5.40 1.01 7.32 0.59 156.12 0.78
South-West Companies(6) 11.17 11.07 0.93 10.04 9.53 0.90 9.72 0.34 182.35 0.55
Western Companies (Excl CA)(5) 16.98 16.49 0.89 6.03 5.48 0.90 6.07 0.37 194.20 0.93
Thrift Strategy(239) 14.81 14.58 0.93 7.41 5.76 0.90 7.07 0.59 149.25 0.75
Mortgage Banker Strategy(27) 7.53 6.82 0.74 9.71 4.96 0.66 9.07 0.63 151.84 0.95
Real Estate Strategy(8) 7.35 7.12 0.87 11.98 8.07 0.81 11.26 1.36 104.70 1.62
Diversified Strategy(7) 8.59 8.32 0.84 10.65 4.96 0.53 7.71 1.67 116.55 1.18
Retail Banking Strategy(3) 6.80 6.55 0.41 7.34 5.33 0.12 3.12 0.88 99.04 1.36
Companies Issuing Dividends(216) 14.00 13.72 0.97 8.12 5.97 0.90 7.38 0.55 151.09 0.76
Companies Without Dividends(68) 13.08 12.83 0.71 6.76 4.99 0.76 7.09 0.92 133.91 0.92
Equity/Assets less than 6%(18) 5.07 4.63 0.51 10.31 5.37 0.57 11.46 1.11 107.84 0.98
Equity/Assets 6-12%(125) 8.70 8.30 0.82 9.64 6.44 0.72 8.48 0.63 147.77 0.89
Equity/Assets greater than 12%(141) 19.30 19.16 1.04 5.88 5.18 1.02 5.77 0.59 151.86 0.70
Converted Last 3 Mths (no MHC)(6) 24.10 24.10 1.00 4.07 4.84 1.03 4.21 0.56 119.72 0.92
Actively Traded Companies(30) 9.18 8.68 0.91 10.59 5.76 0.93 11.33 0.82 139.36 0.94
Market Value Below $20 Million(62) 14.61 14.51 0.86 6.16 5.86 0.78 5.35 0.59 146.04 0.69
Holding Company Structure(256) 13.79 13.52 0.90 7.71 5.68 0.86 7.30 0.65 143.06 0.80
Assets Over $1 Billion(61) 9.22 8.58 0.79 10.22 6.46 0.77 9.79 0.88 124.54 0.98
Assets $500 Million-$1 Billion(36) 10.61 10.23 0.87 8.55 4.99 0.79 7.96 0.55 146.45 0.89
Assets $250-$500 Million(67) 13.95 13.73 0.91 7.62 5.96 0.88 7.18 0.58 169.23 0.82
Assets less than $250 Million(120) 16.84 16.76 0.98 6.49 5.48 0.92 5.98 0.57 148.17 0.67
Goodwill Companies(116) 10.58 9.90 0.83 9.24 6.14 0.79 8.57 0.74 126.00 0.89
Non-Goodwill Companies(166) 15.94 15.94 0.96 6.81 5.47 0.91 6.46 0.57 163.29 0.74
Acquirors of FSLIC Cases(8) 9.31 8.85 1.15 13.28 9.84 0.98 11.18 0.77 66.05 0.63
<CAPTION>
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
_______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(284) 17.04 124.63 15.80 129.01 17.77 0.30 1.87 28.66
NYSE Traded Companies(8) 12.27 142.26 12.16 149.11 11.71 0.21 0.87 18.24
AMEX Traded Companies(22) 16.70 105.00 14.78 106.40 18.21 0.26 1.82 28.04
NASDAQ Listed OTC Companies(254) 17.16 125.95 15.99 130.54 17.85 0.31 1.91 29.01
California Companies(18) 13.70 108.51 8.49 114.47 13.09 0.15 0.73 15.31
Florida Companies(6) 19.10 135.35 14.70 148.81 22.53 0.24 1.31 23.63
Mid-Atlantic Companies(56) 16.09 124.94 13.21 132.71 17.64 0.27 1.59 26.34
Mid-West Companies(131) 17.49 122.85 16.46 125.86 17.89 0.30 1.94 29.17
New England Companies(7) 13.67 124.54 8.98 131.51 16.43 0.39 2.43 31.38
North-West Companies(11) 16.88 131.89 20.37 151.30 18.62 0.31 1.83 31.54
South-East Companies(44) 18.68 138.53 20.18 136.75 19.20 0.37 2.46 37.26
South-West Companies(6) 10.72 102.67 11.46 105.80 10.82 0.22 1.49 18.42
Western Companies (Excl CA)(5) 19.63 98.92 16.50 104.11 19.55 0.37 2.22 27.13
Thrift Strategy(239) 17.36 119.42 16.45 122.08 17.92 0.31 1.96 29.42
Mortgage Banker Strategy(27) 15.95 159.20 12.03 181.24 18.17 0.26 1.43 25.25
Real Estate Strategy(8) 13.32 136.53 10.18 140.12 13.54 0.18 0.88 13.02
Diversified Strategy(7) 17.44 191.88 16.02 198.33 17.41 0.39 1.95 38.86
Retail Banking Strategy(3) 7.88 105.63 6.90 109.02 11.99 0.15 1.02 11.07
Companies Issuing Dividends(216) 17.05 128.24 16.41 133.30 18.04 0.39 2.45 37.73
Companies Without Dividends(68) 17.02 112.90 13.80 114.85 16.79 0.00 0.00 0.00
Equity/Assets less than 6%(18) 14.38 147.75 7.63 166.43 12.88 0.16 0.80 10.92
Equity/Assets 6-12%(125) 15.30 141.72 12.13 147.78 16.87 0.29 1.74 25.29
Equity/Assets greater than 12%(141) 18.93 106.88 20.03 108.09 19.15 0.32 2.13 34.14
Converted Last 3 Mths (no MHC)(6) 21.47 85.39 21.06 85.39 20.49 0.13 1.79 0.00
Actively Traded Companies(30) 15.95 151.82 13.46 166.83 15.61 0.42 1.97 30.60
Market Value Below $20 Million(62) 17.65 104.29 14.82 104.98 19.22 0.29 2.31 31.21
Holding Company Structure(256) 17.22 125.48 15.94 129.80 17.81 0.31 1.89 29.54
Assets Over $1 Billion(61) 15.84 143.21 12.54 158.18 16.36 0.29 1.50 24.19
Assets $500 Million-$1 Billion(36) 15.26 141.43 13.98 149.34 17.28 0.31 1.60 25.84
Assets $250-$500 Million(67) 16.19 119.36 15.67 122.35 16.58 0.29 1.72 28.03
Assets less than $250 Million(120) 18.56 113.39 17.98 112.14 19.21 0.31 2.22 32.38
Goodwill Companies(116) 16.44 135.85 13.43 147.00 17.23 0.31 1.69 24.93
Non-Goodwill Companies(166) 17.40 116.91 17.40 116.91 18.10 0.30 2.01 31.45
Acquirors of FSLIC Cases(8) 11.58 134.80 12.70 142.07 12.93 0.47 2.10 24.37
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(55) 12.09 11.75 1.06 10.59 7.01 1.04 9.92 0.62 212.65 1.24
NYSE Traded Companies(5) 16.97 15.76 1.36 9.50 6.29 1.50 9.36 1.01 106.47 0.96
AMEX Traded Companies(5) 11.94 11.63 1.11 10.60 7.83 0.91 8.41 1.08 111.06 1.15
NASDAQ Listed OTC Companies(45) 11.53 11.29 1.02 10.72 6.99 1.00 10.17 0.52 236.69 1.28
California Companies(1) 10.44 10.41 1.44 13.81 11.37 1.44 13.81 1.07 139.44 1.75
Mid-Atlantic Companies(20) 14.78 14.30 0.95 8.42 5.35 1.03 8.51 0.74 132.40 1.10
New England Companies(29) 9.82 9.53 1.12 12.56 8.14 1.02 11.15 0.60 249.48 1.41
North-West Companies(2) 11.11 11.11 1.29 12.54 8.04 1.26 12.26 0.07 989.94 1.07
South-East Companies(3) 15.09 14.94 0.95 5.65 6.03 0.99 5.83 0.32 152.62 0.52
Thrift Strategy(43) 13.08 12.80 1.04 9.71 6.75 1.03 9.06 0.57 206.26 1.17
Mortgage Banker Strategy(6) 8.49 8.02 1.05 13.08 7.76 0.94 11.46 0.61 320.76 1.15
Real Estate Strategy(2) 10.47 10.45 1.58 14.94 9.63 1.58 14.94 1.17 111.47 1.69
Diversified Strategy(4) 6.90 5.82 0.97 14.72 7.24 1.02 15.40 0.85 142.72 2.00
Companies Issuing Dividends(44) 12.11 11.72 1.04 10.62 6.78 1.03 9.87 0.60 207.13 1.16
Companies Without Dividends(11) 12.01 11.88 1.12 10.48 7.96 1.08 10.15 0.69 236.61 1.56
Equity/Assets less than 6%(2) 4.68 4.60 0.96 19.68 9.50 0.61 12.04 0.58 121.04 0.91
Equity/Assets 6-12%(36) 8.53 8.08 1.03 12.09 7.46 0.96 11.27 0.75 207.89 1.41
Equity/Assets greater than 12%(17) 19.88 19.72 1.13 6.60 5.84 1.24 7.06 0.31 238.85 0.92
Converted Last 3 Mths (no MHC)(1) 19.81 19.81 0.78 3.93 5.19 0.78 3.93 0.00 0.00 0.46
Actively Traded Companies(14) 10.39 9.93 1.36 13.73 8.84 1.30 12.40 0.43 205.71 1.08
Market Value Below $20 Million(5) 9.54 9.50 0.78 7.65 6.49 0.79 7.65 0.58 239.95 1.27
Holding Company Structure(42) 12.98 12.71 1.06 9.92 6.69 1.06 9.45 0.53 211.36 1.25
Assets Over $1 Billion(16) 11.22 10.43 1.21 11.94 7.05 1.24 11.76 0.70 157.45 1.28
Assets $500 Million-$1 Billion(11) 12.50 12.24 1.05 11.29 7.18 0.91 9.20 0.58 174.60 1.26
Assets $250-$500 Million(14) 11.55 11.41 1.05 11.01 7.50 1.07 10.51 0.62 273.24 1.53
Assets less than $250 Million(14) 13.32 13.20 0.91 8.28 6.35 0.87 7.84 0.55 241.39 0.90
Goodwill Companies(28) 11.13 10.45 1.00 10.88 7.14 0.93 9.74 0.82 142.52 1.24
Non-Goodwill Companies(26) 13.30 13.30 1.13 10.11 6.82 1.15 9.92 0.42 257.02 1.23
<CAPTION>
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
_______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(55) 14.41 135.94 15.21 143.94 16.17 0.36 1.96 27.94
NYSE Traded Companies(5) 15.02 138.92 20.60 176.93 17.27 0.55 1.68 28.21
AMEX Traded Companies(5) 13.72 124.71 14.11 129.30 18.32 0.41 2.44 31.03
NASDAQ Listed OTC Companies(45) 14.43 136.95 14.70 141.70 15.75 0.34 1.93 27.52
California Companies(1) 8.80 113.72 11.87 114.05 8.80 0.00 0.00 0.00
Mid-Atlantic Companies(20) 17.10 128.19 17.65 139.90 18.39 0.42 1.80 32.60
New England Companies(29) 13.20 144.31 13.27 151.29 15.46 0.33 1.94 24.70
North-West Companies(2) 12.44 149.70 15.47 149.70 12.73 0.32 2.36 29.35
South-East Companies(3) 13.38 110.71 16.75 111.85 12.49 0.41 3.51 38.47
Thrift Strategy(43) 14.78 127.48 15.66 133.27 16.74 0.38 2.01 29.01
Mortgage Banker Strategy(6) 13.02 162.79 13.14 176.87 15.41 0.29 1.47 18.94
Real Estate Strategy(2) 10.73 157.76 16.52 157.92 10.73 0.18 1.78 22.50
Diversified Strategy(4) 15.10 180.56 12.38 211.01 14.03 0.37 2.29 35.67
Companies Issuing Dividends(44) 14.65 139.77 15.62 148.99 16.35 0.45 2.42 34.93
Companies Without Dividends(11) 13.37 120.24 13.50 123.24 15.45 0.00 0.00 0.00
Equity/Assets less than 6%(2) 10.55 195.44 9.37 199.18 20.19 0.36 2.34 24.21
Equity/Assets 6-12%(36) 13.89 150.09 13.20 162.16 15.57 0.38 1.95 27.08
Equity/Assets greater than 12%(17) 16.27 102.30 19.80 103.14 16.99 0.33 1.92 30.35
Converted Last 3 Mths (no MHC)(1) 19.27 75.77 15.01 75.77 19.27 0.00 0.00 0.00
Actively Traded Companies(14) 12.30 149.50 14.78 161.82 14.48 0.50 2.27 28.43
Market Value Below $20 Million(5) 14.00 117.50 11.15 118.02 16.61 0.34 1.96 26.80
Holding Company Structure(42) 14.89 131.63 15.98 136.83 16.69 0.36 1.94 28.81
Assets Over $1 Billion(16) 14.81 151.73 16.99 174.06 15.66 0.56 2.12 33.97
Assets $500 Million-$1 Billion(11) 13.88 138.45 15.08 141.99 16.95 0.28 1.98 28.91
Assets $250-$500 Million(14) 12.90 133.91 14.10 136.06 15.78 0.29 1.89 24.89
Assets less than $250 Million(14) 15.92 120.57 14.50 122.94 16.73 0.28 1.83 23.37
Goodwill Companies(28) 13.65 139.91 14.07 155.59 16.42 0.34 1.82 26.62
Non-Goodwill Companies(26) 15.26 129.95 16.53 129.95 16.05 0.39 2.11 29.80
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------ ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 14.13 14.02 0.84 6.65 3.74 0.80 6.14 0.47 163.66 0.83
BIF-Insured Thrifts(3) 13.46 12.45 1.03 8.58 5.03 0.77 5.95 0.76 125.67 1.14
NASDAQ Listed OTC Companies(22) 14.03 13.77 0.87 6.96 3.94 0.79 6.11 0.52 157.33 0.88
Florida Companies(2) 6.15 5.98 0.65 8.98 4.79 0.52 7.18 0.27 78.51 0.34
Mid-Atlantic Companies(12) 12.83 12.55 0.78 6.31 3.75 0.74 5.94 0.55 141.41 0.80
Mid-West Companies(5) 14.49 14.49 0.90 6.38 3.66 0.81 5.45 0.41 219.34 0.55
New England Companies(2) 21.32 20.66 1.57 11.22 5.61 1.28 7.95 0.65 203.93 2.05
South-East Companies(1) 20.28 20.28 0.73 5.92 2.93 0.66 5.39 0.50 132.06 0.96
Thrift Strategy(20) 14.64 14.48 0.85 6.37 3.77 0.81 5.92 0.50 163.42 0.82
Mortgage Banker Strategy(1) 8.12 7.33 0.84 10.33 3.89 0.68 8.41 0.66 60.54 0.97
Diversified Strategy(1) 9.42 8.11 1.22 13.58 6.90 0.63 7.05 0.70 156.79 1.72
Companies Issuing Dividends(15) 13.50 13.12 0.88 7.64 4.09 0.78 6.52 0.56 141.46 0.93
Companies Without Dividends(7) 15.17 15.17 0.85 5.48 3.62 0.82 5.23 0.42 198.61 0.76
Equity/Assets 6-12%(12) 9.52 9.03 0.74 7.89 4.01 0.61 6.37 0.66 84.42 0.82
Equity/Assets greater than 12%(10) 19.04 19.04 1.01 5.92 3.86 1.00 5.82 0.34 248.47 0.94
Holding Company Structure(4) 13.40 12.97 0.79 6.08 3.89 0.73 5.51 0.61 90.35 0.63
Assets Over $1 Billion(5) 10.26 9.64 0.95 9.80 4.82 0.76 7.62 0.48 121.45 0.98
Assets $500 Million-$1 Billion(3) 33.21 33.21 1.92 8.85 4.32 1.92 8.85 0.60 251.07 2.37
Assets $250-$500 Million(6) 12.42 12.42 0.75 5.97 3.49 0.72 5.65 0.45 177.83 0.57
Assets less than $250 Million(8) 15.34 15.10 0.77 5.50 3.65 0.72 5.04 0.58 154.93 0.85
Goodwill Companies(7) 10.07 9.25 0.87 9.09 4.53 0.69 7.13 0.69 90.23 0.84
Non-Goodwill Companies(15) 15.85 15.85 0.87 5.97 3.67 0.84 5.64 0.46 183.14 0.89
MHC Institutions(22) 14.03 13.77 0.87 6.96 3.94 0.79 6.11 0.52 157.33 0.88
MHC Converted Last 3 Months(2) 14.70 14.70 0.71 4.80 3.69 0.69 4.68 0.35 82.98 0.51
<CAPTION>
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
_______ _______ _______ _______ _______ _______ _______ _______
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(19) 25.42 163.99 21.25 167.64 25.40 0.26 1.64 28.72
BIF-Insured Thrifts(3) 21.14 156.03 20.37 174.43 26.20 0.35 1.71 30.32
NASDAQ Listed OTC Companies(22) 24.62 162.73 21.11 168.72 25.52 0.27 1.65 29.04
Florida Companies(2) 20.87 180.72 11.12 186.05 26.09 1.00 4.17 0.00
Mid-Atlantic Companies(12) 25.27 164.98 19.93 171.69 25.60 0.17 1.25 22.23
Mid-West Companies(5) 27.55 172.74 23.57 172.74 24.21 0.31 1.63 28.85
New England Companies(2) 18.82 145.03 27.53 158.96 25.54 0.52 2.73 47.53
South-East Companies(1) 0.00 123.09 24.97 123.09 0.00 0.20 1.78 60.61
Thrift Strategy(20) 25.26 156.99 21.44 160.46 25.32 0.24 1.54 26.34
Mortgage Banker Strategy(1) 25.70 249.64 20.27 276.49 0.00 0.22 1.59 40.74
Diversified Strategy(1) 14.49 173.45 16.33 201.30 27.94 0.84 3.62 52.50
Companies Issuing Dividends(15) 24.25 165.17 20.39 173.91 25.28 0.40 2.41 48.40
Companies Without Dividends(7) 25.42 157.45 22.66 157.45 25.90 0.00 0.00 0.00
Equity/Assets 6-12%(12) 24.59 190.23 17.68 201.60 25.85 0.36 1.95 36.00
Equity/Assets greater than 12%(10) 24.65 132.18 24.92 132.18 25.31 0.17 1.31 21.09
Holding Company Structure(4) 25.88 156.76 20.17 163.60 25.64 0.21 1.11 12.82
Assets Over $1 Billion(5) 21.63 194.63 18.71 211.90 25.80 0.44 2.17 32.01
Assets $500 Million-$1 Billion(3) 23.15 116.61 38.73 116.61 23.15 0.20 1.84 42.55
Assets $250-$500 Million(6) 26.49 174.45 20.76 174.45 26.17 0.20 1.08 0.00
Assets less than $250 Million(8) 26.02 136.49 20.60 140.40 25.18 0.23 1.74 44.17
Goodwill Companies(7) 23.20 190.08 18.33 209.03 26.94 0.40 2.06 33.30
Non-Goodwill Companies(15) 25.46 150.11 22.39 150.11 24.89 0.21 1.46 26.91
MHC Institutions(22) 24.62 162.73 21.11 168.72 25.52 0.27 1.65 29.04
MHC Converted Last 3 Months(2) 27.24 131.02 19.45 131.02 27.91 0.00 0.00 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and
assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secon dary 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 September 4, 1998
<TABLE>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 6.11 4.66 0.85 17.57 7.23 0.84 17.38 1.72 52.05 1.33
BYS Bay State Bancorp of MA* 20.71 20.71 0.92 4.44 5.32 0.92 4.44 0.71 122.32 1.06
CFB Commercial Federal Corp. of NE 7.26 6.44 0.79 11.99 6.33 0.95 14.45 0.78 86.50 0.88
DME Dime Bancorp, Inc. of NY* 6.36 5.23 0.84 14.53 6.81 0.52 8.90 1.03 50.85 0.69
DSL Downey Financial Corp. of CA 7.87 7.79 0.97 13.20 8.71 1.01 13.65 0.84 65.10 0.60
FED FirstFed Fin. Corp. of CA 5.99 5.95 0.71 13.19 9.27 0.68 12.52 0.84 256.41 2.80
GSB Golden State Bancorp of CA(8) 6.20 5.20 0.52 8.40 9.58 0.62 10.08 0.86 100.48 1.12
GDW Golden West Fin. Corp. of CA 7.48 7.48 1.02 14.91 9.07 1.00 14.59 0.97 63.28 0.86
GPT GreenPoint Fin. Corp. of NY* 9.93 5.61 1.11 11.28 6.05 1.14 11.54 2.54 33.98 1.22
JSB JSB Financial, Inc. of NY* 24.31 24.31 2.92 12.15 9.93 3.28 13.64 0.16 238.05 0.54
OCN Ocwen Financial Corp. of FL 12.19 11.15 0.87 6.99 3.12 0.08 0.62 6.87 11.20 1.31
SIB Staten Island Bancorp of NY* 23.55 22.95 1.02 5.10 3.33 1.65 8.29 0.61 87.17 1.27
WES Westcorp Inc. of Orange CA 9.07 9.05 0.20 2.19 3.11 -0.89 -9.84 0.60 162.80 2.22
AMEX Traded Companies
_____________________
ANA Acadiana Bancshares, Inc of LA 14.72 14.72 1.05 6.53 7.61 0.98 6.09 0.29 320.59 1.26
ANE Alliance Bncp of New Eng of CT* 7.81 7.64 0.94 12.52 8.50 0.46 6.06 0.53 229.26 1.84
BKC American Bank of Waterbury CT* 8.65 8.39 1.34 15.26 8.80 1.12 12.82 2.10 42.28 1.50
BFD BostonFed Bancorp of MA 7.80 7.53 0.71 8.62 7.88 0.57 6.92 0.17 413.47 0.84
CNY Carver Bancorp, Inc. of NY 8.12 7.84 0.25 2.99 4.74 0.22 2.65 2.21 36.35 1.28
CBK Citizens First Fin.Corp. of IL 13.95 13.95 0.71 5.12 5.42 0.40 2.89 0.67 54.73 0.45
EFC EFC Bancorp Inc of IL 23.66 23.66 -0.78 -5.19 -4.29 0.94 6.26 0.53 57.48 0.42
EBI Equality Bancorp, Inc. of MO 9.58 9.58 0.59 6.72 4.29 0.01 0.12 0.36 37.97 0.37
ESX Essex Bancorp of Norfolk VA(8) 0.02 -0.04 -0.24 NM -20.09 -0.24 NM 1.26 76.64 1.11
FCB Falmouth Bancorp, Inc. of MA* 21.38 21.38 1.08 4.71 4.48 0.82 3.58 NA NA 0.65
FAB FirstFed America Bancorp of MA 8.86 8.86 0.59 5.50 5.80 0.48 4.44 0.29 293.25 1.24
GAF GA Financial Corp. of PA 12.88 12.76 1.02 7.16 8.45 0.95 6.65 0.24 75.96 0.46
HBS Haywood Bancshares, Inc. of NC* 14.85 14.38 1.46 10.18 9.26 1.46 10.18 0.60 82.40 0.66
KNK Kankakee Bancorp, Inc. of IL 9.76 8.34 0.79 7.50 8.53 0.76 7.18 1.12 53.91 0.97
KYF Kentucky First Bancorp of KY 17.56 17.56 1.08 6.34 5.43 1.06 6.25 0.17 272.34 0.78
NBN Northeast Bancorp of ME* 7.00 6.36 0.73 10.34 8.09 0.66 9.41 1.08 90.28 1.12
NEP Northeast PA Fin. Corp of PA 17.78 17.78 -0.28 -1.52 -1.88 0.63 3.42 0.23 182.16 0.72
PDB Piedmont Bancorp, Inc. of NC 16.54 16.54 1.28 7.84 6.28 1.24 7.58 0.71 102.48 0.89
SSB Scotland Bancorp, Inc. of NC 24.95 24.95 1.33 4.93 3.98 1.33 4.93 NA NA 0.57
SZB SouthFirst Bancshares of AL 9.94 9.70 0.47 4.21 3.97 0.42 3.76 1.56 29.54 0.74
SRN Southern Banc Company of AL 17.39 17.27 0.49 2.86 3.00 0.49 2.86 NA NA 0.19
SSM Stone Street Bancorp of NC 27.32 27.32 1.39 4.89 5.21 1.39 4.89 0.03 NA 0.64
TSH Teche Holding Company of LA 13.84 13.84 0.94 6.97 7.72 0.93 6.84 0.18 460.90 0.98
FTF Texarkana Fst. Fin. Corp of AR 14.88 14.88 1.75 11.47 7.91 1.70 11.15 0.12 445.58 0.67
THR Three Rivers Fin. Corp. of MI 13.53 13.48 0.88 6.44 6.22 0.81 5.99 1.00 48.12 0.74
WSB Washington SB, FSB of MD 8.42 8.42 0.73 8.64 9.02 0.50 5.89 NA NA 1.02
WFI Winton Financial Corp. of OH 7.17 7.03 1.05 14.60 6.96 0.86 12.04 NA NA NA
NASDAQ Listed OTC Companies
___________________________
FBCV 1st Bancorp of Vincennes IN(8) 9.17 9.00 0.73 8.30 4.14 0.51 5.83 1.84 30.69 0.77
FBER 1st Bergen Bancorp of NJ 11.60 11.60 0.72 5.57 5.05 0.72 5.57 0.96 111.28 2.41
AFED AFSALA Bancorp, Inc. of NY(8) 12.13 12.13 0.75 5.81 6.74 0.77 5.93 0.33 205.73 1.42
ALBK ALBANK Fin. Corp. of Albany NY(8) 9.19 7.27 1.14 12.55 6.08 1.14 12.51 0.85 84.14 1.04
AMFC AMB Financial Corp. of IN 12.68 12.68 0.84 5.95 6.48 0.54 3.86 0.19 214.55 0.52
ASBP ASB Financial Corp. of OH 12.45 12.45 0.94 6.35 5.65 0.94 6.35 0.34 191.18 0.98
ABBK Abington Bancorp of MA* 6.37 5.81 0.86 12.84 8.46 0.65 9.73 0.14 353.60 0.77
AABC Access Anytime Bancorp of NM 7.93 7.93 1.36 16.80 17.57 1.24 15.30 0.08 535.05 0.67
<CAPTION>
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
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) 13.84 180.63 11.05 236.84 13.99 0.88 1.70 23.53
BYS Bay State Bancorp of MA* 18.81 83.47 17.29 83.47 18.81 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 15.79 150.82 10.95 170.18 13.10 0.22 0.95 15.07
DME Dime Bancorp, Inc. of NY* 14.68 194.11 12.35 236.00 23.95 0.20 0.88 12.90
DSL Downey Financial Corp. of CA 11.48 142.74 11.23 144.25 11.10 0.32 1.37 15.76
FED FirstFed Fin. Corp. of CA 10.78 131.33 7.87 132.27 11.36 0.00 0.00 0.00
GSB Golden State Bancorp of CA(8) 10.44 87.70 5.44 104.47 8.70 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 11.02 151.81 11.36 151.81 11.27 0.50 0.65 7.15
GPT GreenPoint Fin. Corp. of NY* 16.54 189.15 18.77 334.57 16.17 0.64 2.21 36.57
JSB JSB Financial, Inc. of NY* 10.07 121.11 29.44 121.11 8.97 1.60 3.42 34.41
OCN Ocwen Financial Corp. of FL NM 205.41 25.03 224.57 NM 0.00 0.00 0.00
SIB Staten Island Bancorp of NY* NM 106.73 25.13 109.51 18.47 0.32 1.90 57.14
WES Westcorp Inc. of Orange CA NM 71.43 6.48 71.60 NM 0.20 2.22 71.43
AMEX Traded Companies
_____________________
ANA Acadiana Bancshares, Inc of LA 13.14 88.47 13.02 88.47 14.09 0.44 2.84 37.29
ANE Alliance Bncp of New Eng of CT* 11.76 138.48 10.81 141.53 24.31 0.20 1.83 21.51
BKC American Bank of Waterbury CT* 11.37 163.56 14.15 168.62 13.52 0.80 3.87 43.96
BFD BostonFed Bancorp of MA 12.69 109.41 8.54 113.41 15.80 0.40 2.39 30.30
CNY Carver Bancorp, Inc. of NY 21.11 61.85 5.03 64.10 23.75 0.00 0.00 0.00
CBK Citizens First Fin.Corp. of IL 18.44 92.65 12.92 92.65 NM 0.00 0.00 0.00
EFC EFC Bancorp Inc of IL NM 81.61 19.31 81.61 19.34 0.00 0.00 NM
EBI Equality Bancorp, Inc. of MO 23.32 125.58 12.03 125.58 NM 0.24 1.84 42.86
ESX Essex Bancorp of Norfolk VA(8) NM NM 1.08 NM NM 0.00 0.00 NM
FCB Falmouth Bancorp, Inc. of MA* 22.33 103.14 22.05 103.14 29.39 0.24 1.43 32.00
FAB FirstFed America Bancorp of MA 17.24 101.49 9.00 101.49 21.36 0.20 1.40 24.10
GAF GA Financial Corp. of PA 11.84 89.50 11.52 90.34 12.74 0.00 0.00 0.00
HBS Haywood Bancshares, Inc. of NC* 10.80 105.20 15.63 108.63 10.80 0.60 3.16 34.09
KNK Kankakee Bancorp, Inc. of IL 11.72 86.18 8.41 100.86 12.25 0.00 0.00 0.00
KYF Kentucky First Bancorp of KY 18.42 117.40 20.62 117.40 18.67 0.50 3.67 67.57
NBN Northeast Bancorp of ME* 12.36 113.17 7.92 124.58 13.58 0.21 1.91 23.60
NEP Northeast PA Fin. Corp of PA NM 80.41 14.30 80.41 23.62 0.00 0.00 NM
PDB Piedmont Bancorp, Inc. of NC 15.93 121.78 20.15 121.78 16.48 0.48 5.02 NM
SSB Scotland Bancorp, Inc. of NC 25.14 138.94 34.66 138.94 25.14 0.20 1.81 45.45
SZB SouthFirst Bancshares of AL 25.20 99.28 9.87 101.77 28.19 0.60 3.61 NM
SRN Southern Banc Company of AL NM 93.65 16.29 94.34 NM 0.00 0.00 0.00
SSM Stone Street Bancorp of NC 19.21 94.65 25.86 94.65 19.21 0.46 2.92 56.10
TSH Teche Holding Company of LA 12.95 87.35 12.09 87.35 13.18 0.50 3.45 44.64
FTF Texarkana Fst. Fin. Corp of AR 12.64 141.71 21.09 141.71 12.99 0.56 2.43 30.77
THR Three Rivers Fin. Corp. of MI 16.09 101.06 13.67 101.44 17.29 0.44 2.71 43.56
WSB Washington SB, FSB of MD 11.09 93.67 7.89 93.67 16.27 0.10 2.05 22.73
WFI Winton Financial Corp. of OH 14.38 198.28 14.23 202.46 17.42 0.25 2.17 31.25
NASDAQ Listed OTC Companies
___________________________
FBCV 1st Bancorp of Vincennes IN(8) 24.14 193.36 17.73 197.15 NM 0.27 0.64 15.43
FBER 1st Bergen Bancorp of NJ 19.82 120.37 13.97 120.37 19.82 0.28 1.72 34.15
AFED AFSALA Bancorp, Inc. of NY(8) 14.84 88.47 10.73 88.47 14.52 0.28 2.07 30.77
ALBK ALBANK Fin. Corp. of Albany NY(8) 16.46 193.83 17.81 244.85 16.51 0.84 1.51 24.85
AMFC AMB Financial Corp. of IN 15.43 94.09 11.93 94.09 23.77 0.28 1.93 29.79
ASBP ASB Financial Corp. of OH 17.69 131.28 16.35 131.28 17.69 0.40 3.48 61.54
ABBK Abington Bancorp of MA* 11.82 153.60 9.78 168.49 15.60 0.20 1.32 15.63
AABC Access Anytime Bancorp of NM 5.69 91.86 7.29 91.86 6.25 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AFBC Advance Fin. Bancorp of WV 14.09 14.09 0.90 5.94 6.19 0.85 5.61 0.60 51.29 0.35
ALBC Albion Banc Corp. of Albion NY 8.49 8.49 0.54 6.24 5.91 0.50 5.88 0.47 72.86 0.44
ABCL Alliance Bancorp, Inc. of IL 8.74 8.66 0.75 8.27 5.86 0.92 10.16 0.13 240.27 0.47
ALLB Alliance Bank MHC of PA (19.9) 10.67 10.67 0.77 6.87 4.00 0.77 6.87 1.06 45.21 0.88
AHCI Ambanc Holding Co., Inc. of NY* 10.32 10.32 0.40 3.45 3.92 0.41 3.52 0.60 120.40 1.26
ASBI Ameriana Bancorp of IN 12.16 11.94 0.98 8.54 6.50 0.82 7.15 0.56 54.99 0.43
ABCW Anchor Bancorp Wisconsin of WI 6.36 6.26 1.11 17.35 5.54 0.97 15.09 0.58 180.99 1.29
ANDB Andover Bancorp, Inc. of MA* 8.20 8.20 1.19 14.69 8.84 1.16 14.33 0.38 195.38 1.00
ASFC Astoria Financial Corp. of NY 7.71 5.52 0.82 10.39 7.89 0.74 9.42 0.45 72.22 0.77
AVND Avondale Fin. Corp. of IL 7.60 7.60 -0.78 -9.51 -12.49 -0.56 -6.84 1.25 84.71 2.83
BCSB BCSB Bankcorp MHC of MD (38.6) 16.27 16.27 0.80 4.95 3.45 0.80 4.95 NA NA 0.56
BKCT Bancorp Connecticut of CT* 9.89 9.89 1.43 13.91 7.82 1.21 11.72 0.61 181.32 2.10
BPLS Bank Plus Corp. of CA 4.32 3.97 0.19 4.16 5.38 0.28 6.30 1.75 69.27 1.79
BNKU Bank United Corp. of TX 5.11 4.64 0.89 17.73 9.88 0.83 16.62 0.68 50.76 0.46
BWFC Bank West Fin. Corp. of MI 12.84 12.84 0.59 4.30 3.41 0.51 3.74 0.58 28.97 0.24
BANC BankAtlantic Bancorp of FL 6.79 5.25 0.83 13.33 7.73 0.37 5.93 0.81 100.62 1.12
BKUNA BankUnited Fin. Corp. of FL 5.11 4.27 0.23 5.40 3.79 0.13 3.15 0.46 37.03 0.21
BVCC Bay View Capital Corp. of CA 6.89 4.47 0.35 5.46 4.24 0.60 9.26 0.38 218.38 1.06
FSNJ Bayonne Banchsares of NJ(8) 13.70 13.70 0.73 5.31 3.88 0.73 5.31 0.44 96.50 0.92
BFSB Bedford Bancshares, Inc. of VA 13.24 13.24 1.23 8.87 6.70 1.21 8.76 0.21 232.62 0.60
BFFC Big Foot Fin. Corp. of IL 17.27 17.27 0.55 3.12 3.36 0.41 2.32 NA NA 0.26
BYFC Broadway Fin. Corp. of CA 10.13 10.13 0.52 5.03 8.36 0.33 3.20 1.15 68.56 0.97
BRKL Brookline Bncp MHC of MA(47.0) 33.21 33.21 1.92 8.85 4.32 1.92 8.85 0.60 251.07 2.37
CBES CBES Bancorp, Inc. of MO 13.62 13.62 0.94 6.07 5.89 0.67 4.33 NA NA 0.58
CCFH CCF Holding Company of GA 7.28 7.28 0.15 1.61 1.00 -0.01 -0.15 0.36 137.94 0.68
CITZ CFS Bancorp, Inc. of IN 17.41 17.41 0.58 3.31 3.94 0.64 3.68 0.67 42.30 0.81
CFSB CFSB Bancorp of Lansing MI 7.78 7.78 1.36 17.60 6.53 1.22 15.74 0.21 272.22 0.64
CKFB CKF Bancorp of Danville KY 21.57 21.57 1.34 5.95 5.94 1.34 5.95 0.54 40.24 0.24
CNSB CNS Bancorp, Inc. of MO 24.78 24.78 0.89 3.62 3.50 0.76 3.07 0.07 569.23 0.57
CSBF CSB Financial Group Inc of IL 23.13 21.83 0.70 3.03 4.05 0.72 3.11 1.13 34.83 0.69
CBCI Calumet Bancorp of Chicago IL 17.73 17.73 1.95 11.64 11.47 1.96 11.72 1.21 99.71 1.56
CAFI Camco Fin. Corp. of OH 9.90 9.30 1.26 13.00 7.69 0.91 9.41 0.72 39.75 0.34
CMRN Cameron Fin. Corp. of MO 19.87 19.87 1.14 5.47 6.31 1.12 5.36 1.06 67.46 0.87
CFNC Carolina Fincorp of NC* 13.50 13.50 0.93 4.48 6.26 1.05 5.04 0.14 283.77 0.51
CASB Cascade Financial Corp. of WA 7.07 7.07 0.84 12.48 6.51 0.75 11.13 0.54 171.37 1.07
CATB Catskill Fin. Corp. of NY* 22.04 22.04 1.31 5.48 6.75 1.29 5.41 0.22 282.65 1.43
CAVB Cavalry Bancorp of TN 29.66 29.66 1.48 5.11 3.60 1.09 3.76 0.05 NA 1.26
CNIT Cenit Bancorp of Norfolk VA 7.91 7.33 0.90 12.59 7.15 0.83 11.60 0.19 316.10 0.75
CEBK Central Co-Op. Bank of MA* 9.78 8.88 0.86 8.65 7.95 0.67 6.70 0.40 188.70 1.00
CENB Century Bancorp, Inc. of NC(8) 19.34 19.34 1.20 4.68 7.31 1.18 4.63 0.47 120.87 0.79
COFI Charter One Financial of OH 7.47 7.03 0.94 13.19 4.92 1.24 17.42 0.38 148.17 0.84
CVAL Chester Valley Bancorp of PA 8.45 8.45 0.96 11.19 5.12 0.90 10.51 0.33 274.00 1.23
CLAS Classic Bancshares, Inc. of KY 14.87 12.79 0.73 4.88 5.31 0.93 6.18 0.29 216.16 0.92
CBSA Coastal Bancorp of Houston TX 3.85 3.35 0.52 14.54 12.75 0.54 14.90 0.49 61.08 0.62
CFCP Coastal Fin. Corp. of SC 5.89 5.89 1.21 19.85 5.63 0.97 15.96 0.48 188.30 1.31
CFKY Columbia Financial of KY 31.50 31.50 0.48 2.32 1.83 0.48 2.32 0.40 63.42 0.48
CMSB Commonwealth Bancorp Inc of PA 8.44 6.64 0.57 6.25 5.73 0.41 4.43 0.41 97.65 0.66
CMSV Commty. Svgs, MHC of FL (48.5)(8) 10.85 10.85 0.70 6.35 4.59 0.65 5.85 0.27 133.22 0.52
CFTP Community Fed. Bancorp of MS 22.27 22.27 1.24 4.91 4.40 1.07 4.24 0.28 78.26 0.41
CFFC Community Fin. Corp. of VA 14.09 14.04 1.00 7.33 5.68 0.96 7.02 1.30 48.66 0.71
CIBI Community Inv. Bancorp of OH 10.98 10.98 0.94 8.14 5.26 0.94 8.14 0.56 98.23 0.66
COOP Cooperative Bancshares of NC 7.94 7.94 0.65 8.40 5.90 0.59 7.66 0.08 330.28 0.34
CRZY Crazy Woman Creek Bncorp of WY 23.43 23.43 1.24 5.18 5.96 1.24 5.18 0.13 355.84 0.92
CRSB Crusader Holding Corp of PA 11.50 10.89 2.27 32.12 7.61 2.09 29.47 0.96 44.19 0.50
DNFC D&N Financial Corp. of MI 5.57 5.52 0.85 15.64 9.54 0.75 13.67 0.50 113.36 0.83
DCBI Delphos Citizens Bancorp of OH 24.15 24.15 1.53 5.86 4.91 1.53 5.86 0.64 15.93 0.12
<CAPTION>
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
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 16.16 99.04 13.96 99.04 17.12 0.32 2.23 35.96
ALBC Albion Banc Corp. of Albion NY 16.92 103.11 8.76 103.11 17.98 0.12 1.39 23.53
ABCL Alliance Bancorp, Inc. of IL 17.08 109.18 9.54 110.08 13.91 0.44 2.55 43.56
ALLB Alliance Bank MHC of PA (19.9) 25.00 168.51 17.99 168.51 25.00 0.00 0.00 0.00
AHCI Ambanc Holding Co., Inc. of NY* 25.49 91.42 9.44 91.42 25.00 0.24 1.85 47.06
ASBI Ameriana Bancorp of IN 15.38 128.30 15.60 130.62 18.37 0.64 3.56 54.70
ABCW Anchor Bancorp Wisconsin of WI 18.04 302.73 19.24 307.34 20.74 0.20 0.90 16.26
ANDB Andover Bancorp, Inc. of MA* 11.32 156.16 12.80 156.16 11.60 0.72 2.62 29.63
ASFC Astoria Financial Corp. of NY 12.67 112.60 8.68 157.18 13.98 0.80 2.11 26.76
AVND Avondale Fin. Corp. of IL NM 81.29 6.18 81.29 NM 0.00 0.00 NM
BCSB BCSB Bankcorp MHC of MD (38.6) 29.00 143.41 23.33 143.41 29.00 0.00 0.00 0.00
BKCT Bancorp Connecticut of CT* 12.80 169.62 16.78 169.62 15.19 0.54 3.32 42.52
BPLS Bank Plus Corp. of CA 18.59 75.92 3.28 82.67 12.29 0.00 0.00 0.00
BNKU Bank United Corp. of TX 10.13 167.25 8.55 184.10 10.80 0.64 1.81 18.29
BWFC Bank West Fin. Corp. of MI 29.29 125.34 16.09 125.34 NM 0.00 0.00 0.00
BANC BankAtlantic Bancorp of FL 12.93 133.76 9.09 173.05 29.09 0.10 1.07 13.89
BKUNA BankUnited Fin. Corp. of FL 26.39 92.32 4.71 110.47 NM 0.00 0.00 0.00
BVCC Bay View Capital Corp. of CA 23.61 87.49 6.03 134.92 13.93 0.40 2.35 55.56
FSNJ Bayonne Banchsares of NJ(8) 25.80 124.74 17.09 124.74 25.80 0.25 1.90 49.02
BFSB Bedford Bancshares, Inc. of VA 14.94 127.49 16.88 127.49 15.13 0.32 2.78 41.56
BFFC Big Foot Fin. Corp. of IL 29.79 92.35 15.95 92.35 NM 0.00 0.00 0.00
BYFC Broadway Fin. Corp. of CA 11.96 59.18 5.99 59.18 18.75 0.19 2.30 27.54
BRKL Brookline Bncp MHC of MA(47.0) 23.15 116.61 38.73 116.61 23.15 0.20 1.84 42.55
CBES CBES Bancorp, Inc. of MO 16.96 105.97 14.44 105.97 23.75 0.48 2.53 42.86
CCFH CCF Holding Company of GA NM 162.92 11.86 162.92 NM 0.64 3.05 NM
CITZ CFS Bancorp, Inc. of IN 25.36 83.92 14.61 83.92 22.83 0.00 0.00 0.00
CFSB CFSB Bancorp of Lansing MI 15.32 269.18 20.95 269.18 17.13 0.52 2.39 36.62
CKFB CKF Bancorp of Danville KY 16.84 102.74 22.16 102.74 16.84 0.54 3.27 55.10
CNSB CNS Bancorp, Inc. of MO 28.55 102.51 25.40 102.51 NM 0.30 1.98 56.60
CSBF CSB Financial Group Inc of IL 24.71 74.93 17.33 79.39 24.12 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 8.72 95.53 16.94 95.53 8.66 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 13.01 150.66 14.91 160.32 17.98 0.39 2.44 31.71
CMRN Cameron Fin. Corp. of MO 15.84 88.79 17.64 88.79 16.16 0.28 1.75 27.72
CFNC Carolina Fincorp of NC* 15.96 110.78 14.96 110.78 14.19 0.24 2.68 42.86
CASB Cascade Financial Corp. of WA 15.36 173.23 12.25 173.23 17.23 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 14.83 83.83 18.48 83.83 15.00 0.37 2.90 43.02
CAVB Cavalry Bancorp of TN 27.76 141.21 41.88 141.21 NM 0.20 1.06 29.41
CNIT Cenit Bancorp of Norfolk VA 13.98 172.00 13.61 185.67 15.17 0.40 2.25 31.50
CEBK Central Co-Op. Bank of MA* 12.58 104.17 10.19 114.71 16.25 0.32 1.64 20.65
CENB Century Bancorp, Inc. of NC(8) 13.68 88.20 17.06 88.20 13.83 0.68 5.23 71.58
COFI Charter One Financial of OH 20.33 229.77 17.16 244.09 15.39 0.56 2.10 42.75
CVAL Chester Valley Bancorp of PA 19.55 199.54 16.85 199.54 20.80 0.42 1.62 31.58
CLAS Classic Bancshares, Inc. of KY 18.84 89.54 13.31 104.13 14.87 0.32 2.26 42.67
CBSA Coastal Bancorp of Houston TX 7.84 105.47 4.06 121.12 7.66 0.32 2.00 15.69
CFCP Coastal Fin. Corp. of SC 17.76 327.02 19.27 327.02 22.09 0.28 1.47 26.17
CFKY Columbia Financial of KY NM 85.53 26.94 85.53 NM 0.28 2.33 NM
CMSB Commonwealth Bancorp Inc of PA 17.44 116.19 9.80 147.49 24.59 0.32 2.13 37.21
CMSV Commty. Svgs, MHC of FL (48.5)(8) 21.78 135.05 14.66 135.05 23.66 0.90 4.09 NM
CFTP Community Fed. Bancorp of MS 22.73 112.53 25.06 112.53 26.32 0.32 2.13 48.48
CFFC Community Fin. Corp. of VA 17.61 124.38 17.53 124.88 18.38 0.00 0.00 0.00
CIBI Community Inv. Bancorp of OH 19.03 154.60 16.98 154.60 19.03 0.24 1.85 35.29
COOP Cooperative Bancshares of NC 16.94 133.80 10.63 133.80 18.58 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY 16.77 86.38 20.24 86.38 16.77 0.40 3.02 50.63
CRSB Crusader Holding Corp of PA 13.14 210.40 24.19 222.13 14.33 0.00 0.00 0.00
DNFC D&N Financial Corp. of MI 10.48 151.52 8.44 152.84 11.99 0.20 1.14 11.98
DCBI Delphos Citizens Bancorp of OH 20.36 124.87 30.15 124.87 20.36 0.24 1.30 26.37
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DCOM Dime Community Bancorp of NY* 11.47 10.00 0.89 7.00 6.00 0.87 6.80 0.39 189.26 1.27
ESBF ESB Financial Corp of PA 7.20 6.42 0.69 9.08 6.54 0.69 9.08 0.60 83.44 1.34
EGLB Eagle BancGroup of IL 12.05 12.05 0.35 2.97 3.30 0.12 1.03 0.73 75.47 0.82
EBSI Eagle Bancshares of Tucker GA 6.92 6.92 0.88 11.78 8.76 0.85 11.46 1.20 49.97 0.78
ETFS East Texas Fin. Serv. of TX 17.29 17.29 0.53 3.02 3.09 0.45 2.58 0.41 46.61 0.38
ESBK Elmira Svgs Bank (The) of NY* 6.27 6.27 0.47 7.45 6.17 0.49 7.85 0.82 81.26 0.85
EMLD Emerald Financial Corp. of OH 8.50 8.40 1.13 14.08 5.58 1.03 12.82 0.30 86.50 0.32
EFBC Empire Federal Bancorp of MT 36.76 36.76 1.47 4.00 4.95 1.47 4.00 0.01 NA 0.41
EFBI Enterprise Fed. Bancorp of OH 9.96 9.71 0.78 6.96 3.76 0.67 5.95 0.06 333.77 0.30
EQSB Equitable FSB of Wheaton MD 5.12 5.12 0.70 13.60 8.09 0.66 12.87 NA NA NA
FCBF FCB Fin. Corp. of Neenah WI 14.47 14.47 1.24 8.45 5.54 0.92 6.26 0.22 327.68 0.98
FFDF FFD Financial Corp. of OH 22.27 22.27 1.73 7.25 6.41 0.78 3.26 0.08 329.27 0.40
FFLC FFLC Bancorp of Leesburg FL 12.80 12.80 1.00 7.60 6.06 0.94 7.17 0.26 192.43 0.59
FFWC FFW Corporation of Wabash IN 9.41 8.66 0.99 10.40 8.67 0.87 9.12 0.43 112.49 0.70
FFYF FFY Financial Corp. of OH 12.92 12.92 1.24 9.26 6.54 1.21 9.06 0.51 82.43 0.56
FMCO FMS Financial Corp. of NJ 6.08 6.03 0.85 13.57 6.49 0.85 13.57 0.70 68.77 1.07
FFHH FSF Financial Corp. of MN 10.43 10.43 0.79 7.33 7.51 0.75 6.92 0.20 123.88 0.37
FOBC Fed One Bancorp of Wheeling WV(8) 11.20 10.77 0.82 7.39 3.34 0.80 7.15 0.36 111.72 0.90
FBCI Fidelity Bancorp of Chicago IL 10.60 10.58 0.19 1.80 1.56 0.60 5.67 0.24 45.86 0.14
FSBI Fidelity Bancorp, Inc. of PA 7.09 7.09 0.74 10.76 7.84 0.72 10.54 0.17 330.68 1.05
FFFL Fidelity Bcsh MHC of FL (47.9) 6.15 5.98 0.65 8.98 4.79 0.52 7.18 0.27 78.51 0.34
FFED Fidelity Fed. Bancorp of IN 6.78 6.78 -0.34 -5.64 -6.89 -0.26 -4.29 0.38 613.16 2.77
FFOH Fidelity Financial of OH 12.41 11.04 0.89 7.16 6.54 0.86 6.91 0.26 121.33 0.40
FIBC Financial Bancorp, Inc. of NY(8) 8.42 8.39 0.94 10.48 5.45 0.91 10.17 1.92 25.63 0.87
FBSI First Bancshares, Inc. of MO 14.14 13.57 1.10 7.90 6.51 1.10 7.90 1.31 23.38 0.36
FBBC First Bell Bancorp of PA 10.16 10.16 1.08 10.33 7.25 1.07 10.24 0.05 191.03 0.13
SKBO First Carnegie MHC of PA(45.0) 16.79 16.79 0.57 3.37 3.27 0.68 4.03 0.59 64.19 0.80
FSTC First Citizens Corp of GA 10.09 8.07 1.91 19.64 8.63 1.73 17.77 1.17 86.37 1.39
FCME First Coastal Corp. of ME* 8.95 8.95 0.80 8.29 7.66 0.72 7.47 0.24 650.60 2.55
FDEF First Defiance Fin.Corp. of OH 17.74 17.74 0.94 4.96 5.56 0.90 4.74 0.29 171.18 0.62
FESX First Essex Bancorp of MA* 7.14 5.18 0.84 11.61 8.69 0.72 9.94 0.45 191.23 1.48
FFSX First FSB MHC Sxld of IA(46.3)(8) 7.62 6.14 0.68 8.41 4.29 0.66 8.20 0.46 102.36 0.64
FFES First Fed of E. Hartford CT 7.20 7.20 0.59 8.73 8.48 0.64 9.42 0.33 84.42 1.30
BDJI First Fed. Bancorp. of MN 10.46 10.46 0.70 6.62 5.49 0.71 6.70 0.18 202.30 0.78
FFBH First Fed. Bancshares of AR 14.71 14.71 1.00 6.71 6.00 0.99 6.65 0.85 20.75 0.23
FTFC First Fed. Capital Corp. of WI 7.50 7.14 1.20 17.23 7.16 0.83 11.82 0.23 212.49 0.75
FFKY First Fed. Fin. Corp. of KY 13.35 12.67 1.61 11.89 6.47 1.54 11.42 0.53 84.57 0.52
FFBZ First Federal Bancorp of OH 7.95 7.95 0.82 10.74 5.40 0.78 10.14 0.54 190.00 1.19
FFCH First Fin. Holdings Inc. of SC 6.49 6.49 0.89 14.08 6.27 0.85 13.47 1.16 56.67 0.80
FFHS First Franklin Corp. of OH 9.12 9.08 0.81 8.85 7.24 0.70 7.67 0.90 49.39 0.69
FGHC First Georgia Hold. Corp of GA 8.15 7.62 1.17 14.29 4.00 1.17 14.29 1.65 37.32 0.71
FFSL First Independence Corp. of KS 9.58 9.58 0.72 7.28 7.65 0.72 7.28 0.56 95.21 0.72
FISB First Indiana Corp. of IN 9.15 9.05 1.16 12.29 7.44 0.82 8.70 1.11 125.92 1.65
FKAN First Kansas Financial of KS 18.69 18.69 0.88 4.71 6.02 0.88 4.71 0.05 327.59 0.43
FKFS First Keystone Fin. Corp of PA 6.50 6.50 0.74 11.06 9.50 0.66 9.80 1.22 36.94 0.87
FLKY First Lancaster Bncshrs of KY 26.64 26.64 1.03 3.44 3.73 1.03 3.44 1.70 18.91 0.36
FLFC First Liberty Fin. Corp. of GA 7.35 6.72 0.77 10.36 3.70 0.80 10.78 0.77 132.28 1.51
CASH First Midwest Fin., Inc. of OH 10.18 9.09 0.71 6.60 6.01 0.64 5.93 1.94 37.96 1.19
FMBD First Mutual Bancorp Inc of IL(8) 14.62 11.38 0.35 2.53 2.35 0.27 1.94 0.33 115.88 0.48
FMSB First Mutual SB of Bellevue WA* 6.79 6.79 1.01 15.06 8.08 0.99 14.77 0.11 989.94 1.26
FNGB First Northern Cap. Corp of WI 10.89 10.89 0.98 8.88 6.88 0.90 8.16 0.12 400.84 0.54
FFPB First Palm Beach Bancorp of FL 6.85 6.71 0.45 6.95 5.03 0.24 3.70 0.51 59.41 0.50
FWWB First Savings Bancorp of WA 13.02 12.06 1.20 8.69 5.56 1.11 8.07 0.43 164.95 1.03
FSFF First SecurityFed Fin of IL 28.92 28.84 1.03 5.32 3.76 1.61 8.33 0.34 170.99 0.94
FSLA First Source Bancorp of NJ 21.24 20.56 1.04 8.63 4.50 1.01 8.39 0.35 159.84 1.04
SOPN First Svgs Bancorp of NC 22.86 22.86 1.76 7.70 6.68 1.76 7.70 0.18 109.36 0.29
<CAPTION>
Pricing Ratios Dividend Data(6)
_________________________________________ _______________________
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
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* 16.67 117.65 13.50 135.03 17.14 0.40 2.22 37.04
ESBF ESB Financial Corp of PA 15.29 131.14 9.44 146.92 15.29 0.36 2.29 34.95
EGLB Eagle BancGroup of IL NM 88.38 10.65 88.38 NM 0.00 0.00 0.00
EBSI Eagle Bancshares of Tucker GA 11.41 127.25 8.81 127.25 11.72 0.64 3.76 42.95
ETFS East Texas Fin. Serv. of TX NM 96.22 16.63 96.22 NM 0.00 0.00 0.00
ESBK Elmira Svgs Bank (The) of NY* 16.22 120.18 7.53 120.18 15.38 0.64 2.67 43.24
EMLD Emerald Financial Corp. of OH 17.91 234.83 19.97 237.62 19.67 0.14 1.17 20.90
EFBC Empire Federal Bancorp of MT 20.20 80.11 29.45 80.11 20.20 0.32 2.44 49.23
EFBI Enterprise Fed. Bancorp of OH 26.58 166.24 16.56 170.49 NM 1.00 3.65 NM
EQSB Equitable FSB of Wheaton MD 12.37 156.78 8.02 156.78 13.07 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 18.05 140.32 20.30 140.32 24.33 0.88 3.23 58.28
FFDF FFD Financial Corp. of OH 15.60 110.17 24.54 110.17 NM 0.30 1.76 27.52
FFLC FFLC Bancorp of Leesburg FL 16.51 124.03 15.88 124.03 17.50 0.36 2.06 33.96
FFWC FFW Corporation of Wabash IN 11.54 114.33 10.76 124.28 13.16 0.42 2.80 32.31
FFYF FFY Financial Corp. of OH 15.28 140.48 18.15 140.48 15.61 0.80 2.71 41.45
FMCO FMS Financial Corp. of NJ 15.41 197.72 12.03 199.47 15.41 0.12 1.07 16.44
FFHH FSF Financial Corp. of MN 13.31 97.62 10.19 97.62 14.10 0.50 3.48 46.30
FOBC Fed One Bancorp of Wheeling WV(8) 29.90 214.46 24.02 222.90 NM 0.62 1.66 49.60
FBCI Fidelity Bancorp of Chicago IL NM 112.57 11.93 112.75 20.32 0.00 0.00 0.00
FSBI Fidelity Bancorp, Inc. of PA 12.76 130.01 9.22 130.01 13.03 0.00 0.00 0.00
FFFL Fidelity Bcsh MHC of FL (47.9) 20.87 180.72 11.12 186.05 26.09 1.00 4.17 NM
FFED Fidelity Fed. Bancorp of IN NM 84.81 5.75 84.81 NM 0.20 5.51 NM
FFOH Fidelity Financial of OH 15.29 110.26 13.68 123.93 15.85 0.32 2.46 37.65
FIBC Financial Bancorp, Inc. of NY(8) 18.34 184.19 15.52 184.96 18.90 0.00 0.00 0.00
FBSI First Bancshares, Inc. of MO 15.36 115.91 16.39 120.85 15.36 0.12 0.94 14.46
FBBC First Bell Bancorp of PA 13.79 135.82 13.80 135.82 13.91 0.40 2.50 34.48
SKBO First Carnegie MHC of PA(45.0) NM 103.48 17.38 103.48 25.58 0.30 2.73 NM
FSTC First Citizens Corp of GA 11.59 200.47 20.23 250.74 12.81 0.32 1.25 14.55
FCME First Coastal Corp. of ME* 13.06 104.07 9.31 104.07 14.51 0.00 0.00 0.00
FDEF First Defiance Fin.Corp. of OH 18.00 93.84 16.65 93.84 18.86 0.36 3.03 54.55
FESX First Essex Bancorp of MA* 11.51 128.93 9.20 177.78 13.45 0.56 3.50 40.29
FFSX First FSB MHC Sxld of IA(46.3)(8) 23.33 189.19 14.42 234.90 23.93 0.00 0.00 0.00
FFES First Fed of E. Hartford CT 11.80 97.67 7.03 97.67 10.93 0.68 2.71 31.92
BDJI First Fed. Bancorp. of MN 18.21 116.05 12.13 116.05 17.99 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 16.67 108.82 16.01 108.82 16.81 0.28 1.47 24.56
FTFC First Fed. Capital Corp. of WI 13.97 221.96 16.65 233.22 20.36 0.28 1.96 27.45
FFKY First Fed. Fin. Corp. of KY 15.44 178.47 23.82 187.99 16.07 0.60 2.54 39.22
FFBZ First Federal Bancorp of OH 18.52 191.20 15.20 191.20 19.61 0.14 1.40 25.93
FFCH First Fin. Holdings Inc. of SC 15.95 207.40 13.46 207.40 16.67 0.42 2.27 36.21
FFHS First Franklin Corp. of OH 13.81 119.24 10.88 119.74 15.93 0.30 2.07 28.57
FGHC First Georgia Hold. Corp of GA 25.00 333.88 27.20 NM 25.00 0.00 0.00 0.00
FFSL First Independence Corp. of KS 13.07 93.12 8.92 93.12 13.07 0.30 2.61 34.09
FISB First Indiana Corp. of IN 13.44 157.50 14.42 159.27 18.99 0.48 2.43 32.65
FKAN First Kansas Financial of KS 16.61 78.22 14.62 78.22 16.61 0.00 0.00 0.00
FKFS First Keystone Fin. Corp of PA 10.53 113.96 7.41 113.96 11.88 0.20 1.67 17.54
FLKY First Lancaster Bncshrs of KY 26.84 91.82 24.46 91.82 26.84 0.60 4.38 NM
FLFC First Liberty Fin. Corp. of GA 27.03 268.46 19.73 293.69 25.97 0.30 1.50 40.54
CASH First Midwest Fin., Inc. of OH 16.63 110.48 11.25 123.75 18.50 0.48 2.65 44.04
FMBD First Mutual Bancorp Inc of IL(8) NM 105.79 15.47 135.98 NM 0.32 1.92 NM
FMSB First Mutual SB of Bellevue WA* 12.38 176.59 11.99 176.59 12.62 0.20 1.57 19.42
FNGB First Northern Cap. Corp of WI 14.53 126.62 13.79 126.62 15.81 0.36 3.35 48.65
FFPB First Palm Beach Bancorp of FL 19.87 131.75 9.03 134.55 NM 0.70 2.26 44.87
FWWB First Savings Bancorp of WA 17.97 156.78 20.41 169.16 19.36 0.36 1.79 32.14
FSFF First SecurityFed Fin of IL 26.63 83.96 24.28 84.19 17.01 0.00 0.00 0.00
FSLA First Source Bancorp of NJ 22.22 97.92 20.80 101.14 22.86 0.18 2.25 50.00
SOPN First Svgs Bancorp of NC 14.96 113.45 25.93 113.45 14.96 1.00 4.71 70.42
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CATPION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FBNW FirstBank Corp of Clarkston WA 15.63 15.63 1.08 7.37 6.41 0.61 4.18 0.39 160.81 0.78
FFDB FirstFed Bancorp, Inc. of AL 9.71 8.95 0.93 9.56 5.44 0.93 9.56 1.41 41.95 0.90
FSPT FirstSpartan Fin. Corp. of SC 24.31 24.31 1.41 6.66 5.45 1.37 6.47 0.38 111.34 0.51
FLAG Flag Financial Corp of GA 8.89 8.89 0.88 9.49 2.94 0.61 6.57 1.33 65.46 1.22
FLGS Flagstar Bancorp, Inc of MI 5.55 5.40 1.41 23.50 10.48 1.41 23.50 2.26 20.60 0.53
FFIC Flushing Fin. Corp. of NY* 12.80 12.33 0.93 6.92 5.50 0.94 6.98 0.31 198.69 1.00
FBHC Fort Bend Holding Corp. of TX(8) 7.15 6.76 0.66 10.00 6.86 0.43 6.58 0.41 123.80 0.90
FTSB Fort Thomas Fin. Corp. of KY 16.07 16.07 1.18 7.42 6.04 1.18 7.42 1.93 30.61 0.65
FKKY Frankfort First Bancorp of KY 16.88 16.88 1.19 7.05 6.88 1.19 7.05 NA NA 0.08
FTNB Fulton Bancorp, Inc. of MO 23.37 23.37 1.22 5.01 4.44 0.95 3.88 0.70 126.01 1.06
GUPB GFSB Bancorp, Inc of Gallup NM 12.34 12.34 0.91 6.67 5.64 0.91 6.67 0.37 86.67 0.54
GSLA GS Financial Corp. of LA 36.03 36.03 1.14 2.73 3.83 0.99 2.38 0.12 260.11 0.74
GOSB GSB Financial Corp. of NY* 24.90 24.90 0.73 3.21 3.49 0.69 3.05 0.09 156.52 0.24
GBNK Gaston Fed Bncp MHC of NC(47.0 20.28 20.28 0.73 5.92 2.93 0.66 5.39 0.50 132.06 0.96
GFCO Glenway Financial Corp. of OH 9.57 9.49 0.86 9.12 5.84 0.87 9.20 0.19 184.71 0.41
GTPS Great American Bancorp of IL 18.27 18.27 0.70 3.57 3.76 0.70 3.57 0.08 484.87 0.47
PEDE Great Pee Dee Bancorp of SC 45.12 45.12 1.97 4.37 5.17 1.97 4.37 0.73 65.48 0.59
GSFC Green Street Fin. Corp. of NC 34.90 34.90 1.59 4.49 5.52 1.59 4.49 0.07 216.10 0.19
GFED Guaranty Fed Bancshares of MO 27.19 27.19 1.22 5.29 4.29 1.22 5.29 0.35 241.97 1.05
HCBB HCB Bancshares of Camden AR 17.25 17.04 0.33 1.99 2.27 0.33 1.99 0.44 150.91 1.38
HEMT HF Bancorp of Hemet CA 8.01 6.85 0.01 0.15 0.14 0.06 0.77 NA NA NA
HFFC HF Financial Corp. of SD 9.93 9.93 1.13 11.75 9.48 0.98 10.23 0.53 239.17 1.62
HFNC HFNC Financial Corp. of NC(8) 16.96 16.96 1.44 8.07 7.43 0.98 5.49 0.53 131.75 0.86
HMNF HMN Financial, Inc. of MN 11.61 10.79 0.92 6.94 7.71 0.65 4.91 0.09 449.77 0.61
HALL Hallmark Capital Corp. of WI 7.63 7.63 0.66 8.85 8.09 0.62 8.29 0.32 168.40 0.82
HRBF Harbor Federal Bancorp of MD 12.60 12.60 0.77 6.06 5.22 0.75 5.87 0.32 65.53 0.33
HARB Harbor Florida Bancshrs of FL 19.60 19.39 1.36 10.13 5.05 1.29 9.56 0.43 208.24 1.27
HFSA Hardin Bancorp of Hardin MO 10.10 10.10 0.69 6.14 6.03 0.60 5.35 0.14 145.30 0.40
HARL Harleysville SB of PA 6.41 6.41 0.97 14.71 7.02 0.97 14.71 NA NA 0.79
HFGI Harrington Fin. Group of IN 4.68 4.68 -0.37 -7.67 -5.92 -0.13 -2.69 0.18 40.45 0.22
HARS Harris Fin. MHC of PA (24.9) 8.12 7.33 0.84 10.33 3.89 0.68 8.41 0.66 60.54 0.97
HFFB Harrodsburg 1st Fin Bcrp of KY 26.54 26.54 1.36 5.09 5.05 1.36 5.09 0.55 66.83 0.48
HHFC Harvest Home Fin. Corp. of OH 11.35 11.35 0.72 6.20 5.84 0.62 5.35 0.09 144.19 0.25
HAVN Haven Bancorp of Woodhaven NY 5.21 4.98 0.45 7.89 6.95 0.48 8.36 0.45 132.08 0.97
HTHR Hawthorne Fin. Corp. of CA 3.97 3.97 0.94 21.21 20.42 1.09 24.78 6.67 18.16 1.31
HMLK Hemlock Fed. Fin. Corp. of IL 15.14 15.14 0.93 5.41 5.79 0.91 5.28 0.06 625.00 0.84
HBSC Heritage Bancorp, Inc of SC 31.48 31.48 1.12 5.60 4.71 1.12 5.60 0.44 57.25 0.38
HFWA Heritage Financial Corp of WA 28.80 28.80 1.11 5.92 3.32 0.57 3.04 0.12 761.93 1.28
HCBC High Country Bancorp of CO 19.56 19.56 0.84 7.33 4.42 0.84 7.33 0.45 167.06 0.94
HBNK Highland Bancorp of CA 7.87 7.87 1.36 17.69 8.29 1.20 15.55 1.84 88.38 2.06
HIFS Hingham Inst. for Sav. of MA* 9.43 9.43 1.25 13.14 9.49 1.24 13.02 0.17 396.87 0.90
HBEI Home Bancorp of Elgin IL(8) 26.10 26.10 0.69 2.60 2.88 0.69 2.60 0.28 107.27 0.35
HBFW Home Bancorp of Fort Wayne IN 11.92 11.92 0.85 6.84 4.67 0.83 6.68 0.10 402.90 0.43
HCFC Home City Fin. Corp. of OH 13.87 13.87 1.30 7.09 8.75 1.28 7.02 0.59 97.81 0.63
HOMF Home Fed Bancorp of Seymour IN 9.31 9.07 1.48 16.63 8.24 1.16 13.00 0.59 100.21 0.71
HWEN Home Financial Bancorp of IN 17.64 17.64 0.92 5.30 5.42 0.70 4.04 1.10 68.52 0.93
HLFC Home Loan Financial Corp of OH 38.53 38.53 1.34 4.88 3.06 1.34 4.88 0.29 92.92 0.39
HPBC Home Port Bancorp, Inc. of MA* 8.71 8.71 1.45 14.51 8.71 1.62 16.29 0.26 453.64 1.38
HSTD Homestead Bancorp, Inc. of LA 21.66 21.66 0.75 3.46 4.84 0.75 3.46 0.27 119.47 0.69
HFBC HopFed Bancorp of KY 26.78 26.78 1.22 8.52 4.33 1.22 8.52 0.11 107.86 0.23
HZFS Horizon Fin'l. Services of IA 9.11 9.11 0.91 9.24 5.81 0.70 7.08 NA NA NA
HRZB Horizon Financial Corp. of WA* 15.43 15.43 1.56 10.03 8.00 1.52 9.76 0.02 NA 0.88
HRBT Hudson River Bancorp Inc of NY 26.74 26.74 0.90 3.36 3.88 1.03 3.85 1.66 58.37 1.87
ITLA ITLA Capital Corp of CA* 10.44 10.41 1.44 13.81 11.37 1.44 13.81 1.07 139.44 1.75
ICBC Independence Comm Bnk Cp of NY 20.07 18.95 -0.81 -4.22 -4.14 0.68 3.58 0.60 135.71 1.34
IFSB Independence FSB of DC 7.21 6.53 1.15 15.91 18.92 0.18 2.52 NA NA 0.42
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- ----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
------- ------- ------- ------- ------- ------- ------- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FBNW FirstBank Corp of Clarkston WA 15.60 98.76 15.44 98.76 27.51 0.32 2.12 32.99
FFDB FirstFed Bancorp, Inc. of AL 18.38 172.65 16.77 187.41 18.38 0.28 2.24 41.18
FSPT FirstSpartan Fin. Corp. of SC 18.36 109.91 26.71 109.91 18.90 0.60 1.85 33.90
FLAG Flag Financial Corp of GA NM 311.03 27.65 311.03 NM 0.24 1.81 61.54
FLGS Flagstar Bancorp, Inc of MI 9.55 201.15 11.16 206.69 9.55 0.28 1.33 12.73
FFIC Flushing Fin. Corp. of NY* 18.18 122.91 15.74 127.61 18.03 0.36 1.64 29.75
FBHC Fort Bend Holding Corp. of TX(8) 14.59 132.83 9.49 140.46 22.17 0.00 0.00 0.00
FTSB Fort Thomas Fin. Corp. of KY 16.56 119.91 19.27 119.91 16.56 0.25 1.89 31.25
FKKY Frankfort First Bancorp of KY 14.54 101.64 17.15 101.64 14.54 0.80 5.61 NM
FTNB Fulton Bancorp, Inc. of MO 22.51 112.08 26.19 112.08 29.10 0.24 1.42 32.00
GUPB GFSB Bancorp, Inc of Gallup NM 17.72 115.32 14.23 115.32 17.72 0.30 2.14 37.97
GSLA GS Financial Corp. of LA 26.09 74.95 27.01 74.95 30.00 0.28 2.33 60.87
GOSB GSB Financial Corp. of NY* 28.66 82.17 20.46 82.17 NM 0.12 1.02 29.27
GBNK Gaston Fed Bncp MHC of NC(47.0 NM 123.09 24.97 123.09 NM 0.20 1.78 60.61
GFCO Glenway Financial Corp. of OH 17.12 150.79 14.43 152.12 16.96 0.44 2.32 39.64
GTPS Great American Bancorp of IL 26.59 98.13 17.93 98.13 26.59 0.44 2.63 69.84
PEDE Great Pee Dee Bancorp of SC 19.35 84.57 38.16 84.57 19.35 0.36 3.00 58.06
GSFC Green Street Fin. Corp. of NC 18.12 84.40 29.45 84.40 18.12 0.48 3.84 69.57
GFED Guaranty Fed Bancshares of MO 23.33 92.51 25.15 92.51 23.33 0.32 3.05 71.11
HCBB HCB Bancshares of Camden AR NM 76.12 13.13 77.03 NM 0.20 1.82 NM
HEMT HF Bancorp of Hemet CA NM 107.45 8.60 125.60 NM 0.00 0.00 0.00
HFFC HF Financial Corp. of SD 10.54 120.34 11.95 120.34 12.11 0.00 0.00 0.00
HFNC HFNC Financial Corp. of NC(8) 13.46 105.63 17.91 105.63 19.81 0.32 3.05 41.03
HMNF HMN Financial, Inc. of MN 12.97 87.86 10.20 94.50 18.33 0.24 1.75 22.64
HALL Hallmark Capital Corp. of WI 12.37 103.07 7.86 103.07 13.20 0.00 0.00 0.00
HRBF Harbor Federal Bancorp of MD 19.15 112.92 14.23 112.92 19.78 0.47 2.61 50.00
HARB Harbor Florida Bancshrs of FL 19.81 124.85 24.48 126.20 21.00 0.26 2.48 49.06
HFSA Hardin Bancorp of Hardin MO 16.58 101.45 10.25 101.45 19.03 0.56 3.34 55.45
HARL Harleysville SB of PA 14.25 195.71 12.55 195.71 14.25 0.00 0.00 0.00
HFGI Harrington Fin. Group of IN NM 139.16 6.51 139.16 NM 0.12 1.25 NM
HARS Harris Fin. MHC of PA (24.9) 25.70 249.64 20.27 276.49 NM 0.22 1.59 40.74
HFFB Harrodsburg 1st Fin Bcrp of KY 19.81 101.73 27.00 101.73 19.81 0.40 2.62 51.95
HHFC Harvest Home Fin. Corp. of OH 17.12 106.56 12.09 106.56 19.84 0.44 3.52 60.27
HAVN Haven Bancorp of Woodhaven NY 14.38 107.88 5.62 112.87 13.57 0.30 2.09 30.00
HTHR Hawthorne Fin. Corp. of CA 4.90 94.62 3.76 94.62 4.19 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL 17.26 97.91 14.82 97.91 17.68 0.32 2.21 38.10
HBSC Heritage Bancorp, Inc of SC 21.22 78.84 24.82 78.84 21.22 0.30 1.86 39.47
HFWA Heritage Financial Corp of WA NM 116.79 33.64 116.79 NM 0.16 1.44 43.24
HCBC High Country Bancorp of CO 22.64 87.98 17.21 87.98 22.64 0.00 0.00 0.00
HBNK Highland Bancorp of CA 12.06 196.18 15.43 196.18 13.72 0.50 1.32 15.87
HIFS Hingham Inst. for Sav. of MA* 10.53 131.58 12.40 131.58 10.63 0.56 2.46 25.93
HBEI Home Bancorp of Elgin IL(8) NM 89.29 23.31 89.29 NM 0.40 3.20 NM
HBFW Home Bancorp of Fort Wayne IN 21.43 147.78 17.62 147.78 21.95 0.32 1.19 25.40
HCFC Home City Fin. Corp. of OH 11.43 100.33 13.92 100.33 11.54 0.36 3.00 34.29
HOMF Home Fed Bancorp of Seymour IN 12.13 188.03 17.50 192.91 15.51 0.40 1.63 19.80
HWEN Home Financial Bancorp of IN 18.45 95.92 16.92 95.92 24.22 0.10 1.29 23.81
HLFC Home Loan Financial Corp of OH NM 95.30 36.72 95.30 NM 0.05 0.37 12.20
HPBC Home Port Bancorp, Inc. of MA* 11.48 160.31 13.97 160.31 10.23 0.80 4.05 46.51
HSTD Homestead Bancorp, Inc. of LA 20.67 71.54 15.49 71.54 20.67 0.80 10.75 NM
HFBC HopFed Bancorp of KY 23.10 115.01 30.80 115.01 23.10 0.00 0.00 0.00
HZFS Horizon Fin'l. Services of IA 17.22 161.46 14.71 161.46 22.46 0.18 1.16 20.00
HRZB Horizon Financial Corp. of WA* 12.50 122.81 18.95 122.81 12.84 0.44 3.14 39.29
HRBT Hudson River Bancorp Inc of NY 25.76 86.56 23.14 86.56 22.47 0.00 0.00 0.00
ITLA ITLA Capital Corp of CA* 8.80 113.72 11.87 114.05 8.80 0.00 0.00 0.00
ICBC Independence Comm Bnk Cp of NY NM 101.43 20.35 107.38 28.47 0.00 0.00 NM
IFSB Independence FSB of DC 5.28 84.09 6.07 92.92 NM 0.25 1.92 10.16
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
_______________________________________
INBI Industrial Bancorp of OH 15.97 15.97 1.47 8.77 6.39 1.47 8.77 0.30 159.91 0.54
IWBK Interwest Bancorp of WA 6.76 6.65 1.04 15.60 5.08 0.88 13.18 0.67 80.89 0.88
IPSW Ipswich SB of Ipswich MA* 5.58 5.58 1.19 21.84 9.08 0.95 17.43 0.80 92.60 0.94
JXVL Jacksonville Bancorp of TX 14.45 14.45 1.34 9.15 8.59 1.34 9.15 NA NA NA
JXSB Jcksnville SB,MHC of IL (45.6) 10.54 10.54 0.59 5.68 3.41 0.38 3.60 0.68 65.11 0.59
JSBA Jefferson Svgs Bancorp of MO 9.56 7.67 0.78 8.70 5.76 0.69 7.72 0.74 72.40 0.73
KSBK KSB Bancorp of Kingfield ME* 7.78 6.77 1.08 13.91 7.71 1.08 13.91 1.74 52.91 1.14
KFBI Klamath First Bancorp of OR 13.98 12.81 0.95 6.16 6.43 0.94 6.10 0.05 356.52 0.26
LSBI LSB Fin. Corp. of Lafayette IN 8.40 8.40 0.85 9.94 6.07 0.73 8.54 1.20 58.59 0.80
LVSB Lakeview Financial of NJ 9.73 6.64 1.69 16.30 8.19 0.84 8.15 0.96 70.27 1.47
LARK Landmark Bancshares, Inc of KS 13.07 13.07 1.06 7.68 7.18 0.90 6.47 0.25 196.35 0.66
LARL Laurel Capital Group of PA 10.64 10.64 1.42 13.56 8.42 1.46 13.95 0.32 263.07 1.20
LSBX Lawrence Savings Bank of MA* 12.07 12.07 2.58 24.91 17.67 2.54 24.56 0.24 389.46 1.74
LFED Leeds Fed Bksr MHC of MD (36.3 16.50 16.50 1.18 7.20 4.19 1.18 7.20 0.03 560.82 0.29
LXMO Lexington B&L Fin. Corp. of MO 16.06 14.98 0.78 3.83 4.43 0.78 3.83 0.48 130.50 0.95
LIBB Liberty Bancorp MHC of NJ (47) 13.12 13.12 0.61 4.66 3.93 0.58 4.42 0.35 82.98 0.45
LFCO Life Financial Corp of CA(8) 12.64 12.64 3.93 26.18 42.20 4.08 27.17 2.02 18.00 0.47
LFBI Little Falls Bancorp of NJ 10.51 9.75 0.57 4.98 5.19 0.57 4.98 0.33 108.65 0.82
LOGN Logansport Fin. Corp. of IN 18.82 18.82 1.48 7.80 6.92 1.50 7.88 0.26 103.45 0.36
LISB Long Island Bancorp, Inc of NY(8) 8.91 8.83 0.91 10.06 5.39 0.74 8.19 0.86 61.26 0.91
MAFB MAF Bancorp, Inc. of IL 7.84 7.00 1.09 14.02 7.50 1.04 13.43 0.54 81.33 0.55
MBLF MBLA Financial Corp. of MO 13.50 13.50 0.88 6.81 7.80 0.87 6.76 0.55 59.37 0.50
MECH MECH Financial Inc of CT* 9.71 9.71 0.96 9.69 6.78 0.96 9.63 0.46 296.39 2.14
MFBC MFB Corp. of Mishawaka IN 11.38 11.38 0.80 6.38 7.50 0.78 6.24 0.11 131.25 0.18
MSBF MSB Financial, Inc of MI 16.65 16.65 1.57 9.35 6.39 1.36 8.12 0.79 62.16 0.53
MARN Marion Capital Holdings of IN 19.41 19.00 1.24 5.92 5.91 1.24 5.92 1.02 105.99 1.25
MRKF Market Fin. Corp. of OH 29.33 29.33 1.09 3.20 4.18 1.09 3.20 0.39 24.64 0.16
MFSL Maryland Fed. Bancorp of MD(8) 8.76 8.68 0.50 5.66 2.74 0.60 6.86 0.65 61.91 0.49
MASB MassBank Corp. of Reading MA* 11.76 11.61 1.17 10.42 7.55 1.00 8.96 0.20 131.93 0.84
MFLR Mayflower Co-Op. Bank of MA* 9.24 9.10 1.13 11.81 9.28 0.98 10.25 0.61 134.79 1.54
MDBK Medford Bancorp, Inc. of MA* 8.94 8.48 1.07 11.87 7.66 1.02 11.30 0.18 338.34 1.19
MWBX MetroWest Bank of MA* 7.34 7.34 1.25 17.03 8.46 1.25 17.03 0.64 236.24 2.16
METF Metropolitan Fin. Corp. of OH 3.74 3.46 0.70 18.02 7.91 0.61 15.50 1.45 42.45 0.77
MIFC Mid Iowa Financial Corp. of IA(8) 9.93 9.92 1.02 10.90 6.08 1.01 10.76 0.14 161.66 0.44
MCBN Mid-Coast Bancorp of ME 8.02 8.02 0.70 8.30 8.13 0.61 7.21 0.69 79.42 0.70
MWBI Midwest Bancshares, Inc. of IA 7.15 7.15 0.95 13.56 12.55 0.76 10.81 0.66 43.79 0.48
MFFC Milton Fed. Fin. Corp. of OH 11.08 11.08 0.69 5.75 5.25 0.55 4.64 0.41 67.74 0.40
MBSP Mitchell Bancorp, Inc. of NC(8) 39.32 39.32 1.44 3.47 3.38 1.44 3.47 1.54 34.72 0.72
MBBC Monterey Bay Bancorp of CA 10.77 9.85 0.31 2.74 2.06 0.31 2.74 0.55 112.07 1.08
MONT Montgomery Fin. Corp. of IN 17.13 17.13 0.91 4.95 5.68 0.91 4.95 NA NA 0.19
MSBK Mutual SB, FSB of Bay City MI 5.55 5.55 -1.26 -22.42 -28.30 -0.43 -7.63 0.09 312.66 0.54
MYST Mystic Financial of MA* 18.16 18.16 0.83 4.45 5.13 0.77 4.14 0.08 824.00 0.90
NHTB NH Thrift Bancshares of NH 8.14 7.11 0.90 11.39 9.86 0.84 10.56 1.00 95.48 1.21
NSLB NS&L Bancorp, Inc of Neosho MO 18.47 18.35 0.68 3.55 3.75 0.67 3.49 0.19 41.67 0.14
NSSY NSS Bancorp of CT(8)* 8.46 8.25 0.79 9.48 5.24 0.69 8.35 NA NA 1.27
NMSB Newmil Bancorp, Inc. of CT* 9.09 9.09 0.86 9.14 7.26 0.67 7.15 0.46 297.15 2.98
NBCP Niagara Bancorp of NY MHC(45.4* 19.08 19.08 1.10 5.78 4.27 1.06 5.54 0.29 188.17 1.07
NBSI North Bancshares of Chicago IL 10.82 10.82 0.38 2.97 3.03 0.33 2.64 NA NA 0.27
FFFD North Central Bancshares of IA 15.42 13.42 1.32 8.59 8.71 1.29 8.34 0.12 662.09 1.03
NEIB Northeast Indiana Bncrp of IN 13.04 13.04 1.19 8.58 7.67 1.19 8.58 0.41 159.71 0.73
NWSB Northwest Bcrp MHC of PA (30.8 8.55 7.69 0.95 10.36 4.23 0.90 9.91 0.50 123.26 0.82
NWEQ Northwest Equity Corp. of WI 12.19 12.19 1.22 10.37 8.23 1.13 9.65 1.73 28.33 0.60
NTMG Nutmeg FS&LA of CT 6.06 6.06 0.84 14.08 7.25 0.44 7.44 NA NA 0.53
OHSL OHSL Financial Corp. of OH 10.84 10.84 0.86 7.94 5.67 0.80 7.37 0.16 134.65 0.32
OCFC Ocean Fin. Corp. of NJ 13.70 13.64 0.91 6.19 6.02 0.91 6.19 0.40 114.22 0.80
OTFC Oregon Trail Fin. Corp. of OR 26.49 26.49 1.19 6.01 5.69 1.19 6.01 0.18 206.22 0.57
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
INBI Industrial Bancorp of OH 15.65 137.41 21.94 137.41 15.65 0.60 3.58 56.07
IWBK Interwest Bancorp of WA 19.67 281.37 19.02 285.81 23.28 0.53 2.09 41.09
IPSW Ipswich SB of Ipswich MA* 11.01 219.78 12.27 219.78 13.79 0.16 1.33 14.68
JXVL Jacksonville Bancorp of TX 11.64 104.49 15.10 104.49 11.64 0.50 3.30 38.46
JXSB Jcksnville SB,MHC of IL (45.6) 29.33 162.58 17.14 162.58 NM 0.30 1.97 57.69
JSBA Jefferson Svgs Bancorp of MO 17.35 143.58 13.73 178.95 19.54 0.28 1.65 28.57
KSBK KSB Bancorp of Kingfield ME* 12.97 180.44 14.04 207.58 12.97 0.00 0.00 0.00
KFBI Klamath First Bancorp of OR 15.56 98.45 13.76 107.44 15.73 0.36 2.57 40.00
LSBI LSB Fin. Corp. of Lafayette IN 16.49 158.36 13.31 158.36 19.18 0.40 1.31 21.62
LVSB Lakeview Financial of NJ 12.22 177.54 17.27 260.29 24.43 0.25 1.16 14.20
LARK Landmark Bancshares, Inc of KS 13.92 113.70 14.86 113.70 16.54 0.00 0.00 0.00
LARL Laurel Capital Group of PA 11.87 153.77 16.36 153.77 11.54 0.60 3.64 43.17
LSBX Lawrence Savings Bank of MA* 5.66 124.74 15.06 124.74 5.74 0.00 0.00 0.00
LFED Leeds Fed Bksr MHC of MD (36.3 23.86 165.44 27.30 165.44 23.86 0.56 3.56 NM
LXMO Lexington B&L Fin. Corp. of MO 22.58 92.29 14.82 98.94 22.58 0.30 2.14 48.39
LIBB Liberty Bancorp MHC of NJ (47) 25.48 118.63 15.57 118.63 26.82 0.00 0.00 0.00
LFCO Life Financial Corp of CA(8) 2.37 54.88 6.94 54.88 2.28 0.00 0.00 0.00
LFBI Little Falls Bancorp of NJ 19.25 98.19 10.32 105.86 19.25 0.24 1.64 31.58
LOGN Logansport Fin. Corp. of IN 14.46 109.58 20.62 109.58 14.32 0.44 2.98 43.14
LISB Long Island Bancorp, Inc of NY(8) 18.56 179.56 15.99 181.08 22.81 0.80 1.87 34.63
MAFB MAF Bancorp, Inc. of IL 13.33 178.47 14.00 199.91 13.92 0.28 1.27 16.87
MBLF MBLA Financial Corp. of MO 12.82 88.25 11.91 88.25 12.91 0.60 3.04 38.96
MECH MECH Financial Inc of CT* 14.74 136.38 13.24 136.38 14.83 0.00 0.00 0.00
MFBC MFB Corp. of Mishawaka IN 13.33 86.46 9.84 86.46 13.64 0.34 1.89 25.19
MSBF MSB Financial, Inc of MI 15.66 143.22 23.84 143.22 18.04 0.30 2.11 32.97
MARN Marion Capital Holdings of IN 16.91 104.07 20.21 106.33 16.91 0.88 3.83 64.71
MRKF Market Fin. Corp. of OH 23.91 93.38 27.39 93.38 23.91 0.28 2.55 60.87
MFSL Maryland Fed. Bancorp of MD(8) NM 206.92 18.13 208.89 NM 0.45 1.37 50.00
MASB MassBank Corp. of Reading MA* 13.25 130.58 15.36 132.32 15.41 0.00 0.00 0.00
MFLR Mayflower Co-Op. Bank of MA* 10.78 122.70 11.33 124.48 12.41 0.80 4.44 47.90
MDBK Medford Bancorp, Inc. of MA* 13.06 153.64 13.73 161.89 13.73 0.80 2.29 29.85
MWBX MetroWest Bank of MA* 11.81 188.20 13.81 188.20 11.81 0.20 3.13 37.04
METF Metropolitan Fin. Corp. of OH 12.63 209.45 7.82 225.96 14.69 0.00 0.00 0.00
MIFC Mid Iowa Financial Corp. of IA(8) 16.46 168.18 16.70 168.39 16.67 0.08 0.62 10.13
MCBN Mid-Coast Bancorp of ME 12.30 102.04 8.19 102.04 14.15 0.20 2.67 32.79
MWBI Midwest Bancshares, Inc. of IA 7.97 101.38 7.25 101.38 10.00 0.32 2.91 23.19
MFFC Milton Fed. Fin. Corp. of OH 19.03 109.54 12.13 109.54 23.61 0.60 4.71 NM
MBSP Mitchell Bancorp, Inc. of NC(8) 29.63 102.56 40.33 102.56 29.63 0.00 0.00 0.00
MBBC Monterey Bay Bancorp of CA NM 133.67 14.39 146.12 NM 0.12 0.75 36.36
MONT Montgomery Fin. Corp. of IN 17.59 85.50 14.64 85.50 17.59 0.22 2.12 37.29
MSBK Mutual SB, FSB of Bay City MI NM 85.01 4.72 85.01 NM 0.00 0.00 NM
MYST Mystic Financial of MA* 19.49 86.27 15.66 86.27 20.91 0.20 1.74 33.90
NHTB NH Thrift Bancshares of NH 10.14 111.11 9.04 127.16 10.94 0.60 4.29 43.48
NSLB NS&L Bancorp, Inc of Neosho MO 26.67 94.84 17.52 95.47 27.12 0.50 3.13 NM
NSSY NSS Bancorp of CT(8)* 19.10 179.52 15.19 184.04 21.68 0.52 1.25 23.85
NMSB Newmil Bancorp, Inc. of CT* 13.78 123.42 11.21 123.42 17.62 0.00 0.00 0.00
NBCP Niagara Bancorp of NY MHC(45.4* 23.44 135.38 25.83 135.38 24.46 0.00 0.00 0.00
NBSI North Bancshares of Chicago IL NM 112.61 12.19 112.61 NM 0.40 3.37 NM
FFFD North Central Bancshares of IA 11.48 98.60 15.21 113.30 11.82 0.32 1.98 22.70
NEIB Northeast Indiana Bncrp of IN 13.04 113.57 14.81 113.57 13.04 0.34 1.86 24.29
NWSB Northwest Bcrp MHC of PA (30.8 23.65 233.98 20.01 260.29 24.73 0.16 1.47 34.78
NWEQ Northwest Equity Corp. of WI 12.15 122.81 14.97 122.81 13.06 0.00 0.00 0.00
NTMG Nutmeg FS&LA of CT 13.79 190.17 11.53 190.17 26.09 0.20 1.67 22.99
OHSL OHSL Financial Corp. of OH 17.63 135.97 14.73 135.97 19.00 0.50 3.42 60.24
OCFC Ocean Fin. Corp. of NJ 16.63 107.81 14.77 108.29 16.63 0.48 3.28 54.55
OTFC Oregon Trail Fin. Corp. of OR 17.58 83.83 22.21 83.83 17.58 0.20 1.65 28.99
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
OFCP Ottawa Financial Corp. of MI 8.22 6.74 0.89 10.38 5.81 0.79 9.25 0.50 79.48 0.46
PFFB PFF Bancorp of Pomona CA 8.04 7.96 0.60 6.43 7.16 0.56 5.93 1.06 79.87 1.36
PSFI PS Financial of Chicago IL 26.77 26.77 1.00 3.18 3.77 1.73 5.53 0.41 50.85 0.37
PSBI PSB Bancorp Inc. of PA* 19.81 19.81 0.78 3.93 5.19 0.78 3.93 NA NA 0.46
PVFC PVF Capital Corp. of OH 7.20 7.20 1.33 18.67 12.90 1.26 17.66 0.69 95.38 0.74
PBCI Pamrapo Bancorp, Inc. of NJ 12.47 12.41 1.24 9.69 6.84 1.19 9.34 1.66 35.55 1.03
PFED Park Bancorp of Chicago IL 20.33 20.33 0.92 4.28 5.00 0.93 4.34 0.07 390.63 0.67
PVSA Parkvale Financial Corp of PA 7.67 7.64 1.08 13.90 7.17 1.08 13.90 0.43 279.67 1.56
PBHC Pathfinder BC MHC of NY (45.2)* 11.89 10.15 0.75 6.37 3.92 0.62 5.27 1.30 32.06 0.63
PEEK Peekskill Fin. Corp. of NY 21.57 21.57 0.98 4.05 4.34 1.00 4.11 0.79 43.03 1.41
PFSB PennFed Fin. Services of NJ 6.68 5.81 0.78 10.97 9.15 0.76 10.69 0.44 40.82 0.25
PWBK Pennwood Bancorp, Inc. of PA 17.27 17.27 0.59 3.29 3.64 0.65 3.62 1.44 58.95 1.15
PBKB People's Bancshares of MA* 3.78 3.62 0.73 17.51 9.91 0.28 6.65 0.35 149.48 0.88
TSBS Peoples Bancorp Inc of NJ* 39.09 37.92 1.14 5.37 2.77 0.99 4.67 0.68 66.45 0.90
PFDC Peoples Bancorp of Auburn IN 14.97 14.97 1.45 9.60 6.24 1.45 9.60 0.18 172.98 0.36
PBCT Peoples Bank, MHC of CT (41.2)* 9.42 8.11 1.22 13.58 6.90 0.63 7.05 0.70 156.79 1.72
PFFC Peoples Fin. Corp. of OH 17.34 17.34 1.15 6.30 6.68 0.53 2.93 0.15 151.61 0.30
PHBK Peoples Heritage Fin Grp of ME* 7.40 6.15 0.94 12.95 4.54 1.26 17.38 0.79 114.76 1.25
PSFC Peoples Sidney Fin. Corp of OH 18.52 18.52 1.18 4.96 3.73 1.18 4.96 NA NA NA
PERM Permanent Bancorp, Inc. of IN 8.58 7.00 0.59 6.31 4.86 0.56 6.00 0.18 223.89 0.75
PCBC Perry Co. Fin. Corp. of MO 18.47 18.47 0.98 5.17 4.70 0.97 5.12 NA NA 0.16
PHFC Pittsburgh Home Fin Corp of PA 6.93 6.86 0.70 8.10 8.07 0.62 7.21 1.24 33.90 0.75
PFSL Pocahontas Bancorp of AR 14.44 14.00 0.68 7.04 5.93 0.68 7.04 0.26 159.98 0.88
PTRS Potters Financial Corp of OH 8.53 8.53 0.76 8.64 7.07 0.68 7.77 0.32 541.52 2.35
PHSB Ppls Home SB, MHC of PA (45.0) 12.67 12.67 0.80 6.62 4.27 0.73 6.09 0.32 173.78 1.31
PRBC Prestige Bancorp of PA 9.67 9.67 0.47 4.52 5.10 0.46 4.39 0.35 79.16 0.41
PFNC Progress Financial Corp. of PA 6.92 6.17 0.82 14.34 5.53 0.72 12.64 0.79 90.50 1.16
PROV Provident Fin. Holdings of CA 10.62 10.62 0.70 5.87 6.98 0.29 2.39 1.04 73.18 0.89
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 13.42 13.42 1.11 8.38 3.98 0.91 6.88 NA NA 0.51
PLSK Pulaski SB, MHC of NJ (47.0) 11.82 11.82 0.54 4.57 3.62 0.59 4.96 0.63 82.57 0.97
PULS Pulse Bancorp of S. River NJ(8) 8.44 8.44 1.04 12.61 7.12 1.04 12.61 0.46 78.83 1.33
QCFB QCF Bancorp of Virginia MN 17.70 17.70 1.68 9.63 6.79 1.66 9.53 1.22 67.47 1.92
QCBC Quaker City Bancorp of CA 8.71 8.71 0.77 8.95 7.66 0.76 8.79 1.11 80.77 1.13
QCSB Queens County Bancorp of NY* 9.89 9.89 1.48 13.79 3.97 1.47 13.61 0.50 110.42 0.64
RARB Raritan Bancorp of Raritan NJ* 7.33 7.24 0.97 12.91 6.59 0.97 12.84 0.43 186.77 1.14
RELY Reliance Bancorp, Inc. of NY 7.84 5.47 0.86 10.29 7.54 0.90 10.81 0.40 88.82 0.91
RELI Reliance Bancshares Inc of WI(8) 49.97 49.97 1.03 2.11 2.19 1.03 2.11 NA NA 0.60
RCBK Richmond County Fin Corp of NY 20.60 20.52 0.55 3.31 1.99 1.55 9.31 0.37 124.25 1.12
RIVR River Valley Bancorp of IN 13.65 13.46 0.93 7.27 7.20 0.83 6.46 0.55 158.30 1.03
RVSB Riverview Bancorp of WA 23.08 22.36 1.69 8.33 6.00 1.60 7.87 0.28 137.60 0.63
RSLN Roslyn Bancorp, Inc. of NY* 15.43 15.35 1.29 7.43 6.67 1.23 7.10 0.23 281.89 2.01
SCCB S. Carolina Comm. Bnshrs of SC 20.38 20.38 1.01 4.23 3.90 1.01 4.23 1.26 50.34 0.82
SBFL SB Fngr Lakes MHC of NY (33.1) 8.46 8.46 0.42 4.65 1.93 0.33 3.65 0.32 141.95 0.89
SFED SFS Bancorp of Schenectady NY(8) 12.30 12.30 0.66 5.30 3.58 0.64 5.13 0.84 56.89 0.60
SGVB SGV Bancorp of W. Covina CA 7.89 7.80 0.36 4.77 5.36 0.36 4.70 NA NA 0.48
SISB SIS Bancorp, Inc. of MA(8)* 7.14 7.14 0.73 10.12 4.93 0.91 12.63 0.27 471.43 2.63
SWCB Sandwich Bancorp of MA(8)* 8.39 8.16 0.97 11.94 4.22 0.92 11.31 0.36 220.94 1.16
SFSL Security First Corp. of OH(8) 9.90 9.77 1.44 15.16 6.46 1.44 15.16 0.62 122.36 0.83
SKAN Skaneateles Bancorp Inc of NY* 6.87 6.71 0.62 8.92 7.45 0.60 8.67 1.74 57.15 1.23
SOBI Sobieski Bancorp of S. Bend IN 14.10 14.10 0.58 3.93 4.27 0.58 3.93 0.29 77.82 0.28
SSFC South Street Fin. Corp. of NC* 16.92 16.92 0.45 2.28 2.57 0.45 2.28 0.23 91.68 0.40
SBAN SouthBanc Shares Inc. of SC 21.85 21.85 0.94 4.29 4.49 0.94 4.29 0.37 153.09 0.99
SCBS Southern Commun. Bncshrs of AL 15.85 15.85 0.85 5.35 3.66 0.85 5.35 0.19 602.29 1.69
SMBC Southern Missouri Bncrp of MO 15.47 15.47 0.67 4.11 4.50 0.70 4.29 1.49 55.77 1.08
SVRN Sovereign Bancorp, Inc. of PA 5.51 4.85 0.54 11.13 4.11 0.70 14.64 0.57 104.60 1.07
STFR St. Francis Cap. Corp. of WI 7.46 6.68 0.77 9.82 6.46 0.75 9.51 0.19 219.19 0.88
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
OFCP Ottawa Financial Corp. of MI 17.21 179.52 14.76 218.89 19.31 0.40 1.68 28.99
PFFB PFF Bancorp of Pomona CA 13.96 96.38 7.75 97.36 15.14 0.00 0.00 0.00
PSFI PS Financial of Chicago IL 26.50 98.76 26.44 98.76 15.25 0.48 4.31 NM
PSBI PSB Bancorp Inc. of PA* 19.27 75.77 15.01 75.77 19.27 0.00 0.00 0.00
PVFC PVF Capital Corp. of OH 7.75 132.28 9.52 132.28 8.20 0.00 0.00 0.00
PBCI Pamrapo Bancorp, Inc. of NJ 14.62 139.48 17.40 140.21 15.18 1.12 4.64 67.88
PFED Park Bancorp of Chicago IL 20.00 84.59 17.20 84.59 19.72 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 13.95 184.62 14.17 185.53 13.95 0.60 2.00 27.91
PBHC Pathfinder BC MHC of NY (45.2)* 25.48 159.25 18.94 186.62 NM 0.20 1.51 38.46
PEEK Peekskill Fin. Corp. of NY 23.05 98.86 21.32 98.86 22.69 0.36 2.44 56.25
PFSB PennFed Fin. Services of NJ 10.92 117.65 7.86 135.28 11.21 0.14 1.08 11.76
PWBK Pennwood Bancorp, Inc. of PA 27.50 96.32 16.64 96.32 25.00 0.28 2.55 70.00
PBKB People's Bancshares of MA* 10.09 171.09 6.47 178.57 26.59 0.56 3.34 33.73
TSBS Peoples Bancorp Inc of NJ* NM 88.40 34.55 91.12 NM 0.10 1.20 43.48
PFDC Peoples Bancorp of Auburn IN 16.02 151.07 22.61 151.07 16.02 0.44 2.15 34.38
PBCT Peoples Bank, MHC of CT (41.2)* 14.49 173.45 16.33 201.30 27.94 0.84 3.62 52.50
PFFC Peoples Fin. Corp. of OH 14.97 97.61 16.93 97.61 NM 0.60 5.64 NM
PHBK Peoples Heritage Fin Grp of ME* 22.04 202.78 15.02 244.17 16.42 0.44 2.63 57.89
PSFC Peoples Sidney Fin. Corp of OH 26.81 168.33 31.18 168.33 26.81 0.28 1.51 40.58
PERM Permanent Bancorp, Inc. of IN 20.56 124.63 10.69 152.69 21.61 0.24 1.88 38.71
PCBC Perry Co. Fin. Corp. of MO 21.29 107.39 19.83 107.39 21.50 0.50 2.33 49.50
PHFC Pittsburgh Home Fin Corp of PA 12.39 102.90 7.14 104.01 13.92 0.24 1.78 22.02
PFSL Pocahontas Bancorp of AR 16.88 77.23 11.15 79.69 16.88 0.24 3.56 60.00
PTRS Potters Financial Corp of OH 14.14 121.74 10.39 121.74 15.73 0.00 0.00 0.00
PHSB Ppls Home SB, MHC of PA (45.0) 23.41 141.69 17.95 141.69 25.43 0.28 1.90 44.44
PRBC Prestige Bancorp of PA 19.60 86.72 8.39 86.72 20.20 0.17 1.29 25.37
PFNC Progress Financial Corp. of PA 18.09 172.96 11.98 193.94 20.52 0.15 1.09 19.74
PROV Provident Fin. Holdings of CA 14.32 82.63 8.77 82.63 NM 0.00 0.00 0.00
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 25.14 204.10 27.39 204.10 NM 1.10 4.61 NM
PLSK Pulaski SB, MHC of NJ (47.0) 27.66 123.46 14.59 123.46 25.49 0.30 2.31 63.83
PULS Pulse Bancorp of S. River NJ(8) 14.04 169.95 14.34 169.95 14.04 0.80 3.20 44.94
QCFB QCF Bancorp of Virginia MN 14.74 140.14 24.80 140.14 14.89 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA 13.05 111.24 9.68 111.24 13.29 0.00 0.00 0.00
QCSB Queens County Bancorp of NY* 25.16 NM 34.63 NM 25.48 1.00 2.52 63.29
RARB Raritan Bancorp of Raritan NJ* 15.18 190.01 13.92 192.31 15.27 0.60 2.35 35.71
RELY Reliance Bancorp, Inc. of NY 13.27 127.64 10.00 182.97 12.62 0.72 2.77 36.73
RELI Reliance Bancshares Inc of WI(8) NM 98.07 49.01 98.07 NM 0.00 0.00 0.00
RCBK Richmond County Fin Corp of NY NM 109.00 22.45 109.44 17.84 0.24 1.77 NM
RIVR River Valley Bancorp of IN 13.89 97.72 13.34 99.08 15.63 0.22 1.47 20.37
RVSB Riverview Bancorp of WA 16.67 119.76 27.64 123.58 17.65 0.24 2.00 33.33
RSLN Roslyn Bancorp, Inc. of NY* 14.98 115.81 17.87 116.38 15.69 0.40 2.41 36.04
SCCB S. Carolina Comm. Bnshrs of SC 25.63 126.00 25.68 126.00 25.63 0.64 3.12 NM
SBFL SB Fngr Lakes MHC of NY (33.1) NM 236.93 20.03 236.93 NM 0.00 0.00 0.00
SFED SFS Bancorp of Schenectady NY(8) 27.89 146.09 17.97 146.09 28.80 0.32 1.21 33.68
SGVB SGV Bancorp of W. Covina CA 18.65 85.58 6.76 86.65 18.95 0.00 0.00 0.00
SISB SIS Bancorp, Inc. of MA(8)* 20.27 185.60 13.25 185.60 16.23 0.00 0.00 0.00
SWCB Sandwich Bancorp of MA(8)* 23.67 265.93 22.31 273.58 25.00 1.40 2.41 57.14
SFSL Security First Corp. of OH(8) 15.48 218.81 21.67 221.85 15.48 0.36 1.88 29.03
SKAN Skaneateles Bancorp Inc of NY* 13.42 115.29 7.93 118.08 13.80 0.28 1.91 25.69
SOBI Sobieski Bancorp of S. Bend IN 23.44 90.47 12.76 90.47 23.44 0.32 2.13 50.00
SSFC South Street Fin. Corp. of NC* NM 116.15 19.65 116.15 NM 0.40 4.67 NM
SBAN SouthBanc Shares Inc. of SC 22.26 95.53 20.87 95.53 22.26 0.48 2.95 65.75
SCBS Southern Commun. Bncshrs of AL 27.31 146.04 23.15 146.04 27.31 0.30 2.03 55.56
SMBC Southern Missouri Bncrp of MO 22.22 98.46 15.23 98.46 21.33 0.00 0.00 0.00
SVRN Sovereign Bancorp, Inc. of PA 24.31 192.80 10.62 218.83 18.49 0.08 0.61 14.81
STFR St. Francis Cap. Corp. of WI 15.49 151.76 11.32 169.56 16.00 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of September 4, 1998
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SPBC St. Paul Bancorp, Inc. of IL 9.60 9.56 1.08 11.83 7.24 1.04 11.42 0.31 239.56 1.03
SFFC StateFed Financial Corp. of IA 17.91 17.91 1.15 6.51 6.50 1.15 6.51 NA NA NA
SFIN Statewide Fin. Corp. of NJ 9.72 9.70 0.79 8.16 7.22 0.75 7.83 0.47 95.71 0.89
STSA Sterling Financial Corp. of WA 5.09 2.00 0.36 7.02 5.60 0.43 8.45 0.52 128.59 1.09
ROSE T R Financial Corp. of NY* 6.23 6.23 1.02 16.37 7.96 0.87 13.95 0.53 70.19 0.68
THRD TF Financial Corp. of PA 7.49 6.36 0.70 7.48 7.83 0.56 6.02 0.31 97.87 0.86
THTL Thistle Group Holdings of PA 27.80 27.80 1.37 4.91 6.24 1.37 4.91 0.22 98.57 0.76
TSBK Timberland Bancorp of WA 32.34 32.34 1.79 9.12 5.41 1.69 8.57 3.10 21.28 0.91
TRIC Tri-County Bancorp of WY 16.45 16.45 1.00 6.40 6.61 1.03 6.57 NA NA 1.01
TWIN Twin City Bancorp, Inc. of TN 12.67 12.67 1.02 7.92 6.85 0.82 6.41 0.37 27.12 0.14
USAB USABancshares, Inc of PA* 9.74 9.68 0.59 6.21 3.06 0.73 7.64 1.08 49.32 0.90
UCBC Union Community Bancorp of IN 40.02 40.02 1.44 5.52 4.27 1.44 5.52 0.33 99.15 0.40
UCFC United Community Fin. of OH 32.31 32.31 1.50 4.65 4.10 1.50 4.65 0.51 72.00 0.95
UFRM United FSB of Rocky Mount NC(8) 7.75 7.75 0.62 8.37 3.39 0.52 7.03 1.16 83.92 1.15
UBMT United Fin. Corp. of MT 14.74 14.25 0.66 4.49 3.40 0.66 4.49 0.42 156.46 1.02
UTBI United Tenn. Bancshares of TN 27.03 27.03 1.36 7.63 6.07 1.36 7.63 0.57 148.60 1.27
WHGB WHG Bancshares of MD 15.28 15.28 0.58 3.18 4.18 0.58 3.18 0.65 41.31 0.46
WSFS WSFS Financial Corp. of DE* 6.15 6.12 1.12 19.60 8.50 1.08 18.88 1.30 122.16 3.26
WVFC WVS Financial Corp. of PA 11.10 11.10 1.20 10.72 6.34 1.30 11.60 0.20 308.46 1.17
WRNB Warren Bancorp of Peabody MA* 10.49 10.49 1.71 16.06 7.90 1.71 16.06 1.27 83.50 1.62
WSBI Warwick Community Bncrp of NY* 23.05 23.05 -0.64 -2.78 -3.10 0.69 3.01 NA NA NA
WFSL Washington Federal, Inc. of WA 13.90 12.91 1.96 15.11 9.53 1.90 14.68 0.70 60.38 0.57
WYNE Wayne Bancorp, Inc. of NJ 12.77 12.77 0.70 5.45 3.21 0.67 5.28 0.80 103.99 1.18
WAYN Wayne Svgs Bks MHC of OH (48.2 9.53 9.53 0.71 7.52 3.44 0.64 6.80 0.49 58.18 0.36
WCFB Wbstr Cty FSB MHC of IA (45.6) 23.41 23.41 1.40 5.95 4.13 1.40 5.95 0.07 534.72 0.69
WBST Webster Financial Corp. of CT 5.97 5.06 0.68 12.40 5.64 0.76 13.94 0.41 149.68 1.14
WEFC Wells Fin. Corp. of Wells MN 15.37 15.37 1.19 8.14 7.58 1.10 7.56 0.28 154.67 0.48
WCBI WestCo Bancorp, Inc. of IL(8) 15.66 15.66 1.50 9.70 6.61 1.40 9.09 0.44 63.73 0.37
WSTR WesterFed Fin. Corp. of MT 10.73 8.75 0.72 6.77 7.03 0.72 6.77 0.49 97.44 0.74
WOFC Western Ohio Fin. Corp. of OH 14.52 13.58 0.07 0.51 0.58 0.06 0.43 1.29 74.24 1.36
WEHO Westwood Hmstd Fin Corp of OH 20.58 20.58 0.69 2.79 3.39 1.11 4.49 0.19 119.15 0.25
FFWD Wood Bancorp of OH 13.57 13.57 1.43 11.15 5.93 1.16 9.02 0.16 243.12 0.48
YFCB Yonkers Fin. Corp. of NY 10.29 10.29 0.88 6.79 6.90 0.80 6.15 0.15 208.94 0.61
YFED York Financial Corp. of PA 8.89 8.89 0.84 9.60 6.14 0.66 7.54 2.25 31.83 0.90
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
_______________________________________
SPBC St. Paul Bancorp, Inc. of IL 13.81 155.92 14.96 156.54 14.30 0.60 3.02 41.67
SFFC StateFed Financial Corp. of IA 15.38 97.37 17.44 97.37 15.38 0.20 2.00 30.77
SFIN Statewide Fin. Corp. of NJ 13.84 115.44 11.22 115.60 14.44 0.52 3.10 42.98
STSA Sterling Financial Corp. of WA 17.84 114.24 5.82 290.31 14.84 0.00 0.00 0.00
ROSE T R Financial Corp. of NY* 12.56 191.52 11.93 191.52 14.74 0.80 2.86 35.87
THRD TF Financial Corp. of PA 12.77 109.70 8.22 129.28 15.85 0.48 2.70 34.53
THTL Thistle Group Holdings of PA 16.04 78.78 21.90 78.78 16.04 0.00 0.00 0.00
TSBK Timberland Bancorp of WA 18.48 96.19 31.11 96.19 19.65 0.24 1.94 35.82
TRIC Tri-County Bancorp of WY 15.13 94.26 15.51 94.26 14.74 0.44 3.83 57.89
TWIN Twin City Bancorp, Inc. of TN 14.61 115.15 14.59 115.15 18.06 0.40 3.08 44.94
USAB USABancshares, Inc of PA* NM 129.77 12.63 130.57 26.56 0.00 0.00 0.00
UCBC Union Community Bancorp of IN 23.40 77.36 30.96 77.36 23.40 0.34 3.09 72.34
UCFC United Community Fin. of OH 24.36 113.31 36.62 113.31 24.36 0.00 0.00 0.00
UFRM United FSB of Rocky Mount NC(8) 29.46 231.42 17.94 231.42 NM 0.24 1.45 42.86
UBMT United Fin. Corp. of MT 29.38 131.80 19.43 136.39 29.38 1.00 4.26 NM
UTBI United Tenn. Bancshares of TN 16.46 84.53 22.85 84.53 16.46 0.00 0.00 0.00
WHGB WHG Bancshares of MD 23.91 75.76 11.58 75.76 23.91 0.00 0.00 0.00
WSFS WSFS Financial Corp. of DE* 11.76 209.97 12.92 211.08 12.21 0.12 0.75 8.82
WVFC WVS Financial Corp. of PA 15.78 167.87 18.64 167.87 14.58 0.60 3.92 61.86
WRNB Warren Bancorp of Peabody MA* 12.66 201.79 21.17 201.79 12.66 0.36 3.55 45.00
WSBI Warwick Community Bncrp of NY* NM 89.88 20.72 89.88 29.82 0.16 1.38 NM
WFSL Washington Federal, Inc. of WA 10.50 151.05 20.99 162.65 10.80 0.92 4.13 43.40
WYNE Wayne Bancorp, Inc. of NJ NM 166.00 21.20 166.00 NM 0.20 0.69 21.51
WAYN Wayne Svgs Bks MHC of OH (48.2 29.11 213.78 20.36 213.78 NM 0.62 2.92 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 24.21 141.86 33.20 141.86 24.21 0.00 0.00 0.00
WBST Webster Financial Corp. of CT 17.74 159.89 9.54 188.62 15.78 0.44 1.92 34.11
WEFC Wells Fin. Corp. of Wells MN 13.19 108.55 16.68 108.55 14.19 0.60 3.58 47.24
WCBI WestCo Bancorp, Inc. of IL(8) 15.13 142.47 22.31 142.47 16.15 0.68 2.37 35.79
WSTR WesterFed Fin. Corp. of MT 14.23 94.20 10.11 115.55 14.23 0.00 0.00 0.00
WOFC Western Ohio Fin. Corp. of OH NM 91.94 13.35 98.29 NM 1.00 4.82 NM
WEHO Westwood Hmstd Fin Corp of OH 29.53 104.63 21.53 104.63 18.33 0.40 3.76 NM
FFWD Wood Bancorp of OH 16.85 177.51 24.10 177.51 20.83 0.36 2.40 40.45
YFCB Yonkers Fin. Corp. of NY 14.49 103.96 10.70 103.96 15.98 0.00 0.00 0.00
YFED York Financial Corp. of PA 16.29 149.84 13.31 149.84 20.74 0.52 2.85 46.43
</TABLE>
<PAGE>
EXHIBIT IV-2
Historical Stock Price Indices
<PAGE>
Exhibit IV-2
Historical Stock Price Indices(1)
<TABLE>
<CAPTION>
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
- --------------- ---- ------- --------- ------ -----
<S> <C> <C> <C> <C> <C>
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 44.5 743.5 241.6 143.1
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
September 4, 1998 7640.3 973.9 1,566.5 622.5 ____
</TABLE>
(1) End of period data.
Sources: SNL Securities; Wall Street Journal.
<PAGE>
EXHIBIT IV-3
Historical Thrift Stock Indices
<PAGE>
THRIFTINVESTOR
INDEX VALUES
<TABLE>
<CAPTION>
INDEX VALUES PERCENT CHANGE SINCE
------------------------------------------ ---------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------
SAIF Thrifts 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
$20M to $500M 1,262.6 1,305.4 1,312.3 1,012.6 (3.28) (3.79) 24.69
$500M to $1B 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
- ---------------------------------------------------------------------------------------------------------------------------
Dow 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 institution's effect on an
index is proportionate to that institution's market capitalization. All SNL
thrift indices, except for the SNL MHC Index, began at 100 on March 30, 1984.
The SNL MHC Index began at 201.082 on Dec. 31, 1992, the level of the SNL Thrift
Index on that date. On March 30, 1984, the S&P 500 closed at 159.2 and the Dow
Jones Industrials stood at 1164.9.
Mid-Atlantic: DE, DC, MD, NJ, NY, PA, PR; Midwest: IA, IL, IN, KS, KY, MI, MN,
MO, ND, NE, OH, SD, WI;
New England: CT, MA, ME, NH, RI, VT; Southeast: AL, AR, FL, GA, MS, NC, SC, TN,
VA, WV;
Southwest: CO, LA, NM, OK, TX, UT; West: AZ, AK, CA, HI, ID, MT, NV, OR, WA, WY
<PAGE>
EXHIBIT IV-4
Market Area Acquisition Activity
<PAGE>
RP Financial, LC.
<TABLE>
<CAPTION>
Exhibit IV-4
New York Thrift Merger and Acquisition Activity
1997 to Present
Seller Financials
-------------------------------------------------
Total TgEq/ YTD YTD NPAs/ Rsrvs/
Ann'd Comp Assets Assts ROAA ROAE Assets NPLs
Date Date Buyer ST Seller ST ($000) (%) (%) (%) (%) (%)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/20/98 Pending Dime Community Bncsh NY Financial Bancorp NY 310,368 9.00 0.95 10.47 2.19 59.59
06/15/98 Pending Charter One Fin'l OH ALBANK Finl Corp. NY 4,089,428 7.16 0.96 10.81 0.72 118.45
05/26/98 Pending Roslyn Bancorp Inc. NY TR Financial Corp. NY 4,005,695 6.15 0.99 16.05 0.51 80.17
04/23/98 Pending Ambanc Holding Co. NY AFSALA Bancorp Inc. NY 160,408 12.52 0.78 6.19 0.30 250.44
04/03/98 Pending Astoria Financial Cp NY Long Island Bancorp NY 6,072,524 9.10 0.87 9.59 0.89 73.47
03/06/98 Pending USB Holding Company NY Tappan Zee Financial NY 126,470 17.02 0.82 4.78 1.19 45.98
12/16/97 05/29/98 HUBCO, Inc NJ MSB Bancorp NY 773,991 6.23 0.54 6.02 NA NA
10/23/97 04/24/98 HUBCO, Inc. NJ Poughkeepsie Finl NY 880,196 8.37 0.54 6.43 3.82 35.46
10/07/97 03/30/98 North Fork Bancorp NY New York Bancorp NY 3,283,653 5.08 1.61 30.99 1.09 58.08
05/21/97 10/03/97 Charter One Fin'l OH RCSB Financial NY 4,032,365 7.66 0.96 12.26 0.66 132.02
04/25/97 09/10/97 Flushing Financial NY New York FSB NY 82,249 9.28 1.32 3.59 1.14 117.28
03/31/97 10/01/97 Astoria Financial Cp NY Greater New York SB NY 2,541,888 8.25 0.72 9.20 7.84 9.20
12/03/96 04/30/97 Dime Bancorp NY BFS Bankorp, Inc. NY 643,180 7.81 1.58 20.12 1.04 94.15
08/22/96 03/01/97 HSBC Holdings Plc FO First FSLA - Rochester NY 7,348,042 5.35 0.75 13.91 0.72 105.64
07/15/96 01/02/97 North Fork Bancorp NY North Side SB NY 1,580,435 7.67 1.29 17.91 0.51 121.82
Average 2,395,393 8.44 0.98 11.84 1.62 92.98
Median 1,580,435 7.81 0.95 10.47 0.97 87.16
</TABLE>
<TABLE>
<CAPTION>
Deal Terms and Pricing as of Announcement Date
--------------------------------------------------------------
Deal Deal Deal TgBk
Deal Deal Deal Pr/ Pr/ Pr/ Prm/
Ann'd Comp Value Pr/Shr Consid Pr/Bk Tg Bk 4QEPS Assets CoreDp
Date Date Buyer ST Seller ST ($M) ($) Type (%) (%) (x) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/20/98 Pending Dime Community Bncsh NY Financial Bancorp NY 73.4 40.50 Mixture 246.50 247.56 24.40 23.65 22.12
06/15/98 Pending Charter One Fin'l OH ALBANK Finl Corp. NY 1075.8 73.58 Com Stock 257.80 329.64 23.06 26.31 24.87
05/26/98 Pending Roslyn Bancorp Inc. NY TR Financial Corp. NY 1114.1 56.63 Com Stock 403.07 403.07 27.23 27.81 43.83
04/23/98 Pending Ambanc Holding Co. NY AFSALA Bancorp Inc. NY 30.0 21.00 Com Stock 144.62 144.62 22.58 18.70 8.48
04/03/98 Pending Astoria Financial Cp NY Long Island Bancorp NY 1765.7 69.36 Com Stock 299.09 301.83 32.11 29.08 35.57
03/06/98 Pending USB Holding Company NY Tappan Zee Financial NY 33.8 22.00 Com Stock 151.10 151.10 30.56 26.73 14.19
12/16/97 05/29/98 HUBCO, Inc NJ MSB Bancorp NY 105.0 36.02 Com Stock 164.85 309.18 32.16 13.57 11.31
10/23/97 04/24/98 HUBCO, Inc. NJ Poughkeepsie Finl NY 143.5 10.61 Com Stock 181.42 181.42 48.24 16.30 13.37
10/07/97 03/30/98 North Fork Bancorp NY New York Bancorp NY 831.6 37.11 Com Stock 480.13 480.13 19.95 25.33 43.83
05/21/97 10/03/97 Charter One Fin'l OH RCSB Financial NY 647.5 42.32 Com Stock 198.10 203.24 17.06 16.06 16.09
04/25/97 09/10/97 Flushing Financial NY New York FSB NY 13.0 272.50 Cash 169.14 170.51 13.13 15.81 10.44
03/31/97 10/01/97 Astoria Financial Cp NY Greater New York SB NY 344.6 18.94 Mixture 167.44 167.44 24.59 13.56 8.48
12/03/96 04/30/97 Dime Bancorp NY BFS Bankorp, Inc. NY 91.8 52.00 Cash 169.38 169.38 9.94 14.27 10.34
08/22/96 03/01/97 HSBC Holdings Plc FO First FSLA - Rochester NY 652.0 NA Cash 163.00 165.06 12.82 8.87 6.14
07/15/96 01/02/97 North Fork Bancorp NY North Side SB NY 216.3 42.79 Com Stock 168.46 170.07 11.76 13.69 7.98
Average 475.87 56.81 224.27 239.62 23.31 19.32 18.47
Median 216.30 41.41 169.38 181.42 23.06 16.30 13.37
</TABLE>
Note: Excludes deals when pricing is not available
<PAGE>
EXHIBIT IV-5
Directors and Senior Management Summary Resumes
<PAGE>
Exhibit IV-5
Directors and Senior Management Summary Resumes
WILLIAM F. HELMER has served as the Chairman of the Board of Directors
since 1994, and is the President of Helmer-Cronin Construction, Inc., a
construction company.
GEORGE STRAYTON has been employed by the Bank since 1982, and was named
President and Chief Executive Officer of the Bank in 1986.
DENNIS L. COYLE has served as Vice Chairman of the Board of Directors
since 1994. Mr. Coyle is the owner of Coyle Insurance Agency, the owner and
President of Delco Realty and the owner of Dennis L. Coyle Rental Properties.
MURRAY L. KORN was the Senior and Managing Partner of Korn, Rosenbaum,
Phillips and Jauntig, an accounting firm, prior to his retirement in 1986. Mr.
Korn also served as Chairman of the Board of Directors of the Bank from 1984
until his retirement from the position in 1994.
DR. DONALD T. MCNELIS served as President of St. Thomas Aquinas College
in Sparkill, New York from 1974 until his retirement in 1995.
RICHARD A. NOZELL is the owner of Richard Nozell Building Construction,
and serves as a general building contractor.
WILLIAM R. SICHOL, JR. is a principal of Sichol & Hicks, P.C., a private
law firm.
WILBUR C. WARD is currently retired. Prior to his retirement, Mr. Ward
was the President of Ward Bulldozers.
F. GARY ZEH is the President of Haverstraw Transit Inc., a bus
contracting company, and President and Owner of Quality Bus Sales and Service.
DANIEL G. ROTHSTEIN has been employed by the Bank since 1983, and was
named Executive Vice President of the Bank in 1989. Mr. Rothstein has served as
the Bank's Chief Credit Officer and Regulatory Counsel since 1996.
ROBERT J. SANSKY has been employed by the Bank since 1985, and was named
Executive Vice President in 1989. Mr. Sansky has served as the Bank's Director
of Human Resources since 1995.
KATHERINE A. DERING has served as the Bank's Chief Financial Officer
since 1994. Ms. Dering previously served as the Chief Financial Officer of a
community bank located in Connecticut.
STEPHEN G. DORMER has served as Senior Vice President and Director of
Business Development of the Bank since 1996, and was previously Senior Vice
President and Manager of the Bank's Commercial Loan Department from 1994 until
1996. Prior to joining the Bank in 1994, Mr. Dormer was Senior Vice President
of a commercial bank located in Connecticut.
JOHN F. FITZPATRICK has been employed by the Bank since 1986, and was
named Senior Vice President and Director of Support Services in 1997.
<PAGE>
EXHIBIT IV-6
Pro Forma Analysis Sheet
Fully-Converted Basis
<PAGE>
EXHIBIT IV-6
PRO FORMA ANALYSIS SHEET
Provident Bank
Prices as of September 4, 1998
<TABLE>
<CAPTION>
All SAIF-Insured
Peer Group New York Companies Companies
--------------- ------------------ ----------------
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Median
- ------------------------------- ------ ----------- ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 11.34 x 18.71 17.94x 17.70x 16.22x 17.48x 16.65x
Price-book ratio = P/B 59.56% 87.35% 85.20% 101.29% 109.00% 126.92% 113.70%
Price-assets ratio = P/A 8.85% 18.94% 17.88% 13.61% 15.74% 16.12% 15.20%
<CAPTION>
Valuation Parameters
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $4,578,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $53,879,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $49,788,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $679,104,000 RRP Amount (M) 4.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 3.00% Foundation (F) 0.00%
Tax rate (TAX) 40.00% Tax Benefit (Z) 0
Percentage Sold (PCT) 100.00%
<CAPTION>
Calculation of Pro Forma Value After Conversion
<S> <C> <C>
1. V= P/E * (Y) V= $65,000,000
-----------------------------------------------------------
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= $65,000,000
---------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $65,000,000
---------------------------
1 - P/A * PCT * (1-X-E-M-F)
<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 5,525,000 10.00 $55,250,000 5,525,000 55,250,000
Midpoint 6,500,000 10.00 65,000,000 6,500,000 65,000,000
Maximum 7,475,000 10.00 74,750,000 7,475,000 74,750,000
Supermaximum 8,596,250 10.00 85,962,500 8,596,250 85,962,500
</TABLE>
---------------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax
rate of 40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) 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 expenses tax effected at 40.00 percent.
<PAGE>
EXHIBIT IV-7
Pro Forma Effect of Conversion Proceeds
Fully-Converted Basis
<PAGE>
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $55,250,000
Less: Estimated Offering Expenses 1,657,500
-----------
Net Conversion Proceeds $53,592,500
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $53,592,500
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 6,630,000
-----------
Net Proceeds Reinvested $46,962,500
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $1,513,132
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 265,200
Less: Recognition Plan Vesting (4) 265,200
-----------
Net Earnings Increase $982,732
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $4,578,000 $ 982,732 $5,560,732
12 Months ended June 30, 1998 (core) $4,578,000 $ 982,732 $5,560,732
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $53,879,000 $46,962,500 $0 $100,841,500
June 30, 1998 (Tangible) $49,788,000 $46,962,500 $0 $96,750,500
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $679,104,000 $46,962,500 $0 $726,066,500
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Midpoint
<TABLE>
<S> <C>
1. Offering Proceeds $65,000,000
Less: Estimated Offering Expenses 1,950,000
-----------
Net Conversion Proceeds $63,050,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $63,050,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 7,800,000
-----------
Net Proceeds Reinvested $55,250,000
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $1,780,155
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 312,000
Less: Recognition Plan Vesting (4) 312,000
-----------
Net Earnings Increase $1,156,155
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $4,578,000 $1,156,155 $5,734,155
12 Months ended June 30, 1998 (core) $4,578,000 $1,156,155 $5,734,155
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $53,879,000 $55,250,000 $0 $109,129,000
June 30, 1998 (Tangible) $49,788,000 $55,250,000 $0 $105,038,000
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $679,104,000 $55,250,000 $0 $734,354,000
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Maximum
<TABLE>
<S> <C>
1. Offering Proceeds $74,750,000
Less: Estimated Offering Expenses 2,242,500
-----------
Net Conversion Proceeds $72,507,500
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $72,507,500
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 8,970,000
-----------
Net Proceeds Reinvested $63,537,500
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $2,047,178
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 358,800
Less: Recognition Plan Vesting (4) 358,800
-----------
Net Earnings Increase $1,329,578
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $4,578,000 $1,329,578 $5,907,578
12 Months ended June 30, 1998 (core) $4,578,000 $1,329,578 $5,907,578
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $53,879,000 $63,537,500 $0 $117,416,500
June 30, 1998 (Tangible) $49,788,000 $63,537,500 $0 $113,325,500
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $679,104,000 $63,537,500 $0 $742,641,500
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Supermaximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $85,962,500
Less: Estimated Offering Expenses 2,578,875
-----------
Net Conversion Proceeds $83,383,625
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $83,383,625
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 10,315,500
-----------
Net Proceeds Reinvested $73,068,125
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $2,354,255
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 412,620
Less: Recognition Plan Vesting (4) 412,620
-----------
Net Earnings Increase $1,529,015
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $4,578,000 $1,529,015 $6,107,015
12 Months ended June 30, 1998 (core) $4,578,000 $1,529,015 $6,107,015
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $53,879,000 $73,068,125 $0 $126,947,125
June 30, 1998 (Tangible) $49,788,000 $73,068,125 $0 $122,856,125
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $679,104,000 $73,068,125 $0 $752,172,125
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
EXHIBIT IV-8
Peer Group Core Earnings Analysis
<PAGE>
RP FINANCIAL, LC.
- -------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended June 30, 1998
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) ($000)
Comparable Group
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLB Alliance Bank MHC of PA (19.9) 2,000 0 0 0 2,000 3,273 0.61
BCSB BCSB Bankcorp MHC of MD (38.6)(P) -- -- -- -- -- 6,117 0.36
BRKL Brookline Bncp MHC of FL (47.9) 13,726 -78 27 0 13,675 29,095 0.47
FFFL Fidelity Bcsh MHC of MA (47.0) (1) 7,805 -2,311 786 0 6,280 6,802 0.92
SKBO First Carnegie MHC of PA (45.0) 826 260 -88 0 998 2,300 0.43
GBNK Gaston Fed Bncp MHC of NC (47.0) 1,487 -236 80 0 1,331 4,497 0.30
HARS Harris Fin. MHC of PA (24.9) 18,221 -4,739 1,611 0 15,093 33,965 0.44
JXSB Jcksnville SB, MHC of IL (45.6) 998 -551 187 0 634 1,908 0.33
LFED Leeds Fed Bksr MHC of MD (36.3)(1) 3,432 -2 1 0 3,431 5,182 0.66
LIBB Liberty Bancorp MHC of NJ (47)(2) 1,553 -133 45 0 1,465 3,901 0.38
NBCP Niagara Bancorp of NY MHC (45.4)(P) -- -- -- -- -- 29,756 0.46
NWSB Northwest Bcrp MHC of PA (30.8) 21,322 -1,131 385 0 20,576 46,841 0.44
PBHC Pathfinder BC MHC of NY (45.2) 1,460 -366 124 0 1,218 2,831 0.43
PBCT Peoples Bank, MHC of CT (41.2) 102,600 -75,000 25,500 0 53,100 64,130 0.83
PHSB Ppls Home SB, MHC of PA (45.0) 1,749 -209 71 0 1,611 2,760 0.58
PLSK Pulaski SB, MHC of NJ (47.0) 999 124 -42 0 1,081 2,108 0.51
SBFL SB Fngr Lakes MHC of NY (33.1) 995 -295 100 0 800 3,570 0.22
WAYN Wayne Svgs Bks MHC of OH (48.2) 1,822 -270 92 0 1,644 2,486 0.66
WCFB Wbstr Cty FSB MHC of IA (45.6) 1,332 0 0 0 1,332 2,114 0.63
</TABLE>
(P) Pro forma financial data reflective of new conversion.
(1) Financial information is for the quarter ending March 31, 1998.
(2) Financial information is for the quarter ending December 31, 1997.
Source: Audited and unaudited financial statements, corporate and offering
ciculars, and RP Financial, LC. calculations. The information in this
table has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBIT IV-9
Pro Forma Regulatory Capital Ratios
<PAGE>
Exhibit IV-9
Pro Forma Regulatory Capital Ratios
<TABLE>
<CAPTION>
PRO FORMA AT JUNE 30, 1998, BASED UPON THE SALE OF
---------------------------------------------------------------------------
4,007,175 SHARES/(1)/
2,575,500 SHARES 3,030,000 SHARES 3,484,500 SHARES AT ADJUSTED
HISTORICAL AT AT MINIMUM OF AT MIDPOINT OF AT MAXIMUM OF MAXIMUM OF
JUNE 30, 1998 OFFERING RANGE OFFERING RANGE OFFERING RANGE OFFERING RANGE
---------------- ------------------- ------------------ ---------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ --------- ------ ------- ------ ------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity under generally
accepted accounting
principles................ $53,879 7.93% $62,941 9.12% $64,688 9.34% $66,395 9.56% $68,381 9.81%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Tangible capital/(2)/:
Tangible capital/(3)/.... $49,238 7.30% $58,300 8.50% $60,027 8.73% $61,754 8.95% $63,740 16.43%
Requirement.............. 10,120 1.50 10,286 1.50 10,318 1.50 10,349 1.50 10,385 1.50
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess................. $39,119 5.80% $48,014 7.00% $49,709 7.23% $51,405 7.45% $53,355 14.93%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Core capital/(2)/:
Core capital /(3)/....... $49,238 7.30% $58,300 8.50% $60,207 8.73% $61,754 8.95% $63,740 9.21%
Requirement /(4)/........ 20,239 3.00 20,573 3.00 20,635 3.00 20,698 3.00 20,770 3.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess................. $28,999 4.30% $37,727 5.50% $39,392 5.73% $41,056 5.95% $42,970 6.21%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Risk-based capital/(2)/:
Risk-based capital
/(3)//(5)/............... $53,786 14.19% $63,848 16.34% $64,575 16.74% $66,302 17.14% $68,288 17.60%
Requirement.............. 30,331 8.00 30,775 8.00 30,859 8.00 30,943 8.00 31,039 8.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess................. $23,455 6.19% $32,072 8.34% $33,716 8.74% $35,359 9.14% $37,249 9.60%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
___________________________
/(1)/ As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Offering Range of up to 15% as a
result of regulatory considerations, demand for the shares, or changes in
market conditions or general financial and economic conditions following
the commencement of the Offering.
/(2)/ Tangible capital levels are shown as a percentage of tangible assets. Core
capital levels are shown as a percentage of total adjusted assets. Risk-
based capital levels are shown as a percentage of risk-weighted assets.
/(3)/ Pro forma capital levels assume that (i) the Bank funds the
Recognition Plan through purchases in the open market of a number of
shares equal to 4% of the Common Stock sold in the Offering, (ii) the ESOP
purchases 8% of the shares sold in the Offering and (iii) the Mutual
Holding Company is capitalized with $100,000. See "Management of the Bank"
for a discussion of the Recognition Plan and ESOP.
/(4)/ The current core capital requirement for savings associations is 3% of
total adjusted assets. The OTS has proposed core capital requirements that
would require a core capital ratio of 3% of total adjusted assets for
thrifts that receive the highest supervisory rating for safety and
soundness and a 4% to 5% core capital ratio requirement for all other
thrifts. See "Regulation--Federal Regulation of Savings Institutions--
Capital Requirements.
/(5)/ Assumes net proceeds are invested in assets that carry a 50% risk-
weighting.
<PAGE>
EXHIBIT IV-10
Pro Forma Analysis Sheet
Minority Stock Offering
<PAGE>
EXHIBIT IV-10
PRO FORMA ANALYSIS SHEET
Provident Bank
Prices as of September 4, 1998
<TABLE>
<CAPTION>
All SAIF-Insured
Peer Group New York Companies Companies
------------------- -------------------- ----------------
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Median
- --------------- ------ ---------- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 12.73 x 24.62 24.60x 17.70x 16.22x 17.48x 16.65x
Price-book ratio = P/B 81.97% 162.73 159.25% 101.29% 109.00% 126.92% 113.70%
Price-assets ratio = P/A 9.23% 21.11% 20.01% 13.61% 15.74% 16.12% 15.20%
<CAPTION>
Valuation Parameters
--------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $4,578,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $53,879,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $49,788,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Asset (A) $679,104,000 RRP Amount (M) 4.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 4.13% Foundation (F) 0.00%
Tax rate (TAX) 40.00% Tax Benefit (Z) 0
Percentage Sold (PCT) 46.62%
<CAPTION>
Calculation of Pro Forma Value After Conversion
-----------------------------------------------
<S> <C> <C>
1. V= P/E * (Y) V= $65,000,000
----------------------------------------------------------
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= $65,000,000
--------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $65,000,000
--------------------------
1 - P/A * PCT * (1-X-E-M-F)
<CAPTION>
Aggregate
Shares IssShares SolPrice Gross Of Total Shares Market Value
Conclusion MHC Public Share Proceeds Issued of Stock Issued
---------- --- ------ ----- -------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Minimum 2,949,500 2,575,500 10.00 $25,755,000 2,575,500 25,755,000
Midpoint 3,470,000 3,030,000 10.00 30,300,000 3,030,000 30,300,000
Maximum 3,990,500 3,484,500 10.00 34,845,000 3,484,500 34,845,000
Supermaximum 4,589,075 4,007,175 10.00 40,071,750 4,007,175 40,071,750
</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
40.00 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;
amortizationexpenses tax effected at 40.00 percent.
<PAGE>
EXHIBIT IV-11
Pro Forma Effects
Minority Stock Offering
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $25,755,000
Less: Estimated Offering Expenses 1,250,000
-----------
Net Conversion Proceeds $24,505,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $24,505,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 3,090,600
-----------
Net Proceeds Reinvested $21,414,400
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $689,972
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 123,624
Less: Recognition Plan Vesting (4) 123,624
-----------
Net Earnings Increase $442,724
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $4,578,000 $442,724 $5,020,724
12 Months ended June 30, 1998 (core) $4,578,000 $442,724 $5,020,724
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $53,879,000 $21,414,400 $0 $75,293,400
June 30, 1998 (Tangible) $49,788,000 $21,414,400 $0 $71,202,400
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $679,104,000 $21,414,400 $0 $700,518,400
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Mipoint
<TABLE>
<S> <C>
1. Offering Proceeds $30,300,000
Less: Estimated Offering Expenses 1,250,000
-----------
Net Conversion Proceeds $29,050,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $29,050,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 3,636,000
-----------
Net Proceeds Reinvested $25,414,000
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $818,839
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 145,440
Less: Recognition Plan Vesting (4) 145,440
-----------
Net Earnings Increase $527,959
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $4,578,000 $527,959 $5,105,959
12 Months ended June 30, 1998 (core) $4,578,000 $527,959 $5,105,959
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $53,879,000 $25,414,000 $0 $79,293,000
June 30, 1998 (Tangible) $49,788,000 $25,414,000 $0 $75,202,000
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $679,104,000 $25,414,000 $0 $704,518,000
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Maximum
<TABLE>
<S> <C>
1. Offering Proceeds $34,845,000
Less: Estimated Offering Expenses 1,250,000
-----------
Net Conversion Proceeds $33,595,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $33,595,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 4,181,400
-----------
Net Proceeds Reinvested $29,413,600
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $947,706
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 167,256
Less: Recognition Plan Vesting (4) 167,256
-----------
Net Earnings Increase $613,194
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $4,578,000 $613,194 $5,191,194
12 Months ended June 30, 1998 (core) $4,578,000 $613,194 $5,191,194
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $53,879,000 $29,413,600 $0 $83,292,600
June 30, 1998 (Tangible) $49,788,000 $29,413,600 $0 $79,201,600
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $679,104,000 $29,413,600 $0 $708,517,600
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Supermaximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $40,071,750
Less: Estimated Offering Expenses 1,250,000
-----------
Net Conversion Proceeds $38,821,750
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $38,821,750
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 4,808,610
-----------
Net Proceeds Reinvested $34,013,140
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $1,095,903
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 192,344
Less: Recognition Plan Vesting (4) 192,344
-----------
Net Earnings Increase $711,215
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $4,578,000 $711,215 $5,289,215
12 Months ended June 30, 1998 (core) $4,578,000 $711,215 $5,289,215
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $53,879,000 $34,013,140 $0 $87,892,140
June 30, 1998 (Tangible) $49,788,000 $34,013,140 $0 $83,801,140
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
----------- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
30-Jun-98 $679,104,000 $34,013,140 $0 $713,117,140
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
EXHIBIT V-1
RP Financial, LC.
Firm Qualifications Statement
<PAGE>
[RP FINANCIAL, LC. LETTERHEAD APPEARS HERE] FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws
from backgrounds in consulting, regulatory agencies and investment banking,
thereby providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (18)
William E. Pommerening, Managing Director (14)
Gregory E. Dunn, Senior Vice President (16)
James P. Hennessey, Senior Vice President (13)
James J. Oren, Senior Vice President (11)
<PAGE>
Exhibit 99.5
PROVIDENT BANCORP, INC. STOCK OFFERING
TABLE OF CONTENTS
-----------------
CORRESPONDENCE
- --------------
Letter To VRD Members (Eligible to Vote)
Letter To Closed ERD and SERD Accounts (Can Buy, Not Vote)
Potential Investor Letter (Call - Ins and Prospects)
Ryan, Beck "Broker Dealer" Letter
Stock Order Acknowledgment Letter
Stock Certificate Mailing Letter
Stockgram
Proxygram
ADVERTISEMENTS
- --------------
Tombstone Newspaper Advertisement, if desired
Lobby Poster
BROCHURES
- ---------
Invitation (and Lobby Poster)
Marketing Folder and Mission Statement
Q&A Brochure
FORMS
- -----
Stock Order Form
Proxy Card
<PAGE>
LETTER TO MEMBERS ELIGIBLE TO VOTE
[Provident Bancorp Letterhead]
Dear Customer:
It is my pleasure to inform you of an investment opportunity and to request your
vote on our plan of corporate reorganization (The "Plan"). Pursuant to the
Plan, our organization will change from a mutual ("mutual", meaning no
stockholders) corporate structure to a mutual holding company corporate
structure, under which our organization will become partially stockholder-owned.
To effect the change, we are forming Provident Bancorp, Inc., a stock holding
company that will serve as Provident Bank's parent corporation. We will also
establish Provident Bancorp, MHC, a mutual holding company, which will be issued
the majority of Provident Bancorp, Inc.'s outstanding shares of common stock.
Up to __________ additional shares of Provident Bancorp, Inc. stock is now being
offered for sale to investors at a purchase price of $10 per share. Creation of
the two holding companies will increase our business flexibility, and the funds
raised in the Offering will increase our already strong capital base, to support
continued growth and expansion of products and services.
THE VOTE:
- ---------
YOUR VOTE IS IMPORTANT. We have received conditional regulatory approval, but
in order for us to implement the Plan, we must also receive the approval of
Provident Bank's customers eligible to vote on the Plan. Included herein is a
Proxy Statement describing the Plan and the business reasons for the change in
corporate structure. PLEASE VOTE AND SIGN THE PROXY CARD(S). PLEASE MAIL THE
CARD(S) IN THE ENCLOSED PROXY RETURN ENVELOPE, TO BE RECEIVED BY 10:00 A.M., NEW
YORK TIME, ON _________, 1998.
Our Board of Directors would like you to note that:
- - Not voting must be treated the same as voting against the Plan, so your
vote is very important. I hope you join our Board members in voting IN
FAVOR of the Plan.
- - Voting does not obligate you to purchase stock in the Offering.
The Plan will not result in changes to the account numbers or terms of your
deposit accounts or loans. Your deposit accounts will continue to be
insured by the FDIC.
- - The Plan does not involve outside companies or persons. Provident Bank
will remain independent and community-oriented. You will continue to enjoy
the same services in the same offices with the same staff.
THE STOCK OFFERING:
- -------------------
AS AN ELIGIBLE CUSTOMER OF PROVIDENT BANK, YOU HAVE A PURCHASE PRIORITY (BUT NO
OBLIGATION) TO BUY IN THE OFFERING. Those who purchase common stock in the
Offering will share the potential for
(over)
<PAGE>
LETTER TO MEMBERS ELIGIBLE TO VOTE
Page 2
earnings and capital growth through possible receipt of dividends and possible
appreciation in the market value of the stock. There can, of course, be no
assurance that such benefits will be attained. Please read the enclosed
Prospectus carefully before making an investment decision.
If you would like to place an order for common stock, you may do so WITHOUT
PAYING A SALES COMMISSION. Please complete the enclosed Stock Order Form and
return it in the Stock Order Return Envelope, along with payment or
authorization to withdraw funds (without penalty for early withdrawal) from any
-------
Provident Bank passbook or certificate account(s) that you may have. ORDERS
MUST BE RECEIVED BY 10:00 A.M., NEW YORK TIME, ON ______, 1998.
IF YOU WISH TO PURCHASE STOCK THROUGH AN EXISTING PROVIDENT BANK IRA OR ANY
OTHER IRA YOU MAY HAVE, PLEASE CALL THE STOCK INFORMATION CENTER PROMPTLY, AS
IRA-RELATED PROCEDURES REQUIRE ADDITIONAL PROCESSING TIME.
Upon consummation of the Offering, we expect that Provident Bancorp, Inc. common
stock will be quoted on the Nasdaq National Market under the symbol "PBCP".
IF YOU HAVE ANY QUESTIONS, PLEASE REFER TO THE ENCLOSED QUESTION AND ANSWER
BROCHURE OR CALL OUR STOCK INFORMATION CENTER AT THE NUMBER SHOWN BELOW.
I hope that you will take advantage of this opportunity to share in our future.
Sincerely,
George Strayton
President and Chief Executive Officer
THIS LETTER IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY
COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS. THE SHARES OF COMMON
STOCK ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
- --------------------------------------------------------------------------------
QUESTIONS?
STOCK INFORMATION CENTER
(914) ___-____
9:00 A.M. TO 4:00 P.M., MONDAY THROUGH FRIDAY
LOCATED AT 400 RELLA BOULEVARD, MONTEBELLO
<PAGE>
LETTER TO CLOSED ACCOUNTS (Can Buy, Not Vote)
[Provident Bancorp Letterhead]
Dear Friend:
It is my pleasure to inform you of an investment opportunity. Provident Bank,
currently a mutual saving bank ("mutual", meaning no stockholders), is in the
process of changing to the mutual holding company corporate structure, whereby
our organization will become partially stockholder-owned. To effect the change,
Provident Bancorp, Inc., a stock holding company that we are organizing to serve
as Provident Bank's parent, is conducting an offering of up to _______ shares of
its common stock at a purchase price of $10 per share.
AS AN ELIGIBLE DEPOSITOR OF PROVIDENT BANK ON DECEMBER 31, 1996, OR SEPTEMBER
30, 1998 WHOSE ACCOUNT WAS CLOSED THEREAFTER, YOU HAVE A PURCHASE PRIORITY IN
THE OFFERING. Please read the enclosed Prospectus carefully before making an
investment decision. If you choose to participate in the Offering, you may do
so WITHOUT PAYING A SALES COMMISSION. Please complete the enclosed Stock Order
Form and return it in the Stock Order Return Envelope, along with payment.
ORDERS MUST BE RECEIVED BY 10:00 A.M., NEW YORK TIME, ON __________, 1998.
IF YOU WISH TO PURCHASE STOCK THROUGH AN IRA, PLEASE CALL THE STOCK INFORMATION
CENTER PROMPTLY, AS IRA-RELATED PROCEDURES REQUIRE ADDITIONAL PROCESSING TIME.
Upon consummation of the Offering, we expect that Provident Bancorp, Inc.,
common stock will be quoted on the Nasdaq National Market under the symbol
"PBCP".
IF YOU HAVE ANY QUESTIONS, PLEASE REFER TO THE ENCLOSED QUESTION AND ANSWER
BROCHURE OR CALL THE STOCK INFORMATION CENTER AT THE NUMBER SHOWN BELOW.
I hope that you will take advantage of this opportunity to share in our future.
Sincerely,
George Strayton
President and Chief Executive Officer
THIS LETTER IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY
COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS. THE SHARES OF COMMON
STOCK ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
- --------------------------------------------------------------------------------
QUESTIONS?
STOCK INFORMATION CENTER
(914) ___-____
9:00 A.M. TO 4:00 P.M., MONDAY THROUGH FRIDAY
LOCATED AT 400 RELLA BOULEVARD, MONTEBELLO
<PAGE>
POTENTIAL INVESTOR LETTER
[Provident Bancorp Letterhead]
Dear Friend:
I am pleased to provide you an opportunity to learn about Provident Bancorp,
Inc. and its offering of up to _______ shares of common stock at a purchase
price of $10 per share.
Please read the enclosed Prospectus carefully before making an investment
decision. If you choose to participate in the Offering, you may do so WITHOUT
PAYING A SALES COMMISSION. Please complete the enclosed Stock Order Form and
return it in the Stock Order Return Envelope, along with payment. ORDERS MUST
BE RECEIVED BY 10:00 A.M., NEW YORK TIME, ON _______, 1998.
IF YOU WISH TO PURCHASE COMMON STOCK THROUGH AN IRA, PLEASE BE SURE TO CALL THE
STOCK INFORMATION CENTER PROMPTLY, AS IRA-RELATED PROCEDURES REQUIRE ADDITIONAL
PROCESSING TIME.
Upon consummation of the Offering, we expect that Provident Bancorp, Inc. common
stock will be quoted on the Nasdaq National Market under the symbol "PBCP".
IF YOU HAVE ANY QUESTIONS, PLEASE REFER TO THE ENCLOSED QUESTION AND ANSWER
BROCHURE OR CALL THE STOCK INFORMATION CENTER AT THE NUMBER SHOWN BELOW.
Thank you for your interest in the stock offering.
Sincerely,
George Strayton
President and Chief Executive Officer
THIS LETTER IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY
COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS. THE SHARES OF COMMON
STOCK ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
- --------------------------------------------------------------------------------
QUESTIONS?
STOCK INFORMATION CENTER
(914) ___-____
9:00 A.M. TO 4:00 P.M., MONDAY THROUGH FRIDAY
LOCATED AT 400 RELLA BOULEVARD, MONTEBELLO
<PAGE>
RYAN, BECK "BROKER DEALER" LETTER
[Ryan, Beck Letterhead]
Dear Sir/Madam:
At the request of Provident Bancorp, Inc., we are enclosing materials regarding
the offering of Provident Bancorp, Inc. common stock. The materials include a
Prospectus and Question and Answer Brochure describing the stock offering.
Ryan, Beck & Co., Inc., has been retained by Provident Bancorp, Inc. as selling
agent in connection with the stock offering.
We have been asked to forward these materials to you in view of certain
regulatory requirements and the securities laws of your state.
Sincerely,
[LOGO OF RYAN, BECK & CO.]
THIS LETTER IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY
COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS. THE SHARES OF COMMON
STOCK ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
______________________________
NOTE: To accompany one of the preceding letters for prospects in states where
the offer must be made by a broker-dealer.
<PAGE>
STOCK ORDER ACKNOWLEDGEMENT LETTER
[imprint name & address as shown on Stock Order Form as completed by the
subscriber]
Dear Friend:
We are pleased to confirm the receipt of your order and payment for _______
shares of Provident Bancorp, Inc. common stock.
The stock certificate will be registered in the name(s) shown above in the event
that your order is filled in whole or in part. Please verify the spelling and
accuracy of your name and address. All subsequent mailings, including your
stock certificate, will be mailed to that address. If this information is
incorrect, please contact us, promptly, in the Stock Information Center at (914)
___-____, from 9:00 a.m. to 4:00 p.m., Monday through Friday.
Please note that, although the Offering period ends at 10:00 a.m., New York
time, on __________, 1998, we are required to receive final regulatory approval
before stock certificates can be mailed or trading in the stock begins. This
type of approval may take two to three weeks. Your stock certificate cannot be
mailed until such approval is received.
THIS ACKNOWLEDGMENT THAT YOUR ORDER AND PAYMENT HAVE BEEN RECEIVED IS NOT A
GUARANTEE THAT YOUR ORDER WILL BE FILED, EITHER COMPLETELY OR PARTIALLY. IN THE
EVENT THAT WE RECEIVE ORDERS FOR MORE SHARES OF STOCK THAN ARE AVAILABLE, SHARES
WILL BE ALLOCATED AS DESCRIBED IN THE PROSPECTUS, DATED ___________, 1998.
Timing updates as to when trading will commence can be obtained while regulatory
approval is pending. Just call the Stock Information Center at (914) ___-____.
______________________________
NOTE: Printed and mailed by data processing agent or by the Stock Information
Center.
<PAGE>
STOCK CERTIFICATE MAILING LETTER
[Provident Bancorp, Inc.]
Dear Stockholder:
I would like to welcome you as a stockholder of Provident Bancorp, Inc. A total
of ___________ shares were purchased by investors at $10.00 per share.
Your stock certificate is enclosed. Please review it to make sure the
registration name is correct. If you find an error or have questions about your
certificate, please call our Transfer Agent:
Registrar & Transfer Company
10 Commerce Drive
Cranford, NJ 07016
[Contact and phone]
If the original stock certificate must be forwarded for reissue, it is
recommended that it be sent to the Transfer Agent by registered mail. If you
should change your address, please notify the Transfer Agent immediately so you
will continue to receive all stockholder communications.
If you paid for your shares by check or money order, you may have received, or
soon will receive, a check representing interest earned on your funds. Interest
payments were calculated at Provident Bank's passbook rate ( %) from the date
your funds were received until ________, 1998. If you paid for your shares by
authorizing on your Stock Order Form a withdrawal from a Provident Bank passbook
or certificate account, that withdrawal has now been made. Interest was earned
at your account's contractual rate and credited to your account through the date
of withdrawal.
We thank you for your participation in our Offering.
Sincerely,
George Strayton
President and Chief Executive Officer
__________________
NOTE: Mailed by transfer agent, with stock certificate.
<PAGE>
STOCKGRAM
PROVIDENT BANCORP, INC. [LOGO]
S T O C K G R A M
TIME IS RUNNING OUT FOR YOU TO PURCHASE STOCK IN PROVIDENT BANCORP, INC.'S
OFFERING OF COMMON STOCK.
THIS IS A REMINDER THAT YOUR OPPORTUNITY TO PURCHASE STOCK IN OUR OFFERING
EXPIRES AT 10:00 A.M., NEW YORK TIME, ________, 1998.
YOU SHOULD HAVE RECENTLY RECEIVED A PROSPECTUS AND STOCK ORDER FORM. HOWEVER,
ENCLOSED HEREIN ARE ANOTHER STOCK ORDER FORM AND POSTAGE-PAID ORDER REPLY
ENVELOPE. IF YOU WISH TO PURCHASE, THE STOCK ORDER FORM AND PAYMENT MUST BE
RECEIVED BY 10:00 A.M., NEW YORK TIME, ON ________, 1998.
IF YOU HAVE ALREADY PLACED AN ORDER FOR PROVIDENT BANCORP, INC. STOCK, PLEASE
DISREGARD THIS NOTICE.
QUESTIONS?
CALL THE STOCK INFORMATION CENTER AT (914) ___-____, FROM 9:00 A.M. TO 4:00
P.M., MONDAY THROUGH FRIDAY.
THIS NOTICE IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY
COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS. THE SHARES OF COMMON
STOCK ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
PROXYGRAM
R E M I N D E R
WE REQUEST YOUR VOTE!
(NOT VOTING HAS THE SAME EFFECT AS VOTING AGAINST THE PLAN)
-------
IN ORDER TO IMPLEMENT PROVIDENT BANK'S REORGANIZATION PLAN, WE MUST RECEIVE A
MAJORITY OF OUR ELIGIBLE CUSTOMERS' VOTES IN FAVOR OF THE PLAN, WHICH AUTHORIZES
OUR STOCK OFFERING.
You should have recently received our package including a Proxy Statement
describing the Plan. If you have not returned the Proxy Card(s) that we
included therein, please mark, sign, and mail the enclosed replacement Proxy
---- ---- ----
Card, using the enclosed Reply Envelope.
If you recently mailed your proxy card(s), please accept our thanks and
disregard this request.
VOTING DOES NOT OBLIGATE YOU TO PURCHASE STOCK IN OUR STOCK OFFERING.
WE HOPE YOU WILL VOTE YOUR PROXY CARD "FOR" THE PLAN
---
(IF YOU RECEIVE MORE THAN ONE OF THESE REMINDER MAILINGS, PLEASE VOTE EACH PROXY
CARD RECEIVED. NONE ARE DUPLICATES!)
QUESTIONS?
Please call our Information Center at (914) ___-____ 9:00 a.m. to 4:00 p.m.,
Monday through Friday.
PROVIDENT BANK [LOGO]
<PAGE>
TOMBSTONE NEWSPAPER ADVERTISEMENT (Optional)
PROVIDENT BANCORP, INC. [LOGO]
HOLDING COMPANY FOR PROVIDENT BANK
UP TO __________ SHARES
COMMON STOCK
$10 PER SHARE
PURCHASE PRICE
Provident Bancorp, Inc., newly organized to be the holding company of Provident
Bank, is conducting an offering of common stock. Shares may be purchased
directly from Provident Bancorp, Inc. during the offering period.
THIS OFFERING EXPIRES ON ___________, 1998
To receive a Prospectus, please call the Stock Information Center at (914) ___-
____ from 9:00 a.m. to 4:00 p.m., Monday through Friday.
THIS ADVERTISEMENT IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO
BUY COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS. THE SHARES OF
COMMON STOCK ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
LOBBY POSTER
PROVIDENT BANCORP [LOGO]
HOLDING COMPANY FOR PROVIDENT BANK
UP TO ________ SHARES
COMMON STOCK
$10 PER SHARE
PURCHASE PRICE
WE ARE CONDUCTING AN OFFERING OF COMMON STOCK!
This offering expires at 10:00 a.m. on _______________, 1998.
If you have any questions or to obtain a copy of the Prospectus, please call our
Stock Information Center at (914) ___-____, from 9:00 a.m. to 4:00 p.m., Monday
through Friday.
Our Stock Information Center is located at 400 Rella Boulevard, Montebello.
THIS NOTICE IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY
COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS. THE SHARES OF COMMON
STOCK ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
INVITATION AND LOBBY POSTER
(can also be basis of newspaper ad)
- -----------------------------------
YOU ARE CORDIALLY INVITED. . .
TO A COMMUNITY INVESTOR MEETING AND RECEPTION
to learn about the business focus of
Provident Bancorp, Inc.,
parent of Provident Bank,
and its common stock offering
[Put locations here]
___________, 1998
and
___________, 1998
7:00 p.m.
LIGHT REFRESHMENTS SERVED
SEATING IS LIMITED
Please call to make your reservation.
(914) _______________
PROVIDENT BANCORP [LOGO]
THIS INVITATION IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO
BUY COMMON STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS. THE SHARES OF
COMMON STOCK ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
MARKETING FOLDER AND MISSION STATEMENT
AN INVESTMENT OPPORTUNITY . . . . . .
<PAGE>
Values and Beliefs Statement
PROVIDENT BANK . . .
is dedicated to being a full service community bank with the
highest standard of corporate values, including integrity, respect,
honesty, and fairness to its employees and customers.
WE BELIEVE . . .
. . . in being fair and straightforward in our personal and
professional conduct and in expecting the same from others.
. . . that we should conduct ourselves with the highest level of
honesty, fairness and integrity in order to earn the trust of
all our customers, co-workers and the community.
. . . that everybody should have the opportunity to express
themselves, to be taken seriously and to grow both
professionally and personally.
. . . with passion, in satisfying our customers' needs and in
building our community through high quality, efficient and
friendly service to every customer.
. . . that our people are our most important asset.
. . . that we should always treat all people as we would like to be
treated.
. . . in teamwork. We are proud to be on the Provident Team.
. . . in the continuous pursuit of excellence.
. . . in doing what is right each and every time, even when it is
not to our benefit.
. . . in showing respect by listening to, helping and encouraging
each other and our customers.
. . . in personal accountability for our actions and in honoring
all our commitments.
. . . in honest, candid and prompt communications that include all
appropriate people.
. . . in recognizing and celebrating the accomplishments and successes
of our people.
. . . that Provident Bank is a good place to do business with and
to work for.
<PAGE>
Q & A
(LOGO)
<PAGE>
THIS PAMPHLET WILL ANSWER QUESTIONS ABOUT 1) PROVIDENT BANK'S CORPORATE
REORGANIZATION AND 2) PURCHASING STOCK IN PROVIDENT BANCORP, INC.'S STOCK
OFFERING. THE REORGANIZATION AND THE OFFERING ARE REFERRED TO HEREIN AS THE
"TRANSACTION" AND ARE DETAILED IN THE PROVIDENT BANK'S PLAN OF CORPORATE
REORGANIZATION (THE "PLAN").
THE TRANSACTION
Pursuant to the Plan, Provident Bank (the "Bank") is changing its legal form
of organization from a mutual ("mutual", meaning no stockholders) savings bank
to a stock savings bank that will be a wholly-owned subsidiary of Provident
Bancorp, Inc., (the "Company"), a stock holding company. In addition, the Bank
will organize Provident Bancorp, MHC, a mutual holding company, which will own
the majority of common stock of the Company. As a result of the Offering,
investors will own a minority of the Company's common stock.
The Plan has received conditional regulatory approval, subject, primarily,
to approval by customers of the Bank eligible to vote on the Plan. These
customers have been provided with Proxy Cards and Proxy Statements describing
the Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU JOIN US IN VOTING IN
FAVOR OF THE PLAN.
VOTING ON THE PLAN DOES NOT OBLIGATE YOU TO PURCHASE STOCK.
Implementing the Plan will result in a change to our legal form of corporate
structure, but it will not result in changes to customer accounts, staff or
management.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
WHAT ARE THE REASONS FOR THE REORGANIZATION?
A.
We believe that the Reorganization will allow the Bank to better serve our
customers in the future. Because the mutual holding company corporate
structure provides savings banks with increased operating flexibility, the
Bank will be better positioned to respond to future regulatory changes, to
compete with other financial institutions and to take advantage of
business opportunities.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1
<PAGE>
Q.
WHAT ARE THE EXPECTED BENEFITS OF THE REORGANIZATION AND OFFERING?
A.The Transaction that we are undertaking has become common to savings banks
in recent years and is integral to the future of our organization.
. By selling some of its shares of common stock to investors in the
Offering, the Company will become partially publicly-owned. Customers
of the Bank and others who participate in the Offering will become
stockholders, sharing in the future of our organization.
. Proceeds raised in the sale of common stock in the Offering will
benefit our organization by i) providing funds for Provident Bank to
lend and invest and ii) increasing our capital base, which will
facilitate continued growth and expanded products and services.
. The mutual holding company structure i) allows for capital-raising
alternatives, such as selling common stock of our organization and ii)
can facilitate growth by providing the mechanism to acquire financial
institutions and diversity operations. NO ACQUISITION OR
DIVERSIFICATION PLANS CURRENTLY EXIST.
The Transaction may seem complicated, but its purpose is simple. The
practical result will be to enhance our ability to thrive as an
independent, competitive community-oriented financial institution.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.WILL THE TRANSACTION HAVE ANY EFFECT ON MY DEPOSIT ACCOUNT OR LOAN ACCOUNT
WITH PROVIDENT BANK?
A.
No. The Transaction will not affect the account number, amount, interest
rate or withdrawal rights of deposit accounts, which will continue to be
insured by the Federal Deposit Insurance Corporation (FDIC) to the maximum
legal limit. Likewise, the loan accounts and rights of borrowers will not
be affected.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
MAY THE ORGANIZATION CONDUCT FUTURE STOCK OFFERINGS?
A.
Yes. The Plan authorizes Provident Bancorp, Inc. to offer shares of stock
for sale to investors in the future. Importantly, as long as the mutual
holding company corporate structure remains in place, Provident Bancorp,
MHC must remain the Company's majority stockholder, owning over 50% of the
outstanding voting
2
<PAGE>
stock. (As part of the Reorganization, Provident Bancorp, MHC will acquire
53.4% of the stock of the Company.) As a result of the mutual holding
company's ownership requirement, minority stockholders (investors) must
own less than 50% of the Company's outstanding voting stock. This investor
ownership limitation ensures that the Bank can remain independent and
community- oriented. It cannot be sold by stockholders.
Although we have no present intention to do so, the Reorganization
preserves the flexibility for the mutual holding company structure to be
replaced by the fully stock form of corporate structure. In a "full"
conversion, 100% of the shares of outstanding voting stock are owned by
investors. Such a corporate change and related stock offering would again
require obtaining the approval of regulators and the Bank's customers.
.
BUSINESS AS USUAL
Q.WILL THE REORGANIZATION RESULT IN CHANGES TO THE BANK'S STAFF OR MY DE-
POSIT AND LOAN ACCOUNTS?
A.No. The Reorganization will change our corporate form of organization, but
not our business relationships! We are not affiliating with another
company. Our Bank's name will not change. Our employees will continue to
serve our customers. The directors of the Bank will continue in their
current capacity and will also serve as the initial directors of the two
new holding companies.
.
VOTING--YOUR PROMPT VOTE IS IMPORTANT
PURSUANT TO REGULATORY REQUIREMENTS, CERTAIN CUSTOMERS OF PROVIDENT BANK ARE
REQUESTED TO VOTE ON THE PLAN.
Q.
WHO IS ELIGIBLE TO VOTE ON THE PLAN?
A.
Depositors of Provident Bank on October 30, 1998 and borrowers at that
date whose loans were outstanding as of July 9, 1998, are "members" of the
Bank eligible to vote. Members have been provided with a Proxy Statement
describing the Plan and with Proxy Card(s) on which to record their vote.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3
<PAGE>
Q.WHAT VOTE IS REQUIRED FOR APPROVAL OF THE PLAN?
A.As stipulated by regulatory requirements, the affirmative vote of a
majority of the total votes eligible to be cast is required for approval
of the Plan by members. Because of this high requirement, your vote is
very important.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.WHAT HAPPENS IF I DON'T VOTE?
A.
Without sufficient votes cast IN FAVOR of the Plan, the Reorganization and
the Offering cannot be completed. Funds submitted in the Offering by
investors would be returned. NOT VOTING WILL HAVE THE SAME EFFECT AS A
VOTE AGAINST THE PLAN, so our Board of Directors urges you to join them in
voting IN FAVOR of the Plan. Return the signed Proxy Card(s) using the
enclosed Proxy Return Envelope or by hand-delivery to a Provident Bank
office. Please return the card(s) promptly!
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.AM I REQUIRED TO PURCHASE STOCK IF I VOTE ON THE PLAN?
A.No. Voting on the Plan does not obligate you to purchase stock in the
Offering. To make a purchase, you must submit a Stock Order Form and
payment, as described in the "Purchasing Stock" section of this brochure.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
HOW MANY VOTES DO I HAVE?
A.Each depositor member will be entitled to cast one vote for each $100 or
fraction thereof of the withdrawable value of deposit accounts in the Bank
as of October 30, 1998. Each borrower member will be entitled to cast one
vote in the aggregate for all loans as a borrower, in addition to the
votes he or she is entitled to cast as a depositor. No member, however,
may cast more than 1,000 votes.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
WHY DID I RECEIVE SEVERAL PROXY CARDS?
A.
If you have more than one account at Provident Bank, you may have received
more than one Proxy Card, depending on the ownership structure of your
accounts. Please promptly complete, sign and submit all Proxy Cards that
you received. None are duplicates.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4
<PAGE>
.
PURCHASING STOCK
INVESTMENT IN COMMON STOCK INVOLVES CERTAIN RISKS. BEFORE MAKING AN INVESTMENT
DECISION, PLEASE CAREFULLY READ THE PROSPECTUS, INCLUDING THE "RISK FACTORS"
SECTION.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.WHO MAY PURCHASE COMMON STOCK IN THE OFFERING?
A.No one is obligated to purchase stock, however, as described in detail in
the Prospectus, non-transferrable subscription rights to subscribe for
stock have been granted in the SUBSCRIPTION OFFERING, providing for the
following order of purchase priority: (i) Provident Bank depositors with
aggregate deposits of $50 or more as of December 31, 1996; (ii) Provident
Bank's Employee Stock Ownership Plan; (iii) Provident Bank depositors with
aggregate deposits of $50 or more as of September 30, 1998; (iv) Provident
Bank depositors as of October 30, 1998, and borrowers as of that date
whose loans were outstanding as of July 9, 1998 and (v) Provident Bank's
directors, officers and employees.
Shares unsold in the Subscription Offering may be offered in a COMMUNITY
OFFERING to the general public.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.ARE MY SUBSCRIPTION RIGHTS AS AN ELIGIBLE DEPOSITOR OR BORROWER TRANSFER-
ABLE?
A.
No. Any attempt to transfer subscription rights to any other person is
illegal and subject to fines. The Bank and the Company intend to prosecute
any attempt to transfer subscription rights.
If anyone offers to give you money to buy stock in your name, in exchange
for later transferring the stock or requests to share in proceeds upon
your future sale of Provident Bancorp, Inc. stock, please inform our Stock
Information Center at (914) 369-8550.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
HOW MANY SHARES OF STOCK ARE BEING OFFERED, AND WHAT IS THE PRICE PER
SHARE?
A.
Provident Bancorp is offering between 2,575,000 and 3,484,500 shares (the
"Offering Range"), subject to a possible 15% increase to 4,007,125 shares.
All purchasers will pay $10 per share. NO SALES COMMISSION WILL BE
CHARGED.
5
<PAGE>
The Offering Range is based on an independent appraisal of the pro forma
market value of our organization after the Transaction, estimated to be
between $55,250,000 million and $74,750,000 at , 1998. Based on the
appraisal, between 5,525,000 million and 7,475,000 shares will be issued.
Provident Bancorp, MHC will own 53.4% of the outstanding shares, while
investors in the Offering will acquire 46.6% of the outstanding shares.
You will not be permitted to change your order, unless, as a result of a
result of a revised appraisal, less than 2,575,500 or more than 4,077,175
shares are sold in the Offering.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.WHEN DOES THE OFFERING TERMINATE
A.The Offering will terminate at noon, New York time, DECEMBER 17, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
HOW DO I PURCHASE PROVIDENT BANCORP COMMON STOCK IN THE OFFERING
A.Please carefully read and complete the Stock Order Form. You may hand-
deliver the Stock Order Form to any Provident Bank office, or you may use
the enclosed Stock Order Return Envelope. NO SALES COMMISSION WILL BE
CHARGED FOR THE PURCHASE OF SHARES DURING THE OFFERING. Payment, at $10
per share, may be made by check or money order or by authorization of
withdrawal from your Provident Bank passbook or certificate account(s)
(i.e. non-transaction deposit accounts). Withdrawal will not be made until
consummation of the Transaction, but the designated funds will not be
available for your use in the interim. ANY APPLICABLE PENALTY FOR EARLY
WITHDRAWAL FROM PROVIDENT BANK CERTIFICATES WILL BE WAIVED IF YOU USE
CERTIFICATE FUNDS TO PURCHASE STOCK.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
WILL I RECEIVE INTEREST ON FUNDS I SUBMIT?
A.
Yes. Funds received as check or money order will be cashed immediately and
placed in a segregated account at Provident Bank, and interest will be
paid at the Bank's passbook rate until the Transaction is consummated.
With respect to authorized account withdrawals, interest will continue to
accrue at the account's contractual rate until the Transaction is
consummated.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
6
<PAGE>
Q.ON THE STOCK ORDER FORM, MAY SHARES BE REGISTERED IN SOMEONE ELSE'S NAME?
A.No. Common stock must be registered in the name(s) of the purchaser(s).
Persons purchasing in the Subscription Offering, as described above, must
register the stock only in one or more of the names listed on the
Provident Bank account as of the eligibility date.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.MAY I PURCHASE THE COMMON STOCK USING IRA FUNDS?
A.
Yes. However, if you have an IRA at Provident Bank, you will need to
transfer that existing relationship to an independent trustee authorized
to hold self-directed IRA accounts. Because IRA-related purchases require
additional processing time, we recommend that you call the Stock
Information Center promptly for assistance in transferring your account or
establishing a new self-directed IRA for the purchase of the stock.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.WHAT ARE THE PURCHASE LIMITATIONS IN THE OFFERING?
A.The minimum purchase is 25 shares. No person may purchase in the
Subscription Offering more than $200,000 of stock. No person, together
with associates or persons acting in concert with such person, may
purchase more than $400,000 of stock in all categories of the Offering,
consisting of the Subscription Offering and any Community Offering and
Syndicated Community Offering. The Board of Directors may increase or
decrease the purchase limitations, as described in the Prospectus.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
WHAT WILL HAPPEN TO MY ORDER IF ORDERS ARE RECEIVED FOR MORE STOCK THAN IS
OFFERED FOR SALE?
A.
In the event of oversubscription, available shares must be allocated. The
allocation method depends on the purchase priority category in which the
oversubscription takes place. Please read "The Reorganization and
Offering" section of the Prospectus, which provides details about the
allocation procedure.
If an order cannot be filled, funds remitted by you which are not applied
in full or in part to purchase stock will be promptly refunded, with
interest. If payment was
7
<PAGE>
made by authorization to withdraw funds, the funds not used to purchase
stock will remain in that deposit account, along with accrued interest.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.IS THE COMMON STOCK INSURED BY THE FDIC?
A.NO. COMMON STOCK CANNOT BE INSURED BY PROVIDENT BANK, PROVIDENT BANCORP,
INC., BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. COMMON STOCK IS SUBJECT
TO INVESTMENT RISK, INCLUDING LOSS OF PRINCIPAL INVESTED.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.WILL DIVIDENDS BE PAID ON THE COMMON STOCK?
A.
Although no decision has been made whether to pay dividends, Provident
Bancorp, Inc.'s Board of Directors will consider a policy of paying
quarterly cash dividends. Dividends will be dependent on our
organization's operating results and financial condition. No assurance can
be given that any dividends, either regular or special, will be declared.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.ARE DIRECTORS AND OFFICERS PURCHASING COMMON STOCK IN THE OFFERING?
A.Yes. The 14 directors and executive officers intend to purchase an
aggregate of 330,000 shares, or $3,300,000 in the Offering.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
MAY I OBTAIN A LOAN FROM PROVIDENT BANK TO PAY FOR MY COMMON STOCK SHARES?
A.
No. Provident Bank may not make loans for this purpose, but other
financial institutions may be able to make such loans.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Q.
WHEN WILL I RECEIVE MY STOCK CERTIFICATE FOR SHARES I PURCHASED IN THE OF-
FERING?
A.
Stock certificates will be mailed to investors as soon as practicable
after the Transaction is consummated. Please be aware that you may not be
able to sell the shares you purchased until you have received a stock
certificate.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
8
<PAGE>
Q.HOW MAY I PURCHASE OR SELL SHARES OF PROVIDENT BANCORP, INC. STOCK IN THE
FUTURE?
A.After the Offering is concluded, you may purchase or sell Provident
Bancorp, Inc. stock through a stockbroker or discount brokerage. The
Company has received conditional approval to have its shares quoted on the
Nasdaq National Market under the symbol "PBCP".
There can be no assurance that an active and liquid market for the
Company's stock will develop, and there can be no assurance that
purchasers of shares of common stock in the Offering will be able to sell
those shares at or above the $10 per share purchase price in the Offering.
----------------
QUESTIONS?
Call the Stock Information Center at (914) 369-8550from 9:00 a.m. to 4:00
p.m., Monday through Friday
9
<PAGE>
[Provident Bancorp Logo Appears Here]
Provident Bank and its
Reorganization and Stock Offering
<PAGE>
[Provident Bancorp Logo Appears Here]
This presentation contains forward-looking
statements which involve risks and
uncertainties. The Company's actual results
may differ significantly from the results
discussed in the forward-looking statements.
Factors that might cause such a difference
include, but are not limited to, those discussed
in the "Risk Factors" section of the
Prospectus.
<PAGE>
[Provident Bancorp Logo Appears Here]
Overview of Provident Bank
Serving the financial
needs of Rockland
County Residents since
1888
Offering a broad range of [MAP]
customer focused
services as an alternative
to money center banks
<PAGE>
[Provident Bancorp Logo Appears Here]
Operating Strategy
Community Banking and Customer Service
Growing and Diversifying the Loan Portfolio
Expanding the Retail Banking Franchise
Maintaining Asset Quality
Managing Interest Rate Risk
<PAGE>
[Provident Bancorp Logo Appears Here]
Financial Highlights
(Dollars in Thousands)
<TABLE>
<CAPTION>
At or for the Year Ended Sept. 30,
--------------------------------------- Percent
1997 1998 Change
-------------- ---------- --------
<S> <C> <C> <C>
Total Assets $648,742 $691,068 6.5%
Loans Receivable, Net 404,497 463,667 14.6%
Deposits 546,846 573,174 4.8%
Equity 50,399 55,200 9.5%
Net Income $ 4,598 $ 4,242
Ratios
------
Loans as % Deposits 73.97% 80.89%
ROA 0.72% 0.64%
ROE 9.51% 7.94%
Net Int. Rate Spread 3.92% 3.78%
Net Interest Margin 4.36% 4.28%
</TABLE>
<PAGE>
[Provident Bancorp Logo Appears Here]
Asset Growth
[Bar Graph Appears Here]
($ in Millions)
At September 30,
1994 480.5
1995 526.6
1996 634.3
1997 648.7
1998 691.1
<PAGE>
[Provident Bancorp Logo Appears Here]
Asset Composition
At September 30, 1998
Loans are 67% of Assets and 81% of Deposits
97% of Assets are Earning Assets
[Pie Graph Appears Here]
Loans Receivable, Net 67% Mortgage-Backed Securities 19%
Investment Securities 10% Other Interest Earning Assets 1%
Non-Interest Earning Assets 3%
<PAGE>
[Provident Bancorp Logo Appears Here]
Loan Portfolio Composition
At September 30,
Commercial and Commercial Real Estate Lending
have increased over 75% since 1993
[Pie Graph Appears Here]
One to Four Family Multi-family
Commercial Real Estate Construction and Land
Consumer Loans Commercial Business Loans
<PAGE>
[Provident Bancorp Logo Appears Here]
Asset Quality
At September 30,
Non-Performing Assets as % Assets
[Bar Graph Appears Here]
1994 1995 1996 1997 1998
0.94% 1.29% 1.21% 0.75% 0.94%
Allowance to Non-Performing Loans
[Bar Graph Appears Here]
1994 1995 1996 1997 1998
75.55% 52.59% 52.87% 80.80% 80.33%
<PAGE>
[Provident Bancorp Logo Appears Here]
Deposit Composition
At September 30, 1998
57% of Deposits are Core Deposits
[Pie Chart Appears Here]
Demand Deposits NOW Deposits
Savings Deposits MMDAs
CDs less than $100,000 CDs greater than $100,000
<PAGE>
[Provident Bancorp Logo Appears Here]
Net Income
[Bar Graph Appears Here]
($ in Thousands)
1994 $4,805
1995 $4,803
1996* $2,097
1997 $4,598
1998 $4,242
For the Year Ended September 30,
*Includes after tax impact of the SAIF premium of approximately $2 million.
<PAGE>
[Provident Bancorp Logo Appears Here]
Equity
[Bar Graph Appears Here]
($ In Millions)
1994 $38.6
1995 $43.8
1996 $45.5
1997 $50.4
1998 $55.2
At September 30,
<PAGE>
[Provident Bancorp Logo Appears Here]
Bank Capital Ratios
<TABLE>
<CAPTION>
Pro
Forma
for
Capital
Offering
At June 30, at The
1998 Midpoint
---------------- ----------------
<S> <C> <C>
Tangible Capital 7.32% 10.00%
Required 1.50% 1.50%
----- -----
Excess 5.82% 8.50%
Core Capital 7.32% 10.00%
Req. for Well Capitalized 5.00% 5.00%
----- -----
Excess 2.32% 5.00%
Risk-Based Capital 14.23% 19.02%
Req. for Well Capitalized 10.00% 10.00%
----- -----
Excess 4.23% 9.02%
</TABLE>
<PAGE>
[Provident Bancorp Logo Appears Here]
Recent Developments
[To be addressed]
<PAGE>
[Provident Bancorp Logo Appears Here]
What is a Mutual Holding Company?
_________________ ___________________
| | | | 46.6% of the
53.4% of the | Provident | | Minority | Common
Common | Bancorp, MHC | | Stockholders | Stock
Stock | | | (Including ESOP) |
|_________________| |___________________|
| |
| |
| |
| |
| |
___________________________________________________
| |
| Provident Bancorp, Inc. |
|___________________________________________________|
|
| 100% of the Common Stock
|
___________________________________________________
| |
| Provident Bank |
|___________________________________________________|
<PAGE>
[Provident Bancorp Logo Appears Here]
Why the MHC?
The MHC Structure supports our strategic vision
. Provides Access to Capital Markets
- Strengthens Our Capital Base
. Makes us competitive in attracting and retaining the best talent
. Provides flexibility - we can raise capital according to our
measured, strategic plan
<PAGE>
[Provident Bancorp Logo Appears Here]
The Full Conversion Option
Incremental and Second Step Offerings
. Potential to Raise Additional Capital
. Available to Support our Growth Strategy
There can be no assurance that such a transaction will occur
<PAGE>
[Provident Bancorp Logo Appears Here]
[Logo of Ryan, Beck & Co. Appears Here]
<PAGE>
[Provident Bancorp Logo Appears Here]
The Offering
<TABLE>
<CAPTION>
<S> <C>
Price Per Share $10.00
Minority Ownership Interest 46.6%
Offering Range
Minimum $24.57 million
Midpoint $28.90 million
Maximum $33.24 million
Adjusted Maximum $38.22 million
Symbol PBCP
</TABLE>
<PAGE>
[Provident Bancorp Logo Appears Here]
Approvals Required
Regulatory Approvals
Customer Approval
. Voting Record Date is October 30, 1998
<PAGE>
[Provident Bancorp Logo Appears Here]
Offering Priorities
Depositors as of December 31, 1996 (minimum of $50 )
Employee Benefit Plans (ESOP)
Depositors as of September 30, 1998 (minimum of $50 )
Other Members at the Voting Record Date
Employees, Officers and Directors
Provident Bank's Community
<PAGE>
[Provident Bancorp Logo Appears Here]
Directors and Officers anticipate purchasing
up to $3.3 million, or 9.9% of the
offering at the maximum
<PAGE>
[Provident Bancorp Logo Appears Here]
Dividend Policy
[To be determined]
<PAGE>
[Provident Bancorp Logo Appears Here]
Trading Information
Provident has applied to have the stock traded on the Nasdaq National Market
under the symbol PBCP
Once the securities have been issued they can be traded through a stock broker
<PAGE>
[Provident Bancorp Logo Appears Here]
The Offering Price
<TABLE>
<CAPTION>
Price to Pro Forma Price as % Pro
Earnings* Forma Book Value
-------------------- --------------------
<S> <C> <C>
Minimum 10.1x 71.12%
Midpoint 11.7x 79.55%
Maximum 13.4x 87.18%
Adjusted Maximum 15.0x 95.15%
NY Thrift Institutions
Thrifts Nationwide [To be updated]
MHCs Nationwide
</TABLE>
*Based on the nine months ended June 30, 1998, annualized.
<PAGE>
[Provident Bancorp Logo Appears Here]
Investment Attributes
Strong Management
Profitable, Well Positioned Institution
High Asset Quality
Well Capitalized
Directors and Officers anticipate purchasing
up to $3.3 million, or 9.9% of the offering
<PAGE>
[Provident Bancorp Logo Appears Here]
Important!!!
Please Read the Prospectus
Common Stock is NOT Insured
<PAGE>
[Provident Bancorp Logo Appears Here]
How to Order
Complete and Sign the "Stock Order Form"
Payment
. Enclose a Check, or
. Authorize Withdrawal from Passbook or Certificate Accounts
Order Form and Payment must be RECEIVED on or before noon on December 17, 1998
--------
[Shares ordered through IRAs will require additional time to process]
<PAGE>
[Provident Bancorp Logo Appears Here]
Questions?
The Stock Information Center
Just a Phone Call Away
[Phone Graphic Appears Here]
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Stock Information Center
(914) 369-8550
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EXHIBIT 99.6
PROVIDENT BANCORP, INC.
STOCK ORDER FORM
PLEASE READ AND COMPLETE THIS STOCK ORDER FORM.
INSTRUCTIONS ARE INCLUDED [ON THE REVERSE SIDE OF THIS FORM].
DEADLINE FOR DELIVERY FOR OFFICE USE ONLY
10:00 A.M., NEW YORK TIME, ON , 1998
Please mail the completed Stock Date Rec'd Batch # Order # Deposit
Order Form in the enclosed reply
envelope or hand-deliver to any
Provident Bank office. COPIES AND
FACSIMILES OF STOCK ORDER FORMS
MAY NOT BE ACCEPTED.
(1) NUMBER OF SHARES
NUMBER OF SHARES PRICE PER SHARE TOTAL AMOUNT DUE
X =
$10.00 $
(25 Share Minimum)
(3) PURCHASER INFORMATION
(2) METHOD OF PAYMENT (WIRES WILL NOT BE ACCEPTED)
[_] Check here if you are a Provident
Bank Officer, director or employee.
[_]Enclosed is a check or money CHECK THE ONE BOX WHICH APPLIES:
order payable to PROVIDENT
BANK for $ .
(a)[_] Eligible Account Holder--Check
[_]I authorize Provident Bank here if you were a depositor with an
to withdraw from the aggregate of at least $50 at Provident
PROVIDENT BANK passbook or Bank on DECEMBER 31, 1996. List below
certificate account(s) any account(s) you had at that date.
listed below, and I (b)[_] Supplemental Eligible Account
understand that the amounts Holder--Check here if you were a
I authorize below will not depositor with an aggregate of at
otherwise be available to me least $50 at Provident Bank on
once this Stock Order Form SEPTEMBER 30, 1998, but are not an
is submitted. (THERE WILL BE Eligible Account Holder. List below
NO EARLY WITHDRAWAL PENALTY any account(s) you had September 30,
FOR THE PURCHASE OF STOCK.) 1998.
(c)[_] Other Member--Check here if you
were a depositor of Provident Bank on
, 1998, OR were a borrower at that
date whose loan was outstanding at
July 9, 1998, but you are NOT an
Eligible or Supplemental Eligible
Account Holder.
ACCOUNT NUMBER(S) AMOUNT(S)
--------------- $ (d)[_] The preceding boxes do not apply
--------------- $ to you.
--------------- $
ACCOUNT TITLE (NAME(S) ON THE ELIGIBILITY
DATE)
--------------- $ ACCOUNT
NUMBER(S)
--------------- $
TOTAL WITHDRAWAL: $ ------------------------ ----------------
------------------------ ----------------
(4) STOCK REGISTRATION (PLEASE PRINT CLEARLY) THE REGISTRATION INFORMATION YOU
LIST BELOW WILL BE UTILIZED FOR SUBSEQUENT MAILINGS, INCLUDING THE
REGISTRATION OF STOCK CERTIFICATES. PLEASE MAKE SURE THE INFORMATION IS
COMPLETE AND LEGIBLE. IF REGISTERING SHARES IN MORE THAN ONE NAME, LIST THE
NAME AND ADDRESS OF THE FIRST PERSON NAMED.
NOT LISTING ALL APPLICABLE ACCOUNTS COULD
RESULT IN A LOSS OF ALL OR PART OF YOUR
STOCK ALLOCATION. IF ADDITIONAL SPACE IS
NEEDED, PLEASE ATTACH A SEPARATE PAGE.
------------------------ ----------------
(First Name, Middle Initial, Last Name)
Social Security #/Tax ID# (certificate
will show this number)
- -------------------------------------------------------------------------------
(First Name, Middle Initial, Last Name)
Social Security #/Tax ID#
- -------------------------------------------------------------------------------
(Street Address) (Daytime Phone Number)
- -------------------------------------------------------------------------------
(City, State, Zip Code) (Evening Phone Number)
(5) FORM OF STOCK OWNERSHIP (CHECK ONE--SEE [REVERSE SIDE] OF THIS FORM FOR
OWNERSHIP DEFINITIONS)
[_] Individual [_] Joint Tenants
[_] Tenants in Common [_] Uniform
[_] IRA (for broker use only) Transfer to
[_] Corporation Minors
[_] Fiduciary (Under Agreement Dated ,
19 )
[_] Other
(6) NASD AFFILIATION (CHECK AND INITIAL ONLY IF APPLICABLE.)
[_] Check here and initial below if you are a member of the NASD ("National
Association of Securities Dealers") or a person associated with an NASD
member or a member of the immediate family of any such person to whose
support such person contributes, directly or indirectly, or if you have an
account in which an NASD member, or person associated with an NASD member,
has a beneficial interest. I agree (i) not to sell, transfer or hypothecate
the stock for a period of three months days following issuance; and (ii) to
report this subscription in writing to the applicable NASD member I am
associated with within one day of payment for the stock. (Please initial)
(7) ACKNOWLEDGMENT AND SIGNATURE (VERY IMPORTANT)
I(we) acknowledge receipt of the Prospectus dated , 1998, and that I(we)
have been advised to read the Prospectus (including the section entitled
"Risk Factors"). I(we) understand that, after receipt by Provident Bancorp,
Inc., this order may not be modified or withdrawn without the consent of
Provident Bancorp, Inc. I(we) hereby certify that the shares which are being
subscribed for are for my(our) account only, and that I(we) have no present
agreement or understanding regarding any subsequent sale or transfer of such
shares or any applicable subscription rights and I(we) confirm that my(our)
order does not conflict with the purchase limitations in the Plan of
Reorganization. I(we) acknowledge that the common stock being ordered is not
a deposit or savings account, is not insured by the FDIC and is not
guaranteed by Provident Bancorp, Inc. or any government agency. Under
penalties of perjury, I(we) certify that (1) the Social Security #(s) or Tax
ID#(s) given above is(are) correct; and (2) I(we) am(are) not subject to
backup withholding tax. (You must cross out #2 if you have been notified by
the Internal Revenue Service that you are subject to backup withholding
because of underreporting interest or dividends on your tax return).
PLEASE SIGN AND DATE THIS FORM. ONLY ONE SIGNATURE IS REQUIRED, UNLESS
AUTHORIZING A WITHDRAWAL FROM A PROVIDENT BANK DEPOSIT ACCOUNT REQUIRING MORE
THAN ONE SIGNATURE TO WITHDRAW FUNDS. IF SIGNING AS A CUSTODIAN, CORPORATE
OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE.
- -------------------------------------- ---------------------------------------
Signature Title (if applicable) Date Signature Title (if applicable) Date
THIS ORDER IS NOT VALID UNLESS SIGNED--WE RECOMMEND RETAINING A COPY OF THIS
FORM FOR YOUR RECORDS
QUESTIONS? PLEASE CALL (914) - , FROM 9:00 AM TO 4:00 PM, MONDAY-FRIDAY
STOCK INFORMATION CENTER: PROVIDENT BANK, 400 RELLA BLVD.,
MONTEBELLO, NY 10901
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STOCK ORDER FORM INSTRUCTIONS
(1) NUMBER OF SHARES -- Indicate the number of shares of Provident Bancorp,
Inc. common stock that you wish to purchase, and indicate the amount due. The
minimum purchase is 25 shares or $250. No person may purchase in the
Subscription Offering more than $200,000 of stock. No person, together with
associates or persons acting in concert with such person, may purchase more
than an aggregate of $400,000 of stock in all categories of the Offering,
consisting of the Subscription Offering and any Community Offering and/or
Syndicated Community Offering. The categories of the Offering are described in
the Prospectus section entitled "The Reorganization and Offering." Provident
Bancorp, Inc. reserves the right to accept or reject orders, in whole or in
part, placed in any Community Offering and Syndicated Community Offering.
Note: Subscription rights to purchase stock in the Subscription Offering are
non-transferable and expire at the conclusion of the Subscription Offering.
(2) METHOD OF PAYMENT -- Payment for shares may be made by check or money
order payable to PROVIDENT BANK. Funds received in this form of payment will
be cashed immediately. You will earn interest at Provident Bank's passbook
rate from the time funds are received until the Offering is consummated.
You may pay for shares by withdrawal from your existing Provident Bank
passbook or certificate account(s). You may NOT authorize withdrawal from
transaction accounts (i.e. checking, money market). Indicate the account
number(s) and the amount(s) to be withdrawn. Funds designated will be
unavailable to you from the time this Stock Order Form is received, however,
the funds will continue to earn interest at the account's contractual rate
until the Offering is consummated.
PLEASE CONTACT THE STOCK INFORMATION CENTER EARLY IN THE OFFERING PERIOD IF
YOU ARE INTENDING TO UTILIZE PROVIDENT BANK IRA FUNDS (OR ANY OTHER IRA FUNDS)
TO MAKE YOUR STOCK PURCHASE.
(3) PURCHASER INFORMATION -- This information is very important because
eligibility dates are utilized to prioritize your order in the event that we
receive orders for more stock than is available. Please see the portion of the
Prospectus entitled "The Reorganization and Offering" for explanation of
purchase priorities and a detailed explanation of how shares will be allocated
in the event the Offering is oversubscribed. FAILURE TO COMPLETE THIS SECTION,
COMPLETING THIS SECTION INCORRECTLY OR OMITTING INFORMATION IN THIS SECTION
COULD RESULT IN A LOSS OF ALL OR PART OF YOUR STOCK ALLOCATION.
(4) STOCK REGISTRATION -- CLEARLY PRINT the name(s) and address in which you
want the stock certificate registered and mailed. If you are exercising
subscription rights by purchasing in the Subscription Offering as a Provident
Bank (i) Eligible Account Holder as of 12/31/96 or (ii) Supplemental Eligible
Account Holder as of 9/30/98 or (iii) Other Member as of / /98, you must
register the stock in the name of at least one of the account holders listed
on the account as of the applicable date. However, adding the name(s) of other
persons who are not account holders, or were account holders only at a later
eligibility date than yourself, will be a violation of your subscription right
and will result in a loss of your purchase priority. NOTE: ONE STOCK
CERTIFICATE WILL BE GENERATED PER ORDER FORM. IF VARIOUS REGISTRATIONS AND
SHARE AMOUNTS ARE DESIRED ON VARIOUS CERTIFICATES, A SEPARATE STOCK ORDER FORM
MUST BE COMPLETED FOR EACH CERTIFICATE DESIRED. Purchase limitations apply to
aggregate purchases.
Enter the Social Security Number or Tax ID Number of the registered owner(s).
The first number listed will be identified with the stock certificate for tax
purposes. Be sure to include at least one phone number, in the event you must
be contacted regarding this Stock Order Form.
(5) FORM OF STOCK OWNERSHIP -- Please check the one type of ownership
applicable to your registration. An explanation of each follows:
GUIDELINES FOR REGISTERING STOCK
For reasons of clarity and standardization, the stock transfer industry has
developed uniform stockholder registrations which we will utilize in the
issuance of your Provident Bancorp, Inc. stock certificate(s). If you have
any questions, please consult your legal advisor.
Stock ownership must be registered in one of the following manners:
- -----------------------------------
INDIVIDUAL: Avoid the use of two initials. Include the first given name,
middle initial and last name of the stockholder. Omit words of
limitation that do not affect ownership rights such as
"special account," "single man," "personal property," etc. If
the stock is held individually upon the individual's death,
the stock will be owned by the individual's estate and
distributed as indicated by the individual's will or otherwise
in accordance with law.
- -----------------------------------
JOINT: Joint ownership of stock by two or more persons shall be
inscribed on the certificate with one of the following types
of joint ownership. Names should be joined by "and"; do not
connect with "or." Omit titles such as "Mrs.," "Dr.," etc.
JOINT TENANTS--Joint Tenancy with Right of Survivorship and
not as Tenants in Common may be specified to identify two or
more owners where ownership is intended to pass automatically
to the surviving tenant(s). TENANTS IN COMMON--Tenants in
Common may be specified to identify two or more owners. When
stock is held as tenancy in common, upon the death of one co-
tenant, ownership of the stock will be held by the surviving
co-tenant(s) and by the heirs of the deceased co-tenant. All
parties must agree to the transfer or sale of shares held in
this form of ownership.
- -----------------------------------
UNIFORM Stock may be held in the name of a custodian for a minor under
TRANSFER TO the Uniform Transfers to Minors laws of the individual states.
MINORS: There may be only one custodian and one minor designated on a
stock certificate. The standard abbreviation of custodian is
"CUST,", while the description "Uniform Transfers to Minors
Act" is abbreviated "UNIF TRAN MIN ACT." Standard U.S. Postal
Service state abbreviations should be used to describe the
appropriate state. For example, stock held by John P. Jones
under the Uniform Transfers to Minors Act will be abbreviated:
JOHN P. JONES CUST SUSAN A. JONES
UNIF TRAN MIN ACT NY
- -----------------------------------
FIDUCIARIES: Stock held in a fiduciary capacity must contain the following:
1. The name(s) of the fiduciary(ies):
--If an individual, list the first given name, middle
initial and last name.
--If a corporation, list the corporate title
--If an individual and a corporation, list the
corporation's title before the individual.
2. The fiduciary capacity:
--Administrator, Conservator, Committee, Executor,
Trustee, Personal Representative, Custodian
3. The type of document governing the fiduciary relationship.
Generally, such relationships are either under a form of
living trust agreement or pursuant to a court order.
Without a document establishing a fiduciary relationship,
your stock may not be registered in a fiduciary capacity.
4. The date of the document governing the relationship. The
date of the document need not be used in the description of
a trust created by a will.
5. Either of the following:
The name of the maker, donor or testator
OR
The name of the beneficiary
Example of Fiduciary Ownership:
JOHN D. SMITH, TRUSTEE FOR TOM A. SMITH
UNDER AGREEMENT DATED 6/9/74
(6) NASD AFFILIATION -- Check the box and initial, if applicable.
(7) ACKNOWLEDGMENT AND SIGNATURE -- Stock order forms submitted without a
signature will not be accepted. Only one signature is required, unless the
method of payment section of this Form includes authorization to withdraw from
a Provident Bank account requiring more than one signature. If signing as a
custodian, trustee, corporate officer, etc., please include your title. If
exercising a Power of Attorney, you must submit a copy of the POA agreement
with this Form.
QUESTIONS? Please call the Stock Information Center at (914) - , from
9:00 a.m. to 4:00 p.m., Monday through Friday.
THE SHARES OF COMMON STOCK ARE NOT DEPOSIT ACCOUNTS AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
EXHIBIT 99.7
PROSPECTUS SUPPLEMENT
PROVIDENT BANCORP, INC.
PROVIDENT SAVINGS BANK
401(K) PLAN
This Prospectus Supplement is being provided to participants (the
"Participants") in the Provident Savings Bank 401(k) Plan (the "Plan").
Provident Bank (the "Bank") is reorganizing from the mutual form of organization
to the mutual holding company form of organization and shares of Common Stock of
Provident Bancorp, Inc. (the "Company") will be issued to certain depositors and
the public (the "Offering"). As a Participant, you may direct the trustee of the
Plan to purchase Company common stock ("Common Stock") in the Offering with
amounts allocated to your account under the Plan. The Plan would invest in
Common Stock through the Provident Bancorp, Inc. Stock Fund ("Employer Stock
Fund"). Since the Plan actually purchases the Common Stock, you would acquire
only a "participation interest" in the shares and would not own the shares
directly. This Prospectus Supplement relates to your initial election to direct
that all or a portion of your account be invested in the Employer Stock Fund in
the Offering. You will be able to provide alternative investment instructions
to the trustee in the event that the Offering is oversubscribed and the total
amount allocated to your account cannot be used by the trustee to purchase
Common Stock. You will be entitled to direct the investment of your account in
the Employer Stock Fund after the Offering is completed.
The Prospectus of the Company dated November __, 1998 (the "Prospectus")
which is attached to this Prospectus Supplement includes detailed information
with respect to the mutual holding company reorganization and related stock
offering, and the financial condition, results of operations and business of the
Bank. This Prospectus Supplement, which provides information with respect to the
Plan, should be read only in conjunction with the Prospectus. Defined terms
have the same meaning as is set forth in the Prospectus.
____________________
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY EACH
PARTICIPANT AS TO AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS"
BEGINNING ON PAGE __ OF THE PROSPECTUS
_____________________
THE INTERESTS IN THE PLAN AND THE OFFERING OF THE COMMON STOCK HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
OFFICE OF THRIFT SUPERVISION, THE SECURITIES AND EXCHANGE COMMISSION, ANY OTHER
FEDERAL OR STATE AGENCY, OR ANY STATE SECURITIES BUREAU OR OTHER STATE AGENCY.
NO OFFICE, CORPORATION, COMMISSION, BUREAU OR OTHER AGENCY HAS PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE PARTICIPATION INTERESTS OFFERED HEREBY ARE NOT (1) SAVINGS ACCOUNTS OR
DEPOSITS; (2) FEDERALLY INSURED OR GUARANTEED, OR (3) GUARANTEED BY THE COMPANY
OR THE BANK. THE PLAN'S ENTIRE INVESTMENT IN COMMON STOCK IS SUBJECT TO LOSS.
The date of this Prospectus Supplement is November __, 1998.
<PAGE>
NOTICE TO PARTICIPANTS IN
PROVIDENT SAVINGS BANK
401(K) PLAN
Attached to this Notice is a copy of the Prospectus and Prospectus
Supplement relating to the offer and sale of participation interests and shares
of common stock, par value $.10 per share (the "Common Stock") of Provident
Bancorp, Inc. (the "Company").
The Provident Savings Bank 401(k) Plan (the "Plan") enables you to direct
the investment of all or a portion of your account balance into one of five
alternative investment funds. In connection with the reorganization of
Provident Bank (the "Bank") from the mutual form of organization to the mutual
holding company form of organization, the Bank established an Employer Stock
Fund as an additional investment option under the Plan. The Prospectus
Supplement has been prepared and distributed to you so that you can make an
informed decision regarding your opportunity to invest all or a portion of your
account balance in the Plan in the Employer Stock Fund. In the event the
offering is oversubscribed and the trustee is unable to use the full amount
allocated by you to purchase Common Stock in the offering, you may either
(i) elect alternative investments from among the five other funds offered, or
(ii) direct the trustee to hold the funds transferred to the Employer Stock
Fund and purchase Common Stock in the open market after the offering. The
other funds selected by the trustees of the Plan in which you may invest
include:
. the Conservative Portfolio
. the Balanced Portfolio
. the Growth Portfolio
. the Aggressive Growth fund
. the Morley Stable Value II
The Plan's feature which allows participants the opportunity to direct the
investment of their account balances is intended to satisfy the requirements of
Section 404(c) of the Employee Retirement Income Security Act of 1974 ("ERISA").
The effect of this is two-fold. First, you will not be deemed a 'fiduciary' by
virtue of your exercise of investment discretion. Second, no person who
otherwise is a fiduciary (for example, the employer, the Plan administrator, or
the Plan's trustee) is liable under the fiduciary responsibility provision of
ERISA for any loss which results from your exercise of control over the assets
in your Plan account.
Because you will be entitled to invest all or a portion of your account
balance in the Plan in the Employer Stock Fund which will be invested in Common
Stock, the regulations under Section 404(c) of ERISA require that the Plan
establish procedures that ensure the confidentiality of your decision to
purchase, hold, or sell employer securities, except to the extent that
disclosure of such information is necessary to comply with federal or state laws
not preempted by ERISA. These regulations also require that your exercise of
voting and similar rights with respect to the Employer Stock Fund be conducted
pursuant to procedures that ensure the confidentiality of your exercise of these
rights. Accordingly, the Plan committee designates Carol Benoist, Executive
Secretary of the Bank, as the person to whom your investment instructions should
be returned. Carol Benoist will transfer your investment instructions directly
to the trustee of the Plan. In the case of an event that involves a potential
for undue employer influence, you will be instructed to return your instructions
directly to the Stock Information Center at ___________________________.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE OFFERING.................................................................................................. 1
Securities Offered....................................................................................... 1
Election to Purchase Common Stock in the Offering; Priorities............................................ 1
Value of Participation Interests......................................................................... 2
Method of Director Transfer.............................................................................. 2
Time for Directing Transfer.............................................................................. 2
Irrevocability of Transfer Direction..................................................................... 2
Direction to Purchase Common Stock After the Offering.................................................... 2
Purchase Price of Common Stock........................................................................... 3
Nature of a Participant's Interest in Common Stock....................................................... 3
Voting Rights of Common Stock............................................................................ 3
DESCRIPTION OF THE PLAN......................................................................................... 4
Introduction............................................................................................... 4
Eligibility and Participation.............................................................................. 4
Contributions Under the Plan............................................................................... 5
Limitations on Contributions............................................................................... 5
Investment of Contributions and Account Balances........................................................... 7
Benefits Under the Plan................................................................................... 10
Withdrawals and Distributions From the Plan............................................................... 10
Administration of the Plan................................................................................ 11
Reports to Plan Participants.............................................................................. 12
Plan Administrator........................................................................................ 12
Amendment and Termination................................................................................. 12
Merger, Consolidation or Transfer......................................................................... 13
Federal Income Tax Consequences........................................................................... 13
ERISA and Other Qualifications............................................................................ 16
SEC Reporting and Short-Swing Profit Liability............................................................ 16
Financial Information Regarding Plan Assets............................................................... 17
LEGAL OPINION.................................................................................................. 17
</TABLE>
<PAGE>
THE OFFERING
SECURITIES OFFERED
The securities offered hereby are participation interests in the Plan. Up
to 340,000 shares (assuming a purchase price of $10 per share) of Common Stock
may be acquired by the Plan as part of the Offering to be held in the employer
stock fund ("Employer Stock Fund"). The Company is the issuer of the Common
Stock. Only employees of the Bank, the Company, or its subsidiaries may become
Participants in the Plan. The Common Stock to be issued hereby is conditioned
on the consummation of the Reorganization. A Participant's investment in the
Employer Stock Fund in the Offering is subject to the priority set forth in the
Plan of Reorganization. Information with regard to the Plan is contained in
this Prospectus Supplement and information with regard to the Reorganization and
the financial condition, results of operation and business of the Bank is
contained in the attached Prospectus. The address of the principal executive
office of the Bank is 400 Rella Boulevard, Montebello, New York 10901. The
Bank's telephone number is (914) 369-8041.
ELECTION TO PURCHASE COMMON STOCK IN THE OFFERING; PRIORITIES
The Plan permits each Participant to direct the investment of his or her
account balance among six investment alternatives which include the Employer
Stock Fund. The Trustee of the Plan (as hereinafter defined) will purchase
Common Stock offered for sale in connection with the Offering in accordance with
each Participant's directions. IN THE EVENT THE OFFERING IS OVERSUBSCRIBED AND
THE TRUSTEE IS UNABLE TO USE THE FULL AMOUNT ALLOCATED BY A PARTICIPANT TO
PURCHASE COMMON STOCK IN THE OFFERING, PARTICIPANTS MAY EITHER (I) ELECT
ALTERNATIVE INVESTMENTS FROM AMONG THE FIVE OTHER FUNDS OFFERED, OR (II) DIRECT
THE TRUSTEE TO HOLD THE FUNDS TRANSFERRED TO THE EMPLOYER STOCK FUND AND
PURCHASE COMMON STOCK IN THE OPEN MARKET AFTER THE OFFERING. If a Participant
fails to direct the investment of his or her account balance, the Participant's
account balance will remain in the other investment funds of the Plan as
previously directed by the Participant.
The shares of Common Stock to be sold in the Offering are being offered in
accordance with the following priorities: (i) depositors of the Bank with
account balances of $50 or more as of December 31, 1996 ("Eligible Account
Holders"); (ii) tax-qualified employee plans of the Bank, including the Employee
Stock Ownership Plan and related trust ("ESOP"); (iii) depositors of the Bank
with account balances of $50 or more as of September 30, 1998 who are not
Eligible Account Holders ("Supplemental Eligible Account Holders");
(iv) depositors of the Bank as of October 30, 1998 (the "Voting Record Date")
and borrowers of the Bank as of July 9, 1998 whose borrowings remained
outstanding as of the Voting Record Date, who are not Eligible Account Holders
or Supplemental Eligible Account Holders or tax-qualified employee plan;
(v) employees, officers and directors of the Bank; and (vi) certain members of
the general public, with preference given to natural persons residing Rockland
County, New York.
To the extent that the Plan or the Participants fall into one of these
categories, the Participants are being permitted to use funds in their Plan
account to subscribe or pay for the Common Stock being acquired. Common Stock so
purchased will be placed in a Participant's Employer Stock Fund
1
<PAGE>
account within his or her Plan account. Funds not transferred to the Employer
Stock Fund will remain in the other investment funds of the Plan as directed by
the Participant.
VALUE OF PARTICIPATION INTERESTS
The assets of the Plan were valued at approximately $3.6 million as of
June 30, 1998. Each Participant was informed of the value of his or her
beneficial interest in the Plan as of June 30, 1998. The $3.6 million value
represents the aggregate market value as of June 30, 1998, of all Participants'
accounts and earnings thereon, less previous withdrawals.
METHOD OF DIRECTING TRANSFER
Each Participant shall receive a form which provides for a Participant to
direct that all or a portion of his or her beneficial interest in the Plan be
transferred to the Employer Stock Fund (the "Investment Election Form"). If a
Participant wishes to invest all or part of his or her beneficial interest in
the assets of the Plan to the purchase of Common Stock issued in connection with
the Offering, he or she should indicate that decision on the Investment Election
Form.
TIME FOR DIRECTING TRANSFER
Directions to transfer amounts to the Employer Stock Fund in order to
purchase Common Stock issued in connection with the Offering must be returned to
Carol Benoist, Assistant Vice President of the Bank, no later than 12 p.m. on
November ____, 1998.
IRREVOCABILITY OF TRANSFER DIRECTION
A Participant's direction to transfer amounts credited to such
Participant's account in the Plan to the Employer Stock Fund in order to
purchase shares of Common Stock in connection with the Offering is irrevocable.
Participants, however, will be able to direct the investment of their accounts
under the Plan as explained below.
DIRECTION TO PURCHASE COMMON STOCK AFTER THE OFFERING
After the Offering, a Participant will continue to be able to direct that a
certain percentage of his or her interest in the Plan be transferred to the
Employer Stock Fund and invested in Common Stock. Alternatively, a Participant
may direct that all or any portion of his or her interest in the Plan be
transferred to the following funds in accordance with the terms of the Plan:
. Conservative Portfolio
. Balanced Portfolio
. Growth Portfolio
. Aggressive Growth Fund
. Morley Stable Value II
2
<PAGE>
(Said funds, together with the Employer Stock Fund being hereinafter referred to
as the "Plan Funds"). Participants are permitted to direct that future
contributions made to the Plan by or on their behalf will be invested among any
of the Plan Funds. The allocation of a Participant's interest in a Plan Fund
may be changed monthly. Special restrictions may apply to transfers directed to
and from the Employer Stock Fund by those Participants who are officers,
directors and principal shareholders of the Company who are subject to the
provisions of Section 16(b) of the Securities and Exchange Act of 1934
("Exchange Act").
PURCHASE PRICE OF COMMON STOCK
The funds transferred to the Employer Stock Fund for the purchase of Common
Stock in connection with the Offering will be used by the Trustee to purchase
shares of Common Stock, except in the event of an oversubscription, as discussed
above. The price paid for such shares of Common Stock will be the same price as
is paid by all other persons who purchase shares of Common Stock in the
Offering.
Subsequent to the Offering, Common Stock purchased by the Trustee will be
acquired in open market transactions. The prices paid by the Trustee for shares
of Common Stock will not exceed "adequate consideration" as defined in Section
3(18) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
NATURE OF A PARTICIPANT'S INTEREST IN THE COMMON STOCK
The Common Stock will be held in the name of the Trustee, as Trustee.
Shares of Common Stock acquired at the direction of a Participant will be
allocated to the Participant's account under the Plan. Therefore, earnings with
respect to a Participant's account should not be affected by the investment
designations (including investments in Common Stock) of other Participants. The
Trustee as record holder will vote such allocated and unallocated shares, if
any, as directed by Participants.
VOTING RIGHTS OF COMMON STOCK
The Trustee generally will exercise voting rights attributable to all
Common Stock held by the Trust as directed by Participants with interests in the
Employer Stock Fund. With respect to each matter as to which holders of Common
Stock have a right to vote, each Participant will be allocated voting
instruction rights reflecting such Participant's proportionate interest in the
Employer Stock Fund. The number of shares of Common Stock held in the Employer
Stock Fund that are voted in the affirmative and negative on each matter shall
be proportionate to the number of voting instruction rights exercised by
Participants in the affirmative and negative respectively.
3
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DESCRIPTION OF THE PLAN
INTRODUCTION
Effective August 1, 1991, the Bank adopted the Provident Savings Bank
401(k) Plan. The Plan is a profit sharing plan with a cash or deferred
compensation feature established in accordance with the requirements under
Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Plan is qualified under Section 401(a) of the Code,
and its related trust is qualified under Section 501(a) of the Code.
The Bank intends that the Plan, in operation, will comply with the
requirements under Section 401(a) and Section 401(k) of the Code. The Bank will
adopt any amendments to the Plan that may be necessary to ensure the qualified
status of the Plan under the Code and applicable Treasury Regulations.
Employee Retirement Income Security Act. The Plan is an "individual
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account plan" other than a "money purchase pension plan" within the meaning of
ERISA. As such, the Plan is subject to all of the provisions of Title I
(Protection of Employee Benefit Rights) and Title II (Amendments to the Internal
Revenue Code Relating to Retirement Plans) of ERISA, except the funding
requirements contained in Part 3 of Title I of ERISA which by their terms do not
apply to an individual account plan (other than a money purchase plan). The Plan
is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding
requirements contained in Title IV of ERISA are not applicable to Participants
(as defined below) or beneficiaries under the Plan.
Reference to full Text of Plan. The following statements are summaries of
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certain provisions of the Plan. They are not complete and are qualified in their
entirety by the full text of the Plan. Words capitalized but not defined in the
following discussion have the same meaning as set forth in the Plan. Copies of
the Plan are available to all employees by filing a request with the Plan
Administrator, c/o Provident Bank, Attention: Carol Benoist, Assistant Vice
President, 400 Rella Boulevard, Montebello, New York 10901. Each employee is
urged to read carefully the full text of the Plan.
ELIGIBILITY AND PARTICIPATION
Any employee of the Bank, the Company or its affiliates is eligible to
participate in the Plan on the first day of January or July coincident with or
following completion of six (6) months of Service with the Bank. The Plan year
is January 1 to December 31 (the "Plan Year").
As of July 1, 1998, there were approximately 193 employees eligible to
participate in the Plan, and 165 employees participating by making salary
deferral contributions.
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CONTRIBUTIONS UNDER THE PLAN
401(k) Plan Contributions. Each Participant in the Plan is permitted to
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elect to defer such Participant's Compensation (as defined below) on a pre-tax
basis not less than 2% nor more than 10% of annual Compensation (expressed in
terms of whole percentages) up to the applicable limit under the Code (for 1998,
the applicable limit is $10,000) and subject to certain other restrictions
imposed by the Code and to have that amount contributed to the Plan on such
Participant's behalf. (Under the Code, the pre-tax basis could be increased to
the lesser of 25% of annual Compensation or the $10,000 applicable limit). For
purposes of the Plan, "Compensation" means, generally, a Participant's total
compensation received from the Bank, including amounts the Participant elects to
defer as salary contributions to the Plan. In 1998, the annual Compensation of
each Participant taken into account under the Plan was, and is, limited to
$160,000. (Limits established by the IRS are subject to increase pursuant to an
annual cost of living adjustment, as permitted by the Code). A Participant may
elect to modify the amount contributed to the Plan not more often than four
times per year, prior to the first day of each Plan Year quarter. However,
special restrictions apply to persons subject to Section 16 of the Exchange Act.
Employer Contributions. The Bank may make, but is not required to make,
----------------------
discretionary matching contributions to the Plan. In no case may the Bank's
matching contribution exceed 6% of a Participant's annual Compensation.
The Bank may also make discretionary Qualified Non-Elective Contributions
on behalf of Non-Highly Compensated Employees equal to a percentage of each
eligible Participant's Compensation, to be determined each year by the Bank.
LIMITATIONS ON CONTRIBUTIONS
Limitation on Employee Salary Deferrals. The annual amount of deferred
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Compensation of a Participant (when aggregated with any elective deferrals of
the Participant under a simplified employee pension plan or a tax-deferred
annuity) may not exceed the limitation contained in Section 402(g) of the Code,
adjusted for increases in the cost of living as permitted by the Code (the
limitation for 1998 is $10,000). Contributions in excess of this limitation
("excess deferrals") will be included in the Participant's gross income for
federal income tax purposes in the year they are made. In addition, any such
excess deferral will again be subject to federal income tax when distributed by
the Plan to the Participant, unless the excess deferral (together with any
income allocable thereto) is distributed to the Participant not later than the
first April 15th following the close of the taxable year in which the excess
deferral is made. Any income on the excess deferral that is distributed not
later than such date shall be treated, for federal income tax purposes, as
earned and received by the Participant in the taxable year in which the
distribution is made.
Limitations on Annual Additions and Benefits. Pursuant to the
---------------------------------------------
requirements of the Code, the Plan provides that the amount of contributions and
forfeitures allocated to each Participant's account during any Plan Year may not
exceed the lesser of $30,000 or 25% of the Participant's Compensation for the
Plan Year. In addition, annual additions are limited to the extent necessary
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to prevent contributions on behalf of any employee from exceeding the employee's
combined plan limit, i.e., a limit that takes into account the contributions and
benefits made on behalf of an employee to all plans of the Bank. To the extent
that these limitations have been exceeded with respect to a Participant, the
Plan Administrator shall:
(i) return any voluntary after-tax employee contributions to the
extent that the return would reduce the excess amount in the Participant's
accounts; and
(ii) hold any excess amount remaining after the application of
paragraph (i), in a suspense account;
(iii) use the suspense account in the next limitation year (and
succeeding limitation years, if necessary) to reduce employer contributions for
that Participant if such Participant is covered by the Plan at the end of the
limitation year, or if the Participant is not covered, allocate and reallocate
the suspense account in the next limitation year (and succeeding limitation
years, if necessary) to all Participants before any employer contribution or
employee contributions which would be "annual additions" are made to the Plan
for such limitation year; and
(iv) reduce employer contributions to the Plan for the limitation year by
the amount of the suspense account allocated and reallocated during such
limitation year.
Limitation on Plan Contributions for Highly Compensated Employees.
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Sections 401(k) and 401(m) of the Code limits the amount of salary deferral
contributions and matching contributions that may be made to the Plan in any
Plan Year on behalf of Highly Compensated Employees (defined below) in relation
to the amount of salary deferral contributions made by or on behalf of all other
employees eligible to participate in the Plan. Specifically, the "actual
deferral percentage" ("ADP") (i.e., the average of the actual deferral ratios,
expressed as a percentage, of each eligible employee's salary deferral
contribution if any, for the Plan Year over the employee's Compensation), of the
Highly Compensated Employees must meet either of the following tests: (i) the
ADP of the eligible Highly Compensated Employees is not more than 125% of the
ADP of all other eligible employees, or (ii) the ADP of the eligible Highly
Compensated Employees is not more than 200% of the ADP of all other eligible
employees, and the excess of the ADP for the eligible Highly Compensated
Employees over the ADP of all other eligible employees is not more than two
percentage points. Similarly, the actual contribution percentage ("ACP") (i.e.,
the average of the actual contribution ratios, expressed as a percentage, of
each eligible employee's matching contributions, if any, for the Plan Year over
the employee's Compensation) of the Highly Compensated Employees must meet
either of the following tests: (i) the ACP of the eligible Highly Compensated
Employees is not more than 125% of the ACP of all other eligible employees, or
(ii) the ACP of the eligible Highly Compensated Employees is not more than 200%
of the ACP of all other eligible employees, and the excess of the ACP for the
eligible Highly Compensated Employees over the ACP of all other employees is not
more than two percentage points. Effective January 1, 1998, the ADP and ACP
tests are performed by using the actual deferral percentage and the actual
contribution percentage of nonhighly compensated employees for the Plan Year
preceding the Plan Year that is being tested.
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In general, for Plan Years beginning in 1998, a Highly Compensated
Employee includes any employee who, (1) during the Plan Year or the preceding
Plan Year, was at any time a 5% owner (i.e., owns directly or indirectly more
than 5% of the stock of an employer, or stock possessing more than 5% of the
total combined voting power of all stock of an employer), or (2) for the
preceding Plan Year, received Compensation from an employer in excess of $80,000
(in 1998), and (if the employer elects for a Plan Year) was in the group
consisting of the top 20% of employees when ranked on the basis of Compensation
paid during the Plan Year. The dollar amounts set forth above are adjusted
annually to reflect increases in the cost of living.
In order to prevent the disqualification of the Plan, any amount
contributed by Highly Compensated Employees that exceed the ADP limitation in
any Plan Year ("excess contributions"), together with any income allocable
thereto, must be distributed to such Highly Compensated Employees before the
close of the following Plan Year. Moreover, the Bank will be subject to a 10%
excise tax on any excess contributions unless such excess contributions,
together with any income allocable thereto, either are re-characterized or are
distributed before the close of the first 2-1/2 months following the Plan Year
to which such excess contributions relate. In addition, in order to avoid
disqualification of the Plan, any contributions by Highly Compensated Employees
that exceed the average contribution limitation in any Plan Year ("excess
aggregate contributions") together with any income allocable thereto, must be
distributed to such Highly Compensated Employees before the close of the
following Plan Year. However, the 10% excise tax will be imposed on the Bank
with respect to any excess aggregate contributions, unless such amounts, plus
any income allocable thereto, are distributed within 2-1/2 months following the
close of the Plan Year in which they arose.
INVESTMENT OF CONTRIBUTIONS AND ACCOUNT BALANCES
All amounts credited to Participants' accounts under the Plan are held in
the Plan Trust (the "Trust") which is administered by the Trustee appointed by
the Bank's Board of Directors.
Prior to the Offering, Participants have been provided the opportunity to
direct the investment of their accounts into one of the following Plan Funds:
A. Conservative Portfolio
B. Balanced Portfolio
C. Growth Portfolio
D. Aggressive Growth Fund
E. Morley Stable Value II
The Plan now provides that in addition to the funds specified above, a
Participant may direct the Trustee to invest all or a portion of his account in
the Employer Stock Fund. A Participant may elect to have both past
contributions (and earnings), as well as future contributions to the
Participant's accounts invested in either the Employer Stock Fund or among the
Plan Funds listed above. Transfers of past contributions (and the earnings
thereon) do not affect the investment mix of future contributions. The transfer
of past contributions will be effective on the first day of the
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month following the Participant's written notice to the Plan Administrator on a
transfer form, provided such notice is filed with the Plan Administrator prior
to the 25th day of the month before it is to become effective. The election to
change the investment of future contributions will similarly be effective the
first day of the month following the Participant's written notice to the Plan
Administrator, provided such notice is filed with the Plan Administrator prior
to the 25th day of the month before it is to become effective. Alternatively, a
Participant's investment elections will be effective if made in any other manner
deemed appropriate by the Plan Administrator if such manner is communicated in
writing to the Participants by the Plan Administrator.
The net gain (or loss) of the Plan Funds from investments (including
interest payments, dividends, realized and unrealized gains and losses on
securities, and expenses paid from the Trust) will be allocated daily. For
purposes of such allocations, all assets of the Trust are valued at fair market
value.
A. PREVIOUS FUNDS
Prior to the effective date of the Offering, contributions under the Plan
have been invested in the five funds specified above. The following table
provides performance data with respect to the investment funds available under
the Plan, based on information provided to the Company by Benefit Concepts, Inc.
<TABLE>
<CAPTION>
NET INVESTMENT PERFORMANCE AS OF JUNE 30, 1998
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Annualized
Fund 1 Month 3 Months 12 Months 3 Years 5 Years 10 Years
- ---- ------- -------- --------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
A. Conservative Portfolio (0.17) (0.19) 11.97 13.84 11.15 10.52
B. Balanced Portfolio 1.04 (0.13) 18.24 19.68 15.91 14.03
C. Growth Portfolio 0.03 (0.49) 16.52 21.36 18.25 16.36
D. Aggressive Growth Fund (0.29) (4.04) 13.95 20.62 20.57 12.35
E. Morley Stable Value II 1.35 5.64 Annualized Since Inception: 5.62
</TABLE>
The following is a description of each of the Plan's five investment funds:
A. Conservative Portfolio. The conservative portfolio is comprised of several
underlying mutual funds with a focus on preservation of principal. The target
asset allocation in this fund is 80% in fixed income with 20% exposure to the
equity markets as follows: Ivy Bond A (30%), Federated Capital Preservation
(20%), Franklin Convertible Securities I (20%), Income Fund of America (20%) and
PIMCO Renaissance A (10%). The funds principal is not guaranteed, and
therefore, Participants may have risk of loss as to their principal investment.
B. Balanced Portfolio. The balanced portfolio is comprised of several
underlying mutual funds with a focus on balancing current income with the
opportunity for capital appreciation. The target asset allocation in this fund
is 20% in fixed income, 60% in blended markets with 20% exposure to the equity
markets as follows: Seligman High-Yield Bond A (20%), Oppenheimer Quest
Opportunity A (20%), Franklin Income I (20%), Washington Mutual Investors (20%)
and Capital Income Builder
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(20%). The funds principal is not guaranteed, and therefore, Participants may
have a risk of loss as to their principal investment.
C. Growth Portfolio. The growth investment style portfolio is comprised of
several underlying mutual funds with a focus on capital appreciation. The
targeted asset allocation in this fund is 100% exposure to the equity market,
primarily in large cap funds as follows: Fundamental Investors (20%), Strong
Schafer Value (20%), Oppenheimer Quest Global Value A (20%), Oppenheimer Quest
Value A (20%) and Europacific Growth (20%). The funds principal is not
guaranteed, and therefore, Participants may have risk of loss as to their
principal investment.
D. Aggressive Growth Fund. The aggressive investment style portfolio is
comprised of several underlying equity mutual funds with aggressive investment
objectives. The targeted asset allocation in this fund is 100% exposure to the
equity market, primarily in small cap funds as follows: Templeton Foreign I
(20%), Neuberger & Berman Genesis Trust (20%), Franklin CA Growth (20%),
Franklin Small Company Growth (20%) and Evergreen A (20%). The funds principal
is not guaranteed, and therefore, Participants may have risk of loss as to their
principal investment.
E. Morley Stable Value II. This fund seeks to produce consistent, positive
returns for investors while preserving principal and maintaining liquidity.
This fund invests in a diversified portfolio of investment contracts with
insurance companies, banks, and other financial institutions. Stable value
funds seek to out perform CD's and money market investments by 1% - 2%.
B. THE EMPLOYER STOCK FUND
The Employer Stock Fund will consist of investments in Common Stock made on
and after the completion of the Offering. After the Offering, the Trustee will,
to the extent practicable, use all amounts held by it in the Employer Stock
Fund, including cash dividends paid on Common Stock held in the Employer Stock
Fund, to purchase shares of Common Stock of the Company. All purchases will be
made at prevailing market prices. Under certain circumstances, the Trustee may
be required to limit the daily volume of shares purchased. Pending investment in
Common Stock, assets held in the Employer Stock Fund may be placed in Bank
deposits and other short-term investments.
The expenses of managing each Plan Fund, including investment management
fees, commissions, and other transaction costs, are charged against the assets
of the total applicable Fund. A Participant's account will be adjusted to
reflect changes in the value of shares of Common Stock resulting from stock
dividends, stock splits and similar changes.
As of the date of this Prospectus Supplement, none of the shares of Common
Stock have been issued or are outstanding and there is no established market for
the Common Stock. Accordingly, there is no record of the historical performance
of the Employer Stock Fund. Performance will be dependent upon a number of
factors, including the financial condition and profitability of the Company and
the Bank and market conditions for the Common Stock generally.
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The Employer Stock Fund principal is not guaranteed, and therefore, Participants
may have risk of loss as to their principal investment.
INVESTMENT IN THE EMPLOYER STOCK FUND MAY INVOLVE CERTAIN SPECIAL RISKS IN
INVESTMENT IN COMMON STOCK OF THE COMPANY. FOR A DISCUSSION OF THESE RISK
FACTORS, SEE THE PROSPECTUS. NEITHER THE BANK NOR THE PLAN GUARANTEE THE
PERFORMANCE OF THE EMPLOYER STOCK FUND NOR ARE THE AMOUNTS IN THE EMPLOYER
STOCK FUND OR ANY OF THE PLAN FUNDS INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION.
BENEFITS UNDER THE PLAN
Vesting. A Participant, at all times, has a fully vested, nonforfeitable
--------
interest in his or her Participant's Elective Account (consisting of salary
reductions and earnings thereon) under the Plan. The Participant's Account
(consisting of Employer Non-Elective Contributions) vests in the Participant in
accordance with the following schedule:
Years of Service Vested Percentage
---------------- -----------------
2 50%
3 75%
4 100%
A Participant will also be 100% vested in Employer Non-Elective
Contributions regardless of his or her years of vesting service, upon attainment
of normal retirement age under the Plan, death or disability. Any non-vested
contributions which are forfeited shall first be made available to reinstate
previously forfeited account balances, if any, and then be used to reduce the
Bank's contributions to the Plan for the Plan Year in which the forfeitures
occur.
WITHDRAWALS AND DISTRIBUTIONS FROM THE PLAN
APPLICABLE FEDERAL LAW REQUIRES THE PLAN TO IMPOSE SUBSTANTIAL RESTRICTIONS
ON THE RIGHT OF A PLAN PARTICIPANT TO WITHDRAW AMOUNTS HELD FOR HIS OR HER
BENEFIT UNDER THE PLAN PRIOR TO THE PARTICIPANT'S TERMINATION OF EMPLOYMENT WITH
THE BANK. A SUBSTANTIAL FEDERAL TAX PENALTY MAY ALSO BE IMPOSED ON WITHDRAWALS
MADE PRIOR TO THE PARTICIPANT'S ATTAINMENT OF AGE 59-1/2, REGARDLESS OF WHETHER
SUCH A WITHDRAWAL OCCURS DURING HIS OR HER EMPLOYMENT WITH THE BANK OR AFTER
TERMINATION OF EMPLOYMENT.
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Withdrawals Prior to Termination of Employment. A Participant may obtain a
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loan from the Plan or make a withdrawal from his or her accounts prior to
termination of employment in the event of financial hardship, subject to the
hardship/loan distribution rules under the Plan. These requirements insure that
Participants have a true financial need before a withdrawal or loan may be made.
Distribution Upon Retirement or Disability. Payment of benefits to a
-------------------------------------------
Participant who retires, incurs a disability, or otherwise terminates employment
shall be made in a lump-sum payment. Benefit payments ordinarily shall commence
as soon as practicable following termination of employment upon: (i) retirement
on or after attainment of normal retirement age; (ii) termination of service due
to disability; or (iii) death of the Participant. With respect to a 5% owner,
benefit payments must commence no event later than April 1 following the
calendar year in which the Participant attains age 70-1/2. Distributions of the
Employer Stock Fund will generally be made in cash. However, at the election of
the Participant, such distribution may be made wholly or partially in Common
Stock.
Distribution Upon Death. If a Participant dies before his retirement date
------------------------
or other termination of employment, payment will be made to the Participant's
spouse or other designated beneficiary in a single payment generally as soon as
possible following the Participant's death.
Distribution Upon Termination for Any Other Reason. Distribution of
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benefits to a Participant who terminates employment for any other reason will
not be made to the Participant at the time of termination but shall be made on
the occurrence of an event which would result in a distribution had the
Participant remained in the employ of the Bank (i.e., upon the Participant's
death, disability or attainment of normal retirement age). Alternatively, at
the Participant's election, a Participant may receive a distribution of his
account after he ceases to be an employee. If a Participant's vested account
has never exceeded $5,000, the entire vested account will be distributed in a
single sum as of the earliest of the Participant's retirement date, death or the
date the Participant ceases to be a employee for any reason.
Nonalienation of Benefits. Except with respect to federal income tax
-------------------------
withholding and as provided with respect to a qualified domestic relations order
(as defined in the Code), benefits payable under the Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind, either
voluntary or involuntary, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any rights to
benefits payable under the Plan shall be void.
ADMINISTRATION OF THE PLAN
The trustee with respect to the Plan is the named fiduciary of the Plan for
purposes of Section 402 of ERISA.
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Trustee. The trustee is appointed by the Board of Directors of the Bank to
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serve at its pleasure. George Strayton, Daniel Rothstein and Robert Sansky have
been appointed as trustees of the Plan. The trustees are referred to
collectively herein as the Trustee.
The Trustee receives and holds the contributions to the Plan in trust and
distributes the account balances to Participants and beneficiaries in accordance
with the terms of the Plan and the directions of the Plan Administrator. The
Trustee is responsible for investment of the assets of the Trust.
REPORTS TO PLAN PARTICIPANTS
The Trustee will furnish to each Participant a statement quarterly showing
(i) the balance in the Participant's accounts as of the end of that period,
(ii) the amount of contributions allocated to such Participant's accounts for
that period, and (iii) the adjustments to such Participant's accounts to reflect
earnings or losses (if any).
PLAN ADMINISTRATOR
Pursuant to the terms of the Plan, the Plan is administered by the plan
administrator (the "Plan Administrator"). The Bank is the Plan Administrator and
has designated Benefit Concepts, Inc., to supervise its responsibilities as
such. The address and telephone number of the Plan Administrator is
c/o Provident Bank, 400 Rella Boulevard, Montebello, New York 10901, Telephone
number (914) 369-8041. The Plan Administrator is responsible for the
administration of the Plan, interpretation of the provisions of the Plan,
prescribing procedures for filing applications for benefits, preparation and
distribution of information explaining the Plan, maintenance of Plan records,
books of account and all other data necessary for the proper administration of
the Plan, and preparation and filing of all returns and reports relating to the
Plan which are required to be filed with the U.S. Department of Labor and the
IRS, and for all disclosures required to be made to Participants, beneficiaries,
and others under Sections 104 and 105 of ERISA.
AMENDMENT AND TERMINATION
It is the intention of the Bank to continue the Plan indefinitely.
Nevertheless, the Bank may terminate the Plan at any time. If the Plan is
terminated in whole or in part, then regardless of other provisions in the Plan,
each employee affected by such termination shall have a fully vested interest in
his or her accounts. The Bank reserves the right to make, from time to time, any
amendment or amendments to the Plan which do not cause any part of the Trust to
be used for, or diverted to, any purpose other than the exclusive benefit of
Participants or their beneficiaries; provided, however, that the Bank may make
any amendment it determines necessary or desirable, with or without retroactive
effect, to comply with ERISA.
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MERGER, CONSOLIDATION OR TRANSFER
In the event of the merger or consolidation of the Plan with another plan,
or the transfer of the Trust assets to another plan, the Plan requires that each
Participant would (if either the Plan or the other plan then terminated) receive
a benefit immediately after the merger, consolidation or transfer which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had then
terminated).
FEDERAL INCOME TAX CONSEQUENCES
The following is only a brief summary of certain federal income tax aspects
of the Plan which are of general application under the Code and is not intended
to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan. The
summary is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the consequences under applicable state and local income tax laws may
not be the same as under the federal income tax laws. Participants are urged to
consult their tax advisors with respect to any distribution from the Plan and
transactions involving the Plan.
The Plan is qualified under Section 401(a) and 401(k) of the Code and the
related Trust is exempt from tax under Section 501(a) of the Code. A plan that
is qualified under these sections of the Code is afforded special tax treatment
which include the following: (1) the Bank is allowed an immediate tax deduction
for the amount contributed to the Plan each year; (2) Participants pay no
current income tax on amounts contributed by the Bank on their behalf; and
(3) Earnings of the Plan are tax-exempt thereby permitting the tax-free
accumulation of income and gains on investments. The Plan will be administered
to comply in operation with the requirements of the Code as of the applicable
effective date of any change in the law. The Bank expects to timely adopt any
amendments to the Plan that may be necessary to maintain the qualified status of
the Plan under the Code.
Assuming that the Plan is administered in accordance with the requirements
of the Code, participation in the Plan under existing federal income tax laws
will have the following effects:
(a) Amounts contributed to a Participant's account and the investment
earnings on the account are not includable in a Participant's federal taxable
income until such contributions or earnings are actually distributed or
withdrawn from the Plan. Special tax treatment may apply to the taxable portion
of any distribution that includes Common Stock or qualifies as a Lump Sum
Distribution (as described below).
(b) Income earned on assets held by the Trust will not be taxable to the
Trust.
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Lump Sum Distribution. A distribution from the Plan to a Participant or the
---------------------
beneficiary of a Participant will qualify as a lump sum distribution ("Lump Sum
Distribution") if it is made: (i) within one taxable year of the Participant or
beneficiary; (ii) on account of the Participant's death, disability or
separation from service, or after the Participant attains age 59-1/2; and
(iii) consists of the balance to the credit of the Participant under this Plan
and all other profit sharing plans, if any, maintained by the Bank. The
portion of any Lump Sum Distribution that is required to be included in the
Participant's or beneficiary's taxable income for federal income tax purposes
(the"total taxable amount") consists of the entire amount of such Lump Sum
Distribution less the amount of after-tax contributions, if any, made by the
Participant to any other profit sharing plan maintained by the Bank which is
included in such distribution.
Averaging Rules. The portion of the total taxable amount of a Lump Sum
----------------
Distribution that is attributable to participation after 1973 in the Plan or in
any other profit-sharing plan maintained by the Bank (the "ordinary income
portion") will be taxable generally as ordinary income for federal income tax
purposes. However, a Participant who has completed at least five years of
participation in the Plan before the taxable year in which the distribution is
made, or a beneficiary who receives a Lump Sum Distribution on account of the
Participant's death (regardless of the period of the Participant's participation
in the Plan or any other profit-sharing plan maintained by the Bank), may elect
to have the ordinary income portion of such Lump Sum Distribution taxed
according to a special averaging rule ("five-year averaging"). The election of
the special averaging rules may apply only to one Lump Sum Distribution received
by the Participant or beneficiary, provided such amount is received on or after
the Participant turns 59-1/2 and the recipient elects to have any other Lump Sum
Distribution from a qualified plan received in the same taxable year taxed under
the special averaging rule. Under a special grandfather rule, individuals who
turned 50 by 1985 may elect to have their Lump Sum Distribution taxed under
either the five-year averaging rule or under the prior law ten-year averaging
rule.
Common Stock Included in Lump Sum Distribution. If a Lump Sum Distribution
-----------------------------------------------
includes Common Stock, the distribution generally will be taxed in the manner
described above, except that the total taxable amount will be reduced by the
amount of any net unrealized appreciation with respect to such Common Stock,
i.e., the excess of the value of such Common Stock at the time of the
distribution over its cost to the Plan. The tax basis of such Common Stock to
the Participant or beneficiary for purposes of computing gain or loss on its
subsequent sale will be the value of the Common Stock at the time of
distribution less the amount of net unrealized appreciation. Any gain on a
subsequent sale or other taxable disposition of such Common Stock, to the extent
of the amount of net unrealized appreciation at the time of distribution, will
be considered long-term capital gain regardless of the holding period of such
Common Stock. Any gain on a subsequent or other taxable disposition of the
Common Stock in excess of the amount of net unrealized appreciation at the time
of distribution will be considered either short-term capital gain or long-term
capital gain depending upon the length of the holding period of the Common
Stock. The recipient of a distribution may elect to include the amount of any
net unrealized appreciation in the total taxable amount of such distribution to
the extent allowed by the regulations to be issued by the IRS.
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Contribution to Another Qualified Plan or to an IRA. A Participant may
----------------------------------------------------
defer federal income taxation of all or any portion of the total taxable amount
of a Lump Sum Distribution (including the proceeds from the sale of any Common
Stock included in the Lump Sum Distribution) to the extent that such amount, or
a portion thereof, is contributed, within 60 days after the date of its receipt
by the Participant, to another qualified plan or to an individual retirement
account ("IRA"). If less than the total taxable amount of a Lump Sum
Distribution is contributed to another qualified plan or to an IRA within the
applicable 60-day period, the amount not so contributed must be included in the
Participant's income for federal income tax purposes and will not be eligible
for the special averaging rules or for capital gains treatment. Additionally, a
Participant may defer the federal income taxation of any portion of an amount
distributed from the Plan on account of the Participant's disability or
separation from service, generally, if the amount is distributed within one
taxable year of the Participant, and such amount is contributed, within 60 days
after the date of its receipt by the Participant, to an IRA. Prior to 1993,
following the partial distribution of a Participant's account, any remaining
balance under the Plan (and the balance to the credit of the Participant under
any other profit sharing plan sponsored by the Bank) would not be eligible for
the special averaging rules or for capital gains treatment. For these purposes,
a "partial distribution" is a distribution within one taxable year of the
Participant equal to at least 50% of the balance of a Participant's account
("Partial Distribution").
Pursuant to a change in the law, effective January 1, 1993, virtually all
distributions from the Plan may be rolled over to another qualified Plan or to
an IRA without regard to whether the distribution is a Lump Sum Distribution or
a Partial Distribution. Effective January 1, 1993, Participants have the right
to elect to have the Trustee transfer all or any portion of an "eligible
rollover distribution" directly to another plan qualified under Section 401(a)
of the Code or to an IRA. If the Participant does not elect to have an "eligible
rollover distribution" transferred directly to another qualified plan or to an
IRA, the distribution will be subject to a mandatory federal withholding tax
equal to 20% of the taxable distribution. An "eligible rollover distribution"
means any amount distributed from the Plan except: (1) a distribution that is
(a) one of a series of substantially equal periodic payments made (not less
frequently than annually ) over the Participant's life or the joint life of the
Participant and the Participant's designated beneficiary, or (b) for a specified
period of ten years or more; (2) any amount that is required to be distributed
under the minimum distribution rules; and (3) any other distributions excepted
under applicable federal law.
The beneficiary of a Participant who is the Participant's surviving spouse
also may defer federal income taxation of all or any portion of a distribution
from the Plan to the extent that such amount, or a portion thereof, is
contributed within 60 days after the date of its receipt by the surviving
spouse, to an IRA. If all or any portion of the total taxable amount of a Lump
Sum Distribution is contributed by the surviving spouse of a Participant to an
IRA within the applicable 60-day period, any subsequent distribution from the
IRA will not be eligible for the special averaging rules or for capital gains
treatment. Any amount received by the Participant's surviving spouse that is not
contributed to another qualified plan or to an IRA within the applicable 60-day
period, and any amount received by a nonspouse beneficiary will be included in
such beneficiary's income for federal tax purposes in the year in which it is
received.
15
<PAGE>
Additional Tax on Early Distributions. A Participant who receives a
--------------------------------------
distribution from the Plan prior to attaining age 59-1/2 will be subject to an
additional income tax equal to 10% of the taxable amount of the distribution.
The 10% additional income tax will not apply, however, to the extent the
distribution is rolled over into an IRA or another qualified plan or the
distribution is (i) made to a beneficiary (or to the estate or a Participant) on
or after the death of the Participant, (ii) attributable to the Participant's
being disabled within the meaning of Section 72(m)(7) of the Code, (iii) part of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Participant or the joint
lives (or joint life expectancies) of the Participant and his beneficiary,
(iv) made to the Participant after separation from service on account of early
retirement under the Plan after attainment of age 55, (v) made to pay medical
expenses to the extent deductible for federal income tax purposes, (vi) payments
made to an alternate payee pursuant to a qualified domestic relations order, or
(vii) made to effect the distribution of excess contributions or excess
deferrals.
ERISA AND OTHER QUALIFICATIONS
As noted above, the Plan is subject to certain provisions of the ERISA and
has received a favorable determination that it is qualified under Section 401(a)
of the Code.
The foregoing is only a brief summary of certain federal income tax aspects
of the Plan which are of general application under the Code and is not intended
to be a complete or definitive description of the federal income tax
consequences of participating in or receiving distributions from the Plan.
Accordingly, each Participant is urged to consult a tax advisor concerning the
federal, state and local tax consequences of participating in and receiving
distributions from the Plan.
SEC REPORTING AND SHORT-SWING PROFIT LIABILITY
Section 16 of the Exchange Act imposes reporting and liability requirements
on officers, directors, and persons beneficially owning more than 10% of the
equity securities (such as the Common Stock) of public companies. Section 16(a)
of the Exchange Act requires the filing of reports of beneficial ownership.
Within 10 days of becoming a person subject to the reporting requirements of
Section 16(a), a Form 3 reporting initial beneficial ownership must be filed
with the Securities and Exchange Commission ("SEC"). Certain changes in
beneficial ownership, such as purchases, sales and gifts must be reported
periodically, either on a Form 4 within 10 days after the end of the month in
which a change occurs, or annually on a Form 5 within 45 days after the close of
the Company's fiscal year. Certain discretionary transactions in and beneficial
ownership of the Common Stock through the Employer Stock Fund of the Plan by
officers, directors and persons beneficially owning more than 10% of the Common
Stock must be reported to the SEC by such individuals.
In addition to the reporting requirements described above, Section 16(b) of
the Exchange Act provides for the recovery by the Company of profits realized by
an officer, director or any person
16
<PAGE>
beneficially owning more than 10% of the Common Stock ("Section 16(b) Persons")
resulting from non-exempt purchases and sales of the Common Stock within any
six-month period.
The SEC has adopted rules that provide exemption from the profit recovery
provisions of Section 16(b) for participant-directed employer security
transactions within an employee benefit plan, such as the Plan, provided certain
requirements are met. These requirements generally involve restrictions upon the
timing of elections to acquire or dispose of employer securities for the
accounts of Section 16(b) Persons.
Except for distributions of Common Stock due to death, disability,
retirement, termination of employment or under a qualified domestic relations
order, under the Plan, Section 16(b) Persons are required to hold shares of
Common Stock distributed from the Plan for six months following such
distribution and are prohibited from directing additional purchases of Common
Stock within the Employer Stock Fund for six months after receiving such a
distribution.
FINANCIAL INFORMATION REGARDING PLAN ASSETS
Financial statements representing the net assets available for Plan
benefits at December 31, 1997 are attached to this Prospectus Supplement.
LEGAL OPINION
The validity of the issuance of the Common Stock will be passed upon by
Luse Lehman Gorman Pomerenk & Schick, A Professional Corporation, Washington,
D.C., which firm acted as special counsel to the Bank in connection with the
Bank's reorganization into the mutual holding company form of ownership.
17
<PAGE>
PROVIDENT BANK
401 (k) PLAN
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
GABER, NYMAN & CO.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
PROVIDENT BANK 401 (k) PLAN
YEARS ENDED DECEMBER 31, 1997 AND 1996
CONTENTS
--------
Page
-----
Independent Auditors' Report 1 - 2
Statements of Net Assets Available for Plan Benefits 3
Statements of Changes in Net Assets Available for Plan Benefits 4
Notes to Financial Statements 5 -10
Supplemental Information: 11
Schedule of Assets Held for Investment Purposes 12
Schedule of Reportable Transactions 13
Schedule of Loans 14
<PAGE>
[LETTERHEAD OF GABER, NYMAN & CO., LLP]
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Trustees
Provident Bank 401(k) Plan
Montebello, New York 10901
We have audited the accompanying statements of net assets available for plan
benefits of the Provident Bank, 401(k) Plan as of December 31, 1997 and 1996 and
the related statements of changes in net assets available for plan benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles use and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit will provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Provident Bank, 401(k) Plan as of December 31, 1997 and 1996 and the changes in
net assets available for plan benefits for the years then ended, in conformity
with generally accepted accounting principles.
<PAGE>
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules of Provident Bank,
401(k) Plan are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974. The supplemental schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material aspects in relation to the basic
financial statements taken as a whole.
/s/ Gaber, Nyman & Co., LLP
Gaber, Nyman & Co., LLP
September 17, 1998
<PAGE>
PROVIDENT BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
<S> <C> <C>
Assets
- ------
Deposits with insurance company, at
contract value $3,241,749 $2,504,517
Receivables:
Employer contributions 19,896 18,346
Employee contributions 27,371 27,253
Participant loans 41,677 23,199
Cash 25,710 23,590
------------------ ------------------
Total assets 3,356,403 2,596,905
Liabilities
- -----------
Distributions payable 52,864 12,016
------------------ ------------------
Net assets available for plan benefits $3,303,539 $2,584,889
================== ==================
</TABLE>
See notes to financial statements
-3-
<PAGE>
PROVIDENT BANK 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
<S> <C> <C>
Additions:
Investment income:
Net appreciation in fair value of investments $ 389,949 $ 202,372
Interest on participant loans 2,908 996
Contributions:
Employer 267,077 258,793
Employee 358,702 395,008
---------------- ----------------
Total additions 1,018,636 857,169
---------------- ----------------
Deductions:
Distributions 282,525 20,174
Investment Fees 17,461 10,115
---------------- ----------------
Total deductions 299,986 30,289
---------------- ----------------
Net increase 718,650 826,880
Net assets available for plan benefits:
Beginning of period 2,584,889 1,758,009
---------------- ----------------
End of period $3,303,539 $2,584,889
================ ================
</TABLE>
See notes to financial statements.
-4-
<PAGE>
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1. SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------
The financial statements of the Provident Bank, 401(k) Plan (the "Plan") are
prepared on the accrual basis of accounting.
Investments represent funds accumulated in pooled separate accounts (investment
accounts) maintained by Massachusetts Mutual Life Insurance Company. The
investment income, capital gains and losses (realized and unrealized), and any
expenses incurred in conjunction with the investments are reflected in the
statement of changes in net assets available for Plan benefits as net
appreciation in the fair value of investments.
2. DESCRIPTION OF THE PLAN
- ---------------------------
The following description of the Provident Bank, 401 (k) Plan has been extracted
from the Plan agreement and provides only general information. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.
The Plan, which was established by Provident Bank, ("Employer") on August 1,
1991, is a defined contribution plan, which covers all eligible employees who
have elected to participate. All employees are eligible to participate in the
Plan after completion of six months of service. The Employer shall give each
prospective eligible employee written notice of eligibility to participate in
the Plan prior to the close of the Plan year in which the employee first becomes
eligible.
For each Plan year, the employer shall contribute to the Plan:
(a) The amount of the total salary reduction of all Participants made
pursuant to Section 4.1 (a), which amount shall be deemed an Employee's
elective contribution.
(b) On behalf of each participant who is eligible to share in matching
contributions for the Plan year, a discretionary matching contribution
equal to a percentage of each such participant's deferred compensation,
the exact percentage to be determined each year by the Employer, which
amount shall be deemed an Employer's non-elective contribution.
Except, however, in applying the matching percentage specified above,
only salary reductions up to 6% of compensation shall be considered.
-5-
<PAGE>
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
2. DESCRIPTION OF THE PLAN (Cont'd)
- -------------------------------------
(c) Each participant may elect to defer from 2% to 10% of his/her
compensation which would have been received in the Plan year, but not
for deferral election. A deferral election (or modification in an
earlier election) may not be made with respect to compensation which is
currently available on or before the date the participant executed such
election or, if later, the latest of the date the Employer adopts this
cash or deferred arrangement, or the date such arrangement first became
effective.
The amount by which compensation is reduced shall be that participant's deferred
compensation and be treated as an employee contribution and allocated to that
participant's elective account.
The total deferral in any taxable year may not exceed a dollar limit, which is
set by law. The limit was $10,000 in 1997 and was $9,500 in 1996.
A participant has, at all times, a vested and nonforfeitable right to the entire
balance in his/her elective account, and will have a 100% vested interest in the
Employer's matching contributions following the completion of four full years of
service with the Employer, upon attainment of age 65, or upon death or
permanent and total disability.
Participants who have completed less than four years are entitled to a
percentage of the Employer's contributions on the basis of full years of service
in accordance with the following schedule:
Years of Vested
Services Percentage
--------- ----------
2 50%
3 75%
4 100%
-6-
<PAGE>
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
2. DESCRIPTION OF THE PLAN (Cont'd)
- -------------------------------------
Each participant shall direct the trustee as to the investment of the entire
interest in his/her aggregate account. The administrator shall provide pooled
and/or mutual funds for such investments and establish procedures to be applied
in a uniform nondiscriminatory manner for participants to direct the trustee in
writing to invest their aggregate account. The aggregate account of each
participant so directed will be considered a directed investment account.
A separate directed investment account shall be established for each
participant. The directed investment account shall be charged or credited as
appropriate with the net earnings, gains, losses and expenses, as well as any
appreciation or reduction in fair value during each Plan year attributable to
such account.
In determining the fair value of securities held in the trust fund, which are
listed on a registered stock exchange, the administrator shall direct the
trustee to value the same at the prices they were last traded on such exchange
preceding the close of business on the "valuation date." If such securities
were not traded on the "valuation date," or if the exchange on which they are
traded was not open for business on the "valuation date," then the securities
shall be valued at the prices at which they were last traded prior to the
"valuation date." Any unlisted security held in the trust fund shall be valued
at its bid price next preceding the close of business on the "valuation date,"
which bid shall be obtained from a registered broker or an investment banker.
In determining the fair value of assets other than securities for which trading
or bid prices can be obtained, the trustee may appraise such assets itself, or
at its discretion, employ one or more appraisers for that purpose and rely on
the values established by such appraiser or appraisers.
Participants may elect to invest in five accounts, described as follows, with
their respective investment objectives:
1. CM Money Market - to provide maximum current income consistent with the
preservation of capital and liquidity.
2. CM Basis - to preserve capital while seeking relatively high total return
and maintain a low level of portfolio volatility versus an intermediate
government bond index.
-7-
<PAGE>
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
2. DESCRIPTION OF THE PLAN (Cont'd)
- -------------------------------------
3. Portfolio A - to provide current income and moderate capital appreciation
through investment in a portfolio of specified Massachusetts Mutual
separate accounts.
4. Portfolio B - to provide current income and capital appreciation through
investment in a portfolio of specified Massachusetts Mutual separate
accounts.
5. Portfolio C - to provide capital appreciation and moderate income through
investment in a portfolio of specified Massachusetts Mutual separate
accounts.
Normal retirement date - the first day of the month coinciding with or the next
following the participant's normal retirement age (65th birthday). A
participant shall become fully vested in his/her account upon attaining his/her
normal retirement age.
Early retirement date - this Plan does not provide for a retirement date prior
to normal retirement date.
Upon termination of service, at the election of the terminated employee, the
administrator will direct the trustee to distribute the vested benefit due. If
the vested benefit exceeds $3,500, the participant must submit a written consent
before any distribution is made. There is no need for consent for distributions
amounting to $3,500 or less.
3. TRANSACTIONS WITH RELATED PARTIES
- --------------------------------------
The Plan has a non-interest bearing checking account with the Employer.
Accounting fees and other administrative services are paid for by the Employer.
-8-
<PAGE>
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
4. DEPOSITS WITH INSURANCE COMPANY
- ------------------------------------
401K funds are deposited with Massachusetts Mutual Life Insurance Company
(formerly with Connecticut Mutual Life Insurance Company). Contributions for
participants are maintained in individual accounts. Each participant's account
may be divided into as many as five funds depending on the participant's
allocation choice (as described in Note 2). The accounts are credited for
actual earnings on investments and charged for Plan withdrawals. The accounts
are also adjusted for any change in fair value in the investments.
The balances in the various accounts as of December 31, 1997 and 1996 and the
net appreciation in fair value of investments for the year December 31, 1997 are
as follows:
<TABLE>
<CAPTION>
Net appreciation
in fair value of
Balance at Balance at investments
Investment Fund Dec. 31, 1997 Dec. 31, 1996 Y/E 12/31/97
- ----------------- ------------- ------------- ----------------
<S> <C> <C> <C>
CM Basis $ 61,421 $ 49,537 $ 5,439
CM Money Market 117,245 104,364 7,185
Portfolio A 395,281 316,498 43,699
Portfolio B 977,120 727,649 113,763
Portfolio C 1,690,682 1,306,469 219,863
---------- ---------- --------
$3,241,749 $2,504,517 $389,949
========== ========== ========
</TABLE>
5. INCOME TAX STATUS
- ---------------------
The Internal Revenue Service has determined that the Plan qualifies under
Section 401 (a) of the Internal Revenue Code and is, therefore, not subject to
tax under present income tax laws.
6. TERMINATION
- ----------------
The Employer has the right to terminate the Plan at any time. Upon termination,
all amounts credited to the participants' accounts become 100% vested. A
complete discontinuance of contributions by the Employer will constitute a
termination.
-9-
<PAGE>
PROVIDENT BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
7. ACQUISITION OF BANKS
- ------------------------
Provident Bank, acquired the Hillcrest, NY branch of First Nationwide Bank on
March 22, 1996 and the New City, NY Branch of Republic Bank on May 10, 1996.
Employees of the two banks who were in service for more than six months before
the acquisition were allowed to participate immediately and rollover their fund
balances from their former employers. For vesting purposes, the same guidelines
apply as if they were new employees, regardless of their tenure with their
respective former employers.
-10-
<PAGE>
EXHIBIT 99.8
- --------------------------------------------------------------------------------
PRO FORMA VALUATION UPDATE REPORT
MUTUAL HOLDING COMPANY STOCK OFFERING
PROVIDENT BANK
Montebello, New York
Dated As Of:
October 30, 1998
- --------------------------------------------------------------------------------
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
FINANCIAL SERVICES INDUSTRY CONSULTANTS
October 30, 1998
Board of Directors
Provident Bank
400 Rella Boulevard
Montebello, New York 10901
Members of the Board:
We have completed and hereby provide an updated independent appraisal
of the estimated pro forma market value of the Common Stock in connection with
the mutual-to-stock conversion transaction described below.
This Appraisal is furnished pursuant to the conversion regulations
promulgated by the Office of Thrift Supervision ("OTS"). This Appraisal has been
prepared in accordance with the written valuation guidelines promulgated by the
OTS, most recently updated as of October 21, 1994. Specifically, this Appraisal
has been prepared in accordance with the "Guidelines for Appraisal Reports for
the Valuation of Savings and Loan Associations Converting from Mutual to Stock
Form of Organization" of the OTS, as successor to the Federal Home Loan Bank
Board ("FHLBB"), dated as of October 21, 1994; and applicable regulatory
interpretations thereof.
Our original appraisal report, dated September 4, 1998 (the "Original
Appraisal"), is incorporated herein by reference. As in the preparation of our
Original Appraisal, we believe the data and information used herein is reliable;
however, we cannot guarantee the accuracy and completeness of such information.
DESCRIPTION OF REORGANIZATION AND STOCK ISSUANCE PLAN
- -----------------------------------------------------
We understand that the Board of Directors of Provident Bank,
Montebello, New York ("Provident" or the "Bank") has adopted a Plan of
Conversion, incorporated herein by reference, in which the Bank will reorganize
from the mutual form of organization to the mutual holding company form of
organization. In the reorganization process, to become effective concurrent with
the completion of the stock sale, Provident will become a wholly-owned
subsidiary of Provident Bancorp, Inc. (the "Holding Company"), and Provident
Bancorp, Inc. will issue a majority of its common stock to Provident Bancorp,
M.H.C. (the "MHC"), and sell a minority of its common stock to the public. The
above structure reflects 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. The number of shares of common stock sold to the public will
approximate 46.61 percent of the shares issued in the offering, and the number
of shares issued to the MHC will approximate 53.39 percent of the shares issued
in the offering.
- --------------------------------------------------------------------------------
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 2
It is anticipated that the public shares will be issued to the Bank's
Eligible Account Holders, the ESOP, Supplemental Eligible Account Holders, Other
Members and employees, officers, and directors of the MHC and the Bank. 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 50 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.
LIMITING FACTORS AND CONSIDERATIONS
- -----------------------------------
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of the
Common Stock. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change time to time, no assurance can be given that persons who purchase shares
of common stock in the Conversion will thereafter be able to buy or sell such
shares at prices related to the foregoing valuation of the estimated pro forma
market value thereof.
RP Financial's updated valuation was determined based on the financial
condition and operations of the Bank as of September 30, 1998, the date of the
most recent financial data included in the Holding Company's Prospectus.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or solicitation with respect to the purchase or sale of
any securities. RP Financial maintains a policy which prohibits RP Financial,
its principals or employees from purchasing stock of its client financial
institutions.
This valuation will be updated as provided for in the conversion
regulations and guidelines. These updates will consider, among other things, any
developments or changes in the Bank's financial performance and condition,
management policies, and current conditions in the equity markets for thrift
shares. These updates may also consider changes in other external factors which
impact value including, but not limited to: various changes in the legislative
and regulatory environment for financial institutions, the stock market and the
market for thrift stocks, and interest rates. Should any such new developments
or changes be material, in our opinion, to the valuation of the shares,
appropriate adjustments to the estimated pro forma market value will be made.
The reasons for any such adjustments will be explained in the update at the date
of the release of the update.
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 3
DISCUSSION OF RELEVANT CONSIDERATIONS
- -------------------------------------
1. Financial Results
-----------------
Table 1 presents summary balance sheet and income statement details
for the twelve months ended June 30, 1998 and updated unaudited financial
information through September 30, 1998. The overall composition of Provident's
updated balance sheet was comparable to the June 30, 1998 data, with the Bank
experiencing modest asset growth during the quarter. Updated reported earnings
for the trailing twelve months ended June 30, 1998 diminished modestly,
primarily as a result of increased loan loss provisions and operating expenses.
Growth Trends
-------------
Provident's total assets increased by $12 million over the three
months ended September 30, 1998, largely attributable to continued expansion of
the loan portfolio which was funded by an increase in borrowed funds. Capital
increased as a result of interim earnings, although the equity/assets ratio
expanded only modestly as the rate of increase in capital was nearly matched by
the growth rate of total assets.
Loan Receivable
---------------
The balance of loans receivable increased from $440.4 million, as
of June 30, 1998, to $463.7 million, as of September 30, 1998, equal to 67.01
percent of total assets. Expansion of the loan portfolio over the three months
ended September 30, 1998, reflects the strong loan origination volumes in the
low rate environment which were partially offset by an accelerated level of loan
prepayments and the resumption of residential loan sales.
Investments and Mortgage-Backed Securities
------------------------------------------
The balance of investments and mortgage-backed securities remained
relatively stable over the quarter ended September 30, 1998 with the principal
difference being the modest increase in the level of mortgage-backed securities
available for sale and a reduction in mortgage-backed securities held to
maturity. The composition of the portfolio remained consistent with the mixture
described in the Original Appraisal.
Funding Structure
-----------------
Deposit balances decreased by $7 million over the three months
ended September 30, 1998. Management generally sees some deposit outflow during
the fourth quarter, due to real estate tax payments, which are generally made
during the month of September. The reduction in deposit funds was offset by an
increase in borrowed funds consisting of FHLB advances.
Equity
------
After-tax earnings of $798,000 during the three months ended
September 30, 1998, coupled with the impact of a upward equity adjustment on the
available for sale portfolios resulted in equity growth to $55.2 million. The
Bank's equity/assets ratio increased modestly to
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 4
Table 1
Provident Bank
Recent Financial Data
<TABLE>
<CAPTION>
At June 30, 1998 At September 30, 1998
--------------------------- ---------------------------
(% of (% of
Amount Assets) Amount Assets)
------ ------- ------ -------
<S> <C> <C> <C> <C>
($000) (%) ($000) (%)
Balance Sheet Data
- ------------------
Total Assets $679,104 100.00% $691,068 100.00%
Loans Receivable (net) 440,360 64.84% 463,667 67.09%
Mortgage-Backed Securities - HTM 89,334 13.15% 79,226 11.46%
Mortgage-Backed Securities - AFS 43,775 6.45% 49,912 7.22%
MBS - Held for Investment -- 0.00% -- 0.00%
Investment Securities - HTM 20,197 2.97% 19,176 2.77%
Investment Securities - AFS 48,629 7.16% 48,071 6.96%
Investment Securities (Held for Investment) -- 0.00% -- 0.00%
Deposits 580,075 85.42% 573,179 82.94%
Borrowed Funds 25,048 3.69% 38,646 5.59%
Total Equity 53,879 7.93% 55,200 7.99%
<CAPTION>
12 Months Ended 12 Months Ended
June 30, 1998 September 30, 1998
--------------------------- ----------------------------
(% of Avg. (% of Avg.
Amount Assets) Amount Assets)
------ ------ ------ ------
<S> <C> <C> <C> <C>
($000) (%) ($000) (%)
Summary Income Statement
- ------------------------
Interest Income $ 47,539 7.25% $ 47,948 7.23%
Interest Expense (20,718) -3.16% (20,880) -3.15%
-------- ------ -------- ------
Net Interest Income $ 26,821 4.09% $ 27,068 4.08%
Provision for Loan Losses (1,530) -0.23% (1,737) -0.26%
-------- ------ -------- ------
Net Interest Income After Provisions $ 25,291 3.86% $ 25,331 3.82%
Other Operating Income 2,797 0.43% 3,080 0.46%
Operating Expense (21,056) -3.21% (21,823) -3.29%
-------- ------ -------- ------
Net Operating Income $ 7,032 1.07% $ 6,588 0.99%
Net Income Before Tax 7,032 1.07% 6,588 0.99%
Income Taxes (2,454) -0.37% (2,346) -0.35%
-------- ------ -------- ------
Net Income/(Loss) $ 4,578 0.70% $ 4,242 0.64%
Estimated Core Earnings
- -----------------------
Net Income $ 4,578 0.70% $ 4,242 0.64%
Addback(Deduct): Non-Recurring (Inc)/Exp -- 0.00% -- 0.00%
Tax Effect (1) -- 0.00% -- 0.00%
-------- ------ -------- ------
Estimated Core Net Income $ 4,578 0.70% $ 4,242 0.64%
Memo:
Expense Coverage Ratio (2) 127.38% 124.03%
Efficiency Ratio (3) 71.09% 72.39%
Effective Tax Rate 35.61% 35.61%
</TABLE>
(1) Reflects effective tax rate for each period.
(2) Net interest income divided by operating expenses.
(3) Operating expenses as a percent of the sum of net interest income and other
income (excluding gain on sale).
Source: Provident's audited and unaudited financial statements.
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 5
equal to 7.99 percent as of September 30, 1998. The Bank maintained capital
surpluses relative to all of its regulatory capital requirements and was a "well
capitalized" institution.
Income and Expense Trends
-------------------------
Table 1 also shows the Bank's historical income statements for
twelve months ended June 30, 1998 and updated information as of September 30,
1998. Provident's earnings diminished modestly based on updated financial data,
primarily as operating expenses and loan loss provisions increased, which were
partially offset by increases in net interest income and other income. Overall,
net income decreased from $4.6 million for the twelve months ended June 30, 1998
to $4.2 million for the twelve months ended September 30, 1998. The Bank's
return on average assets ("ROA") decreased slightly to 0.64 percent.
Provident's net interest income increased modestly for the most
recent trailing 12 month period in dollar terms but decreased slightly as a
percent of average assets. Specifically, net interest income increased to $27.1
million while the net interest margin as a percent of assets decreased by 1
basis point to equal 4.08 percent.
Non-interest income increased modestly based on updated financial
data through September 30, 1998. Specifically, non-interest income increased by
approximately $283,000 to equal $3.1 million, primarily as a result of increased
loan volumes and gains on sale as well as higher deposit fee income.
Provident's operating expenses increased to $21.8 million, equal to
3.29 percent of average assets, versus $21.1 million for the twelve months ended
June 30, 1998. The increase reflects the cost of terminating the long-term
incentive plan (approximately $200,000) in anticipation of the conversion as
well as expenses attributable to the upcoming data conversion. While these
specific expenses are expected to diminish in the future, the Bank expects to
realize increases to operating expenses due to costs related to operating the
new data processing system and the stock benefit plans among other factors.
Provident's efficiency ratio (operating expenses as a percent of
the sum of net interest income and other operating income) of approximately
72.39 percent for the most recent 12 months reflected an increase from the 71.09
percent ratio reported for the twelve months ended June 30, 1998, with the
deterioration largely reflecting growth in operating expenses.
Provisions for loan losses increased to $1.7 million, equal to 0.26
percent of average assets, primarily as a result of loan growth as well as the
changing composition of the loan portfolio.
2. Peer Group Financial Comparisons
--------------------------------
Tables 2 and 3 present updated financial characteristics and operating
results for Provident, the Peer Group and all publicly-traded savings
institutions. Provident's ratios are based on financial data through June 30,
1998 while the Peer Group's ratios are based on financial data through September
30, 1998.
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 6
Financial Condition
-------------------
In general, the comparative balance sheet ratios for the Bank and
the Peer Group did not vary significantly from the ratios examined in the
earlier appraisal analyses. Relative to the Peer Group, the Bank's
interest-earning asset composition continued to reflect a higher level of loans
and a lower level of MBS and cash and investments.
The Peer Group continues to maintain a higher ratio of capital
relative to Provident on a pre-conversion basis. Provident's net worth base of
8.0 percent was below the Peer Group's average net worth ratio 13.6 percent;
however, with the addition of stock proceeds, the Bank's pro forma capital
position (consolidated with the holding company) is expected to increase to
levels more closely approximating but still below the Peer Group average. As
discussed in the Original Appraisal, the Bank's higher pro forma capital will
provide greater leverage potential than the Peer Group, although in the
intermediate term the higher capital will lead to a disadvantage in terms of
return on equity ("ROE").
Provident's funding liabilities continue to reflect a strategy
which is more dependent upon retail deposits as deposits equaled 82.9 percent
versus 73.3 percent for the Peer Group on average while the Peer Group relied on
a comparatively higher level of borrowed funds (5.6 percent for the Bank versus
10.2 percent of assets on average for the Peer Group).
The Bank's interest-earning assets ("IEA") position (including cash
and equivalents) has reduced to 95.5 percent, which continues to fall short of
the Peer Group average of 96.6 percent. The Bank also continues to maintain a
higher ratio of interest-bearing liabilities ("IBL"), equal to 88.5 percent of
assets as of September 30, 1998, relative to the Peer Group's ratio of 83.5
percent, reflecting the Bank's lower capitalization. The strengthened capital
position from conversion, the potential withdrawal of deposits to purchase
conversion stock and the reinvestment of proceeds should enhance Provident's
financial position and earnings power.
Updated growth rates for the Bank and the Peer Group suggest little
change relative to the trends noted in the Original Appraisal (the Bank's growth
rates are annual rates for the twelve months ended September 30, 1998 while the
Peer Group's growth rates are for the twelve months ended June 30, 1998. In this
regard, growth of assets continues to fall short of the Peer Group asset growth,
although loans and MBS increased at a more comparable rate. The Bank's asset
growth was funded with both deposits and through strong growth of borrowed
funds, particularly in the most recent quarter.
Capital growth rates posted by the Bank and the Peer Group equaled
positive 9.53 percent and 7.91 percent, respectively, as the impact of stronger
reported earnings of the peer Group were offset by the payment of dividends.
Following the increase in capital realized from the stock offering proceeds,
Provident's rate of capital growth may be diminished modestly as the enhanced
earnings levels are offset by the sharply increase equity in the ROE equation.
Income and Expense Trends
-------------------------
Provident's profitability remained below the Peer Group average,
equal to 0.64 percent of average assets for the twelve months ended September
30, 1998, while the Peer Group's earnings equaled 0.85 percent of average
assets. The relatively higher returns posted by
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of June 30, 1998
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
Provident Bank
- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
September 30, 1998 9.7 67.1 18.7 82.9 5.6 0.0 8.0 0.5 7.5 0.0
SAIF-Insured Thrifts 18.9 67.4 10.4 68.6 15.9 0.1 13.5 0.3 13.2 0.0
All Public Companies 19.4 66.8 10.5 69.2 15.7 0.1 13.2 0.3 12.9 0.0
State of NY 21.1 57.8 17.5 68.0 16.6 0.0 13.3 0.6 12.7 0.0
Comparable Group Average 24.6 60.1 11.9 74.5 9.2 0.1 13.4 0.3 13.1 0.0
Mid-Atlantic Companies 26.7 55.9 14.1 75.3 9.4 0.0 11.7 0.3 11.4 0.0
Mid-West Companies 18.8 70.5 7.5 81.7 2.6 0.0 14.5 0.0 14.5 0.0
New England Companies 31.7 62.5 1.7 64.5 12.0 0.8 21.2 0.6 20.6 0.0
Other Comparative Companies 15.3 65.4 16.3 69.0 15.1 0.0 13.2 0.1 13.1 0.0
Comparable Group
- ----------------
Florida Companies
- -----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 7.1 62.2 27.0 69.0 21.2 0.0 6.2 0.2 6.0 0.0
Mid-Atlantic Companies
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 37.7 54.5 4.7 77.0 11.9 0.0 10.7 0.0 10.7 0.0
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 33.7 53.6 10.9 69.5 0.0 0.0 8.0 0.0 8.0 0.0
SBFL Fingr Lakes Fin.MHC OF NY (33.1) 26.4 51.5 18.2 72.6 17.9 0.0 8.5 0.0 8.5 0.0
HARS Harris Fin. MHC of PA (24.9) 56.1 40.5 0.1 48.4 41.3 0.0 8.1 0.8 7.3 0.0
LFED Leeds Fed Bksr MHC of MD (36.3) 29.6 63.1 4.9 81.0 0.2 0.0 16.3 0.0 16.3 0.0
LIBB Liberty Bancorp MHC of NJ (47) 12.9 65.2 20.5 81.8 0.0 0.0 13.1 0.0 13.1 0.0
NBCP Niagara Bancorp of NY MHC (45.4) 23.3 50.6 21.5 74.1 4.3 0.0 19.0 0.0 19.0 0.0
NWSB Northwest Bcrp MHC of PA (30.8) 21.5 74.4 1.3 78.9 11.3 0.0 8.5 0.9 7.6 0.0
PBHC Pathfinder BC MHC of NY (45.2) 16.6 65.6 10.0 79.5 7.6 0.0 11.9 1.7 10.1 0.0
PHSB Ppls Home SB, MHC of PA (45.0) 21.2 42.4 33.4 78.1 8.3 0.0 12.7 0.0 12.7 0.0
PLSK Pulaski SB, MHC of NJ (47.0) 14.2 53.0 29.8 87.2 0.3 0.0 11.8 0.0 11.8 0.0
Mid-West Companies
- ------------------
JXSB Jcksnville SB,MHC of IL (45.6) 14.2 74.4 7.1 87.2 0.1 0.0 10.5 0.0 10.5 0.0
WAYN Wayne Svgs Bks MHC of OH (48.2) 13.8 79.6 2.7 83.8 6.2 0.0 9.5 0.0 9.5 0.0
WCFB Wbstr Cty FSB MHC of IA (45.6) 28.3 57.4 12.8 74.2 1.4 0.0 23.4 0.0 23.4 0.0
New England Companies
- ---------------------
BRKL Brookline Bncp MHC of MA (47.0) 36.8 61.9 0.1 56.0 9.4 0.0 33.0 0.0 33.0 0.0
PBCT Peoples Bank, MHC of CT (41.2) 26.6 63.2 3.2 73.0 14.6 1.6 9.4 1.3 8.1 0.0
South-East Companies
- --------------------
GBNK Gaston Fed Bncp MHC of NC (47.0) 23.5 68.6 5.6 69.0 9.1 0.0 20.3 0.0 20.3 0.0
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------ -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
Provident Bank
- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
September 30, 1998 6.52 -4.90 8.83 4.81 61.03 9.53 11.29 7.40 7.40 14.20
SAIF-Insured Thrifts 14.49 11.65 12.13 9.30 12.59 3.31 3.10 11.69 11.71 24.02
All Public Companies 14.40 10.41 12.68 9.22 12.21 3.97 3.56 11.72 11.56 23.57
State of NY 19.09 1.10 21.34 5.26 33.93 3.67 3.46 11.91 10.87 25.14
Comparable Group Average 16.09 21.33 10.96 5.93 -5.24 8.43 5.30 11.68 12.01 23.70
Mid-Atlantic Companies 16.41 6.74 12.16 5.54 -5.60 7.56 4.91 10.97 10.64 22.59
Mid-West Companies 2.96 34.42 -1.74 2.28 -18.55 4.24 4.24 16.52 14.51 28.57
New England Companies 19.04 38.73 10.86 7.42 9.31 28.45 10.92 7.90 15.51 22.78
Other Comparative Companies 31.12 78.53 23.55 12.04 NM 7.94 5.62 11.60 11.60 22.91
Comparable Group
- ----------------
Florida Companies
- -----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 46.94 78.53 44.33 29.94 NM 7.94 5.62 7.60 7.60 15.20
Mid-Atlantic Companies
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 13.55 27.57 7.33 13.64 21.53 4.84 4.84 NM 10.79 26.12
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 55.91 NM 11.59 0.48 NM 9.55 NM 7.71 7.71 16.58
SBFL Fingr Lakes Fin.MHC OF NY (33.1) 18.72 8.91 22.19 7.51 NM 5.22 5.22 8.41 8.41 19.12
HARS Harris Fin. MHC of PA (24.9) 13.76 20.65 6.35 -3.13 38.65 15.31 19.13 7.10 7.10 12.99
LFED Leeds Fed Bksr MHC of MD (36.3) 5.48 2.70 5.34 5.45 -14.81 5.49 5.49 15.80 15.80 33.26
LIBB Liberty Bancorp MHC of NJ (47) 18.08 NM 7.37 6.86 -100.00 NM NM 9.47 9.47 23.98
NBCP Niagara Bancorp of NY MHC (45.4) 17.23 -2.11 24.94 0.11 NM NM NM 19.10 19.10 35.63
NWSB Northwest Bcrp MHC of PA (30.8) 22.53 26.66 21.28 23.26 29.65 9.77 4.76 NM 7.82 15.91
PBHC Pathfinder BC MHC of NY (45.2) 3.77 -24.17 11.80 -0.77 76.33 5.18 -10.22 8.34 8.34 14.22
PHSB Ppls Home SB, MHC of PA (45.0) 5.58 -9.41 10.44 -2.06 NM NM NM NM NM NM
PLSK Pulaski SB, MHC of NJ (47.0) 5.88 9.83 5.09 9.55 -90.51 5.15 5.15 11.83 11.83 28.08
Mid-West Companies
- ------------------
JXSB Jcksnville SB,MHC of IL (45.6) 4.30 81.50 -2.85 3.79 -37.02 4.77 4.77 NM 10.49 15.70
WAYN Wayne Svgs Bks MHC of OH (48.2) 2.03 -4.37 2.17 2.16 -0.07 5.15 5.15 9.63 9.63 17.50
WCFB Wbstr Cty FSB MHC of IA (45.6) 2.53 26.12 -4.55 0.89 NM 2.80 2.80 23.41 23.41 52.50
New England Companies
- ---------------------
BRKL Brookline Bncp MHC of MA (47.0) 22.38 61.78 7.09 -4.06 20.06 NM NM NM 23.11 33.46
PBCT Peoples Bank, MHC of CT (41.2) 15.70 15.68 14.63 18.91 -1.44 28.45 10.92 7.90 7.90 12.10
South-East Companies
- --------------------
GBNK Gaston Fed Bncp MHC of NC (47.0) 15.29 NM 2.76 -5.86 NM NM NM 15.59 15.59 30.61
</TABLE>
(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.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended June 30, 1998
<TABLE>
<CAPTION>
Net Interest Income Other Income
----------------------------- -------------------
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>
Provident Bank
- --------------
September 30, 1998 0.64 7.23 3.15 4.08 0.26 3.82 0.00 0.00 0.46 0.46
SAIF-Insured Thrifts 0.91 7.37 4.13 3.25 0.12 3.11 0.10 0.01 0.32 0.42
All Public Companies 0.94 7.38 4.07 3.31 0.12 3.15 0.10 0.00 0.33 0.43
State of NY 0.91 7.08 3.65 3.43 0.14 3.18 0.08 -0.01 0.30 0.36
Comparable Group Average 0.86 7.12 3.93 3.19 0.12 3.07 0.16 0.00 0.26 0.42
Mid-Atlantic Companies 0.74 7.08 3.98 3.10 0.10 3.00 0.06 0.00 0.22 0.28
Mid-West Companies 0.90 7.44 4.09 3.35 0.07 3.28 0.07 0.00 0.26 0.32
New England Companies 1.65 7.06 3.43 3.63 0.26 3.37 0.92 0.00 0.46 1.38
Other Comparable Companies 0.69 6.88 3.92 2.96 0.12 2.83 0.06 0.01 0.30 0.00
Comparable Group
- ----------------
Florida Companies
- -----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 0.64 7.09 4.39 2.70 0.00 2.70 0.03 0.01 0.38 0.42
Mid-Atlantic Companies
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 0.77 7.25 3.86 3.39 0.07 3.32 0.00 0.01 0.23 0.24
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 0.83 6.97 3.56 3.41 0.11 3.30 0.06 0.00 0.13 0.19
SBFL Fingr Lakes Fin.MHC OF NY(33.1 0.41 7.20 4.26 2.94 0.06 2.88 0.03 -0.07 0.23 0.20
HARS Harris Fin. MHC of PA (24.9) 0.83 7.10 4.71 2.38 0.08 2.31 0.07 0.04 0.24 0.35
LFED Leeds Fed Bksr MHC of MD (36.3 1.13 6.93 4.15 2.78 0.07 2.71 0.00 0.00 0.12 0.12
LIBB Liberty Bancorp MHC of NJ (47)(3) 0.49 6.13 3.84 2.29 0.02 2.26 0.08 0.00 0.10 0.19
NBCP Niagara Bancorp of NY MHC(45.4 0.64 7.00 3.76 3.24 0.14 3.10 0.16 0.00 0.40 0.56
NWSB Northwest Bcrp MHC of PA (30.8 0.93 7.66 4.17 3.49 0.18 3.31 0.14 -0.01 0.17 0.31
PBHC Pathfinder BC MHC of NY (45.2) 0.75 7.35 3.63 3.72 0.14 3.58 0.03 0.00 0.42 0.44
PHSB Ppls Home SB, MHC of PA (45.0) 0.80 7.12 3.70 3.42 0.20 3.23 0.00 0.00 0.35 0.35
PLSK Pulaski SB, MHC of NJ (47.0) 0.54 7.23 4.18 3.05 0.07 2.98 0.07 0.00 0.05 0.12
Mid-West Companies
- ------------------
JXSB Jcksnville SB,MHC of IL (45.6) 0.60 7.68 4.33 3.34 0.17 3.17 0.20 0.00 0.29 0.49
WAYN Wayne Svgs Bks MHC of OH (48.2 0.71 7.55 4.35 3.20 0.02 3.17 0.00 0.00 0.25 0.25
WCFB Wbstr Cty FSB MHC of IA (45.6) 1.40 7.10 3.58 3.52 0.02 3.50 0.00 -0.01 0.24 0.23
New England Companies
- ---------------------
BRKL Brookline Bncp MHC of MA(47.0) 2.09 7.62 3.50 4.12 0.01 4.10 0.01 0.01 0.15 0.17
PBCT Peoples Bank, MHC of CT (41.2) 1.22 6.50 3.36 3.14 0.51 2.63 1.83 -0.02 0.78 2.58
South-East Companies
- --------------------
GBNK Gaston Fed Bncp MHC of NC(47.0 0.73 6.66 3.45 3.21 0.24 2.97 0.09 0.00 0.21 0.30
</TABLE>
<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>
Provident Bank
- --------------
September 30, 1998 3.05 0.24 0.00 0.00 7.63 3.83 3.80 3,637 35.61
SAIF-Insured Thrifts 2.18 0.03 0.06 0.00 7.50 4.74 2.75 4,252 36.89
All Public Companies 2.21 0.03 0.06 0.00 7.45 4.64 2.81 4,225 37.11
State of NY 2.16 0.05 -0.09 0.00 7.66 4.22 3.44 4,660 41.50
Comparable Group Average 2.25 0.03 0.11 0.00 7.00 4.36 2.64 4,207 35.15
Mid-Atlantic Companies 2.17 0.03 0.01 0.00 6.73 4.19 2.55 4,326 33.38
Mid-West Companies 2.30 0.00 0.15 0.00 7.68 4.85 2.84 3,079 37.58
New England Companies 2.64 0.03 0.53 0.00 7.38 4.26 3.12 5,587 36.35
Other Comparable Companies 2.22 0.02 0.15 0.00 7.09 4.73 2.36 3,869 38.23
Comparable Group
- ----------------
Florida Companies
- -----------------
FFFL Fidelity Bcsh MHC of FL (47.9) 2.17 0.03 0.19 0.00 7.35 4.88 2.47 4,183 41.28
Mid-Atlantic Companies
- ----------------------
ALLB Alliance Bank MHC of PA (19.9) 2.41 0.00 0.00 0.00 7.50 4.37 3.13 3,700 33.58
BCSB BCSB Bankcorp MHC of MD (38.6)(3) 2.15 0.01 0.00 0.00 6.76 4.35 2.41 4,219 NM
SBFL Fingr Lakes Fin.MHC OF NY(33.1 2.52 0.00 0.12 0.00 7.47 4.73 2.74 2,936 39.81
HARS Harris Fin. MHC of PA (24.9) 1.76 0.11 0.22 0.00 7.36 5.21 2.15 4,168 36.07
LFED Leeds Fed Bksr MHC of MD (36.3 1.06 0.00 0.00 0.00 7.08 5.09 1.98 10,439 36.42
LIBB Liberty Bancorp MHC of NJ (47)(3) 1.69 0.00 0.00 0.00 0.00 0.00 0.00 5,804 NM
NBCP Niagara Bancorp of NY MHC(45.4 2.22 0.00 -0.48 0.00 7.30 4.41 2.88 3,606 33.86
NWSB Northwest Bcrp MHC of PA (30.8 2.09 0.08 0.05 0.00 7.89 4.65 3.24 2,980 37.87
PBHC Pathfinder BC MHC of NY (45.2) 3.06 0.16 0.19 0.00 7.92 4.16 3.76 2,751 31.15
PHSB Ppls Home SB, MHC of PA (45.0) 2.76 0.00 0.10 0.00 7.34 4.30 3.04 2,983 12.72
PLSK Pulaski SB, MHC of NJ (47.0) 2.15 0.00 -0.07 0.00 7.45 4.77 2.68 3,995 38.97
Mid-West Companies
- ------------------
JXSB Jcksnville SB,MHC of IL (45.6) 2.96 0.00 0.33 0.00 8.01 4.94 3.07 2,021 41.57
WAYN Wayne Svgs Bks MHC of OH (48.2 2.45 0.00 0.11 0.00 7.83 4.84 2.99 2,594 33.99
WCFB Wbstr Cty FSB MHC of IA (45.6) 1.50 0.00 0.00 0.00 7.21 4.76 2.45 4,624 37.20
New England Companies
- ---------------------
BRKL Brookline Bncp MHC of MA(47.0) 1.17 0.00 0.17 0.00 7.72 4.77 2.95 8,524 36.16
PBCT Peoples Bank, MHC of CT (41.2) 4.12 0.07 0.89 0.00 7.04 3.75 3.29 2,650 36.55
South-East Companies
- --------------------
GBNK Gaston Fed Bncp MHC of NC(47.0 2.26 0.00 0.12 0.00 6.82 4.57 2.25 3,555 35.18
</TABLE>
(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>
Board of Directors
Provident Bank
October 30, 1998
Page 9
the Peer Group continue to be primarily attributable to the Bank's relatively
high level of operating expenses, as Provident outperformed the Peer Group in
other key areas of core operations.
Neither Provident nor the Peer Group's net interest margin changed
significantly incorporating updated financial data (the net interest margin
equaled 4.08 percent and 3.16 percent of assets for the Bank and Peer Group,
respectively). Provident's advantage is the result of both higher asset yields
and a more favorable cost of funds.
Loan loss provisions for Provident remain in excess of the Peer
Group average (0.26 percent for Provident versus an average of 0.11 percent for
the Peer Group). The Bank's higher provisions reflect the growth in high risk
weight lending as well as expansion of the loan portfolio balance.
Provident continues to generate modestly higher levels of
non-interest income relative to the Peer Group, equal to 0.46 percent and 0.40
percent of average assets, respectively. Provident continued to maintain a
higher operating expense ratio, equal to 3.05 percent of average assets versus
an average of 2.23 percent for the Peer Group. As discussed in the Original
Appraisal, Provident's higher operating expense ratio is the result of several
factors including: (1) the Bank has a deposit base heavily weighted towards
transaction accounts which are costly to attract and service but which favorably
influence the cost of funds; (2) management continues to invest in the
infrastructure it believes is required to effectively compete with the local
commercial banks; and (3) the Bank maintains a service-oriented customer base
and offers extended and weekend hours at its branches.
Taking together the components of core net income through a review
of the efficiency ratio (operating expenses divided by net interest income and
non-interest operating income) indicates a disadvantage for the Peer Group, with
an efficiency ratio of 72.39 percent versus 63.20 percent for Provident.
Provident's efficiency ratio is expected to improve on a post-conversion basis
with the investment of the net conversion proceeds.
Provident's effective tax rate of 35.61 percent continues to
compare closely to the Peer Group's effective tax rate of 36.99 percent,
reflecting the fully taxable status of both the Bank and the Peer Group.
3. Stock Market Conditions
-----------------------
Since the date of the Original Appraisal, the performance of the
overall stock market has been volatile although the broad market indices reflect
an upward trend in recent weeks. Notable volatility was evident in the stock
market in early-September, reflecting uncertainty about President Clinton's
future and financial troubles abroad. The stock market recovered somewhat in
mid-September, reflecting a rebound in financial markets around the world.
Congressional testimony by the Federal Reserve Chairman sparked a 257 point
increase in the DJIA on September 23, 1998, as he suggested that short-term
interest rates could be cut soon. However, the rally was not sustained, as
stocks declined the following day on news of Wall Street's bailout of a major
hedge fund. The market continued to experience significant volatility in early
October but rebounded substantially in mid-October following the Fed's decision
to cut the
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 10
discount rate and targeted federal funds rate by an additional 25 basis points.
On October 30, 1998, the DJIA closed at 8592.1, an increase of 12.5 percent
since the date of the Original Appraisal.
Since the date of the Original Appraisal, the market for thrift issues
has generally underperformed the overall stock market. Like the stock market in
general, investor uncertainty provided for significant day-to-day fluctuations
in thrift prices during early-September. Bargain hunting and speculation of an
interest rate cut by the Federal Reserve provided for a modest rebound in thrift
prices in mid-September. However, the upturn was not sustained into
late-September, as the outlook for thrift stocks was dampened somewhat by
expectations of less favorable earnings growth in the thrift sector due to
spread compression resulting from the flat yield curve. Although thrift stocks
benefited from the Fed's cut in interest rates in mid-October, thrift stocks as
well as the stocks of MHC's did not recover to the same extent as the broader
market. On October 30, 1998, the SNL Index for all publicly-traded thrifts
closed at 676.3, an increase of 8.6 percent since the date of the Original
Appraisal. Over the corresponding time frame, the SNL Index for publicly-traded
MHCs has increased modestly by 5.3 percent. Importantly, since the MHC index is
weighted by market capitalization, price appreciation in several of the largest
companies (including Peoples Bank of CT) accounts for most of the appreciation
of the MHC index.
The average pricing measures for all publicly-traded SAIF-insured
thrifts and the Peer Group have trailed the broad market indices reflecting that
the rally has been concentrated more in the issues with the greatest market
capitalization and market liquidity. Since the date of the Original Appraisal,
the Peer Group's earnings based pricing measures have increased slightly (by 1.7
percent) while the pro forma fully converted P/B ratios have declined. The
decline in the P/B measures partially reflects the incorporation of the
ownership dilution attributable to waived dividends and mutual holding company
assets into the pro forma P/B calculation by RP Financial. A comparative pricing
analysis of all publicly-traded SAIF-insured thrifts, the Peer Group and recent
conversions is shown in the table below, based on market prices as of
September 4, 1998 and October 30, 1998.
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 11
<TABLE>
<CAPTION>
Average Pricing Characteristics
At Sept. 4, At Oct. 30, %
1998 1998 Change
---- ---- ------
<S> <C> <C> <C>
Peer Group (Fully Converted Basis)
- ----------------------------------
Price/Earnings (x) 18.71x 19.02x 1.7%
Price/Core Earnings (x) 19.66 19.97 1.6
Price/Book (%) 87.35% 83.66% (4.2)
Price/Tangible Book (%) 88.69 84.78 (4.4)
Price/Assets (%) 18.94 18.75 (1.0)
Publicly-Traded SAIF-Insured Thrifts
- ------------------------------------
Price/Earnings (x) 17.48x 17.45x (0.2)%
Price/Core Earnings (x) 18.12 17.93 (1.0)
Price/Book (%) 126.92% 126.24% (0.5)
Price/Tangible Book (%) 131.27 131.58 0.2
Price/Assets (%) 16.12 16.02 (0.6)
Recent Conversions(1)
- ---------------------
Price/Core Earnings (x)(2) 20.32x 17.86x (12.7)%
Price/Book (%) 84.01% 69.74 (17.0)
</TABLE>
(1) Ratios based on conversions completed for prior three months.
(2) Companies with P/E multiples of greater than 30x have been excluded from
the average.
The "new issue" market is separate and distinct from the market for
seasoned issues like the Peer Group companies. Accordingly, as discussed in the
Original Appraisal, RP Financial has considered the pro forma pricing and
trading level of recently converted companies in this updated appraisal. Since
the date of the Original Appraisal, the market for new issues has weakened,
notwithstanding the improvement in the broader market overall. The average pro
forma price/tangible book of the recent conversions equaled 69.74 percent as of
October 30, 1998, which reflects a 17.0 percent decline. The average pro forma
price/core earnings multiple equaled 17.86 times which reflects a 12.7 percent
reduction between the date of the Original Appraisal and October 30, 1998. The
meaningfulness of this data is diminished somewhat by the fact that the current
group of companies converted over the last three months has diminished to one.
At the same time, there have been two recently completed stock offerings by
mutual holding companies as noted below.
Since the date of the Original Appraisal, two mutual holding
company offerings have been completed involving companies which were
subsequently publicly traded. The companies are Sound Bancorp and West Essex
Bancorp which converted at a pro forma P/B ratio (fully converted basis) of 67.4
percent and 63.6 percent, respectively. Sound Bancorp sold to just above the
minimum of its valuation range while West Essex Bancorp sold to between the
minimum and midpoint, which is in contrast to the oversubscriptions prevailing
earlier in the year. The aftermarket price performance of these two recent
mutual holding company transactions also reflects the weakness in the new issue
market as both companies traded down in
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 4
Market Pricing Comparatives
Prices As of October 30, 1998
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 15.93 145.23 0.91 13.27 17.45 126.24 16.02 131.58 17.93 0.33 2.07 33.36
All Public Companies 16.18 165.64 0.95 13.19 17.02 128.28 15.99 133.37 17.68 0.34 2.06 32.75
Special Selection Grouping(8) 10.00 53.57 0.56 14.34 0.00 69.74 18.99 69.74 17.86 0.00 0.00 0.00
State of NY 18.47 441.11 1.07 14.75 17.09 120.88 17.16 124.08 18.96 0.36 1.71 29.80
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CNYF CNY Financial Corp of NY 10.00 53.57 0.56 14.34 NM 69.74 18.99 69.74 17.86 0.00 0.00 0.00
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Financial Institution Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------ ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,108 13.79 0.64 0.91 7.84 0.87 7.41
All Public Companies 1,200 13.52 0.63 0.94 8.27 0.90 7.79
Special Selection Grouping(8) 282 27.23 1.28 0.47 1.74 1.06 3.91
State of NY 2,655 14.46 0.65 0.81 6.71 0.95 7.25
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CNYF CNY Financial Corp of NY 282 27.23 1.28 0.47 1.74 1.06 3.91
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
(8) Includes Converted Last 3 Mths (no MHC);
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 13
the aftermarket initially and remain at or below their IPO price currently. Key
characteristics of these two offerings are set forth in the schedule below.
In evaluating MHC offerings we considered recent fundamental
characteristics such as market capitalization, market area and financial
condition and recent operating results. In comparison, Provident's market
capitalization is expected to be comparable (fully converted basis), the market
area served is relatively comparable, and the ROE is comparable to better.
<TABLE>
<CAPTION>
At IPO(1) Price
----------------------------- 10/30/98 Change
Mutual Holding Company Price P/B P/E Price Since IPO
- ---------------------- ----- --- --- ----- ---------
<S> <C> <C> <C> <C> <C>
($) (%) (x)
Sound Bancorp $10.00 67.4% 12.8x $10.00 0.0%
West Essex Bancorp 10.00 63.6 23.8 9.75 (2.5)
</TABLE>
(1) Reflects fully-converted pricing ratios.
SUMMARY OF ADJUSTMENTS
- ----------------------
Based on the foregoing, we have changed one key valuation parameter
since the First Update, as described more fully below.
<TABLE>
<CAPTION>
Previous Current Change in
Key Valuation Parameters Valuation Adjustment Valuation Adjustment
- ------------------------ -------------------- --------------------
<S> <C> <C>
Financial Condition Slight Downward No Change
Profitability, Growth and Viability of Earnings Slight Downward No Change
Asset Growth No Adjustment No Change
Primary Market Area Slight Upward No Change
Dividends Slight Downward No Change
Liquidity of the Shares No Adjustment No Change
Marketing of the Issue Moderate Downward Significant Downward
Management No Adjustment No Change
Effect of Government Regul. & Reg. Reform No Adjustment No Change
</TABLE>
There were no material changes in the updated financial conditions of
the Bank and the Peer Group of public MHCs, and the differences between the
Bank's and the Peer Group remained the same as discussed in the Original
Appraisal. However, we note a modest reduction in the reported and core earnings
of Provident versus the Peer Group, some of which is attributable to one-time
events. Overall, the valuation adjustments for financial condition and
profitability, growth, and viability of earnings remain unchanged from those
applied in the Original Appraisal. The factors concerning the valuation
parameters of primary market area,
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 14
dividends, liquidity of the shares, management and effect of government
regulation and regulatory reform did not change since the Original Appraisal
date. Accordingly, those parameters were not discussed further in this update.
The general market for thrift stocks has been flat although the SNL
Thrift Index has appreciated owing to a rally in the higher capitalization
issues. We note that the average pricing ratios for all publicly-traded
SAIF-insured institutions has diminished slightly. Additionally, the two
publicly traded mutual holding companies which have recently issued stock (Sound
Bancorp and West Essex Bancorp) traded down initially in the after-market.
Accordingly, we believe the valuation adjustment for marketing of the issue
should be changed from the moderate downward adjustment as set forth in the
Original Appraisal to a significant downward adjustment.
Overall, taking into account the foregoing factors, particularly the
reduction in P/B ratios of the Peer Group as well as the performance of the two
recent mutual holding company conversions, we believe that a reduction in the
Bank's valuation ratios on a fully converted basis are appropriate.
VALUATION APPROACHES
- --------------------
In applying the accepted valuation methodology promulgated by the OTS,
i.e., the pro forma market value approach, we considered the three key pricing
ratios in valuing Provident to-be-issued stock -- price/earnings ("P/E"),
price/book ("P/B"), and price/assets ("P/A") approaches -- all performed on a
pro forma basis including the effects of the conversion proceeds. In computing
the pro forma impact of the conversion and the related pricing ratios, updated
information consistent with the prospectus for the effective tax rate, offering
expenses, reinvestment rate and stock benefit plans utilized in the Original
Appraisal did not change in this update. The pro assumptions are summarized in
Exhibits 2 and 3.
Consistent with the Original Appraisal, this updated appraisal
continues to be based primarily on fundamental analysis techniques applied to
the Peer Group, including the P/E approach, the P/B approach and the P/A
approach. The updated appraisal also incorporates a technical analysis of
recently completed stock conversions, including principally the P/B approach
which (as discussed in the Original Appraisal) is the most meaningful pricing
ratio as the pro forma P/E ratios reflect an assumed reinvestment rate and do
not yet reflect the actual use of proceeds.
Based on the foregoing, we have concluded that the pro forma market
value range of Provident's stock is subject to a decrease. Therefore, as of
October 30, 1998, RP Financial concluded that the pro forma market value of
Provident's stock as a mutual holding company on a fully-converted basis, is
equal to $62,000,000, which represents a 4.6 percent decrease from the midpoint
valuation of $65,000,000 concluded in the Original Appraisal.
1. P/B Approach. P/B ratios are a useful benchmark in the valuation
------------
of thrift stocks. Based on the midpoint value, Provident's pro forma full
conversion P/TB ratio was 59.48 percent (versus the 61.88 percent midpoint
valuation in the Original Appraisal). Relative to the average P/TB ratio
indicated for the Peer Group of 84.78 percent (fully converted basis),
Provident's
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 15
updated valuation reflected a 29.8 percent discount relative to the Peer Group
(versus the 30.2 percent discount applied in the Original Appraisal). The lower
discount is warranted, notwithstanding the weak new issue market, due to the
change to RP Financial's data base which now explicitly incorporates the
dilution attributable to the dividend waiver by the MHC's of the Peer Group.
Importantly, the pro forma P/TB at the midpoint of 59.48 percent is discounted
only modestly from the fully converted ratios of Sound Bancorp and West Essex
Bancorp, which equaled 67.43 percent and 62.46 percent, respectively as of
October 30, 1998.
2. P/E Approach. In applying the P/E approach, RP Financial's
------------
valuation conclusions were based on the Bank's and the Peer Group's recurring or
"core" earnings estimates, which eliminated the effects of one-time
non-recurring items from the earnings of each. Provident's core earnings for the
twelve months ended September 30, 1998 equaled $4.242 million (see Table 1).
Based on Provident's core earnings, and incorporating the impact of the pro
forma assumptions discussed previously, the Bank's core P/E multiple at the
$62.0 million midpoint value (full conversion) equaled 11.60 times (versus the
11.34 times midpoint valuation in the Original Appraisal). Comparatively, the
Peer Group posted an average core P/E multiple of 19.97 times (fully converted
basis), which indicated a discount of 39.6 percent in the Bank's core P/E
multiple (versus a discount of 42.3 percent as indicated in the Original
Appraisal). The implied conversion pricing ratios relative to the Peer Group's
pricing ratios are indicated in Table 5, and the updated pro forma calculations
are detailed in Exhibits 2 and 3.
3. P/A Approach. P/A ratios are generally not as a reliable
------------
indicator of market value, as investors do not place significant weight on total
assets as a determinant of market value. Investors typically place significantly
greater weight on book value and earnings -- which have received greater weight
in our valuation analysis. At the $62.0 million midpoint of the valuation range,
Provident exhibited a pro forma P/A ratio of 8.34 percent. In comparison to the
Peer Group's average P/A ratio of 18.75 percent (fully converted basis),
Provident's P/A ratio indicated a discount of 55.5 percent (versus a discount of
53.3 percent at the fully-converted midpoint valuation in the Original
Appraisal).
SUMMARY
- -------
Based on the foregoing, we have concluded that Provident's estimated
pro forma market value should be reduced from the level in the Original
Appraisal. Accordingly, it is our opinion, as of October 30, 1998, the estimated
aggregate pro forma market value of the offering shares in a full stock
conversion, was $62,000,000 at the midpoint, equal to 6,200,000 shares offered
at a per share value of $10.00. Pursuant to conversion guidelines, the
15 percent offering range indicates a minimum offering value of $52,700,000, and
a maximum offering value of $71,300,000. Based on the $10.00 per share offering
price determined by the Board, this valuation range equates to an offering of
5,270,000 shares at the minimum to 7,130,000 shares at the maximum. In the event
that the appraised value is subject to an increase, up to 8,199,500 shares may
be sold in the offering at an issue price of $10.00 per share, for an aggregate
market value of $81,995,000, without a resolicitation.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 5
Public Market Pricing
Provident Bank and the Comparables
As of October 30, 1998
Market
Capitalization Per Share Data Pricing Ratios(3)
------------------------------------------------------------------------
Core Book
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------- ------- ------- ------- ------- ------- ------- -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
- ---------------------
Superrange 10.00 82.00 0.70 15.23 14.38 65.65 10.78 67.64 14.38
Range Maximum 10.00 71.30 0.77 16.24 12.94 61.57 9.49 63.58 12.94
Range Midpoint 10.00 62.00 0.86 17.40 11.60 57.46 8.34 59.48 11.60
Range Minimum 10.00 52.70 0.98 18.97 10.17 52.70 7.16 54.71 10.17
SAIF-Insured Thrifts(7)
- -----------------------
Averages 15.93 145.23 0.91 13.27 17.45 126.24 16.02 131.58 17.93
Medians --- --- --- --- 16.67 114.33 14.91 115.21 17.62
All Non-MHC State of NY(7)
- --------------------------
Averages 16.51 320.49 1.02 16.00 16.73 99.42 13.49 110.80 17.29
Medians --- --- --- --- 15.43 109.19 17.84 113.39 18.04
Publicly-Traded MHC Institutions, Full Conversion Basis
- -------------------------------------------------------
Averages 13.66 220.94 0.70 16.14 19.02 83.66 18.75 84.78 19.97
Medians --- --- --- --- 18.81 84.31 17.42 83.92 19.47
Publicly-Traded MHC Institutions, Full Conversion Basis
- ----------------------------
ALLB Alliance Bank MHC of PA (19.9) 12.75 43.75 0.88 18.08 14.49 70.52 14.11 70.52 14.49
BCSB BCSB Bankcorp MHC of MD (38.6) 10.06 61.79 0.52 12.62 19.35 79.71 20.15 79.71 19.35
BRKL Brookline Bncp MHC of MA(47.0) 13.00 379.26 0.69 15.42 18.31 84.31 37.56 84.31 18.84
FFFL Fidelity Bcsh MHC of FL (47.9) 23.56 171.73 1.21 23.69 16.59 99.45 11.08 100.99 19.47
SBFL Fingr Lakes Fin.MHC OF NY(33.1 10.00 35.93 0.40 11.91 21.74 83.96 12.86 83.96 25.00
GBNK Gaston Fed Bncp MHC of NC(47.0 13.13 59.27 0.48 15.16 25.75 86.61 25.77 86.61 27.35
HARS Harris Fin. MHC of PA (24.9) 15.56 600.85 0.71 15.38 19.45 101.17 22.01 104.43 21.92
JXSB Jcksnville SB,MHC of IL (45.6) 14.25 28.14 0.55 16.39 19.52 86.94 15.28 86.94 25.91
LFED Leeds Fed Bksr MHC of MD (36.3 14.25 79.40 0.85 16.98 16.76 83.92 22.81 83.92 16.76
LIBB Liberty Bancorp MHC of NJ (47) 9.63 37.57 0.45 12.98 21.40 74.19 13.79 74.19 21.40
NBCP Niagara Bancorp of NY MHC(45.4 11.00 327.89 0.56 13.78 26.19 79.83 21.86 79.83 19.64
NWSB Northwest Bcrp MHC of PA (30.8 11.88 574.56 0.66 12.03 17.73 98.75 19.63 102.68 18.00
PBHC Pathfinder BC MHC of NY (45.2) 11.63 32.33 0.62 14.05 16.86 82.78 15.14 90.79 18.76
PBCT Peoples Bank, MHC of CT (41.2) 25.56 1,940.21 1.13 25.32 14.36 100.95 19.08 107.58 22.62
PHSB Ppls Home SB, MHC of PA (45.0) 13.75 39.28 0.78 17.19 16.57 79.99 15.90 79.99 17.63
PLSK Pulaski SB, MHC of NJ (47.0) 10.75 23.28 0.65 15.31 17.62 70.22 11.72 70.22 16.54
SKBOD Skibo Fin Corp MHC of PA(45.0) 12.00 28.36 0.60 16.19 22.64 74.12 17.79 74.12 20.00
SFFS Sound Bancorp MHC of NY (44.1) 10.00 52.13 0.78 14.83 12.82 67.43 17.42 67.43 12.82
WAYN Wayne Svgs Bks MHC of OH (48.2 18.25 46.32 0.90 18.06 18.81 101.05 16.51 101.05 20.28
WCFB Wbstr Cty FSB MHC of IA (45.6) 16.00 36.75 0.83 18.06 19.28 88.59 31.73 88.59 19.28
WEBK West Essex MHC of NJ (42.2) 9.75 41.02 0.42 15.61 23.21 62.46 11.49 62.46 23.21
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ---------------- ---------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------ ------- ------ ------- ------- ------- ------- ------- ------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
- ---------------------
Superrange 0.00 0.00 0.00 761 16.42 0.85 0.75 4.56 0.75 4.56
Range Maximum 0.00 0.00 0.00 752 15.41 0.86 0.73 4.76 0.73 4.76
Range Midpoint 0.00 0.00 0.00 744 14.51 0.87 0.72 4.95 0.72 4.95
Range Minimum 0.00 0.00 0.00 736 13.59 0.88 0.70 5.18 0.70 5.18
SAIF-Insured Thrifts(7)
- -----------------------
Averages 0.33 2.07 33.36 1,108 13.79 0.64 0.91 7.84 0.87 7.41
Medians --- --- --- --- --- --- --- --- --- ---
All Non-MHC State of NY(7)
- --------------------------
Averages 0.30 1.58 26.08 2,463 13.69 0.69 0.55 5.25 0.79 6.65
Medians --- --- --- --- --- --- --- --- --- ---
Publicly-Traded MHC Institutions, Full Conversion Basis
- -------------------------------------------------------
Averages 0.32 2.07 33.44 1,128 22.50 0.57 1.05 4.76 1.01 4.50
Medians --- --- --- --- --- --- --- --- --- ---
Publicly-Traded MHC Institutions, Full Conversion Basis
- -------------------------------------------------------
ALLB Alliance Bank MHC of PA (19.9) 0.36 2.82 40.91 310 20.02 1.06 1.03 4.91 1.03 4.91
BCSB BCSB Bankcorp MHC of MD (38.6) 0.00 0.00 0.00 307 25.28 0.34 1.04 4.12 1.04 4.12
BRKL Brookline Bncp MHC of MA(47.0) 0.20 1.54 28.99 1,010 44.55 0.60 2.26 5.74 2.19 5.58
FFFL Fidelity Bcsh MHC of FL (47.9) 1.00 4.24 NM 1,551 11.14 0.27 0.80 6.11 0.68 5.20
SBFL Fingr Lakes Fin.MHC OF NY(33.1 0.24 2.40 60.00 279 15.32 0.32 0.63 3.90 0.55 3.39
GBNK Gaston Fed Bncp MHC of NC(47.0 0.20 1.52 41.67 230 29.75 0.50 1.00 4.40 0.94 4.14
HARS Harris Fin. MHC of PA (24.9) 0.22 1.41 30.99 2,730 21.75 0.66 1.19 5.30 1.06 4.71
JXSB Jcksnville SB,MHC of IL (45.6) 0.30 2.11 54.55 184 17.57 0.68 0.79 4.51 0.60 3.40
LFED Leeds Fed Bksr MHC of MD (36.3 0.56 3.93 65.88 348 27.19 0.83 1.40 5.06 1.40 5.06
LIBB Liberty Bancorp MHC of NJ (47) 0.00 0.00 0.00 272 18.58 0.35 0.64 3.47 0.64 3.47
NBCP Niagara Bancorp of NY MHC(45.4 0.12 1.09 21.43 1,500 27.38 0.29 0.90 4.05 1.20 5.41
NWSB Northwest Bcrp MHC of PA (30.8 0.16 1.35 24.24 2,927 19.88 0.50 1.22 5.66 1.21 5.58
PBHC Pathfinder BC MHC of NY (45.2) 0.20 1.72 32.26 214 18.28 1.30 0.91 4.97 0.82 4.46
PBCT Peoples Bank, MHC of CT (41.2) 0.92 3.60 NM 10,169 18.90 0.59 1.43 7.43 0.91 4.71
PHSB Ppls Home SB, MHC of PA (45.0) 0.28 2.04 35.90 247 19.87 0.21 1.00 5.08 0.94 4.78
PLSK Pulaski SB, MHC of NJ (47.0) 0.30 2.79 46.15 199 16.69 0.63 0.68 4.05 0.72 4.31
SKBOD Skibo Fin Corp MHC of PA(45.0) 0.30 2.50 50.00 159 24.00 0.59 0.78 3.27 0.89 3.70
SFFS Sound Bancorp MHC of NY (44.1) 0.00 0.00 0.00 299 25.84 0.52 1.36 5.26 1.36 5.26
WAYN Wayne Svgs Bks MHC of OH (48.2 0.62 3.40 68.89 281 16.34 0.49 0.89 5.44 0.82 5.04
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.80 5.00 NM 116 35.81 0.07 1.68 4.64 1.68 4.64
WEBK West Essex MHC of NJ (42.2) 0.00 0.00 0.00 357 18.40 1.10 0.50 2.69 0.50 2.69
</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
exit
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 equity) are indicated ratios based
on trailing twelve month earnings and average equity 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.
Copyright (C) 1997 by RP Financial, LC.
<PAGE>
Board of Directors
Provident Bank
October 30, 1998
Page 17
The Board of Directors has established a public offering range such
that the public ownership of the Holding Company will constitute a 46.61 percent
ownership interest. Accordingly, the offering range to the public of the
minority stock will range from $24,565,000 at the minimum, to $28,900,000 at the
midpoint, $33,325,000 at the maximum and $38,220,250 at the supermaximum of the
valuation range, all based on a $10.00 per share offering price. The pro forma
valuation calculations relative to the Peer Group (fully converted basis) are
shown in Table 5 and are detailed in Exhibit 2 and Exhibit 3; the pro forma
valuation calculations relative to the Peer Group based on reported financials
are shown in Table 6 and are detailed in Exhibits 4 and 5.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ Ronald S. Riggins
-------------------------
Ronald S. Riggins
President
/s/ James P.Hennessey
-------------------------
James P. Hennessey
Senior Vice President
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 6
Market Pricing Comparatives
Prices As of October 30, 1998
Market Per Share Data
Capitalization _______________ Pricing Ratios(3)
--------------- Core Book ---------------------------------------
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
- ---------------------
Superrange 10.00 82.00 0.60 10.68 16.67 93.62 11.33 97.71 16.67
Range Maximum 10.00 71.30 0.68 11.67 14.78 85.70 9.92 89.65 14.78
Range Midpoint 10.00 62.00 0.77 12.80 13.07 78.10 8.67 81.88 13.07
Range Minimum 10.00 52.70 0.88 14.34 11.30 69.74 7.41 73.29 11.30
SAIF-Insured Thrifts 15.93 145.23 0.91 13.27 17.45 126.24 16.02 131.58 17.93
All Public Companies 16.18 165.64 0.95 13.19 17.02 128.28 15.99 133.37 17.68
Special Selection Grouping(8) 13.66 79.68 0.50 9.32 23.18 151.16 20.29 156.77 24.58
State of NY 18.47 441.11 1.07 14.75 17.09 120.88 17.16 124.08 18.96
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
ALLB Alliance Bank MHC of PA (19.9) 12.75 8.29 0.61 9.05 20.90 140.88 15.04 140.88 20.90
BCSB BCSB Bankcorp MHC of MD (38.6) 10.06 23.75 0.36 7.28 27.94 138.19 22.49 138.19 27.94
BRKL Brookline Bncp MHC of MA(47.0) 13.00 177.78 0.51 9.47 24.53 137.28 45.28 137.28 25.49
CMSV Commty. Svgs, MHC of FL (48.5)(7) 22.38 55.28 0.93 16.29 22.16 137.38 14.91 137.38 24.06
FFFL Fidelity Bcsh MHC of FL (47.9) 23.56 76.81 0.92 13.28 20.49 177.41 10.91 182.64 25.61
SBFL Fingr Lakes Fin.MHC OF NY(33.1 10.00 11.80 0.22 6.12 NM 163.40 13.82 163.40 NM
FFSX First FSB MHC Sxld of IA(46.3)(7) 20.00 26.26 1.17 14.77 16.67 135.41 10.32 168.07 17.09
GBNK Gaston Fed Bncp MHC of NC(47.0 13.13 27.74 0.30 9.14 NM 143.65 29.14 143.65 NM
HARS Harris Fin. MHC of PA (24.9) 15.56 131.36 0.44 5.56 28.81 279.86 22.74 309.96 NM
JXSB Jcksnville SB,MHC of IL (45.6) 14.25 12.38 0.33 9.38 27.40 151.92 16.02 151.92 NM
LFED Leeds Fed Bksr MHC of MD (36.3 14.25 26.83 0.64 9.49 22.27 150.16 24.46 150.16 22.27
LIBB Liberty Bancorp MHC of NJ (47) 9.63 17.66 0.32 8.59 NM 112.11 14.71 112.11 NM
NBCP Niagara Bancorp of NY MHC(45.4 11.00 148.52 0.40 8.60 NM 127.91 24.33 127.91 27.50
NWSB Northwest Bcrp MHC of PA (30.8 11.88 171.52 0.44 4.65 26.40 255.48 21.73 284.21 27.00
PBHC Pathfinder BC MHC of NY (45.2) 11.63 14.87 0.45 8.61 21.94 135.08 16.06 158.23 25.84
PBCT Peoples Bank, MHC of CT (41.2) 25.56 706.30 0.83 13.37 15.98 191.17 18.01 221.68 NM
PHSB Ppls Home SB, MHC of PA (45.0) 13.75 17.08 0.58 10.41 21.83 132.08 16.74 132.08 23.71
PULB Pulaski Bk,SB MHC of MO (29.8)(7) 19.38 12.09 0.78 11.70 20.40 165.64 22.23 165.64 24.85
PLSK Pulaski SB, MHC of NJ (47.0) 10.75 10.64 0.51 10.53 22.87 102.09 12.07 102.09 21.08
SKBOD Skibo Fin Corp MHC of PA(45.0) 12.00 12.42 0.43 10.63 NM 112.89 18.96 112.89 27.91
SFFS Sound Bancorp MHC of NY (44.1) 10.00 22.99 0.63 10.02 15.87 99.80 19.02 99.80 15.87
WAYN Wayne Svgs Bks MHC of OH (48.2 18.25 21.85 0.66 9.94 25.00 183.60 17.49 183.60 27.65
WCFB Wbstr Cty FSB MHC of IA (45.6) 16.00 15.39 0.63 10.75 25.40 148.84 34.84 148.84 25.40
WEBK West Essex MHC of NJ (42.2) 9.75 17.29 0.27 10.76 NM 90.61 12.17 90.61 NM
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ---------------- ---------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------ ------- ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Provident Bank
- --------------
Superrange 0.00 0.00 0.00 723 12.11 0.90 0.68 5.62 0.68 5.62
Range Maximum 0.00 0.00 0.00 719 11.57 0.90 0.67 5.80 0.67 5.80
Range Midpoint 0.00 0.00 0.00 715 11.10 0.91 0.66 5.98 0.66 5.98
Range Minimum 0.00 0.00 0.00 711 10.62 0.91 0.66 6.17 0.66 6.17
SAIF-Insured Thrifts 0.33 2.07 33.36 1,108 13.79 0.64 0.91 7.84 0.87 7.41
All Public Companies 0.34 2.06 32.75 1,200 13.52 0.63 0.94 8.27 0.90 7.79
Special Selection Grouping(8) 0.32 2.07 14.30 1,005 14.21 0.57 0.84 6.58 0.78 5.97
State of NY 0.36 1.71 29.80 2,655 14.46 0.65 0.81 6.71 0.95 7.25
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
ALLB Alliance Bank MHC of PA (19.9) 0.36 2.82 11.72 278 10.68 1.06 0.77 6.88 0.77 6.88
BCSB BCSB Bankcorp MHC of MD (38.6) 0.00 0.00 0.00 274 16.27 0.34 0.80 4.95 0.80 4.95
BRKL Brookline Bncp MHC of MA(47.0) 0.20 1.54 18.43 835 32.99 0.60 2.07 8.28 2.00 7.97
CMSV Commty. Svgs, MHC of FL (48.5)(7) 0.90 4.02 NM 766 10.85 0.27 0.70 6.35 0.65 5.85
FFFL Fidelity Bcsh MHC of FL (47.9) 1.00 4.24 NM 1,468 6.15 0.27 0.65 8.98 0.52 7.18
SBFL Fingr Lakes Fin.MHC OF NY(33.1 0.24 2.40 NM 258 8.46 0.32 0.42 4.65 0.33 3.65
FFSX First FSB MHC Sxld of IA(46.3)(7) 0.48 2.40 18.93 552 7.62 0.46 0.68 8.43 0.66 8.22
GBNK Gaston Fed Bncp MHC of NC(47.0 0.20 1.52 31.32 203 20.28 0.50 0.73 5.92 0.66 5.39
HARS Harris Fin. MHC of PA (24.9) 0.22 1.41 12.42 2,326 8.13 0.66 0.84 10.33 0.68 8.41
JXSB Jcksnville SB,MHC of IL (45.6) 0.30 2.11 NM 170 10.54 0.68 0.59 5.68 0.38 3.60
LFED Leeds Fed Bksr MHC of MD (36.3 0.56 3.93 NM 303 16.29 0.83 1.13 6.89 1.13 6.89
LIBB Liberty Bancorp MHC of NJ (47) 0.00 0.00 0.00 255 13.12 0.35 0.49 3.73 0.49 3.73
NBCP Niagara Bancorp of NY MHC(45.4 0.12 1.09 13.61 1,345 19.02 0.29 0.63 5.03 0.96 7.74
NWSB Northwest Bcrp MHC of PA (30.8 0.16 1.35 11.20 2,563 8.50 0.50 0.92 10.14 0.90 9.91
PBHC Pathfinder BC MHC of NY (45.2) 0.20 1.72 20.78 198 11.89 1.30 0.74 6.28 0.63 5.33
PBCT Peoples Bank, MHC of CT (41.2) 0.92 3.60 NM 9,105 9.42 0.59 1.22 13.58 0.63 7.05
PHSB Ppls Home SB, MHC of PA (45.0) 0.28 2.04 21.72 227 12.67 0.21 0.80 6.62 0.73 6.09
PULB Pulaski Bk,SB MHC of MO (29.8)(7) 1.10 5.68 NM 184 13.42 NA 1.11 8.38 0.91 6.88
PLSK Pulaski SB, MHC of NJ (47.0) 0.30 2.79 27.63 188 11.82 0.63 0.54 4.57 0.59 4.96
SKBOD Skibo Fin Corp MHC of PA(45.0) 0.30 2.50 31.40 146 16.79 0.59 0.57 3.37 0.68 4.03
SFFS Sound Bancorp MHC of NY (44.1) 0.00 0.00 0.00 274 19.05 0.52 1.20 6.29 1.20 6.29
WAYN Wayne Svgs Bks MHC of OH (48.2 0.62 3.40 NM 259 9.53 0.49 0.71 7.52 0.64 6.80
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.80 5.00 NM 97 23.41 0.07 1.40 5.95 1.40 5.95
WEBK West Essex MHC of NJ (42.2) 0.00 0.00 0.00 336 13.43 1.10 0.34 2.51 0.34 2.51
</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>
EXHIBITS
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
1 Stock Prices: As of October 30, 1998
2 Pro Forma Analysis Sheet: Fully Converted Basis
3 Pro Forma Effect of Conversion Proceeds: Fully Converted Basis
4 Pro Forma Analysis Sheet: Minority Stock Offering
5 Pro Forma Effects: Minority Stock Offering
6 Firm Qualifications Statement
</TABLE>
<PAGE>
EXHIBIT 1
Stock Prices
As of October 30, 1998
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
SAIF-Insured Thrifts(274) 16.12 7,781 152.4 22.98 13.77 15.79 2.22 -7.77 -16.65
NYSE Traded Companies(7) 28.68 42,346 1,412.1 44.18 22.62 28.88 0.70 -25.56 -30.74
AMEX Traded Companies(22) 14.02 3,363 44.6 20.96 12.60 14.11 -0.50 -14.14 -21.73
NASDAQ Listed OTC Companies(245) 15.98 7,252 128.4 22.60 13.64 15.59 2.51 -6.72 -15.82
California Companies(17) 20.12 14,445 499.1 30.40 16.52 20.17 0.72 -21.53 -26.66
Florida Companies(5) 11.28 30,056 320.6 20.58 8.56 11.42 -0.70 -28.92 -34.20
Mid-Atlantic Companies(52) 15.73 11,570 175.7 23.31 13.34 15.42 2.01 -10.37 -19.24
Mid-West Companies(130) 15.86 5,672 109.6 22.14 13.90 15.52 2.27 -6.31 -15.56
New England Companies(7) 17.41 8,257 182.1 25.16 13.19 16.54 5.60 -9.58 -15.88
North-West Companies(11) 17.25 11,460 248.2 22.62 13.86 16.67 4.17 -0.53 -4.26
South-East Companies(41) 16.35 4,622 97.3 23.01 13.73 15.89 2.57 -2.66 -13.18
South-West Companies(6) 13.30 2,743 43.6 19.23 11.80 13.35 1.52 -7.91 -22.91
Western Companies (Excl CA)(5) 15.85 2,133 36.8 22.05 14.44 15.75 -0.34 -9.47 -21.42
Thrift Strategy(233) 15.69 5,193 90.8 22.16 13.57 15.30 2.55 -7.34 -15.88
Mortgage Banker Strategy(24) 20.09 22,735 560.3 29.06 16.00 19.89 1.15 -6.57 -20.19
Real Estate Strategy(7) 15.46 8,453 102.9 24.59 13.62 16.29 -5.90 -13.33 -17.24
Diversified Strategy(7) 18.78 48,273 1,010.2 28.45 13.19 18.37 4.27 -19.84 -27.41
Retail Banking Strategy(3) 15.88 5,223 96.2 25.69 13.85 15.75 0.66 -11.36 -26.91
Companies Issuing Dividends(230) 16.72 7,787 162.8 23.59 14.33 16.38 2.22 -7.59 -16.36
Companies Without Dividends(44) 12.80 7,748 94.5 19.61 10.66 12.49 2.26 -8.84 -18.34
Equity/Assets (less than)6%(18) 16.61 21,380 361.8 26.00 12.63 15.97 2.49 -16.26 -25.20
Equity/Assets 6-12%(119) 17.35 8,362 202.8 24.90 14.56 16.96 2.78 -7.22 -18.36
Equity/Assets (greater than)12%(137) 15.01 5,449 81.0 20.94 13.25 14.76 1.71 -7.10 -14.03
Actively Traded Companies(28) 23.25 29,799 770.5 32.49 18.84 22.51 3.42 -8.73 -19.49
Market Value Below $20 Million(61) 12.17 1,193 13.6 17.94 11.03 12.00 1.91 -14.45 -21.54
Holding Company Structure(247) 16.39 7,690 155.4 23.40 14.03 16.06 2.21 -8.29 -16.80
Assets Over $1 Billion(56) 19.76 25,579 549.6 28.73 15.48 19.41 1.58 -9.02 -18.47
Assets $500 Million-$1 Billion(35) 17.89 5,743 94.3 25.45 15.06 17.24 3.96 -8.34 -17.46
Assets $250-$500 Million(64) 16.23 3,699 55.8 22.65 14.17 15.97 1.68 -3.36 -12.56
Assets less than $250 Million(119) 13.79 1,696 23.0 19.64 12.37 13.53 2.30 -9.18 -17.54
Goodwill Companies(111) 16.70 14,083 255.6 24.46 13.87 16.40 1.74 -9.09 -18.60
Non-Goodwill Companies(161) 15.67 3,460 82.0 21.90 13.67 15.32 2.54 -7.16 -15.36
Acquirors of FSLIC Cases(7) 32.34 33,613 1,443.7 43.53 26.88 32.44 -1.26 -8.02 -16.58
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
SAIF-Insured Thrifts(274) 0.99 0.94 13.56 13.10 122.31
NYSE Traded Companies(7) 2.04 1.72 18.18 17.83 237.16
AMEX Traded Companies(22) 0.84 0.81 14.58 14.28 119.54
NASDAQ Listed OTC Companies(245) 0.98 0.93 13.35 12.87 119.50
California Companies(17) 1.55 1.42 17.16 16.40 232.97
Florida Companies(5) 0.65 0.44 9.37 8.58 103.48
Mid-Atlantic Companies(52) 1.07 1.03 13.14 12.36 140.55
Mid-West Companies(130) 0.91 0.87 13.49 13.20 108.22
New England Companies(7) 1.21 1.11 13.81 13.19 187.81
North-West Companies(11) 0.96 0.90 12.75 11.60 99.70
South-East Companies(41) 0.94 0.90 13.44 13.23 95.93
South-West Companies(6) 1.16 1.13 12.71 12.31 157.12
Western Companies (Excl CA)(5) 0.96 0.96 15.94 15.09 104.65
Thrift Strategy(233) 0.94 0.91 13.73 13.35 113.89
Mortgage Banker Strategy(24) 1.21 1.17 13.34 11.96 184.95
Real Estate Strategy(7) 1.38 1.27 12.23 11.84 169.37
Diversified Strategy(7) 0.95 0.64 9.92 9.67 121.53
Retail Banking Strategy(3) 2.93 2.39 14.04 13.28 207.36
Companies Issuing Dividends(230) 1.05 0.98 13.83 13.36 121.30
Companies Without Dividends(44) 0.70 0.73 12.09 11.67 127.97
Equity/Assets (less than)6%(18) 1.17 1.27 11.42 10.29 230.68
Equity/Assets 6-12%(119) 1.19 1.07 12.98 12.26 152.14
Equity/Assets greater than 12%(137) 0.80 0.79 14.35 14.20 82.13
Actively Traded Companies(28) 1.46 1.53 14.58 13.55 188.08
Market Value Below $20 Million(61) 0.78 0.71 12.76 12.64 94.34
Holding Company Structure(247) 1.00 0.95 13.77 13.29 123.12
Assets Over $1 Billion(56) 1.30 1.27 13.79 12.50 182.51
Assets $500 Million-$1 Billion(35) 1.15 1.05 13.63 13.10 137.12
Assets $250-$500 Million(64) 1.01 0.96 13.89 13.52 122.31
Assets less than $250 Million(119) 0.79 0.74 13.27 13.19 88.76
Goodwill Companies(111) 1.08 1.01 13.21 12.10 144.23
Non-Goodwill Companies(161) 0.93 0.89 13.88 13.88 107.58
Acquirors of FSLIC Cases(7) 2.93 2.77 20.61 19.93 244.71
</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
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHC)
--------------------------------------------
BIF-Insured Thrifts(56) 17.55 12,244 267.8 25.03 14.25 17.44 0.65 -7.24 -18.44
NYSE Traded Companies(5) 30.15 52,930 1,436.9 38.25 24.35 29.68 1.53 15.19 -4.35
AMEX Traded Companies(5) 15.08 2,452 39.4 23.20 13.05 15.20 -0.11 -16.91 -22.02
NASDAQ Listed OTC Companies(46) 16.32 8,476 153.1 23.64 13.16 16.22 0.63 -8.79 -19.72
California Companies(1) 15.25 7,610 116.1 24.00 9.00 14.13 7.93 -23.29 -20.78
Mid-Atlantic Companies(21) 19.91 21,461 530.4 26.49 15.31 19.50 1.73 1.10 -14.48
New England Companies(29) 16.98 7,289 124.2 24.96 14.19 17.06 -0.05 -7.61 -17.52
North-West Companies(2) 13.25 5,865 78.9 19.13 12.22 13.60 -2.29 -22.70 -26.78
South-East Companies(3) 11.23 2,611 25.3 20.67 11.08 11.38 -0.68 -41.07 -45.22
Thrift Strategy(44) 17.64 8,310 196.1 24.87 14.38 17.46 1.13 -6.32 -17.14
Mortgage Banker Strategy(6) 18.74 28,158 616.8 27.80 15.58 19.12 -2.78 -10.88 -25.83
Real Estate Strategy(2) 12.47 7,761 96.4 19.19 8.88 12.01 3.00 -13.19 -18.26
Diversified Strategy(4) 17.34 35,860 639.1 25.50 13.44 17.44 -0.44 -8.17 -21.16
Companies Issuing Dividends(48) 18.08 13,759 305.1 25.82 14.74 18.00 0.39 -7.80 -19.60
Companies Without Dividends(8) 14.69 4,098 67.3 20.75 11.60 14.42 2.03 -4.22 -12.20
Equity/Assets (less than)6%(2) 16.88 2,855 50.0 24.25 12.88 16.75 0.61 6.61 -15.00
Equity/Assets 6-12%(36) 18.37 14,476 335.4 26.30 14.80 18.31 0.25 -8.95 -19.02
Equity/Assets (greater than)12%(18) 16.08 9,147 166.0 22.73 13.38 15.88 1.39 -5.64 -17.75
Converted Last 3 Mths (no MHC)(1) 10.00 5,357 53.6 10.00 8.88 9.88 1.21 0.00 0.00
Actively Traded Companies(14) 22.07 20,226 441.0 30.78 18.25 22.15 -0.87 -6.41 -17.55
Market Value Below $20 Million(6) 13.38 1,360 15.7 21.68 11.24 13.26 1.28 -16.07 -31.12
Holding Company Structure(43) 17.55 9,626 188.3 24.77 14.27 17.38 0.87 -5.38 -17.09
Assets Over $1 Billion(16) 24.01 33,067 791.7 31.80 18.26 23.65 1.25 2.58 -11.20
Assets $500 Million-$1 Billion(11) 19.25 5,781 93.0 27.17 15.72 18.81 3.47 -6.69 -18.12
Assets $250-$500 Million(15) 13.98 3,890 50.7 20.77 12.23 14.31 -2.04 -10.99 -19.89
Assets less than $250 Million(14) 13.23 1,981 23.4 20.81 11.13 13.14 1.07 -14.31 -24.94
Goodwill Companies(28) 17.81 19,691 437.4 26.17 14.21 17.81 -0.28 -6.64 -20.71
Non-Goodwill Companies(28) 17.32 5,624 117.0 24.02 14.29 17.11 1.47 -7.76 -16.43
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
($) ($) ($) ($) ($)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(56) 1.23 1.17 12.99 12.53 124.00
NYSE Traded Companies(5) 1.87 1.94 20.67 19.00 132.39
AMEX Traded Companies(5) 1.13 1.05 12.99 12.62 115.89
NASDAQ Listed OTC Companies(46) 1.16 1.09 12.05 11.73 123.96
California Companies(1) 1.81 1.81 14.00 13.97 134.21
Mid-Atlantic Companies(21) 1.13 1.17 14.37 13.77 121.90
New England Companies(29) 1.35 1.19 12.42 11.97 133.24
North-West Companies(2) 1.16 1.05 9.72 9.72 92.41
South-East Companies(3) 0.63 0.87 11.04 10.85 74.90
Thrift Strategy(44) 1.19 1.15 13.59 13.23 121.18
Mortgage Banker Strategy(6) 1.49 1.28 11.88 11.16 147.12
Real Estate Strategy(2) 1.31 1.31 9.50 9.49 91.01
Diversified Strategy(4) 1.18 1.18 9.48 7.87 137.31
Companies Issuing Dividends(48) 1.24 1.17 12.93 12.38 127.62
Companies Without Dividends(8) 1.15 1.17 13.31 13.30 104.56
Equity/Assets (less than)6%(2) 1.38 0.75 7.62 7.41 178.23
Equity/Assets 6-12%(36) 1.34 1.23 12.20 11.53 144.12
Equity/Assets (greater than)12%(18) 0.99 1.11 15.10 15.02 79.74
Converted Last 3 Mths (no MHC)(1) 0.25 0.56 14.34 14.34 52.66
Actively Traded Companies(14) 1.84 1.68 15.19 14.42 154.89
Market Value Below $20 Million(6) 1.03 1.02 11.68 11.43 142.24
Holding Company Structure(43) 1.19 1.17 13.31 12.97 118.62
Assets Over $1 Billion(16) 1.59 1.58 14.43 13.34 138.69
Assets $500 Million-$1 Billion(11) 1.45 1.19 13.69 13.44 157.36
Assets $250-$500 Million(15) 1.06 1.02 12.10 11.89 106.06
Assets less than $250 Million(14) 0.88 0.88 11.92 11.78 107.13
Goodwill Companies(28) 1.27 1.15 12.84 11.86 139.33
Non-Goodwill Companies(28) 1.18 1.19 13.12 13.12 110.37
</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
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
---------------------------------
SAIF-Insured Thrifts(21) 13.25 9,244 44.6 21.68 11.13 12.85 3.35 -16.02 -18.18
BIF-Insured Thrifts(3) 16.06 32,213 289.9 28.09 12.52 15.13 6.43 -13.88 -21.53
NASDAQ Listed OTC Companies(24) 13.66 12,525 79.7 22.60 11.33 13.17 3.79 -15.71 -18.65
Florida Companies(2) 23.56 6,802 76.8 35.38 18.75 22.75 3.56 -14.33 -27.51
Mid-Atlantic Companies(14) 11.64 10,856 45.4 20.34 9.79 11.19 4.20 -20.70 -22.38
Mid-West Companies(5) 16.17 2,169 16.5 25.75 14.33 15.83 2.31 -21.99 -26.51
New England Companies(2) 19.28 46,621 442.0 29.56 14.54 18.41 4.18 4.47 -1.37
South-East Companies(1) 13.13 4,497 27.7 18.06 10.00 12.88 1.94 31.30 31.30
Thrift Strategy(22) 12.93 8,679 44.0 21.35 10.93 12.51 3.64 -15.38 -17.75
Mortgage Banker Strategy(1) 15.56 33,992 131.4 27.88 11.00 14.88 4.57 -16.66 -21.73
Diversified Strategy(1) 25.56 64,147 706.3 41.13 19.19 24.13 5.93 -21.06 -32.74
Companies Issuing Dividends(20) 14.55 14,330 93.6 25.31 12.03 13.98 4.44 -19.08 -22.71
Companies Without Dividends(4) 9.86 4,857 20.4 11.10 8.35 9.77 1.05 -1.40 -1.40
Equity/Assets 6-12%(12) 15.42 16,789 116.6 28.88 13.02 14.81 4.27 -27.69 -33.98
Equity/Assets greater than 12%(12) 12.05 8,650 46.1 16.89 9.79 11.68 3.35 -4.82 -4.72
Holding Company Structure(5) 12.10 8,818 45.2 18.96 10.23 11.65 4.29 -9.41 -13.26
Assets Over $1 Billion(5) 17.51 36,312 246.9 27.88 13.29 16.40 7.99 -12.71 -17.58
Assets $500 Million-$1 Billion(3) 13.00 29,095 177.8 17.98 9.88 12.69 2.44 30.00 30.00
Assets $250-$500 Million(8) 11.84 4,244 18.8 20.20 10.49 11.81 0.49 -18.83 -20.90
Assets less than $250 Million(8) 13.07 2,632 15.8 22.22 11.09 12.50 4.75 -20.82 -23.80
Goodwill Companies(8) 15.43 23,551 163.1 24.46 12.21 14.76 4.41 -15.14 -20.24
Non-Goodwill Companies(15) 12.98 7,151 39.1 22.57 11.07 12.58 3.55 -17.22 -19.24
MHC Institutions(24) 13.66 12,525 79.7 22.60 11.33 13.17 3.79 -15.71 -18.65
MHC Converted Last 3 Months(2) 9.88 4,705 20.1 10.03 8.46 9.91 -0.26 -1.25 -1.25
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 0.53 0.49 9.17 9.09 74.71
BIF-Insured Thrifts(3) 0.80 0.56 10.19 9.16 86.52
NASDAQ Listed OTC Companies(24) 0.56 0.50 9.32 9.10 76.40
Florida Companies(2) 1.15 0.92 13.28 12.90 215.87
Mid-Atlantic Companies(14) 0.45 0.45 8.59 8.43 66.68
Mid-West Companies(5) 0.63 0.54 10.02 10.02 79.75
New England Companies(2) 1.07 0.67 11.42 10.50 85.33
South-East Companies(1) 0.33 0.30 9.14 9.14 45.06
Thrift Strategy(22) 0.51 0.48 9.30 9.19 73.37
Mortgage Banker Strategy(1) 0.54 0.44 5.56 5.02 68.42
Diversified Strategy(1) 1.60 0.83 13.37 11.53 141.94
Companies Issuing Dividends(20) 0.60 0.52 9.35 9.09 80.09
Companies Without Dividends(4) 0.40 0.40 9.16 9.16 60.73
Equity/Assets 6-12%(12) 0.69 0.54 9.05 8.60 99.28
Equity/Assets >12%(12) 0.45 0.46 9.56 9.56 55.60
Holding Company Structure(5) 0.49 0.49 9.15 8.90 68.00
Assets Over $1 Billion(5) 0.80 0.61 9.09 8.45 105.22
Assets $500 Million-$1 Billion(3) 0.53 0.51 9.47 9.47 28.71
Assets $250-$500 Million(8) 0.48 0.46 8.91 8.91 70.33
Assets less than $250 Million(8) 0.50 0.46 9.92 9.74 69.55
Goodwill Companies(8) 0.70 0.53 9.07 8.43 96.88
Non-Goodwill Companies(15) 0.49 0.47 9.39 9.39 67.20
MHC Institutions(24) 0.56 0.50 9.32 9.10 76.40
MHC Converted Last 3 Months(2) 0.45 0.45 10.39 10.39 66.37
</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
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
BYS Bay State Bancorp of MA* 23.50 2,535 59.6 32.63 19.25 23.13 1.60 17.50 17.50
CFB Commercial Federal Corp. of NE 22.69 60,391 1,370.3 38.19 19.63 23.25 -2.41 -27.69 -36.19
DME Dime Bancorp, Inc. of NY* 23.81 112,027 2,667.4 32.69 18.19 24.19 -1.57 -2.58 -21.29
DSL Downey Financial Corp. of CA 23.44 28,132 659.4 35.00 17.75 26.25 -10.70 -5.10 -13.44
FED FirstFed Fin. Corp. of CA 16.38 21,188 347.1 26.94 14.13 17.50 -6.40 -8.18 -15.48
GSB Golden State Bancorp of CA(8) 19.19 128,549 2,466.9 21.75 11.94 17.75 8.11 N.A. N.A.
GDW Golden West Fin. Corp. of CA 90.69 57,172 5,184.9 114.25 72.38 88.81 2.12 6.14 -7.28
GPT GreenPoint Fin. Corp. of NY* 32.81 95,123 3,121.0 42.63 25.19 31.31 4.79 1.05 -9.56
JSB JSB Financial, Inc. of NY* 52.44 9,833 515.6 59.69 45.00 51.88 1.08 8.39 4.75
OCN Ocwen Financial Corp. of FL 12.00 60,794 729.5 30.38 6.00 11.63 3.18 -55.96 -52.83
SIB Staten Island Bancorp of NY* 18.19 45,130 820.9 23.63 14.13 17.88 1.73 51.58 -13.13
WES Westcorp Inc. of Orange CA 6.88 26,397 181.6 20.31 5.81 5.81 18.42 -62.57 -59.24
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 17.19 2,279 39.2 25.63 15.00 17.50 -1.77 -24.87 -26.48
ANE Alliance Bncp of New Eng of CT* 10.00 2,292 22.9 16.08 9.13 9.88 1.21 -9.75 -9.09
BKC American Bank of Waterbury CT* 21.63 4,703 101.7 32.56 17.88 22.38 -3.35 -2.66 -11.28
BFD BostonFed Bancorp of MA 18.06 5,368 96.9 24.88 14.00 17.88 1.01 -10.81 -17.46
CNY Carver Bancorp, Inc. of NY 9.00 2,314 20.8 17.13 8.50 9.13 -1.42 -28.00 -44.62
CBK Citizens First Fin.Corp. of IL 15.00 2,526 37.9 22.38 14.00 15.00 0.00 -19.18 -25.93
EFC EFC Bancorp Inc of IL 11.25 7,491 84.3 14.94 9.06 10.69 5.24 12.50 12.50
EBI Equality Bancorp, Inc. of MO 12.00 2,518 30.2 16.00 11.63 12.00 0.00 20.00 -17.24
ESX Essex Bancorp of Norfolk VA(8) 2.13 1,059 2.3 6.00 1.38 2.06 3.40 -61.27 -45.94
FCB Falmouth Bancorp, Inc. of MA* 15.38 1,402 21.6 23.88 13.00 15.25 0.85 -24.98 -24.98
FAB FirstFed America Bancorp of MA 14.63 7,858 115.0 23.25 10.75 14.75 -0.81 -25.92 -33.14
GAF GA Financial Corp. of PA 14.00 7,143 100.0 22.25 11.38 15.00 -6.67 -25.85 -25.85
HBS Haywood Bancshares, Inc. of NC* 17.25 1,250 21.6 24.00 17.25 17.75 -2.82 -17.86 -23.33
KNK Kankakee Bancorp, Inc. of IL 24.50 1,373 33.6 37.75 24.25 25.50 -3.92 -21.92 -35.10
KYF Kentucky First Bancorp of KY 12.50 1,241 15.5 15.88 12.13 12.25 2.04 -9.09 -16.33
NBN Northeast Bancorp of ME* 11.13 2,614 29.1 19.50 8.00 10.75 3.53 -29.33 -41.42
NEP Northeast PA Fin. Corp of PA 11.38 6,427 73.1 16.00 8.94 11.25 1.16 13.80 13.80
PDB Piedmont Bancorp, Inc. of NC 9.13 2,688 24.5 11.38 9.00 9.38 -2.67 -17.00 -16.08
SSB Scotland Bancorp, Inc. of NC(8) 11.13 1,914 21.3 11.19 8.13 11.19 -0.54 4.70 11.97
SZB SouthFirst Bancshares of AL 15.69 967 15.2 22.75 14.88 15.63 0.38 -19.54 -31.03
SRN Southern Banc Company of AL 12.75 1,230 15.7 19.13 12.75 12.88 -1.01 -26.09 -28.17
SSM Stone Street Bancorp of NC 15.00 1,843 27.6 22.50 14.00 14.63 2.53 -23.08 -32.40
TSH Teche Holding Company of LA 15.13 3,095 46.8 23.13 13.13 14.88 1.68 -25.28 -33.49
FTF Texarkana Fst. Fin. Corp of AR 21.75 1,676 36.5 30.63 20.00 21.75 0.00 -16.35 -13.00
THR Three Rivers Fin. Corp. of MI 15.13 783 11.8 23.50 15.00 15.50 -2.39 -14.76 -30.44
WSB Washington SB, FSB of MD 4.25 4,421 18.8 9.50 3.75 4.31 -1.39 -43.33 -53.09
WFI Winton Financial Corp. of OH 12.13 4,014 48.7 20.63 9.81 12.38 -2.02 22.03 19.04
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 38.75 1,096 42.5 45.50 22.22 38.75 0.00 71.92 32.30
FBER 1st Bergen Bancorp of NJ(8) 22.50 2,585 58.2 22.63 14.50 22.50 0.00 21.62 17.62
AFED AFSALA Bancorp, Inc. of NY(8) 15.75 1,319 20.8 20.75 12.25 13.75 14.55 -16.00 -18.18
ALBK ALBANK Fin. Corp. of Albany NY(8) 61.13 13,384 818.2 74.63 40.94 60.25 1.46 34.35 18.84
AMFC AMB Financial Corp. of IN 12.63 916 11.6 19.38 11.13 11.88 6.31 -22.89 -20.47
ASBP ASB Financial Corp. of OH 11.81 1,655 19.5 16.75 9.81 11.88 -0.59 -9.15 -10.87
ABBK Abington Bancorp of MA* 14.75 3,532 52.1 22.25 12.50 15.13 -2.51 -13.89 -29.76
AABC Access Anytime Bancorp of NM 8.00 1,228 9.8 13.00 6.63 7.00 14.29 -2.56 -27.27
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
BYS Bay State Bancorp of MA* 1.05 1.05 23.66 23.66 114.26
CFB Commercial Federal Corp. of NE 1.01 1.23 10.65 9.44 146.59
DME Dime Bancorp, Inc. of NY* 1.58 0.96 11.88 9.77 186.69
DSL Downey Financial Corp. of CA 2.03 2.10 16.31 16.14 207.31
FED FirstFed Fin. Corp. of CA 1.39 1.31 11.34 11.27 189.28
GSB Golden State Bancorp of CA(8) 1.14 1.20 8.74 7.33 140.93
GDW Golden West Fin. Corp. of CA 7.05 6.89 51.14 51.14 683.33
GPT GreenPoint Fin. Corp. of NY* 1.53 1.57 13.41 7.59 135.13
JSB JSB Financial, Inc. of NY* 4.65 5.22 38.65 38.65 159.00
OCN Ocwen Financial Corp. of FL 0.45 0.04 7.03 6.43 57.66
SIB Staten Island Bancorp of NY* 0.56 0.91 15.75 15.35 66.89
WES Westcorp Inc. of Orange CA 0.28 -1.26 12.59 12.56 138.79
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 1.29 1.21 19.26 19.26 130.82
ANE Alliance Bncp of New Eng of CT* 1.01 0.49 8.59 8.40 110.07
BKC American Bank of Waterbury CT* 1.82 1.53 12.61 12.23 145.77
BFD BostonFed Bancorp of MA 1.33 1.06 15.38 14.84 197.13
CNY Carver Bancorp, Inc. of NY 0.46 0.40 15.51 15.00 184.69
CBK Citizens First Fin.Corp. of IL 0.78 0.44 15.52 15.52 111.27
EFC EFC Bancorp Inc of IL 0.44 0.53 12.56 12.56 53.08
EBI Equality Bancorp, Inc. of MO 0.56 0.01 10.40 10.40 108.56
ESX Essex Bancorp of Norfolk VA(8) 0.44 -0.44 0.04 -0.08 202.45
FCB Falmouth Bancorp, Inc. of MA* 0.78 0.59 16.86 16.86 78.83
FAB FirstFed America Bancorp of MA 0.87 0.71 14.84 14.84 167.44
GAF GA Financial Corp. of PA 1.14 1.06 15.11 14.97 117.36
HBS Haywood Bancshares, Inc. of NC* 1.12 1.76 17.68 17.12 121.37
KNK Kankakee Bancorp, Inc. of IL 2.10 2.01 28.57 24.41 292.74
KYF Kentucky First Bancorp of KY 0.74 0.73 11.61 11.61 66.11
NBN Northeast Bancorp of ME* 0.91 0.90 9.23 8.50 123.39
NEP Northeast PA Fin. Corp of PA 0.20 0.45 13.22 13.22 74.34
PDB Piedmont Bancorp, Inc. of NC 0.61 0.59 8.04 8.04 48.56
SSB Scotland Bancorp, Inc. of NC(8) 0.44 0.44 7.96 7.96 31.91
SZB SouthFirst Bancshares of AL 0.66 0.59 16.75 16.34 168.54
SRN Southern Banc Company of AL 0.44 0.44 15.10 14.99 85.44
SSM Stone Street Bancorp of NC 0.82 0.82 16.64 16.64 60.91
TSH Teche Holding Company of LA 1.24 1.22 18.44 18.44 133.26
FTF Texarkana Fst. Fin. Corp of AR 1.89 1.84 16.83 16.83 113.10
THR Three Rivers Fin. Corp. of MI 1.05 0.94 16.20 16.15 126.29
WSB Washington SB, FSB of MD 0.44 0.30 5.21 5.21 61.87
WFI Winton Financial Corp. of OH 1.06 0.80 6.49 6.38 89.33
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 1.74 1.22 21.77 21.35 237.36
FBER 1st Bergen Bancorp of NJ(8) 0.82 0.82 13.50 13.50 116.35
AFED AFSALA Bancorp, Inc. of NY(8) 0.77 0.84 14.46 14.46 126.84
ALBK ALBANK Fin. Corp. of Albany NY(8) 3.34 3.32 28.35 22.45 308.64
AMFC AMB Financial Corp. of IN 0.94 0.61 15.41 15.41 121.55
ASBP ASB Financial Corp. of OH 0.65 0.64 8.76 8.76 70.35
ABBK Abington Bancorp of MA* 1.28 0.97 9.85 8.98 154.65
AABC Access Anytime Bancorp of NM 1.22 1.11 7.55 7.55 95.21
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------ ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AFBC Advance Fin. Bancorp of WV 12.50 1,031 12.9 20.88 12.38 13.38 -6.58 -28.57 -28.08
ALBC Albion Banc Corp. of Albion NY 8.00 752 6.0 14.17 7.63 7.75 3.23 -17.95 -39.98
ABCL Alliance Bancorp, Inc. of IL 19.13 11,457 219.2 29.25 15.00 18.13 5.52 -23.48 -27.81
ALLB Alliance Bank MHC of PA (19.9) 12.75 3,274 8.3 39.00 12.75 13.25 -3.77 -57.14 -58.87
AHCI Ambanc Holding Co., Inc. of NY* 15.50 4,105 63.6 20.00 12.00 13.50 14.81 0.00 -17.33
ASBI Ameriana Bancorp of IN 18.00 3,253 58.6 22.00 17.50 18.00 0.00 -11.11 -9.46
ABCW Anchor Bancorp Wisconsin of WI 21.50 17,059 366.8 23.88 14.50 22.63 -4.99 46.96 18.20
ANDB Andover Bancorp, Inc. of MA* 31.25 6,483 202.6 39.88 25.56 30.75 1.63 7.02 -2.95
ASFC Astoria Financial Corp. of NY 43.00 26,593 1,143.5 62.50 30.13 41.63 3.29 -17.70 -22.87
AVND Avondale Fin. Corp. of IL(8) 12.44 2,903 36.1 18.19 8.38 13.13 -5.26 -25.73 -23.45
BCSB BCSB Bankcorp MHC of MD (38.6) 10.06 6,117 23.8 12.63 9.25 10.00 0.60 0.60 0.60
BKCT Bancorp Connecticut of CT* 14.75 5,114 75.4 25.00 14.75 17.00 -13.24 -23.89 -29.76
BPLS Bank Plus Corp. of CA 4.06 19,387 78.7 16.13 2.28 4.94 -17.81 -66.17 -67.85
BNKU Bank United Corp. of TX 39.84 31,583 1,258.3 56.00 25.50 36.38 9.51 -4.00 -18.59
BWFC Bank West Fin. Corp. of MI 9.38 2,624 24.6 17.50 8.75 9.23 1.63 -32.18 -41.85
BANC BankAtlantic Bancorp of FL 8.50 37,097 315.3 17.00 6.50 9.63 -11.73 -37.04 -49.25
BKUNA BankUnited Fin. Corp. of FL 9.06 17,786 161.1 18.50 6.56 8.44 7.35 -30.31 -41.21
BVCC Bay View Capital Corp. of CA 17.25 19,586 337.9 38.00 12.50 17.38 -0.75 -42.98 -52.41
FSNJ Bayonne Banchsares of NJ(8) 14.94 9,120 136.3 17.38 10.00 15.00 -0.40 24.50 11.66
BFSB Bedford Bancshares, Inc. of VA 15.00 2,298 34.5 17.38 10.50 12.00 25.00 21.16 -11.76
BFFC Big Foot Fin. Corp. of IL 13.38 2,513 33.6 23.94 12.75 13.50 -0.89 -26.68 -36.29
BYFC Broadway Fin. Corp. of CA 7.75 933 7.2 12.73 6.75 6.75 14.81 -35.63 -36.84
BRKL Brookline Bncp MHC of MA(47.0) 13.00 29,095 177.8 17.98 9.88 12.69 2.44 30.00 30.00
CBES CBES Bancorp, Inc. of MO 15.88 940 14.9 26.00 14.44 15.88 0.00 -18.56 -28.63
CITZ CFS Bancorp, Inc. of IN 9.88 22,727 224.5 11.44 8.31 9.75 1.33 -1.20 -1.20
CFSB CFSB Bancorp of Lansing MI 25.00 8,166 204.2 28.75 18.79 22.88 9.27 29.94 4.78
CKFB CKF Bancorp of Danville KY 15.25 843 12.9 21.25 15.00 15.25 0.00 -14.08 -17.57
CNSB CNS Bancorp, Inc. of MO 13.00 1,492 19.4 21.50 12.75 13.00 0.00 -24.64 -36.59
CNYF CNY Financial Corp of NY* 10.00 5,357 53.6 10.00 8.88 9.88 1.21 0.00 0.00
CSBF CSB Financial Group Inc of IL 9.88 821 8.1 14.00 9.00 10.50 -5.90 -20.96 -26.81
CBCI Calumet Bancorp of Chicago IL(8) 30.13 3,146 94.8 39.00 26.00 29.75 1.28 -9.16 -9.38
CAFI Camco Fin. Corp. of OH 15.75 5,481 86.3 20.67 14.88 15.38 2.41 2.74 -7.35
CMRN Cameron Fin. Corp. of MO 15.38 2,434 37.4 22.19 14.50 15.50 -0.77 -17.97 -24.98
CFNC Carolina Fincorp of NC* 8.13 1,906 15.5 18.88 8.00 8.00 1.63 -52.18 -56.05
CASB Cascade Financial Corp. of WA 13.50 4,309 58.2 16.00 9.80 12.00 12.50 29.81 27.36
CATB Catskill Fin. Corp. of NY* 13.94 4,358 60.8 18.88 11.75 13.63 2.27 -20.34 -26.17
CAVB Cavalry Bancorp of TN 19.50 7,538 147.0 25.25 18.50 18.81 3.67 95.00 95.00
CNIT Cenit Bancorp of Norfolk VA 19.50 4,997 97.4 28.58 16.50 17.50 11.43 -10.18 -26.42
CEBK Central Co-Op. Bank of MA* 18.63 1,965 36.6 33.50 17.00 19.88 -6.29 -19.00 -34.63
CENB Century Bancorp, Inc. of NC(8) 13.13 1,271 16.7 39.00 12.00 14.00 -6.21 -53.11 -53.52
COFI Charter One Financial of OH 27.44 132,541 3,636.9 34.64 18.25 26.81 2.35 -0.22 -8.72
CVAL Chester Valley Bancorp of PA 29.50 2,444 72.1 35.24 24.76 27.88 5.81 19.14 5.89
CLAS Classic Bancshares, Inc. of KY 13.50 1,300 17.6 21.50 12.00 14.88 -9.27 -14.29 -19.40
CBSA Coastal Bancorp of Houston TX 19.00 7,362 139.9 26.67 14.50 20.00 -5.00 0.90 -18.28
CFCP Coastal Fin. Corp. of SC 19.00 6,256 118.9 20.50 14.72 18.13 4.80 3.37 3.37
CFKY Columbia Financial of KY 13.00 2,671 34.7 17.13 11.63 12.88 0.93 30.00 30.00
CMSB Commonwealth Bancorp Inc of PA 14.25 14,764 210.4 24.25 10.63 13.81 3.19 -21.10 -28.32
CMSV Commty. Svgs, MHC of FL (48.5)(8) 22.38 5,100 55.3 40.75 17.56 20.75 7.86 -36.96 -36.74
CFTP Community Fed. Bancorp of MS 14.75 4,398 64.9 21.00 14.25 14.50 1.72 -11.30 -27.16
CFFC Community Fin. Corp. of VA 11.81 2,569 30.3 16.38 11.00 12.25 -3.59 4.98 -14.48
CIBI Community Inv. Bancorp of OH 12.25 1,243 15.2 15.25 9.83 11.50 6.52 22.50 13.74
COOP Cooperative Bancshares of NC 13.00 3,043 39.6 25.00 12.50 13.00 0.00 -20.00 -46.94
CRZY Crazy Woman Creek Bncorp of WY 13.50 888 12.0 20.00 11.94 13.13 2.82 -10.00 -10.00
CRSB Crusader Holding Corp of PA 12.13 3,833 46.5 17.86 10.63 11.13 8.98 N.A. N.A.
DNFC D&N Financial Corp. of MI 19.25 9,164 176.4 29.75 15.94 19.00 1.32 -15.31 -27.36
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AFBC Advance Fin. Bancorp of WV 0.82 0.71 14.48 14.48 110.75
ALBC Albion Banc Corp. of Albion NY 0.51 0.48 8.37 8.37 98.56
ABCL Alliance Bancorp, Inc. of IL 1.01 1.24 15.77 15.64 180.52
ALLB Alliance Bank MHC of PA (19.9) 0.61 0.61 9.05 9.05 84.76
AHCI Ambanc Holding Co., Inc. of NY* 0.51 0.52 14.22 14.22 137.73
ASBI Ameriana Bancorp of IN 1.17 0.98 14.03 13.78 115.37
ABCW Anchor Bancorp Wisconsin of WI 1.29 1.12 7.67 7.55 120.62
ANDB Andover Bancorp, Inc. of MA* 2.43 2.37 17.61 17.61 214.77
ASFC Astoria Financial Corp. of NY 3.15 2.71 33.56 24.05 435.29
AVND Avondale Fin. Corp. of IL(8) -1.80 -1.23 14.98 14.98 179.17
BCSB BCSB Bankcorp MHC of MD (38.6) 0.36 0.36 7.28 7.28 44.74
BKCT Bancorp Connecticut of CT* 1.27 1.07 9.58 9.58 96.83
BPLS Bank Plus Corp. of CA 0.39 0.59 9.55 8.77 221.09
BNKU Bank United Corp. of TX 3.50 3.29 21.20 19.25 414.65
BWFC Bank West Fin. Corp. of MI 0.32 0.33 8.87 8.87 69.16
BANC BankAtlantic Bancorp of FL 0.71 0.32 6.88 5.32 101.26
BKUNA BankUnited Fin. Corp. of FL 0.44 0.21 10.29 8.60 201.51
BVCC Bay View Capital Corp. of CA 0.74 1.26 20.11 13.04 292.05
FSNJ Bayonne Banchsares of NJ(8) 0.51 0.51 10.51 10.51 76.78
BFSB Bedford Bancshares, Inc. of VA 0.77 0.76 9.02 9.02 68.02
BFFC Big Foot Fin. Corp. of IL 0.47 0.35 15.16 15.16 87.79
BYFC Broadway Fin. Corp. of CA 0.62 0.38 14.01 14.01 147.53
BRKL Brookline Bncp MHC of MA(47.0) 0.53 0.51 9.47 9.47 28.71
CBES CBES Bancorp, Inc. of MO 1.12 0.80 17.93 17.93 131.76
CITZ CFS Bancorp, Inc. of IN 0.36 0.40 10.88 10.88 62.51
CFSB CFSB Bancorp of Lansing MI 1.42 1.28 8.08 8.08 103.82
CKFB CKF Bancorp of Danville KY 0.98 0.98 16.06 16.06 74.45
CNSB CNS Bancorp, Inc. of MO 0.58 0.50 16.27 16.27 65.68
CNYF CNY Financial Corp of NY* 0.25 0.56 14.34 14.34 52.66
CSBF CSB Financial Group Inc of IL 0.44 0.43 13.34 12.59 57.51
CBCI Calumet Bancorp of Chicago IL(8) 3.04 3.06 27.73 27.73 156.38
CAFI Camco Fin. Corp. of OH 1.23 0.89 10.62 9.98 107.32
CMRN Cameron Fin. Corp. of MO 1.01 0.99 18.02 18.02 90.71
CFNC Carolina Fincorp of NC* 0.56 0.63 8.07 8.07 59.76
CASB Cascade Financial Corp. of WA 0.82 0.73 7.29 7.29 103.08
CATB Catskill Fin. Corp. of NY* 0.88 0.87 15.65 15.65 71.03
CAVB Cavalry Bancorp of TN 0.68 0.50 13.37 13.37 45.08
CNIT Cenit Bancorp of Norfolk VA 1.27 1.17 10.32 9.56 130.45
CEBK Central Co-Op. Bank of MA* 1.58 1.18 18.94 17.25 194.33
CENB Century Bancorp, Inc. of NC(8) 0.95 0.94 14.74 14.74 76.21
COFI Charter One Financial of OH 1.27 1.67 11.16 10.51 149.49
CVAL Chester Valley Bancorp of PA 1.33 1.25 13.03 13.03 154.26
CLAS Classic Bancshares, Inc. of KY 0.75 0.95 15.78 13.57 106.14
CBSA Coastal Bancorp of Houston TX 2.10 2.15 15.58 13.57 404.85
CFCP Coastal Fin. Corp. of SC 1.07 0.86 5.81 5.81 98.61
CFKY Columbia Financial of KY 0.22 0.22 14.03 14.03 44.54
CMSB Commonwealth Bancorp Inc of PA 0.90 0.64 13.53 10.66 160.41
CMSV Commty. Svgs, MHC of FL (48.5)(8) 1.01 0.93 16.29 16.29 150.10
CFTP Community Fed. Bancorp of MS 0.66 0.57 13.33 13.33 59.86
CFFC Community Fin. Corp. of VA 0.71 0.68 10.05 10.01 71.32
CIBI Community Inv. Bancorp of OH 0.71 0.71 8.32 8.32 82.49
COOP Cooperative Bancshares of NC 0.79 0.72 9.95 9.95 125.22
CRZY Crazy Woman Creek Bncorp of WY 0.83 0.83 16.22 16.22 69.23
CRSB Crusader Holding Corp of PA 0.97 0.89 6.06 5.74 52.71
DNFC D&N Financial Corp. of MI 1.67 1.46 11.54 11.45 207.12
</TABLE>
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
DCBI Delphos Citizens Bancorp of OH 17.50 1,756 30.7 24.25 15.38 17.50 0.00 2.94 -15.66
DCOM Dime Community Bancorp of NY* 23.94 11,714 280.4 29.31 15.00 23.00 4.09 13.30 0.80
ESBF ESB Financial Corp of PA 16.00 5,665 90.6 20.00 15.06 16.00 0.00 0.57 -8.57
EGLB Eagle BancGroup of IL 19.94 1,177 23.5 21.13 14.00 18.06 10.41 6.35 5.61
EBSI Eagle Bancshares of Tucker GA 18.25 5,806 106.0 27.25 17.00 18.00 1.39 0.00 -17.05
ETFS East Texas Fin. Serv. of TX 10.50 1,539 16.2 16.25 10.50 10.50 0.00 -18.73 -33.67
ESBK Elmira Svgs Bank (The) of NY* 21.00 727 15.3 32.25 16.25 20.75 1.20 -22.62 -30.00
EMLD Emerald Financial Corp. of OH 10.75 10,297 110.7 16.00 9.00 10.50 2.38 19.44 -2.80
EFBC Empire Federal Bancorp of MT 12.75 2,480 31.6 18.00 10.63 12.69 0.47 -21.54 -25.57
EFBI Enterprise Fed. Bancorp of OH(8) 43.50 2,211 96.2 43.50 25.00 42.13 3.25 74.00 38.10
EQSB Equitable FSB of Wheaton MD 22.00 1,223 26.9 34.00 16.13 19.13 15.00 -1.12 -16.98
FCBF FCB Fin. Corp. of Neenah WI 24.50 3,857 94.5 34.00 22.00 24.75 -1.01 -10.91 -16.95
FFDF FFD Financial Corp. of OH 16.00 1,445 23.1 24.00 15.00 16.00 0.00 -14.67 -11.11
FFLC FFLC Bancorp of Leesburg FL 15.88 3,694 58.7 23.50 15.00 16.75 -5.19 -23.84 -26.99
FFWC FFW Corporation of Wabash IN 15.00 1,458 21.9 21.50 14.00 14.63 2.53 -4.03 -21.05
FFYF FFY Financial Corp. of OH 31.00 4,011 124.3 36.88 26.25 28.00 10.71 7.83 -6.43
FMCO FMS Financial Corp. of NJ 10.00 7,220 72.2 16.67 8.88 10.00 0.00 5.26 -15.47
FFHH FSF Financial Corp. of MN 15.00 2,898 43.5 21.25 13.38 14.75 1.69 -21.05 -28.37
FBCI Fidelity Bancorp of Chicago IL 20.75 2,833 58.8 26.00 16.00 19.50 6.41 -14.01 -19.04
FSBI Fidelity Bancorp, Inc. of PA 17.00 1,974 33.6 28.00 16.50 16.88 0.71 -11.46 -26.72
FFFL Fidelity Bcsh MHC of FL (47.9) 23.56 6,802 76.8 35.38 18.75 22.75 3.56 -14.33 -27.51
FFED Fidelity Fed. Bancorp of IN 4.88 3,127 15.3 10.50 3.75 5.00 -2.40 -49.95 -52.67
FFOH Fidelity Financial of OH 13.56 5,602 76.0 19.88 11.88 13.88 -2.31 -11.08 -12.52
FIBC Financial Bancorp, Inc. of NY(8) 36.50 1,709 62.4 37.63 22.00 35.25 3.55 61.29 51.26
SBFL Fingr Lakes Fin.MHC OF NY(33.1 10.00 3,570 11.8 24.75 9.00 9.63 3.84 -31.65 -37.50
FBSI First Bancshares, Inc. of MO 13.25 2,214 29.3 17.50 12.50 12.75 3.92 8.70 -15.23
FBBC First Bell Bancorp of PA 14.50 6,229 90.3 21.63 12.88 14.25 1.75 -13.43 -23.68
FSTC First Citizens Corp of GA 28.00 2,795 78.3 35.50 22.00 28.13 -0.46 10.54 -17.65
FCME First Coastal Corp. of ME* 9.88 1,361 13.4 15.63 8.00 8.44 17.06 -20.96 -33.60
FDEF First Defiance Fin.Corp. of OH 14.25 8,158 116.3 16.25 11.13 12.63 12.83 -7.35 -10.94
FESX First Essex Bancorp of MA* 16.88 7,564 127.7 26.13 13.75 16.50 2.30 -15.09 -27.40
FFSX First FSB MHC Sxld of IA(46.3)(8) 20.00 2,845 26.3 39.00 20.00 20.25 -1.23 -37.98 -37.01
FFES First Fed of E. Hartford CT 25.50 2,743 69.9 42.25 20.50 24.56 3.83 -28.43 -31.54
BDJI First Fed. Bancorp. of MN 13.50 998 13.5 22.00 13.50 13.50 0.00 -17.78 -38.64
FFBH First Fed. Bancshares of AR 19.25 4,871 93.8 30.25 16.00 17.75 8.45 -8.33 -18.95
FTFC First Fed. Capital Corp. of WI 15.25 18,472 281.7 18.38 11.88 14.75 3.39 11.89 -9.98
FFKY First Fed. Fin. Corp. of KY 25.75 4,130 106.3 28.75 20.50 25.50 0.98 21.18 13.19
FFBZ First Federal Bancorp of OH 12.00 3,151 37.8 14.50 9.63 10.38 15.61 24.61 13.64
FFCH First Fin. Holdings Inc. of SC 19.25 13,659 262.9 27.00 14.50 19.00 1.32 4.05 -27.52
FFHS First Franklin Corp. of OH 13.50 1,704 23.0 20.83 12.50 13.50 0.00 -11.94 -35.19
FGHC First Georgia Hold. Corp of GA 8.75 4,799 42.0 15.75 5.33 8.50 2.94 61.44 38.23
FFSL First Independence Corp. of KS 10.25 959 9.8 15.63 9.75 9.75 5.13 -30.51 -26.79
FISB First Indiana Corp. of IN 18.75 12,708 238.3 30.00 17.38 19.00 -1.32 -9.99 -25.62
FKAN First Kansas Financial of KS 10.06 1,554 15.6 12.50 9.00 10.00 0.60 0.60 0.60
FKFS First Keystone Fin. Corp of PA 15.38 2,413 37.1 21.75 11.75 15.00 2.53 4.70 -13.98
FLKY First Lancaster Bncshrs of KY 12.75 959 12.2 16.13 12.00 12.25 4.08 -20.31 -20.01
FLFC First Liberty Fin. Corp. of GA 19.88 13,369 265.8 25.50 17.00 18.94 4.96 14.71 -6.80
CASH First Midwest Fin., Inc. of IA 15.50 2,614 40.5 24.88 15.38 16.50 -6.06 -23.46 -31.11
FMBD First Mutual Bancorp Inc of IL(8) 17.00 3,531 60.0 25.00 14.75 16.88 0.71 -3.57 -32.00
FMSB First Mutual SB of Bellevue WA* 12.50 4,245 53.1 19.00 11.94 14.00 -10.71 -30.25 -32.43
FNGB First Northern Cap. Corp of WI 11.50 8,802 101.2 14.00 9.50 10.25 12.20 -15.63 -17.86
FWWB First Savings Bancorp of WA 22.00 11,699 257.4 25.97 19.38 22.63 -2.78 2.42 -12.00
FSFF First SecurityFed Fin of IL 14.00 6,408 89.7 17.25 10.69 14.13 -0.92 40.00 -11.11
FSLA First Source Bancorp of NJ 8.63 31,740 273.9 13.93 6.75 8.31 3.85 -19.57 -38.05
SOPN First Svgs Bancorp of NC 22.75 3,711 84.4 26.00 20.88 23.25 -2.15 3.41 -10.78
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DCBI Delphos Citizens Bancorp of OH 0.96 0.96 15.62 15.62 64.68
DCOM Dime Community Bancorp of NY* 1.12 1.09 15.91 13.86 138.63
ESBF ESB Financial Corp of PA 1.03 1.03 12.01 10.72 166.91
EGLB Eagle BancGroup of IL 0.52 0.18 17.82 17.82 147.91
EBSI Eagle Bancshares of Tucker GA 1.49 1.45 13.36 13.36 192.94
ETFS East Texas Fin. Serv. of TX 0.41 0.35 13.77 13.77 79.66
ESBK Elmira Svgs Bank (The) of NY* 1.48 1.56 19.97 19.97 318.74
EMLD Emerald Financial Corp. of OH 0.67 0.61 5.10 5.04 59.96
EFBC Empire Federal Bancorp of MT 0.64 0.64 15.62 15.62 43.12
EFBI Enterprise Fed. Bancorp of OH(8) 1.03 0.88 16.47 16.06 165.37
EQSB Equitable FSB of Wheaton MD 1.86 1.76 14.67 14.67 286.64
FCBF FCB Fin. Corp. of Neenah WI 1.51 1.12 19.42 19.42 134.24
FFDF FFD Financial Corp. of OH 0.68 0.48 10.95 10.95 62.95
FFLC FFLC Bancorp of Leesburg FL 1.13 1.13 14.30 14.30 114.30
FFWC FFW Corporation of Wabash IN 1.30 1.14 13.12 12.07 139.45
FFYF FFY Financial Corp. of OH 1.93 1.89 21.00 21.00 162.49
FMCO FMS Financial Corp. of NJ 0.73 0.73 5.67 5.63 93.31
FFHH FSF Financial Corp. of MN 1.10 1.04 14.91 14.91 142.88
FBCI Fidelity Bancorp of Chicago IL 0.33 1.04 18.77 18.74 177.09
FSBI Fidelity Bancorp, Inc. of PA 1.45 1.42 14.23 14.23 200.70
FFFL Fidelity Bcsh MHC of FL (47.9) 1.15 0.92 13.28 12.90 215.87
FFED Fidelity Fed. Bancorp of IN -0.25 -0.19 4.28 4.28 63.14
FFOH Fidelity Financial of OH 0.85 0.82 11.78 10.48 94.95
FIBC Financial Bancorp, Inc. of NY(8) 1.69 1.64 16.81 16.74 199.53
SBFL Fingr Lakes Fin.MHC OF NY(33.1 0.28 0.22 6.12 6.12 72.38
FBSI First Bancshares, Inc. of MO 0.83 0.83 11.00 10.55 77.77
FBBC First Bell Bancorp of PA 1.21 1.20 12.34 12.34 121.47
FSTC First Citizens Corp of GA 2.20 1.99 12.72 10.17 126.02
FCME First Coastal Corp. of ME* 0.90 0.81 11.29 11.29 126.17
FDEF First Defiance Fin.Corp. of OH 0.66 0.63 12.66 12.66 71.36
FESX First Essex Bancorp of MA* 1.39 1.19 12.40 9.00 173.82
FFSX First FSB MHC Sxld of IA(46.3)(8) 1.20 1.17 14.77 11.90 193.88
FFES First Fed of E. Hartford CT 2.13 2.30 25.73 25.73 357.42
BDJI First Fed. Bancorp. of MN 0.81 0.82 12.71 12.71 121.56
FFBH First Fed. Bancshares of AR 1.14 1.13 17.46 17.46 118.69
FTFC First Fed. Capital Corp. of WI 1.02 0.70 6.43 6.12 85.77
FFKY First Fed. Fin. Corp. of KY 1.53 1.47 13.24 12.57 99.19
FFBZ First Federal Bancorp of OH 0.54 0.51 5.23 5.23 65.81
FFCH First Fin. Holdings Inc. of SC 1.16 1.11 8.90 8.90 137.21
FFHS First Franklin Corp. of OH 1.10 0.95 12.72 12.67 139.48
FGHC First Georgia Hold. Corp of GA 0.41 0.41 3.07 2.87 37.68
FFSL First Independence Corp. of KS 0.88 0.88 12.32 12.32 128.64
FISB First Indiana Corp. of IN 1.47 1.04 12.61 12.47 137.77
FKAN First Kansas Financial of KS 0.46 0.45 13.46 13.28 68.21
FKFS First Keystone Fin. Corp of PA 1.14 1.01 10.53 10.53 162.03
FLKY First Lancaster Bncshrs of KY 0.53 0.53 14.73 14.73 56.04
FLFC First Liberty Fin. Corp. of GA 0.68 0.75 8.78 8.03 113.08
CASH First Midwest Fin., Inc. of IA 1.09 0.98 16.41 14.65 161.15
FMBD First Mutual Bancorp Inc of IL(8) 0.39 0.30 15.72 12.23 107.49
FMSB First Mutual SB of Bellevue WA* 1.20 1.01 8.02 8.02 110.92
FNGB First Northern Cap. Corp of WI 0.74 0.69 8.54 8.54 78.43
FWWB First Savings Bancorp of WA 1.12 1.04 12.84 11.90 98.65
FSFF First SecurityFed Fin of IL 0.53 0.79 14.05 14.01 51.66
FSLA First Source Bancorp of NJ 0.36 0.35 8.17 7.91 38.47
SOPN First Svgs Bancorp of NC 1.42 1.42 18.73 18.73 81.96
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FBNW FirstBank Corp of Clarkston WA 15.88 1,984 31.5 23.75 13.25 15.75 0.83 -3.05 -15.89
FFDB FirstFed Bancorp, Inc. of AL 9.75 2,434 23.7 15.94 9.75 9.75 0.00 -11.36 -9.81
FSPT FirstSpartan Fin. Corp. of SC 34.38 4,209 144.7 47.25 24.50 31.25 10.02 -3.51 -14.58
FLAG Flag Financial Corp of GA 12.88 5,175 66.7 19.38 11.00 12.00 7.33 15.31 -10.12
FLGS Flagstar Bancorp, Inc of MI 24.00 13,670 328.1 28.38 17.75 23.63 1.57 29.73 21.21
FFIC Flushing Fin. Corp. of NY* 15.31 11,337 173.6 19.92 12.00 15.00 2.07 9.36 -3.83
FBHC Fort Bend Holding Corp. of TX(8) 21.25 1,866 39.7 28.00 16.63 20.00 6.25 6.25 -2.30
FTSB Fort Thomas Fin. Corp. of KY 11.00 1,474 16.2 15.75 10.25 11.00 0.00 -17.79 -28.48
FKKY Frankfort First Bancorp of KY 15.38 1,584 24.4 19.50 13.63 14.25 7.93 -19.05 -12.76
FTNB Fulton Bancorp, Inc. of MO 15.50 1,719 26.6 24.00 15.50 16.00 -3.13 -23.00 -29.96
GUPB GFSB Bancorp, Inc of Gallup NM 14.25 1,166 16.6 17.00 13.00 14.25 0.00 0.56 1.21
GSLA GS Financial Corp. of LA 13.50 3,267 44.1 21.00 10.38 12.75 5.88 -20.02 -35.71
GOSB GSB Financial Corp. of NY* 13.00 2,212 28.8 18.94 8.31 13.00 0.00 -13.33 -28.02
GBNK Gaston Fed Bncp MHC of NC(47.0 13.13 4,497 27.7 18.06 10.00 12.88 1.94 31.30 31.30
GFCO Glenway Financial Corp. of OH 19.50 2,283 44.5 24.25 15.00 19.00 2.63 20.00 4.00
GTPS Great American Bancorp of IL 17.00 1,371 23.3 23.00 15.00 16.00 6.25 -10.53 -10.53
PEDE Great Pee Dee Bancorp of SC 13.00 2,202 28.6 17.38 10.63 12.38 5.01 30.00 -19.40
GSFC Green Street Fin. Corp. of NC 12.88 4,083 52.6 18.81 11.25 13.50 -4.59 -27.44 -29.42
GFED Guaranty Fed Bancshares of MO 12.50 5,917 74.0 14.34 10.13 10.38 20.42 6.11 -2.95
HCBBE HCB Bancshares of Camden AR 9.25 2,645 24.5 16.13 8.38 8.63 7.18 -29.55 -36.21
HEMT HF Bancorp of Hemet CA 16.75 6,391 107.0 18.25 12.00 16.00 4.69 6.35 -4.29
HFFC HF Financial Corp. of SD 14.00 4,284 60.0 24.17 12.13 14.00 0.00 -16.82 -20.77
HMNF HMN Financial, Inc. of MN 13.38 5,430 72.7 21.67 11.00 11.88 12.63 -18.06 -38.26
HALL Hallmark Capital Corp. of WI 12.38 2,939 36.4 18.00 9.50 11.88 4.21 -9.96 -27.18
HRBF Harbor Federal Bancorp of MD 20.50 1,863 38.2 23.41 17.00 20.00 2.50 15.62 -10.71
HARB Harbor Florida Bancshrs of FL 10.94 30,910 338.2 13.50 8.75 10.63 2.92 2.53 -0.73
HFSA Hardin Bancorp of Hardin MO 18.13 816 14.8 20.00 14.25 16.00 13.31 0.72 -0.66
HARL Harleysville SB of PA 29.13 1,675 48.8 35.00 27.50 29.13 0.00 -0.41 5.93
HFGI Harrington Fin. Group of IN 8.25 3,205 26.4 13.25 8.13 8.50 -2.94 -32.65 -36.54
HARS Harris Fin. MHC of PA (24.9) 15.56 33,992 131.4 27.88 11.00 14.88 4.57 -16.66 -21.73
HFFB Harrodsburg 1st Fin Bcrp of KY 14.50 1,930 28.0 18.00 14.00 14.50 0.00 -12.12 -13.43
HHFC Harvest Home Fin. Corp. of OH 12.00 879 10.5 16.75 11.75 12.00 0.00 -17.24 -23.81
HAVN Haven Bancorp of Woodhaven NY 13.88 8,851 122.9 28.75 10.50 13.69 1.39 -35.83 -38.31
HTHR Hawthorne Fin. Corp. of CA 15.38 3,170 48.8 24.00 12.00 15.13 1.65 -12.76 -23.60
HMLK Hemlock Fed. Fin. Corp. of IL 14.50 1,878 27.2 19.00 13.13 13.88 4.47 -14.71 -15.35
HBSC Heritage Bancorp, Inc of SC 17.88 4,629 82.8 22.38 14.00 17.25 3.65 19.20 19.20
HFWA Heritage Financial Corp of WA 10.94 9,656 105.6 15.94 9.63 10.38 5.39 9.40 9.40
HCBC High Country Bancorp of CO 10.50 1,323 13.9 15.50 10.25 11.75 -10.64 5.00 -32.26
HBNK Highland Bancorp of CA 34.00 2,179 74.1 43.50 32.00 36.13 -5.90 6.25 3.82
HIFS Hingham Inst. for Sav. of MA* 16.75 1,964 32.9 24.67 15.00 17.25 -2.90 -11.84 -12.62
HBEI Home Bancorp of Elgin IL(8) 14.13 6,659 94.1 19.13 10.50 12.75 10.82 -18.70 -20.97
HBFW Home Bancorp of Fort Wayne IN 26.63 2,351 62.6 37.63 24.00 26.63 0.00 10.96 -9.73
HCFC Home City Fin. Corp. of OH 13.75 905 12.4 22.75 11.00 12.50 10.00 -11.29 -25.68
HOMF Home Fed Bancorp of Seymour IN 23.75 5,142 122.1 33.75 20.50 23.75 0.00 -2.38 -8.65
HWEN Home Financial Bancorp of IN 6.50 929 6.0 9.75 6.50 6.50 0.00 -20.63 -29.73
HLFC Home Loan Financial Corp of OH 12.56 2,248 28.2 16.75 11.45 12.06 4.15 25.60 25.60
HPBC Home Port Bancorp, Inc. of MA* 20.13 1,842 37.1 27.63 19.13 19.88 1.26 -13.42 -12.97
HSTD Homestead Bancorp, Inc. of LA 8.00 1,478 11.8 9.31 3.41 7.88 1.52 -20.00 39.13
HFBC HopFed Bancorp of KY 17.50 4,034 70.6 21.88 15.25 17.06 2.58 75.00 75.00
HZFS Horizon Fin'l. Services of IA 14.13 880 12.4 16.88 11.00 14.25 -0.84 26.95 17.75
HRZB Horizon Financial Corp. of WA* 14.00 7,484 104.8 19.25 12.50 13.19 6.14 -15.15 -21.13
HRBT Hudson River Bancorp Inc of NY 10.31 17,854 184.1 13.69 8.88 10.06 2.49 3.10 3.10
ITLA ITLA Capital Corp of CA* 15.25 7,610 116.1 24.00 9.00 14.13 7.93 -23.29 -20.78
ICBC Independence Comm Bnk Cp of NY 13.69 76,044 1,041.0 19.13 11.00 13.25 3.32 36.90 36.90
IFSB Independence FSB of DC 12.50 1,281 16.0 21.63 11.75 12.50 0.00 -7.41 -26.47
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FBNW FirstBank Corp of Clarkston WA 0.97 0.55 15.32 15.32 98.00
FFDB FirstFed Bancorp, Inc. of AL 0.66 0.66 7.31 6.75 73.91
FSPT FirstSpartan Fin. Corp. of SC 1.79 1.74 29.88 29.88 122.93
FLAG Flag Financial Corp of GA 0.39 0.27 4.26 4.26 47.92
FLGS Flagstar Bancorp, Inc of MI 2.20 2.20 10.44 10.16 188.24
FFIC Flushing Fin. Corp. of NY* 0.84 0.84 12.33 11.87 96.31
FBHC Fort Bend Holding Corp. of TX(8) 1.11 0.73 12.19 11.53 170.60
FTSB Fort Thomas Fin. Corp. of KY 0.80 0.80 11.05 11.05 68.76
FKKY Frankfort First Bancorp of KY 1.00 1.00 14.33 14.33 84.90
FTNB Fulton Bancorp, Inc. of MO 0.66 0.51 14.83 14.83 64.05
GUPB GFSB Bancorp, Inc of Gallup NM 0.75 0.75 12.19 12.19 105.67
GSLA GS Financial Corp. of LA 0.46 0.40 16.01 16.01 44.43
GOSB GSB Financial Corp. of NY* 0.42 0.40 14.54 14.54 58.36
GBNK Gaston Fed Bncp MHC of NC(47.0 0.33 0.30 9.14 9.14 45.06
GFCO Glenway Financial Corp. of OH 1.18 1.18 12.80 12.70 132.87
GTPS Great American Bancorp of IL 0.74 0.74 19.77 19.77 108.20
PEDE Great Pee Dee Bancorp of SC 0.59 0.59 14.29 14.29 31.06
GSFC Green Street Fin. Corp. of NC 0.69 0.69 14.81 14.81 42.44
GFED Guaranty Fed Bancshares of MO 0.48 0.47 11.95 11.95 43.95
HCBBE HCB Bancshares of Camden AR 0.25 0.25 14.45 14.28 83.79
HEMT HF Bancorp of Hemet CA 0.02 0.10 13.11 11.21 163.64
HFFC HF Financial Corp. of SD 1.51 1.31 13.21 13.21 133.07
HMNF HMN Financial, Inc. of MN 0.96 0.68 13.04 11.96 133.55
HALL Hallmark Capital Corp. of WI 0.95 0.89 11.38 11.38 149.16
HRBF Harbor Federal Bancorp of MD 0.94 0.91 15.94 15.94 126.53
HARB Harbor Florida Bancshrs of FL 0.53 0.50 8.37 8.27 42.67
HFSA Hardin Bancorp of Hardin MO 1.01 0.88 16.51 16.51 163.38
HARL Harleysville SB of PA 2.08 2.08 15.14 15.14 236.05
HFGI Harrington Fin. Group of IN -0.58 -0.21 7.07 7.07 151.14
HARS Harris Fin. MHC of PA (24.9) 0.54 0.44 5.56 5.02 68.42
HFFB Harrodsburg 1st Fin Bcrp of KY 0.77 0.77 14.99 14.99 56.49
HHFC Harvest Home Fin. Corp. of OH 0.63 0.63 11.73 11.73 103.39
HAVN Haven Bancorp of Woodhaven NY 1.00 1.06 13.33 12.74 255.93
HTHR Hawthorne Fin. Corp. of CA 3.11 3.40 15.06 15.06 378.97
HMLK Hemlock Fed. Fin. Corp. of IL 0.87 0.86 15.50 15.50 102.38
HBSC Heritage Bancorp, Inc of SC 0.76 0.76 20.46 20.46 65.00
HFWA Heritage Financial Corp of WA 0.42 0.24 9.72 8.83 43.07
HCBC High Country Bancorp of CO 0.55 0.55 13.82 13.82 76.03
HBNK Highland Bancorp of CA 3.36 2.96 20.70 20.70 263.15
HIFS Hingham Inst. for Sav. of MA* 1.44 1.42 11.48 11.48 121.77
HBEI Home Bancorp of Elgin IL(8) 0.37 0.37 14.42 14.42 55.21
HBFW Home Bancorp of Fort Wayne IN 1.26 1.23 18.27 18.27 153.25
HCFC Home City Fin. Corp. of OH 1.05 1.04 11.96 11.96 86.23
HOMF Home Fed Bancorp of Seymour IN 2.02 1.58 13.02 12.69 139.94
HWEN Home Financial Bancorp of IN 0.42 0.32 8.08 8.08 45.81
HLFC Home Loan Financial Corp of OH 0.41 0.41 14.04 14.04 36.44
HPBC Home Port Bancorp, Inc. of MA* 1.72 1.97 12.32 12.32 141.40
HSTD Homestead Bancorp, Inc. of LA 0.36 0.36 10.40 10.40 48.02
HFBC HopFed Bancorp of KY 0.72 0.72 14.46 14.46 54.00
HZFS Horizon Fin'l. Services of IA 0.67 0.80 9.65 9.65 102.21
HRZB Horizon Financial Corp. of WA* 1.12 1.09 11.41 11.41 73.90
HRBT Hudson River Bancorp Inc of NY 0.41 0.47 12.20 12.20 45.63
ITLA ITLA Capital Corp of CA* 1.81 1.81 14.00 13.97 134.21
ICBC Independence Comm Bnk Cp of NY -0.53 0.45 12.63 11.93 62.94
IFSB Independence FSB of DC 4.18 3.32 16.53 15.10 207.60
</TABLE>
<PAGE>
P FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
INBI Industrial Bancorp of OH 19.00 4,999 95.0 25.00 16.25 18.50 2.70 8.39 7.04
IWBK Interwest Bancorp of WA 26.56 15,651 415.7 31.33 17.75 26.00 2.15 6.24 5.52
IPSW Ipswich SB of Ipswich MA* 13.00 2,392 31.1 20.75 10.75 13.00 0.00 4.00 -21.21
JXVL Jacksonville Bancorp of TX 14.75 2,422 35.7 23.25 14.38 15.00 -1.67 -19.75 -36.56
JXSB Jcksnville SB,MHC of IL (45.6) 14.25 1,908 12.4 25.50 13.50 13.50 5.56 -19.35 -28.75
JSBA Jefferson Svgs Bancorp of MO 16.13 10,030 161.8 31.88 11.00 15.50 4.06 -22.27 -21.32
KSBK KSB Bancorp of Kingfield ME* 13.00 1,261 16.4 22.50 12.00 13.38 -2.84 -7.14 -42.22
KFBI Klamath First Bancorp of OR 18.25 9,917 181.0 23.06 14.00 17.88 2.07 -19.35 -15.12
LSBI LSB Fin. Corp. of Lafayette IN 29.50 933 27.5 32.00 23.81 28.50 3.51 20.85 8.70
LVSB Lakeview Financial of NJ 18.50 4,880 90.3 28.75 13.50 17.44 6.08 -24.12 -27.45
LARK Landmark Bancshares, Inc of KS 21.38 1,549 33.1 29.25 19.50 21.00 1.81 -8.04 -14.07
LARL Laurel Capital Group of PA 19.00 2,206 41.9 23.50 16.50 17.38 9.32 10.66 -12.32
LSBX Lawrence Savings Bank of MA* 12.75 4,331 55.2 19.31 9.63 13.50 -5.56 -8.14 -22.16
LFED Leeds Fed Bksr MHC of MD (36.3 14.25 5,196 26.8 23.50 11.75 14.50 -1.72 -33.47 -34.48
LXMO Lexington B&L Fin. Corp. of MO 11.75 1,009 11.9 17.88 11.75 11.75 0.00 -28.79 -33.80
LIBB Liberty Bancorp MHC of NJ (47) 9.63 3,901 17.7 11.69 7.25 9.25 4.11 -3.70 -3.70
LFCO Life Financial Corp of CA(8) 4.00 6,562 26.2 25.38 2.25 4.13 -3.15 -75.95 -68.33
LFBI Little Falls Bancorp of NJ 15.38 2,478 38.1 22.25 11.50 14.50 6.07 -16.86 -24.98
LOGN Logansport Fin. Corp. of IN 14.25 1,262 18.0 19.63 13.50 13.75 3.64 -9.52 -20.83
MAFB MAF Bancorp, Inc. of IL 24.50 22,393 548.6 28.83 19.38 23.00 6.52 15.73 3.90
MBLF MBLA Financial Corp. of MO 20.25 1,247 25.3 30.63 18.25 20.50 -1.22 -21.36 -33.61
MECH MECH Financial Inc of CT* 24.25 5,295 128.4 31.81 20.63 24.13 0.50 1.04 -6.95
MFBC MFB Corp. of Mishawaka IN 20.75 1,474 30.6 30.38 18.00 20.00 3.75 -8.79 -31.70
MSBF MSB Financial, Inc of MI 15.25 1,338 20.4 17.73 13.75 14.00 8.93 -6.78 -11.70
MARN Marion Capital Holdings of IN 22.13 1,619 35.8 29.50 21.00 22.63 -2.21 -17.67 -18.43
MRKF Market Fin. Corp. of OH 11.00 1,336 14.7 20.25 10.00 11.00 0.00 -26.67 -29.62
MASB MassBank Corp. of Reading MA* 36.50 3,554 129.7 54.25 29.50 35.50 2.82 -13.61 -23.37
MFLR Mayflower Co-Op. Bank of MA* 21.00 900 18.9 27.50 17.00 21.00 0.00 -10.64 -21.50
MDBK Medford Bancorp, Inc. of MA* 15.50 8,717 135.1 22.13 13.50 17.38 -10.82 -11.43 -21.04
MWBX MetroWest Bank of MA* 6.63 14,258 94.5 9.50 5.75 6.13 8.16 -18.45 -26.33
METF Metropolitan Fin. Corp. of OH 10.25 7,051 72.3 18.88 9.00 10.13 1.18 -13.72 -33.87
MIFC Mid Iowa Financial Corp. of IA(8) 13.50 1,735 23.4 14.00 10.13 13.44 0.45 30.06 17.39
MCBN Mid-Coast Bancorp of ME 9.00 713 6.4 14.00 7.50 8.00 12.50 -3.64 -10.00
MWBI Midwest Bancshares, Inc. of IA 12.00 1,071 12.9 19.50 10.75 12.00 0.00 -26.92 -34.25
MFFC Milton Fed. Fin. Corp. of OH 14.38 2,237 32.2 17.00 12.31 13.00 10.62 -8.00 -6.50
MBSP Mitchell Bancorp, Inc. of NC(8) 15.75 931 14.7 18.50 14.00 14.00 12.50 -7.35 -7.35
MBBC Monterey Bay Bancorp of CA 11.00 3,923 43.2 21.40 10.75 11.63 -5.42 -28.57 -29.49
MONT Montgomery Fin. Corp. of IN 11.00 1,653 18.2 13.63 9.75 10.50 4.76 -13.73 -14.60
MSBK Mutual SB, FSB of Bay City MI 7.75 4,290 33.2 14.13 5.75 7.25 6.90 -38.00 -40.38
MYST Mystic Financial of MA* 13.63 2,574 35.1 18.56 9.75 12.25 11.27 36.30 36.30
NHTB NH Thrift Bancshares of NH 17.00 2,095 35.6 22.50 12.00 17.50 -2.86 -25.27 -17.07
NSLB NS&L Bancorp, Inc of Neosho MO 13.50 686 9.3 19.25 13.25 13.25 1.89 -27.03 -28.50
NSSY NSS Bancorp of CT(8)* 46.63 2,378 110.9 58.75 35.00 46.00 1.37 31.35 23.52
NMSB Newmil Bancorp, Inc. of CT* 12.00 3,837 46.0 14.63 10.00 13.00 -7.69 -7.69 -7.69
NBCP Niagara Bancorp of NY MHC(45.4* 11.00 29,756 148.5 17.00 8.50 10.00 10.00 10.00 10.00
NBSI North Bancshares of Chicago IL 12.00 1,271 15.3 18.83 11.00 11.00 9.09 -30.76 -32.89
FFFD North Central Bancshares of IA 16.75 3,104 52.0 24.88 15.00 16.75 0.00 -7.61 -15.74
NEIB Northeast Indiana Bncrp of IN 18.00 1,650 29.7 22.75 16.38 16.88 6.64 -7.69 -18.66
NWSB Northwest Bcrp MHC of PA (30.8 11.88 46,865 171.5 18.00 9.00 10.25 15.90 -21.48 -15.92
NWEQ Northwest Equity Corp. of WI 17.75 825 14.6 22.25 15.63 17.00 4.41 2.90 -14.46
NTMG Nutmeg FS&LA of CT 13.00 1,077 14.0 13.00 8.72 12.00 8.33 45.90 23.81
OHSL OHSL Financial Corp. of OH 14.63 2,496 36.5 18.38 12.88 14.63 0.00 4.50 8.37
OCFC Ocean Fin. Corp. of NJ 14.50 14,757 214.0 20.00 12.00 14.25 1.75 -22.29 -22.17
OTFC Oregon Trail Fin. Corp. of OR 13.38 4,695 62.8 18.50 11.00 13.00 2.92 -17.66 -23.01
OFCP Ottawa Financial Corp. of MI 21.00 5,717 120.1 30.91 18.88 20.00 5.00 -12.83 -32.06
<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
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
INBI Industrial Bancorp of OH 1.07 1.07 12.23 12.23 76.58
IWBK Interwest Bancorp of WA 1.29 1.09 9.03 8.89 133.60
IPSW Ipswich SB of Ipswich MA* 1.09 0.87 5.45 5.45 97.68
JXVL Jacksonville Bancorp of TX 1.30 1.30 14.48 14.48 100.20
JXSB Jcksnville SB,MHC of IL (45.6) 0.52 0.33 9.38 9.38 88.96
JSBA Jefferson Svgs Bancorp of MO 0.98 0.87 11.84 9.50 123.81
KSBK KSB Bancorp of Kingfield ME* 1.33 1.33 9.54 8.30 122.63
KFBI Klamath First Bancorp of OR 0.90 0.89 14.22 13.03 101.71
LSBI LSB Fin. Corp. of Lafayette IN 1.89 1.62 19.70 19.70 234.33
LVSB Lakeview Financial of NJ 1.94 0.83 11.60 7.78 121.69
LARK Landmark Bancshares, Inc of KS 1.58 1.33 19.35 19.35 148.05
LARL Laurel Capital Group of PA 1.38 1.42 10.66 10.66 100.17
LSBX Lawrence Savings Bank of MA* 2.12 2.09 9.61 9.61 79.63
LFED Leeds Fed Bksr MHC of MD (36.3 0.64 0.64 9.49 9.49 58.26
LXMO Lexington B&L Fin. Corp. of MO 0.62 0.62 15.17 14.15 94.45
LIBB Liberty Bancorp MHC of NJ (47) 0.32 0.32 8.59 8.59 65.46
LFCO Life Financial Corp of CA(8) 2.10 2.19 9.10 9.10 72.00
LFBI Little Falls Bancorp of NJ 0.76 0.76 14.90 13.82 141.79
LOGN Logansport Fin. Corp. of IN 1.02 1.03 13.46 13.46 71.52
MAFB MAF Bancorp, Inc. of IL 1.67 1.60 12.50 11.16 159.41
MBLF MBLA Financial Corp. of MO 1.51 1.49 22.33 22.33 162.97
MECH MECH Financial Inc of CT* 1.62 1.61 17.51 17.51 180.30
MFBC MFB Corp. of Mishawaka IN 1.46 1.42 22.46 22.46 197.38
MSBF MSB Financial, Inc of MI 0.91 0.79 9.95 9.95 59.77
MARN Marion Capital Holdings of IN 1.44 1.44 23.26 22.76 119.80
MRKF Market Fin. Corp. of OH 0.46 0.46 11.78 11.78 40.16
MASB MassBank Corp. of Reading MA* 3.03 2.61 30.77 30.37 261.58
MFLR Mayflower Co-Op. Bank of MA* 1.67 1.45 14.67 14.46 158.85
MDBK Medford Bancorp, Inc. of MA* 1.37 1.30 11.64 11.05 130.24
MWBX MetroWest Bank of MA* 0.54 0.54 3.39 3.39 46.18
METF Metropolitan Fin. Corp. of OH 0.93 0.80 5.61 5.20 150.18
MIFC Mid Iowa Financial Corp. of IA(8) 0.79 0.78 7.73 7.72 77.83
MCBN Mid-Coast Bancorp of ME 0.61 0.53 7.35 7.35 91.60
MWBI Midwest Bancshares, Inc. of IA 1.35 1.08 10.64 10.64 148.89
MFFC Milton Fed. Fin. Corp. of OH 0.67 0.54 11.64 11.64 105.10
MBSP Mitchell Bancorp, Inc. of NC(8) 0.47 0.47 15.72 15.72 40.07
MBBC Monterey Bay Bancorp of CA 0.33 0.33 11.97 10.95 111.19
MONT Montgomery Fin. Corp. of IN 0.59 0.59 12.14 12.14 70.88
MSBK Mutual SB, FSB of Bay City MI -1.91 -0.65 7.94 7.94 143.08
MYST Mystic Financial of MA* 0.62 0.58 14.04 14.04 77.33
NHTB NH Thrift Bancshares of NH 1.38 1.28 12.60 11.01 154.81
NSLB NS&L Bancorp, Inc of Neosho MO 0.60 0.59 16.87 16.76 91.32
NSSY NSS Bancorp of CT(8)* 2.18 1.92 23.19 22.62 274.11
NMSB Newmil Bancorp, Inc. of CT* 0.78 0.61 8.71 8.71 95.80
NBCP Niagara Bancorp of NY MHC(45.4* 0.26 0.40 8.60 8.60 45.21
NBSI North Bancshares of Chicago IL 0.36 0.32 10.50 10.50 97.02
FFFD North Central Bancshares of IA 1.43 1.41 15.85 13.73 106.68
NEIB Northeast Indiana Bncrp of IN 1.40 1.40 16.07 16.07 123.19
NWSB Northwest Bcrp MHC of PA (30.8 0.45 0.44 4.65 4.18 54.68
NWEQ Northwest Equity Corp. of WI 1.44 1.34 14.25 14.25 116.91
NTMG Nutmeg FS&LA of CT 0.87 0.46 6.31 6.31 104.10
OHSL OHSL Financial Corp. of OH 0.83 0.77 10.76 10.76 99.30
OCFC Ocean Fin. Corp. of NJ 0.93 0.93 14.29 14.22 104.24
OTFC Oregon Trail Fin. Corp. of OR 0.69 0.69 14.47 14.47 54.62
OFCP Ottawa Financial Corp. of MI 1.38 1.23 13.23 10.85 160.90
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PFFB PFF Bancorp of Pomona CA 14.69 15,440 226.8 21.13 11.94 13.38 9.79 -23.21 -26.11
PSFI PS Financial of Chicago IL 10.38 2,019 21.0 22.38 8.50 10.00 3.80 -40.89 -53.62
PSBI PSB Bancorp Inc. of PA* 7.63 3,101 23.7 11.27 6.25 7.50 1.73 -23.01 -32.30
PVFC PVF Capital Corp. of OH 11.13 3,991 44.4 18.83 10.00 11.25 -1.07 -17.56 -17.31
PBCI Pamrapo Bancorp, Inc. of NJ 23.75 2,843 67.5 32.38 22.13 23.00 3.26 -5.00 -12.84
PFED Park Bancorp of Chicago IL 14.63 2,418 35.4 19.75 13.25 14.38 1.74 -17.02 -21.47
PVSA Parkvale Financial Corp of PA 21.00 6,381 134.0 28.00 19.60 21.75 -3.45 -6.25 -23.36
PBHC Pathfinder BC MHC of NY (45.2)* 11.63 2,736 14.9 26.13 9.88 11.25 3.38 -30.57 -41.85
PEEK Peekskill Fin. Corp. of NY 13.63 2,860 39.0 18.25 12.00 13.06 4.36 -17.39 -18.63
PFSB PennFed Fin. Services of NJ 13.81 9,230 127.5 19.00 10.25 12.63 9.34 -9.08 -19.38
PWBK Pennwood Bancorp, Inc. of PA 10.88 697 7.6 17.44 9.00 9.88 10.12 -23.65 -26.54
PBKB People's Bancshares of MA* 20.75 3,317 68.8 27.75 15.00 20.50 1.22 9.21 -8.79
TSBS Peoples Bancorp Inc of NJ(8)* 10.13 36,373 368.5 11.83 6.97 10.00 1.30 10.23 -14.37
PFDC Peoples Bancorp of Auburn IN 20.00 3,357 67.1 25.00 19.88 20.13 -0.65 -6.24 -9.09
PBCT Peoples Bank, MHC of CT (41.2)* 25.56 64,147 706.3 41.13 19.19 24.13 5.93 -21.06 -32.74
PFFC Peoples Fin. Corp. of OH 11.00 1,352 14.9 18.50 10.00 10.00 10.00 -15.38 -27.30
PHBK Peoples Heritage Fin Grp of ME* 18.00 87,784 1,580.1 26.50 13.81 17.56 2.51 -7.98 -21.74
PSFC Peoples Sidney Fin. Corp of OH 16.38 1,785 29.2 24.38 15.00 16.50 -0.73 -6.40 -8.39
PERM Permanent Bancorp, Inc. of IN 12.00 4,249 51.0 18.25 10.94 12.00 0.00 -5.88 -22.88
PCBC Perry Co. Fin. Corp. of MO 19.75 828 16.4 25.00 18.00 20.75 -4.82 -5.95 -18.15
PHFC Pittsburgh Home Fin Corp of PA 12.63 1,969 24.9 20.81 12.13 13.25 -4.68 -32.64 -29.83
PFSL Pocahontas Bancorp of AR 8.81 6,685 58.9 11.43 6.75 9.00 -2.11 -2.87 -20.34
PTRS Potters Financial Corp of OH 14.00 951 13.3 22.25 13.00 13.00 7.69 4.17 -30.00
PHSB Ppls Home SB, MHC of PA (45.0) 13.75 2,760 17.1 22.13 11.50 12.13 13.36 -22.54 -27.17
PRBC Prestige Bancorp of PA 13.00 1,000 13.0 22.07 12.50 13.50 -3.70 -20.25 -25.24
PFNC Progress Financial Corp. of PA 14.19 5,192 73.7 21.67 11.50 12.38 14.62 -0.70 -9.68
PROV Provident Fin. Holdings of CA 15.50 4,625 71.7 24.25 14.00 15.50 0.00 -22.50 -29.16
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 19.38 2,106 12.1 51.00 16.00 19.00 2.00 -34.59 -38.24
PLSK Pulaski SB, MHC of NJ (47.0) 10.75 2,108 10.6 21.00 10.13 10.50 2.38 -41.89 -44.16
PULS Pulse Bancorp of S. River NJ(8) 26.00 3,190 82.9 30.50 23.00 26.00 0.00 4.00 -0.50
QCFB QCF Bancorp of Virginia MN 26.00 1,321 34.3 31.75 25.00 26.00 0.00 -3.70 -12.61
QCBC Quaker City Bancorp of CA 15.00 5,799 87.0 21.25 11.75 15.31 -2.02 -6.25 -11.76
QCSB Queens County Bancorp of NY* 29.81 21,419 638.5 31.42 22.88 30.00 -0.63 24.21 10.41
RARB Raritan Bancorp of Raritan NJ(8)* 34.06 2,456 83.7 34.75 24.75 34.00 0.18 21.64 21.64
RELY Reliance Bancorp, Inc. of NY 24.75 8,984 222.4 42.25 21.50 24.75 0.00 -22.37 -32.43
RELI Reliance Bancshares Inc of WI(8) 9.38 2,396 22.5 10.13 8.06 9.00 4.22 13.70 -1.26
RCBK Richmond County Fin Corp of NY 14.63 26,424 386.6 19.75 11.31 14.81 -1.22 46.30 46.30
RIVR River Valley Bancorp of IN 13.88 1,190 16.5 20.75 13.25 13.38 3.74 -15.88 -25.97
RVSB Riverview Bancorp of WA 12.13 6,186 75.0 19.13 11.25 12.38 -2.02 -9.34 -31.66
RSLN Roslyn Bancorp, Inc. of NY* 17.13 41,400 709.2 30.50 13.31 17.25 -0.70 -18.43 -26.32
SCCB S. Carolina Comm. Bnshrs of SC 13.50 580 7.8 24.00 13.50 16.00 -15.63 -40.34 -40.00
SFED SFS Bancorp of Schenectady NY(8) 22.00 1,208 26.6 27.88 19.75 24.25 -9.28 0.00 -18.15
SGVB SGV Bancorp of W. Covina CA 13.00 2,348 30.5 18.81 11.75 12.00 8.33 -27.78 -26.76
SISB SIS Bancorp, Inc. of MA(8)* 39.75 7,171 285.0 52.63 29.50 38.13 4.25 16.71 -1.09
SWCB Sandwich Bancorp of MA(8)* 53.75 2,043 109.8 64.50 37.00 54.50 -1.38 41.45 22.16
SKAN Skaneateles Bancorp Inc of NY* 13.88 1,445 20.1 22.25 12.63 13.38 3.74 -33.90 -37.28
SKBOD Skibo Fin Corp MHC of PA(45.0) 12.00 2,300 12.4 21.00 10.13 11.25 6.67 -38.87 -36.00
SOBI Sobieski Bancorp of S. Bend IN 14.50 764 11.1 24.25 13.88 14.50 0.00 -21.62 -28.85
SFFS Sound Bancorp MHC of NY (44.1) 10.00 5,212 23.0 10.00 8.50 9.75 2.56 0.00 0.00
SSFC South Street Fin. Corp. of NC* 8.31 4,676 38.9 19.13 8.00 8.38 -0.84 -53.18 -56.26
SBAN SouthBanc Shares Inc. of SC 18.00 4,306 77.5 23.76 15.00 17.84 0.90 1.64 -15.33
SCBS Southern Commun. Bncshrs of AL 13.00 1,137 14.8 20.75 12.00 13.00 0.00 -29.73 -28.77
SMBC Southern Missouri Bncrp of MO 16.63 1,484 24.7 23.25 15.75 16.50 0.79 -6.31 -18.88
SVRN Sovereign Bancorp, Inc. of PA 13.13 163,725 2,149.7 22.19 9.00 13.25 -0.91 -10.62 -24.06
STFR St. Francis Cap. Corp. of WI 40.88 4,788 195.7 50.75 34.50 36.13 13.15 11.24 -19.05
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PFFB PFF Bancorp of Pomona CA 1.08 1.00 15.67 15.51 194.81
PSFI PS Financial of Chicago IL 0.42 0.73 11.27 11.27 42.10
PSBI PSB Bancorp Inc. of PA* 0.37 0.37 9.41 9.41 47.49
PVFC PVF Capital Corp. of OH 1.23 1.15 7.82 7.82 108.56
PBCI Pamrapo Bancorp, Inc. of NJ 1.65 1.59 17.30 17.21 138.68
PFED Park Bancorp of Chicago IL 0.70 0.71 16.55 16.55 81.39
PVSA Parkvale Financial Corp of PA 1.74 1.74 13.17 13.11 171.66
PBHC Pathfinder BC MHC of NY (45.2)* 0.53 0.45 8.61 7.35 72.40
PEEK Peekskill Fin. Corp. of NY 0.65 0.66 15.11 15.11 70.05
PFSB PennFed Fin. Services of NJ 1.21 1.18 11.24 9.77 168.14
PWBK Pennwood Bancorp, Inc. of PA 0.40 0.44 11.42 11.42 66.11
PBKB People's Bancshares of MA* 1.66 0.63 9.79 9.37 258.78
TSBS Peoples Bancorp Inc of NJ(8)* 0.23 0.20 9.38 9.10 24.01
PFDC Peoples Bancorp of Auburn IN 1.28 1.28 13.57 13.57 90.65
PBCT Peoples Bank, MHC of CT (41.2)* 1.60 0.83 13.37 11.53 141.94
PFFC Peoples Fin. Corp. of OH 0.71 0.33 10.89 10.89 62.80
PHBK Peoples Heritage Fin Grp of ME* 0.76 1.02 8.24 6.85 111.27
PSFC Peoples Sidney Fin. Corp of OH 0.69 0.69 10.99 10.99 59.33
PERM Permanent Bancorp, Inc. of IN 0.62 0.59 10.23 8.35 119.26
PCBC Perry Co. Fin. Corp. of MO 1.01 1.00 20.02 20.02 108.41
PHFC Pittsburgh Home Fin Corp of PA 1.09 0.97 13.12 12.98 189.20
PFSL Pocahontas Bancorp of AR 0.40 0.40 8.74 8.47 60.52
PTRS Potters Financial Corp of OH 0.99 0.89 11.50 11.50 134.75
PHSB Ppls Home SB, MHC of PA (45.0) 0.63 0.58 10.41 10.41 82.15
PRBC Prestige Bancorp of PA 0.70 0.68 15.93 15.93 164.66
PFNC Progress Financial Corp. of PA 0.77 0.69 8.03 7.17 116.01
PROV Provident Fin. Holdings of CA 1.09 0.44 18.73 18.73 176.43
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 0.95 0.78 11.70 11.70 87.19
PLSK Pulaski SB, MHC of NJ (47.0) 0.47 0.51 10.53 10.53 89.08
PULS Pulse Bancorp of S. River NJ(8) 1.74 1.74 14.39 14.39 170.56
QCFB QCF Bancorp of Virginia MN 2.01 1.95 19.93 19.93 113.92
QCBC Quaker City Bancorp of CA 1.14 1.12 13.32 13.32 153.04
QCSB Queens County Bancorp of NY* 1.11 1.09 7.92 7.92 80.08
RARB Raritan Bancorp of Raritan NJ(8)* 1.62 1.62 12.96 12.81 176.96
RELY Reliance Bancorp, Inc. of NY 2.08 2.19 21.69 15.13 276.68
RELI Reliance Bancshares Inc of WI(8) 0.24 0.23 9.34 9.34 17.65
RCBK Richmond County Fin Corp of NY 0.27 0.76 12.44 12.39 60.39
RIVR River Valley Bancorp of IN 1.07 0.94 15.54 15.34 114.02
RVSB Riverview Bancorp of WA 0.72 0.68 10.02 9.71 43.42
RSLN Roslyn Bancorp, Inc. of NY* 1.11 1.06 14.36 14.29 93.07
SCCB S. Carolina Comm. Bnshrs of SC 0.70 0.70 16.23 16.23 82.74
SFED SFS Bancorp of Schenectady NY(8) 0.95 0.92 18.14 18.14 147.43
SGVB SGV Bancorp of W. Covina CA 0.63 0.62 13.73 13.56 173.91
SISB SIS Bancorp, Inc. of MA(8)* 1.68 2.09 18.34 18.34 256.82
SWCB Sandwich Bancorp of MA(8)* 2.45 2.32 21.81 21.20 259.92
SKAN Skaneateles Bancorp Inc of NY* 1.09 1.06 12.69 12.39 184.59
SKBOD Skibo Fin Corp MHC of PA(45.0) 0.36 0.43 10.63 10.63 63.30
SOBI Sobieski Bancorp of S. Bend IN 0.71 0.69 16.84 16.84 121.07
SFFS Sound Bancorp MHC of NY (44.1) 0.63 0.63 10.02 10.02 52.59
SSFC South Street Fin. Corp. of NC* 0.22 0.22 7.37 7.37 43.56
SBAN SouthBanc Shares Inc. of SC 0.62 0.66 17.72 17.72 85.38
SCBS Southern Commun. Bncshrs of AL 0.75 0.75 10.36 10.36 59.74
SMBC Southern Missouri Bncrp of MO 0.72 0.75 16.25 16.25 105.07
SVRN Sovereign Bancorp, Inc. of PA 0.53 0.66 6.34 5.59 115.12
STFR St. Francis Cap. Corp. of WI 2.68 2.60 27.35 24.47 366.50
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SPBC St. Paul Bancorp, Inc. of IL 20.56 40,598 834.7 27.06 16.81 20.94 -1.81 -10.61 -21.68
SFFC StateFed Financial Corp. of IA 11.88 1,566 18.6 15.00 9.00 11.63 2.15 -12.39 -19.46
SFIN Statewide Fin. Corp. of NJ 15.50 4,397 68.2 26.69 15.25 16.63 -6.79 -28.34 -35.42
STSA Sterling Financial Corp. of WA 16.38 7,606 124.6 27.63 14.00 15.25 7.41 -22.92 -24.69
ROSE T R Financial Corp. of NY* 32.75 17,630 577.4 44.75 19.88 29.63 10.53 3.97 -1.50
THRD TF Financial Corp. of PA 18.50 3,192 59.1 30.00 16.13 17.25 7.25 -20.87 -38.33
THTL Thistle Group Holdings of PA 9.00 9,000 81.0 10.06 7.63 9.13 -1.42 -10.00 -10.00
TSBK Timberland Bancorp of WA 13.38 6,613 88.5 18.50 10.75 12.00 11.50 33.80 33.80
TRIC Tri-County Bancorp of WY 12.75 1,167 14.9 16.50 11.25 12.75 0.00 -8.14 -15.00
TWIN Twin City Bancorp, Inc. of TN 13.25 1,241 16.4 15.50 12.75 13.13 0.91 -8.62 -14.52
USAB USABancshares, Inc of PA* 7.25 2,002 14.5 13.31 6.19 8.00 -9.38 17.12 -3.33
UCBC Union Community Bancorp of IN 12.00 3,042 36.5 15.81 10.63 12.50 -4.00 20.00 -17.98
UCFC United Community Fin. of OH 14.00 33,465 468.5 17.94 13.00 14.25 -1.75 40.00 40.00
UBMT United Fin. Corp. of MT 24.25 1,698 41.2 31.50 21.75 23.00 5.43 N.A. N.A.
UTBI United Tenn. Bancshares of TN 11.63 1,455 16.9 16.00 9.88 10.88 6.89 16.30 16.30
WHGB WHG Bancshares of MD 10.75 1,389 14.9 19.00 10.13 10.25 4.88 -31.22 -42.67
WSFS WSFS Financial Corp. of DE* 17.13 12,233 209.6 23.88 12.75 18.25 -6.14 -1.44 -14.35
WVFC WVS Financial Corp. of PA 15.38 3,615 55.6 20.13 14.75 15.19 1.25 -3.87 -12.76
WRNB Warren Bancorp of Peabody MA* 9.69 7,911 76.7 14.38 8.75 9.88 -1.92 -3.10 -15.74
WSBI Warwick Community Bncrp of NY* 12.75 6,607 84.2 18.00 10.38 12.50 2.00 27.50 -26.64
WFSL Washington Federal, Inc. of WA 26.69 51,446 1,373.1 30.13 22.25 25.81 3.41 -2.95 -6.61
WAYN Wayne Svgs Bks MHC of OH (48.2 18.25 2,486 21.8 30.00 17.00 18.00 1.39 -22.80 -30.77
WCFB Wbstr Cty FSB MHC of IA (45.6) 16.00 2,114 15.4 21.75 12.50 16.00 0.00 -23.81 -20.00
WBST Webster Financial Corp. of CT 24.69 37,943 936.8 36.25 18.88 21.06 17.24 -18.89 -25.74
WEFC Wells Fin. Corp. of Wells MN 16.50 1,652 27.3 22.00 15.25 18.00 -8.33 -5.71 -7.72
WEBK West Essex MHC of NJ (42.2) 9.75 4,197 17.3 10.06 8.41 10.06 -3.08 -2.50 -2.50
WCBI WestCo Bancorp, Inc. of IL(8) 32.25 2,405 77.6 32.50 26.00 30.00 7.50 17.27 18.35
WSTR WesterFed Fin. Corp. of MT 18.25 5,589 102.0 26.75 17.00 18.13 0.66 -24.74 -28.43
WOFC Western Ohio Fin. Corp. of OH 22.63 2,298 52.0 27.50 19.75 21.00 7.76 -6.68 -15.81
WEHO Westwood Hmstd Fin Corp of OH 10.00 2,436 24.4 18.13 10.00 10.38 -3.66 -36.51 -41.18
FFWD Wood Bancorp of OH 13.00 2,669 34.7 27.00 12.25 13.75 -5.45 -10.96 -30.85
YFCB Yonkers Fin. Corp. of NY 14.19 2,726 38.7 20.25 13.00 14.25 -0.42 -29.05 -26.29
YFED York Financial Corp. of PA 20.00 8,968 179.4 27.25 15.63 21.88 -8.59 -6.10 -22.33
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SPBC St. Paul Bancorp, Inc. of IL 1.22 1.17 10.79 10.75 112.44
SFFC StateFed Financial Corp. of IA 0.65 0.65 10.27 10.27 57.34
SFIN Statewide Fin. Corp. of NJ 1.21 1.16 14.51 14.49 149.34
STSA Sterling Financial Corp. of WA 0.89 1.30 13.90 5.47 273.04
ROSE T R Financial Corp. of NY* 2.21 1.88 14.53 14.53 233.45
THRD TF Financial Corp. of PA 1.39 1.12 16.18 13.73 215.94
THTL Thistle Group Holdings of PA 0.53 0.53 10.79 10.79 38.81
TSBK Timberland Bancorp of WA 0.67 0.63 12.87 12.87 39.79
TRIC Tri-County Bancorp of WY 0.76 0.78 12.20 12.20 74.16
TWIN Twin City Bancorp, Inc. of TN 0.89 0.72 11.29 11.29 89.13
USAB USABancshares, Inc of PA* 0.26 0.32 6.55 6.51 67.28
UCBC Union Community Bancorp of IN 0.47 0.47 14.22 14.22 35.53
UCFC United Community Fin. of OH 0.58 0.58 12.47 12.47 38.59
UBMT United Fin. Corp. of MT 1.35 1.32 17.83 17.23 120.93
UTBI United Tenn. Bancshares of TN 0.71 0.71 13.83 13.83 51.16
WHGB WHG Bancshares of MD 0.46 0.46 14.52 14.52 95.01
WSFS WSFS Financial Corp. of DE* 1.39 1.34 7.80 7.77 126.84
WVFC WVS Financial Corp. of PA 0.97 1.05 9.12 9.12 82.17
WRNB Warren Bancorp of Peabody MA* 0.80 0.80 5.01 5.01 47.80
WSBI Warwick Community Bncrp of NY* 0.19 0.64 13.04 13.04 62.12
WFSL Washington Federal, Inc. of WA 2.16 2.10 15.02 13.95 108.05
WAYN Wayne Svgs Bks MHC of OH (48.2 0.73 0.66 9.94 9.94 104.35
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.63 0.63 10.75 10.75 45.93
WBST Webster Financial Corp. of CT 1.30 1.46 14.45 12.25 242.18
WEFC Wells Fin. Corp. of Wells MN 1.45 1.35 17.55 17.55 114.21
WEBK West Essex MHC of NJ (42.2) 0.27 0.27 10.76 10.76 80.14
WCBI WestCo Bancorp, Inc. of IL(8) 1.96 1.84 20.86 20.86 133.18
WSTR WesterFed Fin. Corp. of MT 1.30 1.30 19.63 16.00 182.88
WOFC Western Ohio Fin. Corp. of OH 0.12 0.10 22.57 21.11 155.48
WEHO Westwood Hmstd Fin Corp of OH 0.38 0.61 10.68 10.68 51.86
FFWD Wood Bancorp of OH 0.89 0.72 8.45 8.45 62.25
YFCB Yonkers Fin. Corp. of NY 1.09 0.99 15.17 15.17 147.31
YFED York Financial Corp. of PA 1.12 0.88 12.18 12.18 137.07
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(274) 13.75 13.47 0.92 7.95 5.93 0.88 7.52 0.65 139.77 0.78
NYSE Traded Companies(7) 8.31 7.98 0.76 10.42 6.20 0.47 7.67 2.28 120.17 1.35
AMEX Traded Companies(22) 13.68 13.55 0.74 5.97 5.77 0.77 5.70 0.64 152.06 0.76
NASDAQ Listed OTC Companies(245) 13.91 13.60 0.93 8.06 5.94 0.90 7.68 0.62 139.33 0.77
California Companies(17) 7.80 7.45 0.60 8.47 7.40 0.51 7.66 1.53 97.96 1.29
Florida Companies(5) 11.24 10.51 0.88 9.01 5.78 0.58 5.47 1.75 126.64 0.90
Mid-Atlantic Companies(52) 11.24 10.82 0.83 9.06 6.76 0.85 8.83 0.66 100.19 0.89
Mid-West Companies(130) 14.46 14.25 0.92 7.17 5.43 0.89 6.89 0.55 141.65 0.66
New England Companies(7) 7.44 7.12 0.72 9.86 6.93 0.62 8.56 0.66 129.84 1.01
North-West Companies(11) 17.55 16.79 1.18 8.71 5.42 1.06 8.05 0.59 224.74 0.80
South-East Companies(41) 17.31 17.14 1.09 8.19 5.52 1.03 7.73 0.63 156.92 0.77
South-West Companies(6) 11.01 10.91 0.91 9.94 8.86 0.87 9.62 0.45 176.09 0.58
Western Companies (Excl CA)(5) 16.71 16.21 0.98 6.28 6.01 0.98 6.28 0.37 196.99 0.92
Thrift Strategy(233) 14.78 14.53 0.93 7.46 5.82 0.91 7.15 0.59 142.75 0.73
Mortgage Banker Strategy(24) 7.55 6.84 0.74 9.67 4.86 0.66 9.12 0.71 135.97 0.98
Real Estate Strategy(7) 7.36 7.13 0.88 12.00 8.91 0.80 11.05 1.31 116.26 1.73
Diversified Strategy(7) 8.60 8.32 0.84 10.66 4.88 0.53 7.71 2.16 83.96 1.05
Retail Banking Strategy(3) 6.77 6.40 1.42 20.90 21.06 1.16 17.22 0.91 64.52 0.63
Companies Issuing Dividends(230) 13.98 13.69 0.96 8.13 6.11 0.91 7.57 0.59 137.95 0.75
Companies Without Dividends(44) 12.48 12.22 0.66 6.94 4.93 0.71 7.25 0.96 150.29 0.96
Equity/Assets less than 6%(18) 5.07 4.63 0.52 10.51 5.55 0.58 11.56 1.10 116.82 0.96
Equity/Assets 6-12%(119) 8.71 8.31 0.85 10.00 6.83 0.75 8.92 0.67 136.17 0.86
Equity/Assets greater than 12%(137) 19.25 19.08 1.03 5.86 5.21 1.02 5.78 0.59 145.19 0.69
Actively Traded Companies(28) 8.82 8.31 0.89 10.76 5.35 0.91 11.52 0.78 135.43 0.92
Market Value Below $20 Million(61) 14.81 14.71 0.86 6.29 6.37 0.80 5.70 0.64 154.13 0.67
Holding Company Structure(247) 13.76 13.47 0.91 7.84 5.84 0.87 7.45 0.67 135.62 0.77
Assets Over $1 Billion(56) 9.27 8.63 0.79 10.34 6.36 0.78 9.97 0.97 112.02 0.98
Assets $500 Million-$1 Billion(35) 10.64 10.24 0.92 9.12 5.82 0.83 8.39 0.44 171.94 0.86
Assets $250-$500 Million(64) 13.86 13.58 0.91 7.86 6.13 0.90 7.55 0.64 141.99 0.75
Assets less than $250 Million(119) 16.78 16.69 0.97 6.50 5.65 0.93 6.06 0.59 141.67 0.68
Goodwill Companies(111) 10.70 10.01 0.85 9.35 6.36 0.80 8.74 0.76 129.34 0.90
Non-Goodwill Companies(161) 15.93 15.93 0.96 6.90 5.64 0.92 6.61 0.58 147.73 0.69
Acquirors of FSLIC Cases(7) 9.44 8.97 1.28 14.97 11.49 1.21 14.23 0.79 62.47 0.62
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- ---------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(274) 17.09 124.46 15.70 129.92 17.59 0.33 2.07 32.54
NYSE Traded Companies(7) 18.32 150.65 12.41 158.28 13.82 0.21 0.97 19.34
AMEX Traded Companies(22) 16.11 99.60 13.34 101.01 17.91 0.33 2.33 32.54
NASDAQ Listed OTC Companies(245) 17.14 125.97 16.00 131.73 17.64 0.34 2.07 32.93
California Companies(17) 14.13 104.91 8.13 110.59 12.99 0.15 0.82 15.46
Florida Companies(5) 18.78 124.81 14.65 139.02 20.83 0.14 1.16 19.00
Mid-Atlantic Companies(52) 15.72 123.29 12.98 131.28 16.97 0.32 1.99 31.83
Mid-West Companies(130) 17.37 123.41 16.41 126.48 17.84 0.35 2.19 33.53
New England Companies(7) 14.77 135.62 9.79 143.40 17.74 0.39 2.19 31.16
North-West Companies(11) 19.04 142.62 21.20 164.12 19.93 0.32 1.76 32.90
South-East Companies(41) 19.00 135.87 19.99 139.89 18.98 0.39 2.42 39.61
South-West Companies(6) 14.31 104.59 10.90 108.20 11.60 0.26 1.82 28.50
Western Companies (Excl CA)(5) 16.83 98.54 16.11 103.70 16.82 0.48 2.70 44.34
Thrift Strategy(233) 17.31 118.59 16.29 122.46 17.77 0.35 2.17 34.00
Mortgage Banker Strategy(24) 16.65 163.76 12.37 186.39 18.56 0.26 1.41 25.67
Real Estate Strategy(7) 11.45 126.79 9.52 129.54 12.13 0.18 0.95 11.79
Diversified Strategy(7) 21.15 195.37 16.05 201.47 18.93 0.40 2.08 41.58
Retail Banking Strategy(3) 7.26 121.22 7.66 125.45 8.47 0.23 1.52 8.98
Companies Issuing Dividends(230) 17.10 126.28 16.14 131.33 17.76 0.39 2.44 38.37
Companies Without Dividends(44) 17.06 114.22 13.26 122.02 16.46 0.00 0.00 0.00
Equity/Assets less than 6%(18) 13.82 150.45 7.83 169.63 12.78 0.16 0.77 11.01
Equity/Assets 6-12%(119) 15.30 142.15 12.14 150.21 16.73 0.32 1.87 27.97
Equity/Assets greater than 12%(137) 19.07 105.79 19.82 107.17 18.99 0.37 2.41 40.03
Actively Traded Companies(28) 16.94 167.91 14.46 184.48 16.50 0.44 1.97 34.68
Market Value Below $20 Million(61) 17.30 98.61 14.08 99.25 18.36 0.30 2.40 36.63
Holding Company Structure(247) 17.20 124.89 15.77 130.40 17.59 0.34 2.11 33.37
Assets Over $1 Billion(56) 16.52 147.83 13.07 163.32 16.59 0.32 1.60 25.87
Assets $500 Million-$1 Billion(35) 15.09 141.92 14.09 149.89 17.08 0.37 1.96 29.92
Assets $250-$500 Million(64) 16.70 120.33 15.92 123.75 16.99 0.32 1.87 30.26
Assets less than $250 Million(119) 18.13 110.06 17.34 110.92 18.54 0.34 2.42 38.19
Goodwill Companies(111) 16.52 135.01 13.48 147.91 17.01 0.33 1.87 28.15
Non-Goodwill Companies(161) 17.52 115.27 17.12 115.27 18.03 0.34 2.21 35.67
Acquirors of FSLIC Cases(7) 12.93 152.62 14.40 161.28 12.94 0.47 1.98 24.65
</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
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ----------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(56) 11.93 11.60 1.06 10.51 6.96 1.05 9.89 0.55 208.67 1.23
NYSE Traded Companies(5) 16.97 15.76 1.36 9.51 5.54 1.50 9.36 0.88 129.40 0.91
AMEX Traded Companies(5) 11.98 11.68 1.02 10.09 7.65 0.93 8.79 0.85 124.37 1.19
NASDAQ Listed OTC Companies(46) 11.30 11.09 1.03 10.68 7.05 1.01 10.08 0.48 228.50 1.28
California Companies(1) 10.43 10.41 1.43 13.81 11.87 1.43 13.81 0.00 0.00 1.90
Mid-Atlantic Companies(21) 14.44 14.00 0.96 8.21 5.19 1.06 8.34 0.75 140.68 1.09
New England Companies(29) 9.84 9.55 1.13 12.61 8.11 1.02 11.24 0.46 277.29 1.41
North-West Companies(2) 11.34 11.34 1.32 12.49 8.80 1.22 11.18 0.04 0.00 1.07
South-East Companies(3) 15.00 14.84 0.77 4.38 5.34 0.98 5.79 0.32 159.18 0.52
Thrift Strategy(44) 12.88 12.62 1.04 9.59 6.62 1.05 9.04 0.58 200.68 1.16
Mortgage Banker Strategy(6) 8.56 8.10 1.06 13.08 8.23 0.93 11.10 0.17 335.04 1.13
Real Estate Strategy(2) 10.46 10.45 1.58 14.95 10.06 1.58 14.95 0.00 0.00 1.73
Diversified Strategy(4) 6.90 5.82 0.97 14.71 6.86 1.02 15.40 0.81 162.87 2.01
Companies Issuing Dividends(48) 11.42 11.04 1.05 10.65 6.84 1.03 9.86 0.51 206.41 1.21
Companies Without Dividends(8) 14.64 14.63 1.10 9.75 7.60 1.17 10.01 0.74 219.64 1.37
Equity/Assets greater than 6%(2) 4.68 4.60 0.96 19.71 8.19 0.62 12.06 0.71 99.04 0.92
Equity/Assets 6-12%(36) 8.59 8.14 1.03 12.11 7.55 0.96 11.22 0.64 200.17 1.42
Equity/Assets 12%(18) 19.05 18.95 1.12 6.42 5.71 1.27 7.12 0.40 230.15 0.92
Converted Last 3 Mths (no MHC)(1) 27.23 27.23 0.47 1.74 2.50 1.06 3.91 1.28 74.83 1.43
Actively Traded Companies(14) 10.39 9.93 1.36 13.75 8.53 1.30 12.38 0.24 260.22 1.07
Market Value Below $20 Million(6) 9.24 9.04 0.83 8.70 7.47 0.84 8.70 0.58 243.74 1.25
Holding Company Structure(43) 12.77 12.53 1.06 9.80 6.68 1.08 9.45 0.46 229.96 1.24
Assets Over $1 Billion(16) 11.21 10.43 1.21 11.95 6.63 1.24 11.76 0.56 198.28 1.26
Assets $500 Million-$1 Billion(11) 9.17 9.03 1.03 12.04 7.44 0.90 9.77 0.48 194.26 1.34
Assets $250-$500 Million(15) 12.88 12.75 1.10 10.59 7.68 1.11 10.00 0.60 198.01 1.47
Assets less than $250 Million(14) 13.30 13.18 0.87 8.02 6.33 0.87 7.84 0.52 235.72 0.90
Goodwill Companies(28) 10.13 9.45 0.97 10.92 7.23 0.94 9.89 0.75 166.51 1.26
Non-Goodwill Companies(28) 13.52 13.52 1.14 10.14 6.73 1.15 9.88 0.39 245.08 1.21
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- ---------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(56) 14.58 138.03 15.38 141.17 16.10 0.37 2.03 29.77
NYSE Traded Companies(5) 17.54 159.12 23.56 149.30 19.62 0.55 1.52 29.21
AMEX Traded Companies(5) 13.83 119.46 13.33 123.77 16.56 0.41 2.52 34.24
NASDAQ Listed OTC Companies(46) 14.36 137.72 14.64 142.54 15.57 0.35 2.04 29.27
California Companies(1) 8.43 108.93 11.36 109.16 8.43 0.00 0.00 0.00
Mid-Atlantic Companies(21) 17.72 133.14 18.27 131.17 19.06 0.39 1.63 31.15
New England Companies(29) 13.34 146.41 13.42 153.29 14.93 0.37 2.18 28.67
North-West Companies(2) 11.46 139.28 15.11 139.28 12.61 0.32 2.37 27.98
South-East Companies(3) 14.96 103.69 15.63 104.75 11.35 0.41 3.75 48.21
Thrift Strategy(44) 15.07 130.41 15.91 129.64 16.65 0.41 2.14 31.78
Mortgage Banker Strategy(6) 12.51 156.51 12.85 169.63 15.25 0.21 1.33 16.51
Real Estate Strategy(2) 10.27 151.17 15.82 151.29 10.27 0.18 1.86 22.50
Diversified Strategy(4) 16.05 191.40 13.13 223.60 14.87 0.37 2.15 35.61
Companies Issuing Dividends(48) 14.40 143.67 15.54 147.54 16.23 0.44 2.41 35.57
Companies Without Dividends(8) 15.59 108.42 14.52 108.54 15.43 0.00 0.00 0.00
Equity/Assets greater than 6%(2) 12.21 225.24 10.66 229.99 14.94 0.46 2.45 30.23
Equity/Assets 6-12%(36) 14.13 150.82 13.49 155.67 15.79 0.40 2.12 30.39
Equity/Assets 12%(18) 16.16 104.46 19.50 105.14 16.83 0.31 1.82 28.37
Converted Last 3 Mths (no MHC)(1) 0.00 69.74 18.99 69.74 17.86 0.00 0.00 0.00
Actively Traded Companies(14) 12.69 155.76 15.28 168.60 13.70 0.49 2.22 28.96
Market Value Below $20 Million(6) 14.99 113.92 10.44 117.77 14.25 0.32 1.94 25.34
Holding Company Structure(43) 14.97 131.91 15.98 137.17 16.35 0.38 2.08 31.39
Assets Over $1 Billion(16) 16.09 164.95 18.48 172.50 17.00 0.47 1.86 33.43
Assets $500 Million-$1 Billion(11) 12.53 152.20 13.04 156.06 16.19 0.53 2.70 37.35
Assets $250-$500 Million(15) 12.68 124.12 14.60 125.93 15.15 0.27 1.96 25.21
Assets less than $250 Million(14) 15.93 116.93 14.18 118.81 16.02 0.28 1.91 25.43
Goodwill Companies(28) 14.80 143.17 13.54 150.08 16.06 0.38 1.99 29.24
Non-Goodwill Companies(28) 14.36 133.29 17.02 133.29 16.13 0.36 2.08 30.27
</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
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. MHC Institutions
---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(21) 14.34 14.24 0.83 6.29 3.91 0.79 5.84 0.54 123.18 0.87
BIF-Insured Thrifts(3) 13.44 12.43 0.86 8.30 4.39 0.74 6.70 0.73 132.70 1.11
NASDAQ Listed OTC Companies(24) 14.21 13.98 0.84 6.58 3.98 0.78 5.97 0.57 124.54 0.91
Florida Companies(2) 6.15 5.98 0.65 8.98 4.88 0.52 7.18 0.27 78.51 0.34
Mid-Atlantic Companies(14) 13.29 13.05 0.73 5.87 3.87 0.73 5.81 0.62 94.13 0.86
Mid-West Companies(5) 14.49 14.49 0.90 6.38 3.86 0.81 5.45 0.41 219.34 0.55
New England Companies(2) 21.20 20.55 1.65 10.93 5.17 1.31 7.51 0.60 214.48 2.01
South-East Companies(1) 20.28 20.28 0.73 5.92 2.51 0.66 5.39 0.50 132.06 0.96
Thrift Strategy(22) 14.78 14.64 0.82 6.01 3.88 0.80 5.78 0.56 125.10 0.86
Mortgage Banker Strategy(1) 8.13 7.34 0.84 10.33 3.47 0.68 8.41 0.66 60.54 0.97
Diversified Strategy(1) 9.42 8.12 1.22 13.58 6.26 0.63 7.05 0.59 177.88 1.64
Companies Issuing Dividends(20) 13.92 13.63 0.87 7.10 3.97 0.80 6.34 0.56 136.28 0.92
Companies Without Dividends(4) 15.47 15.47 0.71 4.37 3.99 0.71 4.37 0.58 74.64 0.85
Equity/Assets 6-12%(12) 9.51 9.03 0.74 7.86 4.26 0.61 6.38 0.65 86.53 0.81
Equity/Assets greater than 12%(12) 18.48 18.48 0.92 5.41 3.72 0.95 5.59 0.49 159.10 0.99
Holding Company Structure(5) 14.52 14.18 0.75 5.77 4.11 0.78 5.98 0.59 86.74 0.66
Assets Over $1 Billion(5) 10.24 9.62 0.85 9.61 4.15 0.74 8.06 0.46 125.67 0.97
Assets $500 Million-$1 Billion(3) 32.99 32.99 2.07 8.28 4.08 2.00 7.97 0.60 251.07 2.37
Assets $250-$500 Million(8) 13.35 13.35 0.73 5.43 4.01 0.71 5.21 0.63 71.58 0.74
Assets less than $250 Million(8) 15.34 15.10 0.77 5.48 3.80 0.72 5.05 0.57 166.19 0.85
Goodwill Companies(8) 10.54 9.85 0.79 8.11 4.19 0.64 6.48 0.68 87.93 0.94
Non-Goodwill Companies(15) 15.82 15.82 0.83 5.78 3.68 0.83 5.67 0.51 148.27 0.90
MHC Institutions(24) 14.21 13.98 0.84 6.58 3.98 0.78 5.97 0.57 124.54 0.91
MHC Converted Last 3 Months(2) 16.24 16.24 0.77 4.40 4.53 0.77 4.40 0.81 63.36 1.19
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
--------------------- ------- ------- ------- ------- -------- ------- ------- --------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. MHC Institutions
---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(21) 23.82 151.12 20.42 154.68 24.24 0.31 2.06 33.30
BIF-Insured Thrifts(3) 18.96 151.39 19.47 169.27 26.67 0.41 2.14 47.13
NASDAQ Listed OTC Companies(24) 23.18 151.16 20.29 156.77 24.58 0.32 2.07 36.07
Florida Companies(2) 20.49 177.41 10.91 182.64 25.61 1.00 4.24 0.00
Mid-Atlantic Companies(14) 23.20 145.75 18.17 151.61 24.00 0.20 1.58 29.77
Mid-West Companies(5) 25.93 161.45 22.78 161.45 26.52 0.57 3.50 57.69
New England Companies(2) 20.25 164.22 31.64 179.48 25.49 0.56 2.57 47.62
South-East Companies(1) 0.00 143.65 29.14 143.65 0.00 0.20 1.52 60.61
Thrift Strategy(22) 23.30 142.28 20.28 145.29 24.58 0.30 2.02 34.06
Mortgage Banker Strategy(1) 28.81 279.86 22.74 309.96 0.00 0.22 1.41 40.74
Diversified Strategy(1) 15.98 191.17 18.01 221.68 0.00 0.92 3.60 57.50
Companies Issuing Dividends(20) 23.37 160.81 21.04 167.73 25.03 0.40 2.56 49.18
Companies Without Dividends(4) 21.91 110.18 17.09 110.18 21.91 0.00 0.00 0.00
Equity/Assets 6-12%(12) 23.31 178.09 16.39 189.86 24.68 0.43 2.58 50.30
Equity/Assets greater than 12%(12) 22.97 126.68 23.83 126.68 24.51 0.22 1.60 23.62
Holding Company Structure(5) 20.94 131.70 18.32 136.33 24.22 0.19 1.24 20.97
Assets Over $1 Billion(5) 22.92 206.37 19.54 225.28 26.70 0.48 2.34 44.99
Assets $500 Million-$1 Billion(3) 24.53 137.28 45.28 137.28 25.49 0.20 1.54 37.74
Assets $250-$500 Million(8) 22.40 134.84 17.40 134.84 22.93 0.22 1.57 11.80
Assets less than $250 Million(8) 23.89 132.36 20.55 135.67 24.79 0.34 2.53 52.86
Goodwill Companies(8) 23.59 181.11 17.73 197.93 26.60 0.36 1.76 28.59
Non-Goodwill Companies(15) 23.77 138.98 21.76 138.98 24.66 0.33 2.40 46.18
MHC Institutions(24) 23.18 151.16 20.29 156.77 24.58 0.32 2.07 36.07
MHC Converted Last 3 Months(2) 15.87 95.21 15.59 95.21 15.87 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
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
BYS Bay State Bancorp of MA* 20.71 20.71 0.92 4.44 4.47 0.92 4.44 0.56 150.03 0.99
CFB Commercial Federal Corp. of NE 7.27 6.44 0.78 11.91 4.45 0.96 14.50 0.78 86.50 0.88
DME Dime Bancorp, Inc. of NY* 6.36 5.23 0.85 14.62 6.64 0.52 8.88 NA NA 0.69
DSL Downey Financial Corp. of CA 7.87 7.79 0.98 13.22 8.66 1.01 13.67 0.75 70.52 0.58
FED FirstFed Fin. Corp. of CA 5.99 5.95 0.72 13.26 8.49 0.68 12.50 0.73 312.44 2.92
GSB Golden State Bancorp of CA(8) 6.20 5.20 0.81 13.04 5.94 0.85 13.73 0.68 162.74 1.78
GDW Golden West Fin. Corp. of CA 7.48 7.48 1.02 14.92 7.77 1.00 14.59 NA NA 0.86
GPT GreenPoint Fin. Corp. of NY* 9.92 5.62 1.11 11.26 4.66 1.14 11.55 2.27 36.31 1.11
JSB JSB Financial, Inc. of NY* 24.31 24.31 2.92 12.15 8.87 3.28 13.64 0.16 238.05 0.54
OCN Ocwen Financial Corp. of FL 12.19 11.15 0.87 6.99 3.75 0.08 0.62 6.87 11.20 1.31
SIB Staten Island Bancorp of NY* 23.55 22.95 1.02 5.10 3.08 1.65 8.29 0.53 93.20 1.20
WES Westcorp Inc. of Orange CA 9.07 9.05 0.20 2.19 4.07 -0.89 -9.85 NA NA 1.57
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 14.72 14.72 1.04 6.50 7.50 0.98 6.09 NA NA NA
ANE Alliance Bncp of New Eng of CT* 7.80 7.63 0.94 12.50 10.10 0.46 6.06 0.53 229.26 1.84
BKC American Bank of Waterbury CT* 8.65 8.39 1.34 15.31 8.41 1.13 12.87 1.45 71.20 1.73
BFD BostonFed Bancorp of MA 7.80 7.53 0.71 8.64 7.36 0.57 6.89 NA NA 0.86
CNY Carver Bancorp, Inc. of NY 8.40 8.12 0.25 3.02 5.11 0.22 2.63 2.21 36.35 1.28
CBK Citizens First Fin.Corp. of IL 13.95 13.95 0.71 5.12 5.20 0.40 2.89 0.67 54.73 0.45
EFC EFC Bancorp Inc of IL 23.66 23.66 -0.78 -5.19 -3.91 0.94 6.26 0.53 57.48 0.42
EBI Equality Bancorp, Inc. of MO 9.58 9.58 0.59 6.72 4.67 0.01 0.12 0.36 37.97 0.37
ESX Essex Bancorp of Norfolk VA(8) 0.02 -0.04 -0.24 NM -20.66 -0.24 NM 1.26 76.64 1.11
FCB Falmouth Bancorp, Inc. of MA* 21.39 21.39 1.09 4.72 5.07 0.82 3.57 NA NA 0.65
FAB FirstFed America Bancorp of MA 8.86 8.86 0.59 5.48 5.95 0.48 4.47 0.27 324.40 1.33
GAF GA Financial Corp. of PA 12.87 12.76 1.02 7.15 8.14 0.95 6.65 0.31 60.77 0.47
HBS Haywood Bancshares, Inc. of NC* 14.57 14.11 0.92 6.39 6.49 1.45 10.05 0.60 82.40 0.66
KNK Kankakee Bancorp, Inc. of IL 9.76 8.34 0.79 7.49 8.57 0.76 7.17 1.12 53.91 0.97
KYF Kentucky First Bancorp of KY 17.56 17.56 1.08 6.34 5.92 1.06 6.25 0.17 272.34 0.78
NBN Northeast Bancorp of ME* 7.48 6.89 0.83 11.52 8.18 0.82 11.39 0.81 114.63 1.05
NEP Northeast PA Fin. Corp of PA 17.78 17.78 -0.28 -1.52 -1.76 0.63 3.42 0.23 182.16 0.72
PDB Piedmont Bancorp, Inc. of NC 16.56 16.56 1.28 7.79 6.68 1.23 7.54 0.68 116.45 0.97
SSB Scotland Bancorp, Inc. of NC(8) 24.95 24.95 1.33 4.93 3.95 1.33 4.93 NA NA 0.57
SZB SouthFirst Bancshares of AL 9.94 9.70 0.47 4.21 4.21 0.42 3.76 1.56 29.78 0.75
SRN Southern Banc Company of AL 17.67 17.54 0.51 2.96 3.45 0.51 2.96 0.01 690.91 0.18
SSM Stone Street Bancorp of NC 27.32 27.32 1.39 4.89 5.47 1.39 4.89 0.03 NA 0.64
TSH Teche Holding Company of LA 13.84 13.84 0.94 6.94 8.20 0.93 6.83 NA NA 1.01
FTF Texarkana Fst. Fin. Corp of AR 14.88 14.88 1.75 11.48 8.69 1.70 11.18 NA NA 0.64
THR Three Rivers Fin. Corp. of MI 12.83 12.79 0.85 6.34 6.94 0.76 5.67 0.83 59.56 0.78
WSB Washington SB, FSB of MD 8.42 8.42 0.73 8.64 10.35 0.50 5.89 NA NA 1.02
WFI Winton Financial Corp. of OH 7.27 7.14 1.19 16.33 8.74 0.90 12.33 NA NA NA
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 9.17 8.99 0.73 8.28 4.49 0.51 5.81 1.84 30.69 0.77
FBER 1st Bergen Bancorp of NJ(8) 11.60 11.60 0.72 5.57 3.64 0.72 5.57 0.96 111.28 2.41
AFED AFSALA Bancorp, Inc. of NY(8) 11.40 11.40 0.62 5.01 4.89 0.68 5.47 0.33 205.73 1.42
ALBK ALBANK Fin. Corp. of Albany NY(8) 9.19 7.27 1.14 12.55 5.46 1.13 12.48 0.78 93.99 1.05
AMFC AMB Financial Corp. of IN 12.68 12.68 0.84 5.95 7.44 0.54 3.86 0.19 214.55 0.52
ASBP ASB Financial Corp. of OH 12.45 12.45 0.94 6.35 5.50 0.93 6.26 0.34 191.18 0.98
ABBK Abington Bancorp of MA* 6.37 5.81 0.86 12.84 8.68 0.65 9.73 0.14 353.60 0.77
AABC Access Anytime Bancorp of NM 7.93 7.93 1.37 16.80 15.25 1.24 15.29 0.08 535.05 0.67
AFBC Advance Fin. Bancorp of WV 13.07 13.07 0.78 5.32 6.56 0.67 4.61 0.47 88.35 0.49
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- ---------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
BYS Bay State Bancorp of MA* 22.38 99.32 20.57 99.32 22.38 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 22.47 213.05 15.48 240.36 18.45 0.22 0.97 21.78
DME Dime Bancorp, Inc. of NY* 15.07 200.42 12.75 243.71 24.80 0.20 0.84 12.66
DSL Downey Financial Corp. of CA 11.55 143.72 11.31 145.23 11.16 0.32 1.37 15.76
FED FirstFed Fin. Corp. of CA 11.78 144.44 8.65 145.34 12.50 0.00 0.00 0.00
GSB Golden State Bancorp of CA(8) 16.83 219.57 13.62 261.80 15.99 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 12.86 177.34 13.27 177.34 13.16 0.50 0.55 7.09
GPT GreenPoint Fin. Corp. of NY* 21.44 244.67 24.28 NM 20.90 0.64 1.95 41.83
JSB JSB Financial, Inc. of NY* 11.28 135.68 32.98 135.68 10.05 1.60 3.05 34.41
OCN Ocwen Financial Corp. of FL 26.67 170.70 20.81 186.63 NM 0.00 0.00 0.00
SIB Staten Island Bancorp of NY* NM 115.49 27.19 118.50 19.99 0.32 1.76 57.14
WES Westcorp Inc. of Orange CA 24.57 54.65 4.96 54.78 NM 0.20 2.91 71.43
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 13.33 89.25 13.14 89.25 14.21 0.44 2.56 34.11
ANE Alliance Bncp of New Eng of CT* 9.90 116.41 9.09 119.05 20.41 0.20 2.00 19.80
BKC American Bank of Waterbury CT* 11.88 171.53 14.84 176.86 14.14 0.80 3.70 43.96
BFD BostonFed Bancorp of MA 13.58 117.43 9.16 121.70 17.04 0.40 2.21 30.08
CNY Carver Bancorp, Inc. of NY 19.57 58.03 4.87 60.00 22.50 0.00 0.00 0.00
CBK Citizens First Fin.Corp. of IL 19.23 96.65 13.48 96.65 NM 0.00 0.00 0.00
EFC EFC Bancorp Inc of IL NM 89.57 21.19 89.57 21.23 0.00 0.00 NM
EBI Equality Bancorp, Inc. of MO 21.43 115.38 11.05 115.38 NM 0.24 2.00 42.86
ESX Essex Bancorp of Norfolk VA(8) NM NM 1.05 NM NM 0.00 0.00 NM
FCB Falmouth Bancorp, Inc. of MA* 19.72 91.22 19.51 91.22 26.07 0.24 1.56 30.77
FAB FirstFed America Bancorp of MA 16.82 98.58 8.74 98.58 20.61 0.20 1.37 22.99
GAF GA Financial Corp. of PA 12.28 92.65 11.93 93.52 13.21 0.56 4.00 49.12
HBS Haywood Bancshares, Inc. of NC* 15.40 97.57 14.21 100.76 9.80 0.60 3.48 53.57
KNK Kankakee Bancorp, Inc. of IL 11.67 85.75 8.37 100.37 12.19 0.48 1.96 22.86
KYF Kentucky First Bancorp of KY 16.89 107.67 18.91 107.67 17.12 0.50 4.00 67.57
NBN Northeast Bancorp of ME* 12.23 120.59 9.02 130.94 12.37 0.21 1.89 23.08
NEP Northeast PA Fin. Corp of PA NM 86.08 15.31 86.08 25.29 0.00 0.00 NM
PDB Piedmont Bancorp, Inc. of NC 14.97 113.56 18.80 113.56 15.47 0.48 5.26 NM
SSB Scotland Bancorp, Inc. of NC(8) 25.30 139.82 34.88 139.82 25.30 0.20 1.80 45.45
SZB SouthFirst Bancshares of AL 23.77 93.67 9.31 96.02 26.59 0.60 3.82 NM
SRN Southern Banc Company of AL 28.98 84.44 14.92 85.06 28.98 0.35 2.75 NM
SSM Stone Street Bancorp of NC 18.29 90.14 24.63 90.14 18.29 0.46 3.07 56.10
TSH Teche Holding Company of LA 12.20 82.05 11.35 82.05 12.40 0.50 3.30 40.32
FTF Texarkana Fst. Fin. Corp of AR 11.51 129.23 19.23 129.23 11.82 0.64 2.94 33.86
THR Three Rivers Fin. Corp. of MI 14.41 93.40 11.98 93.68 16.10 0.44 2.91 41.90
WSB Washington SB, FSB of MD 9.66 81.57 6.87 81.57 14.17 0.10 2.35 22.73
WFI Winton Financial Corp. of OH 11.44 186.90 13.58 190.13 15.16 0.25 2.06 23.58
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 22.27 178.00 16.33 181.50 NM 0.27 0.70 15.52
FBER 1st Bergen Bancorp of NJ(8) 27.44 166.67 19.34 166.67 27.44 0.28 1.24 34.15
AFED AFSALA Bancorp, Inc. of NY(8) 20.45 108.92 12.42 108.92 18.75 0.28 1.78 36.36
ALBK ALBANK Fin. Corp. of Albany NY(8) 18.30 215.63 19.81 272.29 18.41 0.84 1.37 25.15
AMFC AMB Financial Corp. of IN 13.44 81.96 10.39 81.96 20.70 0.32 2.53 34.04
ASBP ASB Financial Corp. of OH 18.17 134.82 16.79 134.82 18.45 0.40 3.39 61.54
ABBK Abington Bancorp of MA* 11.52 149.75 9.54 164.25 15.21 0.20 1.36 15.63
AABC Access Anytime Bancorp of NM 6.56 105.96 8.40 105.96 7.21 0.00 0.00 0.00
AFBC Advance Fin. Bancorp of WV 15.24 86.33 11.29 86.33 17.61 0.32 2.56 39.02
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ----------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ALBC Albion Banc Corp. of Albion NY 8.49 8.49 0.54 6.24 6.38 0.50 5.88 0.47 72.86 0.44
ABCL Alliance Bancorp, Inc. of IL 8.74 8.66 0.75 8.29 5.28 0.92 10.18 0.17 175.47 0.45
ALLB Alliance Bank MHC of PA (19.9) 10.68 10.68 0.77 6.88 4.78 0.77 6.88 1.06 45.21 0.88
AHCI Ambanc Holding Co., Inc. of NY* 10.32 10.32 0.40 3.45 3.29 0.41 3.52 0.60 120.40 1.26
ASBI Ameriana Bancorp of IN 12.16 11.94 0.98 8.54 6.50 0.82 7.15 0.56 54.99 0.43
ABCW Anchor Bancorp Wisconsin of WI 6.36 6.26 1.11 17.39 6.00 0.97 15.09 0.58 180.99 1.29
ANDB Andover Bancorp, Inc. of MA* 8.20 8.20 1.19 14.70 7.78 1.16 14.34 0.31 238.74 0.99
ASFC Astoria Financial Corp. of NY 7.71 5.53 0.86 10.97 7.33 0.74 9.44 0.37 81.02 0.76
AVND Avondale Fin. Corp. of IL(8) 8.36 8.36 -0.91 -11.02 -14.47 -0.62 -7.53 1.25 84.71 2.83
BCSB BCSB Bankcorp MHC of MD (38.6) 16.27 16.27 0.80 4.95 3.58 0.80 4.95 0.34 88.87 0.56
BKCT Bancorp Connecticut of CT* 9.89 9.89 1.43 13.91 8.61 1.21 11.72 0.61 181.32 2.10
BPLS Bank Plus Corp. of CA 4.32 3.97 0.19 4.16 9.61 0.28 6.30 1.75 69.27 1.79
BNKU Bank United Corp. of TX 5.11 4.64 0.89 17.72 8.79 0.84 16.66 NA NA 0.44
BWFC Bank West Fin. Corp. of MI 12.83 12.83 0.49 3.63 3.41 0.51 3.74 0.57 28.07 0.23
BANC BankAtlantic Bancorp of FL 6.79 5.25 0.83 13.30 8.35 0.37 5.99 0.81 100.62 1.12
BKUNA BankUnited Fin. Corp. of FL 5.11 4.27 0.28 6.60 4.86 0.13 3.15 0.46 37.03 0.21
BVCC Bay View Capital Corp. of CA 6.89 4.46 0.35 5.42 4.29 0.60 9.23 NA NA 1.06
FSNJ Bayonne Banchsares of NJ(8) 13.69 13.69 0.73 5.33 3.41 0.73 5.33 0.44 96.50 0.92
BFSB Bedford Bancshares, Inc. of VA 13.26 13.26 1.23 8.87 5.13 1.21 8.76 0.21 232.62 0.60
BFFC Big Foot Fin. Corp. of IL 17.27 17.27 0.55 3.12 3.51 0.41 2.32 0.16 87.72 0.26
BYFC Broadway Fin. Corp. of CA 9.50 9.50 0.45 4.56 8.00 0.28 2.79 1.15 68.56 0.97
BRKL Brookline Bncp MHC of MA(47.0) 32.99 32.99 2.07 8.28 4.08 2.00 7.97 0.60 251.07 2.37
CBES CBES Bancorp, Inc. of MO 13.61 13.61 0.94 6.07 7.05 0.67 4.33 0.59 91.39 0.58
CITZ CFS Bancorp, Inc. of IN 17.41 17.41 0.58 3.31 3.64 0.64 3.68 0.67 42.30 0.81
CFSB CFSB Bancorp of Lansing MI 7.78 7.78 1.36 17.60 5.68 1.23 15.86 0.21 275.17 0.64
CKFB CKF Bancorp of Danville KY 21.57 21.57 1.34 5.95 6.43 1.34 5.95 0.54 40.24 0.24
CNSB CNS Bancorp, Inc. of MO 24.77 24.77 0.88 3.59 4.46 0.76 3.10 0.06 606.56 0.57
CNYF CNY Financial Corp of NY* 27.23 27.23 0.47 1.74 2.50 1.06 3.91 1.28 74.83 1.43
CSBF CSB Financial Group Inc of IL 23.20 21.89 0.76 3.28 4.45 0.74 3.20 1.13 34.83 0.69
CBCI Calumet Bancorp of Chicago IL(8) 17.73 17.73 1.95 11.64 10.09 1.96 11.72 1.21 99.71 1.56
CAFI Camco Fin. Corp. of OH 9.90 9.30 1.26 13.00 7.81 0.91 9.41 0.72 39.75 0.34
CMRN Cameron Fin. Corp. of MO 19.87 19.87 1.14 5.47 6.57 1.12 5.36 1.06 67.46 0.87
CFNC Carolina Fincorp of NC* 13.50 13.50 0.93 4.48 6.89 1.05 5.04 0.13 303.47 0.51
CASB Cascade Financial Corp. of WA 7.07 7.07 0.84 12.44 6.07 0.75 11.08 0.48 193.12 1.08
CATB Catskill Fin. Corp. of NY* 22.03 22.03 1.30 5.45 6.31 1.29 5.38 0.22 282.65 1.43
CAVB Cavalry Bancorp of TN 29.66 29.66 1.48 5.11 3.49 1.09 3.76 NA NA NA
CNIT Cenit Bancorp of Norfolk VA 7.91 7.33 0.90 12.59 6.51 0.83 11.60 0.19 316.10 0.75
CEBK Central Co-Op. Bank of MA* 9.75 8.88 0.85 8.64 8.48 0.63 6.45 0.40 188.70 1.00
CENB Century Bancorp, Inc. of NC(8) 19.34 19.34 1.20 4.68 7.24 1.18 4.63 0.47 119.57 0.78
COFI Charter One Financial of OH 7.47 7.03 0.95 13.28 4.63 1.25 17.47 0.40 142.90 0.82
CVAL Chester Valley Bancorp of PA 8.45 8.45 0.96 11.19 4.51 0.90 10.51 0.33 274.00 1.23
CLAS Classic Bancshares, Inc. of KY 14.87 12.79 0.73 4.88 5.56 0.93 6.18 0.29 216.16 0.92
CBSA Coastal Bancorp of Houston TX 3.85 3.35 0.52 14.57 11.05 0.54 14.92 NA NA 0.71
CFCP Coastal Fin. Corp. of SC 5.89 5.89 1.21 19.85 5.63 0.97 15.96 0.48 188.30 1.31
CFKY Columbia Financial of KY 31.50 31.50 0.48 2.32 1.69 0.48 2.32 0.40 63.42 0.48
CMSB Commonwealth Bancorp Inc of PA 8.43 6.65 0.57 6.24 6.32 0.41 4.44 0.46 91.32 0.66
CMSV Commty. Svgs, MHC of FL (48.5)(8) 10.85 10.85 0.70 6.35 4.51 0.65 5.85 0.27 133.22 0.52
CFTP Community Fed. Bancorp of MS 22.27 22.27 1.24 4.91 4.47 1.07 4.24 0.28 78.26 0.41
CFFC Community Fin. Corp. of VA 14.09 14.04 1.00 7.33 6.01 0.96 7.02 1.30 48.66 0.71
CIBI Community Inv. Bancorp of OH 10.09 10.09 0.91 8.05 5.80 0.91 8.05 0.67 81.36 0.67
COOP Cooperative Bancshares of NC 7.95 7.95 0.65 8.45 6.08 0.59 7.70 0.08 330.28 0.34
CRZY Crazy Woman Creek Bncorp of WY 23.43 23.43 1.24 5.15 6.15 1.24 5.15 0.13 355.84 0.92
CRSB Crusader Holding Corp of PA 11.50 10.89 2.27 32.12 8.00 2.09 29.47 0.96 44.19 0.50
DNFC D&N Financial Corp. of MI 5.57 5.53 0.86 15.65 8.68 0.75 13.68 0.50 109.80 0.83
DCBI Delphos Citizens Bancorp of OH 24.15 24.15 1.54 5.87 5.49 1.54 5.87 NA NA NA
DCOM Dime Community Bancorp of NY* 11.48 10.00 0.89 6.98 4.68 0.86 6.80 0.33 209.19 1.17
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- ---------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ALBC Albion Banc Corp. of Albion NY 15.69 95.58 8.12 95.58 16.67 0.12 1.50 23.53
ABCL Alliance Bancorp, Inc. of IL 18.94 121.31 10.60 122.31 15.43 0.44 2.30 43.56
ALLB Alliance Bank MHC of PA (19.9) 20.90 140.88 15.04 140.88 20.90 0.36 2.82 59.02
AHCI Ambanc Holding Co., Inc. of NY* NM 109.00 11.25 109.00 29.81 0.24 1.55 47.06
ASBI Ameriana Bancorp of IN 15.38 128.30 15.60 130.62 18.37 0.64 3.56 54.70
ABCW Anchor Bancorp Wisconsin of WI 16.67 280.31 17.82 284.77 19.20 0.20 0.93 15.50
ANDB Andover Bancorp, Inc. of MA* 12.86 177.46 14.55 177.46 13.19 0.00 0.00 0.00
ASFC Astoria Financial Corp. of NY 13.65 128.13 9.88 178.79 15.87 0.80 1.86 25.40
AVND Avondale Fin. Corp. of IL(8) NM 83.04 6.94 83.04 NM 0.00 0.00 NM
BCSB BCSB Bankcorp MHC of MD (38.6) 27.94 138.19 22.49 138.19 27.94 0.00 0.00 0.00
BKCT Bancorp Connecticut of CT* 11.61 153.97 15.23 153.97 13.79 0.54 3.66 42.52
BPLS Bank Plus Corp. of CA 10.41 42.51 1.84 46.29 6.88 0.00 0.00 0.00
BNKU Bank United Corp. of TX 11.38 187.92 9.61 206.96 12.11 0.64 1.61 18.29
BWFC Bank West Fin. Corp. of MI 29.31 105.75 13.56 105.75 28.42 0.24 2.56 NM
BANC BankAtlantic Bancorp of FL 11.97 123.55 8.39 159.77 26.56 0.10 1.18 14.08
BKUNA BankUnited Fin. Corp. of FL 20.59 88.05 4.50 105.35 NM 0.00 0.00 0.00
BVCC Bay View Capital Corp. of CA 23.31 85.78 5.91 132.29 13.69 0.40 2.32 54.05
FSNJ Bayonne Banchsares of NJ(8) 29.29 142.15 19.46 142.15 29.29 0.25 1.67 49.02
BFSB Bedford Bancshares, Inc. of VA 19.48 166.30 22.05 166.30 19.74 0.32 2.13 41.56
BFFC Big Foot Fin. Corp. of IL 28.47 88.26 15.24 88.26 NM 0.00 0.00 0.00
BYFC Broadway Fin. Corp. of CA 12.50 55.32 5.25 55.32 20.39 0.20 2.58 32.26
BRKL Brookline Bncp MHC of MA(47.0) 24.53 137.28 45.28 137.28 25.49 0.20 1.54 37.74
CBES CBES Bancorp, Inc. of MO 14.18 88.57 12.05 88.57 19.85 0.48 3.02 42.86
CITZ CFS Bancorp, Inc. of IN 27.44 90.81 15.81 90.81 24.70 0.32 3.24 NM
CFSB CFSB Bancorp of Lansing MI 17.61 309.41 24.08 309.41 19.53 0.52 2.08 36.62
CKFB CKF Bancorp of Danville KY 15.56 94.96 20.48 94.96 15.56 0.54 3.54 55.10
CNSB CNS Bancorp, Inc. of MO 22.41 79.90 19.79 79.90 26.00 0.30 2.31 51.72
CNYF CNY Financial Corp of NY* NM 69.74 18.99 69.74 17.86 0.00 0.00 0.00
CSBF CSB Financial Group Inc of IL 22.45 74.06 17.18 78.47 22.98 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL(8) 9.91 108.65 19.27 108.65 9.85 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 12.80 148.31 14.68 157.82 17.70 0.41 2.60 33.33
CMRN Cameron Fin. Corp. of MO 15.23 85.35 16.96 85.35 15.54 0.28 1.82 27.72
CFNC Carolina Fincorp of NC* 14.52 100.74 13.60 100.74 12.90 0.24 2.95 42.86
CASB Cascade Financial Corp. of WA 16.46 185.19 13.10 185.19 18.49 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 15.84 89.07 19.63 89.07 16.02 0.37 2.65 42.05
CAVB Cavalry Bancorp of TN 28.68 145.85 43.26 145.85 NM 0.20 1.03 29.41
CNIT Cenit Bancorp of Norfolk VA 15.35 188.95 14.95 203.97 16.67 0.44 2.26 34.65
CEBK Central Co-Op. Bank of MA* 11.79 98.36 9.59 108.00 15.79 0.32 1.72 20.25
CENB Century Bancorp, Inc. of NC(8) 13.82 89.08 17.23 89.08 13.97 0.68 5.18 71.58
COFI Charter One Financial of OH 21.61 245.88 18.36 261.08 16.43 0.56 2.04 44.09
CVAL Chester Valley Bancorp of PA 22.18 226.40 19.12 226.40 23.60 0.44 1.49 33.08
CLAS Classic Bancshares, Inc. of KY 18.00 85.55 12.72 99.48 14.21 0.32 2.37 42.67
CBSA Coastal Bancorp of Houston TX 9.05 121.95 4.69 140.01 8.84 0.32 1.68 15.24
CFCP Coastal Fin. Corp. of SC 17.76 327.02 19.27 327.02 22.09 0.28 1.47 26.17
CFKY Columbia Financial of KY NM 92.66 29.19 92.66 NM 0.28 2.15 NM
CMSB Commonwealth Bancorp Inc of PA 15.83 105.32 8.88 133.68 22.27 0.32 2.25 35.56
CMSV Commty. Svgs, MHC of FL (48.5)(8) 22.16 137.38 14.91 137.38 24.06 0.90 4.02 NM
CFTP Community Fed. Bancorp of MS 22.35 110.65 24.64 110.65 25.88 0.32 2.17 48.48
CFFC Community Fin. Corp. of VA 16.63 117.51 16.56 117.98 17.37 0.32 2.71 45.07
CIBI Community Inv. Bancorp of OH 17.25 147.24 14.85 147.24 17.25 0.24 1.96 33.80
COOP Cooperative Bancshares of NC 16.46 130.65 10.38 130.65 18.06 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY 16.27 83.23 19.50 83.23 16.27 0.40 2.96 48.19
CRSB Crusader Holding Corp of PA 12.51 200.17 23.01 211.32 13.63 0.00 0.00 0.00
DNFC D&N Financial Corp. of MI 11.53 166.81 9.29 168.12 13.18 0.20 1.04 11.98
DCBI Delphos Citizens Bancorp of OH 18.23 112.04 27.06 112.04 18.23 0.24 1.37 25.00
DCOM Dime Community Bancorp of NY* 21.38 150.47 17.27 172.73 21.96 0.48 2.01 42.86
</TABLE>
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
ESBF ESB Financial Corp of PA 7.20 6.42 0.69 9.08 6.44 0.69 9.08 0.60 83.44 1.34
EGLB Eagle BancGroup of IL 12.05 12.05 0.35 2.97 2.61 0.12 1.03 0.73 75.47 0.82
EBSI Eagle Bancshares of Tucker GA 6.92 6.92 0.88 11.78 8.16 0.85 11.46 1.20 49.97 0.78
ETFS East Texas Fin. Serv. of TX 17.29 17.29 0.53 3.02 3.90 0.45 2.58 0.41 46.61 0.38
ESBK Elmira Svgs Bank (The) of NY* 6.27 6.27 0.47 7.45 7.05 0.49 7.85 0.83 80.50 0.85
EMLD Emerald Financial Corp. of OH 8.51 8.41 1.13 14.11 6.23 1.03 12.84 0.33 NA NA
EFBC Empire Federal Bancorp of MT 36.22 36.22 1.45 3.95 5.02 1.45 3.95 0.01 NA 0.41
EFBI Enterprise Fed. Bancorp of OH(8) 9.96 9.71 0.78 6.96 2.37 0.67 5.95 0.06 333.77 0.30
EQSB Equitable FSB of Wheaton MD 5.12 5.12 0.70 13.60 8.45 0.66 12.87 0.31 52.60 0.25
FCBF FCB Fin. Corp. of Neenah WI 14.47 14.47 1.24 8.45 6.16 0.92 6.26 0.22 327.68 0.98
FFDF FFD Financial Corp. of OH 17.39 17.39 1.07 4.76 4.25 0.75 3.36 0.09 329.27 0.38
FFLC FFLC Bancorp of Leesburg FL 12.51 12.51 1.03 7.97 7.12 1.03 7.97 0.19 276.11 0.60
FFWC FFW Corporation of Wabash IN 9.41 8.66 0.99 10.40 8.67 0.87 9.12 0.43 112.60 0.70
FFYF FFY Financial Corp. of OH 12.92 12.92 1.24 9.26 6.23 1.21 9.06 0.51 82.43 0.56
FMCO FMS Financial Corp. of NJ 6.08 6.03 0.85 13.59 7.30 0.85 13.59 NA NA 1.09
FFHH FSF Financial Corp. of MN 10.44 10.44 0.80 7.37 7.33 0.76 6.97 0.20 123.88 0.37
FBCI Fidelity Bancorp of Chicago IL 10.60 10.58 0.19 1.80 1.59 0.60 5.67 0.24 45.86 0.14
FSBI Fidelity Bancorp, Inc. of PA 7.09 7.09 0.74 10.76 8.53 0.72 10.54 0.17 330.68 1.05
FFFL Fidelity Bcsh MHC of FL (47.9) 6.15 5.98 0.65 8.98 4.88 0.52 7.18 0.27 78.51 0.34
FFED Fidelity Fed. Bancorp of IN 6.78 6.78 -0.34 -5.64 -5.12 -0.26 -4.29 0.40 389.90 1.91
FFOH Fidelity Financial of OH 12.41 11.04 0.89 7.17 6.27 0.86 6.91 0.26 121.33 0.40
FIBC Financial Bancorp, Inc. of NY(8) 8.42 8.39 0.94 10.50 4.63 0.91 10.19 1.92 25.63 0.87
SBFL Fingr Lakes Fin.MHC OF NY(33.1 8.46 8.46 0.42 4.65 2.80 0.33 3.65 0.32 141.95 0.89
FBSI First Bancshares, Inc. of MO 14.14 13.57 1.10 7.90 6.26 1.10 7.90 1.24 24.67 0.36
FBBC First Bell Bancorp of PA 10.16 10.16 1.08 10.29 8.34 1.07 10.20 0.08 121.66 0.14
FSTC First Citizens Corp of GA 10.09 8.07 1.91 19.64 7.86 1.73 17.77 1.17 86.37 1.39
FCME First Coastal Corp. of ME* 8.95 8.95 0.80 8.29 9.11 0.72 7.47 0.24 650.60 2.55
FDEF First Defiance Fin.Corp. of OH 17.74 17.74 0.94 4.96 4.63 0.90 4.74 0.29 171.18 0.62
FESX First Essex Bancorp of MA* 7.13 5.18 0.84 11.62 8.23 0.72 9.95 0.45 191.26 1.48
FFSX First FSB MHC Sxld of IA(46.3)(8) 7.62 6.14 0.68 8.43 6.00 0.66 8.22 0.46 102.36 0.64
FFES First Fed of E. Hartford CT 7.20 7.20 0.59 8.73 8.35 0.64 9.42 0.33 84.42 1.30
BDJI First Fed. Bancorp. of MN 10.46 10.46 0.70 6.62 6.00 0.71 6.70 0.18 202.30 0.78
FFBH First Fed. Bancshares of AR 14.71 14.71 1.00 6.71 5.92 0.99 6.65 0.85 20.75 0.23
FTFC First Fed. Capital Corp. of WI 7.50 7.14 1.20 17.20 6.69 0.82 11.80 NA NA NA
FFKY First Fed. Fin. Corp. of KY 13.35 12.67 1.61 11.89 5.94 1.54 11.42 0.53 84.57 0.52
FFBZ First Federal Bancorp of OH 7.95 7.95 0.82 10.74 4.50 0.78 10.14 0.54 190.00 1.19
FFCH First Fin. Holdings Inc. of SC 6.49 6.49 0.89 14.09 6.03 0.85 13.49 0.71 97.86 0.81
FFHS First Franklin Corp. of OH 9.12 9.08 0.81 8.86 8.15 0.70 7.66 NA NA 0.71
FGHC First Georgia Hold. Corp of GA 8.15 7.62 1.17 14.29 4.69 1.17 14.29 1.65 37.32 0.71
FFSL First Independence Corp. of KS 9.58 9.58 0.72 7.30 8.59 0.72 7.30 0.56 95.21 0.72
FISB First Indiana Corp. of IN 9.15 9.05 1.15 12.22 7.84 0.81 8.65 NA NA 1.65
FKAN First Kansas Financial of KS 19.73 19.47 0.67 3.42 4.57 0.66 3.34 0.05 327.59 0.43
FKFS First Keystone Fin. Corp of PA 6.50 6.50 0.74 11.06 7.41 0.66 9.80 1.22 36.94 0.87
FLKY First Lancaster Bncshrs of KY 26.28 26.28 1.03 3.61 4.16 1.03 3.61 1.60 23.31 0.42
FLFC First Liberty Fin. Corp. of GA 7.76 7.10 0.68 9.04 3.42 0.75 9.97 0.77 132.28 1.51
CASH First Midwest Fin., Inc. of IA 10.18 9.09 0.71 6.60 7.03 0.64 5.93 1.94 37.96 1.19
FMBD First Mutual Bancorp Inc of IL(8) 14.62 11.38 0.35 2.53 2.29 0.27 1.94 NA NA NA
FMSB First Mutual SB of Bellevue WA* 7.23 7.23 1.08 14.96 9.60 0.91 12.59 0.06 NA 1.26
FNGB First Northern Cap. Corp of WI 10.89 10.89 0.98 8.83 6.43 0.91 8.23 0.08 578.49 0.55
FWWB First Savings Bancorp of WA 13.02 12.06 1.20 8.69 5.09 1.11 8.07 0.43 164.95 1.03
FSFF First SecurityFed Fin of IL 27.20 27.12 1.13 5.03 3.79 1.69 7.50 0.34 170.99 0.94
FSLA First Source Bancorp of NJ 21.24 20.56 1.04 8.63 4.17 1.01 8.39 0.35 159.84 1.04
SOPN First Svgs Bancorp of NC 22.85 22.85 1.76 7.70 6.24 1.76 7.70 0.18 109.36 0.29
FBNW FirstBank Corp of Clarkston WA 15.63 15.63 1.08 7.37 6.11 0.61 4.18 0.39 160.81 0.78
FFDB FirstFed Bancorp, Inc. of AL 9.89 9.13 0.90 9.30 6.77 0.90 9.30 1.41 41.95 0.90
FSPT FirstSpartan Fin. Corp. of SC 24.31 24.31 1.41 6.67 5.21 1.37 6.48 NA NA 0.55
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
------- ------- ------- ------- -------- ------- ------- ---------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ESBF ESB Financial Corp of PA 15.53 133.22 9.59 149.25 15.53 0.36 2.25 34.95
EGLB Eagle BancGroup of IL NM 111.90 13.48 111.90 NM 0.00 0.00 0.00
EBSI Eagle Bancshares of Tucker GA 12.25 136.60 9.46 136.60 12.59 0.64 3.51 42.95
ETFS East Texas Fin. Serv. of TX 25.61 76.25 13.18 76.25 NM 0.20 1.90 48.78
ESBK Elmira Svgs Bank (The) of NY* 14.19 105.16 6.59 105.16 13.46 0.64 3.05 43.24
EMLD Emerald Financial Corp. of OH 16.04 210.78 17.93 213.29 17.62 0.16 1.49 23.88
EFBC Empire Federal Bancorp of MT 19.92 81.63 29.57 81.63 19.92 0.34 2.67 53.13
EFBI Enterprise Fed. Bancorp of OH(8) NM 264.12 26.30 270.86 NM 1.00 2.30 NM
EQSB Equitable FSB of Wheaton MD 11.83 149.97 7.68 149.97 12.50 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 16.23 126.16 18.25 126.16 21.88 0.88 3.59 58.28
FFDF FFD Financial Corp. of OH 23.53 146.12 25.42 146.12 NM 0.30 1.88 44.12
FFLC FFLC Bancorp of Leesburg FL 14.05 111.05 13.89 111.05 14.05 0.36 2.27 31.86
FFWC FFW Corporation of Wabash IN 11.54 114.33 10.76 124.28 13.16 0.42 2.80 32.31
FFYF FFY Financial Corp. of OH 16.06 147.62 19.08 147.62 16.40 0.90 2.90 46.63
FMCO FMS Financial Corp. of NJ 13.70 176.37 10.72 177.62 13.70 0.12 1.20 16.44
FFHH FSF Financial Corp. of MN 13.64 100.60 10.50 100.60 14.42 0.50 3.33 45.45
FBCI Fidelity Bancorp of Chicago IL NM 110.55 11.72 110.73 19.95 0.40 1.93 NM
FSBI Fidelity Bancorp, Inc. of PA 11.72 119.47 8.47 119.47 11.97 0.36 2.12 24.83
FFFL Fidelity Bcsh MHC of FL (47.9) 20.49 177.41 10.91 182.64 25.61 1.00 4.24 NM
FFED Fidelity Fed. Bancorp of IN NM 114.02 7.73 114.02 NM 0.00 0.00 NM
FFOH Fidelity Financial of OH 15.95 115.11 14.28 129.39 16.54 0.32 2.36 37.65
FIBC Financial Bancorp, Inc. of NY(8) 21.60 217.13 18.29 218.04 22.26 0.50 1.37 29.59
SBFL Fingr Lakes Fin.MHC OF NY(33.1 NM 163.40 13.82 163.40 NM 0.24 2.40 NM
FBSI First Bancshares, Inc. of MO 15.96 120.45 17.04 125.59 15.96 0.12 0.91 14.46
FBBC First Bell Bancorp of PA 11.98 117.50 11.94 117.50 12.08 0.40 2.76 33.06
FSTC First Citizens Corp of GA 12.73 220.13 22.22 275.32 14.07 0.36 1.29 16.36
FCME First Coastal Corp. of ME* 10.98 87.51 7.83 87.51 12.20 0.00 0.00 0.00
FDEF First Defiance Fin.Corp. of OH 21.59 112.56 19.97 112.56 22.62 0.36 2.53 54.55
FESX First Essex Bancorp of MA* 12.14 136.13 9.71 187.56 14.18 0.56 3.32 40.29
FFSX First FSB MHC Sxld of IA(46.3)(8) 16.67 135.41 10.32 168.07 17.09 0.48 2.40 40.00
FFES First Fed of E. Hartford CT 11.97 99.11 7.13 99.11 11.09 0.68 2.67 31.92
BDJI First Fed. Bancorp. of MN 16.67 106.22 11.11 106.22 16.46 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 16.89 110.25 16.22 110.25 17.04 0.28 1.45 24.56
FTFC First Fed. Capital Corp. of WI 14.95 237.17 17.78 249.18 21.79 0.28 1.84 27.45
FFKY First Fed. Fin. Corp. of KY 16.83 194.49 25.96 204.85 17.52 0.60 2.33 39.22
FFBZ First Federal Bancorp of OH 22.22 229.45 18.23 229.45 23.53 0.16 1.33 29.63
FFCH First Fin. Holdings Inc. of SC 16.59 216.29 14.03 216.29 17.34 0.48 2.49 41.38
FFHS First Franklin Corp. of OH 12.27 106.13 9.68 106.55 14.21 0.30 2.22 27.27
FGHC First Georgia Hold. Corp of GA 21.34 285.02 23.22 304.88 21.34 0.00 0.00 0.00
FFSL First Independence Corp. of KS 11.65 83.20 7.97 83.20 11.65 0.30 2.93 34.09
FISB First Indiana Corp. of IN 12.76 148.69 13.61 150.36 18.03 0.48 2.56 32.65
FKAN First Kansas Financial of KS 21.87 74.74 14.75 75.75 22.36 0.00 0.00 0.00
FKFS First Keystone Fin. Corp of PA 13.49 146.06 9.49 146.06 15.23 0.20 1.30 17.54
FLKY First Lancaster Bncshrs of KY 24.06 86.56 22.75 86.56 24.06 0.60 4.71 NM
FLFC First Liberty Fin. Corp. of GA 29.24 226.42 17.58 247.57 26.51 0.30 1.51 44.12
CASH First Midwest Fin., Inc. of IA 14.22 94.45 9.62 105.80 15.82 0.48 3.10 44.04
FMBD First Mutual Bancorp Inc of IL(8) NM 108.14 15.82 139.00 NM 0.32 1.88 NM
FMSB First Mutual SB of Bellevue WA* 10.42 155.86 11.27 155.86 12.38 0.20 1.60 16.67
FNGB First Northern Cap. Corp of WI 15.54 134.66 14.66 134.66 16.67 0.36 3.13 48.65
FWWB First Savings Bancorp of WA 19.64 171.34 22.30 184.87 21.15 0.36 1.64 32.14
FSFF First SecurityFed Fin of IL 26.42 99.64 27.10 99.93 17.72 0.00 0.00 0.00
FSLA First Source Bancorp of NJ 23.97 105.63 22.43 109.10 24.66 0.18 2.09 50.00
SOPN First Svgs Bancorp of NC 16.02 121.46 27.76 121.46 16.02 1.00 4.40 70.42
FBNW FirstBank Corp of Clarkston WA 16.37 103.66 16.20 103.66 28.87 0.36 2.27 37.11
FFDB FirstFed Bancorp, Inc. of AL 14.77 133.38 13.19 144.44 14.77 0.28 2.87 42.42
FSPT FirstSpartan Fin. Corp. of SC 19.21 115.06 27.97 115.06 19.76 0.80 2.33 44.69
</TABLE>
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FLAG Flag Financial Corp of GA 8.89 8.89 0.88 9.49 3.03 0.61 6.57 1.33 65.46 1.22
FLGS Flagstar Bancorp, Inc of MI 5.55 5.40 1.41 23.50 9.17 1.41 23.50 2.26 20.60 0.53
FFIC Flushing Fin. Corp. of NY* 12.80 12.32 0.94 6.97 5.49 0.94 6.97 0.22 262.60 0.95
FBHC Fort Bend Holding Corp. of TX(8) 7.15 6.76 0.66 10.00 5.22 0.43 6.58 0.41 123.80 0.90
FTSB Fort Thomas Fin. Corp. of KY 16.07 16.07 1.18 7.42 7.27 1.18 7.42 1.93 30.61 0.65
FKKY Frankfort First Bancorp of KY 16.88 16.88 1.19 7.03 6.50 1.19 7.03 NA NA 0.08
FTNB Fulton Bancorp, Inc. of MO 23.15 23.15 1.07 4.44 4.26 0.82 3.43 0.51 171.86 1.05
GUPB GFSB Bancorp, Inc of Gallup NM 11.54 11.54 0.78 6.14 5.26 0.78 6.14 0.70 44.69 0.51
GSLA GS Financial Corp. of LA 36.03 36.03 1.14 2.73 3.41 0.99 2.38 0.12 260.11 0.74
GOSB GSB Financial Corp. of NY* 24.91 24.91 0.73 3.23 3.23 0.70 3.08 0.09 156.52 0.24
GBNK Gaston Fed Bncp MHC of NC(47.0) 20.28 20.28 0.73 5.92 2.51 0.66 5.39 0.50 132.06 0.96
GFCO Glenway Financial Corp. of OH 9.63 9.56 0.90 9.53 6.05 0.90 9.53 0.32 119.55 0.45
GTPS Great American Bancorp of IL 18.27 18.27 0.71 3.62 4.35 0.71 3.62 0.12 331.46 0.47
PEDE Great Pee Dee Bancorp of SC 46.01 46.01 1.89 4.14 4.54 1.89 4.14 0.48 107.27 0.62
GSFC Green Street Fin. Corp. of NC 34.90 34.90 1.59 4.49 5.36 1.59 4.49 0.07 216.10 0.19
GFED Guaranty Fed Bancshares of MO 27.19 27.19 1.24 5.36 3.84 1.21 5.25 0.50 168.80 1.05
HCBBE HCB Bancshares of Camden AR 17.25 17.04 0.33 1.99 2.70 0.33 1.99 0.44 150.91 1.38
HEMT HF Bancorp of Hemet CA 8.01 6.85 0.01 0.15 0.12 0.06 0.77 NA NA NA
HFFC HF Financial Corp. of SD 9.93 9.93 1.13 11.77 10.79 0.98 10.21 0.93 151.01 1.74
HMNF HMN Financial, Inc. of MN 9.76 8.96 0.79 6.41 7.17 0.56 4.54 0.09 449.77 0.61
HALL Hallmark Capital Corp. of WI 7.63 7.63 0.66 8.86 7.67 0.62 8.30 0.37 NA NA
HRBF Harbor Federal Bancorp of MD 12.60 12.60 0.77 6.06 4.59 0.75 5.87 0.69 33.35 0.34
HARB Harbor Florida Bancshrs of FL 19.62 19.38 1.37 10.17 4.84 1.29 9.60 0.43 208.24 1.27
HFSA Hardin Bancorp of Hardin MO 10.11 10.11 0.69 6.15 5.57 0.60 5.36 NA NA NA
HARL Harleysville SB of PA 6.41 6.41 0.97 14.71 7.14 0.97 14.71 NA NA 0.79
HFGI Harrington Fin. Group of IN 4.68 4.68 -0.36 -7.64 -7.03 -0.13 -2.77 0.15 58.96 0.27
HARS Harris Fin. MHC of PA (24.9) 8.13 7.34 0.84 10.33 3.47 0.68 8.41 0.66 60.54 0.97
HFFB Harrodsburg 1st Fin Bcrp of KY 26.54 26.54 1.36 5.09 5.31 1.36 5.09 0.55 66.83 0.48
HHFC Harvest Home Fin. Corp. of OH 11.35 11.35 0.62 5.35 5.25 0.62 5.35 0.09 144.19 0.25
HAVN Haven Bancorp of Woodhaven NY 5.21 4.98 0.45 7.89 7.20 0.48 8.37 0.45 132.08 0.97
HTHR Hawthorne Fin. Corp. of CA 3.97 3.97 1.00 22.67 20.22 1.09 24.78 5.28 22.92 1.31
HMLK Hemlock Fed. Fin. Corp. of IL 15.14 15.14 0.92 5.35 6.00 0.91 5.29 NA NA 0.82
HBSC Heritage Bancorp, Inc of SC 31.48 31.48 1.12 5.60 4.25 1.12 5.60 0.44 57.25 0.38
HFWA Heritage Financial Corp of WA 22.57 20.50 1.10 4.34 3.84 0.63 2.48 0.11 760.09 1.28
HCBC High Country Bancorp of CO 18.18 18.18 0.84 5.51 5.24 0.84 5.51 0.41 181.40 0.91
HBNK Highland Bancorp of CA 7.87 7.87 1.36 17.65 9.88 1.19 15.55 1.65 96.78 2.01
HIFS Hingham Inst. for Sav. of MA* 9.43 9.43 1.25 13.19 8.60 1.24 13.00 0.20 340.32 0.86
HBEI Home Bancorp of Elgin IL(8) 26.12 26.12 0.69 2.59 2.62 0.69 2.59 0.24 122.58 0.34
HBFW Home Bancorp of Fort Wayne IN 11.92 11.92 0.85 6.84 4.73 0.83 6.68 0.10 402.90 0.43
HCFC Home City Fin. Corp. of OH 13.87 13.87 1.30 7.09 7.64 1.28 7.02 0.59 97.81 0.63
HOMF Home Fed Bancorp of Seymour IN 9.30 9.07 1.48 16.64 8.51 1.16 13.01 0.59 100.21 0.71
HWEN Home Financial Bancorp of IN 17.64 17.64 0.92 5.30 6.46 0.70 4.04 1.10 68.52 0.93
HLFC Home Loan Financial Corp of OH 38.53 38.53 1.34 4.88 3.26 1.34 4.88 0.06 NA NA
HPBC Home Port Bancorp, Inc. of MA* 8.71 8.71 1.45 14.51 8.54 1.66 16.62 0.26 453.64 1.38
HSTD Homestead Bancorp, Inc. of LA 21.66 21.66 0.75 3.46 4.50 0.75 3.46 0.27 119.47 0.69
HFBC HopFed Bancorp of KY 26.78 26.78 1.22 8.52 4.11 1.22 8.52 0.11 107.86 0.23
HZFS Horizon Fin'l. Services of IA 9.44 9.44 0.66 6.84 4.74 0.79 8.16 1.03 37.74 0.62
HRZB Horizon Financial Corp. of WA* 15.44 15.44 1.56 10.03 8.00 1.52 9.76 0.02 NA 0.88
HRBT Hudson River Bancorp Inc of NY 26.74 26.74 0.90 3.36 3.98 1.03 3.85 NA NA 2.20
ITLA ITLA Capital Corp of CA* 10.43 10.41 1.43 13.81 11.87 1.43 13.81 NA NA 1.90
ICBC Independence Comm Bnk Cp of NY 20.07 18.95 -0.81 -4.22 -3.87 0.68 3.58 0.69 116.06 1.29
IFSB Independence FSB of DC 7.96 7.27 1.98 26.14 33.44 1.57 20.76 1.32 19.24 0.42
INBI Industrial Bancorp of OH 15.97 15.97 1.47 8.74 5.63 1.47 8.74 0.35 138.50 0.55
IWBK Interwest Bancorp of WA 6.76 6.65 1.04 15.58 4.86 0.88 13.16 0.64 83.89 0.90
IPSW Ipswich SB of Ipswich MA* 5.58 5.58 1.20 21.89 8.38 0.95 17.47 0.71 99.04 0.91
JXVL Jacksonville Bancorp of TX 14.45 14.45 1.34 9.15 8.81 1.34 9.15 0.62 78.01 0.63
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FLAG Flag Financial Corp of GA NM 302.35 26.88 302.35 NM 0.24 1.86 61.54
FLGS Flagstar Bancorp, Inc of MI 10.91 229.89 12.75 236.22 10.91 0.32 1.33 14.55
FFIC Flushing Fin. Corp. of NY* 18.23 124.17 15.90 128.98 18.23 0.24 1.57 28.57
FBHC Fort Bend Holding Corp. of TX(8) 19.14 174.32 12.46 184.30 29.11 0.40 1.88 36.04
FTSB Fort Thomas Fin. Corp. of KY 13.75 99.55 16.00 99.55 13.75 0.25 2.27 31.25
FKKY Frankfort First Bancorp of KY 15.38 107.33 18.12 107.33 15.38 0.80 5.20 NM
FTNB Fulton Bancorp, Inc. of MO 23.48 104.52 24.20 104.52 NM 0.30 1.94 45.45
GUPB GFSB Bancorp, Inc of Gallup NM 19.00 116.90 13.49 116.90 19.00 0.30 2.11 40.00
GSLA GS Financial Corp. of LA 29.35 84.32 30.38 84.32 NM 0.28 2.07 60.87
GOSB GSB Financial Corp. of NY* NM 89.41 22.28 89.41 NM 0.12 0.92 28.57
GBNK Gaston Fed Bncp MHC of NC(47.0) NM 143.65 29.14 143.65 NM 0.20 1.52 60.61
GFCO Glenway Financial Corp. of OH 16.53 152.34 14.68 153.54 16.53 0.44 2.26 37.29
GTPS Great American Bancorp of IL 22.97 85.99 15.71 85.99 22.97 0.44 2.59 59.46
PEDE Great Pee Dee Bancorp of SC 22.03 90.97 41.85 90.97 22.03 0.36 2.77 61.02
GSFC Green Street Fin. Corp. of NC 18.67 86.97 30.35 86.97 18.67 0.48 3.73 69.57
GFED Guaranty Fed Bancshares of MO 26.04 104.60 28.44 104.60 26.60 0.32 2.56 66.67
HCBBE HCB Bancshares of Camden AR NM 64.01 11.04 64.78 NM 0.24 2.59 NM
HEMT HF Bancorp of Hemet CA NM 127.77 10.24 149.42 NM 0.00 0.00 0.00
HFFC HF Financial Corp. of SD 9.27 105.98 10.52 105.98 10.69 0.36 2.57 23.84
HMNF HMN Financial, Inc. of MN 13.94 102.61 10.02 111.87 19.68 0.24 1.79 25.00
HALL Hallmark Capital Corp. of WI 13.03 108.79 8.30 108.79 13.91 0.00 0.00 0.00
HRBF Harbor Federal Bancorp of MD 21.81 128.61 16.20 128.61 22.53 0.52 2.54 55.32
HARB Harbor Florida Bancshrs of FL 20.64 130.70 25.64 132.29 21.88 0.26 2.38 49.06
HFSA Hardin Bancorp of Hardin MO 17.95 109.81 11.10 109.81 20.60 0.60 3.31 59.41
HARL Harleysville SB of PA 14.00 192.40 12.34 192.40 14.00 0.48 1.65 23.08
HFGI Harrington Fin. Group of IN NM 116.69 5.46 116.69 NM 0.12 1.45 NM
HARS Harris Fin. MHC of PA (24.9) 28.81 279.86 22.74 309.96 NM 0.22 1.41 40.74
HFFB Harrodsburg 1st Fin Bcrp of KY 18.83 96.73 25.67 96.73 18.83 0.40 2.76 51.95
HHFC Harvest Home Fin. Corp. of OH 19.05 102.30 11.61 102.30 19.05 0.44 3.67 69.84
HAVN Haven Bancorp of Woodhaven NY 13.88 104.13 5.42 108.95 13.09 0.30 2.16 30.00
HTHR Hawthorne Fin. Corp. of CA 4.95 102.12 4.06 102.12 4.52 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL 16.67 93.55 14.16 93.55 16.86 0.32 2.21 36.78
HBSC Heritage Bancorp, Inc of SC 23.53 87.39 27.51 87.39 23.53 0.30 1.68 39.47
HFWA Heritage Financial Corp of WA 26.05 112.55 25.40 123.90 NM 0.18 1.65 42.86
HCBC High Country Bancorp of CO 19.09 75.98 13.81 75.98 19.09 0.00 0.00 0.00
HBNK Highland Bancorp of CA 10.12 164.25 12.92 164.25 11.49 0.50 1.47 14.88
HIFS Hingham Inst. for Sav. of MA* 11.63 145.91 13.76 145.91 11.80 0.27 1.61 18.75
HBEI Home Bancorp of Elgin IL(8) NM 97.99 25.59 97.99 NM 0.40 2.83 NM
HBFW Home Bancorp of Fort Wayne IN 21.13 145.76 17.38 145.76 21.65 0.32 1.20 25.40
HCFC Home City Fin. Corp. of OH 13.10 114.97 15.95 114.97 13.22 0.36 2.62 34.29
HOMF Home Fed Bancorp of Seymour IN 11.76 182.41 16.97 187.16 15.03 0.40 1.68 19.80
HWEN Home Financial Bancorp of IN 15.48 80.45 14.19 80.45 20.31 0.10 1.54 23.81
HLFC Home Loan Financial Corp of OH NM 89.46 34.47 89.46 NM 0.20 1.59 48.78
HPBC Home Port Bancorp, Inc. of MA* 11.70 163.39 14.24 163.39 10.22 0.80 3.97 46.51
HSTD Homestead Bancorp, Inc. of LA 22.22 76.92 16.66 76.92 22.22 0.20 2.50 55.56
HFBC HopFed Bancorp of KY 24.31 121.02 32.41 121.02 24.31 0.30 1.71 41.67
HZFS Horizon Fin'l. Services of IA 21.09 146.42 13.82 146.42 17.66 0.18 1.27 26.87
HRZB Horizon Financial Corp. of WA* 12.50 122.70 18.94 122.70 12.84 0.44 3.14 39.29
HRBT Hudson River Bancorp Inc of NY 25.15 84.51 22.59 84.51 21.94 0.00 0.00 0.00
ITLA ITLA Capital Corp of CA* 8.43 108.93 11.36 109.16 8.43 0.00 0.00 0.00
ICBC Independence Comm Bnk Cp of NY NM 108.39 21.75 114.75 NM 0.12 0.88 NM
IFSB Independence FSB of DC 2.99 75.62 6.02 82.78 3.77 0.25 2.00 5.98
INBI Industrial Bancorp of OH 17.76 155.36 24.81 155.36 17.76 0.60 3.16 56.07
IWBK Interwest Bancorp of WA 20.59 294.13 19.88 298.76 24.37 0.56 2.11 43.41
IPSW Ipswich SB of Ipswich MA* 11.93 238.53 13.31 238.53 14.94 0.16 1.23 14.68
JXVL Jacksonville Bancorp of TX 11.35 101.86 14.72 101.86 11.35 0.50 3.39 38.46
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
-------------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
JXSB Jcksnville SB,MHC of IL (45.6) 10.54 10.54 0.59 5.68 3.65 0.38 3.60 0.68 65.11 0.59
JSBA Jefferson Svgs Bancorp of MO 9.56 7.67 0.78 8.70 6.08 0.69 7.72 0.74 72.40 0.73
KSBK KSB Bancorp of Kingfield ME* 7.78 6.77 1.08 13.94 10.23 1.08 13.94 NA NA 1.15
KFBI Klamath First Bancorp of OR 13.98 12.81 0.95 6.16 4.93 0.94 6.10 0.05 351.18 0.26
LSBI LSB Fin. Corp. of Lafayette IN 8.41 8.41 0.85 9.93 6.41 0.73 8.51 1.20 58.59 0.80
LVSB Lakeview Financial of NJ 9.53 6.39 1.75 16.93 10.49 0.75 7.24 NA NA 1.54
LARK Landmark Bancshares, Inc of KS 13.07 13.07 1.06 7.68 7.39 0.90 6.47 0.25 196.35 0.66
LARL Laurel Capital Group of PA 10.64 10.64 1.42 13.54 7.26 1.46 13.94 0.27 309.56 1.19
LSBX Lawrence Savings Bank of MA* 12.07 12.07 2.58 24.91 16.63 2.54 24.56 0.27 357.94 1.76
LFED Leeds Fed Bksr MHC of MD (36.3 16.29 16.29 1.13 6.89 4.49 1.13 6.89 0.83 28.70 0.38
LXMO Lexington B&L Fin. Corp. of MO 16.06 14.98 0.78 3.83 5.28 0.78 3.83 0.48 130.50 0.95
LIBB Liberty Bancorp MHC of NJ (47) 13.12 13.12 0.49 3.73 3.32 0.49 3.73 0.35 82.98 0.45
LFCO Life Financial Corp of CA(8) 12.64 12.64 3.91 26.05 NM 4.08 27.17 2.27 20.25 0.75
LFBI Little Falls Bancorp of NJ 10.51 9.75 0.57 4.98 4.94 0.57 4.98 0.33 108.65 0.82
LOGN Logansport Fin. Corp. of IN 18.82 18.82 1.48 7.80 7.16 1.50 7.88 0.26 103.45 0.36
MAFB MAF Bancorp, Inc. of IL 7.84 7.00 1.09 14.00 6.82 1.04 13.41 0.53 82.75 0.54
MBLF MBLA Financial Corp. of MO 13.70 13.70 0.86 6.67 7.46 0.85 6.58 0.45 74.68 0.50
MECH MECH Financial Inc of CT* 9.71 9.71 0.96 9.69 6.68 0.96 9.63 0.51 259.89 2.05
MFBC MFB Corp. of Mishawaka IN 11.38 11.38 0.80 6.40 7.04 0.78 6.22 NA NA 0.18
MSBF MSB Financial, Inc of MI 16.65 16.65 1.57 9.35 5.97 1.36 8.12 0.79 62.16 0.53
MARN Marion Capital Holdings of IN 19.42 19.00 1.25 5.96 6.51 1.25 5.96 1.02 105.99 1.25
MRKF Market Fin. Corp. of OH 29.33 29.33 1.09 3.20 4.18 1.09 3.20 0.39 24.64 0.16
MASB MassBank Corp. of Reading MA* 11.76 11.61 1.16 10.41 8.30 1.00 8.97 0.16 166.21 0.82
MFLR Mayflower Co-Op. Bank of MA* 9.24 9.10 1.13 11.81 7.95 0.98 10.25 0.61 134.79 1.54
MDBK Medford Bancorp, Inc. of MA* 8.94 8.48 1.07 11.88 8.84 1.02 11.27 0.17 360.57 1.18
MWBX MetroWest Bank of MA* 7.34 7.34 1.26 17.03 8.14 1.26 17.03 NA NA 2.28
METF Metropolitan Fin. Corp. of OH 3.74 3.46 0.70 18.02 9.07 0.61 15.50 1.45 42.45 0.77
MIFC Mid Iowa Financial Corp. of IA(8) 9.93 9.92 1.02 10.90 5.85 1.01 10.76 0.14 161.58 0.43
MCBN Mid-Coast Bancorp of ME 8.02 8.02 0.70 8.30 6.78 0.61 7.21 0.69 79.42 0.70
MWBI Midwest Bancshares, Inc. of IA 7.15 7.15 0.95 13.51 11.25 0.76 10.81 0.54 54.65 0.49
MFFC Milton Fed. Fin. Corp. of OH 11.08 11.08 0.69 5.75 4.66 0.55 4.64 0.41 67.74 0.40
MBSP Mitchell Bancorp, Inc. of NC(8) 39.23 39.23 1.23 3.03 2.98 1.23 3.03 1.54 34.72 0.72
MBBC Monterey Bay Bancorp of CA 10.77 9.85 0.31 2.74 3.00 0.31 2.74 0.55 112.07 1.08
MONT Montgomery Fin. Corp. of IN 17.13 17.13 0.91 4.95 5.36 0.91 4.95 0.78 20.37 0.19
MSBK Mutual SB, FSB of Bay City MI 5.55 5.55 -1.26 -22.42 -24.65 -0.43 -7.63 0.10 312.68 0.55
MYST Mystic Financial of MA* 18.16 18.16 0.83 4.44 4.55 0.77 4.15 0.08 824.00 0.88
NHTB NH Thrift Bancshares of NH 8.14 7.11 0.90 11.39 8.12 0.84 10.56 1.00 95.48 1.21
NSLB NS&L Bancorp, Inc of Neosho MO 18.47 18.35 0.68 3.55 4.44 0.67 3.49 0.19 41.67 0.14
NSSY NSS Bancorp of CT(8)* 8.46 8.25 0.79 9.48 4.68 0.69 8.35 0.63 131.72 1.27
NMSB Newmil Bancorp, Inc. of CT* 9.09 9.09 0.86 9.14 6.50 0.68 7.15 0.75 179.97 2.87
NBCP Niagara Bancorp of NY MHC(45.4* 19.02 19.02 0.63 5.03 2.36 0.96 7.74 0.29 188.17 1.07
NBSI North Bancshares of Chicago IL 10.82 10.82 0.38 2.98 3.00 0.34 2.65 NA NA 0.26
FFFD North Central Bancshares of IA 14.86 12.87 1.34 8.83 8.54 1.32 8.71 0.19 424.53 1.03
NEIB Northeast Indiana Bncrp of IN 13.04 13.04 1.19 8.58 7.78 1.19 8.58 0.41 159.71 0.73
NWSB Northwest Bcrp MHC of PA (30.8 8.50 7.64 0.92 10.14 3.79 0.90 9.91 0.50 123.26 0.82
NWEQ Northwest Equity Corp. of WI 12.19 12.19 1.22 10.37 8.11 1.13 9.65 1.73 28.33 0.60
NTMG Nutmeg FS&LA of CT 6.06 6.06 0.84 14.08 6.69 0.44 7.44 1.30 35.79 0.53
OHSL OHSL Financial Corp. of OH 10.84 10.84 0.86 7.94 5.67 0.80 7.37 NA NA NA
OCFC Ocean Fin. Corp. of NJ 13.71 13.64 0.91 6.22 6.41 0.91 6.22 0.41 113.75 0.80
OTFC Oregon Trail Fin. Corp. of OR 26.49 26.49 1.19 6.01 5.16 1.19 6.01 0.18 206.22 0.57
OFCP Ottawa Financial Corp. of MI 8.22 6.74 0.89 10.38 6.57 0.79 9.25 0.50 79.48 0.46
PFFB PFF Bancorp of Pomona CA 8.04 7.96 0.60 6.42 7.35 0.56 5.94 NA NA 1.32
PSFI PS Financial of Chicago IL 26.77 26.77 1.00 3.18 4.05 1.73 5.53 0.41 50.85 0.37
PSBI PSB Bancorp Inc. of PA* 19.81 19.81 0.78 3.93 4.85 0.78 3.93 1.46 16.02 0.46
PVFC PVF Capital Corp. of OH 7.20 7.20 1.22 17.04 11.05 1.14 15.93 0.96 64.83 0.72
PBCI Pamrapo Bancorp, Inc. of NJ 12.47 12.41 1.24 9.69 6.95 1.19 9.34 1.66 35.55 1.03
<CAPTION>
Pricing Ratios Dividend Data(6)
------------------------------------------ -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Earning Book Assets Book Earnings Share Yield Ratio(7)
------- ------- ------- ------- -------- ------- ------- ---------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JXSB Jcksnville SB,MHC of IL (45.6) 27.40 151.92 16.02 151.92 NM 0.30 2.11 57.69
JSBA Jefferson Svgs Bancorp of MO 16.46 136.23 13.03 169.79 18.54 0.28 1.74 28.57
KSBK KSB Bancorp of Kingfield ME* 9.77 136.27 10.60 156.63 9.77 0.24 1.85 18.05
KFBI Klamath First Bancorp of OR 20.28 128.34 17.94 140.06 20.51 0.36 1.97 40.00
LSBI LSB Fin. Corp. of Lafayette IN 15.61 149.75 12.59 149.75 18.21 0.40 1.36 21.16
LVSB Lakeview Financial of NJ 9.54 159.48 15.20 237.79 22.29 0.25 1.35 12.89
LARK Landmark Bancshares, Inc of KS 13.53 110.49 14.44 110.49 16.08 0.60 2.81 37.97
LARL Laurel Capital Group of PA 13.77 178.24 18.97 178.24 13.38 0.60 3.16 43.48
LSBX Lawrence Savings Bank of MA* 6.01 132.67 16.01 132.67 6.10 0.00 0.00 0.00
LFED Leeds Fed Bksr MHC of MD (36.3 22.27 150.16 24.46 150.16 22.27 0.56 3.93 NM
LXMO Lexington B&L Fin. Corp. of MO 18.95 77.46 12.44 83.04 18.95 0.30 2.55 48.39
LIBB Liberty Bancorp MHC of NJ (47) NM 112.11 14.71 112.11 NM 0.00 0.00 0.00
LFCO Life Financial Corp of CA(8) 1.90 43.96 5.56 43.96 1.83 0.00 0.00 0.00
LFBI Little Falls Bancorp of NJ 20.24 103.22 10.85 111.29 20.24 0.24 1.56 31.58
LOGN Logansport Fin. Corp. of IN 13.97 105.87 19.92 105.87 13.83 0.44 3.09 43.14
MAFB MAF Bancorp, Inc. of IL 14.67 196.00 15.37 219.53 15.31 0.28 1.14 16.77
MBLF MBLA Financial Corp. of MO 13.41 90.69 12.43 90.69 13.59 0.60 2.96 39.74
MECH MECH Financial Inc of CT* 14.97 138.49 13.45 138.49 15.06 0.60 2.47 37.04
MFBC MFB Corp. of Mishawaka IN 14.21 92.39 10.51 92.39 14.61 0.34 1.64 23.29
MSBF MSB Financial, Inc of MI 16.76 153.27 25.51 153.27 19.30 0.30 1.97 32.97
MARN Marion Capital Holdings of IN 15.37 95.14 18.47 97.23 15.37 0.88 3.98 61.11
MRKF Market Fin. Corp. of OH 23.91 93.38 27.39 93.38 23.91 0.28 2.55 60.87
MASB MassBank Corp. of Reading MA* 12.05 118.62 13.95 120.18 13.98 1.00 2.74 33.00
MFLR Mayflower Co-Op. Bank of MA* 12.57 143.15 13.22 145.23 14.48 0.80 3.81 47.90
MDBK Medford Bancorp, Inc. of MA* 11.31 133.16 11.90 140.27 11.92 0.40 2.58 29.20
MWBX MetroWest Bank of MA* 12.28 195.58 14.36 195.58 12.28 0.20 3.02 37.04
METF Metropolitan Fin. Corp. of OH 11.02 182.71 6.83 197.12 12.81 0.00 0.00 0.00
MIFC Mid Iowa Financial Corp. of IA(8) 17.09 174.64 17.35 174.87 17.31 0.08 0.59 10.13
MCBN Mid-Coast Bancorp of ME 14.75 122.45 9.83 122.45 16.98 0.20 2.22 32.79
MWBI Midwest Bancshares, Inc. of IA 8.89 112.78 8.06 112.78 11.11 0.36 3.00 26.67
MFFC Milton Fed. Fin. Corp. of OH 21.46 123.54 13.68 123.54 26.63 0.60 4.17 NM
MBSP Mitchell Bancorp, Inc. of NC(8) NM 100.19 39.31 100.19 NM 0.80 5.08 NM
MBBC Monterey Bay Bancorp of CA NM 91.90 9.89 100.46 NM 0.12 1.09 36.36
MONT Montgomery Fin. Corp. of IN 18.64 90.61 15.52 90.61 18.64 0.22 2.00 37.29
MSBK Mutual SB, FSB of Bay City MI NM 97.61 5.42 97.61 NM 0.00 0.00 NM
MYST Mystic Financial of MA* 21.98 97.08 17.63 97.08 23.50 0.20 1.47 32.26
NHTB NH Thrift Bancshares of NH 12.32 134.92 10.98 154.41 13.28 0.60 3.53 43.48
NSLB NS&L Bancorp, Inc of Neosho MO 22.50 80.02 14.78 80.55 22.88 0.50 3.70 NM
NSSY NSS Bancorp of CT(8)* 21.39 201.08 17.01 206.15 24.29 0.52 1.12 23.85
NMSB Newmil Bancorp, Inc. of CT* 15.38 137.77 12.53 137.77 19.67 0.36 3.00 46.15
NBCP Niagara Bancorp of NY MHC(45.4* NM 127.91 24.33 127.91 27.50 0.12 1.09 46.15
NBSI North Bancshares of Chicago IL NM 114.29 12.37 114.29 NM 0.40 3.33 NM
FFFD North Central Bancshares of IA 11.71 105.68 15.70 122.00 11.88 0.32 1.91 22.38
NEIB Northeast Indiana Bncrp of IN 12.86 112.01 14.61 112.01 12.86 0.40 2.22 28.57
NWSB Northwest Bcrp MHC of PA (30.8 26.40 255.48 21.73 284.21 27.00 0.16 1.35 35.56
NWEQ Northwest Equity Corp. of WI 12.33 124.56 15.18 124.56 13.25 0.68 3.83 47.22
NTMG Nutmeg FS&LA of CT 14.94 206.02 12.49 206.02 28.26 0.20 1.54 22.99
OHSL OHSL Financial Corp. of OH 17.63 135.97 14.73 135.97 19.00 0.50 3.42 60.24
OCFC Ocean Fin. Corp. of NJ 15.59 101.47 13.91 101.97 15.59 0.48 3.31 51.61
OTFC Oregon Trail Fin. Corp. of OR 19.39 92.47 24.50 92.47 19.39 0.24 1.79 34.78
OFCP Ottawa Financial Corp. of MI 15.22 158.73 13.05 193.55 17.07 0.40 1.90 28.99
PFFB PFF Bancorp of Pomona CA 13.60 93.75 7.54 94.71 14.69 0.00 0.00 0.00
PSFI PS Financial of Chicago IL 24.71 92.10 24.66 92.10 14.22 0.52 5.01 NM
PSBI PSB Bancorp Inc. of PA* 20.62 81.08 16.07 81.08 20.62 0.00 0.00 0.00
PVFC PVF Capital Corp. of OH 9.05 142.33 10.25 142.33 9.68 0.00 0.00 0.00
PBCI Pamrapo Bancorp, Inc. of NJ 14.39 137.28 17.13 138.00 14.94 1.12 4.72 67.88
</TABLE>
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
PFED Park Bancorp of Chicago IL 20.33 20.33 0.92 4.28 4.78 0.93 4.34 0.07 390.63 0.67
PVSA Parkvale Financial Corp of PA 7.67 7.64 1.07 13.88 8.29 1.07 13.88 NA NA 1.51
PBHC Pathfinder BC MHC of NY (45.2)* 11.89 10.15 0.74 6.28 4.56 0.63 5.33 1.30 32.05 0.63
PEEK Peekskill Fin. Corp. of NY 21.57 21.57 0.98 4.06 4.77 1.00 4.12 0.79 43.03 1.41
PFSB PennFed Fin. Services of NJ 6.68 5.81 0.78 10.97 8.76 0.76 10.70 0.44 40.82 0.25
PWBK Pennwood Bancorp, Inc. of PA 17.27 17.27 0.59 3.29 3.68 0.65 3.62 1.44 58.95 1.15
PBKB People's Bancshares of MA* 3.78 3.62 0.73 17.53 8.00 0.28 6.65 NA NA 0.92
TSBS Peoples Bancorp Inc of NJ(8)* 39.07 37.90 1.14 5.37 2.27 0.99 4.67 NA NA NA
PFDC Peoples Bancorp of Auburn IN 14.97 14.97 1.45 9.60 6.40 1.45 9.60 0.18 172.98 0.36
PBCT Peoples Bank, MHC of CT (41.2)* 9.42 8.12 1.22 13.58 6.26 0.63 7.05 0.59 177.88 1.64
PFFC Peoples Fin. Corp. of OH 17.34 17.34 1.15 6.30 6.45 0.53 2.93 0.15 151.61 0.30
PHBK Peoples Heritage Fin Grp of ME* 7.41 6.16 0.94 12.97 4.22 1.26 17.41 NA NA 1.28
PSFC Peoples Sidney Fin. Corp of OH 18.52 18.52 1.18 4.96 4.21 1.18 4.96 0.91 44.42 0.45
PERM Permanent Bancorp, Inc. of IN 8.58 7.00 0.59 6.31 5.17 0.56 6.00 0.18 223.89 0.75
PCBC Perry Co. Fin. Corp. of MO 18.47 18.47 0.98 5.17 5.11 0.97 5.12 NA NA 0.16
PHFC Pittsburgh Home Fin Corp of PA 6.93 6.86 0.70 8.10 8.63 0.62 7.21 1.24 33.90 0.75
PFSL Pocahontas Bancorp of AR 14.44 14.00 0.68 7.04 4.54 0.68 7.04 0.26 159.98 0.88
PTRS Potters Financial Corp of OH 8.53 8.53 0.76 8.64 7.07 0.68 7.77 0.32 541.52 2.35
PHSB Ppls Home SB, MHC of PA (45.0) 12.67 12.67 0.80 6.62 4.58 0.73 6.09 0.21 252.66 1.29
PRBC Prestige Bancorp of PA 9.67 9.67 0.47 4.49 5.38 0.46 4.36 0.35 79.16 0.41
PFNC Progress Financial Corp. of PA 6.92 6.18 0.82 14.39 5.43 0.74 12.90 NA NA 1.19
PROV Provident Fin. Holdings of CA 10.62 10.62 0.71 5.91 7.03 0.29 2.39 NA NA 0.88
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 13.42 13.42 1.11 8.38 4.90 0.91 6.88 NA NA 0.51
PLSK Pulaski SB, MHC of NJ (47.0) 11.82 11.82 0.54 4.57 4.37 0.59 4.96 0.63 82.57 0.97
PULS Pulse Bancorp of S. River NJ(8) 8.44 8.44 1.04 12.60 6.69 1.04 12.60 0.46 78.83 1.33
QCFB QCF Bancorp of Virginia MN 17.49 17.49 1.72 9.92 7.73 1.67 9.62 0.08 NA 1.92
QCBC Quaker City Bancorp of CA 8.70 8.70 0.78 8.98 7.60 0.76 8.83 0.83 NA NA
QCSB Queens County Bancorp of NY* 9.89 9.89 1.50 13.88 3.72 1.47 13.63 0.44 125.66 0.63
RARB Raritan Bancorp of Raritan NJ(8)* 7.32 7.24 0.97 12.89 4.76 0.97 12.89 0.44 180.63 1.14
RELY Reliance Bancorp, Inc. of NY 7.84 5.47 0.86 10.25 8.40 0.90 10.79 0.40 90.40 0.92
RELI Reliance Bancshares Inc of WI(8) 52.92 52.92 1.28 2.56 2.56 1.22 2.45 0.47 85.79 0.65
RCBK Richmond County Fin Corp of NY 20.60 20.52 0.55 4.13 1.85 1.55 11.64 NA NA 1.01
RIVR River Valley Bancorp of IN 13.63 13.45 0.93 7.10 7.71 0.82 6.23 0.55 158.30 1.03
RVSB Riverview Bancorp of WA 23.08 22.36 1.69 8.33 5.94 1.60 7.87 0.28 137.60 0.63
RSLN Roslyn Bancorp, Inc. of NY* 15.43 15.35 1.29 7.43 6.48 1.23 7.10 0.16 412.78 1.89
SCCB S. Carolina Comm. Bnshrs of SC 19.62 19.62 0.88 3.88 5.19 0.88 3.88 1.87 32.63 0.81
SFED SFS Bancorp of Schenectady NY(8) 12.30 12.30 0.66 5.30 4.32 0.64 5.13 0.84 56.89 0.60
SGVB SGV Bancorp of W. Covina CA 7.89 7.80 0.36 4.77 4.85 0.36 4.70 1.12 31.15 0.48
SISB SIS Bancorp, Inc. of MA(8)* 7.14 7.14 0.73 10.11 4.23 0.91 12.58 0.26 488.24 2.66
SWCB Sandwich Bancorp of MA(8)* 8.39 8.16 0.97 11.94 4.56 0.92 11.31 0.57 138.76 1.16
SKAN Skaneateles Bancorp Inc of NY* 6.87 6.71 0.62 8.92 7.85 0.60 8.67 1.74 57.15 1.23
SKBOD Skibo Fin Corp MHC of PA(45.0) 16.79 16.79 0.57 3.37 3.00 0.68 4.03 0.59 64.19 0.80
SOBI Sobieski Bancorp of S. Bend IN 13.91 13.91 0.62 4.31 4.90 0.60 4.19 0.08 315.79 0.31
SFFS Sound Bancorp MHC of NY (44.1) 19.05 19.05 1.20 6.29 6.30 1.20 6.29 0.52 72.34 0.77
SSFC South Street Fin. Corp. of NC* 16.92 16.92 0.45 2.28 2.65 0.45 2.28 0.23 91.68 0.40
SBAN SouthBanc Shares Inc. of SC 20.75 20.75 0.86 6.72 3.44 0.91 7.16 0.37 153.09 0.99
SCBS Southern Commun. Bncshrs of AL 17.34 17.34 1.21 7.33 5.77 1.21 7.33 0.19 602.29 1.69
SMBC Southern Missouri Bncrp of MO 15.47 15.47 0.67 4.11 4.33 0.70 4.29 1.49 55.70 1.08
SVRN Sovereign Bancorp, Inc. of PA 5.51 4.86 0.57 11.75 4.04 0.70 14.63 NA NA 1.18
STFR St. Francis Cap. Corp. of WI 7.46 6.68 0.77 9.82 6.56 0.75 9.53 NA NA 0.85
SPBC St. Paul Bancorp, Inc. of IL 9.60 9.56 1.08 11.84 5.93 1.04 11.36 NA NA 0.88
SFFC StateFed Financial Corp. of IA 17.91 17.91 1.15 6.51 5.47 1.15 6.51 1.55 14.83 0.30
SFIN Statewide Fin. Corp. of NJ 9.72 9.70 0.79 8.16 7.81 0.75 7.83 0.47 95.71 0.89
STSA Sterling Financial Corp. of WA 5.09 2.00 0.36 7.02 5.43 0.53 10.26 NA NA 1.06
ROSE T R Financial Corp. of NY* 6.22 6.22 1.01 16.31 6.75 0.86 13.87 0.49 76.54 0.65
THRD TF Financial Corp. of PA 7.49 6.36 0.70 7.48 7.51 0.56 6.02 0.30 99.71 0.86
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
--------------------- ------- ------- ------- ------- --------- ------- ------- ---------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
PFED Park Bancorp of Chicago IL 20.90 88.40 17.98 88.40 20.61 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 12.07 159.45 12.23 160.18 12.07 0.48 2.29 27.59
PBHC Pathfinder BC MHC of NY (45.2)* 21.94 135.08 16.06 158.23 25.84 0.20 1.72 37.74
PEEK Peekskill Fin. Corp. of NY 20.97 90.21 19.46 90.21 20.65 0.36 2.64 55.38
PFSB PennFed Fin. Services of NJ 11.41 122.86 8.21 141.35 11.70 0.16 1.16 13.22
PWBK Pennwood Bancorp, Inc. of PA 27.20 95.27 16.46 95.27 24.73 0.28 2.57 70.00
PBKB People's Bancshares of MA* 12.50 211.95 8.02 221.45 NM 0.76 3.66 45.78
TSBS Peoples Bancorp Inc of NJ(8)* NM 108.00 42.19 111.32 NM 0.10 0.99 43.48
PFDC Peoples Bancorp of Auburn IN 15.63 147.38 22.06 147.38 15.63 0.48 2.40 37.50
PBCT Peoples Bank, MHC of CT (41.2)* 15.98 191.17 18.01 221.68 NM 0.92 3.60 57.50
PFFC Peoples Fin. Corp. of OH 15.49 101.01 17.52 101.01 NM 0.60 5.45 NM
PHBK Peoples Heritage Fin Grp of ME* 23.68 218.45 16.18 262.77 17.65 0.44 2.44 57.89
PSFC Peoples Sidney Fin. Corp of OH 23.74 149.04 27.61 149.04 23.74 0.28 1.71 40.58
PERM Permanent Bancorp, Inc. of IN 19.35 117.30 10.06 143.71 20.34 0.24 2.00 38.71
PCBC Perry Co. Fin. Corp. of MO 19.55 98.65 18.22 98.65 19.75 0.50 2.53 49.50
PHFC Pittsburgh Home Fin Corp of PA 11.59 96.27 6.68 97.30 13.02 0.24 1.90 22.02
PFSL Pocahontas Bancorp of AR 22.03 100.80 14.56 104.01 22.03 0.24 2.72 60.00
PTRS Potters Financial Corp of OH 14.14 121.74 10.39 121.74 15.73 0.28 2.00 28.28
PHSB Ppls Home SB, MHC of PA (45.0) 21.83 132.08 16.74 132.08 23.71 0.28 2.04 44.44
PRBC Prestige Bancorp of PA 18.57 81.61 7.90 81.61 19.12 0.20 1.54 28.57
PFNC Progress Financial Corp. of PA 18.43 176.71 12.23 197.91 20.57 0.16 1.13 20.78
PROV Provident Fin. Holdings of CA 14.22 82.75 8.79 82.75 NM 0.00 0.00 0.00
PULB Pulaski Bk,SB MHC of MO (29.8)(8) 20.40 165.64 22.23 165.64 24.85 1.10 5.68 NM
PLSK Pulaski SB, MHC of NJ (47.0) 22.87 102.09 12.07 102.09 21.08 0.30 2.79 63.83
PULS Pulse Bancorp of S. River NJ(8) 14.94 180.68 15.24 180.68 14.94 0.80 3.08 45.98
QCFB QCF Bancorp of Virginia MN 12.94 130.46 22.82 130.46 13.33 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA 13.16 112.61 9.80 112.61 13.39 0.00 0.00 0.00
QCSB Queens County Bancorp of NY* 26.86 NM 37.23 NM 27.35 0.80 2.68 72.07
RARB Raritan Bancorp of Raritan NJ(8)* 21.02 262.81 19.25 265.89 21.02 0.60 1.76 37.04
RELY Reliance Bancorp, Inc. of NY 11.90 114.11 8.95 163.58 11.30 0.72 2.91 34.62
RELI Reliance Bancshares Inc of WI(8) NM 100.43 53.14 100.43 NM 0.00 0.00 0.00
RCBK Richmond County Fin Corp of NY NM 117.60 24.23 118.08 19.25 0.24 1.64 NM
RIVR River Valley Bancorp of IN 12.97 89.32 12.17 90.48 14.77 0.22 1.59 20.56
RVSB Riverview Bancorp of WA 16.85 121.06 27.94 124.92 17.84 0.24 1.98 33.33
RSLN Roslyn Bancorp, Inc. of NY* 15.43 119.29 18.41 119.87 16.16 0.40 2.34 36.04
SCCB S. Carolina Comm. Bnshrs of SC 19.29 83.18 16.32 83.18 19.29 0.64 4.74 NM
SFED SFS Bancorp of Schenectady NY(8) 23.16 121.28 14.92 121.28 23.91 0.32 1.45 33.68
SGVB SGV Bancorp of W. Covina CA 20.63 94.68 7.48 95.87 20.97 0.00 0.00 0.00
SISB SIS Bancorp, Inc. of MA(8)* 23.66 216.74 15.48 216.74 19.02 0.64 1.61 38.10
SWCB Sandwich Bancorp of MA(8)* 21.94 246.45 20.68 253.54 23.17 1.40 2.60 57.14
SKAN Skaneateles Bancorp Inc of NY* 12.73 109.38 7.52 112.03 13.09 0.28 2.02 25.69
SKBOD Skibo Fin Corp MHC of PA(45.0) NM 112.89 18.96 112.89 27.91 0.30 2.50 NM
SOBI Sobieski Bancorp of S. Bend IN 20.42 86.10 11.98 86.10 21.01 0.32 2.21 45.07
SFFS Sound Bancorp MHC of NY (44.1) 15.87 99.80 19.02 99.80 15.87 0.00 0.00 0.00
SSFC South Street Fin. Corp. of NC* NM 112.75 19.08 112.75 NM 0.40 4.81 NM
SBAN SouthBanc Shares Inc. of SC 29.03 101.58 21.08 101.58 27.27 0.48 2.67 NM
SCBS Southern Commun. Bncshrs of AL 17.33 125.48 21.76 125.48 17.33 0.30 2.31 40.00
SMBC Southern Missouri Bncrp of MO 23.10 102.34 15.83 102.34 22.17 0.50 3.01 69.44
SVRN Sovereign Bancorp, Inc. of PA 24.77 207.10 11.41 234.88 19.89 0.08 0.61 15.09
STFR St. Francis Cap. Corp. of WI 15.25 149.47 11.15 167.06 15.72 0.64 1.57 23.88
SPBC St. Paul Bancorp, Inc. of IL 16.85 190.55 18.29 191.26 17.57 0.60 2.92 49.18
SFFC StateFed Financial Corp. of IA 18.28 115.68 20.72 115.68 18.28 0.20 1.68 30.77
SFIN Statewide Fin. Corp. of NJ 12.81 106.82 10.38 106.97 13.36 0.52 3.35 42.98
STSA Sterling Financial Corp. of WA 18.40 117.84 6.00 299.45 12.60 0.00 0.00 0.00
ROSE T R Financial Corp. of NY* 14.82 225.40 14.03 225.40 17.42 0.88 2.69 39.82
THRD TF Financial Corp. of PA 13.31 114.34 8.57 134.74 16.52 0.48 2.59 34.53
</TABLE>
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of October 30, 1998
Key Financial Ratios Asset Quality Ratios
-------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
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 32.34 32.34 1.79 9.12 5.01 1.69 8.57 3.10 21.28 0.91
TRIC Tri-County Bancorp of WY 16.45 16.45 1.00 6.40 5.96 1.03 6.57 NA NA 1.01
TWIN Twin City Bancorp, Inc. of TN 12.67 12.67 1.02 7.92 6.72 0.82 6.41 0.37 27.12 0.14
USAB USABancshares, Inc of PA* 9.74 9.68 0.59 6.21 3.59 0.73 7.64 1.08 49.32 0.90
UCBC Union Community Bancorp of IN 40.02 40.02 1.44 5.52 3.92 1.44 5.52 0.33 99.15 0.40
UCFC United Community Fin. of OH 32.31 32.31 1.50 4.65 4.14 1.50 4.65 0.51 72.00 0.95
UBMT United Fin. Corp. of MT 14.74 14.25 1.12 7.57 5.57 1.09 7.40 0.42 156.46 1.02
UTBI United Tenn. Bancshares of TN 27.03 27.03 1.36 9.53 6.10 1.36 9.53 0.57 148.60 1.27
WHGB WHG Bancshares of MD 15.28 15.28 0.58 3.18 4.28 0.58 3.18 0.65 41.31 0.46
WSFS WSFS Financial Corp. of DE* 6.15 6.13 1.12 19.55 8.11 1.08 18.85 1.17 134.48 3.28
WVFC WVS Financial Corp. of PA 11.10 11.10 1.20 10.72 6.31 1.30 11.60 NA NA 1.19
WRNB Warren Bancorp of Peabody MA* 10.48 10.48 1.72 16.10 8.26 1.72 16.10 NA NA 1.56
WSBI Warwick Community Bncrp of NY* 20.99 20.99 0.32 1.46 1.49 1.08 4.93 0.35 106.03 0.71
WFSL Washington Federal, Inc. of WA 13.90 12.91 1.96 15.10 8.09 1.90 14.69 0.52 81.10 0.57
WAYN Wayne Svgs Bks MHC of OH (48.2 9.53 9.53 0.71 7.52 4.00 0.64 6.80 0.49 58.18 0.36
WCFB Wbstr Cty FSB MHC of IA (45.6) 23.41 23.41 1.40 5.95 3.94 1.40 5.95 0.07 534.72 0.69
WBST Webster Financial Corp. of CT 5.97 5.06 0.68 12.38 5.27 0.76 13.90 0.39 159.51 1.14
WEFC Wells Fin. Corp. of Wells MN 15.37 15.37 1.19 8.16 8.79 1.11 7.60 NA NA NA
WEBK West Essex MHC of NJ (42.2) 13.43 13.43 0.34 2.51 2.77 0.34 2.51 1.10 54.38 1.60
WCBI WestCo Bancorp, Inc. of IL(8) 15.66 15.66 1.50 9.68 6.08 1.40 9.09 0.56 50.90 0.36
WSTR WesterFed Fin. Corp. of MT 10.73 8.75 0.72 6.77 7.12 0.72 6.77 0.52 94.24 0.74
WOFC Western Ohio Fin. Corp. of OH 14.52 13.58 0.07 0.51 0.53 0.06 0.43 1.29 74.24 1.36
WEHO Westwood Hmstd Fin Corp of OH 20.59 20.59 0.69 2.80 3.80 1.11 4.50 0.29 82.74 0.26
FFWD Wood Bancorp of OH 13.57 13.57 1.43 11.15 6.85 1.16 9.02 0.16 243.12 0.48
YFCB Yonkers Fin. Corp. of NY 10.30 10.30 0.89 6.80 7.68 0.80 6.18 0.15 208.94 0.61
YFED York Financial Corp. of PA 8.89 8.89 0.84 9.60 5.60 0.66 7.54 2.25 31.83 0.90
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
--------------------- ------- ------- ------- ------- -------- ------- ------- ---------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
THTL Thistle Group Holdings of PA 16.98 83.41 23.19 83.41 16.98 0.20 2.22 37.74
TSBK Timberland Bancorp of WA 19.97 103.96 33.63 103.96 21.24 0.24 1.79 35.82
TRIC Tri-County Bancorp of WY 16.78 104.51 17.19 104.51 16.35 0.44 3.45 57.89
TWIN Twin City Bancorp, Inc. of TN 14.89 117.36 14.87 117.36 18.40 0.40 3.02 44.94
USAB USABancshares, Inc of PA* 27.88 110.69 10.78 111.37 22.66 0.00 0.00 0.00
UCBC Union Community Bancorp of IN 25.53 84.39 33.77 84.39 25.53 0.38 3.17 NM
UCFC United Community Fin. of OH 24.14 112.27 36.28 112.27 24.14 0.00 0.00 0.00
UBMT United Fin. Corp. of MT 17.96 136.01 20.05 140.74 18.37 1.00 4.12 74.07
UTBI United Tenn. Bancshares of TN 16.38 84.09 22.73 84.09 16.38 0.00 0.00 0.00
WHGB WHG Bancshares of MD 23.37 74.04 11.31 74.04 23.37 0.32 2.98 69.57
WSFS WSFS Financial Corp. of DE* 12.32 219.62 13.51 220.46 12.78 0.12 0.70 8.63
WVFC WVS Financial Corp. of PA 15.86 168.64 18.72 168.64 14.65 0.60 3.90 61.86
WRNB Warren Bancorp of Peabody MA* 12.11 193.41 20.27 193.41 12.11 0.36 3.72 45.00
WSBI Warwick Community Bncrp of NY* NM 97.78 20.52 97.78 19.92 0.16 1.25 NM
WFSL Washington Federal, Inc. of WA 12.36 177.70 24.70 191.33 12.71 0.92 3.45 42.59
WAYN Wayne Svgs Bks MHC of OH (48.2 25.00 183.60 17.49 183.60 27.65 0.62 3.40 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 25.40 148.84 34.84 148.84 25.40 0.80 5.00 NM
WBST Webster Financial Corp. of CT 18.99 170.87 10.19 201.55 16.91 0.44 1.78 33.85
WEFC Wells Fin. Corp. of Wells MN 11.38 94.02 14.45 94.02 12.22 0.60 3.64 41.38
WEBK West Essex MHC of NJ (42.2) NM 90.61 12.17 90.61 NM 0.00 0.00 0.00
WCBI WestCo Bancorp, Inc. of IL(8) 16.45 154.60 24.22 154.60 17.53 0.68 2.11 34.69
WSTR WesterFed Fin. Corp. of MT 14.04 92.97 9.98 114.06 14.04 0.54 2.96 41.54
WOFC Western Ohio Fin. Corp. of OH NM 100.27 14.55 107.20 NM 1.00 4.42 NM
WEHO Westwood Hmstd Fin Corp of OH 26.32 93.63 19.28 93.63 16.39 0.40 4.00 NM
FFWD Wood Bancorp of OH 14.61 153.85 20.88 153.85 18.06 0.36 2.77 40.45
YFCB Yonkers Fin. Corp. of NY 13.02 93.54 9.63 93.54 14.33 0.32 2.26 29.36
YFED York Financial Corp. of PA 17.86 164.20 14.59 164.20 22.73 0.52 2.60 46.43
</TABLE>
<PAGE>
EXHIBIT 2
Pro Forma Analysis Sheet
Fully Converted Basis
<PAGE>
EXHIBIT 2
PRO FORMA ANALYSIS SHEET
Provident Bank
Prices as of October 30, 1998
<TABLE>
<CAPTION>
All SAIF-Insured
Peer Group New York Companies Companies
------------------------ ---------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Median
- -------------- ------ --------- ----- ------ ----- ------- ------ -------
Price-earnings ratio = P/E 11.x0 19.02 18.81x 16.73x 15.43x 17.45x 16.67x
Price-book ratio = P/B 57.46% 83.66% 84.31% 99.42% 109.19% 126.24% 114.33%
Price-assets ratio = P/A 8.34% 18.75% 17.42% 13.49% 17.84% 16.02% 14.91%
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $4,242,000 ESOP Stock Purchases (E) 8.(5)
Pre-Conversion Book Value (B) $55,200,000 Cost of ESOP Borrowings (S) 0.(4)
Pre-Conv. Tang. Book Value (B) $51,535,389 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $691,068,000 RRP Amount (M) 4.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 3.00% Foundation (F) 0.00%
Tax rate (TAX) 40.00% Tax Benefit (Z) 0
Percentage Sold (PCT) 100.00%
<CAPTION>
Calculation of Pro Forma Value After Conversion
<S> <C> <C>
1. V= P/E * (Y) V= $62,000,000
-----------------------------------------------------
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= $62,000,000
-----------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $62,000,000
-------------------------------------
1 - P/A * PCT * (1-X-E-M-F)
<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 5,270,000 10.00 $52,700,000 5,270,000 52,700,000
Midpoint 6,200,000 10.00 62,000,000 6,200,000 62,000,000
Maximum 7,130,000 10.00 71,300,000 7,130,000 71,300,000
Supermaximum 8,199,500 10.00 81,995,000 8,199,500 81,995,000
</TABLE>
- ----------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate of
40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) 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 expenses tax effected at 40.00 percent.
<PAGE>
EXHIBIT 3
Pro Forma Effect of Conversion Proceeds
Fully Converted Basis
<PAGE>
Exhibit 3
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $52,700,000
Less: Estimated Offering Expenses 1,581,000
-----------
Net Conversion Proceeds $51,119,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $51,119,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 6,324,000
-----------
Net Proceeds Reinvested $44,795,000
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $1,443,295
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 252,960
Less: Recognition Plan Vesting (4) 252,960
-----------
Net Earnings Increase $937,375
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- --------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $4,242,000 $937,375 $5,179,375
12 Months ended September 30, 1998 (core) $4,242,000 $937,375 $5,179,375
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
September 30, 1998 $55,200,000 $44,795,000 $0 $99,995,000
September 30, 1998 (Tangible) $51,535,389 $44,795,000 $0 $96,330,389
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
------------ ----------- --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $691,068,000 $44,795,000 $0 $735,863,000
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit 3
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Midpoint
<TABLE>
<S> <C>
1. Offering Proceeds $62,000,000
Less: Estimated Offering Expenses 1,860,000
-----------
Net Conversion Proceeds $60,140,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $60,140,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 7,440,000
-----------
Net Proceeds Reinvested $52,700,000
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $ 1,697,994
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 297,600
Less: Recognition Plan Vesting (4) 297,600
-----------
Net Earnings Increase $ 1,102,794
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $4,242,000 $1,102,794 $5,344,794
12 Months ended September 30, 1998 (core) $4,242,000 $1,102,794 $5,344,794
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $55,200,000 $52,700,000 $0 $107,900,000
September 30, 1998 (Tangible) $51,535,389 $52,700,000 $0 $104,235,389
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
------------ ----------- --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $691,068,000 $52,700,000 $0 $743,768,000
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit 3
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Maximum
<TABLE>
<S> <C>
1. Offering Proceeds $71,300,000
Less: Estimated Offering Expenses 2,139,000
-----------
Net Conversion Proceeds $69,161,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $69,161,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 8,556,000
-----------
Net Proceeds Reinvested $60,605,000
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $1,952,693
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 342,240
Less: Recognition Plan Vesting (4) 342,240
-----------
Net Earnings Increase $1,268,213
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $4,242,000 $1,268,213 $5,510,213
12 Months ended September 30, 1998 (core) $4,242,000 $1,268,213 $5,510,213
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $55,200,000 $60,605,000 $0 $115,805,000
September 30, 1998 (Tangible) $51,535,389 $60,605,000 $0 $112,140,389
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
------------ ----------- --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $691,068,000 $60,605,000 $0 $751,673,000
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit 3
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Supermaximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $81,995,000
Less: Estimated Offering Expenses 2,459,850
-----------
Net Conversion Proceeds $79,535,150
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $79,535,150
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 9,839,400
-----------
Net Proceeds Reinvested $69,695,750
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $2,245,597
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 393,576
Less: Recognition Plan Vesting (4) 393,576
-----------
Net Earnings Increase $1,458,445
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- ---------- -----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $4,242,000 $1,458,445 $5,700,445
12 Months ended September 30, 1998 (core) $4,242,000 $1,458,445 $5,700,445
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $55,200,000 $69,695,750 $0 $124,895,750
September 30, 1998 (Tangible) $51,535,389 $69,695,750 $0 $121,231,139
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
------------ ----------- --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $691,068,000 $69,695,750 $0 $760,763,750
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
EXHIBIT 4
Pro Forma Analysis Sheet
Minority Stock Offering
<PAGE>
EXHIBIT 4
PRO FORMA ANALYSIS SHEET
Provident Bank
Prices as of October 30, 1998
<TABLE>
<CAPTION>
All SAIF-Insured
Peer Group New York Companies Companies
------------------------ ------------------------- -----------------
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Median
-------------- ------ ----------- ------ ------ ----- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 13.07x 23.18 22.87x 16.73x 15.43x 17.45 16.67x
Price-book ratio = P/B 78.10% 151.16% 144.86% 99.42% 109.19% 126.24% 114.33%
Price-assets ratio = P/A 8.67% 20.29% 17.75% 13.49% 17.84% 16.02% 14.91%
<CAPTION>
Valuation Parameters
--------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $4,242,000 ESOP Stock Purchases (E) 8.00%(5)
Pre-Conversion Book Value (B) $55,200,000 Cost of ESOP Borrowings (S) 0.00%(4)
Pre-Conv. Tang. Book Value (B) $51,535,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $691,068,000 RRP Amount (M) 4.00%
Reinvestment Rate (2)(R) 3.22% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 4.33% Foundation (F) 0.00%
Tax rate (TAX) 40.00% Tax Benefit (Z) 0
Percentage Sold (PCT) 46.61%
<CAPTION>
Calculation of Pro Forma Value After Conversion
<S> <C> <C>
1. V= P/E * (Y) V= $62,000,000
-----------------------------------------------------
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= $62,000,000
-------------------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $62,000,000
-------------------------------------
1 - P/A * PCT * (1-X-E-M-F)
<CAPTION>
Aggregate
Shares Issued 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 2,813,500 2,456,500 10.00 $24,565,000 2,456,500 24,565,000
Midpoint 3,310,000 2,890,000 10.00 28,900,000 2,890,000 28,900,000
Maximum 3,806,500 3,323,500 10.00 33,235,000 3,323,500 33,235,000
Supermaximum 4,377,475 3,822,025 10.00 38,220,250 3,822,025 38,220,250
</TABLE>
----------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.37 percent, and a tax rate
of 40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) 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 expenses tax effected at 40.00 percent.
<PAGE>
EXHIBIT 5
Pro Forma Effects
Minority Stock Offering
<PAGE>
Exhibit 5
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Minimum
<TABLE>
<CAPTION>
<S> <C>
1. Offering Proceeds $24,565,000
Less: Estimated Offering Expenses 1,250,000
-----------
Net Conversion Proceeds $23,315,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $23,315,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 2,947,800
-----------
Net Proceeds Reinvested $20,367,200
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $656,231
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 117,912
Less: Recognition Plan Vesting (4) 117,912
-----------
Net Earnings Increase $420,407
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
------------- ------------ ------------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $4,242,000 $420,407 $4,662,407
12 Months ended September 30, 1998 (core) $4,242,000 $420,407 $4,662,407
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $55,200,000 $20,367,200 $0 $75,567,200
September 30, 1998 (Tangible) $51,535,000 $20,367,200 $0 $71,902,200
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
------------ ------------ --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $691,068,000 $20,367,200 $0 $711,435,200
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit 5
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Midpoint
<TABLE>
<C> <S> <C>
1. Offering Proceeds $28,900,000
Less: Estimated Offering Expenses 1,250,000
-----------
Net Conversion Proceeds $27,650,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $27,650,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 3,468,000
-----------
Net Proceeds Reinvested $24,182,000
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $779,144
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 138,720
Less: Recognition Plan Vesting (4) 138,720
-----------
Net Earnings Increase $501,704
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- --------- -----------
<C> <S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $4,242,000 $501,704 $4,743,704
12 Months ended September 30, 1998 (core) $4,242,000 $501,704 $4,743,704
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- --------------- -----------
<C> <S> <C> <C> <C> <C>
September 30, 1998 $55,200,000 $24,182,000 $0 $79,382,000
September 30, 1998 (Tangible) $51,535,000 $24,182,000 $0 $75,717,000
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- ----------- --------------- ------------
<C> <S> <C> <C> <C> <C>
September 30, 1998 $691,068,000 $24,182,000 $0 $715,250,000
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit 5
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Maximum
<TABLE>
<CAPTION>
<S> <C>
1. Offering Proceeds $33,235,000
Less: Estimated Offering Expenses 1,250,000
-----------
Net Conversion Proceeds $31,985,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $31,985,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 3,988,200
-----------
Net Proceeds Reinvested $27,996,800
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $902,057
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 159,528
Less: Recognition Plan Vesting (4) 159,528
-----------
Net Earnings Increase $583,001
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
------------ ------------ ------------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $4,242,000 $583,001 $4,825,001
12 Months ended September 30, 1998 (core) $4,242,000 $583,001 $4,825,001
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
------------ ------------ ---------------- -----------
<S> <C> <C> <C> <C>
September 30, 1998 $55,200,000 $27,996,800 $0 $83,196,800
September 30, 1998 (Tangible) $51,535,000 $27,996,800 $0 $79,531,800
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
------------ ------------ ---------------- ------------
September 30, 1998 $691,068,000 $27,996,800 $0 $719,064,800
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
Exhibit 5
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Provident Bank
At the Supermaximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $38,220,250
Less: Estimated Offering Expenses 1,250,000
-----------
Net Conversion Proceeds $36,970,250
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $36,970,250
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 4,586,430
-----------
Net Proceeds Reinvested $32,383,820
Estimated net incremental rate of return 3.22%
-----------
Earnings Increase $1,043,407
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 183,457
Less: Recognition Plan Vesting (4) 183,457
-----------
Net Earnings Increase $676,492
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- --------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $4,242,000 $676,492 $4,918,492
12 Months ended September 30, 1998 (core) $4,242,000 $676,492 $4,918,492
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
----------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
September 30, 1998 $55,200,000 $32,383,820 $0 $87,583,820
September 30, 1998 (Tangible) $51,535,000 $32,383,820 $0 $83,918,820
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
------------ ----------- --------------- ------------
<S> <C> <C> <C> <C>
September 30, 1998 $691,068,000 $32,383,820 $0 $723,451,820
</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 40.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
40.00 percent.
<PAGE>
EXHIBIT 6
Firm Qualifications Statement
<PAGE>
RP FINANCIAL, LC.
- --------------------------------------- FIRM QUALIFICATION STATEMENT
FINANCIAL SERVICES INDUSTRY CONSULTANTS
RP Financial provides financial and management consulting and valuation
services to the financial services industry nationwide, particularly
federally-insured financial institutions. RP Financial establishes long-
term client relationships through its wide array of services, emphasis on
quality and timeliness, hands-on involvement by our principals and senior
consulting staff, and careful structuring of strategic plans and
transactions. RP Financial's staff draws from backgrounds in consulting,
regulatory agencies and investment banking, thereby providing our clients
with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to
provide effective workable plans with quantifiable results. Through a
program known as SAFE (Strategic Alternatives Financial Evaluations), RP
Financial analyzes strategic options to enhance shareholder value or other
established objectives. Our planning services involve conducting situation
analyses; establishing mission statements, strategic goals and objectives;
and identifying strategies for enhancement of franchise value, capital
management and planning, earnings improvement and operational issues.
Strategy development typically includes the following areas: capital
formation and management, asset/liability targets, profitability, return on
equity and market value of stock. Our proprietary financial simulation
model provides the basis for evaluating the financial impact of alternative
strategies and assessing the feasibility/compatibility of such strategies
with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness
opinions and assisting in implementing post-acquisition strategies. Through
our financial simulations, comprehensive in-house data bases, valuation
expertise and regulatory knowledge, RP Financial's M&A consulting focuses
on structuring transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a
variety of purposes including mergers and acquisitions, mutual-to-stock
conversions, ESOPs, subsidiary companies, mark-to-market transactions, loan
and servicing portfolios, non-traded securities, core deposits, FAS 107
(fair market value disclosure), FAS 122 (loan servicing rights) and FAS 123
(stock options). Our principals and staff are highly experienced in
performing valuation appraisals which conform with regulatory guidelines
and appraisal industry standards. RP Financial is the nation's leading
valuation firm for mutual-to-stock conversions of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching
strategies, feasibility studies and special research studies, which are
complemented by our quantitative and computer skills. RP Financial's
consulting services are aided by its in-house data base resources for
commercial banks and savings institutions and proprietary valuation and
financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and
development company with a proprietary methodology, offers Year 2000
advisory and conversion services to financial institutions which are more
cost effective and less disruptive than most other providers of such
service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (18)
William E. Pommerening, Managing Director (14)
Gregory E. Dunn, Senior Vice President (16)
James P. Hennessey, Senior Vice President (13)
James J. Oren, Senior Vice President (11)
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210
Arlington, VA 22209
