As filed with the Securities and Exchange Commission on November 3, 1998
Registration No. 333-63737
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
FORM S-1
TO THE
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WILLOW GROVE BANCORP, INC.
(In organization)
(Exact name of registrant as specified in its to be filed Federal Stock Charter)
----------
<TABLE>
<S> <C> <C>
United States 6035 Requested
- ------------------------------- ------------------------------------- -------------------
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
Welsh and Norristown Roads
Maple Glen, Pennsylvania 19002
(215) 646-5405
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Frederick A. Marcell, Jr.
President and Chief Executive Officer
Welsh and Norristown Roads
Maple Glen, Pennsylvania 19002
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Raymond A. Tiernan, Esq.
Hugh T. Wilkinson, Esq.
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
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Approximate date of commencement of proposed sale to 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, please check the following box
and list the Securities Act registration 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
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<CAPTION>
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Amount
Title of each Class of to be Purchase Price Aggregate Registration
Securities to be Registered Registered Per Share Offering Price Fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value
per share (1)............... 2,530,736 shares $10.00 $25,307,360 (2) $8,726.68
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Participation interests..... 168,958 shares -- -- --(3)
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</TABLE>
(1) Includes shares of Common Stock to be issued to The Willow Grove Foundation,
a private foundation.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The shares of Willow Grove Bancorp, Inc. to be purchased by participants in
the Willow Grove Bank 401(k) Plan are included in the amount shown for
Common Stock. Accordingly, no separate fee is required for the participation
interests. In accordance with Rule 457(h) of the Securities Act, as amended,
the registration fee has been calculated on the basis of the maximum number
of shares of Common Stock which could be purchased through utilization of
the assets of such plan.
The Registrant hereby amends this Registration Statement on such date as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.
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<PAGE>
PROSPECTUS SUPPLEMENT
WILLOW GROVE BANCORP, INC.
Willow Grove Bank 401(k) Plan and Trust
(Participation Interest in up to 168,959 shares of
Willow Grove Bancorp, Inc.)
This prospectus supplement is being provided to participants of the
Willow Grove Bank 401(k) Plan and Trust (the "Plan"). Willow Grove Bank is
reorganizing from a mutual bank to a stock bank, establishing a stock holding
company, Willow Grove Bancorp, Inc. (the "Company"), to hold all of the
outstanding shares of the Willow Grove Bank, with the Company becoming a
majority-owned subsidiary of the Willow Grove Mutual Holding Company. In
connection with this reorganization, the Company's common stock will be made
available to the general public.
The Company is offering for sale shares of its common stock to the
participants of the Plan (the "Participants"). Participants have two possible
ways of purchasing shares of the Company:
First, those who already have subscription rights as depositors or
borrower members of Willow Grove Bank, may exercise such rights and use
the monies held in his or her individual Plan account. Such shares will
be purchased in the public offering of the Company's shares. Because
the Plan actually purchases the shares, you will acquire a
"participation interest" in the shares and not own the shares directly.
Shares may be purchased in this manner by allocating all or a portion
of the funds in your Plan account into the investment fund established
to invest in the Company's common stock;
Second, after the Company's public offering is completed, a fund
dedicated to investing in the Company's common stock will be available
as an additional investment fund under the Plan. On a quarterly basis
you will be able to allocate all or a portion of your Plan account
between all of the Plan's investment funds including the Employer Stock
Fund.
The prospectus dated November 3, 1998 of Willow Grove Bancorp, Inc., which is
2attached to this prospectus supplement, includes detailed information with
respect to Willow Grove Bancorp, Inc., Willow Grove Bank and the offering of
Willow Grove Bancorp, Inc. common stock. This prospectus supplement should be
read only in conjunction with the attached prospectus.
For a discussion of certain factors that you should consider before
investing, see "Restrictions on Resale" at page S-14 in this prospectus
supplement and "Risk Factors" at page ____ in the prospectus.
Neither the Securities Exchange Commission nor any state or federal agency has
approved these securities or determined that this prospectus supplement is
accurate or complete. Any representation to the contrary is a criminal offense.
The participation interests offered by the Willow Grove Bank 401(k) Plan and
Trust are not savings accounts or deposits and are not insured or guaranteed by
any government insurance fund, Willow Grove Bank or Willow Grove Bancorp, Inc.
This type of investment involves risk and you may lose some or all of your
investment.
The date of this prospectus supplement is November 3, 1998.
<PAGE>
TABLE OF CONTENTS
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<S> <C>
THE OFFERING.....................................................................................1
Summary of Reorganization...............................................................1
Securities Offered......................................................................1
Election to Purchase Common Stock in the Offering; Priorities...........................1
Value of Participation Interests........................................................2
How to Use Plan Funds to Invest in Offering.............................................2
Deadline for Participating in Offering..................................................2
Irrevocability of Election to Participate in Offering...................................2
Direction to Purchase Common Stock After the Offering...................................3
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
Employee Retirement Income Security Act.................................................4
Reference to Full Text of Plan..........................................................4
Eligibility and Participation...........................................................5
Contributions Under the Plan............................................................5
Limitations on Contributions............................................................5
Limitation on Annual Additions and Benefits....................................5
Limitation on 401(k) Plan Contributions........................................6
Limitation on Plan Contribution for Highly Compensated Employees...............6
Top-Heavy Plan Requirements....................................................7
Investment of Contributions.............................................................7
Previous Funds.................................................................8
Employer Stock Fund.....................................................................9
Vesting................................................................................10
Distributions Upon Retirement or Disability ...........................................10
Distribution Upon Death................................................................10
Distribution upon Termination of Employment............................................11
Non-alienation of Benefits.............................................................11
Reports to Profit Sharing Plan Participants............................................11
Plan Administration....................................................................11
Amendment and Termination..............................................................12
Merger, Consolidation or Transfer......................................................12
Federal Income Tax Consequences........................................................12
Lump Sum Distribution.........................................................13
Averaging Rules...............................................................13
Common Stock Included in Lump Sum Distribution................................13
Distribution: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA....14
ERISA and Other Qualifications.........................................................14
Restrictions on Resale.................................................................14
SEC Reporting and Short-Swing Profit Liability.........................................15
LEGAL OPINION...................................................................................16
</TABLE>
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<PAGE>
THE OFFERING
Summary of the Reorganization
Bank is reorganizing into a federal mutual holding company form,
whereby the Bank will convert to a federally chartered stock savings bank as a
wholly owned subsidiary of the Company, and the Company will become a
majority-owned subsidiary of Willow Grove Mutual Holding Company (the "MHC"), a
federally chartered mutual holding company (the "Reorganization") pursuant to
the Bank's Plan of Reorganization From Mutual Savings Bank to Mutual Holding
Company (the "Plan of Reorganization") and the related offering of its Common
Stock (the "Offering") pursuant to the Bank's Plan of Stock Issuance (the "Plan
of Stock Issuance").
Securities Offered
The securities offered hereby are participation interests in the Plan.
Up to 168,959 shares (at a purchase price of $10.00 per share) of the Company's
par value $.01 per share common stock (the "Common Stock"). Common Stock may be
acquired in the Offering by the Plan to be held in an investment fund
established to primarily invest in the Common Stock of Willow Grove Bancorp,
Inc. (the "Employer Stock Fund"). The Company is the issuer of the Common Stock.
Only employees of the Bank may become participants in the Plan. The Common Stock
to be issued hereby is conditioned on the consummation of the Reorganization. A
Participant's investment in the Employer Stock Fund in the Reorganization is
subject to the priority purchase rights, applicable to the Participant, as set
forth in the Plan of Reorganization, and as described below. 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 Company is contained in the attached Prospectus.
This Prospectus Supplement should be read with the attached Prospectus. The
address of the principal executive office of the Company and the Bank is Welsh
and Norristown Roads, Maple Glen, Pennsylvania 19002. The telephone number of
the Bank is (215) 646-5405.
Election to Purchase Common Stock in the Offering; Priorities
The Plan has recently been amended to permit each Participant to direct
the transfer of all or part of the funds which represent his or her beneficial
interest in the assets of the Plan to be invested in the Employer Stock Fund.
Accordingly, the Trustee of the Plan will subscribe for Common Stock offered for
sale in connection with the Offering in accordance with each Participant's
directions. In the event the Offering is oversubscribed and the Trustee is
unable to use the full amount allocated by a Participant to purchase Common
Stock in the Offering, the amount that is not invested in the Employer Stock
Fund will be reallocated on a pro rata basis to the other investment options
that the Participant has selected. If a Participant chooses not to direct the
investment of his or her Plan account balance, the Participant's Plan account
balance will remain in the other investment options of the Plan previously
directed by the Participant.
The shares of Common Stock to be sold in the Offering are being offered
in the following order of priority: (i) holders of deposit accounts at the Bank
with an aggregate balance of $50 or more on June 30, 1997; (ii) the Bank's;
(iii) holders of deposit accounts at Tax-Qualified Exployee Stock Benefit Plans
with an aggregate balance of $50 or more on _________ ____, 1998; (iv)
depositors and certain borrowers of the Bank as of the close of business on
_________ ___, 1998;
S-1
<PAGE>
and (v) employees, officers and directors of the Bank and the Company
(the "Subscription Offering"). (Subject to the prior rights of holders of
subscription rights the Company may also offer shares of Common Stock in a
community offering and/or syndicated community offering.) To the extent that
Participants fall into one of the Subscription Offering categories, they have
subscription rights to purchase shares of Common Stock in the Subscription
Offering and are being permitted to use funds in their Plan account to pay for
the Common Stock that they may subscribe for. Common Stock so purchased will be
placed in the Participant's Employer Stock Fund within his/her Plan account.
The limitations on the amount of Common Stock that a person may
purchase in the Offering, which are described in the Prospectus, see
"Limitations on Common Stock Purchases," in the Prospectus, will be calculated
based on the aggregate amount directly purchased by a person in the Offering
together with the amount purchased with funds allocated to a Participant's Plan
account.
Value of Participation Interests
The assets of the Plan were valued at $1,689,596.89 as of June 30,
1998, representing the aggregate market value of all Participants' accounts and
earnings thereon, less previous withdrawals.
How to Use Plan Funds to Invest in Offering
Accompanying this Prospectus Supplement is a form (the "Investment
Election Form" attached as Annex A) which will enable a Participant to direct
that all or a portion of his or her beneficial interest in the Plan,
representing Plan contributions through ______________ 1998, be transferred
to the Employer Stock Fund. If a Participant wishes to invest all or part of his
or her beneficial interest in the assets of the Plan in the Common Stock issued
in the Offering, he or she should complete the Investment Election Fund.
Deadline for Participating in Offering
Directions to transfer amounts to the Employer Stock Fund in order to
purchase Common Stock issued in the Offering indicated on the Investment
Election Form. Such Form then must be returned to Willow Grove Bank, Welsh and
Norristown Road, Maple Glen, Pennsylvania, 19002 Attn: Mr. John D. Foff, Jr., no
later than noon on _____________________ 1998.
Irrevocability of Election to Participate in Offering
A Participant's direction to transfer amounts credited to his or her
Plan account to the Employer Stock Fund in order to purchase shares
of Common Stock in the Offering is irrevocable.
Direction to Purchase Common Stock After the Offering
After the Offering, a Participant will continue to be able to direct
the investment of past
S-2
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balances and current contributions in the investment options available under the
Plan, including the Employer Stock Fund (the percentage invested in any option
must be a whole percent). The allocation of a Participant's interest in the
various investment options offered under the Plan may be changed quarterly.
Special restrictions may apply to transfers directed to or from the Employer
Stock Fund by those Participants who are executive officers, directors and
principal shareholders of the Company and are subject to the provisions of
Section 16(b) of the Securities and Exchange Act of 1934 (the "Exchange Act"),
as amended. In addition, Participants who are officers or directors, of the
Company or the Bank will not be able to transfer their initial investment out of
the Employer Stock Fund for a period of one (1) year following consummation of
the Reorganization.
Purchase Price of Common Stock
The funds transferred to the Employer Stock Fund for the purchase of
Common Stock in connection with the Offering will be used in full by the Trustee
to purchase shares of Common Stock, except in the event of an over subscription,
as discussed above. The price paid for such shares of Common Stock will be
$10.00 per share, the same price as paid by all other persons who purchase
shares of Common Stock in the Offering.
Subsequent to the Offering, Common Stock purchased by the Trustee will
be acquired in open market transactions or from the Company's treasury stock
account. The prices paid by the Trustee of shares of Common Stock will not
exceed "adequate consideration" as defined in Section 3(18) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
Nature of a Participant's Interest in Common Stock
The Common Stock will be held in the name of the Plan, as Trustee, and
will be allocated to a Participant's individual Plan account under the Plan.
Therefore, earnings with respect to a Participant's Plan account should not be
affected by the investment designations (including investments in Common Stock)
of other Participants. The Plan Administrator will vote such allocated shares,
if any, as described in the following paragraph.
Voting Rights of Common Stock
The Plan Administrator generally will exercise voting rights
attributable to all Common Stock held by the Employer Stock Fund. For matters
involving a tender offer for the Company, the Plan Administrator will vote such
allocated shares, if any, as directed by Participants with interests in the
Employer Stock Fund. Each Participant will be allocated voting instruction
rights reflecting such Participant's proportionate interest in the Employer
Stock Fund. The number of negative votes on each matter shall be proportionate
to the number of voting instruction rights exercised by Participants in the
affirmative and negative, respectively. For matters not involving a tender
offer, the Plan Administrator will vote such allocated shares in his own
discretion and Participants will not have an opportunity to direct the voting of
shares.
DESCRIPTION OF THE PLAN
S-3
<PAGE>
Introduction
The Bank originally adopted the Plan January 1, 1993. Recently, the
Board of Directors of the Bank voted to include the Employer Stock Fund as an
investment option. The Plan is a profit sharing plan with a cash or deferred
compensation feature established in accordance with the requirements under
Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Bank has obtained a ruling from the Internal Revenue
Service (the "IRS") that the Plan is qualified under Section 401(a) of the Code,
and its related trust is tax exempt under Section 501(a) of the Code.
Employee Retirement Income Security Act.
The Plan is an "individual account plan" other than a "money purchase
pension plan" within the meaning of ERISA. As such, the Plan is subject to all
of the provisions of Title I (Protection of Employee Benefits 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 or beneficiaries under the Plan.
Applicable federal law requires the Plan to impose substantial
restrictions on the right of a 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 also may 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.
Reference to Full Text of Plan
The following statements are summaries of certain provisions of the
Plan. They are not complete and are qualified in their entirety by the full text
of the Plan. Words capitalized but not defined in the following discussion have
the same meaning as set forth in the Plan. Copies of the Plan are available to
all employees by filing a request with the Bank, Welsh and Norristown Roads,
Maple Glen, Pennsylvania 19005, Attention: Mr. John Foff, Jr. Each employee is
urged to read carefully the full text of the Plan.
S-4
<PAGE>
Eligibility and Participation
An employee of the Employer is eligible to become a Participant in the
Plan on the first January 1st or July 1st following the completion of one (1)
Year of Service, as defined below, with the Bank, provided he or she has reached
age 21 at such time. A Year of Service is defined as a 12 consecutive month
period during which an employee completes at least 1,000 hours of service with
the Bank. The plan year is January 1 to December 31 (the "Plan Year").
As of June 30, 1998, there were approximately 75 employees eligible
to participate in the Plan, and 70 employees participating by making elective
deferral contributions.
Contributions Under the Plan
401(k) Contributions. Each Participant in the Profit Sharing Plan is
permitted to elect to reduce his or her Compensation (as defined below) pursuant
to a "Salary Reduction Agreement" by an amount subject to certain restrictions
not to exceed $10,000 for 1998 or such higher amount as may be periodically set
by the IRS and have such amount contributed to the Plan on his or her behalf
(the "Pre-Tax Employee Contribution"). Pre-Tax Employee Contributions are
transferred by the Employer to the Trustee and credited to the Participant's
Plan account. The Plan defines "Compensation" as a Participant's total taxable
compensation paid by the Employer, including certain amounts of compensation
deferred from taxation by reason of Code Sections 125, 402(a)(8), 402(h), or
403(b). Generally, a Participant may elect to modify the amount contributed to
the Plan under his or her Salary Reduction Agreement with 30 days advance notice
of such modification. However, special restrictions apply to those Participants
who are subject to Section 16 of the Exchange Act.
After-Tax Contributions. Employee after-tax contributions are not
allowed under the Plan.
Employer Contributions. The Bank, in its sole discretion, may make a
contribution matching all or some portion of the Participant's Pre-Tax Employee
contribution. Furthermore, the Bank, in its sole discretion, may also make other
discretionary contributions to the Plan. Currently the Bank makes matching
contributions of 50% of the Participant's Pre-Tax Contribution up to 10% of
Compensation. Past contributions are no assurance that the Bank will continue to
make matching contributions in the future.
Limitations on Contributions
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 Plan account and during any Plan
Year may not exceed the lesser of 25% of the Participant's Section 415
Compensation (as defined below) for the Plan Year or $30,000 (adjusted for
increases in the cost of living as permitted by the Code). A Participant's
Section 415 Compensation is a Participant's compensation, excluding certain
Employer contributions to the Plan or to any other plan of deferred compensation
or any distributions from a plan of deferred compensation. Annual additions
shall be limited to the extent necessary to prevent the limitations set forth in
the Code for all of the qualified defined benefit plans and defined contribution
plans maintained by the Bank from being exceeded. To the extent that
S-5
<PAGE>
these limitations would be exceeded by reason of excess annual additions with
respect to a Participant, such excess will be disposed of as follows:
(i) The Administrator will return any voluntary employee contribution
to the extent that such return would reduce the excess;
(ii) Any excess amount in the Participant's Plan account will be used
to reduce the Employer's contributions for such Participant in the next
Limitation Year, and each succeeding Limitation Year if necessary; and
(iii) If an excess amount still exists, and the Participant is not
covered by the Plan at the end of the Limitation Year, the excess amount during
the succeeding Limitation Year, shall be allocated to each Participant then
actively participating in the Plan.
Limitation on 401(k) Plan Contributions. The annual amount of deferred
compensation under a salary reduction agreement 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 $7,000 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 excess deferral is
made.
Limitation on Plan Contributions for Highly Compensated Employees.
Sections 401(k) and 401(m) of the Code limit the amount of Deferred Compensation
that may be made to the Plan in any Plan Year on behalf of Highly Compensated
Employees (as defined below) in relation to the amount of Deferred Compensation
made by or on behalf of all other employees eligible to participate in the Plan.
Specifically, the actual deferral percentage (i.e., the average of the ratios,
calculated separately for each eligible employee in each group, by dividing the
amount of Deferred Compensation credited to the Plan account of such eligible
employee by such eligible employee's compensation for the Plan Year) of the
Highly Compensated Employees may not exceed the greater of (i) 125% of the
actual deferral percentage of all other eligible employees, or (ii) the lesser
of (x) 200% of the actual deferral percentage of all other eligible employees,
or (y) the actual deferral percentage of all other eligible employees plus two
percentage points. In addition, the actual contribution percentage for such Plan
Years (i.e., the average of the ratios calculated separately for each eligible
employee in each group, by dividing the amount of voluntary Employee and
Employer matching contribution credited to the Plan account of such eligible
employee by such eligible employee's compensation for the Plan Year) of the
Highly Compensated Employees may not exceed the greater of (i) 125% of the
actual contribution percentage of all other eligible employees, or (ii) the
lesser of (x) 200% of the actual contribution percentage of all other eligible
employees, or (y) the actual contribution percentage of all other eligible
employees plus two percentage points.
S-6
<PAGE>
In general, a Highly Compensated Employee includes any employee who,
during the Plan Year or the preceding Plan Year, (1) was at any time a 5% owner
(i.e., owns directly or indirectly more than 5% of the stock of the Employer, or
stock possessing more than 5% of the total combined voting power of all stock of
the Employer), or (2) for the preceding year (i) had compensation from the
Employer in excess of $80,000, and (ii) if the Employer elects the application
of this clause for such preceding year, was in the top-group of employees for
such preceding year. An employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20% of employees
when ranked on the basis of Compensation paid during such year. Such amounts 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 exceeds the average deferral
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. However, the Employer will be
subject to a 10% excise tax on any excess contributions unless such excess
contributions, together with any income allocable thereto, either are
recharacterized or are distributed before the close of the first 2 1/2 months
following the Plan Year to which such excess contributions relate.
Top-Heavy Plan Requirements. If for any Plan Year the Plan is a
Top-Heavy Plan (as defined below), then (i) the Bank may be required to make
certain minimum contributions to the Profit Sharing Plan on behalf of non-key
employees (as defined below), and (ii) certain additional restrictions would
apply with respect to the combination of annual additions to the Plan and
projected annual benefits under any defined benefit plan maintained by the Bank.
In general, the Plan will be regarded as a "Top-Heavy Plan" for any
Plan Year if, as of the last day of the preceding Plan Year, the aggregate
balance of the Accounts of Participants who are Key Employees (as defined below)
exceeds 60% of the aggregate balance of the accounts of all Participants. Key
Employees generally include any employee who, at any time during the Plan Year
or any of the four preceding Plan Years, is (1) an officer of the Employer
having annual compensation in excess of 50% of the amount under Section
415(b)(1)(A) of the Code ($130,000 for 1998), (2) one of the ten employees
having annual Compensation greater than the Section 415(c)(1)(A) amount ($30,000
for 1998) and owning, directly or indirectly, the largest interests in the
Employer, (3) a 5% owner of the Employer, (i.e., owns directly or indirectly
more than 5% of the stock of the Employer, or stock possessing more than 5% of
the total combined voting power of all stock of the Employer) or (4) a 1% owner
of the Company having annual compensation in excess of $150,000.
Investment of Contributions
General. All amounts credited to Participants' accounts under the Plan
are held in the Trust Fund which is administered by the Trustee appointed by the
Bank's Board of Directors.
The Accounts of a Participant held in the Trust may be invested by the
Trustee at the direction of the Participant in the following investment funds
(collectively, the "Funds"):
a. Willow Grove Investment (Statement Account)
b. Fixed Income Securities Fund/Short-Term Federal Portfolio
S-7
<PAGE>
c. Wellesley Income Fund
d. Wellington Fund
e. Windsor II
f. Explorer Fund
No more than once a quarter may a Participant elect (in increments of
1%) to have both portions of his or her participation interest invested either
in the Employer Stock Fund or among the other Funds changed. These elections
will be effective approximately fifteen business days from the date Willow Grove
Bank receives the properly completed Change of Investment Allocation Form. Any
amounts credited to a Participant's accounts for which investment directions are
not given will be invested in the Willow Grove Investment.
The Trustee, in his/her sole discretion, can make loans to
Participants. Subject to certain limitations, the loans must be made on a
nondiscriminatory basis, bear a reasonable interest rate and be adequately
secured. In the event that a Participant has a loan outstanding and becomes
entitled to payment of benefits from the Plan, the Trustee shall offset, at the
time of distribution, any outstanding indebtedness, including accrued interest,
for the total amount otherwise distributable to the Participant.
The net gain (or loss) of the Funds from investments (including
interest payments, dividends, realized and unrealized gains and losses on
securities, and expenses paid from the Trust) will be determined at least daily
during the Plan Year. For purposes of such allocations, all assets of the Trust
are valued at their fair market value.
Previous Funds. The annual percentage return on these Funds for the
prior three years was:
================================================================================
Fund 1997 1996 1995
- --------------------------------------------------------------------------------
Willow Grove Investment (Statement
Account) 7.0% 7.0% 7.0%
- --------------------------------------------------------------------------------
Fixed Income Securities Fund/
Short-Term Federal
Portfolio 12.3% 4.8% 6.5%
- --------------------------------------------------------------------------------
Wellesley Income Fund 28.9% 9.4% 20.2%
- --------------------------------------------------------------------------------
Wellington Fund 32.9% 16.2% 23.2%
- --------------------------------------------------------------------------------
Windsor II 38.8% 24.2% 32.4%
- --------------------------------------------------------------------------------
Explorer Fund 26.6% 14.0% 14.6%
================================================================================
A brief summary of such funds is as follows:
Willow Grove Investment (Statement Account) - Money invested in this
fund is guaranteed to earn 7% for 1998. This rate is compounded monthly and a
new rate of interest will be set at the beginning of each calendar year. The
principal value is federally insured.
The remaining investment options are mutual funds managed by the
Vanguard Group. Any investment program involving equities is subject to both
market risk (share price volatility over a time) and Fund Risk (meaning the
possibility that the fund's investment strategy may prove unsuccessful due to
its particular approach).
Fixed Income Securities Fund/Short-Term Federal Portfolio - Offers
current income with low credit risk by investing primarily in short-term U.S.
Government agency securities.
S-8
<PAGE>
Wellesley Income Fund - Seeks to provide as much current income as is
consistent with reasonable risk. The fund also offers the potential for moderate
growth of capital by investing primarily in U.S. Government and Corporate fixed
income securities of investment grade quality.
Wellington Fund - Seeks conservation of principal, reasonable income
return, and profits without undue risk by investing in a diversified portfolio
of common stocks equities and bonds, with common stocks expected to represent
60% to 70% of total fund assets.
Windsor II - Seeks to provide long-term growth in capital and income by
investing primarily in common stocks equities. The fund's secondary objective is
to provide current income.
Explorer Fund - Invests primarily in equity securities of small
companies deemed to have favorable prospects for growth in market value.
Dividend income is expected to be incidental to this objective.
Employer Stock Fund.
The Employer Stock Fund will consist of investments in Common Stock
made on and after the effective date of the Reorganization and Stock Issuance.
Each Participant's proportionate undivided beneficial interest in the Employer
Stock Fund is measured in units. Each day, a unit value will be calculated by
determining the market value of the shares of Common Stock actually held and
adding to that any cash attributable to the Employer Stock Fund currently held
by the Trustee. This total will be divided by the number of units outstanding to
determine the unit value of the Employer Stock Fund. It is expected that all
purchases will be made at prevailing market prices. Under certain circumstances,
the Trustee may be required to limit the daily volume of shares purchased.
Pending investment in Common Stock assets held in the Employer Stock Fund will
be placed in money market or equivalent account.
Any brokerage commissions, transfer fees and other expenses incurred in
the sale and purchase of Common Stock for the Employer Stock Fund will be paid
out of a cash account managed by the Trustee. Therefore, although Participants'
accounts will not be directly adjusted for such fees, the market value of the
units held in their accounts will be reduced.
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.
Investments in the Employer Stock Fund involve certain special risks as
they are an indirect investment in the Common Stock of the Company. For a
discussion of these risk factors, see "Risk Factors" on page ______ in the
Prospectus.
Vesting
A Participant at all times has a fully vested nonforfeitable interest
in his or her Pre-Tax
S-9
<PAGE>
Employee Contributions and the earnings thereon under the Plan. However,
Participants' vested interests in any matching or other discretionary
contributions allocated to his/her Plan account shall be determined in
accordance with the following schedule, based on the number of Years of Service
(as defined in the Plan) the Participant completes:
----------------------------------------------------
Years of Service Vested Interest
----------------------------------------------------
3 20%
----------------------------------------------------
4 40%
----------------------------------------------------
5 60%
----------------------------------------------------
6 80%
----------------------------------------------------
7 100%
----------------------------------------------------
A Participant leaving the employ of the Employer prior to complete
vesting, will forfeit the unvested portion of his/her Plan account upon five
consecutive 1-Year Breaks in Service. Amounts subject to forfeiture in the Plan
are then reallocated to the accounts of the remaining Participants based upon
each Participant's Compensation as compared to aggregate Compensation. The
allocation of forfeitures is done as of December 31.
Distribution Upon Retirement or Disability. Upon retirement or
Disability, a Participant may elect to have his/her vested account balance
distributed in either a (1) single lump-sum payment; or (2) equal monthly,
quarterly, semi-annual or annual installments. In any event the payment of the
Participant's benefits must begin no later than the April 1 following the
calendar year in which the Participant attains age 70 1/2 or the calendar year
in which the employee retires. Additionally, a Participant who suffers a
Disability (as defined in the Plan) shall become 100% vested in his/her Plan
account.
Distribution Upon Death. A Participant who dies before his or her
entire vested interest has been distributed shall have his or her benefits paid
to the surviving spouse in either a (1) single lump-sum payment; or (2) equal
monthly, quarterly, semi-annul, or annual installments. If the Participant
elected to and began receiving a distribution in the form of installments, such
beneficiary shall receive distributions over the remaining period, at the times
set forth in such election. Absent an election by the Participant, the Trustee,
subject to certain conditions, will either (1) determine the payment, interval
in which the installment payments shall be made or (2) invest the deceased
Participant's vested Plan account balance in a nontransferable annuity policy.
With respect to an unmarried Participant, and in the case of a married
Participant with special consent to the designation of a beneficiary other than
their spouse, payment of benefits to the deceased Participant's chosen
beneficiary shall be accomplished in the same manner as described above.
Distribution upon Termination of Employment. A Participant who has a
termination of employment shall be entitled to his/her Vested Plan account upon
the earlier of death, Disability, or their attainment of the Plan's normal
retirement age.
S-10
<PAGE>
Non-alienation of Benefits. Except with respect to Federal income tax
withholdings and Qualified Domestic Relations (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.
Reports to Profit Sharing Plan Participants
The Administrator (as defined below) will furnish to each Participant a
statement at least yearly showing (i) the balance in the Participant's Plan
account as of the end of that period, (ii) the amount of contributions allocated
to such Participant's Plan account for that period, and (iii) the adjustments to
such Participant's Plan account to reflect earnings or losses, distributions,
loans disbursed, loan repayments and/or transfers between investment funds.
Plan Administration
The Trustee with respect to the Plan is the named fiduciary of the Plan
for purposes of Section 402 of ERISA. Willow Grove Bank currently serves as
Trustee of the Plan's Trust. The Trustee receives, holds and invests the
contributions to the Plan in trust and distributes them to Participants and
beneficiaries in accordance with the terms of the Plan and the directions of the
Plan Administrator. The Trustee is responsible for investment of the assets of
the Trust.
Pursuant to the terms of the Plan, the Plan is administered by one or
more persons who are appointed by and who serve at the pleasure of the Bank (the
"Administrator"). Currently, the Plan Administrator is Willow Grove Bank. The
address and telephone number of the Administrator is Welch and Norristown Roads,
Maple Glen, Pennsylvania 19002; Attn: Mr. John Foff, Jr. (215) 646-5405. The
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 current 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 Participant affected by such termination shall have a fully
vested interest in his/her Plan account. 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 and/or the Code.
S-11
<PAGE>
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 will (if either the Plan or the other plan were 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
General. 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 amended Plan will be submitted to the IRS in a timely manner for a
determination that it is qualified under Section 401(a) and 401(k) of the Code,
and that 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 sponsoring employer 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
employer 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 will
adopt any amendments to the Plan that may be necessary to maintain the qualified
status of the Plan under the Code. Following such an amendment, the Bank will
submit the Plan to the IRS for a determination that the Plan, as amended,
continues to qualify under Sections 401(a) and 501(a) of the Code and that it
continues to satisfy the requirements for a qualified cash or deferred
arrangement under Section 401(k) of the Code. Should the Plan receive from the
IRS an adverse determination letter regarding its tax exempt status, all
Participants would generally recognize income equal to their vested interest in
the Plan, the Participants would not be permitted to transfer amounts
distributed from the Plan to an Individual Retirement Account ("IRA") or to
another qualified retirement plan, and the Bank may be denied certain deductions
taken with respect to the Plan.
Lump Sum Distribution. A distribution from the Plan to a Participant or
the beneficiary of a Participant will qualify as a Lump Sum Distribution if it
is made: (i) within one taxable year to 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
S-12
<PAGE>
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 plans maintained by the Bank which is included in such
distribution.
Averaging Rules. The Small Business Job Protection Act of 1996 repealed
five-year income averaging for Lump Sum Distributions for taxable years
beginning after 1999. Ten-year averaging which was grandfathered for individuals
who attained the age of 50 before January 1, 1986 was retained. The portion of
the total taxable amount of a Lump Sum Distribution that is attributable to
participation after 1973 in this 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 for distributions
prior to the effective date, a Participant who has completed at least five years
of participation in this 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 this Plan or any other profit sharing plan maintained by the Employer), 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
on or after the Participant turns 50 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 grandfathering
rule, individuals who turned 50 by 1986 may elect to have their Lump Sum
Distribution taxed under either the Five-Year Averaging rule or under the prior
laws; ten-year averaging rule. Such individuals also may elect to have that
portion of the Lump Sum Distribution attributable to the participant's pre-1974
participation in the Plan taxed at a flat 20% rate as gain from the sale of a
capital asset.
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 of 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 sale 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.
Distribution: Rollovers and Direct Transfers to Another Qualified Plan
or to an IRA. Virtually all distributions from the Plan may be rolled over to
another qualified retirement plan or to an IRA without regard to whether the
distribution is a Lump Sum Distribution or a partial distribution. Participants
have the right to elect
S-13
<PAGE>
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. The principal types of distributions
which do not constitute eligible rollover distributions are (i) an annuity type
distribution made over the life expectancy of the Participant (or Participant
and another) or for a period of 10 years or more, (ii) a minimum distribution
required by Section 409(a)(9) of the Code, or (iii) the portion of any
distribution not includable in gross income, except that unrealized appreciation
in employee securities can be included in an eligible rollover distribution. The
tax law change described above did not modify the special tax treatment of Lump
Sum Distributions that are not rolled over or transferred, i.e., forward
averaging, capital gains tax treatment and the nonrecognition of net unrealized
appreciation, discussed earlier.
ERISA and Other Qualification
As noted above, the Plan is subject to certain provisions of ERISA, and
will be submitted to the IRS for a 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 profit sharing 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 profit sharing 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 profit sharing Plan.
Restrictions on Resale
Any person receiving shares of Common Stock under the Plan who is an
"affiliate" of the Company as the term "affiliate" is used in Rules 144 and 405
under the Securities Act of 1933, as amended (the "Securities Act"), (e.g.,
directors, officers and substantial stockholders of the Company) may reoffer or
resell such shares only pursuant to a registration statement filed under the
Securities Act assuming the availability thereof, pursuant to Rule 144 or some
other exemption of the registration requirements of the Securities Act. Any
person who may be an "affiliate" of the Company may wish to consult with counsel
before transferring any Common Stock owned by him or her. In addition,
Participants are advised to consult with counsel as to the applicability of
Section 16 of the Exchange Act which may restrict the sale of Common Stock when
acquired under the Profit Sharing Plan, or other sales of Common Stock.
Persons who are not deemed to be "affiliates" of the Company at the
time of resale will be free to resell any shares of Common Stock allocated to
them under the Plan, either publicly or privately, without regard to the
Registration and Prospectus delivery requirements of the Securities Act or
compliance with the restrictions and conditions contained in the exemptive rules
thereunder. An "affiliate" of the Company is someone who directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control, with the Company. Normally, a director, principal officer or
major stockholder of a corporation may be deemed to be an "affiliate" of that
corporation. A person who may be deemed an "affiliate" of the Company at the
time of a proposed resale will be permitted to make public resales of the Common
Stock only
S-14
<PAGE>
pursuant to a "reoffer" prospectus or in accordance with the restrictions and
conditions contained in Rule 144 under the Securities Act or some other
exemption from registration, and will not be permitted to use this Prospectus in
connection with any such resale. In general, the amount of the Common Stock
which any such affiliate may publicly resell pursuant to Rule 144 in any
three-month period may not exceed the greater of one percent of the Common Stock
then outstanding or the average weekly trading volume reported on the Nasdaq
National Market during the four calendar weeks prior to the sale. Such sales may
be made only through brokers without solicitation and only at a time when the
Company is current in filing the reports required of it under the Exchange Act.
SEC Reporting and Short-Swing Profit Liability
Section 16 of the Exchange Act imposes reports and liability
requirements on officers, directors and persons beneficially owning more than
10% of public companies such as the Company. Section 16(a) of the Exchange Act
requires the filing of reports of beneficial ownership. Within ten 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, gifts and participation in savings and retirement plans must
be reported periodically, either on a Form 4 within ten 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. Participation in the Employer Stock Fund
of the Plan by officers, directors and persons beneficially owning more than ten
percent of the Common Stock must be reported to the SEC at least annually on a
Form 4 or a Form 5 by such individuals.
In addition to the reporting requirements described above, Section
16(b) of the 1934 Act provides for the recovery by the Company of profits
realized by any officer, director or any person beneficially owning more than
ten percent of the Common Stock ("Section 16(b) Persons") resulting from the
purchase and sale or sale and purchase 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.
LEGAL OPINIONS
The validity of the issuance of the Common Stock will be passed upon by
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D. C., which firm acted as
special counsel for the Company, the MHC and the Bank in connection with the
Reorganization and Stock Issuance.
S-15
<PAGE>
ANNEX A
WILLOW GROVE BANK 401(k) PLAN AND TRUST
Investment Election Form
---------------------
Name of Plan Participant: ___________________________
Social Security Number: ___________________________
1. INSTRUCTIONS. The Willow Grove Bank 401(k) Plan and Trust ("Plan")
permits participants to direct their account balances into an fund: the Employer
Stock Fund. The percentage of a participant's account transferred at the
direction of the participant into the Employer Stock Fund will be used to
purchase shares of common stock of Willow Grove Bancorp, Inc. (the "Common
Stock").
To direct a transfer of all or part of the funds credited to your
account to the Employer Stock Fund, you should complete and file this form with
the Human Resources Department, no later than ________ __, 1998. A
representative for Willow Grove Bank will retain a copy of this form and return
a copy to you. If you need any assistance in completing this form, please
contact Valerie Winters If you do not complete and return this form to the
Willow Grove Bank by _______ __, 1998, the funds credited to your accounts under
the Plan will continue to be invested in accordance with your prior investment
direction, or in accordance with the terms of the Plan if no investment
direction has been provided.
2. INVESTMENT DIRECTIONS. I hereby authorize the Plan Administrator to
direct the Willow Grove Bank to sell the units currently credited to my account
and to purchase units in the Employer Stock Fund. Transfers of units from
existing investment Funds must be in multiples of 1% or whole percentages.
Purchases of units in the Employer Stock Fund will always be 100%:
===============================================================
SELL UNITS FROM Purchase Units in Employer Stock
Fund
---------------------------------------------------------------
Sell _____% of A Willow Grove Investment (Statement
Account)
---------------------------------------------------------------
Sell _____% of B Fixed Income Securities Fund/
Short-Term Federal Portfolio
---------------------------------------------------------------
Sell _____% of C Wellesley Income Fund
---------------------------------------------------------------
Sell _____% of D Wellington Fund
---------------------------------------------------------------
Sell _____% of E Windsor II
---------------------------------------------------------------
Sell _____% of F Explorer Fund
===============================================================
3. PURCHASER INFORMATION. The ability of a participant in the Plan to
purchase Common Stock in the reorganization of Willow Grove Bank and the related
stock issuance and to direct his or her current balances into the Employer Stock
Fund is based upon the participant's status as an Eligible Account Holder
Supplemental Eligible Account Holder, Other Member, and/or Director, Officer or
Employee of Willow Grove Bank, as defined in the William Grove Bancorp, Inc.
prospectus (the "Prospectus"). To the extent your order cannot be filled with
Common Stock purchased in the reorganization of Willow Grove Bank and the
related stock issuance, the amount not used to purchase Common Stock will be
returned to the other investment funds of the Plan pursuant to your existing
investment directions. Please indicate your status.
A-1
<PAGE>
a. |_| Eligible Account Holder - Check here if you were a
depositor with $50.00 or more on deposit with the
Bank as of June 30, 1997.
b. |_| Supplemental Eligible Account Holder - Check here
if you were a depositor with $50.00 or more on
deposit with the Bank as of ______ __, 1998, but
are not an Eligible Account Holder.
c. |_| Other Members - Check here if you are a
depositor of the Bank on _________ 1998 or a
borrower Willow Grove Bank on May 15, 1995 and your
loan is outstanding on _________ 1998 and you are
not classified as either an Eligible Account Holder
or a Supplemental Account Holder.
d. |_| Directors, Officers and Employees - Check here if
you are a Director, Officer or Employee Willow
Grove Bank.
4. ACKNOWLEDGMENT OF PARTICIPANT. I understand that this Investment
Election Form shall be subject to all of the terms and conditions of the Plan. I
acknowledge that I have received a copy of the Prospectus and the Prospectus
Supplement.
______________________________
Signature of Participant
Date: ________________________
ACKNOWLEDGMENT OF RECEIPT BY PLAN ADMINISTRATOR. This Investment Form was
received by the Plan Administrator and will become effective on the date noted
below.
By:__________________________
Date:________________________
A-2
<PAGE>
PROSPECTUS
WILLOW GROVE BANCORP, INC.
(Proposed Holding Company for Willow Grove Bank)
2,314,375 Shares of Common Stock Anticipated Maximum, As Adjusted
Willow Grove Bancorp, Inc. (the "Company"), a Federal corporation, is
offering up to 2,314,375 shares of its common stock, par value $.01 per share
(the "Common Stock"), in connection with the reorganization of Willow Grove
Bank, a Federally chartered mutual savings bank ("Willow Grove" or the "Bank"),
into the federal mutual holding company form of ownership, whereby the Bank will
convert to a federally chartered stock savings bank as a wholly owned subsidiary
of the Company, and the Company will become a majority-owned subsidiary of
Willow Grove Mutual Holding Company (the "MHC"), a federally chartered mutual
holding company (the "Reorganization"). The shares of Common Stock are being
offered hereby pursuant to the Company's Plan of Stock Issuance (the "Plan of
Stock Issuance"), which is an integral part of the Bank's Plan of Reorganization
from Mutual Savings Bank to Mutual Holding Company (the "Plan of
Reorganization"). The issuance of shares of the Company's Common Stock to the
MHC pursuant to the Plan of Reorganization and the issuance and sale of up to
2,314,375 shares of Common Stock offered by this Prospectus pursuant to the Plan
of Stock Issuance is referred to hereinafter as the "Stock Issuance." The number
of shares of Common Stock to be sold will be based on an independent appraisal
and, based on such appraisal, it is expected that the number of shares to be
sold will be within the range of 1,487,500 shares and 2,012,500 shares
(2,314,375 shares, as adjusted) (the "Estimated Offering Range"). Throughout
this prospectus, references to the "maximum" of the Estimated Offering Range
refer to the sale and issuance of 2,012,500 shares of Common Stock. A minimum of
at least 1,487,500 shares of Common Stock must be sold (the "minimum" of the
Estimated Offering Range). Under certain circumstances, the Company may increase
the number of shares of Common Stock offered hereby to up to 2,314,375 shares,
which is referred to herein as the "maximum, as adjusted" of the Estimated
Offering Range. References to the "mid-point" of the Estimated Offering Range
shall refer to the sale and issuance of 1,750,000 shares of Common Stock. See
"The Reorganization and Stock Issuance - Stock Pricing and Number of Shares to
be Issued." The purchase price of the shares of Common Stock being offered
hereby is $10.00 per share (the "Purchase Price"). Based on the Purchase Price,
the gross proceeds from the sale of shares of Common Stock will be between $14.9
million at the minimum of the Estimated Offering Range and $20.1 million at the
maximum of the Estimated Offering Range ($23.1 million at the maximum, as
adjusted of the Estimated Offering Range). The Company will use 50% of the
proceeds from the sale of shares of Common Stock (net of Reorganization-related
expenses and the loan to be made to the Company's ESOP, as defined below) to
purchase all of the to-be-issued shares of capital stock of the Bank; the Bank
is an affiliate of the Company.
Nontransferable rights to subscribe for the shares of Common Stock have
been granted, in order of priority, to (i) depositors of the Bank with account
balances of $50.00 or more as of the close of business on June 30, 1997
("Eligible Account Holders"), (ii) the Company's employee stock ownership plan
("ESOP"), (iii) depositors of the Bank with account balances of $50.00 or more
as of the close of business on __________, 1998 ("Supplemental Eligible Account
Holders"), (iv) depositors and certain borrowers of the Bank as of the close of
business on ___________, 1998 ("Other Members") and (v) officers, directors and
employees of the Bank, subject to the limitations described herein (the
"Subscription Offering"). In the event that there are any shares of Common Stock
which are not sold in the Subscription Offering, the Company anticipates that it
will offer any such shares of Common Stock in a community offering (the
"Community Offering"). If necessary, any shares of Common Stock not subscribed
for in the Subscription Offering or purchased in the Community Offering will be
offered to members of the general public on a best efforts basis by a selling
group of broker-dealers managed by Charles Webb & Company ("Webb"), a division
of Keefe, Bruyette & Woods, Inc. ("Keefe, Bruyette"), in a syndicated community
offering (the "Syndicated Community Offering"). (The Subscription Offering,
Community Offering and Syndicated Community Offering are referred to
collectively as the "Offerings").
<PAGE>
With the exception of the ESOP, the maximum amount that any person may
purchase in any particular priority category in the Offerings is generally
limited to 15,000 shares of Common Stock ($150,000 aggregate Purchase Price). No
person, together with associates and persons acting in concert with such person,
may purchase in the aggregate more than 50,000 shares of the Common Stock sold
in the Offerings ($500,000 aggregate Purchase Price, assuming the sale of the
maximum, as adjusted of the Estimated Offering Range) (subject to adjustment).
The minimum purchase is 25 shares. See "The Reorganization and Stock Issuance -
Limitations on Common Stock Purchases."
The Subscription Offering will close at 12:00 noon, Eastern Time, on
__________, 1998 (the "Expiration Date"), unless extended by the Company and the
Bank, with regulatory approval if necessary. The Community Offering or any
Syndicated Community Offering must be completed within 45 days after the close
of the Subscription Offering, or ___________, 1998, unless extended by the
Company and the Bank, with regulatory approval if necessary. No single extension
can exceed 90 days, and the extensions may not go beyond __________, 2000. Any
extension of the Offerings will be conducted in accordance with the terms
described herein. Orders submitted are irrevocable until the completion of the
Stock Issuance; provided that, if the Stock Issuance is not completed within the
45-day period referred to above, unless such period has been extended, all
subscribers will have their funds returned promptly with interest at the Bank's
passbook rate, and all withdrawal authorizations will be canceled. Funds
submitted to subscribe for shares of Common Stock will be held at a segregated
account at the Bank until completion of the Stock Issuance. The completion of
the Subscription Offering is subject to potential delay and subscribers will
have no access to funds used to subscribe for shares of Common Stock, regardless
of any such delay. See "The Reorganization and Stock Issuance - Subscription
Offering and Subscription Rights."
The Company has applied to the National Association of Securities
Dealers, Inc. to have its Common Stock quoted on the Nasdaq National Market
under the symbol "WGBC." Prior to the Offerings, there has not been a public
market for the Common Stock, and there can be no assurance that an active and
liquid trading market for the Common Stock will develop or that the Common Stock
will trade at or above the Purchase Price. See "Market for the Common Stock."
THE SHARES OF COMMON STOCK BEING OFFERED BY THIS PROSPECTUS WILL
REPRESENT A MINORITY OWNERSHIP INTEREST IN THE COMPANY. THE REMAINING ISSUED AND
OUTSTANDING SHARES OF COMMON STOCK, REPRESENTING A MAJORITY OF THE OUTSTANDING
SHARES OF COMMON STOCK, WILL BE OWNED BY WILLOW GROVE MUTUAL HOLDING COMPANY.
FOR INFORMATION ON HOW TO SUBSCRIBE, CALL THE STOCK SALES CENTER AT
(___) ___-____.
EACH PROSPECTIVE INVESTOR SHOULD CONSIDER CERTAIN FACTORS BEFORE
SUBSCRIBING FOR SHARES OF COMMON STOCK, SEE "RISK FACTORS" AT PAGE __ HEREOF.
Consummation of the Reorganization will result in certain additional
benefits to directors and officers of the Company and the Bank, with respect to
officers, participation in the ESOP. The Company expends to use a portion of the
net proceeds from the Offerings to make a loan to the ESOP, which loan is
anticipated to range from $1.2 million to $1.9 million. See "Summary--Benefits
of Reorganization to Officers and Directors."
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT
SUPERVISION OR ANY OTHER FEDERAL AGENCY OR STATE SECUR-
ITIES COMMISSION, NOR HAS SUCH COMMISSION, OFFICE OR
OTHER AGENCY PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
================================================================================
Estimated
Underwriting Estimated
Subscription Fees and Other Net
Price(1) Expenses(2) Proceeds(3)
- --------------------------------------------------------------------------------
Minimum Per Share $10.00 $0.58 $9.42
Midpoint Per Share $10.00 $0.51 $9.49
Maximum Per Share $10.00 $0.46 $9.54
Maximum Per Share, as adjusted $10.00 $0.41 $9.59
Total Minimum(1) $14,875,000 $863,600 $14,012,000
Total Midpoint(1) $17,500,000 $893,800 $16,606,200
Total Maximum(1) $20,125,000 $924,000 $19,201,000
Total Maximum, as adjusted(4) $23,143,750 $959,000 $22,184,750
================================================================================
(1) Determined in accordance with an independent appraisal prepared by RP
Financial, LC. ("RP Financial") dated September 4, 1998, which states that
the pro forma market value of the Common Stock that would be offered in a
full mutual-to-stock conversion of the Bank, assuming that a contribution
to a charitable foundation would be made in an amount equal to 4.0% of the
shares sold, ranged from $33.6 million to $45.4 million (the "Estimated
Valuation Range"), with a midpoint of $39.5 million. Upon consummation of
the Offerings, the Company anticipates that it will contribute shares of
Common Stock to the Willow Grove Foundation (the "Foundation") in an amount
equal to 4.0% of the shares sold in the Offerings. The Board of Directors
has established a public offering range such that the public ownership of
the Company will constitute a 44.3% ownership interest prior to the
issuance of shares to the Foundation. Accordingly, the Estimated Offering
Range to the public of the minority stock will be 1,487,500 shares at the
minimum, 1,750,000 shares at the midpoint, 2,012,500 shares at the maximum
and 2,314,375 shares, at the maximum, as adjusted. Based on the Estimated
Offering Range, and giving effect to the proposed contribution of shares of
Common Stock of the Foundation, the shares of Common Stock owned by the
public (other than the Foundation) will represent 43.5% of the shares of
Common Stock to be outstanding following consummation of the Reorganization
and Stock Issuance.
(2) Consists of the estimated costs to the Bank and the Company arising from
the Reorganization, including estimated fixed expenses of $725,000 and fees
to be paid to Webb in connection with the Offerings, which fees are
estimated to be $138,600, $168,800, $199,000, and $234,000, respectively,
at the minimum, midpoint, maximum and maximum, as adjusted. Webb is not
obligated to purchase any shares of Common Stock in the Offerings. Such
fees paid to Webb may be deemed to be underwriting fees. See "The
Reorganization and Stock Issuance - Marketing Arrangements." The actual
fees and expenses may vary from the estimates. See "Pro Forma Data."
(3) Actual net proceeds may vary substantially from estimated amounts. Includes
the purchase of shares of Common Stock by the ESOP, which initially will be
deducted from the Company's stockholders' equity. For the effects of such
purchase, see "Capitalization" and "Pro Form Data."
(4) Reflects a 15% increase in the Estimated Offering Range, which may occur
without a resolicitation of subscribers or any right of cancellation, due
to regulatory considerations or changes in market or general financial and
economic conditions prior to completion of the Reorganization or to fill
the order of the ESOP.
-----------------------------------------------
Charles Webb & Company
a Division of Keefe, Bruyette & Woods, Inc.
-----------------------------------------------
The date of this Prospectus is ____________, 1998.
<PAGE>
[MAP of Montgomery and Bucks Counties, Pennsylvania identifying branch
office locations of Willow Grove Bank together with a smaller map of the
Commonwealth of Pennsylvania showing Montgomery and Bucks Counties and
identifying the cities of Harrisburg and Philadelphia, Pennsylvania to be
produced here.]
<PAGE>
SUMMARY
This summary is qualified in its entirety by the more detailed
information regarding the Company, the Bank and the MHC (collectively, the
"Parties") and the Financial Statements of the Bank appearing elsewhere in this
Prospectus. This Prospectus contains certain forward looking statements
consisting of estimates with respect to the financial condition, results of
operations and business of the Parties. Prospective investors are cautioned that
such forward looking statements are not guarantees of future performance and are
subject to various factors which could cause actual results to differ materially
from these estimates. These factors include changes in general economic and
market conditions, and the development of an interest rate environment that
adversely affects the interest rate spread or other income anticipated from the
Parties' operations and investments. See "Risk Factors" for a discussion of
other factors that might cause actual results to differ from such estimates.
Willow Grove Bancorp, Inc.
Willow Grove Bancorp, Inc. is being organized by the Bank for the
purpose of serving as the savings association holding company of the Bank upon
consummation of the Reorganization. The Company will be incorporated under
Federal law and, upon consummation of the Reorganization and Stock Issuance,
will purchase all of the capital stock of the Bank to be issued in the
Reorganization in exchange for 50% of the proceeds of the Stock Issuance (net of
Reorganization expenses and the loan to be made to the Company's ESOP) and will
retain the remaining net proceeds as its initial capitalization. Following the
Reorganization, the only significant assets of the Company will be the capital
stock of the Bank, the Company's loan to the ESOP and the remainder of the net
proceeds of the Stock Issuance retained by the Company. The business and
management of the Company initially will consist primarily of the business and
management of the Bank. Initially, the Company will neither own nor lease any
property, but will instead use the premises and equipment of the Bank. At the
present time, the Company does not intend to employ any persons other than
officers of the Bank, and the Company will utilize the support staff of the Bank
from time to time. Additional employees will be hired as appropriate to the
extent the Company expands or changes its business in the future. See "Business"
and "Management - Management of the Company."
The Company's executive office will be located at the executive office
of the Bank at Welsh and Norristown Roads, Maple Glen, Pennsylvania 19002, and
its telephone number will be (215) 646-5405.
Willow Grove Bank
Willow Grove is a federally chartered, federally insured mutual savings
bank conducting business from its executive offices located in Maple Glen,
Pennsylvania and six branch offices in Willow Grove, Warminster (where two
branch offices are located), Dresher, Huntingdon Valley and Hatboro,
Pennsylvania. At June 30, 1998, the Bank had total assets of $405.4 million,
total deposits of $340.8 million and equity of $35.9 million.
1
<PAGE>
Willow Grove is primarily engaged in attracting deposits from the
general public through its offices and using those and other available sources
of funds to originate loans secured primarily by single-family residences
located in Bucks and Montgomery Counties, Pennsylvania. At June 30, 1998, Willow
Grove's net loans in portfolio totaled $315.7 million or 77.9% of total assets,
and its total loans receivable, including loans available for sale, amounted to
$340.5 million or 84.0% of total assets. Single family first mortgage loans
amounted to $243.1 million or 71.4% of the Bank's total loans receivable at such
date.
During the 1980's, the Bank experienced adverse results of operations
due to, among other factors, the economic downturn and increases in the levels
of the Bank's non-performing and underperforming assets. Under the direction of
its Board of Directors and its senior officers the Bank implemented a strategic
plan to improve the Bank's results of operations and improve its asset quality.
As a result, the Bank has reported net income in each of the past five fiscal
years while maintaining strong asset quality. More recently, the Bank has
implemented a strategic plan that has focused on diversifying its products and
services in order to be more like a full-service community bank, continuing to
maintain strong asset quality and increasing its deposits and overall market
presence.
o Diversification and Expansion of Products and Services. In recent
years the Bank has begun its efforts to become more like a
full-service community bank and, as a result, has concentrated its
efforts on diversifying and expanding both its lending and deposit
products. The Bank has reduced its emphasis on the origination of
single-family residential first mortgage loans. The Bank has
instead focused its efforts on increased originations of home
equity, commercial and multi-family real estate, construction and
commercial business loans, all of which generally have higher yields
and shorter terms to maturity and/or repricing than single-family
residential mortgage loans. In the deposit area, the Bank has
concentrated on reducing its cost of funds by emphasizing lower
costing checking and commercial business accounts. For the year
ended June 30, 1998, the Bank's interest rate spread and margin were
3.36% and 3.71%, respectively. In a further effort to expand its
traditional services, in the fall of 1998 the Bank will commence
offering securities and annuities sales through Willow Financial
Services.
o Growth. The Bank has increased its total assets by $172.8 million,
or 74.3%, from $232.6 million at June 30, 1994 to $405.4 million at
June 30, 1998. In recent years the Bank has added four new branch
offices to its network. The Bank expects that it will continue to
further expand its branch office network in the future. See
"Business."
o Asset Quality. While it has embarked on a diversification and
expansion policy, management believes that maintenance of strong
asset quality is imperative to Willow Grove's long-term
profitability. The Bank's total nonperforming assets, which consist
of non-accruing loans and loans 90 days or more delinquent and still
accruing interest (the Bank currently has no real estate acquired
through foreclosure or by deed-in-lieu thereof ("REO")), amounted to
$1.5 million, or 0.37% of total
2
<PAGE>
assets, at June 30, 1998. The Bank's total charge-offs amounted to
$6,000, $445,000 and zero for the fiscal years ended June 30, 1998,
1997 and 1996, respectively. See "Business - Asset Quality."
o Capital Position. As of June 30, 1998, Willow Grove had total equity
of $35.9 million and it exceeded all of its regulatory capital
requirements, with tangible, core and risk-based capital ratios of
8.3%, 8.3% and 14.9%, as compared to the minimum regulatory
requirements of 1.5%, 3.0% and 8.0%, respectively.
o Community Orientation. Willow Grove is committed to meeting the
financial needs of the communities in which it operates. Management
believes that the Bank provides superior customer service on a
personalized and efficient basis. At June 30, 1998, substantially
all of the Bank's deposits and loans were to residents of its market
area. The Bank intends to continue its practice of investing in
loans and obtaining deposits from residents of its market area and
surrounding communities.
The Bank is subject to examination and comprehensive regulation by the
Office of Thrift Supervision ("OTS"), which is the Bank's chartering authority
and primary federal regulator. The Bank is also regulated by the Federal Deposit
Insurance Corporation ("FDIC"), the administrator of the Savings Association
Insurance Fund ("SAIF"). The Bank is also subject to certain reserve
requirements established by the Board of Governors of the Federal Reserve System
("Federal Reserve Board") and is a member of the Federal Home Loan Bank ("FHLB")
of Pittsburgh, which is one of the 12 regional banks comprising the FHLB System.
Willow Grove's executive office is located at Welsh and Norristown
Road, Maple Glen Pennsylvania 19002, and its telephone number is (215) 646-5405.
Willow Grove Mutual Holding Company
As part of the Reorganization, the Bank will organize the MHC as a
federal mutual holding company. Upon consummation of the Reorganization and the
Stock Issuance as well as the proposed contribution of shares of Common Stock to
the Foundation, the MHC will own more than a majority (54.7%) of the issued and
outstanding shares of Common Stock. As long as they remain depositors of the
Bank, persons who had membership or liquidation rights with respect to the Bank
as of the date of the Reorganization will continue to have such rights solely
with respect to the MHC after the Reorganization.
The MHC's principal assets will be the shares of Common Stock received
in the Reorganization. Immediately after consummation of the Reorganization, it
is expected that the MHC will not engage in any business activity other than its
investment in, and control of, more than a majority of the issued and
outstanding shares of Common Stock of the Company. The MHC will be a mutual
corporation chartered under federal law and regulated by the OTS. The MHC will
be subject to the limitations and restrictions imposed on savings and loan
holding companies by Section 10(o)(5) of the Home Owner's Loan Act of 1933, as
amended (the "HOLA"). See "Regulation - The Mutual Holding Company."
3
<PAGE>
The Reorganization
On July 28, 1998, the Board of Directors of the Bank adopted the Plan
of Reorganization, pursuant to which the Bank will reorganize into the federal
mutual holding company form of organization as a wholly owned subsidiary of the
Company, which in turn will be a majority-owned subsidiary of the MHC. The Plan
of Reorganization must be approved by members of the Bank as of the voting
record date ("Voting Record Date") established for a special meeting of members
("Special Meeting") to be called in order to consider the Plan of
Reorganization. Following receipt of all required regulatory approvals, the
approval of the members of the Bank entitled to vote on the Plan of
Reorganization, and the satisfaction of all other conditions precedent to the
Reorganization, the Bank will consummate the Reorganization. Following
completion of the Reorganization, the Bank in its stock form will continue to
conduct its business and operations from the same offices with the same
personnel as the Bank conducted prior to the Reorganization. The Reorganization
will not affect the balances, interest rates or other terms of the Bank's loans
or deposit accounts, and the deposit accounts will continue to be insured by the
FDIC to the same extent as they were prior to the Reorganization. The MHC
initially will be capitalized with $100,000. Upon consummation of the
Reorganization, such capital will be used for general corporate purposes. See
"The Reorganization and Stock Issuance."
Those persons who currently serve as directors of the Bank will be the
initial directors of the Bank in its stock form. The directors of the Company
and the MHC initially also will be the same as the current members of the Board
of Directors of the Bank. As a holding company parent of a federally chartered
savings bank, the Company will be required to register as a savings and loan
holding company pursuant to the HOLA, and will be subject to regulation,
examination and supervision by the OTS. For additional information, see
"Regulation - The Company."
The Reorganization will (i) enable the Bank to raise new equity capital
through the sale of its shares of capital stock, (ii) enhance the ability of the
Bank to continue to grow, through acquisitions and/or internally, and diversify
and (iii) enable the establishment of stock-based compensation plans for
directors, officers and employees of the Bank thereby providing additional
incentives to improve the performance of the Bank. Rather than reorganizing into
the second-tier mutual holding company form, the Bank could have reorganized
into a wholly owned stock-form subsidiary of a stock-form holding company (a
"standard conversion"). However, the amount of equity capital that would be
raised in a standard conversion would be substantially more than that which is
to be raised by the Bank in a minority stock issuance as a second-tier
subsidiary of a mutual holding company, which would make it more difficult for
the Bank to maximize the return on equity. A standard conversion also would
eliminate all aspects of the mutual form of organization. Formation of the
Company as a subsidiary of the MHC will facilitate any determination by
management to make future repurchases of Common Stock, subject to OTS
regulations, while preserving the mutual nature of the MHC. See "The
Reorganization and Stock Issuance--Purposes of the Reorganization." Upon
consideration of the foregoing, as well as other factors, the Board of Directors
of the Bank unanimously approved the Plan of Reorganization and the related Plan
of Stock Issuance as being in the best interest of the Bank, its members and the
customers served by the Bank.
The Stock Issuance
The Plan of Stock Issuance authorizes the Company to offer Common Stock
to persons other than the MHC in an amount less than 50% of the to-be issued and
outstanding shares of the Common Stock. The Company is offering between a
minimum of 1,487,500 and a maximum of 2,012,500 shares of Common Stock, subject
to adjustment of up to 2,314,375 shares of Common Stock, in the Offerings, which
will represent 43.5% of the Common Stock to be outstanding upon completion of
4
<PAGE>
the Reorganization and Stock Issuance and the establishment of, and contribution
of shares to, the Foundation.
The corporate structure of the Bank, upon consummation of the
Reorganization the Stock Issuance and the proposed contribution of shares of
Common Stock to the Foundation, is diagramed below:
<TABLE>
<S> <C> <C>
- ------------------------------------- -------------------------------------------- ---------------------------------
| Willow Grove | | Minority Stockholders | | Foundation |
| Mutual Holding Company | | (Excluding Foundation) | | |
- ------------------------------------- -------------------------------------------- ---------------------------------
| 54.7% of the | 43.5% of the | 1.7% of the
| Common | Common | Common
| Stock | Stock | Stock
- ----------------------------------------------------------------------------------------------------------------------------
| Willow Grove Bancorp, Inc. |
- ----------------------------------------------------------------------------------------------------------------------------
| 100% of the Common
| Stock
- ----------------------------------------------------------------------------------------------------------------------------
| Willow Grove Bank |
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Under current law, the MHC is not permitted to have its percentage
ownership of the Common Stock be less than a majority in interest. By virtue of
its ownership of more than a majority of the outstanding shares of Common Stock,
the MHC will be able to elect all members of the Board of Directors of the
Company and generally will be able to control the outcome of all matters
presented to the stockholders of the Company for resolution by vote. The
Reorganization also may tend to perpetuate the management of the Company and the
Bank. See Risk Factors -- Control of the Company by the MHC."
As a mutual institution, the MHC will have no authorized capital stock
and, thus, no stockholders. Holders of deposit accounts in the Bank and certain
borrowers will be members of the MHC entitled to vote on all matters presented
to members of the MHC for resolution by vote, including, without limitation,
election of directors of the MHC. Holders of deposit accounts in the Bank shall
be entitled, pro rata to the value of their accounts, to distribution of any
assets of the MHC remaining upon a voluntary or involuntary liquidation,
dissolution or winding-up of the MHC following the Reorganization. Stockholders
of the Company shall be entitled to a pro rata distribution of any assets of the
Company remaining upon a voluntary or involuntary liquidation, dissolution or
winding-up of the Company following the Reorganization, and will have no voting,
liquidation or other rights with respect to the MHC in their capacities as such
stockholders.
Pursuant to the Plan of Stock Issuance and in connection with the
Reorganization, the Company is offering up to 2,012,500 shares of Common Stock
in the Offerings (which may be increased to up to 2,314,375 shares without any
resolicitation). The shares of Common Stock are first being offered in the
Subscription Offering with nontransferable subscription rights being granted, in
the following order of priority, to (i) depositors of the Bank with account
balances of $50.00 or more as of the close of business on June 30, 1997
("Eligible Account Holders"), (ii) the ESOP, (iii) depositors of the Bank with
account balances of $50.00 or more as of the close of business on
5
<PAGE>
_________, 1998 ("Supplemental Eligible Account Holders"), (iv) depositors and
certain borrowers of the Bank as of the close of business on _________, 1998
(other than Eligible Account Holders and Supplemental Eligible Account Holders)
("Other Members"), and (v) directors, officers and employees of the Bank.
Subscription rights will expire if not exercised by 12:00 noon, Eastern Time, on
__________, 1998, unless extended.
It is anticipated that any shares of Common Stock not subscribed for in
the Subscription Offering and Community Offering will be offered to certain
members of the general public in a Syndicated Community Offering.
Payments for subscriptions made by cash, check or money order will be
placed in a segregated account at the Bank and will earn interest at the Bank's
passbook rate (____% as of the date of this Prospectus) from the date of receipt
until the Reorganization is completed or terminated. Payments authorized by
withdrawal from deposit accounts at the Bank will continue to earn interest at
the contractual rate until the Reorganization is completed or terminated; these
funds will be otherwise unavailable to the depositor until such time. If a
withdrawal is authorized to fund the purchase of shares of Common Stock, the
funds will be withdrawn upon consummation of the Reorganization without penalty.
The Company and the Bank have retained Webb as consultant and advisor
in connection with the Offerings and to assist in soliciting subscriptions in
the Offerings. Webb may also manage a selling group of broker-dealers in the
Syndicated Community Offering to facilitate the Offerings. Webb is not obligated
to take or purchase any shares of Common Stock in the Offerings. See "The
Reorganization and Stock Issuance - Subscription Offering and Subscription
Rights," "- Community Offering" and "- Marketing Arrangements."
Restrictions on Transfer of Subscription Rights
Prior to the completion of the Reorganization, no person may transfer
or enter into any agreement or understanding to transfer the legal or beneficial
ownership of the subscription rights issued under the Plan of Stock Issuance or
the shares of Common Stock to be issued upon their exercise. Each person
exercising subscription rights will be required to certify that the purchase of
shares of Common Stock is solely for the purchaser's own account and that there
is no agreement or understanding regarding the sale or transfer of such shares.
See "The Reorganization and Stock Issuance - Restrictions on Transfer of
Subscription Rights and Shares." Subscription rights are nontransferable and
persons found to be attempting to transfer subscription rights will be subject
to the forfeiture of such rights and possible further sanctions and penalties
imposed by the OTS. The Company and the Bank will refer to the OTS any
situations that they believe may involve a transfer of subscription rights and
will not honor orders believed by them to involve the transfer of such rights.
Purchase Limitations
With the exception of the ESOP, which intends to purchase up to an
aggregate of 8% of the shares of Common Stock sold in the Offerings, or 119,000
shares and 161,000 shares at the minimum
6
<PAGE>
and maximum of the Estimated Offering Range, respectively, the maximum amount
that any person may purchase in any priority category in the Subscription
Offering, as well as in the Community Offering and any Syndicated Community
Offering, is generally limited to 15,000 shares of Common Stock. No person,
together with associates of or persons acting in concert with such person, may
purchase in the aggregate more than 50,000 shares of Common Stock sold ($500,000
aggregate Purchase Price). For a definition of the terms "associate" and "acting
in concert," see "The Reorganization and Stock Issuance - Limitations on Common
Stock Purchases." At any time during the Offerings, and without further approval
by the members of the Bank, the Company and the Bank may, in their sole
discretion, increase the individual purchase limitations up to 5% of the shares
offered (100,625 shares at the maximum of the Estimated Offering Range). If the
purchase limitation is increased, persons who submitted an order for 15,000
shares of Common Stock will be given the opportunity to increase their order. In
the event of a decrease in the purchase limitation, any orders in excess of the
revised purchase limitation will be reduced to the extent necessary. The minimum
purchase is 25 shares. In the event of an oversubscription, shares will be
allocated in accordance with the Plan as described in "The Reorganization and
Stock Issuance - Subscription Offering and Subscription Rights" and "- Community
Offering."
Stock Pricing and Number of Shares to be Issued in the Stock Issuance
Federal regulations require the aggregate purchase price of the shares
of Common Stock to be consistent with an independent appraisal of the estimated
pro forma market value of the shares of Common Stock to be issued to the MHC and
sold in the Offerings following the Reorganization (including the contribution
of 4.0% of the shares of Common Stock sold to the Foundation). RP Financial, an
independent appraiser, has advised the Company that, in its opinion, dated
September 4, 1998, as amended on October 30, 1998, the Estimated Valuation Range
of the shares of Common Stock if they were sold in a full mutual-to-stock
conversion was from $33.6 million to $45.4 million, with a midpoint of $39.5
million. This appraisal of the Common Stock is not intended and should not be
construed as a recommendation of any kind as to the advisability of purchasing
such stock, nor can any assurance be given that purchasers of the Common Stock
will be able to sell such shares after the Reorganization at or above the
Purchase Price.
All shares of Common Stock issued in the Offerings will be sold at the
Purchase Price of $10.00 per share, which was established by the Board of
Directors of Willow Grove. The actual number of shares to be issued in the Stock
Issuance will be determined by the Company and the Bank based upon the final
updated valuation of the estimated pro forma market value of the Common Stock,
giving effect to the Reorganization and the Stock Issuance, at the completion of
the Offerings. The Company and the Bank have determined that the MHC, upon
consummation of the Reorganization and the Stock Issuance and prior to the
contribution to the Foundation, will own 55.7% of the issued and outstanding
shares of Common Stock. Accordingly, the Estimated Offering Range of the shares
of Common Stock to be sold in the Stock Issuance is expected to range from a
minimum of 1,487,500 shares to a maximum of 2,012,500 shares. Subject to
approval of the OTS, the Estimated Offering Range may be increased or decreased
to reflect market and economic conditions prior to the completion of the
Reorganization to fill the order of the ESOP, and under such circumstances the
Company and the Bank may increase or decrease the number of shares of Common
Stock to be issued in the Stock Issuance. No resolicitation of subscribers will
be made and
7
<PAGE>
subscribers will not be permitted to modify or cancel their subscriptions unless
the gross proceeds from the sale of the shares of Common Stock are less than the
minimum or more than 15% above the maximum of the current Estimated Offering
Range (or 2,314,375 shares). An affirmative response to any resolicitation must
be received by the Bank in order to confirm subscriptions. In connection with a
resolicitation, to the extent that subscriptions are canceled, rescinded or
reduced, all funds delivered to the Company or the Bank will be promptly
returned with interest earned from the date of receipt, and withdrawal
authorizations will be reduced or canceled. See "Pro Forma Data," "Risk Factors
- - Possible Dilutive Effect of Issuance of Additional Shares" and "The
Reorganization and Stock Issuance - Stock Pricing and Number of Shares to be
Issued."
In connection with the Reorganization, the Company and Willow Grove
intend to establish the Foundation, with the Company contributing to the
Foundation shares of Common Stock equal to 4.0% of the shares sold in the
Offerings immediately following completion of the Reorganization. The
establishment of the Foundation was taken into account in determining the
estimated pro forma market value of the Common Stock. In the event the
Reorganization and Stock Issuance did not include the Foundation, the mid-point
of the Estimated Offering Range, based on the appraisal of RP Financial, would
be $18.6 million rather than $17.5 million. See "Risk Factors - Establishment of
the Foundation - Comparison of Valuation and Other Factors Assuming the
Foundation is Not Established as Part of the Reorganization" and "Comparison of
Valuation and Pro Forma Information with No Foundation."
The Willow Grove Foundation
As a community oriented institution, the Bank has implemented a
community enrichment program (the "Community Enrichment Program") in order to
support charitable organizations within the communities served by the Bank. In
the fiscal year ended June 30, 1998 and 1997, the Bank's contributions to its
Community Enrichment Program amounted to $373,000 and $259,000, respectively.
In furtherance of the Bank's commitment to the communities that it
serves, the Plan of Reorganization provides for the establishment of a private
charitable foundation in connection with the Reorganization. The Plan provides
that the Bank and the Company will create The Willow Grove Foundation, which
will be incorporated under Delaware law as a nonstock corporation, and will fund
the Foundation with shares of Common Stock contributed by the Company, as
further described below. The Company and the Bank believe that the funding of
the Foundation with Common Stock of the Company is a means of enhancing the bond
between the Bank and the communities that it serves and thereby enable such
communities to share in the potential growth and success of the Company over the
long term. By further enhancing the Bank's visibility and reputation in the
communities that it serves, the Bank believes that the Foundation will benefit
the long term value of the Bank's community banking franchise. See "The
Reorganization Establishment of the Foundation - Structure of the Foundation."
The authority for the affairs of the Foundation will be vested in the
Board of Directors of the Foundation, which initially will be comprised of two
members of the Company's and the Bank's Board of Directors and four other
individuals chosen in light of their commitment and service to charitable
8
<PAGE>
and community purposes. The directors of the Foundation will be responsible for
establishing the policies of the Foundation with respect to grants or donations
by the Foundation, consistent with the purposes for which the Foundation was
established, and will also be responsible for directing the activities of the
Foundation, including matters related to ownership of the Common Stock held by
the Foundation. However, it is expected that establishment of the Foundation
will be subject to certain conditions, including, among others, a requirement
that the Common Stock of the Company held by the Foundation be voted in the same
ratio as all other shares of the Company's Common Stock on all proposals
considered by stockholders of the Company. See "The Reorganization and Stock
Issuance - Establishment of the Foundation-Regulatory Conditions Imposed on the
Foundation."
The Company proposes to fund the Foundation by contributing to the
Foundation immediately following the Reorganization authorized but unissued
shares of Common Stock in an amount equal to 4.0% of the shares of Common Stock
sold in the Offerings. Such contribution, once made, will not be recoverable by
the Company or the Bank. Assuming the sale of shares at the maximum of the
Estimated Offering Range, 80,500 shares would be contributed to the Foundation,
the Company will have 4,623,000 shares outstanding of which the Foundation will
own 80,500 shares, or 1.7%. Due to the issuance of additional shares of Common
Stock to the Foundation, persons purchasing shares in the Stock Issuance will
have their ownership and voting interests in the Company diluted from 44.3% to
43.5%. See "Pro Forma Data."
As a result of the establishment of the Foundation, the Company will
recognize an expense of the full amount of the contribution, offset in part by a
corresponding tax benefit, during the quarter in which the contribution is made,
which is expected to be the second quarter of fiscal 1999. Such expense will
reduce earnings and have a material impact on the Company's earnings for such
quarter and for the year. Assuming a contribution of $805,000 in Common Stock,
and assuming an effective tax rate of 34.0%, the Company estimates a net tax
effected expense of $531,000.
In addition to the contribution of shares of Common Stock to the
Foundation, after consummation of the Reorganization, the Bank may make
additional cash contributions to the Foundation or for other charitable
purposes. Although no decision has been made as to the amount of such additional
cash contributions, the Bank is committed to continuing to support charitable
organizations in the communities served by the Bank. It is anticipated that any
decision by the Bank to make additional cash contributions will be based on,
among other factors, the Bank's profitability, the needs of charitable
organizations in the community and the deductibility of such expenses. Given the
expenses associated with the Community Enrichment Program, which amounted to
approximately 9.8% and 6.6% of the Bank's pre-tax net income in fiscal 1998 and
1997, respectively, expenses related to the Foundation and additional
contributions pursuant to the Bank's Community Enrichment Program may be
significant. For further discussion of the Foundation and its impact on
purchasers in the Stock Issuance, see "Risk Factors - Establishment of the
Foundation," "Pro Forma Data," "Comparison of Valuation and Pro Forma
Information With No Foundation" and "The Reorganization and Stock Issuance -
Establishment of the Foundation."
9
<PAGE>
Reorganization to Officers and Directors
General. In connection with the Reorganization, the Bank's directors
and executive officers as a group (12 persons) have proposed to purchase 200,000
shares of Common Stock, or 13.5% and 9.9% of the shares at the minimum and
maximum of the Estimated Offering Range, respectively, excluding shares to be
issued to the Foundation.
The ESOP. The Company has adopted the ESOP, a tax-qualified benefit
plan for officers and employees of the Company and the Bank, which intends to
purchase 8% of the shares of Common Stock sold in the Offerings, or 119,000
shares ($1.2 million) and 161,000 shares ($1.6 million) at the minimum and
maximum of the Estimated Offering Range, respectively. The Company intends to
use a portion of the net proceeds retained by it to make a loan directly to the
ESOP to enable the ESOP to purchase such shares. See "Management - Benefits -
Employee Stock Ownership Plan."
Stock Option Plan. Following consummation of the Reorganization, the
Company intends to adopt a stock option plan for the benefit of the directors,
officers and employees of the Company and the Bank (the "Stock Option Plan"),
pursuant to which the Company intends to reserve a number of shares of Common
Stock equal to an aggregate of 10% of the shares of Common Stock sold in the
Offerings (201,250 shares at the maximum of the Estimated Offering Range) for
issuance pursuant to stock options and stock appreciation rights. The Stock
Option Plan will not be implemented prior to the receipt of stockholder approval
of the plan. For stock option plans implemented within one year of a mutual
holding company reorganization and stock issuance, OTS regulations currently
permit an aggregate of up to 30% of the shares available under the Stock Option
Plan to be granted to non-employee directors. In addition, OTS regulations
further provide that under such stock option plans, no officer may receive stock
options for more than 25% of the shares available under the stock option plan,
which, in the Company's case, would amount to 50,312 maximum of the Estimated
Offering Range. See "Management - Benefits - Stock Option Plan."
Recognition and Retention Plan. Following consummation of the
Reorganization, the Company intends to adopt a recognition and retention plan
for the benefit of the directors, officers and employees of the Company and the
Bank (the "Recognition Plan" or "RRP"). The Recognition Plan will not be
implemented prior to the receipt of stockholder approval of the plan. It is
expected that the Recognition Plan will be submitted to stockholders for
approval at the same time as the Stock Option Plan. Upon the receipt of such
approval, the Recognition Plan is expected to purchase a number of shares of
Common Stock either from the Company or in the open market equal to an aggregate
of 4% of the shares of Common Stock sold in the Offerings (80,500 shares or
$805,000 at the maximum of the Estimated Offering Range). Similar to the
treatment of the Stock Option Plan, current OTS regulations provide that, with
respect to stock benefit plans such as the Recognition Plan implemented within
one year of a mutual holding company reorganization and stock issuance, an
aggregate of no more than 30% of the shares available under such plan may be
awarded to non-employee directors and no more than 25% of the shares available
under such plan may be awarded to any individual officer. See "Management -
Benefits - Recognition Plan."
The following table presents the dollar value at the minimum and the
maximum of the Estimated Offering Range of the shares to be reserved for, or
purchased for distribution by, the proposed stock benefit plans to be
implemented upon consummation of the Reorganization, as well as the percentage
of issued and outstanding shares of Common Stock which will be represented by
such shares.
<TABLE>
<CAPTION>
Value of Shares(1)
--------------------------------------------
At the At the
Minimum of Maximum of Percentage of
Estimated Estimated Issued and
Stock Benefit Plans: Valuation Range Valuation Range Outstanding Shares(2)
- -------------------- --------------- --------------- ---------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Stock Option Plan NA(3) NA(3) 4.35%
RRP $ 595 $ 805 1.74
ESOP 1,190 1,610 3.48
</TABLE>
- -----------------
(1) Assumes that the value is equal to the Purchase Price of $10.00 per
share.
(2) Reflects shares in stock benefit plans as a percentage of total issued
and outstanding shares including shares to be issued to the MHC and the
Foundation. Shares to be reserved for issuance under the Stock Option
Plan are assumed to be issued and outstanding pursuant to option
exercises only for purposes of computing the percentage of the Stock
Option Plan. Otherwise, no exercise of stock options is assumed, and
shares for the RRP are assumed to be purchased on the open market.
(3) Awards under Stock Option Plan are not valued as value is realized only
to the extent the market value of Common Stock increases subsequent to
the date of grant.
10
<PAGE>
Employment Agreements. Upon consummation of the Reorganization, the
Bank intends to enter into a two-year employment agreement with Mr. Frederick A.
Marcell, Jr., President. If the employment of Mr. Marcell is terminated as a
result of a change in control of the Company, he would be entitled to a cash
severance amount equal to two times his base salary and annual bonus (or
$327,000, assuming such change in control had occurred on June 30, 1998). At
least 60 days prior to each annual anniversary date of the employment agreement,
the Boards of Directors of the Bank shall determine whether or not to continue
the term of the agreement. In addition, the three other current executive
officers of the Bank will enter into one-year employment agreements with the
Bank upon consummation of the Reorganization. See "Management - Management of
the Bank - Employment Agreements."
Prospectus Delivery and Procedure for Purchasing Shares
To ensure that each purchaser receives a Prospectus at least 48 hours
prior to the Expiration Date in accordance with Rule 15c2-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), no Prospectus will be
mailed any later than five days prior to such date or hand delivered any later
than two days prior to such date. Execution of the order form will confirm
receipt or delivery of the Prospectus in accordance with Rule 15c2-8. Order
forms will be distributed only with a Prospectus. The Company and the Bank will
accept for processing only orders submitted on original order forms. Copies of
order forms will not be accepted nor will order forms unaccompanied by a
properly executed certification form be accepted. Payment by check, money order,
cash or debit authorization to an existing account at the Bank must accompany
the order form. No wire transfers will be accepted.
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priorities, depositors as of the close of business on the Eligibility
Record Date (June 30, 1997) or the Supplemental Eligibility Record Date
(__________, 1998), and/or depositors and certain borrowers as of the close of
business on the Voting Record Date (__________, 1998), must properly and fully
list all accounts on the stock order form giving all names as reflected on each
account and the correct account numbers. The records of the Bank will be deemed
to control with respect to all matters related to the existence of subscription
rights and/or one's ability to purchase shares of Common Stock in the
Subscription Offering. See "The Reorganization and Stock Issuance - Procedure
for Purchasing Shares in the Subscription Offering."
Use of Proceeds
The net proceeds from the sale of the shares of Common Stock in the
Offerings are estimated to be between $14.0 million and $19.2 million ($22.2
million assuming a 15% increase in the Estimated Offering Range), depending on
the number of shares of Common Stock sold and the expenses of the
Reorganization. See "Pro Forma Data." The Company will purchase all of the
capital stock of the Bank to be issued in the Reorganization in exchange for 50%
of the Offerings proceeds (net of expenses and the loan to be made to the ESOP)
and will retain the remaining net proceeds as its initial capitalization. The
Company intends to use a portion of the net proceeds retained by it to make a
loan directly to the ESOP to enable the ESOP to purchase up to 8% of the
11
<PAGE>
shares of Common Stock sold in the Stock Issuance. The amount of the loan is
expected to be between $1.2 million and $1.6 million at the minimum and maximum
of the Estimated Offering Range, respectively. See "Management - Management of
the Company - Benefits - Employee Stock Ownership Plan." The remaining net
proceeds retained by the Company initially may be used to invest in U.S.
Government and federal agency securities of various maturities, mortgage-backed
or other securities, deposits in either the Bank or other financial
institutions, or a combination thereof. Ultimately, the portion of net proceeds
retained by the Company may be used to support the Bank's lending activities, to
support the future expansion of operations through establishment of additional
branch offices or other customer facilities, acquisitions of other financial
service organizations, such as other savings institutions or commercial banks
(although no such transactions are specifically being considered at this time),
and for other business and investment purposes, including the payment of regular
cash dividends and possible repurchases of the Company's Common Stock. See
"Dividend Policy." Funds contributed to the Bank from the Company will be used
for general business purposes. The proceeds will be used to support the Bank's
lending and investment activities and thereby enhance the Bank's capabilities to
serve the borrowing and other financial needs of the communities it serves. In
addition, the Bank may use a portion of the net proceeds to repay borrowings in
the ordinary course. See "Use of Proceeds."
Dividends
Following consummation of the Reorganization, the Board of Directors of
the Company intends to consider implementation of a policy of paying quarterly
cash dividends on the Common Stock. However, there has been no determination
made at this point in time as to the initial rate of dividend, if any, to be
paid on the Common Stock. Declarations of dividends by the Company's Board of
Directors will depend upon a number of factors, including the amount of the net
proceeds retained by the Company in the Reorganization, investment opportunities
available to the Company or the Bank, capital requirements, the Company's and
the Bank's financial condition and results of operations, tax considerations,
statutory and regulatory limitations, and general economic conditions. The
payment of dividends by the Company also will depend, in part, on the payment of
dividends by the Bank to the Company, which Bank dividends are subject to OTS
regulations. See "Regulation--the Bank--Capital Distributions." It is currently
unclear what limitations may exist with respect to the Company's ability to pay
dividends since the OTS has not promulgated regulations with respect to this
matter. However, the OTS may, by regulation or otherwise, impose similar
restrictions on the Company's ability to pay dividends as are imposed on the
Bank. There can be no assurances that dividends will in fact be paid on the
Common Stock or that, if paid, such dividends will not be reduced or eliminated
in future periods. Furthermore, the Company has committed that it will not pay
or undertake any action to affect a return of capital for one year following the
Stock Issuance. For a more detailed discussion of the factors that may affect
the payment of dividends, see "Dividend Policy."
Waivers of Dividends by the MHC
It has been the recent practice of the OTS to permit mutual holding
companies to waive the receipt of cash dividends declared by savings association
subsidiaries or subsidiary holding companies on a case-by-case basis and subject
to the satisfaction of certain conditions, although there can be no assurance
that the OTS will permit future dividend waivers, or of the terms of such
permitted waivers. The Board of Directors of the MHC, which initially will
consist of the same individuals as the Board of Directors of the Bank, will
determine whether the MHC will waive receipt of such dividends as such dividends
are declared by the Company. The MHC may elect to receive dividends and to
utilize the dividends received, if any, for general corporate purposes and to
fund the purchase of Common Stock in the open market, as well as the payment of
miscellaneous expenses. Any waiver of dividends
12
<PAGE>
by the MHC may result in an adjustment to the ratio pursuant to which shares of
Common Stock are exchanged for shares of a stock holding company should the MHC
convert from the mutual to stock form of organization. Such an adjustment would
have the effect of diluting the ownership interest of stockholders other than
the MHC. The Board of Directors of the MHC presently intends to waive the
receipt of dividends declared by the Company and to seek OTS approval to do so.
See Risk Factors - Waiver of Dividends by the MHC," "MHC Conversion to Stock
Form" and "Dividend Policy."
Conversion of the MHC to Stock Form
Although the MHC may convert to the stock form of organization (a
"Conversion Transaction") in the future and OTS regulations provide for a
Conversion Transaction, there can be no assurance when, if ever, a Conversion
Transaction will occur, or what conditions may be imposed by the OTS on any
Conversion Transaction. Any Conversion Transaction would be subject to federal
securities laws and the regulations of the OTS in effect at the time of the
Conversion Transaction. In the event of a Conversion Transaction, subject to OTS
approval, (i) the stockholders of the Company other than the MHC will be
entitled to exchange their shares of Common Stock for shares of the stock
holding company in a manner that is deemed fair and reasonable to the
stockholders and subject to the stock purchase limitations of the OTS conversion
regulations (which may require, as a condition to the approval of the Conversion
Transaction by the OTS, that certain insiders of the Company who have
accumulated shares in excess of the stock purchase limitations of the Conversion
Transaction to divest such shares, and may also potentially restrict or prohibit
additional purchases of common stock of the stock holding company in the
Conversion Transaction by other stockholders that could be in excess of such
stock purchase limitation), or (ii) the MHC may conduct a Conversion Transaction
that does not exchange shares of Common Stock for stock of the stock holding
company; provided, however, the MHC must purchase all shares not owned by it
simultaneously with the closing of such Conversion Transaction at the fair
market value of such shares, determined as if such shares had such exchange
rights, as determined by an independent appraisal. The precise treatment of a
Conversion Transaction by the OTS cannot be determined at this time and the OTS
may impose, or the regulations of the OTS may require, restrictions or
conditions that may adversely affect minority stockholders. See "MHC Conversion
to Stock Form."
Market for Common Stock
The Company has never issued capital stock to the public and,
consequently, there is no existing market for the Common Stock. The Company has
applied to have the Common Stock listed on the Nasdaq National Market under the
symbol "WGBC." Keefe, Bruyette has indicated its intention to act as a market
maker in the Common Stock following the consummation of the Reorganization,
depending on trading volume and subject to compliance with applicable laws and
regulatory requirements. Furthermore, Webb has agreed to use its best efforts to
assist the Company in obtaining additional market makers for the Common Stock.
No assurance can be given that an active and liquid trading market for the
Common Stock will develop. Further, no assurance can be given that purchasers
will be able to sell their shares at or above the Purchase Price after the
Reorganization. See "Risk Factors -- Absence of Market for the Common Stock" and
"Market for the Common Stock."
13
<PAGE>
Risk Factors
See "Risk Factors" for a discussion of certain factors that should be
considered by prospective investors, including, among other factors, control of
the Company by the MHC, waiver of dividends by the MHC, the potential for a low
return on equity following the Reorganization and the uncertainty as to future
growth opportunities, the dilutive effect of the issuance of additional shares
of Common Stock, the charitable foundation to be established in connection with
the Reorganization, the potential effects of changes in interest rates and the
current interest rate environment, risks related to construction and land
development loans, multi-family residential real estate loans, commercial real
estate loans and commercial business loans, competition, the Bank's geographic
concentration of loans, certain anti-takeover provisions, regulatory oversight,
the absence of a market for the Common Stock, a possible increase in the number
of shares issued in the Reorganization, potential increased compensation
expenses after the Reorganization, possible adverse tax consequences of the
distribution of subscription rights to purchase the Common Stock, compliance
with the Year 2000 issues, certain additional anti-takeover considerations and
the potential delay in consummation of the Reorganization and the irrevocability
of orders.
14
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
(Dollars in Thousands)
The following selected historical financial data is derived in part
from, should be read in conjunction with, and is qualified in its entirety by,
the historical financial statements of the Bank, including the related notes,
included elsewhere herein.
<TABLE>
<CAPTION>
At June 30,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Selected Financial Condition Data:
Total assets............................. $405,374 $354,679 $312,326 $293,589 $232,551
Cash and cash equivalents................ 18,291 4,204 4,282 6,871 6,488
Investment securities held to maturity... -- 3,999 -- 55,480 61,341
Securities available for sale............ 48,111 45,766 50,163 742 180
Loans available for sale................. 12,152 6,173 5,140 9,370 562
Loans receivable, net.................... 315,705 284,596 243,310 210,212 151,341
Real estate held for investment, net..... -- 180 204 206 206
Deposits................................. 340,793 309,726 267,695 237,645 204,022
Borrowings............................... 21,000 6,500 10,120 22,620 120
Total Equity............................. 35,945 33,122 30,374 28,420 24,615
<CAPTION>
Year Ended June 30,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Selected Operating Data:
Interest income.......................... $ 28,604 $ 25,423 $ 22,105 $ 19,848 $ 15,630
Interest expense......................... 15,097 13,817 12,370 10,207 6,920
-------- -------- -------- -------- --------
Net interest income...................... 13,507 11,606 9,735 9,641 8,710
Provision for loan losses................ 993 185 210 60 156
-------- -------- -------- -------- --------
Net interest income after provision for
loan losses............................ 12,514 11,421 9,525 9,581 8,554
Non-interest income...................... 760 786 1,245 1,553 1,500
Non-interest expense..................... 9,462 8,284 6,024 5,598 4,179
-------- -------- -------- -------- --------
Income before income taxes............... 3,812 3,923 4,746 5,536 5,875
Income taxes............................. 1,367 1,548 1,744 2,108 2,157
Change in accounting principle........... -- -- -- -- 333
-------- -------- -------- -------- --------
Net income............................... $ 2,445 $ 2,375 $ 3,002 $ 3,428 $ 4,051
======== ======== ======== ======== ========
Key Operating Ratios:(1)
<CAPTION>
At or For the Year Ended June 30,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Performance Ratios:
Return on average assets................... 0.65% 0.71% 1.02% 1.28% 1.97%
Return on average equity................... 6.81 7.54 10.11 12.73 17.67
Average interest-earning assets to average
interest-bearing liabilities............. 108.22 108.06 108.74 108.78 110.26
Interest rate spread(2).................... 3.36 3.21 3.02 3.35 4.01
Net interest margin(2)..................... 3.71 3.56 3.40 3.69 4.36
Asset Quality Ratios:
Nonperforming assets to total assets at end
of period(3)............................. 0.37% 0.54% 0.87% 0.20% 0.28%
Allowance for loan losses to nonperforming
loans at end of period................... 178.98 87.62 71.67 291.89 257.41
Allowance for loan losses to total loans at
end of period............................ 0.83 0.58 0.79 0.81 1.08
Capital and Other Ratios:
Average equity to average assets........... 9.59% 9.39% 10.09% 10.02% 11.17%
Tangible equity to assets at end of
period................................. 8.32 8.70 9.00 8.60 9.02
Total capital to risk-weighted assets...... 14.89 15.87 16.06 18.17 20.13
</TABLE>
- ----------
(1) With the exception of end of period ratios and ratios for the years ended
December 31, 1994 and 1995, ratios are based on average daily balances
during the respective periods. Ratios for 1994 and 1995 are based on
average month-end balances.
(2) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities; net interest margin represents net interest
income as a percentage of average interest-earning assets.
(3) Nonperforming assets consist of non-accrual loan and accruing loans 90
days or more past due. The Bank had no real estate acquired through
foreclosure or by deed-in-lieu thereof ("REO") at any of the year ends.
15
<PAGE>
SUMMARY OF RECENT DEVELOPMENTS
(Dollars in Thousands)
The selected financial and other data in the Bank set forth below does
not purport to be complete and should be read in conjunction with, and is
qualified in its entirety by, the more detailed information, including the
financial statements and related notes, appearing elsewhere herein. In the
opinion of management, financial information at September 30, 1998 and for the
three months ended September 30,1998 and 1997 reflect all adjustments
(consisting only of normal recurring accruals) which are necessary to present
fairly the results for such periods. Results for the three month periods ended
September 30, 1998 and 1997 may not be indicative of operations of the Bank on
an annualized basis.
<TABLE>
<CAPTION>
At At
Selected Financial Condition Data: September 30, 1998 June 30, 1998
------------------ -------------
<S> <C> <C>
Total assets............................................... $398,723 $405,374
Cash and cash equivalents.................................. 25,854 18,291
Investment securities held to maturity..................... -- --
Securities available for sale.............................. 36,338 48,111
Loans available for sale................................... 5,661 12,152
Loans receivable, net...................................... 320,529 315,705
Real estate held for investment, net....................... -- --
Deposits................................................... 342,955 340,793
Borrowings................................................. 14,000 21,000
Total equity............................................... 37,125 35,945
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
Selected Operating Data: 1998 1997
---- ----
<S> <C> <C>
Interest income............................................ $7,605 $6,843
Interest expense........................................... 3,962 3,674
Net interest income........................................ 3,643 3,169
Provision for loan losses.................................. 90 90
Net interest income after provision for loan
losses................................................... 3,553 3,079
Non-interest income........................................ 301 161
Non-interest expense....................................... 2,205 1,887
Income before income taxes................................. 1,649 1,353
Income taxes............................................... 611 486
Net income................................................. 1,038 867
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Key Operating Ratios: At or For the Three Months
Ended September 30,
--------------------------
Performance Ratios: 1998 1997
---- ----
<S> <C> <C>
Return on average assets..................................... 1.04% 0.97%
Return on average equity..................................... 11.16 10.08
Average interest-earning assets to average
interest-bearing liabilities............................... 108.68 108.08
Interest rate spread(1)...................................... 3.39 3.30
Net interest margin(1)....................................... 3.74 3.64
Asset Quality Ratios:
Nonperforming assets to total asset at end of
period(2).................................................. 0.43% 0.31%
Allowance for loan losses to nonperforming
loans at end of period..................................... 161.80 157.22
Allowance for loan losses to total loans at
end of period.............................................. 0.84 0.58
Capital and Other Ratios:
Average equity to average assets............................. 9.30% 9.59%
Tangible equity to assets at end of period................... 8.74 8.84
Total capital to risk-weighted assets........................ 14.94 15.24
</TABLE>
- ----------
(1) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities; net interest margin represents net interest
income as a percentage of average interest-earning assets.
(2) Nonperforming assets consist of non-accrual loan and accruing loans 90
days or more past due. The Bank has no real estate acquired through
foreclosure or by deed-in-lieu thereof ("REO") at any of the year ends.
At September 30, 1998, Willow Grove's total assets amounted to $398.7
million compared to total assets of $405.4 million at June 30, 1998. The $6.7
million, or 1.6%, decrease in total assets was due primarily to decreases in
securities available for sale and loans available for sale. The Bank's deposits
amounted to $343.0 million at September 30, 1998 compared to $340.8 million at
June 30, 1998. Borrowings decreased to $14.0 million at September 30, 1998 from
$21.0 million at June 30, 1998. The Bank's total equity increased by $1.2
million, or 3.3%, to $37.1 million at September 30, 1998 compared to $35.9
million at June 30, 1998. The increase in total equity was due to the continued
profitable operations of the Bank.
<PAGE>
Net income amounted to $1.0 million for the three months ended
September 30, 1998 compared to $867,000 for the three months ended September 30,
1997. The $171,000, or 19.7%, increase in net income during the first quarter of
fiscal 1999 was due primarily to a $762,000 increase in interest income, which
was partially offset by a $228,000 increase in interest expense and a $323,000
increase in non-interest expense.
Net interest income increased by $474,000, or 15.0%, for the three
months ended September 30, 1998 compared to the same period in 1997. The
increase in net interest income was due to a $762,000 increase in interest
income which was partially offset by a $288,000 increase in interest expense.
The Bank's interest rate spread increased to 3.39% for the first quarter of
fiscal 1999 from 3.30% for the comparable prior year period. Willow Grove's
ratio of average interest-earning assets to average interest-bearing liabilities
and its net interest margin both increased during the three months ended
September 30, 1998 compared to the three months ended September 30, 1997. Such
increases reflect, in part, Willow Grove's continuing efforts to increase its
loan originations, particularly with respect to relatively higher yielding home
equity and commercial loans.
The Bank's provision for loan losses was $90,000 for both the three
months ended September 30, 1998 and 1997. At September 30, 1998, the Bank's
total non-performing loans amounted to $1.7 million. The Bank's allowance for
loan losses amounted to $2.8 million at September 30, 1998, representing 0.84%
of total loans and 161.8% of non-performing loans at such date.
Non-interest income increased by $140,000, or 87.0% to $301,000 for the
three months ended September 30, 1998 compared to the same period in 1997. The
primary reason for the increase in non-interest income during the quarter was
increased levels of loan originations as well as increased transaction fees from
the Bank's automated teller machines ("ATM").
Non-interest expense amounted to $2.2 million for the three months
ended September 30, 1998 compared to $1.9 million for the three months ended
September 30, 1997. The $318,000, or 16.9% increase in non-interest expenses
during the 1998 period primarily reflects the increased number of Bank employees
during the 1998 period.
Willow Grove's income tax expenses amounted to $611,000 and $486,000
for the three months ended September 30, 1998 and 1997, respectively. The
increase in the 1998 period primarily was the result of the increase in
profitability during the period. The Bank's effective tax rate was 37.1% for the
quarter ended September 30, 1998 compared to 35.9% for the comparable quarter in
1997.
At September 30, 1998, the Bank's tangible and core capital both
amounted to $35.0 million or 8.73% of adjusted total assets of $397.0 million,
and the Bank's risk-based capital amount to $37.0 million or 14.94% of adjusted
risk-weighted assets of $250.3 million.
<PAGE>
RISK FACTORS
The following risk factors, in addition to those discussed elsewhere in
this Prospectus, should be carefully considered by investors in deciding whether
to make an investment in the Common Stock offered hereby.
Control of the Company by the MHC
The Company is required to be a majority-owned subsidiary of the MHC as
long as the MHC remains in existence. Following the Stock Issuance and assuming
the contribution to the Foundation of 4.0% of the shares of Common Stock sold in
the Offerings, the MHC will own 54.7% of the outstanding Common Stock. Holders
of deposit accounts in the Bank will be entitled to vote on all matters
presented to the members of the MHC for resolution by vote, including, without
limitation, election of directors of the MHC. Prior to the Reorganization,
members of the Bank generally granted revocable proxies to the Board of
Directors of the Bank, and members of the MHC may grant proxies to the Board of
Directors of the MHC after the Reorganization. According to regulations of the
OTS, the revocable proxies that members of the Bank have granted to the Board of
Directors of the Bank, which confer on the Board of Directors of the Bank
general authority to cast a member's vote on any and all matters presented to
the members, shall be deemed to cover the member's votes as members of the MHC,
and such authority shall be conferred on the Board of Directors of the MHC. The
use of such proxies will facilitate control over the MHC by the MHC's Board of
Directors and thereby control of the Company by virtue of the MHC's ownership of
a majority of the outstanding shares of Common Stock. The MHC will be able to
elect all of the members of the Board of Directors of the Company and will be
able to control the outcome of most matters presented to the stockholders of the
Company for resolution by vote, excluding certain matters related to stock
compensation plans and certain votes regarding a conversion to stock form by the
MHC. Therefore, purchasers of the Common Stock in the Offerings will be minority
stockholders of the Company ("Minority Stockholders") and, as such, will not be
able to elect directors or effect a change of control in management of the
Company.
No assurances can be given that the MHC or the Company will not take
action which the Minority Stockholders believe to be contrary to their interests
at some future time. For example, the MHC or the Company could revise the Bank's
dividend policy, prevent a Conversion Transaction or defeat a candidate for the
Bank's Board of Directors or other proposals put forth by the Minority
Stockholders. Moreover, the MHC's ownership of a majority of the outstanding
shares of Common Stock, the MHC's mutual form of organization and, to a lesser
extent, provisions in the Company's Charter and Bylaws that eliminate cumulative
voting for the election of directors, authorize the issuance of additional
amounts of capital stock and require staggered terms for members of the Board of
Directors, are likely to perpetuate existing management and directors and
discourage certain transactions that involve an actual or threatened change in
control of the Company. See "Certain Restrictions on Acquisition of the Company
and the Bank."
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Waiver of Dividends by the MHC
The Board of Directors of the MHC will determine whether the MHC will
waive the receipt of dividends declared by the Company each time the Company
declares a dividend. The Board of Directors of the MHC presently intends to
waive the receipt of dividends declared by the Company. OTS regulations require
the MHC to notify the OTS of any proposed waiver of the right to receive
dividends. It is the OTS' recent practice to review dividend waiver notices on a
case-by-case basis, and, in general, not to object to any such waiver if: (i)
the mutual holding company's board of directors determine that such waiver is
consistent with such directors' fiduciary duties to the mutual holding company's
members; (ii) for as long as the subsidiary holding company is controlled by the
mutual holding company, the dollar amount of dividends waived by the mutual
holding company is considered to be a restriction on the stockholders' equity of
the subsidiary holding company, which restriction, if material, is disclosed in
the public financial statements of the subsidiary holding company 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 Statement of Financial Accounting
Standards No. 5, where the subsidiary holding company 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 subsidiary holding
company 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
Transaction takes into account the amount of the dividends waived by the mutual
holding company. In addition, the OTS has announced that the dividends waived by
mutual holding companies will affect the ratio pursuant to which shares of
common stock of a subsidiary holding company held by minority stockholders would
be exchanged for shares of common stock of the converted holding company in a
Conversion Transaction. The OTS will not permit a pro rata exchange if the
mutual holding company has waived the receipt of cash dividends by the
subsidiary holding company. Accordingly, the precise treatment of any Conversion
Transaction cannot be assured. Any waiver of dividends by the MHC is likely to
result in an adjustment to the ratio pursuant to which shares of Common Stock
are exchanged for shares of the converted MHC in a Conversion Transaction, which
adjustment will have the effect of diluting Minority Stockholders' interests.
See "MHC Conversion to Stock Form."
Potential Low Return on Equity Following the Reorganization; Uncertainty as to
Future Growth Opportunities
At June 30, 1998, the Bank's ratio of equity to assets was 8.9%. The
Company's equity position will be significantly increased as a result of the
Stock Issuance. On a pro forma basis as of June 30, 1998, assuming the sale of
the shares of Common Stock at the maximum of the Estimated Offering Range, the
Company's ratio of equity to assets would be 12.53%. The Company's ability to
leverage this capital will be significantly affected by industry competition for
loans and deposits. The Company currently anticipates that it will take time to
prudently deploy such capital. As a result,
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the Company's return on equity initially is expected to be below the industry
average after the Reorganization.
In an effort to fully deploy post-Reorganization capital, in addition
to attempting to increase its loan and deposit growth, the Company may seek to
expand its banking franchise by establishing new branch offices and/or by
acquiring other financial institutions or branches in the greater Philadelphia
metropolitan area. The Bank's total assets and total deposits increased by 29.8%
and 27.3%, respectively, from June 30, 1996 to June 30, 1998. The Company's
ability to grow through selective acquisitions of other financial institutions
or branches of such institutions will be dependent on successfully identifying,
acquiring and integrating such institutions or branches. There can be no
assurance the Company will be able to generate internal growth or to identify
attractive acquisition candidates, acquire such candidates on favorable terms or
successfully integrate any acquired institutions or branches into the Company.
Neither the Company nor the Bank has any specific plans, arrangements or
understandings regarding any such expansions or acquisitions at this time, nor
have criteria been established to identify potential candidates for acquisition.
Potential Increased Compensation Expense After the Reorganization
Current accounting standards for employee stock ownership plans
requires an employer to record compensation expense in an amount equal to the
fair value of shares committed to be released to employees from an employee
stock ownership plan, rather than an amount equal to the cost basis of such
shares. If the shares of Common Stock appreciate in value over time, additional
shares committed to be released will result in increased compensation expense
with respect to the ESOP as compared with prior periods. It is impossible to
determine at this time the extent of such impact on future net income. See "Pro
Forma Data" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Impact of Accounting Pronouncements." In addition, after
consummation of the Reorganization, the Company intends to implement, subject to
stockholder approval (which approval cannot be obtained earlier than six months
subsequent to the Reorganization), the Recognition Plan. Upon implementation,
the release of shares of Common Stock from the Recognition Plan will result in
additional compensation expense. See "Pro Forma Data" and "Management - Benefits
- - Recognition Plan." Assuming that shares of Common Stock are valued at the
Purchase Price, the value of shares to be issued under the RRP will be between
$595,000 and $805,000 at the minimum and maximum of the Estimated Offering
Range, respectively, while the value of the shares to be purchased by the ESOP
will be between $1.2 million and $1.6 million at the minimum and the maximum of
the Estimated Offering Range, respectively.
Risks Related to Construction and Land Development Loans, Multi-Family
Residential Real Estate Loans, Commercial Real Estate Loans and Commercial
Business Loans
Consistent with its strategy to become more like a full-service
community bank, in recent years Willow Grove has increased its efforts to
originate construction loans, multi-family residential real estate loans and
commercial real estate loans, which amounted to $13.6 million (or 4.0% of the
total loans receivable), $7.5 million (or 2.2% of the total loans receivable)
and $24.5 million (or 7.2% of the Bank's total loans receivable), respectively,
at June 30, 1998. The Bank also has commenced a program designed to attract
commercial business loans, which amounted to $5.4 million, or 1.6% of the Bank's
total loans receivable at June 30, 1998.
Construction and land development lending, multi-family residential
real estate lending and commercial real estate lending generally are considered
to involve a higher degree of risk than single-family residential lending due to
a variety of factors, including generally larger loan balances, the dependency
on successful operation of the project for repayment, loan terms which often do
not require full amortization of the loan over its term and successfully
developing and/or selling the property. In addition, risk of loss on a
construction loan is dependent largely upon the accuracy of the initial estimate
of the property's value at completion of construction or development and the
estimated cost (including interest) of construction. During the construction
phase, a number of factors could result in delays and cost overruns. If the
estimate of value proves to be inaccurate, the Bank may be confronted, at or
prior to the maturity of the loan, with a project, when completed, having a
value which is insufficient to assure full repayment. See "Business - Lending
Activities." Commercial business loans are generally considered to involve a
higher degree of risk than residential mortgage loans because the collateral may
be in the form of intangible assets and/or inventory subject to market
obsolescence. Commercial business loans may involve large loan balances to
single borrowers or groups of related borrowers, with the repayment of such
loans typically dependent on the successful operations and income stream of the
borrower. Such risks can be significantly affected
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by economic conditions. In addition, commercial business lending generally
requires substantially greater oversight efforts compared to residential real
estate lending. As of June 30, 1998, the Bank had no non-performing construction
and land development loans, multi-family residential real estate loans or
commercial real estate loans. See "Business - Asset Quality - NonPerforming and
Under-Performing Assets."
Dilutive Effect of Issuance of Additional Shares
If the Recognition Plan is approved by stockholders of the Company, the
Recognition Plan intends to acquire an amount of Common Stock equal to 4% of the
shares of Common Stock sold in the Offerings. If such shares are acquired at a
per share price equal to the Purchase Price, the cost of such shares would be
$805,000, assuming the number of shares of Common Stock sold are equal to the
maximum of the Estimated Offering Range. The value of shares awarded under the
Recognition Plan will be expensed as they are earned by plan participants. 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. In the event that the Recognition Plan acquires authorized but unissued
shares of Common Stock from the Company, the interests of existing stockholders
will be diluted. Assuming the issuance of 2,012,500 shares of Common Stock and
the contribution of 80,500 shares of Common Stock to the Foundation, the
issuance of authorized but unissued shares of Common Stock to such plan in an
amount equal to 4% of the shares of Common Stock sold in the Offerings would
dilute the voting interests of existing stockholders by approximately 0.4%, and
net income per share and stockholders' equity per share would be decreased by a
corresponding amount. See "Pro Forma Data" and "Management Benefits -
Recognition Plan."
If the Stock Option Plan is approved by stockholders of the Company,
the Company intends to reserve for future issuance pursuant to such plan a
number of shares of Common Stock equal to an aggregate of 10% of the shares of
Common Stock sold (201,250 shares, based on the sale of the maximum 2,012,500
shares). Such shares may be authorized but previously unissued shares, treasury
shares or shares purchased by the Company in the open market or from private
sources. Assuming the sale of 2,012,500 shares and the contribution of 80,500
shares of Common Stock to the Foundation, if only authorized but previously
unissued shares are used under such plan, the issuance of the total number of
shares available under such plan would dilute the voting interests of existing
Minority Stockholders by approximately 1.8%, and net income per share and
stockholders' equity per share would be decreased by a corresponding amount. See
"Pro Forma Data" and "Management - Benefits."
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Establishment of the Foundation
Pursuant to the Plan, the Company intends to voluntarily establish a
charitable foundation in connection with the Reorganization. The Plan provides
that the Foundation will be incorporated under Delaware law as a nonstock
corporation and will be funded with shares of Common Stock contributed by the
Company. The contribution of Common Stock to the Foundation will be dilutive to
the interests of stockholders and will have an adverse impact on the reported
earnings of the Company in fiscal 1999, the year in which the Foundation will be
or is to be established.
Dilution of Stockholders' Interests. The Company proposes to fund the
Foundation with a contribution of shares of Common Stock equal to 4.0% of the
shares of Common Stock sold in the Offerings. Assuming the sale of the shares of
Common Stock at the maximum of the Estimated Offering Range, upon completion of
the Reorganization and establishment of the Foundation, the Company will have
4,623,000 shares of Common Stock issued and outstanding of which the Foundation
will own 80,500 shares of Common Stock, or 1.7%, and the Minority Stockholders
will own 2,012,500 shares, or 43.5%. As a result, persons purchasing shares of
Common Stock in the Offerings will have their ownership and voting interests in
the Company diluted. See "Pro Forma Data."
Impact on Earnings. The contribution of Common Stock to the Foundation
will have a significant adverse impact on the Company's and the Bank's earnings
in the year in which the contribution is made. The Company will recognize the
full expense in the amount of the contribution of Common Stock to the Foundation
in the quarter in which it occurs, which is expected to be the second quarter of
fiscal 1999. The contribution expense will be partially offset by the tax
benefit related to the expense. The Company and the Bank have been advised by
their independent tax advisors that the contribution to the Foundation will be
tax deductible, subject to an annual limitation based on 10% of the Company's
annual taxable income. Assuming a contribution of $805,000 in Common Stock, the
Company estimates a net tax effected expense of $531,000 (based on a 34.0% tax
rate). If the Foundation had been established at June 30, 1998, the Bank would
have reported net income of $1.9 million for the year ended June 30, 1998 rather
than reporting net income of $2.4 million. Management cannot predict earnings
for fiscal 1999, but expects that the establishment and funding of the
Foundation will have a significant adverse impact on the Company's earnings for
such year. In addition to the anticipated costs related to the Foundation, the
Bank may make additional cash contributions pursuant to its Community Enrichment
Program. See "Summary - The Willow Grove Foundation."
Tax Considerations. The Company and the Bank have been advised by their
independent tax advisors that an organization created for the above-described
purposes would qualify as a Section 501(c)(3) exempt organization under the
Internal Revenue Code of 1986, as amended (the "Code"), and would be classified
as a private foundation. Because the MHC is deemed to be a "disqualified person"
(as defined under the Code), in order to avoid certain excise tax provisions,
which could be significant, the Foundation may not own more than 2.0% of the
issued and outstanding shares of Common Stock. The Bank considered such excise
tax provisions and determined that it would be prudent to ensure that the
initial contribution of Common Stock to the Foundation be within the 2.0%
safe-harbor provided by the Code. The Bank anticipates that the Bank and the
Foundation will monitor the Foundation's ownership interest in Common Stock and
will take actions as may be appropriate in order to ensure continued compliance
with the safe-harbor. The Foundation will submit a request to the Internal
Revenue Service ("IRS") to be recognized as an exempt organization. The Company
and the Bank have received an opinion of their independent tax advisors that the
Foundation would qualify as a Section 501(c)(3) exempt organization under the
Code, except that such opinion does not consider
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the impact of the condition expected to be required by regulatory authorities
that Common Stock issued to the Foundation be voted in the same ratio as all
other shares of the Company's Common Stock on all proposals considered by
stockholders of the Company. See "The Reorganization and Stock Issuance -
Establishment of the Foundation-Regulatory Conditions Imposed on the
Foundation." Consistent with this condition, in the event that the Company or
the Foundation receives an opinion of its legal counsel that compliance with the
voting restriction would (i) cause a violation of Delaware law and the OTS
determines that federal law would not preempt the application of the laws of
Delaware to the Foundation, (ii) have the effect of causing the Foundation to
lose its tax-exempt status, or otherwise have a material and adverse tax
consequence on the Foundation or (iii) subject the Foundation to an excise tax
under Section 4941 of the Code, the OTS shall waive such voting restriction upon
submission of a legal opinion by the Company or the Foundation that is
satisfactory to the OTS. The independent tax advisors' opinion further provides
that there is substantial authority for the position that the Company's
contribution of its own stock to the Foundation would not constitute an act of
self-dealing, and that the Company would be entitled to a deduction in the
amount of the fair market value of the stock at the time of the contribution,
subject to an annual limitation based on 10% of the Company's annual taxable
income. The Company, however, would be able to carry forward any unused portion
of the deduction for five years following the contribution. Thus, while the
Company would have generated a tax benefit of approximately $273,000 in fiscal
1998 (based upon a contribution of $805,000 of Common Stock and the Bank's
pre-tax income for fiscal 1998), as a result of the limitation on deductible
amounts, the Company expects to carry over the excess contribution in the five
following years. The Company estimates that for federal income tax purposes, a
substantial portion of the deduction should be deductible over the six-year
period. Although the Company and the Bank have received an opinion of their
independent tax advisors that the Company will be entitled to the deduction of
the charitable contribution, there can be no assurances that the IRS will
recognize the Foundation as a Section 501(c)(3) exempt organization or that the
deduction will be permitted. In such event, the Company's tax benefit related to
the Foundation would have to be fully expensed, resulting in further reduction
in earnings in the year in which the IRS makes such a determination.
The Foundation will receive working capital from any dividends that may
be paid on the Common Stock in the future, and subject to applicable federal and
state laws, loans collateralized by the Common Stock or from the proceeds of the
sale of any of the Common Stock in the open market from time to time as may be
permitted to provide the Foundation with additional liquidity. As a private
foundation under Section 501(c)(3) of the Code, the Foundation will be required
to distribute annually in grants or donations, a minimum of 5% of the average
fair market value of its net investment assets.
Comparison of Valuation and Other Factors Assuming the Foundation is
Not Established as Part of the Reorganization. The establishment of the
Foundation was taken into account by RP Financial in determining the estimated
pro forma market value of the shares of Common Stock. The aggregate price of the
shares of Common Stock being offered in the Offerings is based upon the
independent appraisal conducted by RP Financial of the estimated pro forma
market value of the Common Stock. The pro forma aggregate price of the shares of
Common Stock being
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offered for sale in the Offerings is currently estimated to be between $14.9
million and $20 million, with a midpoint of $17.5 million. The pro forma price
to book ratio and the pro forma price to earnings ratio, at and for the year
ended June 30, 1998, are 87.4% and 15.9x, respectively, at the maximum of the
Estimated Offering Range. In the event that the Reorganization and Stock
Issuance did not include the Foundation, RP Financial has estimated that the
estimated pro forma market value of the shares of Common Stock sold in the
Offerings would be $21 million at the maximum based on a pro forma price to
book ratio and the pro forma price to earnings ratio at 89.9% and 16.7x,
respectively. Assuming the Subscription Offering closes at the maximum of the
Estimated Offering Range the contribution to the Foundation would amount to
80,500 shares of Common Stock (with a value of $805,000 based on the Purchase
Price) and the amount of the shares of Common Stock sold would be $1.3 million
less than the amount which would have been sold without the Foundation based on
the estimate provided by RP Financial. Accordingly, certain account holders of
the Bank who subscribe to purchase shares of Common Stock in the Subscription
Offering would receive fewer shares depending on the size of a depositor's stock
order and the amount of his or her qualifying deposits in the Bank and the
overall level of subscriptions. See "Comparison of Valuation and Pro Forma
Information with No Foundation." This estimate by RP Financial was prepared
solely for purposes of providing Eligible Account Holders and subscribers with
information with which to make an informed decision on the Reorganization.
The decrease in the amount of shares of Common Stock being offered as a
result of the contribution of Common Stock to the Foundation will not have a
significant effect on the Company or the Bank's capital position. The Bank's
regulatory capital is in excess of its regulatory capital requirements and will
further exceed such requirements following the Reorganization and Stock
Issuance. The Bank's tangible and core capital ratios at June 30, 1998 would be
9.9% and its risk-based capital ratio would be 17.7%, respectively, and on a
consolidated basis, the Company's pro forma stockholders' equity would be $52.9
million, or approximately 12.5% of pro forma consolidated assets, assuming the
sale of shares of Common Stock at the maximum of the Estimated Offering Range.
Pro forma stockholders' equity per share and pro forma diluted net earnings per
share would be $11.44 and $0.63, respectively. If the Foundation were not being
established in the Reorganization, based on the RP Financial estimate, the
Company's pro forma stockholders' equity would be approximately $53.7 million,
or approximately 12.7% of pro forma consolidated assets at the maximum of the
Estimated Offering Range, and pro forma stockholders' equity per share and pro
forma net earnings per share would be 11.13 and 0.60, respectively. See
"Comparison of Valuation and Pro Forma Information with No Foundation."
Potential Challenges. To date, there has been limited precedent with
respect to the establishment and funding of a charitable foundation as part of a
mutual holding company reorganization and stock issuance. In addition,
establishment and funding of the Foundation will require the OTS to grant the
Company and the Bank waivers from its regulations. As such, the Foundation and
the OTS's non-objection to the Reorganization may be subject to potential
challenges with respect to, among other things, the Company's and the Bank's
ability to establish the Foundation, notwithstanding that the Board of Directors
of the Bank and the Company have carefully considered the various factors
involved in the establishment of the Foundation in reaching their determination
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to establish the Foundation as part of the Reorganization, and/or with respect
to the OTS' authority to grant the waivers necessary to establish the
Foundation. See "The Reorganization and Stock Issuance - Establishment of the
Foundation-Purpose of the Foundation." If challenges were to be instituted
seeking to require the Bank and the Company to eliminate establishment of the
Foundation in connection with the Reorganization no assurances can be made that
the resolution of such challenges would not result in a delay in the
consummation of the Reorganization or that any objecting persons would not be
ultimately successful in obtaining such removal or other relief against the Bank
and the Company. In addition, if the Bank and the Company are forced to
eliminate the Foundation, it could affect the amount of orders received in the
Offerings and, if the number of shares of Common Stock subscribed for times the
Purchase Price would be either below the minimum or more than 15% above the
maximum of the Estimated Offering Range, then the Company may be required to
resolicit subscribers in the Offerings.
Approval of Members. Establishment of the Foundation is subject to the
approval of a majority of the total outstanding votes of the Bank's members
eligible to be cast at the Special Meeting. The Foundation will be considered as
a separate matter from approval of the Plan of Reorganization. If the Bank's
members approve the Plan of Reorganization, but not the establishment of the
Foundation, the Bank intends to complete the Reorganization and Stock Issuance
without the establishment of the Foundation. Failure to approve the Foundation
may materially increase the pro forma market value of the shares of Common Stock
being offered for sale in the Offerings since the Estimated Offering Range, as
set forth herein, takes into account the proposed contribution to the
Foundation. If the pro forma market value of the Company without the Foundation
is either greater than $23.1 million or less than $14.9 million or if the OTS
otherwise requires a resolicitation of subscribers, the Bank will establish a
new Estimated Offering Range and commence a resolicitation of subscribers (i.e.,
subscribers will be permitted to continue their orders, in which case they will
need to affirmatively reconfirm their subscriptions prior to the expiration of
the resolicitation offering or their subscription funds will be promptly
refunded with interest.) Any change in the Estimated Offering Range must be
approved by the OTS. See "The Reorganization and Stock Issuance -Stock Pricing
and Number of Shares to be Issued."
Potential Effects of Changes in Interest Rates and the Current Interest Rate
Environment
The operations of depository institutions, including Willow Grove Bank,
are substantially dependent on its net interest income, which is the difference
between the interest income earned on its interest-earning assets and the
interest expense paid on its interest-bearing liabilities. Like most savings
institutions, the Bank's earnings are affected by changes in market interest
rates, and other economic factors beyond its control. While the Bank's average
interest rate spread increased from 3.02% for fiscal 1996 to 3.36% for fiscal
1998, no assurance can be given that the Bank's average interest rate spread
will not decrease in future periods. Any such decrease in the Bank's average
interest rate spread could adversely affect the Bank's net interest income. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Asset and Liability Management."
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If an institution's interest-earning assets have longer effective
maturities than its interest-bearing liabilities, the yield on the institution's
interest-earning assets generally will adjust more slowly than the cost of its
interest-bearing liabilities and, as a result, the institution's net interest
income generally would be adversely affected by material and prolonged increases
in interest rates and positively affected by comparable declines in interest
rates. The Bank attempts to reduce the vulnerability of its operations to
changes in interest rates by maintaining significant amounts of liquid assets
and assets with relatively short estimated lives. Based upon certain repricing
assumptions, the Bank's interest-earning liabilities repricing or maturing
within one year exceeded its interest-bearing assets with similar
characteristics by $46.1 million or 11.4% of total assets. Accordingly, an
increase in interest rates generally would result in a decrease in the Bank's
average interest rate spread and net interest income. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Asset
and Liability Management."
In addition to affecting interest income and expense, changes in
interest rates also can affect the value of the Bank's interest-earning assets,
which are comprised of fixed and adjustable-rate instruments, and the ability to
realize gains from the sale of such assets. Generally, the value of fixed-rate
instruments fluctuates inversely with changes in interest rates. At June 30,
1998, the Bank had $48.1 million of securities available for sale ($30.4 million
of which had fixed-rates of interest) and $12.2 million of loans available for
sale ($12.2 million of which had fixed-rates of interest.)
The OTS has implemented an interest rate risk component into its
risk-based capital rules, which is designed to calculate on a quarterly basis
the extent to which the value of an institution's assets and liabilities would
change if interest rates increase or decrease. If the net portfolio value of an
institution would decline by more than 2% of the estimated market value of the
institution's assets in the event of a 200 basis point increase or decrease in
interest rates, then the institution is deemed to be subject to a greater than
"normal" interest rate risk and must deduct from its capital 50% of the amount
by which the decline in net portfolio value exceeds 2% of the estimated market
value of the institution's assets, as of an effective date to be determined. As
of June 30, 1998, if interest rates increased or decreased by 200 basis points,
the Bank's net portfolio value would decrease by 30% and increase by 11%,
respectively, of the estimated market value of the Bank's portfolio equity, as
calculated by the OTS. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Asset and Liability Management." As a
result of such interest rate risk, the Bank could be required to deduct $2.6
million in calculating its total regulatory capital if certain regulations were
applicable, although even with such deduction the Bank would continue to be
deemed "well-capitalized." See "Regulation - The Bank - Regulatory Capital
Requirements."
Changes in interest rates also can affect the average life of loans and
mortgage-related and other securities. Decreases in interest rates in recent
periods have resulted in increased prepayments of loans and mortgage-related
securities, as borrowers refinanced 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 which are comparable to the rates
on the maturing loans or securities. The Bank also has utilized FHLB advances as
an additional source of funds. Such
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advances often have features permitting them to be called by the FHLB which
subjects the Bank to interest rate risk if it is required to replace such
borrowings. See "Business - Lending Activities."
Strong Competition Within the Bank's Market Area
Competition in the banking and financial services industry is intense.
In its market area, the Bank competes with commercial banks, savings
institutions, mortgage brokerage firms, credit unions, finance companies, mutual
funds, insurance companies, and brokerage and investment banking firms operating
locally and elsewhere. The Bank estimates that it competes with approximately 36
other banks and savings institutions in its market area. The largest bank
currently operating in the Bank's market area has over $2.0 billion in deposits
in each of Bucks County and Montgomery County, Pennsylvania and has over 25% and
20% of the deposit market share in such respective counties. By comparison,
Willow Grove's deposits in Bucks County and Montgomery County were $49.7 million
and $260.0 million at June 30, 1997 (the most recent available data)
representing approximately 0.7% and 2.3% of deposit market share at such date.
Many of these competitors have substantially greater resources and lending
limits than the Bank and may offer certain services that the Bank does not or
cannot provide. The profitability of the Bank depends upon its continued ability
to successfully compete in its market area.
Geographic Concentration of Loans
The market areas of the Bank are comprised primarily of Montgomery and
Bucks Counties, Pennsylvania. The real estate loans of the Bank are primarily
secured by properties located in such market area and its non-real estate loans
are primarily made to local residents. Accordingly, the asset quality of the
loan portfolios of the Bank are highly dependent upon the economy and the
unemployment rate in the market area. While the economy of the Philadelphia
suburbs generally has been stable in recent years, there is still potential for
a significant degree of volatility in the local economy. No assurance can be
given that downturns in the economy in the Bank's market area may not adversely
affect the Bank's operations in the future. See "Business of Willow Grove -
Market Area and Competition."
Regulatory Oversight and Legislation
Willow Grove is subject to extensive regulation, supervision and
examination by the OTS, as its chartering authority, and by the FDIC as insurer
of deposits up to applicable limits. The Bank is a member of the FHLB System and
is subject to certain limited regulations promulgated by the Federal Reserve
Board. The MHC and the Company also will be subject to regulation and oversight
by the OTS. Such regulation and supervision govern the activities in which an
institution can engage and are intended primarily for the protection of the
insurance fund and depositors. Regulatory authorities have been granted
extensive discretion in connection with their supervisory and enforcement
activities which are intended to strengthen the financial condition of the
banking and thrift industries, including the imposition of restrictions on the
operation of an institution, the classification of assets by the institution and
the adequacy of an institution's allowance for loan losses. Any change in such
regulation and oversight, whether by the OTS, the FDIC or Congress, could have a
material impact on the Company, the Bank and their respective operations. See
"Regulation."
On September 30, 1996, the Deposit Insurance Funds ("DIF") Act of 1996
was enacted into law. The DIF Act contemplates the development of a common
charter for all federally chartered depository institutions and the abolition of
separate charters for national banks and federal savings
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associations. It is not known what form the common charter may take and what
effect, if any, the adoption of a new charter would have on the financial
condition or results of operations of the Bank. See "Regulation - The Bank."
Legislation is proposed periodically providing for a comprehensive
reform of the banking and thrift industries, and has included provisions that
would (i) require federal savings associations to convert to a national bank or
a state-chartered bank or thrift, (ii) require all savings and loan holding
companies to become bank holding companies and (iii) abolish the OTS. It is
uncertain when or if any of this type of legislation will be passed, and, if
passed, in what form the legislation would be passed. As a result, management
cannot accurately predict the possible impact of such legislation.
Absence of Market for the Common Stock
The Company has never issued capital stock. Webb has been retained to
assist in the distribution of the Common Stock on a "best efforts" basis and is
not obligated to purchase any shares of Common Stock in the Offerings. The
Company has applied to have its Common Stock quoted on the Nasdaq National
Market, and there must be, among other things, at least three market makers for
the Common Stock. Keefe, Bruyette has indicated its intention to make a market
on the Common Stock, and the Company anticipates, based on advice received from
representatives of Webb, that it will be able to secure at least two additional
market makers for the Common Stock. See "Market for the Common Stock."
Making a market in securities involves maintaining bid and ask
quotations and being able, as principal, to effect transactions in reasonable
quantities at those quoted prices, subject to various securities laws and other
regulatory requirements. The development of a public trading market depends upon
the existence of willing buyers and sellers, the presence of which is not within
the control of the Company, the Bank, or any market maker. Because there can be
no assurance that buyers and sellers of the Common Stock can be readily matched,
investors may wish to consider the potential illiquid and long-term nature of an
investment in the Common Stock. There can be no assurance that an active and
liquid trading market for the Common Stock will develop, or once developed, will
continue, nor assurances that purchasers of the Common Stock will be able to
sell their shares at or above the Purchase Price. The absence of a liquid and
active trading market, or the discontinuance thereof, may have an adverse effect
on both the price and the liquidity of the Common Stock.
Possible Increase in Number of shares of Common Stock Issued in the
Reorganization
The number of shares of Common Stock to be sold in the Stock Issuance
may be increased as a result of an increase in the Estimated Offering Range of
up to 15% to reflect changes in market and financial conditions prior to
completion of the Reorganization or to fill the order of the ESOP. In the event
that the Estimated Offering Range is so increased, it is expected that the
Company will issue up to 2,314,375 shares of Common Stock at the Purchase Price
for an aggregate price of up to $23.1 million. An increase in the number of
shares will decrease net income per share and
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stockholders' equity per share on a pro forma basis and will increase the
Company's consolidated stockholders' equity and net income. Such an increase
will also increase the Purchase Price as a percentage of pro forma stockholders'
equity per share and net income per share.
The ESOP currently intends to purchase 8% of the shares sold in the
Offerings, which purchase may be increased to up to 10% of the shares. In the
event that the number of shares to be sold in the Offerings are increased as a
result of an increase in the Estimated Offering Range, the ESOP shall have a
first priority to purchase all of such shares sold in excess of 2,012,500
shares, up to a maximum of 10% of the total number of shares sold in the
Offerings. See "Pro Forma Data" and "The Reorganization and Stock Issuance -
Stock Pricing and Number of Shares to be Issued."
Possible Adverse Income Tax Consequences of the Distribution of Subscription
Rights
The Company and the Bank have received a letter from RP Financial
advising them of its belief that subscription rights granted to Eligible Account
Holders, Supplemental Eligible Account Holders and Other Members have no value.
However, this letter is not binding on the IRS. If the subscription rights
granted to Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members are deemed to have an ascertainable value, receipt of such rights
would be taxable probably only to those Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members who exercise the subscription rights
(either as capital gain or ordinary income) in an amount equal to such value.
Whether subscription rights are considered to have ascertainable value is an
inherently factual determination. See "The Reorganization and Stock Issuance -
Effects of the Reorganization" and "- Tax Aspects."
Year 2000 Compliance
As the year 2000 approaches, significant concerns have been expressed
with respect to the ability of existing computer software programs and operating
systems to function properly with respect to data containing dates in the year
2000 and thereafter. Many existing application software products were designed
to accommodate only a two digit year (e.g., 1998 is reflected as "98"). The
Bank's operating, processing and accounting operations are computer reliant and
could be affected by the Year 2000 issues. The Bank is reliant on third-party
vendors for its data processing needs as well as certain other significant
functions and services (e.g., securities safekeeping services, securities
pricing data, etc.). In early 1998, the Bank commenced an extensive plan to
identify and address potential systems and software problems as a result of the
Year 2000. Willow Grove also currently is working with its third-party vendors
in order to assess its Year 2000 readiness. Management believes that such
vendors are taking appropriate steps to address the issues on a timely basis.
While no assurances can be given as to actual systems operations upon the turn
of the century, based upon information currently known to it and upon
consideration of its testing efforts to date, management believes that in the
worst case scenario, the Bank will suffer only a slight interruption of business
as a result of minor application failures of its systems and software as a
result of the Year 2000. Based on certain preliminary estimates, Willow Grove
believes that its expenses related to upgrading its systems and software for
Year 2000 issues will not be material. While Willow Grove 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 Willow Grove or the third party vendors on which it relies will
become Year 2000 compliant in a successful and timely fashion. Nevertheless, the
Company 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. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Year 2000 Considerations.
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Certain Additional Anti-Takeover Considerations
As previously indicated, the MHC will own more than a majority of the
issued and outstanding shares of Common Stock and, accordingly, will be able to
elect all of the members of the Board of Directors of the Company and will be
able to control the outcome of most matters presented to stockholders for their
approval. See " - Control of the Company by the MHC." In addition, certain
provisions in the Company's Charter and Bylaws and Federal law and regulations
as well as the anticipated stock ownership levels of the Bank's management will
provide certain additional anti-takeover provisions.
The Company's Charter and Bylaws contain certain provisions that could
discourage non-negotiated takeover attempts that certain stockholders might deem
to be in their interests or as a result of which stockholders might otherwise
receive a premium for their shares over the then current market price and that
may tend to perpetuate existing management. These provisions include the
classification of the terms of the members of the Board of Directors, the
elimination of cumulative voting by stockholders in the election of directors,
certain provisions relating to meetings of stockholders, and restrictions on the
acquisition of the Company's equity securities. The Charter also authorizes the
issuance of up to 10,000,000 shares of Preferred Stock as well as additional
shares of Common Stock. Such shares could be issued without stockholder approval
on terms or in circumstances that could deter a future takeover attempt. In
addition, Federal law provides for certain restrictions on acquisition of the
Company and Bank. See "Certain Restrictions on Acquisition of the Company and
the Bank."
Directors and executive officers of the Bank expect to purchase
approximately 200,000 shares of Common Stock, which would equal 4.98% of the
total issued and outstanding shares assuming the sale of 1,750,000 shares at the
mid-point of the Estimated Offering Range. See "Proposed Management Purchases."
The directors who act as trustees of the ESOP are also expected to immediately
control the voting of 8% of the shares of Common Stock sold in the Offerings
through the ESOP, at least until an allocation has been made under the ESOP.
Under the terms of the ESOP, after an allocation has been made, the unallocated
shares will be voted by the trustees in the same proportion as the allocated
shares are voted by the ESOP participants.
The Company intends to seek stockholder approval of the Company's
proposed Recognition Plan, which is a non-tax qualified restricted stock plan
for the benefit of directors, officers, and employees of the Company and the
Bank. Assuming the receipt of stockholder approval, which stockholder approval
cannot be obtained earlier than six months following the Reorganization pursuant
to regulations of the OTS, the Company expects to acquire Common Stock on behalf
of the Recognition Plan, in an amount equal to 4% of the Common Stock sold in
the Offerings, or 59,500 shares and 80,500 shares at the minimum and maximum of
the Estimated Offering Range, respectively. These shares will be acquired either
through open market purchases, if permissible, or from authorized but unissued
Common Stock. Under the terms of the Recognition Plan, recipients of awards will
be entitled to instruct the trustee of the Recognition Plan as to how the
underlying shares should be voted, and the trustee will be entitled to vote all
unallocated shares in its discretion. If the shares are purchased in the open
market, directors and executive officers would have effective control over
11.08% or 9.55% of the Common Stock outstanding at such time based upon the
minimum and the maximum of the Estimated Offering Range, respectively, before
giving effect to the potential exercise of any stock options by directors and
officers of the Company and the Bank, and shares held by the ESOP. If approved
by stockholders at a meeting held no earlier than six months following the
Reorganization, the Company intends to reserve for future issuance pursuant to
the Stock Option Plan a number of authorized shares of Common Stock equal to an
aggregate of 10% of the Common Stock sold in the Offerings (175,000 shares,
based on the issuance of 1,750,000 shares at the mid-point of the Estimated
Offering Range). See "Management - Benefits - Stock Option Plan." Management's
potential stock ownership interest could, together with additional stockholder
support, make more difficult takeover attempts that certain stockholders deem to
be in their best interest and may tend to perpetuate existing management.
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Upon completion of the Reorganization, the Foundation will own 1.7% of
the total shares of the Common Stock outstanding. Such shares will be owned
solely by the Foundation; however, pursuant to a condition expected to be
required by regulatory authorities, it is anticipated that the shares of Common
Stock held by the Foundation will be voted in the same ratio as all other shares
of the Common Stock voted on all proposals considered by the stockholders of the
Company. As such, the Company does not believe the Foundation will have an
anti-takeover effect on the Company. However, in the event that the OTS were to
waive this voting restriction for the reasons described herein as provided in
the condition, the Foundation's Board of Directors would exercise sole voting
power over such shares and would no longer be subject to the restriction. See
"The Reorganization and Stock Issuance - Establishment of the Foundation -
Regulatory Conditions Imposed on the Foundation." In the event the OTS waived
the voting restriction (although it is not currently anticipated that the
Company and the Foundation will seek such a waiver), management of the Company
and the Bank may benefit to the extent that the Board of Directors of the
Foundation determines to vote the shares of Common Stock held by the Foundation
in favor of proposals supported by the Company and the Bank.
Upon consummation of the Reorganization, the Bank intends to enter into
a two-year employment agreement with the Bank's President and one-year
employment agreements with the Bank's three other executive officers. Such
agreements provide for severance payments under certain conditions after a
change-in-control of the Bank. Such severance provisions may have the effect of
increasing the cost of an acquisition of the Bank and, thereby, may discourage
future attempts to acquire the Company or the Bank. See "Management - Management
of the Bank - Employment Agreements."
Irrevocability of Orders; Potential Delay in Completion of Offerings
Orders submitted in the Subscription Offering and any Community
Offering or any Syndicated Community Offering are irrevocable. Funds submitted
in connection with any purchase of Common Stock in the Offerings will be held by
the Company until the completion or termination of the Reorganization and Stock
Issuance, including any extension of the Expiration Date. Because, among other
factors, completion of the Reorganization and Stock Issuance will be subject to
an update of the independent appraisal prepared by RP Financial, there may be
one or more delays in the completion of the Reorganization and Stock Issuance.
Subscribers will have no access to subscription funds and/or shares of Common
Stock until the Reorganization and Stock Issuance is completed or terminated.
WILLOW GROVE BANCORP, INC.
The Company, which is in organization, will be incorporated under
Federal law for the purpose of holding all of the capital stock of the Bank and
in order to facilitate the Reorganization and Stock Issuance. The Company has
applied for the approval of the OTS to become a savings and loan holding company
and as such will be subject to regulation by the OTS. After completion of the
Reorganization and Stock Issuance, the Company will conduct business initially
as a unitary savings and loan holding company. See "Regulation - Regulation of
Savings and Loan Holding Companies." Upon consummation of the Reorganization,
the Company will have no significant assets other than all of the outstanding
shares of common stock of the Bank, the portion of the net proceeds from the
Offerings retained by the Company and the Company's loan to the ESOP, and the
Company will have no significant liabilities. See "Use of Proceeds." Initially,
the management of the Company and the Bank will be substantially identical and
the Company will neither own nor lease any property but will instead use the
premises, equipment and furniture of the Bank. At the present time, the Company
does not intend to employ any persons other than officers who are also officers
of the Bank, and the Company will utilize the support staff of the Bank from
time to time. Additional employees will be hired as appropriate to the extent
the Company expands or changes its business in the future.
Management believes that the proposed corporate structure of the Bank
upon consummation of the Reorganization will provide the Company and the Bank
with additional flexibility to diversify its business activities through
existing or newly-formed subsidiaries, or through acquisitions of other
entities, including potentially other financial institutions and financial
services related companies. Although there are no current arrangements,
understandings or agreements regarding any such opportunities or transactions,
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 acquisition and expansion opportunities that may arise. The initial
activities of the Company are anticipated to be funded by the proceeds to be
retained by the Company and earnings thereon, as well as dividends from the
Bank. See "Dividend Policy."
The Company's principal executive office will be located at the
executive office of the Bank at Welsh and Norristown Roads, Maple Glen,
Pennsylvania 19002, and its telephone number is (215) 646-5405.
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WILLOW GROVE BANK
Willow Grove is a federally chartered, SAIF-insured mutual savings bank
conducting business from its executive offices and six branch offices. At June
30, 1998, the Bank had total assets of $405.4 million, total deposits of $340.8
million and equity of $35.9 million. For additional information with respect to
the business and operations of the Bank, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."
The Bank is subject to examination and comprehensive regulation by the
OTS, which is the Bank's chartering authority and primary federal regulator. The
Bank is also regulated by the FDIC, the administrator of the SAIF. The Bank is
also subject to certain reserve requirements established by the Federal Reserve
Board and is a member of the FHLB of Pittsburgh, which is one of the 12 regional
banks comprising the FHLB System.
The Bank's principal executive offices are located at Welsh and
Norristown Roads, Maple Glen, Pennsylvania 19002, and its telephone number is
(215) 646-5405.
WILLOW GROVE MUTUAL HOLDING COMPANY
As part of the Reorganization, the Bank will organize the MHC as a
federal mutual holding company with the powers set forth in its proposed charter
and bylaws. As long as they remain depositors of the Bank, persons who had
membership or liquidation rights with respect to the bank as of the date of the
Reorganization will continue to have such rights solely with respect to the MHC
after the Reorganization. Borrowers whose loans were outstanding on May 15, 1995
have membership rights in the Bank and, accordingly, will have membership rights
in the MHC upon completion of the Reorganization so long as their loans remain
outstanding. Members of the MHC (Consisting solely of depositors and certain
borrowers of the Bank) shall have exclusive authority to elect the board of
directors of the MHC for so long as the MHC remains a mutual institution.
The MHC's principal assets will be the shares of Common Stock received
in the Reorganization and up to $100,000 received as its initial capitalization.
Immediately after consummation of the Reorganization, it is expected that the
MHC will not engage in any business activity other than its investment in, and
control of, a majority of the Common Stock of the Company. The MHC will be a
mutual corporation chartered under federal law and regulated by the OTS. The MHC
will be subject to the limitations and restrictions imposed on savings and loan
holding companies by HOLA. See "Regulation - The Mutual Holding Company" The
MHC's executive offices will be located at Welsh and Norristown Roads, Maple
Glen, Pennsylvania 19002, and its main telephone number will be (215) 646-5405.
USE OF PROCEEDS
Although the actual net proceeds from the sale of the shares of Common
Stock cannot be determined until the Reorganization and Stock Issuance is
completed, it is presently anticipated that the net proceeds from the sale of
the shares of Common Stock will be between $14.0 million and $19.2 million
($22.2 million assuming an increase in the Estimated Offering Range by 15%). See
"Pro Forma Data" and "The Reorganization and Stock Issuance - Stock Pricing and
Number of Shares to be Issued" as to the assumptions used to arrive at such
amounts.
The Company will purchase all of the capital stock of the Bank to be
issued in the Reorganization in exchange for 50% of the Reorganization proceeds
(net of Reorganization-related expenses and the loan to be made to the ESOP),
and the Company will retain the remaining net proceeds. The Company intends to
use a portion of the net proceeds to make a loan directly to the ESOP to enable
the ESOP to purchase up to 8% of the shares of Common Stock sold in the
Offerings. Based upon the issuance of 1,487,500 shares of Common Stock and
2,012,500 shares of Common Stock at the minimum and maximum of the Estimated
Offering Range, respectively, the loan
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to the ESOP would be $1.2 million and $1.6 million, respectively. See
"Management - Benefits - Employee Stock Ownership Plan." The remaining net
proceeds retained by the Company initially may be used to invest in U.S.
Government and federal agency securities of various maturities, mortgage-backed
or other securities, deposits in either the Bank or other financial
institutions, or a combination thereof. The portion of the net proceeds retained
by the Company may ultimately be used to support the Bank's lending activities,
to repay borrowings in the ordinary course to support the future expansion of
operations through the establishment of additional banking offices or other
customer facilities or through acquisitions of other financial institutions or
branch offices (although no such acquisition transactions are specifically being
considered at this time). The net proceeds from the Offerings may also be used
for other business and investment purposes, including the payment of regular or
special cash dividends, possible repurchases of the Common Stock or returns of
capital (the Company and the Bank have committed not to take any action to
further the payment of any return of capital on the Common Stock during the
one-year period subsequent to consummation of the Reorganization). Management of
the Company expects to consider expanding or diversifying, as such opportunities
become available.
Following the six-month anniversary of the completion of the
Reorganization (to the extent permitted by the OTS), and based upon then
existing facts and circumstances, the Company's Board of Directors may determine
to repurchase some shares of Common Stock, subject to any applicable statutory
and regulatory requirements. 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, the ability to increase the book value and/or earnings per share of
the remaining outstanding shares, and an improvement in the Company's return on
equity; (ii) the avoidance of dilution to stockholders by not having to issue
additional shares to cover the exercise of stock options or to fund employee
stock benefit plans; and (iii) any other circumstances in which repurchases
would be in the best interests of the Company and its stockholders. Any stock
repurchases will be subject to the determination of the Company's Board of
Directors that the Bank will be capitalized in excess of all applicable
regulatory requirements after any such repurchases.
The portion of the net proceeds used by the Company to purchase the
capital stock of the Bank will be added to the Bank's general funds to be used
for general corporate purposes, including increased lending activities and
purchases of securities and to fund potential expenditures for improvements in
the Bank's technological resources. While the amount of net proceeds received by
the Bank will further strengthen the Bank's capital position, which already
substantially exceeds all regulatory requirements, it should be noted that the
Bank is not converting primarily to raise capital. After the Reorganization and
Stock Issuance, the Bank's tangible capital ratio will be approximately 9.9%
(based upon the maximum of the Estimated Offering Range). As a result, the Bank
will be a well-capitalized institution. After the Reorganization and Stock
Issuance, the Bank intends to emphasize capital strength and growth in assets
and earnings.
The net proceeds may vary because total expenses of the Reorganization
and Stock Issuance may be more or less than those estimated. The net proceeds
will also vary if the number of shares
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to be issued in the Reorganization and Stock Issuance is adjusted to reflect a
change in the estimated pro forma market value of the Bank. Payments for shares
made through withdrawals from existing deposit accounts at the Bank will not
result in the receipt of new funds for investment by the Bank but will result in
a reduction of the Bank's interest expense and liabilities as funds are
transferred from interest-bearing certificates or other deposit accounts.
DIVIDEND POLICY
Following consummation of the Reorganization, the Board of Directors of
the Company intends to consider implementation of a policy of paying quarterly
cash dividends on the Common Stock. However, there has been no determination
made at this point in time as to the initial rate of dividend, if any, to be
paid on the Common Stock. The initial or continued payment of dividends thereof
will depend upon a number of factors, including the amount of net proceeds
retained by the Company in the Reorganization and Stock Issuance, investment
opportunities available to the Company or the Bank, capital requirements, the
Company's and the Bank's financial condition and results of operations, tax
considerations, statutory and regulatory limitations, and general economic
conditions. No assurances can be given that any dividends will be paid or that,
if paid, will not be reduced or eliminated in future periods. If the MHC does
not waive the receipt of any dividends from the Company, the amount of dividends
payable by the Company to public stockholders will be reduced. Special cash
dividends, stock dividends or returns of capital may be paid in addition to, or
in lieu of, regular cash dividends (however, the Company and the Bank have
committed to the OTS that they will take no action to further the payment of any
return of capital during the one-year period following consummation of the
Reorganization and Stock Issuance). The Company anticipates that it will file
consolidated tax returns with the Bank commencing with the first taxable year
following Reorganization. Accordingly, it is anticipated that any cash
distributions made by the Company to its stockholders would be treated as cash
dividends and not as a non-taxable return of capital for federal and state tax
purposes.
Dividends from the Company will depend, in large part, upon receipt of
dividends from the Bank, because the Company initially will have no source of
income other than dividends from the Bank, earnings from the investment of
proceeds from the sale of shares of Common Stock retained by the Company, and
interest payments with respect to the Company's loan to the ESOP. A regulation
of the OTS imposes limitations on "capital distributions" by savings
institutions. See "Regulation - The Bank - Capital Distributions." The payment
of dividends by the Company also will depend, in part, on the payment of
dividends by the Bank to the Company, which Bank dividends are subject to OTS
regulations. See "Regulation - The Bank - Capital Distributions." It is
currently unclear what limitations may exist with respect to the Company's
ability to pay dividends since the OTS has not promulgated regulations with
respect to this matter. However, the OTS may, by regulation or otherwise, impose
similar restrictions on the Company's ability to pay dividends as are imposed on
the Bank.
Any payment of dividends by the Bank to the Company which would be
deemed to be drawn out of the Bank's bad debt reserves would require a payment
of taxes at the then-current tax rate by the Bank on the amount of earnings
deemed to be removed from the reserves for such distribution. The Bank does not
intend to make any distribution to the Company that would create such a federal
tax liability. See "Taxation."
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WAIVER OF DIVIDENDS BY THE MHC
The Board of Directors of the MHC will determine whether the MHC will
waive the receipt of dividends declared by the Company each time the Company
declares a dividend. The Board of Directors of the MHC presently intends to
waive the receipt of dividends declared by the Company. OTS regulations require
the MHC to notify the OTS of any proposed waiver of the right to receive
dividends. It is the OTS' recent practice to review dividend waiver notices on a
case-by-case basis, and, in general, not to object to any such waiver if: (i)
the mutual holding company's board of directors determine that such waiver is
consistent with such directors' fiduciary duties to the mutual holding company's
members; (ii) for as long as the subsidiary holding company is controlled by the
mutual holding company, the dollar amount of dividends waived by the mutual
holding company is considered to be a restriction on the stockholders' equity of
the subsidiary holding company, which restriction, if material, is disclosed in
the public financial statements of the subsidiary holding company 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 Statement of Financial Accounting
Standards No. 5, where the subsidiary holding company 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 subsidiary holding
company 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
Transaction takes into account the amount of the dividends waived by the mutual
holding company. In addition, the OTS has announced that the dividends waived by
the mutual holding companies will affect the ratio pursuant to which shares of
common stock of a subsidiary holding company held by Minority Stockholders would
be exchanged for shares of common stock of the converted holding company in a
Conversion Transaction. The OTS will not permit a pro rata exchange if the
mutual holding company has waived the receipt of cash dividends by the
subsidiary holding company. Accordingly, the precise treatment of any Conversion
Transaction cannot be assured. Any waiver of dividends by the MHC is likely to
result in an adjustment to the ratio pursuant to which shares of Common Stock
are exchanged for shares of the converted MHC in a Conversion Transaction, which
adjustment will have the effect of diluting Minority Stockholders' interests.
See "MHC Conversion to Stock Form."
The MHC's Board of Directors may conclude that a dividend waiver by the
MHC, which permits retention of capital by the Company, is in the best interest
of the MHC's members because, among other reasons: (i) the MHC has no need for
the dividend for its business operations, (ii) the cash that would be received
could be invested by the Company more effectively; and (iii) such waiver
preserves the retained earnings of the MHC through its principal asset (the
Company), which would be available for distribution in the unlikely event of a
voluntary liquidation of the Company after satisfaction of claims of depositors
and other creditors. The Board of Directors may consider other factors in
determining whether such waiver is consistent with its fiduciary duties to
members of the MHC. There is no assurance that the MHC will waive the receipt of
the dividends.
33
<PAGE>
Immediately after consummation of the Reorganization and the Stock
Issuance, it is expected that the MHC's operations will consist of activities
relating to its investment in, and control of, a majority of the shares of
Common Stock of the Company and maintenance of books and records relating to
members of the MHC. In the future, the MHC may accept dividends paid by the
Company to be used for the payment of operating expenses and other purposes,
including purchasing Common Stock from time to time in the open market or from
the Company. There can be no assurance that the MHC will accept dividends paid
by the Company, or if such dividends are accepted, that the MHC will purchase
shares of Common Stock in the open market. Any purchases of Common Stock other
than from the MHC will increase the percentage of the Company's outstanding
shares of Common Stock held by the MHC and increase the number of shares
eligible to be sold in any subsequent secondary offering or mutual to stock
conversion of the MHC. Any waiver of dividends by the MHC is likely to result in
an adjustment to the ratio pursuant to which shares of Common Stock are
exchanged for shares of the converted MHC in the event of a Conversion
Transaction, which adjustment will have the effect of diluting Minority
Stockholders' percentage ownership interest in the converted MHC's shares. See
"MHC Conversion to Stock Form."
MHC CONVERSION TO STOCK FORM
As long as the MHC remains a mutual holding company, it must own at
least a majority of the outstanding voting stock of the Company. OTS regulations
specifically authorize mutual holding companies to (i) convert to stock form and
(ii) exchange stock issued by the converted holding company for stock issued by
a subsidiary holding company. OTS regulations require that such exchange be
"fair and reasonable" but do not specify the basis for such exchange. Although
the MHC may convert to stock form in the future, the Bank has no current plans
and there can be no assurance as to when, if ever, such a conversion will occur.
Any Conversion Transaction would be subject to federal securities laws and
regulations of the OTS in effect at the time of the Conversion Transaction. In
addition, the OTS may, in the future, authorize alternative forms of structure
or organization for mutual holding companies or their affiliates or
subsidiaries. Although the Bank and the MHC may consider such alternative forms
of structure or organization, there can be no assurances as to when, if ever,
the Bank and the MHC will choose to avail itself of any such alternative form of
structure or organization. A decision by the MHC to convert to stock form would
require the approval of its members prior to the Conversion Transaction. It is
expected that these members will have subscription rights to purchase stock of
the converted MHC. In a Conversion Transaction, the MHC, the Company or the Bank
will have to demonstrate to the OTS that the terms of such exchange are fair and
reasonable and comply with the stock purchase limitations of the OTS conversion
regulations (which may, as a condition to OTS approval of the Conversion
Transaction, in certain limited circumstances, require certain insiders of the
Bank who have accumulated shares in excess of stock purchase limitations in the
Conversion Transaction to divest such shares in connection with such Conversion
Transaction, and also potentially restrict or prohibit additional purchases of
Common Stock in the Conversion Transaction by other stockholders that would be
in excess of such stock purchase limitations). The fairness of the exchange may
be supported by an opinion from an independent third party.
34
<PAGE>
The OTS policy with respect to dividends waived by mutual holding
companies requires that, in the case of mutual to stock conversions of recently
formed mutual holding companies, such as the MHC, the aggregate amount of cash
dividends waived by a mutual holding company must be considered when
establishing a fair and reasonable basis for exchanging subsidiary holding
company common stock for converted MHC common stock. The OTS will not permit a
pro rata exchange if the mutual holding company has waived the receipt of cash
dividends by the subsidiary holding company. Accordingly, the precise treatment
of any Conversion Transaction cannot be assured. Any waiver of dividends by the
MHC is likely to result in an adjustment to the ratio pursuant to which shares
of Common Stock are exchange for shares of the converted MHC in a Conversion
Transaction, which adjustment will have the effect of diluting Minority
Stockholders' ownership interests.
In addition to the possible adjustment to the exchange ratio due to
waived dividends, the percentage of the converted MHC's common stock received by
Minority Stockholders in any Conversion Transaction may be affected by any
purchases of Common Stock by the MHC, any subsequent secondary offerings or
other stock issuances by the Company (including shares issued under the terms of
the Stock Option Plan and MRP), any intervening acquisitions by the MHC, the
Company's dividend policy, including special dividends and the amount of
dividends paid by the Company.
As an alternative to the exchange of shares discussed above, if the
stockholders of the Company do not receive shares of the converted MHC or the
stock institution resulting from the Conversion Transaction based upon a fair
and reasonable exchange ratio, or cash from the resulting institution in an
amount equal to the fair market value of their stock given the circumstances of
the Conversion Transaction, the Company or the MHC (and its successors) may
elect to purchase all shares of the Common Stock not owned by its simultaneously
with the consummation of the Conversion Transaction at the fair market value of
the stock on the date of the Conversion Transaction, subject to OTS approval and
compliance with the limitations of the OTS regulations governing capital
distributions and other conditions that the OTS may impose. Such fair market
value of the Company's Common Stock shall be established by an independent
appraisal, and may be greater than or less than the Purchase Price. Moreover, if
the Common Stock is traded and has an established and liquid trading market, of
which there is no assurance, the fair market value of the Common Stock, as
established by the independent appraisal, may be greater than or less than the
trading price of such stock.
Moreover, in the event that the MHC converts to stock form in a
Conversion Transaction, any options or other convertible securities held by an
officer, director or employee of the Company, convertible into shares of Common
Stock shall become options to purchase or convertible into shares of the
converted MHC; provided, however, that if such options or convertible shares
cannot be so reconstituted, the holders of such options or other convertible
securities shall be entitled to receive cash payment for such shares in an
amount equal to the offering price of the number of shares of the converted MHC
into which such securities would otherwise be converted, less the exercise price
of such options of other convertible securities. Any such exchange or redemption
of these securities will
35
<PAGE>
be subject to the written approval of the OTS, and there can be no assurance
that such approval would be obtained. In addition, the OTS may place
restrictions on the Company's or the MHC's ability to purchase Common Stock that
are more restrictive than the OTS regulations governing capital distributions.
The fair market value of the common stock of the converted MHC shall be
established by the independent appraisal utilized in the Conversion Transaction
pursuant to the OTS regulations governing conversions However, there is no plan,
agreement or understanding with respect to such a conversion, and there can be
no assurance that such a conversion will occur.
Further, if the MHC were to undertake a Conversion Transaction, and in
connection therewith additional shares of stock of the converted MHC were
proposed to be contributed to the Foundation, any Conversion Transaction and
contribution of additional shares of Common Stock to the Foundation will be
voted on as separate matters and both matters will require the approval of (i) a
majority of the total outstanding vote of the members of the MHC eligible to be
cast and (ii) a majority vote of the total outstanding shares of Common Stock
held by stockholders other than the MHC and the Foundation.
MARKET FOR THE COMMON STOCK
The Company and the Bank have never issued capital stock, and,
consequently, there is no established market for the Common Stock at this time.
The Company has applied to have its Common Stock quoted on the Nasdaq National
Market under the symbol "WGBC." Making a market involves maintaining bid and ask
quotations and being able, as principal, to effect transactions in reasonable
quantities at these quoted prices, subject to various securities laws and other
regulatory requirements. Additionally, the development of a liquid public market
depends on the existence of willing buyers and sellers, the presence of which is
not within the control of the Company, the Bank or any market maker.
Accordingly, the number of active buyers and sellers of the Common Stock at any
particular time may be limited. Under such circumstances, investors in the
Common Stock could have difficulty disposing of their shares and should not view
the Common Stock as a short-term investment. Accordingly, there can be no
assurance that an active and liquid trading market for the Common Stock will
develop or that, if developed, it will continue, nor is there any assurance that
persons purchasing shares of Common Stock will be able to sell them at or above
the Purchase Price. In order to be quoted on the Nasdaq National Market, among
other criteria, there must be at least three market makers for the Common Stock,
the Company must satisfy certain minimum capitalization requirements, and there
must be at least 400 round lot shareholders. Keefe, Bruyette has indicated its
intention to act as a market maker in the Common Stock following the
consummation of the Reorganization, depending on trading volume and subject to
compliance with applicable laws and regulatory requirements. Furthermore, Webb
has agreed to use its best efforts to assist the Company in obtaining at least
two additional market makers for the Common Stock. There can be no assurance
there will be two additional market makers for the Common Stock. There can be no
assurance that purchasers will be able to sell their shares at or above the
Purchase Price.
36
<PAGE>
REGULATORY CAPITAL
At June 30, 1998, Willow Grove exceeded all of the regulatory capital
requirements applicable to it. The table on the following page sets forth the
historical regulatory capital of Willow Grove at June 30, 1998 and the pro forma
regulatory capital of Willow Grove after giving effect to the Reorganization and
Stock Issuance, based upon the sale of the number of shares shown in the table.
The pro forma regulatory capital amounts reflect the receipt by the Bank of 50%
of the net Stock Issuance proceeds, minus expenses and the amounts to be loaned
to the ESOP and contributed to the RRP. The pro forma risk-based capital amounts
assume the investment of the net proceeds received by the Bank in assets which
have a risk-weight of 20% under applicable regulations, as if such net proceeds
had been received and so applied at June 30, 1998.
37
<PAGE>
<TABLE>
<CAPTION>
Pro Forma at June 30, 1998 Based on
--------------------------------------------------------------
1,487,500 1,750,000
Shares Sold Shares Sold
Historical at at $10.00 at $10.00
June 30, 1998 Per Share Per Share
------------------------- ---------------------------- ----------------------------
Percent of Percent of Percent of
Amount Assets(1) Amount Assets(1) Amount Assets(1)
----------- ------------ ------------ ------------- ------------ -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible capital:
Actual...................... $33,504 8.3% $38,625 9.4% $39,607 9.7%
Requirement................. 6,038 1.5 6,132 1.5 6,150 1.5
------- ---- ------- ---- ------- ----
Excess...................... $27,466 6.8% $32,492 7.9% $33,457 8.2%
======= ==== ======= ==== ======= ====
Core capital(2):
Actual...................... $33,504 8.3% $38,625 9.4% $39,607 9.7%
Requirement................. 12,075 3.0 12,264 3.0 12,300 3.0
------- ----- ------- ---- ------- ----
Excess...................... $21,429 5.3% $26,360 6.4% $27,307 6.7%
======= ===== ======= ==== ======= ====
Risk-based capital(2):
Actual...................... $36,169 14.9% $41,290 16.9% $42,272 17.3%
Requirement................. 19,438 8.0 19,539 8.0 19,558 8.0
------- ---- ------- ---- ------- ----
Excess...................... $16,731 6.9% $21,751 8.9% $22,714 9.3%
======= ==== ======= ==== ======= ====
<CAPTION>
Pro Forma at June 30, 1998 Based on
----------------------------------------------------------
2,012,500 2,314,375
Shares Sold Shares Sold
at $10.00 at $10.00
Per Share Per Share
--------------------------- ---------------------------
Percent of Percent of
Amount Assets(1) Amount Assets(1)
----------- ------------ ----------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Tangible capital:
Actual...................... $40,590 9.9% $41,719 10.1%
Requirement................. 6,168 1.5 6,188 1.5
------- ---- ------- ----
Excess...................... $34,422 8.4% $35,531 8.6%
======= ==== ======= ====
Core capital(2):
Actual...................... $40,590 9.9% $41,719 10.1%
Requirement................. 12,336 3.0 12,377 3.0
------- ---- ------- ----
Excess...................... $28,254 6.9% $29,342 7.1%
======= ==== ======= ====
Risk-based capital(2):
Actual...................... $43,255 17.9% $44,384 18.1%
Requirement................. 19,577 8.0 19,599 8.0
------- ---- ------- ----
Excess...................... $23,678 9.9% $24,785 10.1%
======= ==== ======= ====
</TABLE>
- ---------------------------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate. The Bank's
adjusted total assets and risk-weighted assets were $402.5 million and
$242.9 million, respectively, as June 30, 1998. The Bank's pro forma
adjusted total assets at the minimum, mid-point, maximum and maximum, as
adjusted of the Estimated Offering Range would be $414.8, $417.2, $419.5
and $422.1, respectively, while its risk-weighted assets would be $245.4,
$248.4, $251.8 and $255.7, respectively. As of June 30, 1998, the Bank's
equity capital, calculated in accordance with GAAP, was $35.9 million or
9.04% of total assets. See "capitalization" for the Bank's pro forma GAAP
capital at the minimum, mid-point, maximum and maximum, as adjusted of the
Estimated Offering Range.
(2) Does not reflect the interest rate risk component to be added to the
risk-based capital requirements or, see "Regulation - The Bank - Regulatory
Capital Requirements."
38
<PAGE>
CAPITALIZATION
The following table presents the historical capitalization of the Bank
at June 30, 1998, and the pro forma consolidated capitalization of the Company
after giving effect to the Reorganization, based upon the sale of the number of
shares shown below and the other assumptions set forth under "Pro Forma Data."
<TABLE>
<CAPTION>
The Company - Pro Forma
Based Upon Sale at $10.00 Per Share
---------------------------------------------
The Bank- 1,487,500 Shares 1,750,000 Shares
Historical (Minimum of (Midpoint of
Capitalization Range) Range)
-------------------- -------------------- ---------------------
(In Thousands) (Dollars)
<S> <C> <C> <C>
Deposits(2)....................................... $340,793 $340,793 $340,793
Borrowings........................................ 21,000 21,000 21,000
--------- -------- --------
Total deposits and borrowings..................... $ 361,793 $361,793 $361,793
========= ======== ========
Stockholders' equity:
Preferred Stock, $.01 par value, 10,000,000
shares authorized; none to be issued......... $ -- $ -- $ --
Common Stock, $.01 par value, 25,000,000
shares authorized; shares to be issued as
reflected(3)................................. $ -- $ 34 $ 40
Additional paid-in capital..................... -- 13,977 16,566
Retained earnings(4)........................... 35,865 35,765 35,765
Shares issued to Foundation(5)................. -- 595 700
Net unrealized gain on investment securities
available for sale........................... 80 80 80
Less:
Expense of contribution to Foundation,
net(6)....................................... -- (393) (462)
Common Stock to be acquired by the
ESOP(7)...................................... -- (1,190) (1,400)
Common Stock to be acquired by the
Recognition Plan(8).......................... -- (595) (700)
--------- -------- --------
Total stockholders' equity........................ $ 35,945 $ 48,273 $ 50,589
========= ======== ========
Stockholders' equity to total assets.............. 8.87% 11.56% 12.04%
========= ========= =========
Total shares to be issued and outstanding(9)...... NA 3,417,000 4,020,000
========= ========= =========
<CAPTION>
The Company - Pro Forma
Based Upon Sale at $10.00 Per Share
-----------------------------------------------
2,012,500 Shares 2,314,375 Shares(1)
(Maximum of (15% above
Range) Maximum of Range)
-------------------- -----------------------
(In Thousands)
<S> <C> <C>
Deposits(2)....................................... $340,793 $340,973
Borrowings........................................ 21,000 21,000
-------- --------
Total deposits and borrowings..................... $361,793 $361,973
======== ========
Stockholders' equity:
Preferred Stock, $.01 par value, 10,000,000
shares authorized; none to be issued......... $ -- $ --
Common Stock, $.01 par value, 25,000,000
shares authorized; shares to be issued as
reflected(3)................................. $ 46 $ 53
Additional paid-in capital..................... 19,155 22,132
Retained earnings.............................. 35,765 35,765
Shares issued to Foundation(4)................. 805 926
Net unrealized gain on investment securities
available for sale........................... 80 80
Less:
Expense of contribution to Foundation,
net(5)....................................... (531) (611)
Common Stock to be acquired by the
ESOP(6)...................................... (1,610) (1,852)
Common Stock to be acquired by the
Recognition Plan(7).......................... (805) (926)
--------- ---------
Total stockholders' equity........................ $ 52,905 $ 55,567
========= =========
Stockholders' equity to total assets.............. 12.53% 13.07%
========= =========
Total shares to be issued and outstanding(8)...... 4,623,000 5,316,450
========= =========
</TABLE>
(Footnotes on following page)
39
<PAGE>
- ----------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Offering Range of up to 15%
to reflect changes in market and financial conditions following the
commencement of the Offerings.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Offerings. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals.
(3) Reflects the issuance of the shares of Common Stock to be sold in the
Offerings. No effect has been given to the issuance of additional shares of
Common Stock pursuant to the proposed Stock Option Plan. See "Pro Forma
Data" and "Management - Benefits - Stock Option Plan." Reflects issuance of
additional shares of Common Stock to the Foundation.
(4) Pro forma information reflects proposed $100,000 contribution to capital to
the MHC.
(5) Reflects shares to be contributed to the Foundation at an assumed value of
$10.00 per share.
(6) Net of the tax effect of the contribution of Common Stock to the Foundation
based upon an assumed 34.0% tax rate. The realization of the deferred tax
benefit is limited annually to 10% of the Company's annual taxable income,
subject to the ability of the Company to carry forward any unused portion
of the deduction for five years following the year in which the
contribution is made. Due to this limitation, no state income tax benefit
has been assured. Historical equity has been reduced in the pro forma
presentation by $100,000 due to the retention of such amount by the MHC as
its initial capitalization upon consummation of the MHC.
(7) Assumes that 8.0% of the Common Stock sold in the Offerings will be
purchased by the ESOP, which is reflected as a reduction of stockholders'
equity. The ESOP shares will be purchased with funds loaned to the ESOP by
the Company. See "Pro Forma Data" and "Management - Benefits - Employee
Stock Ownership Plan."
(8) The Company intends to adopt the Recognition Plan and to submit such plan
to stockholders at an annual or special meeting of stockholders held at
least six months following the consummation of the Reorganization. If the
plan is approved by stockholders, the Company intends to contribute
sufficient funds to the trust created under the Recognition Plan to enable
the trust to purchase a number of shares of Common Stock equal to 4.0% of
the Common Stock sold in the Offerings. Assumes that stockholder approval
has been obtained and that the shares have been purchased in the open
market at the Purchase Price. However, in the event the Company issues
authorized but unissued shares of Common Stock to the Recognition Plan in
the amount of 4.0% of the Common Stock sold in the Offerings, the voting
interests of existing stockholders would be diluted approximately 3.8%. The
shares are reflected as a reduction of stockholders' equity. See "Pro Forma
Data" and "Management - Benefits - Recognition Plan."
(9) Reflects shares to be sold in the offering, issued to the MHC and
contributed to the Foundation. Does not give any effect to the anticipated
stock option Plan.
40
<PAGE>
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Reorganization is completed. However, net proceeds are
currently estimated to be between $14.0 million and $19.2 million (or $22.2
million in the event the Estimated Offering Range is increased by 15%) based
upon the following assumptions: (i) all shares of Common Stock will be sold in
the Subscription Offering; (ii) no fees will be paid to Webb on shares purchased
by (x) the ESOP and any other employee benefit plan of the Company or the Bank,
(y) officers, directors, employees and members of their immediate families or
(z) the Foundation; (iii) Webb will receive a fee equal to 1.25% of the
aggregate Purchase Price for sales in the Subscription Offering (excluding the
sale of shares to the ESOP, employee benefit plans, officers, directors and
their immediate families and the Foundation); (iv) the Company will contribute
to the Foundation an amount of Common Stock equal to 4.0% of the Common Stock
sold in the Offerings from authorized but unissued shares; and (v) total
expenses, including the marketing fees paid to Webb will be between $864,000 and
$924,000 (or $959,000 in the event the Estimated Offering Range is increased by
15%). Actual expenses may vary from those estimated.
Pro forma consolidated net income and stockholders' equity of the
Company have been calculated for the fiscal year ended June 30, 1998 as if the
Common Stock to be issued in the Offerings had been sold at the beginning of the
period and the net proceeds had been invested at 5.37%, which represents the
yield on one-year U.S. Government securities at June 30, 1998 (which, in light
of changes in interest rates in recent periods, are deemed by the Company and
the Bank to more accurately reflect pro forma reinvestment rates than the
arithmetic average method). The effect of withdrawals from deposit accounts for
the purchase of Common Stock has not been reflected. A combined Federal and
state income tax rate of 39.0% has been assumed for the period, resulting in an
after-tax yield of 3.28%, for the year ended June 30, 1998. 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 shares purchased by the ESOP and the effect of the issuance
of shares to the Foundation. See Note 3 to the tables below. 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
intends to make a loan to fund the purchase of 8.0% of the Common Stock by the
ESOP and retain 50% of the net proceeds from the Offerings.
No effect has been given in the tables to the issuance of additional
shares of Common Stock pursuant to the proposed Option Plan. See "Management -
Benefits - Stock Option Plan." The table below gives effect to the Recognition
Plan, which is expected to be adopted by the Company following the
Reorganization and presented (together with the Stock Option Plan) to
stockholders for approval at an annual or special meeting of stockholders to be
held at least six months following the consummation of the Reorganization. If
the Recognition Plan is approved by stockholders, the Recognition Plan intends
to acquire an amount of Common Stock equal to 4.0% of the shares of Common Stock
sold in the Offerings, either through open market purchases or from authorized
but unissued shares of Common Stock. The table below assumes that stockholder
approval has been obtained, as to which there can be no assurance, and that the
shares acquired by the Recognition Plan
41
<PAGE>
are purchased in the open market at the Purchase Price. No effect has been given
to (i) the Company's results of operations after the Reorganization, (ii) the
market price of the Common Stock after the Reorganization or (iii) a less than
4.0% purchase by the Recognition Plan.
The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations. Pro forma stockholders' equity represents the difference
between the stated amount of assets and liabilities of the Company computed in
accordance with GAAP.
The following table gives effect to the issuance of authorized but
unissued shares of the Common Stock to the Foundation concurrently with the
completion of the Reorganization. The pro forma stockholders' equity is not
intended to represent the fair market value of the Common Stock and may be
different than amounts that would be available for distribution to stockholders
in the event of liquidation.
42
<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended June 30, 1998
--------------------------------------------------------------
1,487,500 1,750,000 2,012,500 2,314,375
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00 Per
Per Share Per Share Per Share Share (15%
(Minimum of (Midpoint (Maximum of above Maximum
Range) of Range) Range) of Range)(8)
-------------- ------------- ------------- ----------------
(Dollars in Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Gross proceeds............................................. $ 14,875 $ 17,500 $ 20,125 $ 23,144
Plus: Shares acquired by Foundation (equal to
4.0% of the shares sold in the Offerings)................ 595 700 805 926
---------- ---------- ---------- ----------
Pro forma market capitalization.......................... $ 15,470 $ 18,200 $ 20,930 $ 24,070
========== ========== ========== ==========
Gross proceeds............................................. 14,875 17,500 20,125 23,144
Less offering expenses and commissions..................... 864 894 924 959
0 0 0 0
---------- ---------- ---------- ----------
Estimated net proceeds................................... $ 14,011 $ 16,606 $ 19,201 $ 22,185
Less: Shares purchased by the ESOP......................... (1,190) (1,400) (1,610) (1,852)
Shares purchased by the
Recognition Plan................................... (595) (700) (805) (926)
---------- ---------- ---------- ----------
Total estimated net proceeds, as adjusted(1)............... 12,226 14,506 $ 16,786 $ 19,408
========== ========== ========== ==========
Net income(2):
Historical............................................... $ 2,445 $ 2,445 $ 2,445 $ 2,445
Pro forma income on net proceeds, as adjusted............ 397 472 547 632
Pro forma ESOP adjustment(3)............................. (73) (85) (98) (113)
Pro forma Recognition Plan
adjustment(4).......................................... (73) (85) (98) (113)
---------- ---------- ---------- ----------
Pro forma net income..................................... $ 2,696 $ 2,747 $ 2,796 $ 2,851
========== ========== ========== ==========
Net income per share(2)(5):
Historical............................................... $ 0.74 $ 0.63 $ 0.55 $ 0.47
Pro forma income on net proceeds, as adjusted............ 0.12 0.12 0.12 0.12
Pro forma ESOP adjustment(3)............................. (0.02) (0.02) (0.02) (0.02)
Pro forma Recognition Plan adjustment(4)................ (0.02) (0.02) (0.02) (0.02)
---------- ---------- ---------- ----------
Pro forma net income per share(4)(6)..................... $ 0.82 $ 0.71 $ 0.63 $ 0.55
========== ========== ========== ==========
Number of shares outstanding for pro forma net income per
share calculations(5)............................. 3,309,900 3,894,000 4,478,100 5,149,185
========= ========= ========= =========
Offering price to pro forma net
income per share(5)...................................... 12.20x 14.08x 15.87x 18.18x
===== ===== ===== =====
Stockholders' equity:
Historical............................................... $ 35,845 $ 35,845 $ 35,845 $ 35,845
Estimated net proceeds................................... 14,011 16,606 19,201 22,185
Plus: Shares issued to Foundation........................ 595 700 805 926
Less: Contribution to Foundation......................... (595) (700) (805) (926)
Plus: Tax benefit of the contribution to Foundation...... 202 238 274 315
Less: Common Stock acquired by the ESOP(3)............... (1,190) (1,400) (1,610) (1,852)
Common Stock to be acquired by
the Recognition Plan(4).......................... (595) (700) (805) (926)
---------- ---------- ---------- ----------
Pro forma stockholders' equity(4)(6)(7).................. $ 48,273 $ 50,589 $ 52,905 $ 55,567
========== ========== ========= ==========
Stockholders' equity per share(5):
Historical............................................... $ 10.49 $ 8.92 $ 7.75 $ 6.74
Estimated net proceeds................................... 4.10 4.13 4.15 4.17
Plus: Shares issued to Foundation........................ 0.17 0.17 0.17 0.17
Less: Contribution to Foundation......................... (0.17) (0.17) (0.17) (0.17)
Plus: Tax benefit of contribution to Foundation.......... 0.06 0.06 0.06 0.06
Less: Common Stock acquired by the ESOP(3)............... (0.35) (0.35) (0.35) (0.35)
Common Stock to be acquired by the Recognition
Plan(4)......................................... (0.17) (0.17) (0.17) (0.17)
---------- ---------- ---------- ----------
Pro forma stockholders' equity
per share(4)(6)(7)..................................... $14.13 $12.59 $11.44 $10.45
====== ====== ====== ======
Offering price as a percentage of pro
forma stockholders' equity per share(5)................ 70.77% 79.43% 87.41% 95.69%
===== ===== ===== =====
Offering price as a percentage of pro forma tangible
stockholders' equity per share(5)...................... 74.41% 83.31% 91.50% 99.94%
===== ===== ===== ======
Number of shares outstanding for pro forma stockholders'
equity per share calculations(5)......................... 3,417,000 4,020,000 4,623,000 5,316,450
========== ========= ========= =========
</TABLE>
43
<PAGE>
- ---------------
(1) Estimated net proceeds, as adjusted, consist of the estimated net proceeds
from the Offerings minus (i) the proceeds attributable to the purchase by
the ESOP and (ii) the value of the shares to be purchased by the
Recognition Plan, subject to stockholder approval, after the Reorganization
at an assumed purchase price of $10.00 per share.
(2) Does not give effect to the non-recurring expense that will be recognized
in fiscal 1999 as a result of the establishment of the Foundation. The
Company will recognize an after-tax expense for the amount of the
contribution to the Foundation which is expected to be $393,000, $462,000,
$531,000 and $611,000 at the minimum, midpoint, maximum and maximum, as
adjusted, of the Estimated Valuation Range, respectively. Assuming the
contribution to the Foundation was expensed during the year ended June 30,
1998, pro forma net earnings per share would be 0.70, 0.59, 0.51 and 0.43
at the minimum, midpoint, maximum and maximum, as adjusted, respectively.
Per share net income data is based on 3,309,500, 3,894,000, 4,478,100 and
5,149,815 shares outstanding which represents shares issued to the MHC,
sold in the Offerings, shares contributed to the Foundation and shares to
be allocated or distributed under the ESOP and Recognition Plan for the
period presented.
(3) It is assumed that 8.0% of the shares of Common Stock sold in the Offerings
will be purchased by the ESOP with funds loaned by the Company. The Company
and the Bank intend to make annual contributions to the ESOP in an amount
at least equal to the principal and interest requirement of the debt. The
pro forma net earnings assumes (i) that the loan to the ESOP is payable
over 10 years, with the ESOP shares having an average fair value of $10.00
per share in accordance with SOP 93-6, entitled "Employers' Accounting for
Employee Stock Ownership Plans," of the AICPA, and (ii) the effective tax
rate was 39.0% for the period. See "Management - Benefits - Employee Stock
Ownership Plan."
(4) It is assumed that the Recognition Plan will purchase, following
stockholder approval of such plan, a number of shares of Common Stock equal
to 4.0% of the shares of Common Stock sold in the Offerings for issuance to
directors, officers and employees. Funds used by the Recognition Plan to
purchase the shares initially will be contributed to the Recognition Plan
by the Company. It is further assumed that the shares were acquired by the
Recognition Plan at the beginning of the period presented in open market
purchases at the Purchase Price and that 20% of the amount contributed, net
of combined Federal and State taxes of 39.0%, was an amortized expense
during the year ended June 30, 1998. The issuance of authorized but
unissued shares of Common Stock pursuant to the Recognition Plan in the
amount of 4.0% of the Common Stock sold in the Offerings would dilute the
voting interests of existing stockholders by approximately 3.8% and under
such circumstances pro forma net earnings per share for the year ended June
30, 1998 would be $0.81, $0.70, $0.63 and $0.56, at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Offering Range,
respectively, and pro forma stockholders' equity per share at June 30, 1998
would be $14.06, $12.54, $11.42 and $10.45 at the minimum, midpoint,
maximum and 15% above the maximum of such range, respectively. There can be
no assurance that the actual purchase price of shares purchased by or
issued to the Recognition Plan will be equal to the Purchase Price. See
"Management - Benefits - Recognition Plan."
(footnotes continued on following page)
44
<PAGE>
(5) The per share calculations are determined by adding the number of shares
assumed to be issued to the MHC and sold in the Offerings as well as
contributed to the Foundation and for purposes of calculating earnings per
share, in accordance with SOP 93-6, subtracting 107,100 shares, 126,000
shares, 144,900 shares, and 166,635 shares, respectively, representing the
ESOP shares which have not been committed for release during the year ended
June 30, 1998. Thus, it is assumed at June 30, 1998 that 3,309,500,
3,894,000, 4,478,100 and 5,149,815 shares of Common Stock are outstanding
at the minimum, midpoint, maximum and 15% above the maximum of the
Estimated Offering Range, respectively. Assuming the uncommitted ESOP
shares were not subtracted from the number of shares of Common Stock
outstanding at June 30, 1998, the offering price as a multiple of pro forma
net earnings per share would be 12.66x, 14.71x, 16.67x and 18.52x at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated
Offering Range, respectively. For purposes of calculating pro forma
stockholders' equity per share, it is assumed that shares outstanding total
3,417,000, 4,020,000, 4,623,000 and 5,316,450 shares at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range.
(6) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan, which will be adopted by the
Company following the Reorganization and presented for approval by
stockholders at an annual or special meeting of stockholders of the Company
held at least six months following the consummation of the Reorganization.
If the Stock Option Plan is approved by stockholders, an amount equal to
10% of the Common Stock sold in the Offerings, or 148,750, 175,000, 201,250
and 231,438 shares at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated 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 stockholder approval of the Stock Option
Plan, that all these options were exercised at the beginning of the period
at an exercise price of $10.00 per share and that the shares to fund the
Recognition Plan are acquired through open market purchases at the Purchase
Price, pro forma net earnings per share for the year ended June 30, 1998
would be $0.82, $0.71, $0.63, and $0.55 at the minimum, midpoint, maximum
and 15% above the maximum of the Estimated Offering Range, respectively,
and pro forma stockholders' equity per share at June 30, 1998 would be
$14.13, $12.59, $11.44 and $10.45 at the minimum, midpoint, maximum and 15%
above the maximum of such range, respectively. See "Management - Benefits -
Stock Option Plan."
(7) The retained earnings of the Bank will be substantially restricted because
certain distributions from the Bank's retained earnings may be treated as
being from its accumulated bad debt reserve for tax purposes, which would
cause the Bank to have additional taxable income. See "Taxation - Federal
Taxation." No effect has been given to the establishment of the liquidation
account subsequent to the Reorganization. Pro forma stockholders' equity
and pro forma stockholders' equity per share do not give effect to the bad
debt reserves established by the Bank for federal income tax purposes in
the event of a liquidation of the Bank. Pro forma retained earnings have
been reduced by $100,000 to reflect the proposed capitalization by the MHC.
(8) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Offering Range of up to 15%
to reflect changes in market and financial conditions following the
commencement of the Offerings.
45
<PAGE>
COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH NO FOUNDATION
In the event that the Foundation was not being established as part of
the Reorganization, RP Financial has estimated that the pro forma aggregate
market capitalization of the Company would be approximately $18.6 million at the
midpoint, which is approximately $408,000 greater than the pro forma aggregate
market capitalization of the Company if the Foundation is included, and would
result in an approximately $1.1 million increase in the amount of Common Stock
offered for sale in the Stock Issuance. At the mid-point, the pro forma price to
book ratio and pro forma price to earnings ratio without the Foundation would be
81.90% and 14.71x, respectively, compared to 79.43% and 14.08x, respectively,
with the Foundation. Further, assuming the midpoint of the Estimated Offering
Range, pro forma stockholders' equity per share and pro forma earnings per share
without the Foundation would be $12.21 and $0.68, respectively, and $12.59 and
$0.71, respectively, with the Foundation. There is no assurance that in the
event the Foundation was not formed that the appraisal prepared at the time
would have concluded that the pro forma market value of the Company would be the
same as that estimated herein. Any appraisals prepared at that time would be
based on the facts and circumstances existing at that time, including, among
other things, market and economic conditions.
For comparative purposes only, set forth below are certain pricing
ratios and financial data and ratios, at the minimum, midpoint, maximum and
maximum, as adjusted, of the Estimated Offering Range, assuming the
Reorganization and Stock Issuance was completed at June 30, 1998.
<TABLE>
<CAPTION>
At the Minimum At the Midpoint
------------------------------- ------------------------------
With With
Foundation No Foundation Foundation No Foundation
--------------- -------------- --------------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Estimated offering amount................. $ 14,875 $ 15,816 $ 17,500 $ 18,608
Pro forma market capitalization........... 15,470 15,816 18,200 18,608
Total assets.............................. 417,702 418,318 420,018 420,743
Total liabilities......................... 369,429 369,429 369,429 369,429
Pro forma stockholders' equity............ 48,273 48,889 50,589 51,314
Pro forma consolidated net earnings....... 2,696 2,715 2,747 2,766
Pro forma stockholders' equity per share.. 14.13 13.70 12.59 12.21
Pro forma consolidated net earnings per
share.................................. 0.82 0.79 0.71 0.68
Pro forma pricing ratios:
Offering price as a percentage of pro
forma stockholders' equity per
share................................ 70.77% 72.99% 79.43% 81.90%
Offering price to pro forma net
earnings per share(1)................ 12.20x 12.66x 14.08x 14.71x
Pro forma market capitalization to
assets............................... 8.18% 8.53% 9.57% 9.98%
Pro forma financial ratios:
Return on assets(2).................... 0.65% 0.65% 0.65% 0.66%
Return on stockholders' equity(3)...... 5.58% 5.55% 5.43% 5.39%
Stockholders' equity to assets......... 11.56% 11.69% 12.04% 12.20%
<CAPTION>
At the Maximum,
At the Maximum As Adjusted
------------------------------- ------------------------------
With With
Foundation No Foundation Foundation No Foundation
--------------- -------------- -------------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Estimated offering amount................. $ 20,125 $ 21,399 $ 23,144 $ 24,609
Pro forma market capitalization........... 20,930 21,399 24,070 24,609
Total assets.............................. 422,334 423,166 424,996 425,955
Total liabilities......................... 369,429 369,429 369,429 369,429
Pro forma stockholders' equity............ 52,905 53,737 55,567 56,526
Pro forma consolidated net earnings....... 2,796 2,820 2,851 2,879
Pro forma stockholders' equity per share.. 11.44 11.13 10.45 10.17
Pro forma consolidated net earnings per
share.................................. 0.63 0.60 0.55 0.54
Pro forma pricing ratios:
Offering price as a percentage of pro
forma stockholders' equity per
share................................ 87.41% 89.85% 95.69% 98.33%
Offering price to pro forma net
earnings per share(1)................ 15.87x 16.67x 18.18x 18.52x
Pro forma market capitalization to
assets............................... 10.95% 11.41% 12.51% 13.04%
Pro forma financial ratios:
Return on assets(2).................... 0.66% 0.67% 0.67% 0.68%
Return on stockholders' equity(3)...... 5.28% 5.25% 5.13% 5.09%
Stockholders' equity to assets......... 12.53% 12.70% 13.07% 13.27%
</TABLE>
- -----------------
(1) If the contribution to the Foundation had been expensed during the year
ended June 30, 1998, the offering price to pro forma net earnings per share
would have been 14.37x, 17.04x, 19.77x and 22.99x at the minimum, midpoint,
maximum and maximum, as adjusted, respectively.
(2) If the contribution to the Foundation had been expensed during the year
ended June 30, 1998, return on assets would have been 0.55%, 0.54%, 0.54%
and 0.53% at the minimum, midpoint, maximum and maximum, as adjusted,
respectively.
(3) If the contribution to the Foundation had been expensed during the year
ended June 30, 1998, return on stockholders' equity would have been 4.77%,
4.52%, 4.28% and 4.03% at the minimum, midpoint, maximum and maximum, as
adjusted, respectively.
46
<PAGE>
WILLOW GROVE BANK
STATEMENTS OF OPERATIONS
Set forth below are the statements of operations of the Bank for the
periods indicated. The financial statements of the Bank as of June 30, 1998,
1997 and 1996 were audited by KPMG Peat Marwick LLP, independent public
accountants.
<TABLE>
<CAPTION>
For the Year Ended
June 30,
-------------------------------------------------------------
1998 1997 1996
------------------- ------------------- ---------------
(Dollars In Thousands)
<S> <C> <C> <C>
Interest and dividend income:
Loans receivable................................... $25,356 $22,374 $18,456
Securities, primarily taxable...................... 3,248 3,049 3,649
------- ------- -------
Total interest income......................... 28,604 25,423 22,105
------- ------- -------
Interest expense:
Deposits........................................ 14,536 13,224 11,598
Borrowings...................................... 529 555 729
Advance payment from borrowers for
taxes......................................... 32 38 43
------- ------- -------
Total interest expense........................ 15,097 13,817 12,370
------- ------- -------
Net interest income................................ 13,507 11,606 9,735
Provision for loan losses.......................... 993 185 210
------- ------- -------
Net interest income after provision for
loan losses................................... 12,514 11,421 9,525
------- ------- -------
Non-interest income:
Service charges and fees........................ 618 409 364
Gain (loss) on sale of land held for
development and resale...................... (25) 16 314
Gain (loss) on sale of securities available
for sale.................................... (105) (8) 564
Gain (loss) on sale of loans available for
sale........................................ 69 29 (66)
Loan servicing income, net...................... 203 340 69
------- ------- -------
Total non-interest income..................... 760 786 1,245
------- ------- -------
Non-interest expense:
Compensation and employee benefits.............. 5,386 3,440 2,919
Occupancy....................................... 636 470 403
Furniture and equipment......................... 328 264 229
Federal insurance premium....................... 195 1,829 545
Amortization of intangible assets............... 410 410 410
Data processing ................................ 388 319 350
Advertising..................................... 413 297 287
Community enrichment............................ 373 259 --
Other expense................................... 1,333 996 881
------- ------- -------
Total non-interest expense.................... 9,462 8,284 6,024
------- ------- -------
Income before income taxes......................... 3,812 3,923 4,746
Income taxes....................................... 1,367 1,548 1,744
------- ------- -------
Net income......................................... $ 2,445 $ 2,375 $ 3,002
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
47
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to assist in understanding the
financial condition and results of operations of Willow Grove. The discussion
and analysis does not include any comments relating to the Company since the
Company has had no significant operations. The information contained in this
section should be read in conjunction with the Financial Statements and the
accompanying Notes and the other sections contained in this Prospectus.
The Bank's results of operations depend primarily on its net interest
income, which is the difference between interest income on interest-earning
assets, which principally consist of loans and securities, and interest expense
on interest-bearing liabilities which consist of deposits and borrowings. The
Bank's results of operations also are affected by the provision for loan losses,
the level of its other income and expenses, and income tax expense.
Market Risk Analysis - Asset and Liability Management
Qualitative Risk Analysis. The ability to maximize net interest income
is largely dependent upon the achievement of a positive interest rate spread
that can be sustained during fluctuations in prevailing interest rates. Interest
rate sensitivity is a measure of the difference between amounts of
interest-earning assets and interest-bearing liabilities which either reprice or
mature within a given period of time. The difference, or the interest rate
repricing "gap," provides an indication of the extent to which an institution's
interest rate spread will be affected by changes in interest rates. A gap is
considered positive when the amount of interest-rate sensitive assets exceeds
the amount of interest-rate sensitive liabilities, and is considered negative
when the amount of interest-rate sensitive liabilities exceeds the amount of
interest-rate sensitive assets. Generally, during a period of rising interest
rates, a negative gap within shorter maturities would adversely affect net
interest income, while a positive gap within shorter maturities would result in
an increase in net interest income, and during a period of falling interest
rates, a negative gap within shorter maturities would result in an increase in
net interest income while a positive gap within shorter maturities would have
the opposite effect. As of June 30, 1998, the ratio of the Bank's cumulative
one-year gap to total interest-earning assets was a negative 11.6% and its ratio
of interest-earning assets to interest-bearing liabilities maturing or repricing
within one year was 77.3%.
In order to minimize the potential for adverse effects of material and
prolonged increases in interest rates on the Bank's results of operations, the
Bank has adopted asset and liability management policies designed to better
match the maturities and repricing terms of the Bank's interest-earning assets
and interest-bearing liabilities. Willow Grove's actions with respect to
interest rate risk and its asset/liability gap management are taken under the
guidance of the Asset/Liability Management Committee ("ALCO") of Willow Grove,
which is comprised of directors Langan, Kremp and Ramsey as well as the Bank's
President and the three other senior executive officers. The purpose of the ALCO
is to communicate, coordinate and control asset/liability management consistent
with the Bank's business plan and Board approved policies. The ALCO establishes
and monitors the volume and mix of assets and funding sources taking into
account relative costs and spreads, interest rate sensitivity and liquidity
needs. The objectives are to manage assets and funding sources to produce
48
<PAGE>
results that are consistent with liquidity, capital adequacy, growth, risk and
profitability goals. The ALCO generally meets on at least a quarterly basis to
review, among other things, economic conditions and interest rate outlook,
current and projected liquidity needs and capital positions, anticipated changes
in the volume and mix of assets and liabilities and interest rate risk exposure
limits versus current projections pursuant to gap analysis and income
simulations. At each meeting, the ALCO recommends appropriate strategy changes
based on such review.
In order to manage its assets and liabilities and improve the Bank's
interest rate risk exposure in recent years Willow Grove has emphasized the
origination of commercial and multi-family real estate loans, construction
loans, commercial business loans and home equity loans, all of which generally
have shorter terms to maturity than single-family residential mortgage loans and
are more likely to have interest rates which either are floating or adjustable.
At the same time, the Bank has been seeking to lengthen the term of its deposits
by emphasizing longer term certificates of deposit, to increase the amount of
its core deposits and to reduce its costs of funds by increasing non-interest
bearing checking and business accounts. In recent years, the Bank has used FHLB
advances as an additional source of funds and, pursuant to guidelines of the
Bank's Board of Directors, has reinvested such funds in securities with
estimated lives approximating the lives of the advances but with effective
yields higher than the rate paid for the advances.
Quantitative Risk Analysis. The ALCO regularly reviews interest rate
risk by, among other things, examining the impact of alternative interest rate
environments on net interest income and market value of portfolio equity
("MVPE"), which is defined as the net present value of an institution's existing
assets, liabilities and off-balance sheet instruments, and evaluating such
impacts against the maximum potential changes in net interest income and MVPE
that is authorized by the Board of Directors of the Bank.
Presented below, as of June 30, 1998, is an analysis of Willow Grove's
interest rate risk as measured by changes in net portfolio value ("NPV") for
instantaneous and sustained parallel shifts in the yield curve, in 100 basis
point increments, up and down 400 basis points in accordance with OTS
regulations. As illustrated in the table, NPV is more sensitive to and may be
more negatively impacted by, rising rates than declining rates. This occurs
principally because as rates rise, the market value of fixed-rate loans declines
due to both the rate increase and slowing prepayments. When rates decline, the
Bank does not experience a significant rise in market value for these loans
because borrowers prepay at relatively high rates. The value of the Bank's
deposits and borrowings change in approximately the same proportion in rising or
falling rate scenarios.
49
<PAGE>
<TABLE>
<CAPTION>
Estimated Change in
-----------------------------------------------------------------------
Change (in Basis Points) in Net Interest Income
Interest Rates(1) (next four quarters) MVPE
------------------------------- ------------------------------- ------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
+400 (32)% $(4,414) (65)% $(29,254)
+300 (24) (3,355) (48) (21,520)
+200 (15) (2,055) (30) (13,523)
+100 (6) (858) (13) (5,917)
0
-100 8 1,089 8 3,607
-200 8 1,182 11 4,955
-300 16 2,271 16 7,060
-400 16 2,271 23 10,449
</TABLE>
- -------------
(1) Assumes an instantaneous uniform change in interest rates at all
maturities.
The assumptions used by management to evaluate the vulnerability of the
Bank's operations to changes in interest rates in the table above are based on
assumptions utilized in the gap table below. Although management finds these
assumptions reasonable, the interest rate sensitivity of the Bank's assets and
liabilities and the estimated effects of changes in interest rates on the Bank's
net interest income and MVPE indicated in the above table could vary
substantially if different assumptions were used or actual experience differs
from such assumptions. Based upon the above-described changes in the Bank's
MVPE, the Bank could be required to deduct $2.6 million from the calculation of
its total regulatory capital if certain OTS regulations were applicable,
although the Bank would continue to be deemed a "well-capitalized" institution.
See "Regulation - Regulation of Federal Savings Banks - Regulatory Capital
Requirements."
50
<PAGE>
The following table summarizes the anticipated maturities or repricing
of the Bank's interest-earning assets and interest-bearing liabilities as of
June 30, 1998, based on the information and assumptions set forth in the notes
below.
<TABLE>
<CAPTION>
More Than
Three to More Than Three Years
Within Three Twelve One Year to to Five Over Five
Months Months Three Years Years Years Total
------------- ------------ ------------ ------------ ------------ -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Cash and interest-earning deposits...... $18,291 $ -- $ -- $ -- $ -- $ 18,291
Securities(1)(2)........................ 20,812 1,800 4,150 9,800 11,549 48,111
Loans(3)(4)............................. 46,642 69,147 91,317 73,117 49,902 330,125
------- -------- -------- ------- ------- --------
Total interest-earning assets......... $85,745 $ 70,947 $ 95,467 $82,917 $61,451 $396,527
======= ======== ======== ======= ======= ========
Interest-bearing liabilities:
Escrow accounts......................... 2,913 1,568 -- -- -- 4,481
Money market accounts(5)................ 15,365 3,842 960 240 80 20,487
Savings accounts(5)..................... 6,034 5,129 4,359 3,705 20,998 40,225
NOW accounts(5)......................... 15,866 10,630 7,122 4,772 9,689 48,079
Certificates of deposit(5).............. 32,972 97,350 84,191 14,148 3,341 232,002
Borrowings(6)........................... 7,000 4,000 -- 6,000 4,000 21,000
------- -------- -------- ------- ------- --------
Total interest-bearing liabilities.... $80,150 $122,519 $ 96,632 $28,865 $38,108 $366,274
======= ======== ======== ======= ======= ========
Excess (deficiency) of interest-earning
assets over interest-bearing liabilities.. $5,595 $(51,572) $ (1,165) $54,052 $23,343 $ 30,253
======= ======== ======== ======= ======= ========
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities....................... $5,595 $(45,977) $(47,142) $ 6,910 $30,253
======= ======== ======== ======= =======
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities as a percent of
total assets.............................. 1.38% (11.34)% (11.63)% 1.70% 7.46%
==== ====== ====== ==== ====
Ratio of interest-earning assets to interest
bearing liabilities........................ 106.82% 57.91% 98.79% 287.26% 161.25%
====== ===== ===== ====== ======
</TABLE>
- --------------
(1) Includes $20.0 million of callable agency securities for which the expected
repayment schedule is based on management's estimates given the current
interest rate environment.
(2) Repayments are based on management's estimates given the current interest
rate environment.
(3) Adjustable-rate loans are included in the period in which interest rates
are next scheduled to adjust rather than in the period in which they are
due, and fixed-rate loans are included in the periods in which they are
scheduled to be repaid, based on scheduled amortization, in each case as
adjusted for management's estimates of prepayments.
(4) Includes available for sale loans. Balances are gross of the allowance for
loan losses and deferred loan fees, and have been reduced for
non-performing loans, which amounted to $1.5 million at June 30, 1998.
(5) Although the Bank's NOW accounts, passbook savings accounts and money
market deposit accounts are subject to immediate withdrawal, management
considers a substantial amount of such accounts to be core deposits having
significantly longer effective maturities. The decay rates used on these
accounts are based on management estimates and should not be regarded as
indicative of the actual withdrawals that may be experienced by the Bank.
(6) Borrowings consist of FHLB advances and are stated at contractual maturity.
A substantial amount of such advances could be called for repayment within
one year.
51
<PAGE>
Certain assumptions are contained in the above tables which affect the
presentation therein. Although certain assets and liabilities may have similar
maturities or periods of repricing, they may react in different degrees to
changes in market interest rates. The interest rates on certain types of assets
and liabilities may fluctuate in advance of changes in market interest rates,
while interest rates of other types of assets and liabilities lag behind changes
in market interest rates. Certain assets, such as adjustable-rate mortgage
loans, have features which restrict changes in interest rates on a short-term
basis and over the life of the asset. In the event of a change in interest
rates, prepayment and early withdrawal levels would likely deviate significantly
from those assumed in calculating the table.
Changes in Financial Condition
General. Total assets of Willow Grove increased by $50.7 million, or
14.3%, to $405.4 million at June 30, 1998 compared to $354.7 million at June 30,
1997. Such increase was due primarily to a $31.1 million increase in net loans
receivable.
Cash and cash equivalents. Cash and cash equivalents, which consist of
cash and deposits at other institutions, amounted to $18.3 million and $4.2
million at June 30, 1998 and 1997, respectively. The increase during fiscal 1998
primarily reflects significant loan repayments during the period as well as
deposit inflows during the period.
Assets Available for Sale. At June 30, 1998, Willow Grove's assets
available for sale consisted of $48.1 million in securities and $12.2 million in
loans compared to $45.8 million and $6.2 million, respectively, at June 30,
1997. During fiscal 1996, the Bank reclassified substantially all of its
securities as available for sale pursuant to Statement of Financial Accounting
Standards No. 115 ("SFAS 115"). Such classification provides the Bank with
additional flexibility to dispose of securities prior to maturity if, for
example, it is determined that they have unacceptable levels of interest rate
risk, that their sale is desirable for liquidity purposes or for other asset and
liability management reasons. Securities classified as available for sale are
accounted for at fair value, with unrealized gains or losses, net of taxes,
reflected as an adjustment to equity. As a result of changes in market rates of
interest, at June 30, 1998, the Bank had a net unrealized gain on securities
available for sale of $80,000 compared to a net loss of $298,000 at June 30,
1997. Mortgage loans which are originated by the Bank for sale into the
secondary market are classified as available for sale and are carried at the
lower of cost or market value with any unrealized losses reflected in the
statement of operations.
Loans. Willow Grove's net loans receivable amounted to $315.7 million
at June 30, 1998 compared to $284.6 million at June 30, 1997. The $31.1 million,
or 10.9%, increase in the Bank's net loan portfolio during fiscal 1998 was due
primarily to a $9.0 million increase in commercial real estate mortgage loans
and a $15.8 million increase in home equity loans. The increase in the loan
portfolio was due to increased loan demand as well as the Bank's efforts to
expand its lending activities, other than single-family residential first
mortgage loans.
Intangible Assets. Willow Grove's intangible assets amounted to $2.4
million and $2.8 million at June 30, 1998 and 1997, respectively. Such assets
are comprised of goodwill and a core deposit intangible resulting from the
Bank's purchase of three branch offices from another institution
52
<PAGE>
in March 1994. The goodwill is being amortized on a straight-line basis over 15
years while the core deposit intangible is being amortized on an accelerated
basis over 10 years.
Liabilities. Willow Grove's total liabilities increased by $47.8
million, or 14.9%, to $369.4 million at June 30, 1998 compared to $321.6 million
at June 30, 1997. The primary reason for such increase was a $31.1 million
increase in deposits together with a $14.5 million increase in borrowings. The
Bank attributes the growth in deposits primarily to its efforts to solicit
no-cost checking accounts and business accounts. The increase in borrowings
reflects the Bank's determination to utilize borrowings, on a limited basis, as
an additional source of funds. The Bank has commenced a leverage program
whereby, subject to limits established by the Bank's Board of Directors, it
obtains FHLB advances and, at the same time, purchases securities with estimated
average lives corresponding to the term of the advances while paying a higher
yield than the cost of borrowings. Pursuant to such leverage program, the
Board's policy permits the President or Chief Financial Officer to obtain
borrowings of up to $20 million at any time in order to make investments. At
June 30, 1998, the Bank had $16.0 million in borrowings outstanding under this
leverage program and a commensurate amount of securities. See "Business Sources
of Funds - Borrowings."
Equity. Total equity of Willow Grove amounted to $35.9 million, or 8.9%
of total assets, at June 30, 1998 compared to $33.1 million, or 9.3% of total
assets, at June 30, 1997. The increase in Willow Grove's total equity from June
30, 1997 to June 30, 1998 primarily reflects net income of $2.4 million during
the year.
53
<PAGE>
Average Balances, Net Interest Income, Yields Earned and Rates Paid
The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest income of the Bank from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average rate; (iii) net interest income; (iv) interest rate spread; and (v) net
interest margin. Information is based on average daily balances during the
indicated periods. The table also reflects the yields on the Bank's
interest-earning assets and costs of the Bank's interest-bearing liabilities at
June 30, 1998. Given that the Bank had only nominal amounts of tax-exempt
investments ($100,000 at June 30, 1998), the data below is shown without tax
effects.
<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------
1998
---------------------------------------
Average
Yield/Cost at Average Yield/
June 30, 1998 Balance Interest Cost
------------- ------------- ---------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(1):
Mortgage loans.............................. 7.89% $303,458 $24,824 8.18%
Non-mortgage consumer loans................. 9.08 4,038 254 6.29
Commercial business loans................... 9.32 3,423 278 8.12
-------- -------
Total loans............................... 7.93 310,919 25,356 8.16
Securities................................... 6.16 46,336 2,923 6.31
Other interest-earning assets(2)............. 6.11 6,961 325 4.67
-------- -------
Total interest-earning assets............. 7.66 364,216 28,604 7.85
-------
Noninterest-earning assets..................... 10,364
--------
Total assets.............................. $374,580
========
Interest-bearing liabilities:
Deposits:
NOW and money market accounts............. 1.43% $ 60,144 $ 916 1.52%
Savings accounts.......................... 2.10 36,984 787 2.13
Certificates of deposit................... 5.62 226,340 12,833 5.67
-------- -------
Total deposits.......................... 4.36 323,468 14,536 4.49
Borrowings................................... 5.62 9,794 529 5.40
Advance payments by borrowers
for taxes and insurance............... 2.00 3,274 32 0.98
-------- -------
Total interest-bearing liabilities........... 4.40 336,536 15,097 4.49
-------
Noninterest bearing liabilities(3)............. 2,133
--------
Total liabilities....................... 338,669
Retained earnings.............................. 35,911
--------
Total liabilities and equity............ $374,580
========
Net interest-earning assets.................... $ 27,680
========
Net interest income/interest rate spread....... $13,507 3.36%
======= ======
Net interest margin............................ 3.71%
======
Ratio of average interest-earning assets
to average interest-bearing liabilities...... 108.22%
======
<CAPTION>
Year Ended June 30,
-----------------------------------------------------------------------------
1997 1996
----------------------------------- ---------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
---------- --------- --------- ------------ ---------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(1):
Mortgage loans.............................. $273,423 $22,208 8.12% $225,084 $18,256 8.11%
Non-mortgage consumer loans................. 2,635 164 6.22 1,688 118 6.99
Commercial business loans................... 1,743 2 0.11 1,459 82 5.62
-------- ------- -------- -------
Total loans............................... 277,801 22,374 8.05 228,231 18,456 8.09
Securities................................... 44,811 2,877 6.42 54,596 3,478 6.37
Other interest-earning assets(2)............. 3,641 172 4.72 3,428 171 4.99
-------- ------- -------- -------
Total interest-earning assets............. 326,253 25,423 7.79 286,255 22,105 7.72
------- -------
Noninterest-earning assets..................... 9,121 8,317
-------- --------
Total assets.............................. $335,374 $294,572
======== ========
Interest-bearing liabilities:
Deposits:
NOW and money market accounts............. $ 47,784 $ 803 1.68 $ 37,882 $ 721 1.90
Savings accounts.......................... 34,690 768 2.21 32,810 745 2.27
Certificates of deposit................... 205,792 11,653 5.66 176,777 10,132 5.73
-------- ------- -------- -------
Total deposits.......................... 288,266 13,224 4.59 247,469 11,598 4.69
Borrowings................................... 10,567 555 5.25 12,956 729 5.63
Advance payments by borrowers
for taxes and insurance............... 3,091 38 1.23 2,812 43 1.53
-------- ------- -------- -------
Total interest-bearing liabilities........... 301,924 13,817 4.58 263,237 12,370 4.70
------- -------
Noninterest bearing liabilities(3)............. 1,948 1,627
-------- --------
Total liabilities....................... 303,872 264,864
Retained earnings.............................. 31,502 29,708
-------- --------
Total liabilities and equity............ $335,374 $294,572
======== ========
Net interest-earning assets.................... $ 24,329 $ 23,018
======== ========
Net interest income/interest rate spread....... $11,606 3.21% $ 9,735 3.02%
======= ====== ======= ======
Net interest margin............................ 3.56 3.40%
====== ======
Ratio of average interest-earning assets
to average interest-bearing liabilities...... 108.06% 108.74%
====== ======
</TABLE>
- ----------
(1) The average balance of loans receivable includes loans available for sale
and nonperforming loans, interest on which is recognized on a cash basis.
(2) Includes money market accounts and interest-earning bank deposits.
(3) Consists primarily of demand deposit accounts.
54
<PAGE>
Rate/Volume Analysis
The following table sets forth the effects of changing rates and
volumes on net interest income of the Bank. Information is provided with respect
to (i) effects on interest income attributable to changes in volume (changes in
volume multiplied by prior rate); (ii) effects on interest income attributable
to changes in rate (changes in rate multiplied by prior volume); and (iii)
changes in rate/volume (change in rate multiplied by change in volume).
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------
1998 compared to 1997
----------------------------------------------------
Increase (decrease) due to
----------------------------------------------------
Total Net
Rate Increase
Rate Volume /Volume (Decrease)
------ -------- ------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Mortgage loans.......................... $164 $2,439 $ 13 $2,616
Non-mortgage consumer loans............. 2 87 1 90
Commercial business loans............... 140 2 134 276
---- ------ ---- ------
Total loans receivable................ 306 2,528 148 2,982
Securities................................. (49) 98 (3) 46
Other interest - earning assets............ (2) 157 (2) 153
---- ------ ---- ------
Total net change in income on
interest-earning assets............... 255 2,783 143 3,181
--- ------ ---- ------
Interest-bearing liabilities:
Deposits:
NOW and money market deposits........... (76) 208 (19) 113
Savings accounts........................ (28) 51 (4) 19
Certificates of deposit................. 21 1,163 (4) 1,180
---- ------ ---- ------
Total deposits....................... (83) 1,422 (27) 1,312
Borrowings.................................. 16 (41) (1) (26)
Advance payments by borrowers for taxes
and insurance............................. (8) 2 - (6)
---- ------ ---- ------
Total net change in expense on
interest-bearing liabilities............. (75) 1,383 (28) 1,280
---- ------ ---- ------
Net change in net interest income........... $330 $1,400 $171 $1,901
==== ====== ==== ======
<CAPTION>
Year Ended June 30,
---------------------------------------------------
1997 compared to 1996
---------------------------------------------------
Increase (decrease) due to
---------------------------------------------------
Total Net
Rate/ Increase
Rate Volume Volume (Decrease)
----- -------- ------ -----------
(In Thousands)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Mortgage loans.......................... $ 23 $3,920 $ 9 $3,952
Non-mortgage consumer loans............. (13) 66 (7) 46
Commercial business loans............... (80) 16 (16) (80)
---- ------ ---- ------
Total loans receivable................ (70) 4,002 (14) 3,918
Securities................................. 27 (623) (5) (601)
Other interest - earning assets............ (9) 11 (1) 1
---- ------ ---- ------
Total net change in income on
interest-earning assets............... (52) 3,390 (20) 3,318
---- ------ ---- ------
Interest-bearing liabilities:
Deposits:
NOW and money market deposits........... (83) 188 (23) 82
Savings accounts........................ (20) 43 -- 23
Certificates of deposit................. (124) 1,663 (18) 1,521
---- ------ ---- ------
Total deposits....................... (227) 1,894 (41) 1,626
Borrowings.................................. (49) (135) 10 (174)
Advance payments by borrowers for taxes
and insurance............................. (8) 4 (1) (5)
---- ------ ---- ------
Total net change in expense on
interest-bearing liabilities............. (284) 1,763 (32) 1,447
---- ------ ---- ------
Net change in net interest income........... $232 $1,627 $ 12 $1,871
==== ====== ==== ======
</TABLE>
55
<PAGE>
Results of Operation
General. Willow Grove reported net income of $2.4 million for the year
ended June 30, 1998 compared to $2.4 million and $3.0 million for the years
ended June 30, 1997 and 1996, respectively. While the Bank's net interest income
increased in both in fiscal 1998 and 1997, the results of operations for those
years were adversely affected by decreases in other income and increases in
other expenses including, in fiscal 1997, a one-time special SAIF assessment of
$1.5 million.
Net Interest Income. Net interest income is determined by the Bank's
interest rate spread (i.e., the difference between the yields earned on the
Bank's interest-earning assets and the rate paid on its interest-bearing
liabilities) and the relative amounts of interest-earning assets and
interest-bearing liabilities. While many institutions have experienced
compression in their interest rate spreads in recent years, Willow Grove's
spread has improved in each of the last three fiscal years. In large part, the
Bank's management attributes such increases in spread to the Bank's efforts to
increase its originations of higher yielding home equity loans, commercial and
multi-family real estate loans, construction loans and commercial business loans
as well as its strategy to decrease its costs of funds by attracting increased
amounts of lower costing checking and business accounts. Willow Grove's average
interest rate spread was 3.36%, 3.21% and 3.02% during the fiscal years ended
June 30, 1998, 1997 and 1996, respectively. The Bank's net interest margin
(i.e., net interest income as a percentage of average interest-earning assets)
was 3.71%, 3.56% and 3.40% during the fiscal years ended June 30, 1998, 1997 and
1996, respectively. The Bank's interest-rate spread was 3.26% at June 30, 1998
compared to its average interest rate spread of 3.36% for the fiscal year. Given
the current interest rate environment, the Bank's interest-rate spread may be
subject to further compression in future periods.
Willow Grove's net interest income amounted to $13.5 million for the
fiscal year ended June 30, 1998 compared to $11.6 million and $9.7 million for
the fiscal years ended June 30, 1997 and 1996, respectively. The $1.9 million,
or 16.4%, increase in net interest income in fiscal 1998 compared to fiscal 1997
was due to an increase in interest income due primarily to a larger average
balance of interest-earning assets, particularly real estate loans, as well as
an increase in interest rate spread. The $1.9 million, or 19.6%, increase in net
interest income in fiscal 1997 compared to fiscal 1996 was due primarily to an
increase during the year in the average balance of the Bank's loan portfolio.
Interest Income. Willow Grove reported total interest income of $28.6
million for the fiscal year ended June 30, 1998 compared to $25.4 million and
$22.1 million for fiscal 1997 and 1996, respectively. The $3.2 million, or
12.6%, increase in interest income in fiscal 1998 compared to fiscal 1997 was
due primarily to a $3.0 million increase in interest income from loans. The
increase in interest income from loans in fiscal 1998 is attributable primarily
to a $30.0 million, or 11.0%, increase in the average balance of the Bank's real
estate loans as well as a six basis point (with 100 basis points being equal to
1.0%) increase in the average yield earned on real estate loans. Interest income
from securities increased by $199,000 in fiscal 1998 compared to fiscal 1997.
The average balance of the Bank's securities portfolio increased by an aggregate
of $1.5 million in fiscal 1998 compared to fiscal 1997, which offset an 11 basis
point decrease in the average yield on securities.
56
<PAGE>
Total interest income increased by $3.3 million, or 14.9%, in the
fiscal year ended June 30, 1997 compared to fiscal 1996. Such increase was due
to a $3.9 million increase in interest income on loans which more than offset a
$600,000 decrease in interest income from securities. The average balance of
loans increased by $49.6 million in fiscal 1997 compared to fiscal 1996. The
average balance of securities decreased $9.8 million in fiscal 1997.
Interest Expense. Interest expense is comprised primarily of interest
paid on deposit accounts maintained at the Bank and, to a much lesser extent, on
borrowings and escrow accounts. Total interest expense amounted to $15.1 million
for the fiscal year ended June 30, 1998 compared to $13.8 million and $12.4
million, respectively, for fiscal 1997 and 1996. The primary reason for the $1.3
million, or 9.4%, increase in interest expense in fiscal 1998 was increased cost
as a result of the increased volume associated with the Bank's certificates of
deposit, which constitute the largest component of the Bank's deposits. The
average balance of the Bank's certificates of deposit increased by 10.0% to
$226.3 million for the fiscal year ended June 30, 1998 compared to fiscal 1997.
The average cost of certificates of deposit was relatively constant and amounted
to 5.67% in fiscal 1998 and 5.66% in fiscal 1997. The average balance of the
Bank's NOW and money market accounts increased by 25.7% in fiscal 1998 to $60.1
million while the average cost of such deposits declined by 16 basis points
during the fiscal year. Interest expense on savings accounts and borrowings
changed nominally in fiscal 1998 compared to fiscal 1997.
Total interest expense increased by $1.4 million, or 11.3%, in fiscal
1997 compared to fiscal 1996. Interest expense on certificates of deposit
increased by $1.6 million, or 15.8%, to $11.7 million in fiscal 1997 compared to
fiscal 1996 due to a 16.4% increase in the average balance of certificates
during the period. Such increase was partially offset by a $174,000 reduction in
expense on borrowings due to a $2.4 million, or 18.5%, reduction in the average
balance of borrowings. Interest expense on NOW and money market accounts and
savings accounts increased nominally in fiscal 1997 compared to fiscal 1996.
The Bank's certificates of deposit are its highest costing deposit
accounts. While the average balance of the Bank's certificate accounts increased
in both fiscal 1998 and 1997, it declined as a percentage of total deposits to
68.1% at June 30, 1998 from 70.0% at June 30, 1997 and 71.4% at June 30, 1996.
The Bank's NOW and money market accounts, which is its lowest costing form of
deposit, increased both in average balance in fiscal 1998 and 1997 and as a
percentage of total deposits to 20.1% at June 30, 1998, compared to 18.3% and
16.0%, respectively, at June 30, 1997 and 1996.
Provision for Loan Losses. Willow Grove establishes provisions for loan
losses, which are charged to operations, in order to maintain the allowance for
loan losses at a level which is deemed appropriate to absorb future charge-offs
of loans deemed uncollectible. In determining the appropriate level of the
allowance of loan losses, management considers past experience, evaluations of
real estate collateral, current and anticipated economic conditions, volume and
type of lending and the levels of nonperforming and other classified loans. The
amount of the allowance is based on estimates and the ultimate losses may vary
from such estimates. Management of the Bank assesses the allowance for loan
losses on at least a quarterly basis and will make provisions for loan losses as
deemed appropriate by management in order to maintain the adequacy
57
<PAGE>
of the allowance. Willow Grove's provision for loan losses was $993,000 for the
fiscal year ended June 30, 1998 compared to $185,000 and $210,000 for the years
ended June 30, 1997 and 1996, respectively. The primary reason for the
significant increase in Willow Grove's provision for loan losses in fiscal 1998
was the increase in the Bank's total loan portfolio including single-family
residential mortgage which do not conform to FNMA and FHLMC underwriting
guidelines, the continuing shift in recent years of such loan portfolio towards
home equity second mortgage loans, construction loans, commercial real estate
and commercial business loans, and a change in the Bank's allowance for loan
loss methodology to give greater consideration of loan loss allowance ratio
levels maintained by peer group institutions. Management periodically evaluates
whether the methodology used to estimate the allowance for loan losses provides
for a reasonable basis on which to determine the amount of the provision for
loan losses. While management has historically relied on its own loan experience
as one of the factors to be considered in determining the allowance for loan
losses, management determined during 1998 that consideration of loss reserve
ratios established by peer group institutions should be given greater emphasis
than the Bank had in the past because, in part, management believed
industry-wide experience may better represent the inherent loss in its portfolio
due to the changing mix of loan types therein. In making this determination, the
Bank considered in particular the increase in its outstanding commercial
business and commercial real estate loans, which generally are deemed to be more
risky than the single-family residential mortgage loans historically originated
by the Bank. Given this changing mix of the Bank's portfolio, the increasing
originations of loans which may be deemed to involve more risk elements than
conforming, single-family residential mortgage loans and the anticipated future
growth of such loans as a percentage of the Bank's total loan portfolio, the
Bank anticipates that its allowance for loan losses as a percentage to total
loans will continue to increase in future periods.
Although management of Willow Grove believes that the Bank's allowance
for loan losses was adequate at June 30, 1998, based on facts and circumstances
available to it, there can be no assurances that additions to such allowance
will not be necessary in future periods, which would adversely affect the Bank's
results of operations. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the Bank's provision for
loan losses and the carrying value of its other nonperforming assets based on
their judgments about information available to them at the time of their
examination. No assurance can be given whether any of such agencies might
require the Bank to make additional provisions for loan losses in the future.
Non-interest Income. Willow Grove reported non-interest income of
$760,000 for the fiscal year ended June 30, 1998 compared to $786,000 and $1.2
million for the fiscal years ended June 30, 1997 and 1996, respectively.
Non-interest income is comprised primarily of service charges and fees, gains
and losses on sales of assets held or available for sale and loan servicing
income. The primary reason for differences in non-interest income during the
past three fiscal years was the gains in fiscal 1996 on sales of real estate
held for investment and securities available for sale of $314,000 and $564,000,
respectively. The Bank reported a loss on real estate held for investment of
$25,000 in fiscal 1998 compared to a gain of $16,000 in fiscal 1997. The gain on
real estate held for investment in fiscal 1996 and, to a much lesser extent,
fiscal 1997 reflects the completion and sale of the final units in a 240 unit
residential subdivision which the Bank acquired through foreclosure prior to
completion of development in 1990. The Bank subsequently managed the completion
of this project and it has no further investment in the development at this
time. The loss on real estate held for investment in fiscal 1998 was due to the
Bank's determination to sell a parcel of land previously acquired as a potential
site for a new branch. The Bank reported losses on sales of securities available
for sale of $105,000 and $8,000 in fiscal 1998 and 1997, respectively, compared
to a gain of $564,000 in fiscal 1996. The Bank took advantage of certain gain
opportunities and recognized sales proceeds of $600,000 from securities in
fiscal 1996. During fiscal 1998 and, to a lesser extent, fiscal 1997, the Bank
determined to sell limited amounts of securities at a loss provided that the
Bank believed it could reinvest the proceeds from such sales in higher yielding
assets so that the loss could be recouped within 12 months of the sale through
increased interest income. Service charges and fee income amounted to $618,000,
$409,000 and $364,000 in the fiscal years ended June 30, 1998, 1997 and 1996,
respectively. The increase in service charges and fees in fiscal 1998 primarily
reflects an
58
<PAGE>
increased number of deposit accounts maintained by the Bank. Loan servicing
income amounted to $203,000 $340,000 and $69,000 in fiscal 1998, 1997 and 1996,
respectively.
Non-interest Expense. The primary components of non-interest expense
are compensation and employee benefits expense, occupancy and equipment costs,
federal insurance premiums and a variety of other operating expenses. Willow
Grove's total non-interest expense amounted to $9.5 million, $8.3 million and
$6.0 million in the fiscal years ended June 30, 1998, 1997 and 1996,
respectively. The primary reasons for the significant increase in non-interest
expenses during the past three fiscal years have been increases in compensation
and benefit expenses and occupancy and equipment costs and, in fiscal 1997, a
one-time special SAIF assessment. In addition, non-interest expense has
increased as a result of the Bank's implementation of its Community Enrichment
Program in fiscal 1997.
Compensation and employee benefit expense totaled $5.4 million, $3.4
million and $2.9 million, respectively, in the fiscal years ended June 30, 1998,
1997 and 1996. Such increases primarily reflect the increase in the Bank's work
force, which numbered 106 full time equivalent employees at June 30, 1998
compared to 75 at June 30, 1996, needed by the Bank as a result of its
diversification and expansion efforts. During fiscal 1998, compensation and
benefit expense also increased as the result of the Bank's accrual of $566,000
(pre-tax) and $234,000 (pre-tax), respectively, with respect to the
implementation of a directors' retirement plan and a supplemental executive
retirement plan. See "Management--Management of the Bank--Directors'
Compensation" and "--Benefits--Supplemental Executive Retirement Plan."
Increased compensation and benefit expense also is the result of normal
recurring salary increases as well as certain changes to the Bank's compensation
policies designed to keep the Bank competitive with the market and to provide
additional incentives to Bank employees to cross-sell Bank products (the bank
has instituted a policy where by certain employees are paid specified bonus
amounts if their customer utilize additional products and services of the Bank,
such bonuses aggregrated approximately $14,000 in fiscal 1998). Occupancy,
furniture and equipment costs aggregated $964,000, $734,000 and $632,000,
respectively, in fiscal 1998, 1997 and 1996. Such increases primarily reflect
the opening of two new branch offices in fiscal 1998 and 1997, the installation
of three new ATMs, the renovation and refurbishing costs for the Bank's offices
(all of the Bank's offices have been renovated or refurbished during the past
four years) and continued improvements in technology and equipment. The Bank's
federal insurance premium amounted to $195,000 in fiscal 1998 compared to $1.8
million (including a one-time special SAIF assessment) and $545,000,
respectively, in fiscal 1997 and 1996. The decrease in federal insurance expense
in fiscal 1998 reflects the FDIC's determination to reduce, commencing in 1997,
the federal insurance premiums paid by SAIF members on their deposits from 23
basis points to 6.4 basis points. Amortization expense during the three fiscal
years was constant at $410,000, and data processing expense changed nominally
during the periods. Advertising expense increased to $413,000 in fiscal 1998
compared to $297,000 and $287,000, respectively, in fiscal 1997 and 1996. Such
increase in advertising expense in fiscal 1998 reflects the Bank's efforts to
continue to increase its deposits and loans. Community enrichment expense, which
reflects the Bank's expense with respect to contributions pursuant to its
Community Enrichment Program, commenced in fiscal 1997, was $373,000 and
$259,000, respectively, in fiscal 1998 and 1997. As previously discussed, upon
consummation of the Reorganization, expenses with respect to establishment and
funding of the Foundation as well as additional potential cash contributions
pursuant to the Community Enrichment Program, may have a significant adverse
effect upon the Bank's future results of operations. See "Risk Factors -
Establishment of the Foundation - Impact on Earnings." Other expenses, which
include a sundry of other operating expenses, increased to $1.3 million in
fiscal 1998 compared to $996,000 and $881,000, respectively, in fiscal 1997 and
1996. Such increase in other expenses again primarily reflect the Bank's growth
and diversification efforts in recent years.
59
<PAGE>
Income Taxes. The Bank's income tax expense was $1.4 million for the
fiscal year ended June 30, 1998 compared to $1.5 million and $1.7 million,
respectively, in fiscal 1997 and 1996. Willow Grove's effective tax rates were
35.9%, 39.4% and 36.7%, respectively, for the fiscal years ended June 30, 1998,
1997 and 1996.
Liquidity and Commitments
The Bank's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Bank's primary
sources of funds are deposits, amortization, prepayments and maturities of
outstanding loans and mortgage-related securities, maturities of investment
securities and other short-term investments and funds provided from operations.
While scheduled payments from the amortization of loans and mortgage-related
securities and maturing investment securities and short-term investments are
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by general interest rates, economic conditions and
competition. In addition, the Bank invests excess funds in short-term
interest-earning assets which provide liquidity to meet lending requirements.
Historically, the Bank has been able to generate sufficient cash through its
deposits and has utilized borrowings on only a limited basis. The Bank expects
to continue utilizing borrowings in the future to leverage its capital base and
provide additional funds for its lending and investment activities.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments
such as U.S. Treasury securities. On a longer term basis, the Bank maintains a
strategy of investing in various lending products as described in greater detail
under "Business of Willow Grove Bank - Lending Activities." The Bank uses its
sources of funds primarily to meet its ongoing commitments, to pay maturing
certificates of deposit and savings withdrawals, fund loan commitments and
maintain a portfolio of mortgage-backed and investment securities. At June 30,
1998, the total approved loan origination commitments outstanding amounted to
$14.9 million. Certificates of deposit scheduled to mature in one year or less
at June 30, 1998, totaled $130.3 million. Investment securities scheduled to
mature or permitted to be called for redemption in one year or less at June 30,
1998 totaled $20.0 million. Based on historical experience, management believes
that a significant portion of maturing deposits will remain with the Bank. The
Bank anticipates that it will continue to have sufficient funds, together with
borrowings, to meet its current commitments.
Impact of Inflation and Changing Prices
The financial statements and related financial data presented herein
have been prepared in accordance with generally accepted accounting principles,
which require the measurement of financial position and operating results in
terms of historical dollars, without considering changes in relative purchasing
power over time due to inflation. Unlike most industrial companies, virtually
all of the Bank's assets and liabilities are monetary in nature. As a result,
interest rates generally have a more significant impact on a financial
institution's performance than does the effect of inflation.
60
<PAGE>
Year 2000 Considerations
In order to be ready for the year 2000 (the "Year 2000 Issue"), the
Bank has developed a Year 2000 Action and Assessment Plan (the "Action Plan")
which was presented to the Board of Directors during February 1998. The Action
Plan was developed using the guidelines outlined in the Federal Financial
Institutions Examination's Council's "The Effect of 2000 on Computer Systems".
The Bank's Board of Directors assigned responsibility for the Action Plan to the
Bank's Year 2000 Committee which reports to the Board of Directors on a
quarterly basis. The Action Plan recognizes that the Bank's operating,
processing and accounting operations are computer reliant and could be affected
by the Year 2000 Issue. Pursuant to its Action Plan, the Bank has tested all of
its computer equipment for Year 2000 readiness and believes that it has
identified all equipment which needs to be upgraded or replaced. Commencing in
early 1998, the Bank began a program of upgrading or replacing all such
equipment in order to ensure that the Bank's equipment is Year 2000 compliant on
or before September 30, 1999. The Bank is primarily reliant on third party
vendors for its computer output and processing, as well as other significant
functions and services (i.e., securities safekeeping services, securities
pricing information, etc.). The Year 2000 Committee is currently working with
these third party vendors to assess their year 2000 readiness. A major factor in
the Bank's operations is the data processing software which is used on a
Bank-wide basis. Such software is maintained by a third party vendor. The Bank
has been working closely with such vendor, whose clients include many depository
institutions, in an effort to ensure the Bank's Year 2000 preparedness. In this
respect, the Bank has, on two occasions during non-banking hours, tested
essentially all of its operation sysstems for Year 2000 readiness. Such tests
revealed only minor problems, which are being corrected, with the Bank's systems
with respect to Year 2000. Based upon the initial assessment, management
presently believes that with planned modifications to existing software and
hardware and planned conversions to new software and hardware, the Bank's third
party vendors are taking the appropriate steps to ensure critical systems will
function properly. The Bank's Action Plan contemplates that all of its software
vendors will be Year 2000 compliant by December 31, 1998. If any of its vendors
cannot assure the Bank of their Year 2000 readiness by such date, the Bank
intends to evaluate and use alternative vendors and products where possible.
While no assurance can be given as to actual systems operations upon the turn of
the century, based on information currently known to it and upon consideration
of its testing efforts to date, management believes that in the worse case
scenario, the Bank will suffer only a slight interruption of business as a
result of minor application failures of its systems and software as the result
of the Year 2000. However, if the appropriate modifications and conversions are
not made, or are not completed on a timely basis, the Year 2000 Issue could have
a material impact on the operations of the Bank.
The Year 2000 Issue also affects certain of the Bank's customers,
particularly in the areas of access to funds and additional expenditures to
achieve compliance. The Bank has engaged in a program of contacting its
commercial customers regarding the customers awareness of the Year 2000 Issue.
The Bank has sent mailings out to its commercial customers addressing the Year
2000 Issue and now includes a standard representation from its commercial
borrowers that their software will be Year 2000 compliant by the turn of the
century. The Bank has not yet received sufficient replies to its communications
to business customers to make any assessment as to their Year 2000 readiness.
The Bank has completed its own company-wide Year 2000 contingency plan.
Individual contingency plans concerning specific software and hardware issues
have been formulated for the specific departments of the Bank. Such plans
include the identification of Bank operations that can be done on a manual basis
or with stand alone personal computers and printers. The Bank has identified
phone lines within the Bank which should not be affected by any Year 2000
problems and it also has identified alternative electric power sources.
The costs of modifications to the existing software is being primarily
absorbed by the third party vendors, however the Bank recognized that the need
exists to purchase new hardware and software. Based upon current estimates, the
Bank has identified $300,000 in total costs, including hardware, software, and
other issues, for completing the Year 2000 project. Of that amount,
approximately $56,000 was expensed during the fiscal year ended June 30, 1998,
with $199,000 budgeted for the fiscal year ended June 30, 1999.
Impact of Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income. According to the statement, all items of comprehensive
income are to be reported in a financial statement that is displayed with the
same prominence as other financial statements. Comprehensive income is defined
as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. Along
with net income, examples of
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comprehensive income include foreign currency translation adjustments,
unrealized holding gains and losses on available-for-sale securities, changes in
the market value of a futures contract that qualifies as a hedge of an asset
reported at fair value, and minimum pension liability adjustments. Currently,
the comprehensive income of the Bank would consist primarily of net income and
unrealized holding gains and losses on available-for-sale securities. This
statement becomes effective for fiscal years beginning after December 15, 1997.
In June 1997, the FASB issued SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information. This statement, which supersedes SFAS
No. 14, requires public companies to report financial and descriptive
information about their reportable operating segments on both an annual and
interim basis. SFAS No. 131 mandates disclosure of a measure of segment
profit/loss, certain revenue and expense items and segment assets. In addition,
the statement requires reporting information on the entity's products and
services, countries in which the entity earns revenues and holds assets, and
major customers. This statement requires changes in disclosures only and would
not affect the financial condition operating results or equity of the Bank. This
statement becomes effective for fiscal years beginning after December 15, 1997.
In February 1998, the FASB issued SFAS No. 132, "Employer's Disclosures
About Pensions and Other Post Retirement Benefits". This statement revises
employer's disclosures about pension and other postretirement benefit plans. It
does not change the measurement or recognition of those plans. It standardizes
the disclosure requirements for pensions and other postretirement benefits to
the extent practicable, requires additional information on changes in the
benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures that are no longer
useful. This statement requires changes in disclosures only and would not affect
the financial condition, operating results, or equity of the Bank. This
statement becomes effective for fiscal years beginning after December 31, 1997.
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, (collectively referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial condition and measure those
instruments at fair value. The accounting for changes in the fair value of a
derivative depends on the intended use of the derivative and the resulting
designation. If certain conditions are met, a derivative may be specifically
designated as (a) a hedge of certain exposure to changes in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (b) a hedge of
an exposure to variable cash flows of a forecasted transaction, or (c) a hedge
of a foreign currency exposure. This Statement is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. Earlier adoption is
permitted. The Bank has not yet determined the impact, if any, of this
Statement, including its provisions for the potential reclassifications of
investment securities, on operations, financial condition, and equity. However,
the Bank currently has no derivatives covered by this statement and currently
conducts no hedging activities.
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BUSINESS
Willow Grove is a federally chartered mutual savings bank that was
originally organized in 1909. The Bank conducts its business from its
headquarters in Maple Glen, Pennsylvania and six branch offices in Warminster
(where two of its branch offices are located), Willow Grove, Dresher, Huntingdon
Valley and Hatboro, Pennsylvania. The Bank is primarily engaged in attracting
deposits from the general public and using those funds to invest in loans and
securities. In recent years, Willow Grove has concentrated its business plans on
three primary goals, changing its operations to be more like a full-service
community bank, continuing its steady growth and maintaining a high level of
asset quality.
Historically, the Bank's primary lending emphasis has been on
single-family (one- to four-units) residential loans secured by first mortgages
on properties in the Bank's market area. While single-family residential
mortgage loans continue to be the predominant type of loan in the Bank's
portfolio (amounting to $243.1 million or 71.4% of the Bank's total loan
portfolio at June 30, 1998), in recent years the Bank has, to a large extent,
concentrated its efforts on originations of home equity loans, commercial real
estate and multi-family residential mortgage loans, construction loans and
commercial business loans. The Bank favors increases in such loans because they
generally have higher yields and shorter terms to maturity and/or repricing than
single-family residential mortgage loans. Over time, the Bank expects that its
single-family residential mortgage loans, which decreased from 84.8% of the
total portfolio at June 30, 1995 to 71.4% at June 30, 1998, will continue to
decrease as a percentage of the portfolio but will remain the largest single
category within the portfolio. While the Bank is diversifying its loan mix, at
the same time it is very conscious that commercial real estate, construction,
consumer and commercial business loans generally are deemed to be higher risk
loans than single-family residential mortgage loans. In this respect, the Bank
believes that it has implemented conservative policies and procedures for loan
originations. While the Bank has maintained excellent credit quality during the
past five years, with very low delinquency and charge-off rates, given its
recent lending emphasis the Bank increased its provision for loan losses during
fiscal 1998 in an effort to maintain its allowance for loan losses at a level
deemed appropriate by management. As to liabilities, the Bank has reduced its
cost of funds by emphasizing checking and business accounts and has attempted to
lengthen the terms of its deposit base.
During the past five years Willow Grove also has engaged in a strategy
to achieve steady growth. The Bank's total assets, net loans and total deposits
at June 30, 1998 had increased by 74.3%, 108.6% and 67.0%, respectively, over
the levels at June 30, 1994. During such period, the Bank has acquired three new
branch offices from another institution (one of which subsequently was
consolidated with an existing Bank branch) and opened two additional branch
offices. Willow Grove expects to continue to consider opening additional new
offices, through acquisitions or otherwise, in order to supplement the branch
office network in its existing market area and/or to expand its network into
contiguous markets. Currently, the Bank has two sites under active consideration
for new branch offices which may be opened within the next year. As part of the
Bank's expansion efforts, the number of its full-time equivalent employees has
increased from 67 at June 30, 1994 to 106 at June 30, 1998. The Bank also has
increased its advertising efforts and, as part of its efforts to show its
commitment to the communities in its market area, has increased the level of its
charitable
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contributions and made them more systematic through the implementation, in April
1996, of a Community Enrichment Program.
Upon consummation of the Reorganization and Stock Issuance, the Bank
expects to continue its asset growth, the expansion of its franchise and the
diversification of its products. The Bank also will continue to consider new
services and, in the fall of 1998, the Bank will begin offering, on a brokerage
basis, securities and annuities brokerage through Willow Financial Services.
Willow Grove has no specific plans, arrangements or understanding with respect
to any acquisitions at this time.
Market Area and Competition
Willow Grove's main office is approximately 20 miles north of downtown
Philadelphia and its primary market area is Montgomery and Bucks Counties,
Pennsylvania and, to a lesser extent, Chester and Delaware Counties, the City of
Philadelphia and southern New Jersey.
The Bank faces significant competition both in making loans and in
attracting deposits. The Bank's competition for loans comes principally from
commercial banks, other savings banks, savings associations and mortgage-banking
companies. The Bank estimates that it competes with approximately 36 other banks
and savings institutions in its market area. The longest bank currently
operating the Bank's market area has over $2.0 Billions in deposite in each of
Bucks County and Montgomery County, Pennsylvania and has over 25% and 20% of the
deposit market share in such repsective counties. by comparison, Willow Grove
deposits in Bucks County and Montgomery County were $49.7 million and 260.0
million at June 30, 1997, (the most recent available data), representing
approximately 0.7% and 2.3% of deposit market share at such date. The Bank's
most direct competition for deposits has historically come from savings
associations, other savings banks, commercial banks and credit unions. The Bank
faces additional competition for deposits from short-term money market funds and
other corporate and government securities funds and from other non-depository
financial institutions such as securities brokerage firms and insurance
companies. Competition for banking services may increase as a result of, among
other things, the elimination of restrictions on interstate operations of
financial institutions.
Lending Activities
General. At June 30, 1998, Willow Grove's net portfolio loans amounted
to $315.7 million or 77.9% of the Bank's total assets at such date, and its
total loans receivable, including loans available for sale, amounted to $340.5
million or 84.0% of total assets. Historically, the Bank's primary emphasis has
been the origination of loans secured by first liens on single-family
residences. As previously indicated, the Bank has increased its emphasis on the
origination of home equity loans, commercial and multi-family real estate loans,
construction loans and commercial business loans. The Bank's mortgage loans
secured by commercial real estate amounted to $24.5 million or 7.2% of the total
loan portfolio at June 30, 1998, while its construction loans totaled $13.6
million or 4.0% of the portfolio and its multi-family residential mortgage loans
amounted to $7.5 million or 2.2% of the total loan portfolio at June 30, 1998.
In addition to traditional single-family first mortgage loans, the Bank
also offers home equity loans and lines of credit, which generally have shorter
terms to maturity and higher yields than single-family first mortgage loans.
Willow Grove's home equity loans and lines of credit totaled $41.4 million, or
12.1% of the total loan portfolio at June 30, 1998. Willow Grove also offers,
through a program commenced in May 1997, commercial business loans, which
amounted to $5.4 million or 1.6% of the total portfolio at June 30, 1998, and
non-mortgage consumer loans, which totaled $4.9 million or 1.5% of the total
portfolio at June 30, 1998.
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The types of loans that the Bank may originate are subject to federal
and state law and regulations. Interest rates charged by the Bank on loans are
affected principally by the demand for such loans and the supply of money
available for lending purposes and the rates offered by its competitors. These
factors are, in turn, affected by general and economic conditions, the monetary
policy of the federal government, including the Federal Reserve Board,
legislative tax policies and governmental budgetary matters.
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<PAGE>
Loan Portfolio Composition. The following table sets forth the
composition of the Bank's loans at the dates indicated.
<TABLE>
<CAPTION>
At June 30,
------------------------------------------------------------------------------------------
1998 1997 1996
------------------------- ----------------------- ------------------------
Percent of Percent of Percent of
Amount Total Amount Total Amount Total
------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Single-family residential(1)..... $243,131 71.4% $236,832 78.1% $208,877 79.6%
Multi-family residential......... 7,500 2.2 7,686 2.5 4,565 1.7
Commercial real estate........... 24,478 7.2 15,455 5.1 14,904 5.7
Construction..................... 13,627 4.0 13,120 4.3 13,746 5.2
Home equity...................... 41,366 12.1 25,553 8.4 16,184 6.2
-------- ----- -------- ------ -------- -----
Total mortgage loans........... 330,102 96.9 298,646 98.4 258,276 98.4
Non-mortgage consumer loans......... 4,930 1.5 2,924 1.0 2,173 0.9
Commercial business loans........... 5,437 1.6 1,698 0.6 1,841 0.7
-------- ----- -------- ------ -------- -----
Total loans receivable......... 340,469 100.0% 303,268 100.0% 262,290 100.0%
===== ====== =====
Less:
Undisbursed portion of loan
proceeds....................... (8,855) (9,344) (10,341)
Allowance for loan losses......... (2,665) (1,678) (1,938)
Deferred loan fees................ (1,092) (1,477) (1,536)
------- -------- --------
Loans receivable, net............... $327,857 $290,769 $248,475
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
At June 30,
-------------------------------------------------------------
1995 1994
------------------------------ ------------------------
Percent of Percent of
Amount Total Amount Total
-------------------------------------------------------------
(Dollars in Thounsands)
<S> <C> <C> <C> <C>
Mortgage loans: $192,168 84.8% $130,310 81.7%
Single-family residential(1)..... 4,203 1.9 4,049 2.6
Multi-family residential......... 9,411 4.2 12,992 8.2
Commercial real estate........... 8,470 3.7 5,328 3.3
Construction..................... 10,494 4.6 5,693 3.5
Home equity...................... -------- ----- ------- -----
224,746 99.2 158,372 99.3
Total mortgage loans........... 1,281 0.5 788 0.5
Non-mortgage consumer loans......... 672 0.3 275 0.2
Commercial business loans........... -------- ----- -------- -----
226,699 100.0% 159,435 100.0%
Total loans receivable......... ===== =====
Less:
Undisbursed portion of loan (3,541) (4,073)
proceeds....................... (1,728) (1,668)
Allowance for loan losses......... (1,848) (1,790)
Deferred loan fees................ -------- --------
$219,582 $151,904
Loans receivable, net............... ======== ========
- -----------------------------
</TABLE>
(1) Includes loans available for sale of $12.2 million, $6.2 million, $5.1
million, $9.4 million and $600,000, respectively, at June 30, 1998, 1997,
1996, 1995 and 1994.
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Contractual Principal Repayments and Interest Rates. The following
table sets forth scheduled contractual amortization of the Bank's loans at June
30, 1998, as well as the dollar amount of such loans which are scheduled to
mature after one year which have fixed or adjustable interest rates. Demand
loans, loans having no schedule of repayments and no stated maturity and
overdraft loans are reported as due in one year or less.
<TABLE>
<CAPTION>
At June 30, 1998
----------------------------------------------------------------------------------------------------
Non-
Single-Family Multi- Commercial Mortgage Commercial Total
Residential(1) Family Real Estate Construction Consumer Business Loans
----------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Amounts due in:
One year or less............ $ 299 $1,245 $ 431 $ 8,808 $ 98 $2,589 $ 13,470
After one year:
More than one year to
three years......... 2,595 694 704 4,009 963 170 9,135
More than three years to
five years........... 14,460 859 3,584 - 1,335 935 21,173
More than 5 years to 10
years................ 25,716 78 12,150 410 630 1,669 40,653
More than 10 years to 20
years................ 72,850 1,002 5,384 - 1,863 74 81,173
More than 20 years....... 168,577 3,622 2,225 400 41 -- 174,865
-------- ------ ------- ------- ------ ------ --------
Total Amount Due....... $284,497 $7,500 $24,478 $13,627 $4,930 $5,437 $340,469
======== ====== ======= ======= ====== ====== ========
- -------------------
</TABLE>
(1) Includes $12.2 million of loans available for sale and $41.4 million of
home equity loans.
On the $327 million of loan principal repayments contractually due
after June 30, 1999, $260.5 million have fixed rates of interest and $66.5
million have adjustable rates of interest.
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<PAGE>
Activity in Loans. The following table shows the activity in the Bank's
loans during the periods indicated.
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------
1998 1997 1996
--------------- --------------- ------------
(In Thousands)
<S> <C> <C> <C>
Total loans held at beginning of period(1)........... $303,268 $262,290 $226,699
======== ======= =======
Originations of loans for portfolio:
Mortgage loans:
Single-family residential....................... $ 33,653 $ 31,007 $ 35,246
Multi-family residential........................ -- 1,000 1,510
Commercial real estate.......................... 11,591 6,298 3,107
Construction.................................... 13,020 4,708 6,604
Home equity..................................... 23,400 16,487 10,328
Non-mortgage consumer loans....................... 3,800 1,717 412
Commercial business loans......................... 6,668 297 2,216
-------- -------- --------
Transfer of loans from available for sale
("AFS") to portfolio.............................. -- 2,089 3,028
-------- -------- --------
Total originations of and transfers to
loans for portfolio........................ 92,132 63,603 62,451
-------- -------- --------
Origination of loans AFS............................. 30,341 16,922 19,955
Transfer of loans AFS to portfolio................... -- (2,089) (3,028)
-------- -------- --------
Total origination of loans.................... 122,473 78,436 79,378
-------- -------- --------
Purchases of loans for portfolio:
Single-family residential......................... 19,836 16,677 7,887
Commercial real estate............................ 600 -- --
Construction...................................... -- 956 2,824
Home equity....................................... 3,988 -- --
Purchases of AFS loans: 6,055 12,205 17,256
-------- -------- --------
Total purchases of loans.......................... 30,479 29,838 27,967
-------- -------- --------
Repayments........................................... 85,328 40,841 33,279
Charge-offs of loans for portfolio................... 6 445 --
Sales of AFS loans................................... 30,417 26,010 38,475
-------- -------- --------
Net activity in loans for portfolio.................. 37,201 40,978 35,591
-------- -------- --------
Total loans at end of period(1)...................... $340,469 $303,268 $262,290
======== ======== ========
</TABLE>
- ------------------
(1) Includes loans available for sale.
The lending activities of Willow Grove are subject to underwriting
standards and loan origination procedures established by the Bank's Board of
Directors and management. Given the significant amount of standardization that
has occurred in underwriting and documentation with respect to single-family
residential mortgage loans, the Bank determined in mid-1996 that it was more
cost-effective for it to "out-source" its single-family loan origination
function. As a result of such
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<PAGE>
determination, the Bank no longer maintains single-family mortgage loan
originators on its staff. The Bank relies on a network of approximately 25
correspondent mortgage brokers and mortgage bankers to identify, underwrite and
process new single-family residential mortgage loans on the Bank's behalf. The
Bank regularly provides its network of correspondents with the terms and pricing
of the loans it is willing to consider. Pursuant to various programs of such
correspondents, the Bank's correspondent may either (i) advance funds for
closing provided the Bank commits to purchase, in which case the loan is
classified as "purchased" in the above table, or (ii) may request the Bank to
provide the funds necessary for closing, in which case the loan is classified as
"originated" by the Bank in the above table. In either case, the Bank may retain
such loans in its portfolio or sell them (either on a servicing retained or
servicing released basis). Such correspondents forward loan applications to the
Bank for its review and, depending on the Bank's assessment of its current needs
for new loan product, the Bank determines whether it will either buy such loans
or commit to advance the funds at closing for the Bank's portfolio or for
eventual sale into the secondary market. The Bank makes a determination at the
time of origination whether loans will be available for sale or will be for
retention in the Bank's portfolio. Such loans generally are required to be
underwritten in accordance with standard FNMA or FHLMC guidelines (which
facilitate resale into the secondary market). The Bank makes a determination at
the time of origination whether loans will be available for sale or will be for
retention in the Bank's portfolio. Such loans generally are required to be
underwritten in accordance with standard FNMA or FHLMC guidelines (which
facilitate resale into the secondary market). The Bank also originates
residential mortgage loans which do not conform to FNMA or FHLMC guidelines
("non-conforming" loans). Most of the Bank's non-conforming loans do not conform
because they either exceed the current mortgage loan limits ($227,150) (commonly
referred to as "jumbo" loans) or they have a bi-weekly repayment schedule. Such
non-conforming loans, which generally amount to approximately one-quarter of the
Bank's residential mortgage loans, are underwritten pursuant to the Bank's
alternative underwriting standards, which, in many respects, are similar to FNMA
and FHLMC guidelines.
The Bank's underwriting function for home equity, commercial and
multi-family residential real estate, commercial business and construction loans
is centralized at the Bank's main office. Willow Grove requires that a property
appraisal be prepared by an independent appraisal firm in connection with all
new mortgage loans. Willow Grove requires that title insurance and hazard
insurance be maintained on all security properties (except for home equity
loans) and that flood insurance be maintained if the property is within a
designated flood plain.
The Board of Directors of the Bank has authorized certain officers to
approve loans on an individual basis up to certain designated amounts not
exceeding, in the case of the President, $500,000. Loans exceeding the
individual limits must be approved by the Officers' Loan Committee (which is
comprised of the Bank's President, the three other executive officers and a
vice-president of lending), the Directors' Loan Committee (comprised of three
directors, the President and the Senior Lending Officer) or the full Board of
Directors. The Directors' Loan Committee and full Board of Directors of the Bank
also are provided with summaries of new loan activity on a routine basis.
A federal savings bank generally may not make loans to one borrower and
related entities in an amount which exceeds 15% of its unimpaired capital and
surplus, although loans in an amount equal to an additional 10% of unimpaired
capital and surplus may be made to a borrower if the loans are fully secured by
readily marketable securities. Willow Grove's aggregate loans to one borrower
and related entities has been below the regulatory limits. As of June 30, 1998,
Willow Grove's three largest relationships with one borrower and related
entities amounted to $4.4 million, $2.8 million and $2.5 million, and all of the
Bank's loans included in such relationships were performing in accordance with
their terms. The net proceeds received by the Bank from the Offerings will
increase the Bank's capital and thus its loans to one borrower limits. On
occasion, as a result of the loan-to-one borrower limits, the Bank will sell
participation interests in loans which it originates. Conversely, the Bank on
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<PAGE>
occasion may consider buying a participation interest in a loan from another
institution, provided, that the loan meets the Bank's underwriting standards.
Single-Family Residential Mortgage Loans. The Bank utilizes its network
of correspondents to originate and buy single-family (one- to four-units),
conventional residential mortgage loans. Conventional loans are loans that are
neither insured by the Federal Housing Administration ("FHA") or partially
guaranteed by the Department of Veterans Affairs ("VA"). The vast majority of
the Bank's single-family mortgage loans are secured by properties located in
Montgomery and Bucks Counties, Pennsylvania. As of June 30, 1998, the Bank's
single-family residential mortgage loans amounted to $243.1 million or 71.4% of
the total loan portfolio. During the fiscal year ended June 30, 1998, the Bank
originated and purchased $33.7 million and $19.8 million, respectively, of
single-family residential mortgage loans for its portfolio. Given the reduced
emphasis on the origination of single-family residential mortgage loans, such
loans have declined, as a percentage of the total portfolio, during each of the
past four fiscal years. The Bank expects such trend to continue, although
single-family residential mortgage loans are likely to remain the largest single
category of loans within the Bank's portfolio for the foreseeable future.
The Bank's single-family residential mortgage loans originated or
purchased for sale generally are underwritten with terms and documentation
conforming to FNMA and FHLMC guidelines. The Bank's loans originated or
purchased for portfolio may conform to such agency guidelines, may exceed
conforming loan amounts for such agencies or may otherwise not comply to such
agencies' underwriting standards for a variety of reasons including credit risk.
Willow Grove's residential mortgage loans have either fixed rates of interest or
interest rates which adjust periodically during the term of the loan. Fixed-rate
loans generally have maturities of 10, 15, 20 or 30 years and are fully
amortizing with monthly loan payments sufficient to repay the total amount of
the loan with interest by the end of the loan term. As of June 30, 1998, the
Bank's fixed-rate single-family residential mortgage loans amounted to $198.9
million or 81.8% of single-family residential mortgage loans.
The Bank also offers a variety of adjustable-rate single-family
residential mortgage ("ARM") loans. Such loans have interest rates which are
pre-determined for an initial period ranging from one to ten years, and then are
adjusted on an annual or other basis in accordance with a designated index such
as one-year U.S. Treasury obligations adjusted to a constant maturity ("CMT"),
plus a stipulated margin. The Bank's adjustable-rate single-family residential
real estate loans generally have a cap of 1% or 2% on any increase or decrease
in the interest rate at any adjustment date, and include a specified cap on the
maximum interest rate over the life of the loan, which cap generally is 4% to 6%
above the initial rate. From time to time, based on prevailing market
conditions, the Bank may offer ARM loans with initial rates which are below the
fully indexed rate. Such loans generally are underwritten based on the fully
indexed rate. The Bank's adjustable-rate loans require that any payment
adjustment resulting from a change in the interest rate of an adjustable-rate
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, or so-called negative amortization. At June
30, 1998, $44.2 million or 18.2% of the Bank's single-family residential
mortgage loans were adjustable-rate loans.
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<PAGE>
Adjustable-rate loans decrease the risks associated with changes in
interest rates but involve other risks, primarily because as interest rates
increase, the loan payment by the borrower increases to the extent permitted by
the terms of the loan, thereby increasing the potential for default. Moreover,
as with fixed-rate loans, as interest rates increase, the marketability of the
underlying collateral property may be adversely affected by higher interest
rates. The Bank believes that these risks, which have not had a material adverse
effect on the Bank to date, generally are less than the risks associated with
holding fixed-rate loans in an increasing interest rate environment.
The volume and types of ARMs originated by Willow Grove are affected by
such market factors as the level of interest rates, competition, consumer
preferences and availability of funds. Accordingly, although the Bank
anticipates that it will continue to offer single-family ARMs, there can be no
assurance that in the future the Bank will be able to originate a sufficient
volume of single-family ARMs to increase or maintain the proportion that these
loans bear to total loans.
The Bank's single-family residential mortgage loans generally do not
exceed $400,000. In addition, the maximum loan-to-value ("LTV") ratio for the
Bank's single-family residential mortgage loans generally is 95% of the
appraised value of the security property, provided, however, that private
mortgage insurance is obtained on the portion of the principal amount that
exceeds 80% of the appraised value.
Home Equity Loans. Willow Grove offers home equity loans, including
home equity lines of credit. Due to the relatively higher yields and shorter
terms of maturity (the maximum term to maturity is 15 years), the Bank has
emphasized the origination of home equity loans in recent years. At June 30,
1998, the Bank's home equity loans amounted to $41.4 million compared to $25.6
million and $16.2 million at June 30, 1997 and 1996, respectively. Home equity
loans, like single-family residential mortgage loans, are secured by the
underlying equity in the borrower's residence. However, the Bank generally
obtains a second mortgage position to secure its home equity loans. The Bank has
aggressively marketed its home equity loans and, as part of such efforts, offers
a "no point, no cost" loan for which no origination fees are charged and the
Bank absorbs closing costs. In addition, the Bank offers home equity loans in
amounts of up to, when combined with any first mortgage, 100% of the appraised
value of the security property. Recently, the Bank also commenced buying home
equity loans from its correspondents, and may increase such purchases in the
future.
Commercial Real Estate and Multi-Family Residential Real Estate Loans.
At June 30, 1998, Willow Grove's commercial real estate and multi-family
residential real estate loans amounted to $24.5 million and $7.5 million,
respectively, or 7.2% and 2.2%, respectively, of the Bank's total loan
portfolio.
The Bank's commercial real estate loans generally are secured by small
office buildings, retail and industrial use buildings, strip shopping centers
and other properties used for commercial purposes located in the Bank's market
area. The Bank's commercial real estate loans seldom exceed $3.0 million, and,
as of June 30, 1998, the average size of the Bank's commercial real estate loans
was $319,000. During fiscal 1998, the Bank originated $11.6 million in
commercial real estate loans for portfolio, compared to $6.3 million and $3.1
million, respectively, in fiscal 1997 and 1996. The Bank also purchased $600,000
in commercial real estate loans in fiscal 1998. Since May 1997, the Bank
71
<PAGE>
has hired three new commercial loan officers in an effort to increase its
portfolio of commercial real estate, multi-family residential and commercial
business loans.
The Bank also originates loans secured by multi-family (five or more
units) residential properties. During fiscal 1998, Willow Grove originated no
multi-family residential mortgage loans compared to $1.0 million and $1.5
million, respectively, in fiscal 1997 and 1996.
The Bank's commercial real estate and multi-family residential loans
generally are fixed-rate or five-year adjustable-rate loans indexed to U.S.
Treasury obligations adjusted to a CMT, plus a margin. Generally, fees of
between 50 basis points and 1.50% of the principal loan balance are charged to
the borrower upon closing. The Bank generally charges prepayment penalties on
commercial real estate and multi-family residential mortgage loans. Although
terms for multi-family residential and commercial real estate loans may vary,
the Bank's underwriting standards generally provide for terms of up to 25 years
with amortization of principal over the term of the loan and LTV ratios of not
more than 80%. Generally, the Bank obtains personal guarantees of the principals
as additional security for any commercial real estate and multi-family
residential loans.
The Bank evaluates various aspects of commercial and multi-family
residential real estate loan transactions in an effort to mitigate risk to the
extent possible. In underwriting these loans, consideration is given to the
stability of the property's cash flow history, future operating projections,
current and projected occupancy, position in the market, location and physical
condition. The Bank has also generally imposed a debt coverage ratio (the ratio
of net cash from operations before payment of debt service to debt service) of
not less than 115%. The underwriting analysis also includes credit checks and a
review of the financial condition of the borrower and guarantor, if applicable.
An appraisal report is prepared by an independent appraiser commissioned by the
Bank to substantiate property values for every commercial real estate and
multi-family loan transaction. All appraisal reports are reviewed by the Bank
prior to the closing of the loan.
Commercial real estate and multi-family residential lending entails
substantially different risks when compared to single-family residential lending
because such loans often involve large loan balances to single borrowers and
because the payment experience on such loans is typically dependent on the
successful operation of the project or the borrower's business. These risks can
also be significantly affected by supply and demand conditions in the local
market for apartments, offices, warehouses, or other commercial space. The Bank
attempts to minimize its risk exposure by limiting such lending to proven
businesses, only considering properties with existing operating performance
which can be analyzed, requiring conservative debt coverage ratios, and
periodically monitoring the operation and the physical condition of the
collateral.
As of June 30, 1998, none of the Bank's commercial real estate or
multi-family residential mortgage loans were considered non-performing and none
were 60 or more days delinquent.
Construction Loans. The Bank originates construction loans for
residential and commercial uses within its market area. The Bank generally
limits its construction loans to builders and developers with whom it has an
established relationship or who are otherwise known to the Bank's officers. As
of June 30, 1998, the Bank's construction loans amounted to $13.6 million or
4.0% of
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<PAGE>
the Bank's total loan portfolio. In addition, the Bank had $8.9 million of
undisbursed construction loans in process as of such date. The Bank originated
$13.0 million in new construction loans in fiscal 1998, compared to $4.7 million
and $6.6 million, respectively, in fiscal 1997 and 1996.
The Bank's construction loans generally have floating rates of interest
for a term of up to three years. Construction loans to builders are typically
made with a maximum loan to value ratio of 90%. The Bank's construction loans to
local builders are made on either a pre-sold or speculative (unsold) basis.
However, the Bank generally limits the number of unsold homes under construction
to its builders, with the amount dependent on the reputation of the builder, the
present outstanding obligations of the builder, the location of the property and
prior sales of homes in the development and the surrounding area. The Bank
generally limits the number of construction loans for speculative units to two
to six model homes per project.
Prior to making a commitment to fund a construction loan, the Bank
requires an appraisal of the property by independent appraisers approved by the
Board of Directors. The Bank's staff also reviews and inspects each project at
the commencement of construction and prior to every disbursement of funds during
the term of the construction loan. Loan proceeds are disbursed after inspections
of the project based on a percentage of completion. The Bank requires monthly
interest payments during the construction term.
The Bank's construction loans include loans for the acquisition and
development of land (i.e., roads, sewer and water) for resale. Such land loans
generally are originated only when a construction loan has been committed to by
the Bank, are secured by a lien on the property, are generally limited to 75% of
the appraised value of the secured property and are typically made for a period
of up to three years with a floating interest rate based on the prime rate. The
Bank requires monthly interest payments during the term of the land loan. The
principal of the loan is reduced as lots are sold and released. All of the
Bank's land loans are secured by property located in its market area. In
addition, the Bank generally obtains personal guarantees from its borrowers and
originates such loans to developers with whom it has established relationships.
Construction and land lending generally is considered to involve a
higher level of risk as compared to permanent single-family residential lending,
due to the concentration of principal in a limited number of loans and borrowers
and the effects of general economic conditions on developers and builders.
Moreover, a construction loan can involve additional risks because of the
inherent difficulty in estimating both a property's value at completion of the
project and the estimated cost (including interest) of the project. The nature
of these loans is such that they are generally more difficult to evaluate and
monitor. In addition, speculative construction loans to a builder are not
pre-sold and thus pose a greater potential risk to the Bank than construction
loans to individuals on their personal residences.
The Bank has attempted to minimize the foregoing risks by, among other
things, periodically inspecting properties under construction and reviewing
construction progress before additional draws are disbursed and by working with
builders with whom it has established relationships. It is also the Bank's
policy to obtain personal guarantees from the principals of its corporate
borrowers on its construction and land loans.
73
<PAGE>
Commercial Loans. Willow Grove had $5.4 million of commercial business
loans at June 30, 1998 compared to $1.7 million at June 30, 1997. In May 1997,
the Bank commenced a program designed to facilitate the origination of loans to
small- to mid-sized businesses in the Bank's market area. The Bank has hired
three commercial loan officers to actively solicit such loans (as well as
commercial real estate and multi-family residential mortgage loans). As a result
of such efforts, the Bank anticipates that this portion of its loan portfolio
will continue to increase. The Bank has targeted commercial business loans for
expansion due to the generally higher yields of such loans, their relatively
short terms and the prevalence of adjustable or floating rates of interest.
The Bank's commercial business loans may be structured as term loans or
revolving lines of credit. Commercial business loans generally have a term of
five years or less and adjustable or variable rates of interest based upon the
Wall Street Journal Prime Rate. The Bank's commercial business loans generally
are secured by equipment, machinery, real property or other corporate assets. In
addition, the Bank generally obtains personal guarantees from the principals of
the borrower with respect to all commercial business loans. The Bank also
provides commercial loans structured as advances based upon perfected security
interests in accounts receivable and inventory. Generally the Bank will advance
amounts up to 75% of accounts receivable and 50% of the value of inventory.
Commercial business loans generally are deemed to involve a greater
degree of risk than single-family residential mortgage loans. While commercial
business lending is relatively new to the Bank and the Bank is attempting to
aggressively increase its originations of commercial business loans, Willow
Grove has hired experienced commercial loan officers and has implemented
policies and procedures for commercial business lending which are deemed to be
prudent. As of June 30, 1998, the Bank had no non-performing commercial business
loans.
Non-Mortgage Consumer Lending Activities. The Bank offers a variety of
consumer loans including student loans, unsecured loans, automobile loans,
passbook loans and other consumer loans in order to provide a full range of
financial services to its customers. Such loans are obtained primarily through
existing and walk-in customers and direct advertising. At June 30, 1998, $4.9
million or 1.5% of the Bank's total loan portfolio was comprised of consumer
loans. At such date student loans amounted to $2.5 million, unsecured loans
amounted to $1.3 million and automobile loans were $898,000.
Consumer loans generally have shorter terms and higher interest rates
than residential mortgage loans but generally involve more credit risk than
residential mortgage loans because of the type and nature of the collateral and,
in certain cases, the absence of collateral.
Loan Origination and Loan Fees. In addition to interest earned on
loans, Willow Grove receives loan origination fees or "points" for many of the
loans it originates. Loan points are a percentage of the principal amount of the
mortgage loan and are charged to the borrower in connection with the origination
of the loan.
In accordance with SFAS No. 91, which addresses the accounting for
non-refundable fees and costs associated with originating or acquiring loans,
the Bank's loan origination fees and certain related direct loan origination
costs are offset, and the resulting net amount is deferred and amortized
74
<PAGE>
as interest income over the contractual life, adjusted for prepayments, of the
related loans as an adjustment to the yield of such loans. At June 30, 1998, the
Bank had $1.1 million of such deferred loan fees.
Asset Quality
General. As a part of Willow Grove's efforts to maintain its asset
quality, it has developed and implemented an asset classification system. All of
the Bank's assets are subject to review under this classification system. Loans
are periodically reviewed and the classifications are reviewed by the Asset
Quality Committee of the Board of Directors on at least a quarterly basis. In
addition, the Bank has retained an independent firm to perform periodic,
generally every six months, reviews of the asset quality of a designated portion
of its loan portfolio.
When a borrower fails to make a required payment on a loan, the Bank
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made 16 days after a payment is due. In most cases,
deficiencies are cured promptly. If a delinquency continues, late charges are
assessed and additional efforts are made to collect the loan. While the Bank
generally prefers to work with borrowers to resolve such problems, when the
account becomes 90 days delinquent, the Bank institutes foreclosure or other
proceedings, as necessary, to minimize any potential loss.
Non-accrual loans are loans on which the accrual of interest has ceased
because the collection of principal or interest payments is determined to be
doubtful by management. It is the policy of the Bank to discontinue the accrual
of interest and reverse any accrued interest when principal or interest payments
are delinquent more than 90 days (unless the loan principal and interest are
determined by management to be fully secured and in the process of collection),
or earlier if the financial condition of the borrower raises significant concern
with regard to the ability of the borrower to service the debt in accordance
with the terms of the loan. Interest income on such loans is not accrued until
the financial condition and payment record of the borrower demonstrates the
ability to service the debt.
Real estate acquired by the Bank as a result of foreclosure or by
deed-in-lieu of foreclosure is classified as real estate owned until sold. Real
estate owned is recorded at the lower of cost or fair value less estimated
selling costs. Costs of holding foreclosed property are usually capitalized to
the extent that carrying value does not exceed fair value less estimated selling
costs. Holding costs are charged to expense. Gains and losses on such sales are
charged to operations as incurred. Willow Grove has not had any real estate
owned at any of the five most recent fiscal year ends.
Delinquent Loans. The following table sets forth information concerning
delinquent loans at the dates indicated, in dollar amounts and as a percentage
of each category of the Bank's loan portfolio. The amounts presented represent
the total outstanding principal balances of the related loans, rather than the
actual payment amounts which are past due.
75
<PAGE>
<TABLE>
<CAPTION>
June 30, 1998
---------------------------------------------------------------------------
30-59 Days 60-89 Days
------------------------------------ -----------------------------------
Percent of Loan Percent of Loan
Amount Category Amount Category
--------------- ----------------- --------------- -----------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Residential:
Single-family...................... $2,268 0.98% $1,304 0.56%
Multi-family....................... -- -- -- --
Commercial real estate............... 288 0.90 -- -
Construction........................ -- -- -- --
Home equity.......................... 92 0.22 35 0.08
Non-mortgage consumer loans............. 17 0.34 -- --
Commercial business loans............... -- -- -- --
------ ------
Total.............................. $2,665 0.83% $1,339 0.42%
====== ======
</TABLE>
<TABLE>
<CAPTION>
June 30, 1997
---------------------------------------------------------------------------
30-59 Days 60-89 Days
------------------------------------ -----------------------------------
Percent of Loan Percent of Loan
Amount Category Amount Category
--------------- ----------------- --------------- -----------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Residential:
Single-family...................... $2,659 1.15% $519 0.23%
Multi-family....................... -- -- -- --
Commercial real estate............... 136 0.59 310 1.34
Construction........................ -- -- -- --
Home equity.......................... 32 0.13 46 0.18
Non-mortgage consumer loans............. -- -- -- --
Commercial business loans............... -- -- -- --
------ ----
Total............................ $2,827 0.98% $875 0.30%
====== ====
</TABLE>
<TABLE>
<CAPTION>
June 30, 1996
---------------------------------------------------------------------------
30-59 Days 60-89 Days
---------------------------------- -----------------------------------
Percent of Loan Percent of Loan
Amount Category Amount Category
--------------- ----------------- --------------- -----------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Residential:
Single-family...................... $1,501 0.74% $407 0.20%
Multi-family....................... -- -- -- --
Commercial real estate............... 59 0.40 -- --
Construction........................ 540 3.93 -- --
Home equity.......................... 153 0.95 -- --
Non-mortgage consumer loans............. 2 0.09 2 0.09%
Commercial business loans............... -- -- -- --
------ ----
Total............................ $2,255 0.91% $409 0.17%
====== ====
</TABLE>
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<PAGE>
Non-Performing Assets. The following table sets forth information with
respect to non-performing assets identified by the Bank, including non-accrual
loans and other real estate owned.
<TABLE>
<CAPTION>
At June 30,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------- ------------- ----------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Accruing loans 90 days or more past due:
Mortgage loans........................ $ 142 $ 124 $ 101 $ -- $ --
------ ------ ------ ---- ----
Total............................... 142 124 101 -- --
------ ------ ------ ---- ----
Non-accrual loans:
Mortgage loans:
Single-family residential........... 1,249 374 655 497 495
Multi-family residential............ -- -- -- -- --
Commercial real estate.............. -- 54 55 95 153
Construction........................ -- -- -- -- --
Home equity......................... -- -- 73 -- --
Non-mortgage consumer loans........... 2 17 34 -- --
Commercial business loans............. 96 1,346 1,786 -- --
------ ------ ------ ---- ----
Total non-accruing loans............ 1,347 1,791 2,603 592 648
------ ------ ------ ---- ----
Total non-performing loans.......... 1,489 1,915 2,704 592 648
------ ------ ------ ---- ----
Other real estate owned, net............. -- -- - - --
------ ------ ------ ---- ----
Total non-performing assets......... $1,489 $1,915 $2,704 $592 $648
====== ===== ====== ==== ====
Performing troubled debt
restructurings........................ -- -- -- -- --
------ ------ ------ ---- ----
Total non-performing assets and
troubled debt restructurings...... $1,489 $1,915 $2,704 $592 $648
====== ====== ====== ==== ====
Non-performing loans to total loans...... 0.47% 0.67% 1.11% 0.28% 0.42%
Non-performing assets to total assets.... 0.37% 0.54% 0.87% 0.20% 0.28%
</TABLE>
Classified and Criticized Assets. Federal regulations require that each
insured institution classify its assets on a regular basis. Furthermore, in
connection with examinations of insured institutions, federal examiners have
authority to identify problem assets and, if appropriate, classify them. There
are three classifications for problem assets: "substandard," "doubtful" and
"loss." Substandard assets have one or more defined weaknesses and are
characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a high
probability of loss. An asset classified loss is considered uncollectible and of
such little value that continuance as an asset of the institution is not
warranted. Another category designated "special mention" also must be
established and maintained for assets which do not currently expose an insured
institution to a sufficient degree of risk to warrant classification as
substandard, doubtful or loss. At June 30, 1998, Willow Grove had an aggregate
of $1.7 million of classified assets, all of which were classified substandard.
At such date the Bank also had $1.9 in assets which were deemed special mention.
77
<PAGE>
Allowance for Loan Losses. The allowance for loan losses is maintained
at a level believed adequate by management to absorb losses in the portfolio.
Management's determination of the adequacy of the allowance is based on an
evaluation of the portfolio, past loss experience, current economic conditions,
volume, growth and composition of the portfolio, and other relevant factors.
Among other factors, Willow Grove considers the amount of loan origination
volume and the risk characteristics of new loans when establishing the
appropriate amount of the provisions to the allowance for loan losses. The
allowance is increased by provisions for loan losses which are charged against
income. As shown in the table below, at June 30, 1998, the Bank's allowance for
loan losses amounted to $2.7 million or 179.0% and 0.83% of the Bank's
non-performing loans and total loans receivable, respectively. The Bank's
provision for loan losses amounted to $993,000 for the year ended June 30, 1998.
The primary reason for the significant increase in Willow Grove's provision for
loan losses in fiscal 1998 was the increase in the Bank's total loan portfolio
including single-family residential mortgage which do not conform to FHMA and
FHLMC underwriting guidelines, the continuing shift in the loan portfolio
towards home equity second mortgage loans, commercial real estate and commercial
business loans, and a change in the bank's allowance for loan loss methodology
to give greater consideration to ratio levels of loan loss allowances maintained
by peer group institutions.
Effective December 21, 1993, the OTS, in conjunction with the Office of
the Comptroller of the Currency, the FDIC and the Federal Reserve Board, issued
a Policy Statement regarding an institution's allowance for loan and lease
losses. The Policy Statement, which reflects the position of the issuing
regulatory agencies and does not necessarily constitute GAAP, includes guidance
(i) on the responsibilities of management for the assessment and establishment
of an adequate allowance and (ii) for the agencies' examiners to use in
evaluating the adequacy of such allowance and the policies utilized to determine
such allowance. The Policy Statement also sets forth quantitative measures for
the allowance with respect to assets classified substandard and doubtful and
with respect to the remaining portion of an institution's loan portfolio.
Specifically, the Policy Statement sets forth the following quantitative
measures which examiners may use to determine the reasonableness of an
allowance: (i) 50% of the portfolio that is classified doubtful; (ii) 15% of the
portfolio that is classified substandard; and (iii) for the portions of the
portfolio that have not been classified (including loans designated special
mention), estimated credit losses over the upcoming 12 months based on facts and
circumstances available on the evaluation date. While the Policy Statement sets
forth this quantitative measure, such guidance is not intended as a "floor" or
"ceiling." Willow Grove's policy for establishing loan losses is consistent with
the Policy Statement.
78
<PAGE>
The following table sets forth the activity in the Bank's allowance for
loan losses during the periods indicated.
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Allowance at beginning of period ............... $1,678 $1,938 $1,728 $1,668 $1,512
------ ------ ------ ------ ------
Provisions ..................................... 993 185 210 60 156
Charge-offs:
Mortgage loans ............................ -- -- -- -- --
Non-mortgage consumer loans ............... 6 5 -- -- --
Commercial business loans ................. -- 440 -- -- --
------ ------ ------ ------ ------
Total charge-offs ....................... 6 445 -- -- --
Recoveries .................................. -- -- -- -- --
------ ------ ------ ------ ------
Allowance at end of period ..................... $2,665 $1,678 $1,938 $1,728 $1,668
====== ====== ====== ====== ======
Allowance for loan losses to total
nonperforming loans at end of
period ...................................... 178.98% 87.62% 71.67% 291.89% 257.41%
====== ===== ===== ====== ======
Allowance for loan losses to total loans
at end of period ............................ 0.83% 0.58% 0.79% 0.81% 1.08%
==== ==== ==== ==== ====
Ratio of charge-offs to average loans .......... 0.002% 0.16% N/A N/A N/A
===== ====
</TABLE>
The $440,000 of charge-offs of commercial loans and leases during
fiscal 1997 relate to an aggregate of $1.8 million of lease financings which the
Bank had purchased from the Bennett Funding Group. All of such leases became
non-performing in fiscal 1996, when the Bennett Funding Group and certain
affiliates filed for bankruptcy and it was discovered that a massive nationwide
fraud had been undertaken with respect to these lease financings. In March 1997,
the Bank accepted a settlement offer of $1.0 million in cash plus a residual
interest in $300,000 of additional amortization payments (of which $205,000 has
been received) from the trustee in bankruptcy and charged-off the remaining
$440,000.
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<PAGE>
Management of the Bank considers the entire allowance for loan losses
to be adequate, however, to comply with regulatory reporting requirements,
management has allocated the allowance for loan losses as shown in the table
below into components by loan type at each year end. Through such allocation,
management does not intend to imply that actual future charge-offs will
necessarily follow the same pattern or that any portion of the allowance is
restricted.
<TABLE>
<CAPTION>
At June 30,
----------------------------------------------------------------------------------
1998 1997 1996
----------------------- ----------------------- -----------------------
Percent of Percent of Percent of
Loans in Loans in Loans in
Each Each Each
Category to Category to Category to
Amount Total Loans Amount Total Loans Amount Total Loans
--------- ----------- ---------- ----------- -------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Single-family residential ................... $ 649 71.41% $ 261 78.09% $ 501 79.64%
Multi-family residential .................... -- 2.20 -- 2.53 -- 1.74
Commercial real estate ...................... 352 7.19 113 5.10 -- 5.68
Construction ................................ 361 4.00 188 4.33 -- 5.24
Home equity ................................. 324 12.15 128 8.43 281 6.17
------ ------ ------
Total mortgage loans ..................... 1,686 690 782
Non-mortgage consumer
loans ...................................... 28 1.45 25 0.96 -- 0.83
Commercial business loans ...................... 124 1.60 138 0.56 -- 0.70
------ ------ ------
Unallocated .................................... 827 825 1,156
------ ------ ------
Total loans ............................ $2,665 100.00% $1,678 100.00% $1,938 100.00%
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------
1995 1994
------------------------- ------------------------
Percent of Percent of
Loans in Loans in
Each Each
Category to Category to
Amount Total Loans Amount Total Loans
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Mortgage loans:
Single-family residential ................... $ 661 84.76% $ 521 81.74%
Multi-family residential .................... -- 1.85 -- 2.54
Commercial real estate ...................... -- 5.39 -- 8.15
Construction ................................ -- 2.50 -- 3.34
Home equity ................................. 58 4.63 24 3.57
------ ------
Total mortgage loans ..................... 719 545
Non-mortgage consumer
loans ...................................... -- 0.57 -- 0.49
Commercial business loans ...................... -- 0.30 -- 0.17
------ ------
Unallocated .................................... 1,009 1,123
------ ------
Total loans ............................ $1,728 100.00% $1,668 100.00%
====== ====== ====== ======
</TABLE>
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<PAGE>
The determination of the allowance at June 30, 1998 specifically
considered various factors, including the fact that the outstanding balance of
the Bank's commercial real estate loans and commercial business loans continued
to increase during the year. Such loans generally are considered to constitute a
higher risk of loss than other components of the portfolio.
Willow Grove will continue to monitor and modify its allowance for loan
losses as conditions dictate. While management believes that, based on
information currently available, the Bank's allowance for loan losses is
sufficient to cover losses inherent in its loan portfolio at this time, no
assurance will be given that the Bank's level of allowance for loan losses will
be sufficient to absorb future loan losses incurred by the Bank or that future
adjustments to the allowance for loan losses will not be necessary if economic
and other conditions differ substantially from the economic and other conditions
used by management to determine the current level of the allowance for loan
losses. In addition, the OTS, as an integral part of its examination process,
periodically reviews the Bank's allowance for loan losses. Such agency may
require the Bank to make additional provisions for estimated loan losses based
upon judgments different from those of management.
Securities Activities
General. As of June 30, 1998, Willow Grove had an aggregate of $48.1
million of securities, or 11.9% of the Bank's total assets at such date. At such
date, the unrealized net gain on the Bank's securities available for sale
amounted to $80,000, net of income taxes. The securities investment policy of
the Bank, which has been established by the Board of Directors, is designed,
among other things, to assist the Bank in its asset/liability management
policies. Willow Grove's investment policy emphasizes principal preservation,
favorable returns on investment, maintaining liquidity within designated
guidelines, minimizing credit risk and maintaining flexibility. The Bank's
current securities investment policy permits investments in various types of
securities including obligations of the U.S. Treasury and federal agencies,
investment grade corporate obligations rated in the top two grades, various
types of mortgage-related securities, commercial paper, certificates of deposit,
and federal funds sold to financial institutions approved by the Board of
Directors.
The Bank currently does not participate in hedging programs, interest
rate swaps, or other activities involving the use of off-balance sheet
derivative financial instruments. Similarly, the Bank has not and does not
invest in mortgage derivative securities which are deemed to be "high risk" at
the time of purchase or purchase privately issued securities which are not rated
investment grade. The Bank tests its securities on at least a quarterly basis to
determine if they are considered "high risk" securities under OTS regulations.
At June 30, 1998, all of the Bank's securities were classified as
available for sale. Securities classified as available for sale are carried at
fair value. Unrealized gains and losses on available for sale securities are
recognized as direct increases or decreases in equity, net of applicable income
taxes. Securities which are held to maturity are carried at cost, adjusted for
the amortization of premiums and the accretion of discounts using a method which
approximates a level yield. See Notes 2 and 3 of the Notes to Financial
Statements.
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<PAGE>
The following table sets forth information regarding the carrying and
fair value of the Bank's securities classified available for sale at the dates
indicated.
<TABLE>
<CAPTION>
At June 30,
--------------------------------------------------------------------------
1998 1997 1996
---------------------- ------------------------ ------------------------
Carrying Fair Carrying Fair Carrying Fair
Value Value Value Value Value Value
---------- ---------- ---------- ----------- ---------- -----------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Available for sale (at fair value)
Equity securities........................ $ 9,940 $ 9,937 $ 6,851 $ 6,862 $ 2,543 $ 2,548
U.S. Government and government
agency securities(1).................. 20,104 20,095 7,009 7,050 1,000 999
Mortgage-related securities.............. 17,940 18,079 32,388 31,854 47,702 46,616
------- ------- ------- ------- ------- -------
$47,984 $48,111 $46,248 $45,766 $51,245 $50,163
======= ======= ======= ======= ======= =======
</TABLE>
- ------------------------------
(1) Includes a municipal bond with a face amount of $100,000.
In addition, at June 30, 1997, the Bank had $4.0 million of U.S.
Government and government agency securities classified as held to maturity. Such
securities matured during fiscal 1998.
The following table sets forth the activity in the Bank's aggregate
securities portfolio during the periods indicated.
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
(In Thousands)
<S> <C> <C> <C>
Securities at beginning of period.................. $49,765 $50,163 $58,557
Purchases.......................................... 55,878 18,296 1,100
Sales and calls.................................... (53,375) (10,076) (36)
Repayments, maturities and amortization .......... (4,766) (9,219) (7,777)
Increase (decrease) in unrealized gains
on available-for-sale securities(1).............. 609 601 (1,681)
------- ------- -------
Securities at end of period(2)..................... $48,111 $49,765 $50,163
======= ======= =======
</TABLE>
- ------------
(1) At June 30, 1998, the cumulative unrealized gains on securities
classified as available-for-sale securities amounted to $127,000.
(2) At June 30, 1998, $7.8 million or 16.2% of the Bank's securities
portfolio consisted of adjustable rate securities, as compared to zero
and $454,000 or 0.91% at June 30, 1997 and 1996, respectively.
Mortgage-Related Securities. At June 30, 1998, Willow Grove's
securities included $10.3 million of mortgage participation certificates (which
are also known as mortgage-backed securities) and $7.8 million of collateralized
mortgage obligations ("CMOs") which have qualified under the Code as real estate
mortgage investment conduits ("REMICs").
Mortgage-backed securities represent a participation interest in a pool
of single-family or multi-family mortgages. The principal and interest payments
on mortgage-backed securities are
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<PAGE>
passed from the mortgage originators, as servicer, through intermediaries
(generally U.S. Government agencies and government-sponsored enterprises) that
pool and repackage the participation interests in the form of securities, to
investors such as the Bank. Such U.S. Government agencies and government
sponsored enterprises, which guarantee the payment of principal and interest to
investors, primarily include the FHLMC, the FNMA and the Government National
Mortgage Association ("GNMA").
Mortgage-backed securities typically are issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages can be composed of either fixed-rate or
adjustable-rate loans. As a result, the risk characteristics of the underlying
pool of mortgages, (i.e., fixed-rate or adjustable-rate) as well as prepayment
risk, are passed on to the certificate holder. The life of a mortgage-backed
pass-through security thus approximates the life of the underlying mortgages.
The Bank's mortgage-backed securities portfolio includes investments in
mortgage-backed securities backed by ARMs or securities which otherwise have an
adjustable rate feature.
CMOs have been developed in response to investor concerns regarding the
uncertainty of cash flows associated with the prepayment option of the
underlying mortgagor and are typically issued by governmental agencies,
governmental sponsored enterprises and special purpose entities, such as trusts,
corporations or partnerships, established by financial institutions or other
similar institutions. In contrast to pass-through mortgage-backed securities, in
which cash flow is received pro rata by all security holders, the cash flow from
the mortgages underlying a CMO is segmented and paid in accordance with a
predetermined priority to investors holding various CMO classes. By allocating
the principal and interest cash flows from the underlying collateral among the
separate CMO classes, different classes of bonds are created, each with its own
stated maturity, estimated average life, coupon rate and prepayment
characteristics. As of June 30, 1998, the Bank's mortgage-related securities did
not include any residual interests or interest-only or principal-only
securities. As a matter of policy, the Bank does not invest in residual
interests of mortgage-related securities or interest-only and principal-only
securities.
Mortgage-related securities generally yield less than the loans which
underlie such securities because of their payment guarantees. In addition,
mortgage-related securities are more liquid than individual mortgage loans and
may be used to collateralize borrowings of the Bank. Mortgage-related securities
issued or guaranteed by the FNMA or the FHLMC (except interest-only securities
or the residual interests in CMOs) are weighted at no more than 20.0% for
risk-based capital purposes, compared to a weight of 50.0% to 100.0% for
residential loans.
At June 30, 1998, the estimated weighted average life of the Bank's
mortgage-related securities was approximately 2.6 years. Prepayments that are
faster than anticipated may shorten the life of the security and adversely
affect its yield to maturity. The yield is based upon the interest income and
the amortization of any premium or discount related to the mortgage-backed
security. In accordance with GAAP, premiums are amortized and discounts are
accreted over the estimated lives of the loans, which decrease and increase
interest income, respectively. The prepayment assumptions used to determine the
amortization period for premiums and discounts can significantly affect the
yield of the mortgage-backed or mortgage-related security, and these assumptions
are
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<PAGE>
rviewed periodically to reflect actual prepayments. Although prepayments of
underlying mortgages depend on many factors, including the type of mortgages,
the coupon rate, the age of mortgages, the geographical location of the
underlying real estate collateralizing the mortgages and general levels of
market interest rates, 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 prepayments.
During periods of rising mortgage interest rates, if the coupon rates
of the underlying mortgages are less than the prevailing market interest rates
offered for mortgage loans, refinancings generally decrease and slow the
prepayment of the underlying mortgages and the related securities. Conversely,
during periods of falling mortgage interest rates, if the coupon rates of the
underlying mortgages exceed the prevailing market interest rates offered for
mortgage loans, refinancing generally increases and accelerates the prepayment
of the underlying mortgages and the related securities. Under such
circumstances, the Bank may be subject to reinvestment risk because to the
extent that the Bank's mortgage-backed and mortgage-related securities amortize
or prepay faster than anticipated, the Bank may not be able to reinvest the
proceeds of such repayments and prepayments at a comparable rate. At June 30,
1998, of the $18.1 million of mortgage-backed securities, an aggregate of $10.3
million were secured by fixed-rate securities and an aggregate of $7.8 million
were secured by adjustable-rate securities.
Other Securities. Other than mortgage-related securities, the Bank's
securities consist primarily of U.S. Treasury and Federal agency obligations,
which amounted to $20.1 million at June 30, 1998, and various equity securities,
which amounted to $9.9 million at such date. At June 30, 1998, the Bank's equity
securities were comprised primarily of a $7.0 million investment in a mutual
fund backed by Federal agency obligations and $2.7 million in FHLB stock. As
with its mortgage-related securities, the Bank attempts to maintain a high
degree of liquidity in its other debt securities. As of June 30, 1998, the
estimated weighted average lives of Willow Grove's other debt securities was
less than one year due to their callable nature.
The following table sets forth certain information regarding the
maturities of the Bank's debt securities at June 30, 1998.
<TABLE>
<CAPTION>
Contractually Maturing
------------------------------------------------------------------------------------------------
Weighted Weighted Weighted Weighted
Under 1 Average 1-5 Average 6-10 Years Average Over 10 Average
Year Yield Years Yield --------- Yield Years Yield
--------- --------- ---------- --------- --------- -------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and government
agency obligations............ $-- --% $1,000 6.82% $7,004 6.72% $12,100 7.05%
</TABLE>
Sources of Funds.
General. Deposits are the primary source of the Bank's funds for
lending and other investment purposes. In addition to deposits, the Bank derives
funds from loan principal repayments and prepayments and borrowings. Loan
repayments are a relatively stable source of funds, while deposit inflows and
outflows are significantly influenced by general interest rates and money market
conditions. Borrowings may be used on a short-term basis to compensate for
reductions in the
84
<PAGE>
availability of funds from other sources. They may also be used on a longer term
basis for general business purposes.
Deposits. The Bank's deposit products include a broad selection of
deposit instruments, including negotiable order of withdrawal ("NOW") accounts,
money market accounts, non-interest bearing checking accounts, regular savings
accounts and term certificate accounts. Deposit account terms vary, with the
principal differences being the minimum balance required, the time periods the
funds must remain on deposit and the interest rate.
The Bank utilizes traditional marketing methods to attract new
customers and savings deposits. The Bank does not advertise for deposits outside
of its market area and management believes that an insignificant number of
deposit accounts were held by non-residents of Pennsylvania. The Bank does not
utilize the services of deposit brokers. The Bank traditionally has relied on
customer service and convenience in marketing its deposit products, and the Bank
generally has not sought to be a price leader on its deposits. In recent years,
many depository institutions have experienced disintermediation of their
deposits due, in part, to higher returns provided by competing investment
products offered by non-depository institutions. However, Willow Grove
experienced increases in deposits before interest credited of $19.0 million,
$31.0 million and $19.8 million during fiscal 1998, 1997 and 1996, respectively.
Such increases, in management's view, primarily were the result of the increase
in the Bank's branch network as well as its business development efforts.
Commencing in 1996, the Bank's business development officers have actively
solicited, through individual meetings and other contacts, increased deposits
particularly commercial transaction accounts, with businesses and individuals in
the Bank's market areas. In addition, in recent periods, the Bank's business
development officers, lending officers and branch personnel have increased their
efforts to solicit new deposits from the Bank's loan customers and other
residents in its market area. The Bank provides monetary incentives to its
business development officers and branch personnel to obtain new deposits from
customers.
The following table sets forth the activity in the Bank's deposits
during the periods indicated.
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------------------
1998 1997 1996
---------------- ---------------- ----------------
(In Thousands)
<S> <C> <C> <C>
Beginning balance...................... $309,726 $267,695 $237,645
Net increase before interest credited.. 18,985 30,999 19,833
Interest credited...................... 12,082 11,032 10,217
-------- -------- --------
Net increase in deposits............... 31,067 42,031 30,050
-------- -------- --------
Ending balance......................... $340,793 $309,726 $267,695
======== ======== ========
</TABLE>
85
<PAGE>
The following table sets forth by various interest rate categories the
certificates of deposit with the Bank at the dates indicated.
<TABLE>
<CAPTION>
June 30,
-----------------------------------------------------
1998 1997 1996
--------------- ---------------- ---------------
(In Thousands)
<S> <C> <C> <C>
0.00% to 2.99%............................. $ 132 $ 30 $ 110
3.00% to 3.99%............................. 12 11 1,281
4.00% to 4.99%............................. 41,261 37,989 42,589
5.00% to 6.99%............................. 180,858 167,923 134,816
7.00% to 8.99%............................. 9,133 9,817 10,880
9.00% to 10.99%............................ 606 1,057 1,465
11.00% and over............................ -- -- --
-------- -------- --------
Total.................................. $232,002 $216,827 $191,141
======== ======== ========
</TABLE>
The following table sets forth the amount and remaining maturities of
the Bank's certificates of deposit at June 30, 1998.
<TABLE>
<CAPTION>
Over Six Over One Over Two
Months Year Years
Six Months Through One Through Through Over Three
and Less Year Two Years Three Years Years
--------------- ---------------- -------------- --------------- -------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
0.00% to 1.99%............. $ -- $ -- $ -- $ -- $ --
2.00% to 2.99%............. 132 -- -- -- --
3.00% to 3.99%............. 12 -- -- -- --
4.00% to 4.99%............. 19,274 17,232 4,755 -- --
5.00% to 6.99%............. 49,292 42,570 44,882 27,798 16,316
7.00% to 8.99%............. 379 848 1,285 5,448 1,173
9.00% to 10.99% ........... 216 367 23 -- --
11.00% and over............ -- -- -- -- --
------- ------- ------- ------- -------
Total.................. $69,305 $61,017 $50,945 $33,246 $17,489
======= ======= ======= ======= =======
</TABLE>
As of June 30, 1998, the aggregate amount of outstanding time
certificates of deposit in amounts greater than or equal to $100,000, was
approximately $38.5 million. The following table presents the maturity of these
time certificates of deposit at such dates.
June 30, 1998
--------------------------
(In Thousands)
3 months or less.............................. $ 8,023
Over 3 months through 6 months................ 6,754
Over 6 months through 12 months............... 10,312
Over 12 months................................ 13,380
-------
$38,469
=======
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<PAGE>
The following table sets forth the dollar amount of deposits in various
types of deposits offered by the Bank at the dates indicated.
<TABLE>
<CAPTION>
June 30,
-------------------------------------------------------------------------------------------
1998 1997 1996
-------------------------- ---------------------------- ----------------------------
Amount Percentage Amount Percentage Amount Percentage
------------ ---------- ----------- ----------- ----------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Savings accounts.......... $ 40,225 11.80% $ 36,373 11.74% $ 33,805 12.63%
Certificates of deposit... 232,002 68.08 216,827 70.01 191,141 71.40
Money market accounts..... 20,487 6.01 19,715 6.36 17,412 6.50
NOW accounts.............. 48,079 14.11 36,811 11.89 25,337 9.47
-------- ------ -------- ------ -------- ------
Total................. $340,793 100.00% $309,726 100.00% $267,695 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
Borrowings. Traditionally, the Bank made very limited use of
borrowings. The Bank recently determined to increase its use of leverage through
increased utilization of borrowings. At June 30, 1998, the Bank had $21.0
million of borrowed funds, all of which were FHLB advances. Advances from the
FHLB of Pittsburgh are obtained upon the security of the common stock Willow
Grove owns in that bank and certain of its residential mortgage loans, provided
certain standards related to creditworthiness have been met. Such advances are
available pursuant to several credit programs, each of which has its own
interest rate and range of maturities. In recent years, the Bank has used FHLB
advances as an additional source of funds and, pursuant to guidelines of the
Bank's Board of Directors, has reinvested such funds in securities with
estimated lives approximating the lives of the advances but with effective
yields higher than the rate paid for the advances. The Bank intends to continue
to utilize borrowings as a source of funds subsequent to the Reorganization.
The following table sets forth certain information regarding the
short-term borrowings of the Bank at or for the dates indicated.
<TABLE>
<CAPTION>
At or For the Year Ended June 30,
---------------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
FHLB advances: (Dollars in Thousands)
<S> <C> <C> <C>
Average balance outstanding........................... $ 9,532 $10,349 $12,956
Maximum amount outstanding at any
month-end during the period.......................... 21,000 16,120 16,120
Balance outstanding at end of period.................. 21,000 6,000 10,120
Average interest rate during the period............... 5.55% 5.36% 5.60%
Average interest rate at end of period................ 5.62% 5.50% 5.25%
Other:
Average balance outstanding........................... $ 263 $ 218 $ --
Maximum amount outstanding at any
month-end during the period.......................... 500 500 --
Balance outstanding at end of period.................. -- 500 --
Average interest rate during the period............... --% --% --%
Average interest rate at end of period................ --% --% --%
</TABLE>
87
<PAGE>
The majority of the Bank's FHLB advances are callable at the discretion
of the FHLB within certain parameters and substantially all of such advances
could be called within one year.
Subsidiaries
The Bank currently has no subsidiaries.
Legal Proceedings
The Bank is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate, are believed by management
to be immaterial to the financial condition and results of operations of the
Bank.
Employees
The Bank had 96 full-time employees and 25 part-time employees at June
30, 1998. None of these employees is represented by a collective bargaining
agent, and the Bank believes that it enjoys good relations with its personnel.
88
<PAGE>
The following table sets forth certain information relating to the
Bank's offices at June 30, 1998.
<TABLE>
<CAPTION>
Net Book Value of
Property and
Lease Leasehold
Owned or Expiration Improvements at Deposits at
Location(1) Leased Date June 30, 1998 June 30, 1998
- ------------------------------------ ----------- ------------ --------------------- ----------------------
(In Thousands)
<S> <C> <C> <C> <C>
Executive Office:
Welsh & Norristown Roads(1)
Maple Glen, PA 19002-8030 Owned N/A $1,884 $96,602
Branch Offices:
1555 West Street Road
Warminster, PA 18974-3103 Leased 01/2001 7 46,147
1141 Ivyland Road
Warminster, PA 18974-2048 Leased 06/2004 39 12,468
9 Easton Road
Willow Grove, PA 19090-0905 Owned N/A 690 109,381
715 Twining Road(2)
Dresher, PA 19025-1894 Leased 09/1998 -- 34,398
761 Huntingdon Pike
Huntingdon, PA 19006-8399 Owned N/A 350 33,672
2 N. York Road
Hatboro, PA 19040-3201 Leased 05/2002 196 8,125
</TABLE>
- ---------------------------
(1) Includes adjacent nine acre property that could be used for future
expansion.
(2) Office was relocated to 701 Twining Road on July 13, 1998.
89
<PAGE>
REGULATION
Set forth below is a brief description of certain laws and regulations
which are applicable to the Company, the Bank and the MHC. The description of
these laws and regulations, as well as descriptions of laws and regulations
contained elsewhere herein, does not purport to be complete and is qualified in
its entirety by reference to the applicable laws and regulations.
General
The Bank, as a federally chartered savings institution, is subject to
federal regulation and oversight by the OTS extending to all aspects of its
operations. The Bank also is subject to regulation and examination by the FDIC,
which insures the deposits of the Bank to the maximum extent permitted by law,
and requirements established by the Federal Reserve Board. Federally chartered
savings institutions are required to file periodic reports with the OTS and are
subject to periodic examinations by the OTS and the FDIC. The investment and
lending authority of savings institutions are prescribed by federal laws and
regulations, and such institutions are prohibited from engaging in any
activities not permitted by such laws and regulations. Such regulation and
supervision primarily is intended for the protection of depositors and not for
the purpose of protecting shareholders. This regulatory oversight will continue
to apply to the Bank following the Reorganization.
The OTS regularly examines the Bank and prepares reports for the
consideration of the Bank's Board of Directors on any deficiencies that it may
find in the Bank's operations. The FDIC also has the authority to examine 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 requirements. The OTS'
enforcement authority over all savings institutions and their holding companies
includes, among other things, the ability to assess civil money penalties, to
issue cease and desist or removal orders and to initiate injunctive actions. In
general, these enforcement actions may be initiated for violations of laws and
regulations and unsafe or unsound practices. Other actions or inactions may
provide the basis for enforcement action, including misleading or untimely
reports filed with the OTS. Any change in such regulations, whether by the FDIC,
OTS or Congress, could have a material adverse impact on the MHC, the Company
and the Bank and their operations.
The Company
Upon consummation of the Reorganization, the Company will be a savings
and loan holding company within the meaning of Section 10 of the HOLA. As such,
the Company will be required to register with and be subject to OTS examination
and supervision as well as certain reporting requirements. In addition, because
the Bank's deposits are insured by the SAIF maintained by the FDIC, the Bank is
subject to certain restrictions in dealing with the Company and with other
persons affiliated with the Bank.
90
<PAGE>
One of the requirements for OTS approval of the Reorganization is that
the Company will operate under the activities restrictions applicable to
multiple savings and loan holding companies. The HOLA limits the activities of a
multiple savings and loan holding company and its non-insured institution
subsidiaries primarily to activities specifically permissible by statute for
multiple savings and loan holding companies and to activities of bank holding
companies which the Federal Reserve Board has deemed permissible by regulation
under Section 4(c)(8) of the Bank Holding Company Act of 1956, as amended (the
"BHCA"), subject to prior approval by the OTS, and to other activities
authorized by OTS regulation.
Pursuant to regulations of the OTS and the terms of the Company's
federal stock charter, the purpose and powers of the Company is to pursue any or
all of the lawful objectives of a federal mutual holding company and to exercise
any of the powers accorded to a mutual holding company. A mutual holding company
is permitted to, among other things: (i) invest in the stock of a savings
institution; (ii) acquire a mutual institution through the merger of such
institution into a savings institution subsidiary of such mutual holding company
or an interim savings institution of such mutual holding company; (iii) merge
with or acquire another mutual holding company, one of whose subsidiaries is a
savings institution; (iv) acquire non-controlling amounts of the stock of
savings institutions and savings institution holding companies, subject to
certain restrictions; (v) invest in a corporation the capital stock of which is
available for purchase by a savings institution under Federal law or under the
law of any state where the subsidiary savings institution or institutions have
their home offices; (vi) furnish or perform management services for a savings
institution subsidiary of such company; (vi) hold, manage or liquidate assets
owned or acquired from a savings institution subsidiary of such company; (viii)
hold or manage properties used or occupied by a savings institution subsidiary
of such company; and (ix) act as a trustee under deed or trust.
The HOLA prohibits a savings and loan holding company, such as the
Company, directly or indirectly, from (1) acquiring control (as defined) of a
savings institution (or holding company thereof) without prior OTS approval, (2)
acquiring more than 5% of the voting shares of a savings institution (or holding
company thereof) which is not a subsidiary, subject to certain exceptions,
without prior OTS approval, or (3) acquiring through merger, consolidation or
purchase of assets, another savings institution (or holding company thereof) or
acquiring all or substantially all of the assets, another savings institution
(or holding company thereof) without prior OTS approval or (4) acquiring control
of an uninsured institution. A savings and loan holding company may not acquire
as a separate subsidiary a savings institution which has its principal offices
outside of the state where the principal offices of its subsidiary institution
is located, except (i) in the case of certain emergency acquisitions approved by
the FDIC, (ii) if the holding company controlled (as defined) such savings
institution as of March 5, 1987 or (iii) when the laws of the state in which the
savings institution to be acquired is located specifically authorize such an
acquisition. No director or officer of a savings and loan holding company or
person owning or controlling more than 25% of such holding company's voting
shares may, except with the prior approval of the OTS, acquire control of any
savings institution which is not a subsidiary of such holding company.
91
<PAGE>
The Mutual Holding Company
Upon completion of the Reorganization and Stock Issuance, the MHC will
become a federal mutual holding company within the meaning of Section 10(o) of
the HOLA. As such, the MHC will be required to register with and be subject to
OTS examination and supervision as well as certain reporting requirements. In
addition, the OTS has enforcement authority over the MHC and its non-savings
Bank subsidiaries, if any. Among other things, this authority permits the OTS to
restrict or prohibit activities that are determined to be a serious risk to the
financial safety, soundness or stability of a subsidiary savings Bank. The MHC
will be subject to the same activities limitations to which the Company is
subject. See " -- The Company."
The Bank
Insurance of Accounts. The deposits of the Bank are insured to the
maximum extent permitted by the SAIF, which is administered by the FDIC, and are
backed by the full faith and credit of the U.S. Government. As insurer, the FDIC
is authorized to conduct examinations of, and to require reporting by,
FDIC-insured institutions. It also may prohibit any FDIC-insured institution
from engaging in any activity the FDIC determines by regulation or order to pose
a serious threat to the FDIC. The FDIC also has the authority to initiate
enforcement actions against savings institutions, after giving the OTS an
opportunity to take such action.
Under current FDIC regulations, SAIF-insured institutions are assigned
to one of three capital groups which are based solely on the level of an
institution's capital--"well capitalized," "adequately capitalized," and
"undercapitalized"--which are defined in the same manner as the regulations
establishing the prompt corrective action system discussed below. These three
groups are then divided into three subgroups which reflect varying levels of
supervisory concern, from those which are considered to be healthy to those
which are considered to be of substantial supervisory concern. The matrix so
created results in nine assessment risk classifications, with rates ranging
prior to September 30, 1996 from 23 basis points for well capitalized, healthy
institutions to 31 basis points for undercapitalized institutions with
substantial supervisory concerns.
The deposits of the Bank are currently insured by the SAIF. Both the
SAIF and the BIF are required by law to attain and thereafter maintain a reserve
ratio of 1.25% of insured deposits. The BIF achieved a fully funded status
first, and therefore as discussed below, effective January 1, 1996, the FDIC
substantially reduced the average deposit insurance premium paid by BIF-insured
banks. On November 14, 1995, the FDIC approved a final rule regarding deposit
insurance premiums. The final rule reduced deposit insurance premiums for BIF
member institutions to zero basis points (subject to a $2,000 minimum) for
institutions in the lowest risk category, while holding deposit insurance
premiums for SAIF members at their then-current levels (23 basis points for
institutions in the lowest risk category). The reduction was effective with
respect to the semiannual premium assessment beginning January 1, 1996.
92
<PAGE>
On September 30, 1996 Congress passed, and the President signed, the
DIF Act which mandated that all institutions which have deposits insured by SAIF
were required to pay a one-time special assessment of 65.7 basis points on such
deposits (subject to adjustment for certain types of banks with SAIF deposits)
that were held at March 31,1995 payable by November 27, 1996 to recapitalize the
SAIF. The assessment increased the SAIF's reserve ratio to a comparable level to
that of the BIF at 1.25% of total insured deposits. The Bank's share of this
special assessment totaled $1.5 million and is reflected in the fiscal 1997
operating results. The FDIC, in connection with the recapitalization, also
lowered SAIF premiums from $0.23 per $100 to $0.064 per $100 of insured deposits
beginning in January 1997.
The FDIC may terminate the deposit insurance of any insured depository
institution, including the Bank, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. If insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing circumstances which would result in
termination of the Bank's deposit insurance.
Regulatory Capital Requirements. The OTS capital requirements consist
of a "tangible capital requirement," a "leverage capital requirement" and a
"risk-based capital requirement." The OTS is authorized to impose capital
requirements in excess of those standards on individual institutions on a
case-by-case basis.
Under the tangible capital requirement, a savings Bank must maintain
tangible capital in an amount equal to at least 1.5% of adjusted total assets.
Tangible capital is defined as core capital less all intangible assets
(including supervisory goodwill), plus a specified amount of purchased mortgage
servicing rights.
Under the leverage capital requirement adopted by the OTS, savings
Banks must maintain "core capital" in an amount equal to at least 3% of adjusted
total assets. Core capital is defined as common shareholders' equity (including
retained earnings), non-cumulative perpetual preferred stock, and minority
interests in the equity accounts of consolidated subsidiaries, plus purchased
mortgage servicing rights valued at the lower of 90% of fair market value, 90%
of original cost or the current amortized book value as determined under GAAP,
and "qualifying supervisory goodwill," less non-qualifying intangible assets. At
June 30, 1998, the Bank's ratio of core capital to total adjusted assets was
8.3%.
Under the risk-based capital requirement, a savings Bank must maintain
total capital (which is defined as core capital plus supplementary capital)
equal to at least 8.0% of risk-weighted assets. A savings Bank must calculate
its risk-weighted assets by multiplying each asset and
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off-balance sheet item by various risk factors, which range from 0% for cash and
securities issued by the United States Government or its agencies to 100% for
repossessed assets or loans more than 90 days past due. Qualifying one-to-four
family residential real estate loans and qualifying multi-family residential
real estate loans (not more than 90 days delinquent and having an 80% or lower
loan-to-value ratio), which at June 30, 1998, represented 73.6% of the total
loans receivable, are weighted at a 50% risk factor. Supplementary capital may
include, among other items, cumulative perpetual preferred stock, perpetual
subordinated debt, mandatory convertible subordinated debt, intermediate-term
preferred stock, and general allowances for loan losses. The allowance for loan
losses includable in supplementary capital is limited to 1.25% of risk-weighted
assets. Supplementary capital is limited to 100% of core capital.
Certain exclusions from capital and assets are required to be made for
the purpose of calculating total capital, in addition to the adjustments
required for calculating core capital. Such exclusions consist of equity
investments (as defined by regulation) and that portion of land loans and
non-residential construction loans in excess of an 80% loan-to-value ratio and
reciprocal holdings of qualifying capital instruments. However, in calculating
regulatory capital, institutions can add back unrealized losses and deduct
unrealized gains net of taxes, on debt securities reported as a separate
component of GAAP capital.
The OTS regulations establish special capitalization requirements for
savings Banks that own service corporations and other subsidiaries, including
subsidiary savings Banks. According to these regulations, certain subsidiaries
are consolidated for capital purposes and others are excluded from assets and
capital. In determining compliance with the capital requirements, all
subsidiaries engaged solely in activities permissible for national banks,
engaged solely in mortgage-banking activities, or engaged in certain other
activities solely as agent for its customers are "includable" subsidiaries that
are consolidated for capital purposes in proportion to the Bank's level of
ownership, including the assets of includable subsidiaries in which the Bank has
a minority interest that is not consolidated for GAAP purposes. For excludable
subsidiaries, the debt and equity investments in such subsidiaries are deducted
from assets and capital. At June 30, 1998, the Bank had no investments subject
to a deduction from tangible capital.
The OTS amended its risk-based capital requirements that would require
institutions with an "above normal" level of interest rate risk to maintain
additional capital. A savings Bank is considered to have a "normal" level of
interest rate risk if the decline in the market value of its portfolio equity
after an immediate 200 basis point increase or decrease in market interest rates
(whichever leads to the greater decline) is less than two percent of the current
estimated market value of its assets. The market value of portfolio equity is
defined as the net present value of expected cash inflows and outflows from an
Bank's assets, liabilities and off-balance sheet items. The amount of additional
capital that an institution with an above normal interest rate risk is required
to maintain (the "interest rate risk component") equals one-half of the dollar
amount by which its measured interest rate risk exceeds the normal level of
interest rate risk. The interest rate risk component is in addition to the
capital otherwise required to satisfy the risk-based capital
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requirement. Implementation of this component has been postponed by the OTS. The
final rule was to be effective as of January 1, 1994, subject however to a three
quarter lag time in implementation. However, in October 1994, the Director of
the OTS indicated that it would waive the capital deductions for institutions
with a greater than "normal" risk until the OTS published an appeals process. On
August 21, 1995, the OTS released Thrift Bulletin 67, which established (i) an
appeals process to handle "requests for adjustments" to the interest rate risk
component and (ii) a process by which "well-capitalized" institutions may obtain
authorization to use their own interest rate risk model to determine their
interest rate risk component. The Director of the OTS indicated, concurrent with
the release of Thrift Bulletin 67, that the OTS will continue to delay the
implementation of the capital deduction for interest rate risk pending the
testing of the appeals process set forth in Thrift Bulletin 67.
Effective November 28, 1994, the OTS revised its interim policy issued
in August 1993 under which savings institutions computed their regulatory
capital in accordance with SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Under the revised OTS policy, savings institutions
must value securities available for sale at amortized cost for regulatory
capital purposes. This means that in computing regulatory capital, savings
institutions should add back any unrealized losses and deduct any unrealized
gains, net of income taxes, on debt securities reported as a separate component
of GAAP capital.
At June 30, 1998, the Bank exceeded all of its regulatory capital
requirements, with tangible, core and risk-based capital ratios of 8.3%, 8.3%
and 14.9%, respectively.
The OTS and the FDIC generally are authorized to take enforcement
action against a savings Bank that fails to meet its capital requirements, which
action may include restrictions on operations and banking activities, the
imposition of a capital directive, a cease-and-desist order, civil money
penalties or harsher measures such as the appointment of a receiver or
conservator or a forced merger into another institution. In addition, under
current regulatory policy, an Bank that fails to meet its capital requirements
is prohibited from paying any dividends.
Prompt Corrective Action. Under the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), the federal banking regulators
are required to take prompt corrective action if an insured depository
institution fails to satisfy certain minimum capital requirement, including a
leverage limit, a risk-based capital requirement, and any other measure of
capital deemed appropriate by the federal banking regulator for measuring the
capital adequacy of an insured depository institution. All institutions,
regardless of their capital levels, are restricted from making any capital
distribution or paying management fees if the institution would thereafter fail
to satisfy the minimum levels for any of its capital requirements.
Under the FDICIA, which became effective on December 19, 1992, an
institution is deemed to be (i) "well capitalized" if it has total risk-based
capital of 10.0% or more, has a Tier 1 risk-based capital ratio of 6.0% or more,
has a Tier 1 leverage capital ratio of 5.0% or more and is not subject
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to any order or final capital directive to meet and maintain a specific capital
level for any capital measure, (ii) "adequately capitalized" if it has a total
risk-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of
4.0% or more and a Tier 1 leverage capital ratio of 4.0% or more (3.0% under
certain circumstances) and does not meet the definition of "well capitalized,"
(iii) "undercapitalized" if it has a total risk-based capital ratio that is less
than 8.0%, a Tier 1 risk-based capital ratio that is less than 4.0% or a Tier 1
leverage capital ratio that is less than 4.0% (3.0% under certain
circumstances), (iv) "significantly undercapitalized" if it has a total
risk-based capital ratio that is less than 6.0%, a Tier 1 risk-based capital
ratio that is less than 3.0% or a Tier 1 leverage capital ratio that is less
than 3.0%, and (v) "critically undercapitalized" if it has a ratio of tangible
equity to total assets that is equal to or less than 2.0%. Under specified
circumstances, a federal banking agency may reclassify a well capitalized
institution as adequately capitalized and may require an adequately capitalized
institution or an undercapitalized institution to comply with supervisory
actions as if it were in the next lower category (except that the FDIC may not
reclassify a significantly undercapitalized institution as critically
undercapitalized).
An institution generally must file a written capital restoration plan
which meets specified requirements with its appropriate federal banking agency
within 45 days of the date that the institution receives notice or is deemed to
have notice that it is undercapitalized, significantly undercapitalized or
critically undercapitalized. A federal banking agency must provide the
institution with written notice of approval or disapproval within 60 days after
receiving a capital restoration plan, subject to extensions by the agency. An
institution which is required to submit a capital restoration plan must
concurrently submit a performance guaranty by each company that controls the
institution. In addition, undercapitalized institutions are subject to various
regulatory restrictions, and the appropriate federal banking agency also may
take any number of discretionary supervisory actions.
At June 30, 1998, the Bank was in the "well capitalized" category for
purposes of the above regulations.
Alteration of Financial Services Industry. On May 21, 1997, the Clinton
Administration announced a plan to modernize the financial services industry.
The proposal, among other things, addresses the ongoing debate concerning mixing
banking and commerce, elimination of the savings Bank charter and the merger of
the SAIF and BIF. Under the proposal, companies that own banks (bank holding
companies) and meet certain qualifications would -- subject to certain
safeguards -- be permitted to engage in any financial activity, including the
full range of securities activities, insurance activities, investment advisory
activities and mutual fund sponsorship and merchant banking. Likewise, financial
companies could own banks.
Regarding financial activities of insured depository institutions and
their subsidiaries, the proposal provides that national banks (and state banks
to the extent permitted by state law) would be authorized, subject to certain
safeguards, to conduct any financial activity through subsidiaries (except that
national bank subsidiaries would not be authorized to engage in real estate
development). National banks would be permitted to engage in the full scope of
activities that have
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previously been permissible for national banks or federally chartered savings
Banks (except engaging in the real estate development). Moreover, national banks
(and state banks to the extent permitted by state law) would be permitted to act
as general agents for the sale of insurance, but would be prohibited from
engaging directly in insurance underwriting other than what is currently
permissible (for instance, credit-related insurance). Additionally, national
banks (and state banks to the extent permitted by state law) would be permitted
to underwrite and deal in municipal revenue bonds in addition to other
securities activities currently permissible in the bank.
The Clinton Administration's proposal also addressed affiliations
between banking organizations and non-financial companies. The proposal
recommended two alternative approaches -- the "basket" approach and the
"financial-only" approach. Under the basket approach, bank holding companies
that derive some significant percentage (as specified by the U.S. Congress) of
their gross revenues in the U.S. from financial activities could derive the
remainder of their revenues from non-financial activities. In addition to the
basket limitation, the proposal suggested prohibiting any affiliation between a
bank holding company and a non-financial firm having assets in excess of a
specified amount (calculated to be approximately the 1,000 largest non-financial
companies). Moreover, banks would be prohibited from extending any credit to, or
for the benefit of, any non-financial affiliate.
Under the basket approach, the federal savings Bank charter would be
eliminated after two years (thereby requiring all federal thrifts to convert to
bank charters), and existing unitary thrift holding companies (which presently
have no activity restrictions) would be given a grandfather exemption from the
"basket" test (terminable upon a change of control). All remaining
state-chartered thrifts would be treated as banks for federal bank regulatory
purposes. The OTS and the OCC would be merged at the end of the
two-year-Reorganization period and the SAIF and BIF would be merged. The Federal
Reserve Board, however, would continue to approve the formation of, and to
supervise and regulate all bank holding companies.
Under the financial-only approach, bank holding companies would not be
permitted to engage in any non-financial activities. But the existing federal
savings Bank charter would be preserved, and thrift holding companies would
retain their current authority to engage in any lawful activity. Furthermore,
the OTS and OCC would be kept in tact, but the SAIF and BIF would be merged.
The Administration's proposal also sets forth capital protections and
other safeguards associated with the new activities contemplated for banks. In
order for a bank holding company or a subsidiary of a bank to engage as a
principal in activities not permissible for a national bank to engage in
directly, the bank would have to remain "well capitalized" -- that is, to be in
the highest regulatory capital category, with regulatory capital exceeding
normal requirements -- and it would have to deduct from its regulatory capital
the entire amount of its equity investment in a subsidiary engaged in such
activities. The Bank also would have to be well-managed.
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On June 20, 1997, the House Committee on Banking and Financial Services
of the U.S. House of Representatives passed H.R. 10 (the "Act"), the "Financial
Services Competition Act of 1997," by a vote of 28 to 26. Like the proposal
announced by the Clinton Administration on May 2, 1997, H.R. 10 is a sweeping
proposal for financial modernization of the banking system that would permit
affiliations between commercial banks, securities firms, insurance companies
and, subject to certain limitations, other commercial enterprises. The stated
purposes of the Act are to enhance consumer choice in the financial services
marketplace, level the playing field among providers of financial services and
increase competition.
H.R. 10 removes the restrictions contained in the Glass-Steagall Act of
1933 and the BHCA, thereby allowing qualified financial holding companies to
control banks, securities firms, insurance companies, and other financial firms.
Conversely, securities firms, insurance companies and financial firms would be
allowed to own or affiliate with a commercial bank. The Act also provides that
subsidiaries of national banks may engage in financial activities not allowed in
the bank itself (except real estate investment and development, merchant banking
and insurance underwriting), but only if the bank and all of its depository
institutions are well capitalized and well managed and have achieved a
"satisfactory" rating under the Community Reinvestment Act.
Under the new framework, the Federal Reserve would serve as an umbrella
regulator to oversee the new financial holding company structure. Securities
affiliated would be required to comply with all applicable federal securities
laws, including registration and other requirements applicable to
broker-dealers. The Act also would provide that insurance affiliates be subject
to applicable state insurance regulations and supervision.
With respect to the thrift industry, H.R. 10 would eliminate the
federal savings Bank charter by requiring all federal thrifts to convert to
national banks, state-chartered savings Banks or state-chartered banks within
two years after the date of the Act's adoption. State-chartered savings Banks
would be treated as commercial banks for purposes of federal banking law. After
Reorganization, the new institution would be permitted to retain its existing
investments, affiliations and branches. In addition, the Act would merge the OTS
with the OCC, and merge the SAIF and BIF. Unitary savings and loan holding
companies could maintain their affiliations with nonfinancial enterprises and
engage in all currently permissible activities.
The U.S. Congress has been considering the Administration's proposal,
as well as proposals offered by others, in recent months. H.R. 10, specifically,
is being considered by the Commerce Committee of the House of Representatives,
but a vote on the bill has been indefinitely postponed. It is unknown whether
legislation will be enacted that alters the financial services industry, or if
enacted, what form such legislation might take.
Safety and Soundness Guidelines. The OTS and the other federal bank
regulatory agencies have established guidelines for safety and soundness,
addressing operational and managerial standards, as well as compensation matters
for insured financial institutions. Institutions failing to meet these standards
are required to submit compliance plans to their appropriate federal
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regulators. The OTS and the other agencies have also established guidelines
regarding asset quality and earnings standards for insured institutions. The
Bank believes that it is in compliance with these guidelines and standards.
Liquidity Requirements. All savings institutions are required to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings institutions. At the present time, the required minimum
liquid asset ratio is 4%. The Bank consistently has had liquidity well in excess
of the Federal requirements during the past three fiscal years.
Capital Distributions. OTS regulations govern capital distributions by
savings institutions, which include cash dividends, stock redemptions or
repurchases, cash-out mergers, interest payments on certain convertible debt and
other transactions charged to the capital account of a savings institution to
make capital distributions. Generally, the regulations create a safe harbor for
specified levels of capital distributions from institutions meeting at least
their minimum capital requirements, so long as such institutions notify the OTS
and receive no objection to the distribution from the OTS. Savings institutions
and distributions that do not qualify for the safe harbor are required to obtain
prior OTS approval before making any capital distributions.
Generally, a savings institution that before and after the proposed
distribution meets or exceeds its fully phased-in capital requirements (Tier 1
institutions) may make capital distributions during any calendar year equal to
the higher of (i) 100% of net income for the calendar year-to-date plus 50% of
its "surplus capital ratio" at the beginning of the calendar year or (ii) 75% of
net income over the most recent four-quarter period. The "surplus capital ratio"
is defined to mean the percentage by which the institution's tangible, core or
risk-based capital ratio exceeds its tangible, core or risk-based capital
requirement. Failure to meet minimum capital requirements will result in further
restrictions on capital distributions, including possible prohibition without
explicit OTS approval. See "- Regulatory Capital Requirements."
In order to make distributions under these safe harbors, Tier 1 and
Tier 2 institutions must submit 30 days written notice to the OTS prior to
making the distribution. The OTS may object to the distribution during that
30-day period based on safety and soundness concerns. In addition, a Tier 1
institution deemed to be in need of more than normal supervision by the OTS may
be downgraded to a Tier 2 or Tier 3 institution as a result of such a
determination. At June 30, 1998, the Bank was a Tier 1 institution for purposes
of this regulation.
Branching by Federal Savings Institutions. OTS policy permits
interstate branching to the full extent permitted by statute (which is
essentially unlimited). Generally, federal law prohibits federal savings
institutions from establishing, retaining or operating a branch outside the
state in which the federal institution has its home office unless the
institution meets the IRS' domestic building and loan test (generally, 60% of a
thrift's assets must be housing-related) ("IRS Test").
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The IRS Test requirement does not apply if: (i) the branch(es) result(s) from an
emergency acquisition of a troubled savings institution (however, if the
troubled savings institution is acquired by a bank holding company, does not
have its home office in the state of the bank holding company bank subsidiary
and does not qualify under the IRS Test, its branching is limited to the
branching laws for state-chartered banks in the state where the savings
institution is located); (ii) the law of the state where the branch would be
located would permit the branch to be established if the federal savings
institution were chartered by the state in which its home office is located; or
(iii) the branch was operated lawfully as a branch under state law prior to the
savings institution's Reorganization to a federal charter.
Furthermore, the OTS will evaluate a branching applicant's record of
compliance with the Community Reinvestment Act of 1977 ("CRA"). An
unsatisfactory CRA record may be the basis for denial of a branching
application.
Community Reinvestment Act and the Fair Lending Laws. Savings
institutions have a responsibility under the 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 comply 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.
Qualified Thrift Lender Test. All savings institutions are required to
meet a QTL test to avoid certain restrictions on their operations. Under Section
2303 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996, a
savings institution can comply with the QTL test by either qualifying as a
domestic building and loan Bank as defined in Section 7701(a)(19) of the Code or
by meeting the second prong of the QTL test set forth in Section 10(m) of the
HOLA. A savings institution that does not meet the QTL test must either convert
to a bank charter or comply with the following restrictions on its operations:
(i) the institution may not engage in any new activity or make any new
investment, directly or indirectly, unless such activity or investment is
permissible for a national bank; (ii) the branching powers of the institution
shall be restricted to those of a national bank; (iii) the institution shall not
be eligible to obtain any new advances from its FHLB, other than special
liquidity advances with the approval of the OTS; and (iv) payment of dividends
by the institution shall be subject to the rules regarding payment of dividends
by a national bank. Upon the expiration of three years from the date the savings
institution ceases to be a QTL, it must cease any activity and not retain any
investment not permissible for a national bank and immediately repay any
outstanding FHLB advances (subject to safety and soundness considerations).
Currently, the portion of the QTL test that is based on Section 10(m)
of the HOLA rather than the Code requires that 65% of an institution's
"portfolio assets" (as defined) consist of certain
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housing and consumer-related assets on a monthly average basis in nine out of
every 12 months. Assets that qualify without limit for inclusion as part of the
65% requirement are loans made to purchase, refinance, construct, improve or
repair domestic residential housing and manufactured housing; home equity loans;
mortgage-backed securities (where the mortgages are secured by domestic
residential housing or manufactured housing); stock issued by the FHLB of
Atlanta; and direct or indirect obligations of the FDIC. In a recent amendment
to the QTL, small business loans, credit card loans, student loans and loans for
personal, family and household purposes were allowed to be included without
limitation as qualified investments. In addition, the following assets, among
others, may be included in meeting the test subject to an overall limit of 20%
of the savings institution's portfolio assets: 50% of residential mortgage loans
originated and sold within 90 days of origination; 100% of consumer and
educational loans (limited to 10% of total portfolio assets); and stock issued
by the FHLMC or the FNMA. Portfolio assets consist of total assets minus the sum
of (i) goodwill and other intangible assets, (ii) property used by the savings
institution to conduct its business, and (iii) liquid assets up to 20% of the
institution's total assets. At June 30, 1998, substantially all of the portfolio
assets of the Bank were qualified thrift investments.
Federal Home Loan Bank System. The Bank is a member of the FHLB of
Pittsburgh, which is one of 12 regional FHLBs that administers the home
financing credit function of savings institutions. Each FHLB serves as a reserve
or central bank for its members within its assigned region. It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB System. It makes loans to members (i.e., advances) in accordance with
policies and procedures established by the Board of Directors of the FHLB. At
June 30, 1998, the Bank had $21.0 million of FHLB advances.
As a member, the Bank is required to purchase and maintain stock in the
FHLB of Atlanta in an amount equal to at least 1% of its aggregate unpaid
residential mortgage loans, home purchase contracts or similar obligations at
the beginning of each year. At June 30, 1998, the Bank had $2.7 million in FHLB
stock, which was in compliance with this requirement.
The FHLBs are required to provide funds for the resolution of troubled
savings institutions and to contribute to affordable housing programs through
direct loans or interest subsidies on advances targeted for community investment
and low- and moderate-income housing projects. These contributions have
adversely affected the level of FHLB dividends paid and could continue to do so
in the future. These contributions also could have an adverse effect on the
value of FHLB stock in the future. The dividend yield on the Bank's FHLB stock
was 6.4% for each of the fiscal years ended June 30, 1998 and 1997.
Federal Reserve System. Federal Reserve Board regulations require all
depository institutions to maintain non-interest earning reserves against their
transaction accounts (primarily NOW and Super NOW checking accounts) and
non-personal time deposits. At June 30, 1998, the Bank was in compliance with
these reserve requirements. The balances maintained to meet the reserve
requirements imposed by the Federal Reserve Board may be used to satisfy
liquidity requirements that may be imposed by the OTS.
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Savings Banks are authorized to borrow from a Federal Reserve Bank
"discount window," but Federal Reserve Board regulations require savings Banks
to exhaust other reasonable alternative sources of funds, including FHLB
advances, before borrowing from a Federal Reserve Bank.
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. Recent legislation required the
Treasury Department to prepare for Congress a comprehensive study on the
development of a common charter for federal savings institutions and commercial
banks; and, in the event that the thrift charter was eliminated by January 1,
1999, would require the merger of the BIF and the SAIF into a single Deposit
Insurance Fund on that date. 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 its
parent holding company.
Affiliate Restrictions. Section 11 of HOLA provides that transactions
between an insured subsidiary of a holding company and an affiliate thereof will
be subject to the restrictions that apply to transactions between banks that are
members of the Federal Reserve System and their affiliates pursuant to Sections
23A and 23B of the Federal Reserve Act ("FRA").
In general, Sections 23A and 23B and OTS regulations issued in
connection therewith limit the extent to which a savings institution or its
subsidiaries may engage in certain "covered transactions" with affiliates to an
amount equal to 10% of the institution's capital and surplus, in the case of
covered transactions with any one affiliate, and to an amount equal to 20% of
such capital and surplus, in the case of covered transactions with all
affiliates. In addition, a savings institution and its subsidiaries may engage
in covered transactions and certain other transactions only on terms and under
circumstances that are substantially the same, or at least as favorable to the
savings institution or its subsidiary, as those prevailing at the time for
comparable transactions with nonaffiliated companies. A "covered transaction" is
defined to include a loan or extension of credit to an affiliate; a purchase of
investment securities issued by an affiliate; a purchase of assets from an
affiliate, with certain exceptions; the acceptance of securities issued by an
affiliate as collateral for a loan or extension of credit to any party; or the
issuance of a guarantee, acceptance or letter of credit on behalf of an
affiliate.
In addition, under the OTS regulations, a savings institution may not
make a loan or extension of credit to an affiliate unless the affiliate is
engaged only in activities permissible for bank holding companies; a savings
institution may not purchase or invest in securities of an affiliate other than
shares of a subsidiary; a savings institution and its subsidiaries may not
purchase a low-quality asset from an affiliate; and covered transactions and
certain other transactions between a savings institution or its subsidiaries and
an affiliate must be on terms and conditions that are consistent with safe and
sound banking practices. With certain exceptions, each loan or extension of
credit by a savings institution to an affiliate must be secured by collateral
with a market value ranging from
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100% to 130% (depending on the type of collateral) of the amount of the loan or
extension of credit.
The OTS regulation generally excludes all non-bank and non-savings
institution subsidiaries of savings institutions from treatment as affiliates,
except to the extent that the OTS or the Federal Reserve Board decides to treat
such subsidiaries as affiliates. The regulation also requires savings
institutions to make and retain records that reflect affiliate transactions in
reasonable detail, and provides that certain classes of savings institutions may
be required to give the OTS prior notice of affiliate transactions.
Federal Securities Law
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), for the registration
of the Common Stock to be issued in the Offerings. Upon completion of the
Offerings, the Common Stock will be registered with the SEC under the Exchange
Act and, under OTS regulations, generally may not be deregistered for at least
three years thereafter. The Company will be subject to the information, proxy
solicitation, insider trading restrictions and other requirements of the
Exchange Act.
The registration under the Securities Act of the Common Stock does not
cover the resale of such shares. Shares of the Common Stock purchased by persons
who are not affiliates of the Company may be resold without registration. Shares
purchased by an affiliate of the Company will be subject to the resale
restrictions of Rule 144 under the Securities Act. If the Company meets the
current public information requirements of Rule 144 under the Securities Act,
each affiliate of the Company who complies with the other conditions of Rule 144
(including those that require the affiliate's sale to be aggregated with those
of certain other persons) would be able to sell in the public market, without
registration, a number of shares not to exceed, in any three-month period, the
greater of (i) 1% of the outstanding shares of the Company or (ii) the average
weekly volume of trading in such shares during the preceding four calendar
weeks. Provision may be made in the future by the Company to permit affiliates
to have their shares registered for sale under the Securities Act under certain
circumstances. There are currently no demand registration rights outstanding.
However, in the event the Company at some future time determines to issue
additional shares from its authorized but unissued shares, the Company might
offer registration rights to certain of its affiliates who want to sell their
shares.
TAXATION
Federal Taxation
General. The Company and the Bank will be subject to federal income
taxation in the same general manner as other corporations with some exceptions
discussed below. The following discussion of federal taxation is intended only
to summarize certain pertinent federal income tax
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matters and is not a comprehensive description of the tax rules applicable to
the Company or the Bank. The Bank's federal income tax returns have been closed
without audit by the IRS through 1994.
Following the Reorganization, the Company anticipates that it will file
a consolidated Federal income tax return with the Bank commencing with the first
taxable year after consummation of the Reorganization. Accordingly, it is
anticipated that any cash distributions made by the Company to its stockholders
would be treated as cash dividends and not as a non-taxable return of capital to
stockholders for federal and state tax purposes.
Method of Accounting. For federal income tax purposes, the Bank
currently reports its income and expenses on the accrual method of accounting
and uses a tax year ending June 30, for filing its federal income tax return.
The Small Business Protection Act of 1996 (the "1996 Act") eliminated the use of
the reserve method of accounting for bad debt reserves by savings institutions,
effective for taxable years beginning after 1995.
Bad Debt Reserves. Prior to the 1996 Act, the Bank was permitted to
establish a reserve for bad debts and to make annual additions to the reserve.
These additions could, within specified formula limits, be deducted in arriving
at taxable income. As a result of the 1996 Act, savings associations must use
the specific chargeoff method in computing its bad debt deduction beginning with
their 1996 Federal tax return. In addition, federal legislation requires the
recapture (over a six year period) of the excess of tax bad debt reserves at
December 31, 1995 over those established as of December 31, 1987. The amount of
such reserve subject to recapture as of June 30, 1998 is approximately $2.4
million for the Bank.
Taxable Distributions and Recapture. Prior to the 1996 Act, bad debt
reserves created prior to January 1, 1988 were subject to recapture into taxable
income should the Bank fail to meet certain thrift asset and definitional tests.
New federal legislation eliminated these thrift related recapture rules.
However, under current law, pre-1988 reserves remain subject to recapture should
the Bank make certain non-dividend distributions or cease to maintain a bank
charter.
At June 30, 1998 the total federal pre-1988 reserve was approximately
$6.2 million for the Bank. This reserve reflects the cumulative effects of
federal tax deductions by the Bank for which no federal income tax provision has
been made.
Minimum Tax. The Code imposes an alternative minimum tax ("AMT") at a
rate of 20% on a base of regular taxable income plus certain tax preferences
("alternative minimum taxable income" or "AMTI"). The AMT is payable to the
extent such AMTI is in excess of an exemption amount. Net operating losses can
offset no more than 90% of AMTI. Certain payments of alternative minimum tax may
be used as credits against regular tax liabilities in future years. The Bank has
not been subject to the alternative minimum tax nor does the Bank have any such
amounts available as credits for carryover.
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Net Operating Loss Carryovers. A financial institution may carry back
net operating losses to the preceding three taxable years and forward to the
succeeding 15 taxable years. This provision applies to losses incurred in
taxable years beginning before August 6, 1997. At June 30, 1998, the Bank had no
net operating loss carryforwards for federal income tax purposes.
Corporate Dividends-Received Deduction. The Company may exclude from
its income 100% of dividends received from the Bank as a member of the same
affiliated group of corporations. The corporate dividends-received deduction is
80% in the case of dividends received from corporations with which a corporate
recipient does not file a consolidated tax return, and corporations which own
less than 20% of the stock of a corporation distributing a dividend may deduct
only 70% of dividends received or accrued on their behalf.
State and Local Taxation
Pennsylvania Taxation. The Company is subject to the Pennsylvania
Corporate Net Income Tax and Capital Stock and Franchise Tax. The Corporation
Net Income Tax rate for 1997 is 9.99% and is imposed on the Company's
unconsolidated taxable income for federal purposes with certain adjustments. In
general, the Capital Stock Tax is a property tax imposed at the rate of
approximately 1.2% of a corporation's capital stock value, which is determined
in accordance with a fixed formula based upon average net income and net worth.
The Bank is taxed under the Pennsylvania Mutual Thrift Institutions Tax
Act (the "MTIT"), as amended to include thrift institutions having capital
stock. Pursuant to the MTIT, the Bank's tax rate is 11.5%. The MTIT exempts the
Bank from all other taxes imposed by the Commonwealth of Pennsylvania for state
income tax purposes and from all local taxation imposed by political
subdivisions, except taxes on real estate and real estate transfers. The MTIT is
a tax upon net earnings, determined in accordance with GAAP with certain
adjustments. The MTIT, in computing GAAP income, allows for the deduction of
interest earned on state and federal securities, while disallowing a percentage
of a thrift's interest expense deduction in the proportion of interest income on
those securities to the overall interest income of the Bank. Net operating
losses, if any, thereafter can be carried forward three years for MTIT purposes.
MANAGEMENT
Management of the Company
The Board of Directors of the Company will consist of the same
individuals who serve as directors of the Bank. The Board of Directors of the
Company is divided into three classes, each of which contains approximately
one-third of the Board. The directors shall be elected by the stockholders of
the Company for staggered three year terms, or until their successors are
elected and qualified. One class of directors, consisting of Messrs. Langan,
O'Brien and Ramsey, has a term of office expiring at the first annual meeting of
stockholders, a second class, consisting of
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Messrs. Hull, Kitzelman and Kremp, has a term of office expiring at the second
annual meeting of stockholders and a third class, consisting of Messrs. Kirk,
Marcell and Weihenmayer, has a term of office expiring at the third annual
meeting of stockholders.
The following individuals are executive officers of the Company and
hold the offices set forth below opposite their names.
<TABLE>
<CAPTION>
Executive Position Held with Company
- ------------------------------------- -----------------------------------------------------
<S> <C>
Frederick A. Marcell, Jr. President and Chief Executive Officer
Thomas M. Fewer Senior Vice President and Chief Credit
Officer
John J. Foff, Jr. Senior Vice President, Chief Financial
Officer and Treasurer
John T. Powers Senior Vice President and Corporate
Secretary
</TABLE>
The executive officers of the Company are elected annually and hold
office until their respective successors have been elected and qualified or
until death, resignation or removal by the Board of Directors.
Information concerning the principal occupations, employment and
compensation of the directors and officers of the Company during the past five
years is set forth under "- Management of the Bank" and "- Executive Officers
Who Are Not Directors." Directors of the Company initially will not be
compensated by the Company but will serve and be compensated by the Bank. It is
not anticipated that separate compensation will be paid to directors of the
Company until such time as such persons devote significant time to the separate
management of the Company's affairs, which is not expected to occur until the
Company becomes actively engaged in additional businesses other than holding the
stock of the Bank. The Company may determine that such compensation is
appropriate in the future.
Management of the Bank
Because the Bank is a mutual savings bank, its members have elected its
Board of Directors. Upon completion of the Reorganization and Stock Issuance,
the directors of the Bank immediately prior to the Stock Issuance will continue
to serve as directors of the Bank until successors are eligible and qualified.
Currently, the term of each director is three years, and all of the members of
the Board of Directors stand for election upon the expiration of their term.
This will continue to be the case for the Bank following the Reorganization and
Stock Issuance. Because the Company will own all the issued and outstanding
capital stock of the Bank following the Reorganization and Stock Issuance, the
Board of Directors of the Company will elect the directors
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of the Bank. The persons who are serving as directors of the Bank will also
serve as directors of the MHC and the Company upon consummation of the
Reorganization and Stock Issuance.
The following table sets forth certain information regarding the Board
of Directors of the Bank.
<TABLE>
<CAPTION>
Positions Held
With Director
Name Age(1) the Bank Since
- ------------------------- ------ ----------------------------- --------------
<S> <C> <C> <C>
Lewis W. Hull 81 Director 1974
J. Ellwood Kirk 68 Director 1978
Stanley B. Kitzelman 76 Director 1979
Charles F. Kremp, 3rd 55 Director 1994
William W. Langan 58 Chairman of the Board 1986
Frederick A. Marcell, Jr. 60 Director, President and Chief 1992
Executive Officer
A. Brent O'Brien 60 Director 1996
Samuel H. Ramsey, III 55 Director 1988
William B. Weihenmayer 51 Director 1996
</TABLE>
- ------------------------------
(1) As of August 26, 1998.
Set forth below is information with respect to the principal
occupations during at least the last five years for the directors of the Bank.
Lewis W. Hull. Mr. Hull is currently Chairman of Hull Corp and Hull
Company, manufacturing companies located in Hatboro, Pennsylvania. He is the
controlling shareholder of Hull Corp.
J. Ellwood Kirk. Mr.Kirk is currently retired. Previously, Mr. Kirk
served as President of the Bank.
Stanley B. Kitzelman. Mr. Kitzelman is currently retired. Previously,
Mr. Kitzelman was an insurance executive.
Charles F. Kremp, 3rd. Mr. Kremp is President and owner of Charles F.
Kremp, 3rd, florist, Willow Grove, Pennsylvania.
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William W. Langan. Mr. Langan is the President and owner of Marmetal
Industries, Inc., Horsham, Pennsylvania.
Frederick A. Marcell, Jr. Mr. Marcell has served as President and Chief
Executive Officer of the Bank since April 1992.
A. Brent O'Brien. Mr. O'Brien is President and owner of the insurance
broker firm Bean, Mason & Eyer, Inc., Doylestown, Pennsylvania.
Samuel H. Ramsey, III. Mr. Ramsey is President and owner of Samuel H.
Ramsey III, certified public accountants since 1973.
William B. Weihenmayer. Mr. Weihenmayer is a self-employed real estate
investor, Huntingdon Valley, Pennsylvania.
Executive Officers Who Are Not Directors
Set forth below is information with respect to the principal
occupations during at least the last five years for the three executive officers
of the Bank who do not serve as directors.
Thomas M. Fewer. Age 46 years. Mr. Fewer has served as Senior Vice
President of the Bank since 1997. Mr. Fewer has been employed by the Bank since
1991 and has previously served as Vice President and Senior Lending Officer.
John J. Foff, Jr. Age 47 years. Mr. Foff currently is Senior Vice
President and Chief Financial Officer of the Bank. Mr. Foff joined the Bank in
1986 as Vice President and Treasurer. Mr. Foff has served as a financial manager
in the banking industry since 1976.
John T. Powers. Age 48 years. Mr. Powers currently is Senior Vice
President, Community Banking and Corporate Secretary of the Bank and has served
with the Bank since 1986.
Directors' Compensation
The Chairman of the Board of Directors receives $1,260 per Board
meeting while the other non-employee directors receive $1,000 per meeting. In
addition, the Chairman of committees of the Board receives $600 per committee
meeting while other directors receive $500 per committee meeting. In order to
receive such compensation, directors may not be absent for more than two Board
meetings or committee meetings, as the case may be. Board fees are subject to
periodic adjustment by the Board of Directors. See "- Benefits - Stock Option
Plan" and "- Recognition Plan."
The Bank has adopted a non-qualified retirement plan for the Bank's
non-employee directors (the "Directors' Plan"). Assuming the completion of ten
years of service, the Directors'
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Plan provides for fixed annual payments at retirement of $12,000 a year for a
period of ten years. The Directors' Plan provides that directors become 20%
vested after six years of service, with the vested benefit increasing by 20% per
year through year ten. The plan, which was adopted in fiscal 1998, provides for
credit for past service and, as such, resulted in the Bank accruing $566,000 in
expense for the year ended June 30, 1998.
Compensation Committee Interlocks and Insider Participation
Determinations regarding compensation of the Bank's employees are made
by the Compensation Committee of the Board of Directors. Messrs. Langan, Hull
and O'Brien, directors of the Bank, and Mr. Marcell, President and Chief
Executive Officer of the Bank, serve as members of the Compensation Committee.
Summary Compensation Table
The following table sets forth a summary of certain information
concerning the compensation paid by the Bank (including amounts deferred to
future periods by the officers) for services rendered in all capacities during
the fiscal year ended June 30, 1998 to the President and Chief Executive Officer
of the Bank and the three other officers of the Bank whose compensation exceeded
$100,000.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------- ------------------------------------
Other Awards Payouts
Name and Fiscal Annual ------------------------------------ All Other
Principal Position Year Salary Bonus Compensation Securities Compensation(1)
Restricted Underlying LTIP
Stock Options Payouts
- ------------------------- ------ -------- ------- ------------ ---------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frederick A. Marcell,
Jr., President and Chief
Executive Officer 1998 $142,000 $21,675 - - - - - - - - $15,700
Thomas M. Fewer,
Senior Vice President 1998 $87,500 $13,977 - - - - - - - - $10,937
John J. Foff, Jr.
Senior Vice President
and Chief Financial 1998 $87,500 $13,977 - - - - - - - - $10,937
Officer
John T. Powers, Senior
Vice President,
Community Banking 1998 $87,500 $13,977 - - - - - - - - $10,079
</TABLE>
- -------------------
(1) Consists of the Bank's contributions to the Bank's 401(k) profit
sharing plan and the Bank's money purchase plan to the account of the
named executive officers. In addition to the amounts allocated under
the Bank's 401(k) profit sharing plan and money purchase plan, in
fiscal 1998, the Bank adopted a supplemental executive retirement plan
("SERP") for the benefit of Mr. Marcell. The Bank accrued $234,000 with
respect to such SERP in the fiscal year. Under the Bank's 401(k) profit
sharing plan for fiscal 1998, $5,050, $4,375, $4,375 and $3,516,
respectively, was allocated to the accounts of Messrs. Marcell, Fewer,
Foff and Powers. Under the Bank's money purchase pension plan in fiscal
1998, $10,650, $6,562, $6,562 and $6,562, respectively, was allocated
to the accounts of Messrs. Marcell, Fewer, Foff and Powers.
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Employment Agreements
In connection with the Reorganization and Stock Issuance, the Bank (the
"Employer") intends to enter into employment agreements with each of Messrs.
Frederick A. Marcell, Jr., John J. Foff, Jr., Thomas M. Fewer and John T. Powers
(the "Executives"). The Employer has agreed to employ Mr. Marcell for a term of
two years and Messrs. Foff, Fewer and Powers for a term of one year, in each
case in their current respective positions. The agreements with the Executives
initially will be at their current salary levels. With respect to the
Executives, the employment agreements will be reviewed annually by the Board of
Directors of the Employer. The term of the Executives' employment agreements
shall be extended annually for a successive additional one-year periods unless
the Company and the Bank provide notice not less than 30 days prior to such
date, not to extend the employment term.
Each of the employment agreements shall be terminable with or without
cause by the Employer. The Executives shall have no right to compensation or
other benefits pursuant to the employment agreements for any period after
voluntary termination or termination by the Employer for cause, disability,
retirement or death. In the event that (i) the Executive terminates his
employment because of failure to comply with any material provision of the
employment agreement or the Employer changes the Executive's title or duties or
(ii) the employment agreement is terminated by the Employer other than for
cause, disability, retirement or death, the Executive will be entitled to
receive his salary for the remaining term of the Agreement. If employment is
terminated by the Employer or by the executive as a result of certain adverse
actions which are taken with respect to the executive's employment following a
change in control of the Company, as defined, the Executives will be entitled to
a cash severance amount equal to their base salary plus bonus received in the
prior year, multiplied by the number of years in the initial term of the
employment agreement (two in the case of Mr. Marcell and one in the case of the
other Executives).
A change in control is generally defined in the employment agreements
to include any change in control of the Company required to be reported under
the federal securities laws, as well as (i) the acquisition by any person of 20%
or more of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any three-year period without
the approval of at least two-thirds of the persons who were directors of the
Company at the beginning of such period. If the new employment agreements were
in effect and a change-of-control of the Company had occurred on June 30, 1998,
Mr. Marcell would be entitled to receive $327,000, and Messrs. Foff, Fewer and
Powers would each be entitled to receive $101,000 in severance payments.
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect. The Company and/or the Bank may determine to enter into similar
employment agreements with other officers of the Company and/or the Bank in the
future.
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Benefits
Employee Stock Ownership Plan. The Company has established the ESOP for
employees of the Company and the Bank to become effective upon the
Reorganization and Stock Issuance. Full-time employees of the Company and the
Bank who have been credited with at least 1,000 hours of service during a twelve
month period are eligible to participate in the ESOP.
As part of the Reorganization and Stock Issuance, in order to fund the
purchase of up to 8% of the Common Stock sold in the Reorganization and Stock
Issuance, it is anticipated that the ESOP will borrow funds from the Company. It
is anticipated that such loan will equal 100% of the aggregate purchase price of
the Common Stock acquired by the ESOP. The loan to the ESOP will be repaid
principally from the Company's and the Bank's contributions to the ESOP over a
period of not less than 10 years, and the collateral for the loan will be the
Common Stock purchased by the ESOP. The interest rate for the ESOP loan is
expected to be a fixed rate at the Bank's prime rate as of the date of the loan.
The Company may, in any plan year, make additional discretionary contributions
for the benefit of plan participants in either cash or shares of Common Stock,
which may be acquired through the purchase of outstanding shares in the market
or from individual stockholders, upon the original issuance of additional shares
by the Company or upon the sale of treasury shares by the Company. Such
purchases, if made, would be funded through additional borrowings by the ESOP or
additional contributions from the Company. The timing, amount and manner of
future contributions to the ESOP will be affected by various factors, including
prevailing regulatory policies, the requirements of applicable laws and
regulations and market conditions.
Shares purchased by the ESOP with the proceeds of the loan will be held
in a suspense account and released to participants on a pro rata basis as debt
service payments are made. Shares released from the ESOP will be allocated to
each eligible participant's ESOP account based on the ratio of each such
participant's compensation to the total compensation of all eligible ESOP
participants. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have contributed
to the ESOP. Upon the completion of seven years of service, the account balances
of participants within the ESOP will become 100% vested. Credit is given for
years of service with the Bank prior to adoption of the ESOP. In the case of a
"change in control," as defined, however, participants will become immediately
fully vested in their account balances. Benefits may be payable upon retirement
or separation from service. The Company's contributions to the ESOP are not
fixed, so benefits payable under the ESOP cannot be estimated.
Messrs. Marcell, Fewer, Foff and Powers will serve as trustees of the
ESOP. Under the ESOP, the trustees must vote all allocated shares held in the
ESOP in accordance with the instructions of the participating employees, and
unallocated shares will be voted in the same ratio on any matter as those
allocated shares for which instructions are given.
See "Risk Factor-Potential Increased Compensation Expense After the
Reorganization" for discussion which addresses compensation expense to be
incurred as a result of the ESOP.
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<PAGE>
GAAP requires that any third party borrowing by the ESOP be reflected
as a liability on the Company's statement of financial condition. Since the ESOP
is borrowing from the Company, such obligation is not treated as a liability,
but will be excluded from stockholders' equity. If the ESOP purchases newly
issued shares from the Company, total stockholders' equity would neither
increase nor decrease, but per share stockholders' equity and per share net
earnings would decrease as the newly issued shares are allocated to the ESOP
participants.
The ESOP will be subject to the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the regulations of the
IRS and the Department of Labor thereunder.
Stock Option Plan. Following consummation of the Reorganization and
Stock Issuance, the Board of Directors of the Company intends to adopt a Stock
Option Plan, which will be designed to attract and retain qualified personnel in
key positions, provide directors, officers and key employees with a proprietary
interest in the Company as an incentive to contribute to the success of the
Company and reward key employees for outstanding performance. The Stock Option
Plan will provide for the grant of incentive stock options intended to comply
with the requirements of Section 422 of the Code ("incentive stock options"),
non-incentive or compensatory stock options, stock appreciation rights and
limited rights which will be exercisable only upon a change in control of the
Company or the Bank (collectively "Awards"). Awards may be granted to directors
and key employees of the Company and any subsidiaries. The Stock Option Plan
will be administered and interpreted by a committee of the Board of Directors
("Committee"). Unless sooner terminated, the Stock Option Plan shall continue in
effect for a period of 10 years from the date the Stock Option Plan is adopted
by the Board of Directors. Subject to any applicable OTS regulations, upon
exercise of "Limited Rights" in the event of a change in control, the employee
will be entitled to receive a lump sum cash payment equal to the difference
between the exercise price of the related option and the fair market value of
the shares of common stock subject to the option on the date of exercise of the
right in lieu of purchasing the stock underlying the option.
Under the Stock Option Plan, the Committee will determine which
directors, officers and key employees will be granted Awards, whether options
will be incentive or compensatory options, the number of shares subject to each
Award, the exercise price of each option, whether options may be exercised by
delivering other shares of Common Stock and when such options become
exercisable. The per share exercise price of an incentive stock option must at
least equal the fair market value of a share of Common Stock on the date the
option is granted (110% of fair market value in the case of incentive stock
options granted to employees who are 5% stockholders). The granting or vesting
of stock options may be conditioned upon the achievement of individual or
company-wide performance goals, which could include goals such as the
achievement by the Company or the Bank of specified levels of net income, asset
growth, return on assets, return on equity or other specific performance goals.
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At a meeting of stockholders of the Company following the
Reorganization, which under applicable OTS regulations may be held no earlier
than six months after the completion of the Reorganization, the Board of
Directors intends to present the Stock Option Plan to stockholders for approval
and to reserve an amount equal to 10% of the shares of Common Stock sold in the
Offerings (or 201,250 shares based upon the issuance of 2,012,500 shares), for
issuance under the Stock Option Plan. OTS regulations provide that, in the event
such plan is implemented within the one year following the Reorganization, no
individual officer or employee of the Bank may receive more than 25% of the
options granted under the Stock Option Plan and non-employee directors may not
receive more than 5% individually, or 30% in the aggregate, of the options
granted under the Stock Option Plan. OTS regulations also provide that the
exercise price of any options granted under any such plan must be the fair
market value of the Common Stock as of the date of grant. Each stock option or
portion thereof will be exercisable at any time on or after it vests and will be
exercisable until 10 years after its date of grant or for periods of up to one
year following the death, disability or other termination of the optionee's
employment or service as a director. However, failure to exercise incentive
stock options within three months after the date on which the optionee's
employment terminates may result in adverse tax consequences to the optionee.
At the time an Award is granted pursuant to the Stock Option Plan, the
recipient will not be required to make any payment in consideration for such
grant. With respect to incentive or compensatory stock options, the optionee
will be required to pay the applicable exercise price at the time of exercise in
order to receive the underlying shares of Common Stock. The shares reserved for
issuance under the Stock Option Plan may be authorized but previously unissued
shares, treasury shares, or shares purchased by the Company on the open market
or from private sources. In the event of a stock split, reverse stock split or
stock dividend, the number of shares of Common Stock under the Stock Option
Plan, the number of shares to which any Award relates and the exercise price per
share under any option or stock appreciation right shall be adjusted to reflect
such increase or decrease in the total number of shares of Common Stock
outstanding. In the event the Company declares a special cash dividend or return
of capital following the implementation of the Stock Option Plan in an amount
per share which exceeds 10% of the fair market value of a share of Common Stock
as of the date of declaration, the per share exercise price of all previously
granted options which remain unexercised as of the date of such declaration
shall, subject to certain limitations, be proportionately adjusted to give
effect to such special cash dividend or return of capital as of the date of
payment of such special cash dividend or return of capital.
Under current provisions of the Code, the federal income tax treatment
of incentive stock options and compensatory stock options is different. As
regards incentive stock options, an optionee who meets certain holding period
requirements will not recognize income at the time the option is granted or at
the time the option is exercised, and a federal income tax deduction generally
will not be available to the Company at any time as a result of such grant or
exercise. With respect to compensatory stock options, the difference between the
fair market value on the date of exercise and the option exercise price
generally will be treated as compensation income upon exercise, and the Company
will be entitled to a deduction in the amount of income so recognized by the
optionee. Upon the exercise of a stock appreciation right, the holder will
realize income for federal income tax
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purposes equal to the amount received by him, whether in cash, shares of stock
or both, and the Company will be entitled to a deduction for federal income tax
purposes in the same amount.
It is currently expected that the Stock Option Plan will provide that
no individual officer will be able to receive stock options for more than 25% of
the shares available under the Stock Option Plan, or 50,312 shares if the amount
of Common Stock sold in the Reorganization is equal to the maximum of the
Estimated Offering Range, vesting over a five-year period (or 10,062 shares per
year based upon the maximum of the Estimated Offering Range).
Recognition Plan. Following consummation of the Reorganization and
Stock Issuance, the Board of Directors of the Company intends to adopt a
Recognition Plan for directors, officers and employees. The objective of the
Recognition Plan will be to enable the Company to provide directors, officers
and employees with a proprietary interest in the Company as an incentive to
contribute to its success. The Company intends to present the Recognition Plan
to stockholders for their approval at a meeting of stockholders which, pursuant
to applicable OTS regulations, may be held no earlier than six months subsequent
to completion of the Reorganization.
The Recognition Plan will be administered by a committee of the Board
of Directors, which will have the responsibility to invest all funds contributed
to the trust created for the Recognition Plan (the "Trust"). The Company will
contribute sufficient funds to the Trust so that the Trust can purchase,
following the receipt of stockholder approval, a number of shares equal to an
aggregate of 4% of the Common Stock sold in the Offerings (80,500 shares based
on the sale of 2,012,500 shares at the maximum of the Estimated Offering Range).
Based on the Purchase Price, the shares of Common Stock in the Recognition Plan
will have an aggregate value of $800,500 and $925,750 assuming the sale of
shares at the maximum and the maximum, as adjusted, of the Estimated Offering
Range. Shares of Common Stock granted pursuant to the Recognition Plan generally
will be in the form of restricted stock vesting at the rate of 20% per year over
the five years following the date of grant. For accounting purposes,
compensation expense in the amount of the fair market value of the Common Stock
at the date of the grant to the recipient will be recognized pro rata over the
period during which the shares are earned. A recipient will be entitled to all
voting and other stockholder rights, except that the shares, while restricted,
may not be sold, pledged or otherwise disposed of and are required to be held in
the Trust. Under the terms of the Recognition Plan, recipients of awards will be
entitled to instruct the trustee of the Recognition Plan as to how the
underlying shares should be voted, and the trustee will be entitled to vote all
unallocated shares in its discretion. If a recipient's employment is terminated
as a result of death or disability, all restrictions will expire and all
allocated shares will become unrestricted. The Board of Directors of the Company
can terminate the Recognition Plan at any time, and if it does so, any shares
not allocated will revert to the Company. Recipients of grants under the
Recognition Plan will not be required to make any payment at the time of grant
or when the underlying shares of Common Stock become vested, other than payment
of withholding taxes.
The amount and timing of awards made to participants in the Recognition
Plan will be solely in the discretion of the committee of the Board of
Directors, subject to the limitations imposed by OTS regulations. In making
grants under the Recognition Plan, it is expected that the committee will
consider factors such as the duties, responsibilities and performance of
participants, their past and anticipated Future Contributions to the growth and
success of the bank, compensation levels and other factors as deemed
appropriate.
It is currently expected that the Recognition Plan will provide that no
individual officer will be able to receive an award for more than 25% of the
shares available under the Recognition Plan,
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or 20,125 shares if the amount of Common Stock sold in the Reorganization and
Stock Issuance is equal to the maximum of the Estimated Offering Range, vesting
over a five-year period (or 4,025 shares per year based upon the maximum of the
Estimated Offering Range).
Money Purchase Plan. The Bank maintains a Money Purchase Plan (the
"Retirement Plan") which provides retirement benefits for all full-time
employees who have attained the age of 21 and have completed one year of service
with the Bank. The Retirement Plan is a tax-qualified money purchase plan
pursuant to which the Bank's contributions are fixed based upon the compensation
of each participant. For each participant, the Bank's contribution is an amount
equal to 7.5% of the participant's base salary. With the consent of the
Retirement Plan's administrator, the Retirement Plan may also accept rollover
contributions from employees. Messrs. Marcell, Fewer, Foff and Powers are
trustees of the Retirement Plan. A participant's account balance becomes 100%
vested after completion of seven years of service. A participant also becomes
100% vested in his account balance in the event of death, disability or
retirement. Normal retirement age under the Retirement Plan is 65. Retirement
expense is funded as accrued and amounted to $182,000 for fiscal year 1998.
Supplemental Executive Retirement Plan. The Bank adopted the SERP in
fiscal 1998 in order to supplement the retirement benefits payable to Mr.
Marcell pursuant to the Bank's qualified plans. The SERP provides for payments
for a period of ten years beginning at retirement based on a percentage of
annual cash compensation. Assuming Mr. Marcell remains in the Bank's employ at
age 68, the SERP provides for an annual benefit equal to 50% of his annual cash
compensation. In the event that Mr. Marcell retires prior to age 68, his benefit
will be reduced in increments of 5% per year. The Bank accrued $234,000 on a
pre-tax basis $144,000 after tax for the year ended June 30, 1998, which
included estimated costs for past service.
401(k) Plan. The Bank has adopted a 401(k) Plan, which is a
tax-qualified defined contribution plan which permits salaried employees with at
least one year of service and who are 21 years of age or older to make pre-tax
salary deferrals under section 401(k) of the Code. Salary deferrals are made by
election and are limited to 10% of compensation up to $10,000 (for 1998). The
Bank generally makes matching contributions equal to 50% of deferred amounts.
Employees are fully vested in their salary deferrals, and become gradually
vested in the Bank's contribution over seven years of participation in the Plan.
The 401(k) Plan provides that employees select the investment of their accounts
from several options.
The Bank's 401(k) Plan is being amended to include the option to invest
401(k) Plan assets in Common Stock. In addition, participating employees may
elect to invest all or any part of their 401(k) Plan account balances in Common
Stock. Common Stock held by the 401(k) Plan may be newly issued or treasury
shares acquired from the Company or outstanding shares purchased on the open
market or in privately negotiated transactions. All Common Stock held by the
401(k) Plan will be held by an independent trustee and allocated to the accounts
of individual participants. Participants will control the exercise of voting and
tender rights relating to the Common Stock held in their accounts.
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PROPOSED MANAGEMENT PURCHASES
The following table sets forth, for each of the Company's directors and
for all of the directors and executive officers as a group, the proposed
purchases of Common Stock, assuming sufficient shares are available to satisfy
their subscriptions. The amounts include shares that may be purchased through
individual retirement accounts and by associates.
<TABLE>
<CAPTION>
At the Minimum of the Estimated At the Maximum of the
Offering Range Estimated Offering Range
------------------------------- --------------------------
As a Percent
Number of As a Percent of Number of of Shares
Name Amount Shares Shares Offered Shares Offered
- --------------------------- ---------- --------- --------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Lewis W. Hull $200,000 20,000 1.34% 20,000 .99%
J. Ellwood Kirk 100,000 10,000 0.67 10,000 0.50
Stanley B. Kitzelman 50,000 5,000 0.34 50,000 0.25
Charles F. Kremp, 3rd 100,000 10,000 0.67 10,000 0.50
William W. Langan 150,000 15,000 1.01 15,000 0.75
Frederick A. Marcell, Jr. 300,000 30,000 2.02 30,000 1.49
A. Brent O'Brien 50,000 5,000 0.34 5,000 0.25
Samuel H. Ramsey, III 300,000 30,000 2.02 30,000 1.49
William B. Weihenmayer 300,000 30,000 2.02 30,000 1.49
All directors and executive
officers as a group (12
persons) $2,000,000 200,000 13.08% 200,000 9.94%
</TABLE>
In addition, the ESOP currently intends to purchase 8% of the Common
Stock sold in the Offerings for the benefit of officers and employees. Stock
options and stock grants may also be granted in the future to directors,
officers and employees upon the receipt of stockholder approval of the Company's
proposed stock benefit plans. See "Management - Management of the Bank -
Benefits" for a description of these plans.
THE REORGANIZATION AND STOCK ISSUANCE
General
The Board of Directors of the Bank adopted the Plan of Reorganization,
pursuant to which the Bank will reorganize into the federal mutual holding
company form of organization as a wholly owned subsidiary of the Company, which
in turn will be a majority-owned subsidiary of the MHC. Following receipt of all
required regulatory approvals, the approval of the members of the Bank
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entitled to vote on the Plan of Reorganization, and the satisfaction of all
other conditions precedent to the Reorganization, the Bank will consummate the
Reorganization. Following completion of the Reorganization, the Bank in its
stock form will continue to conduct its business and operations from the same
offices with the same personnel as the Bank conducted prior to the
Reorganization. The Reorganization will not affect the balances, interest rates
or other terms of the Bank's loans or deposit accounts, and the deposit accounts
will continue to be issued by the FDIC to the same extent as they were prior to
the Reorganization. The MHC initially will be capitalized with $100,000. Upon
consummation of the Reorganization, such capital will be used for general
corporate purposes.
Pursuant to the Plan of Reorganization, 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 of 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 Company as a wholly owned
subsidiary;
(iv) the Bank will convert its charter to a federal stock savings
bank charter and Interim One will convert its charter to a
federal mutual holding company charter to become the MHC;
(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 MHC in exchange for membership interests in
the MHC;
(vii) the MHC will contribute the capital stock of the Bank to the
Company, and the Bank will become a wholly-owned subsidiary of
the Company; and
(viii) contemporaneously with the Reorganization, the Company will
sell a Minority Interest in shares of Common Stock in the
Offerings.
The Company expects to receive the approval of the OTS to become a
savings and loan holding company and to own all of the common stock of the Bank.
The Company intends to contribute at least 50% of the net proceeds of the
Offerings to the Bank. The Reorganization will be effected only upon completion
of the sale of all of the shares of Common Stock to be issued pursuant to the
Plan of Stock Issuance.
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The discussion herein provides a brief summary of material aspects of
the Reorganization and Stock Issuance. The summary is qualified in its entirety
by reference to the provisions of the Plan of Reorganization and the Plan of
Stock Issuance. Copies of the Plan of Reorganization and the Plan of Stock
Issuance are available for inspection at any office of the Bank and at the OTS.
The Plan of Reorganization and the Plan of Stock Issuance are also filed as an
exhibit to the Registration Statement of which this Prospectus is a part, copies
of which may be obtained from the SEC. See "Additional Information."
THE BOARD OF DIRECTORS OF THE BANK, AND THE OTS, HAVE APPROVED THE PLAN
OF REORGANIZATION, SUBJECT TO APPROVAL BY THE MEMBERS OF THE BANK ENTITLED TO
VOTE ON THE MATTER AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS. SUCH OTS
APPROVAL, HOWEVER, DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE
PLAN BY SUCH AGENCY.
Purposes of the Reorganization
As a mutual institution, the Bank has no authority to issue shares of
capital stock and consequently has no access to market sources of equity
capital. Only by generating and retaining earnings from year to year is the Bank
able to enhance its capital position.
As a stock corporation upon consummation of the Reorganization, the
Bank will be organized in the form used by commercial banks and corporations and
by an increasing number of savings associations. The ability to raise new equity
capital through the issuance and sale of the Bank's capital stock will allow the
Bank the flexibility to enhance its capital position more rapidly than by
accumulating earnings and at times deemed advantageous by the Board of Directors
of the Bank, thereby supporting future growth and expanded operations (including
increased lending and investment activities) as business and regulatory needs
dictate. The ability to attract new capital also will assist in increasing the
capabilities of the Bank to address the needs of the communities it serves and
enhance its ability to effect acquisitions or pursue business diversification
opportunities. Thus, whereas the acquisition alternatives available to the Bank
are quite limited as a mutual institution (because of a requirement in OTS
regulations that the surviving institution in a merger involving a mutual
institution generally must be in mutual form), upon consummation of the
Reorganization the Bank will have increased ability to merge with other mutual
and stock institutions and the Company may acquire control of other mutual or
stock savings associations and retain the acquired association as a separate
subsidiary of the Company. Finally, the ability to issue capital stock will
enable the Bank to establish stock compensation plans for directors, officers
and employees, thereby granting them equity interests in the Bank and greater
incentive to improve its performance. For a description of the stock
compensation plans which will be adopted by the Bank in connection with the
Reorganization, see "Management." Although the Bank's ability to raise capital
and general business flexibility will be enhanced by organizing as a subsidiary
of a stock subsidiary of a mutual holding company, such advantages will be
limited by (i) the requirement in applicable laws and regulations that a mutual
holding company maintain a majority ownership interest in its savings
association
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holding company subsidiary and (ii) the Company's proposed offering of up to
approximately 46.0% of its to-be-outstanding Common Stock (prior to the proposed
issuance of shares to the Foundation), which will affect the Company's ability
to issue additional shares of Common Stock in the future absent additional
issuances of such stock to the MHC.
The foregoing advantages of the Reorganization also could be achieved
if the Bank were to reorganize into a wholly owned subsidiary of a stock form
holding company (a "standard conversion") rather than as a second-tier
subsidiary of a mutual holding company. A standard conversion also would free
the Bank from the restrictions on its ability to raise capital which result from
the requirement that its mutual holding company maintain a majority ownership
interest in the Company. Nevertheless, the Board of Directors of the Bank
unanimously believes that the Reorganization is in the best interests of the
Bank and its account holders. Because OTS regulations require that savings
institutions converting to stock form in a standard conversion sell all of their
to-be-outstanding capital stock rather than a minority interest in such capital
stock, however, the amount of equity capital that would be raised in a standard
conversion would be substantially more than that which could be raised in a
minority stock offering by a subsidiary of a mutual holding company, which would
make it more difficult for the Bank to maximize the return on its equity.
Finally, such a reorganization also would eliminate all aspects of the mutual
form of organization. Consummation of the Reorganization does not foreclose the
possibility of the MHC converting from mutual to stock form in the future;
however, no such action is contemplated at this time. See "Conversion of the MHC
to Stock Form."
After considering the foregoing advantages and disadvantages of the
Reorganization, as well as applicable fiduciary duties and alternative
transactions, including a reorganization into a wholly owned subsidiary of a
stock form holding company rather than as a second-tier subsidiary of a mutual
holding company, the Board of Directors of the Bank unanimously approved the
Reorganization as being in the best interests of the Bank and equitable to its
account holders.
Effects of the Reorganization
General. The Reorganization will have no effect on the Bank's present
business of accepting deposits and investing its funds in loans and other
investments permitted by law. The Reorganization will not result in any change
in the existing services provided to depositors and borrowers, or in existing
offices, management and staff. The Bank will continue to be subject to
regulation, supervision and examination by the OTS and the FDIC.
Deposits and Loans. Each holder of a deposit account in the Bank at the
time of the Reorganization will continue as an account holder in the Bank after
the Reorganization, and the Reorganization will not affect the deposit balance,
interest rate or other terms of such accounts. Each such account will be insured
by the FDIC to the same extent as before the Reorganization. Depositors in the
Bank will continue to hold their existing certificates, passbooks and other
evidence of their accounts. The Reorganization will not affect the loans of any
borrower from the Bank. The amount, interest rate, maturity, security for and
obligations under each loan will remain contractually
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fixed as they existed prior to the Reorganization. See "- Voting Rights" and "-
Liquidation Rights" below for a discussion of the effects of the Reorganization
on the voting and liquidation rights of the depositors of the Bank.
Continuity. During the Reorganization and Stock Issuance process, the
normal business of the Bank of accepting deposits and making loans will continue
without interruption. Following consummation of the Reorganization and Stock
Issuance, the Bank will continue to be subject to regulation by the OTS, and
FDIC insurance of accounts will continue without interruption. After the
Reorganization and Stock Issuance, the Bank will continue to provide services
for depositors and borrowers under current policies and by its present
management and staff.
The Board of Directors presently serving the Bank will serve as the
Board of Directors of the Bank after the Reorganization and Stock Issuance. The
Board of Directors of the Company and the MHC will consist of the individuals
currently serving on the Board of Directors of the Bank. All current officers of
the Bank will retain their positions with the Bank after the Reorganization and
Stock Issuance.
Voting Rights. Upon the completion of the Reorganization and Stock
Issuance, depositor and borrower members as such will have no voting rights in
the Bank or the Company and, therefore, will not be able to elect directors of
the Bank or the Company or to control their affairs. Currently these rights are
accorded to depositors of the Bank. Subsequent to the Reorganization and Stock
Issuance, voting rights will be vested exclusively in the stockholders of the
Company which, in turn, will own all of the stock of the Bank. Each holder of
Common Stock shall be entitled to vote on any matter to be considered by the
stockholders of the Company, subject to the provisions of the Company's Articles
of Incorporation.
As a federally chartered mutual holding company, the MHC will have no
authorized capital stock and, thus, no stockholders. The MHC will be controlled
by members of the Bank (i.e., depositors and certain borrowers), and such
members have granted proxies in favor of the Bank's management. According to
regulations of the OTS, the revocable proxies that members of the Bank have
granted to the Board of Directors of the Bank, which confer on the Board of
Directors of the Bank general authority to cast a member's vote on any and all
matters presented to the members, shall be deemed to cover the member's votes as
members of the MHC, and such authority shall be conferred on the Board of
Directors of the MHC. The Plan of Reorganization also provides for the transfer
of proxy rights to the Board of Directors of the MHC. Accordingly, the Board of
Directors of the MHC will, in effect, be able to govern the operations of the
MHC, and hence the Company, notwithstanding objections raised by members of the
MHC or stockholders of the Company, respectively, so long as the Board of
Directors has been appointed proxy for a majority of the outstanding votes of
members of the MHC and such proxies have not been revoked. In addition, all
persons who become depositors of the Bank following the Reorganization will have
membership rights with respect to the MHC. Borrowers who were borrowers of the
Bank on May 15, 1995 and whose loans continue in existence are members of the
Bank and will have membership rights in the
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MHC; all other borrowers are not members of the Bank and, thus, will not receive
membership rights in the MHC.
Liquidation Rights. In the event of a voluntary liquidation of the Bank
prior to the Reorganization, holders of deposit accounts in the Bank would be
entitled to distribution of any assets of the Bank remaining after the claims of
such depositors (to the extent of their deposit balances) and all other
creditors are satisfied. Following the Reorganization, the holder of the Bank's
common stock, i.e., the Company, would be entitled to any assets remaining upon
a liquidation, dissolution or winding-up of the Bank and, except through their
liquidation interests in the MHC, discussed below, holders of deposit accounts
in the Bank would have not interest in any such assets.
In the event of a voluntary or involuntary liquidation, dissolution or
winding up of the MHC following consummation of the Reorganization, holders of
deposit accounts in the Bank would be entitled, pro rata to the value of their
accounts, to distribution of any assets of the MHC remaining after the claims of
all creditors of the MHC are satisfied. Stockholders of the Company will have no
liquidation or other rights with respect to the MHC in their capacities as such.
In the event of a liquidation, dissolution or winding up of the
Company, each holder of shares of the Common Stock would be entitled to receive,
after payment of all debts and liabilities of the Company, a pro rata portion of
all assets of the Company available for distribution to holders of the Common
Stock.
There currently are no plans to liquidate the Bank, the Company or the
MHC in the future.
Tax Effects. The Bank has received an opinion from its special counsel,
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., as to the material
federal income tax consequences of the Reorganization and Stock Issuance to the
Bank, the Company and the MHC, and as to the generally applicable material
federal income tax consequences of the Reorganization and Stock Issuance to the
Bank's account holders and to persons who purchase Common Stock in the Offering.
In the following discussion, "Stock Bank" refers to the Bank after the
Reorganization and Stock Issuance.
The opinion provides that, among other things, (i) the Bank's adoption
of a charter in stock form (the "Bank Conversion") will qualify as a tax-free
reorganization under Internal Revenue Code of 1986, as amended (the "Code"),
Section 368(a)(1)(F); (ii) the conversion of the Bank's wholly owned subsidiary
("Interim 1") into the MHC will qualify as a tax-free reorganization under Code
Section 368(a)(1)(F); (iii) the merger of the wholly owned subsidiary of Interim
1 ("Interim 2") into the Stock Bank with the Stock Bank as the survivor will
qualify as a tax-free reorganization under Code Section 368(a)(1)(A); (iv) no
gain or loss will be recognized by the Bank in the Bank Conversion; (v) neither
the Stock Bank nor the MHC will recognize gain or loss upon the receipt by the
Stock Bank of substantially all of the assets of the Bank in exchange for equity
interests in the MHC and the Stock Bank's assumption of the Bank's
liabilities;(vi) the MHC's basis in the stock of the Stock Bank will increase by
an amount equal to the Bank's net basis in the property transferred to the Stock
Bank; (vii) the Stock Bank's basis in the property received from the Bank will
be the
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same as the basis of such property in the hands of the Bank immediately prior to
the Reorganization and Stock Issuance; (viii) the Stock Bank's holding period
for the property received from the Bank will include the period during which
such property was held by the Bank; (ix) subject to the conditions and
limitations set forth in Code Sections 381, 382, 383, and 384 and the Treasury
regulations promulgated thereunder, the Stock Bank will succeed to and take into
account the items of the Bank described in Code Section 381(c); (x) no gain or
loss will be recognized by the depositors of the Bank on the receipt of equity
interests with respect to the MHC in exchange for their equity interests
surrendered therefor; (xi) the exchange of stock by depositors in exchange for
equity interests in the MHC will constitute a tax-free exchange of property
solely for voting "stock" pursuant to Code Section 351; (xii) each Bank
depositor's aggregate basis, if any, in the MHC equity interest received in the
exchange will equal the aggregate basis, if any, of each depositor's equity
interest in the Bank; (xiii) the holding period of the MHC equity interests
received by the depositors of Bank will include the period during which the Bank
equity interests surrendered in exchange therefor were held; (xiv) the MHC will
recognize no gain or loss upon the transfer of the Stock Bank stock to the
Company in exchange for Common Stock pursuant to Code Section 351; (xv) the
Company will recognize no gain or loss upon its receipt of Stock Bank stock from
the MHC in exchange for Common Stock; (xvi) the MHC will increase its basis in
its shares of the Common Stock by the MHC's basis in its Stock Bank stock;
(xvii) the Company will recognize no gain or loss upon the receipt of money in
exchange for shares of Common Stock; (xviii) no gain or loss will be recognized
by the Bank's account holders upon the issuance to them of accounts in the Stock
Bank in stock form immediately after the Reorganization and Stock Issuance, in
the same dollar amounts and on the same terms and conditions as their accounts
at the Bank immediately prior to the Reorganization and Stock Issuance; (xix)
the tax basis of the Common Stock purchased in the Reorganization and Stock
Issuance will be equal to the amount paid therefor increased, in the case of the
Common Stock acquired to the exercise of Subscription Rights, by the fair market
value, if any, of the Subscription Rights exercised; (xx) the holding period for
the Common Stock purchased in the Reorganization and Stock Issuance will
commence upon the exercise of such holder's Subscription Rights and otherwise on
the day following the date of such purchase; (xxi) gain or loss will be
recognized to account holders upon the receipt or exercise of Subscription
Rights in the Reorganization and Stock Issuance, but only to the extent such
Subscription Rights are deemed to have value, as discussed below.
The opinion of Elias, Matz, Tiernan & Herrick L.L.P. is based in part
upon, and subject to the continuing validity in all material respects through
the date of the Reorganization and Stock Issuance of various representations of
the Bank and upon certain assumptions and qualifications, including that the
Reorganization and Stock Issuance are consummated in the manner and according to
the terms provided in the Plan of Reorganization and Plan of Stock Issuance.
Such opinion is also based upon the Code, regulations now in effect or proposed
thereunder, current administrative rulings and practice and judicial authority,
all of which are subject to change and such change may be made with retroactive
effect. Unlike private letter rulings received from the Internal Revenue Service
("IRS"), an opinion is not binding upon the IRS and there can be no assurance
that the IRS will not take a position contrary to the positions reflected in
such opinion, or that such opinion will be upheld by the courts if challenged by
the IRS.
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The Bank has also obtained an opinion from KPMG Peat Marwick LLP that
the income tax effects of the Reorganization and Stock Issuance under
Pennsylvania tax laws will be substantially the same as described above with
respect to federal income tax laws.
The Company and the Bank have received a letter from RP Financial
stating its belief that the subscription rights do not have any value, based on
the fact that such rights are acquired by the recipients without cost, are
nontransferable and of short duration, and afford the recipients the right only
to purchase the Common Stock at a price equal to its estimated fair market
value, which will be the same price as the Purchase Price for the unsubscribed
shares of Common Stock. If the subscription rights granted to eligible
subscribers are deemed to have an ascertainable value, receipt of such rights
would be taxable probably only to those eligible subscribers who exercise the
subscription rights (either as a capital gain or ordinary income ) in an amount
equal to such value, and the Company and the Bank could recognize gain on such
distribution. Eligible subscribers are encouraged to consult with their own tax
advisor as to the tax consequences in the event that such subscription rights
are deemed to have an ascertainable value. Unlike private rulings, the letter of
RP Financial is not binding on the IRS, and the IRS could disagree with
conclusions reached therein. In the event of such disagreement, there can be no
assurance that the IRS would not prevail in a judicial or administrative
proceeding.
Establishment of the Foundation
General. In furtherance of the Bank's commitment to the communities
that it serves, the Plan of Reorganization provides that the Bank and the
Company will establish the Foundation, which will be incorporated under Delaware
law as a non-stock corporation, and will fund the Foundation with Common Stock
of the Company. By further enhancing the Bank's visibility and reputation in the
communities that it serves, the Bank believes that the Foundation will enhance
the long-term value of the Bank's community banking franchise. The Foundation
will be dedicated to charitable purposes within the communities served by the
Bank, including community development activities.
Purpose of the Foundation. The purpose of the Foundation is to provide
funding to support charitable causes and community development activities.
Traditionally, the Bank has emphasized community lending and community
development activities within the communities that it serves. The Foundation is
being formed as a complement to the Bank's existing community activities, not as
a replacement for such activities. While the Bank intends to continue to
emphasize community lending and community development activities following the
Reorganization, such activities are not the Bank's sole corporate purpose. The
Foundation, conversely, will be completely dedicated to community activities and
the promotion of charitable causes, and may be able to support such activities
in ways that are not currently available to the Bank. The Bank believes that the
Foundation will enable the Company and the Bank to assist their local community
in areas beyond community development and lending. The Bank believes the
establishment of the Foundation will enhance its activities under the CRA. In
this regard, the Board of Directors believes the establishment of a charitable
foundation is consistent with the Bank's commitment to community service. The
Board further believes that the funding of the Foundation with Common Stock of
the Company is a means of enabling the
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communities served by the Bank to share in the growth and success of the Company
long after completion of the Reorganization. The Foundation will accomplish that
goal by providing for continued ties between the Foundation and Bank, thereby
forming a partnership with the Bank's community. The establishment of the
Foundation will also enable the Company and the Bank to develop a unified
charitable donation strategy and will centralize the responsibility for
administration and allocation of corporate charitable funds. Charitable
foundations have been formed by other financial institutions for this purpose,
among others. The Bank, however, does not expect the contribution to the
Foundation to take the place of the Bank's traditional community lending
activities. In this respect, subsequent to the Reorganization the Bank may
continue to make contributions to other charitable organizations and/or it may
make additional contributions to the Foundation.
Structure of the Foundation. The Foundation will be incorporated under
Delaware law as a non-stock corporation. Pursuant to the Foundation's Bylaws,
the Foundation's initial Board of Directors will be comprised of two members of
the Company's and the Bank's Boards of Directors (Messrs. William B. Weihenmayer
and Charles F. Kremp, 3rd) and four other individuals chosen in light of their
commitment and service to charitable and community purposes. The other persons
expected to serve as directors of the Foundation are Stewart J. Greenleaf,
Robert Abel, Joe Conti and Sandra Fields-Henley, none of whom is affiliated with
the Company or Willow Grove. There are no plans to change the size of the
Foundation's Board of Directors during the one-year period subsequent to
consummation of the Reorganization. The Bank currently intends that, for at
least the three-year period subsequent to consummation of the Reorganization,
less than a majority of the Bank's directors will also serve as directors of the
Foundation. A Nominating Committee of the Foundation's Board will nominate
individuals eligible for election to the Board of Directors. The members of the
Foundation, who are comprised of its Board members, will elect the Directors at
the annual meeting of the Foundation from those nominated by the Nominating
Committee. Only persons serving as Directors of the Foundation qualify as
members of the Foundation, with voting authority. Directors will be divided into
three classes with each class appointed for three-year terms. It is not
anticipated that the members of the Company's and the Bank's Boards of Directors
who also serve as a director of the Foundation will receive any additional
compensation for serving as a director of the Foundation. No determination has
been made at this point what, if any, compensation the other Foundation
directors will receive. The certificate of incorporation of the Foundation
provides that the corporation is organized exclusively for charitable purposes,
including community development, as set forth in Section 501(c)(3) of the Code.
The Foundation's certificate of incorporation further provides that no part of
the net earnings of the Foundation will inure to the benefit of, or be
distributable to its directors, officers or members. No award, grant or
distribution shall be made by the Foundation to any director, officer or
employee of the Company or the Bank or any affiliate thereof. In addition, any
of such persons, to the extent that they serve as an officer, director or
employee of the Foundation will be subject to the conflict of interest
regulations of the OTS.
The authority for the affairs of the Foundation will be vested in the
Board of Directors of the Foundation. The directors of the Foundation will be
responsible for establishing the policies of the Foundation with respect to
grants or donations by the Foundation, consistent with the purposes for
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which the Foundation was established. Although no formal policy governing
Foundation grants exists at this time, the Foundation's Board of Directors will
adopt such a policy upon establishment of the Foundation. As directors of a
nonprofit corporation, directors of the Foundation will at all times be bound by
their fiduciary duty to advance the Foundation's charitable goals, to protect
the assets of the Foundation and to act in a manner consistent with the
charitable purpose for which the Foundation is established. The directors of the
Foundation will also be responsible for directing the activities of the
Foundation, including the management of the Common Stock of the Company held by
the Foundation. However, it is expected that as a condition to receiving the
approval of the OTS to the Bank's Reorganization, that the Foundation will be
required to commit to the OTS that all shares of Common Stock held by the
Foundation will be voted in the same ratio as all other shares of the Company's
Common Stock on all proposals considered by stockholders of the Company;
provided, however, that, consistent with such expected condition, the OTS would
waive this voting restriction under certain circumstances if compliance with the
voting restriction would: (i) cause a violation of the law of the State of
Delaware and the OTS determines that federal law would not preempt the
application of the laws of Delaware to the Foundation; (ii) would cause the
Foundation to lose its tax-exempt status, or cause the IRS to deny the
Foundation's request for a determination that it is an exempt organization or
otherwise have a material and adverse tax consequence on the Foundation; or
(iii) would cause the Foundation to be subject to an excise tax under Section
4941 of the Code. In order for the OTS to waive such voting restriction, the
Company's or the Foundation's legal counsel would be required to render an
opinion satisfactory to the OTS that compliance with the voting requirement
would have the effect described in clauses (I), (ii) or (iii) above. Under those
circumstances, the OTS would grant a waiver of the voting restriction upon
submission of such legal opinions(s) by the Company or the Foundation that are
satisfactory to the OTS. In the event that the OTS were to waive the voting
requirement, the Directors would direct the voting of the Common Stock held by
the Foundation.
The Foundation's place of business is expected to initially be located
at the Bank's administrative offices and initially the Foundation is expected
initially to have no separate employees but will utilize the members of the
staff of the Company or the Bank. The Board of Directors of the Foundation will
appoint such officers as may be necessary to manage the operations of the
Foundation. In this regard, it is expected that the Bank will be required to
provide the OTS with a commitment that, to the extent applicable, the Bank will
comply with the affiliate restrictions set forth in Sections 23A and 23B of the
Federal Reserve Act with respect to any transactions between the Bank and the
Foundation.
The Company intends to capitalize the Foundation with 4.0% of the
shares of Common Stock of the Company sold in the Offerings which would have a
market value of $595,000 to $805,000 ($926,000 at the maximum, as adjusted),
based on the Purchase Price of $10.00 per share. Messrs. Weihenmayer and Kremp,
who will serve as initial directors of the Foundation, and their affiliates
intend to purchase, subject to availability, an aggregate of 40,000 shares of
Common Stock. No other director of the Foundation expects to purchase any shares
of Common Stock. The shares of Common Stock to be acquired by the Foundation,
when combined with the proposed purchases of shares of Common Stock by Messrs.
Weihenmayer and Kremp and their affiliates will total 124,600
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shares or 2.6% of the total number of shares of Common Stock to be issued and
outstanding (assuming the sale of 2,012,500 shares of Common Stock).
The Company and the Bank determined to fund the Foundation with Common
Stock rather than cash because it desired to form a bond with the communities
the Bank serves in a manner that would allow such communities to share in the
growth and success of the Company and the Bank over the long term. The funding
of the Foundation with stock also provides the Foundation with a potentially
larger endowment than if the Company contributed cash to the Foundation since,
as a stockholder, the Foundation will share in the growth and success of the
Company. As such, the contribution of Common Stock to the Foundation has the
potential to provide a self-sustaining funding mechanism which reduces the
amount of cash that the Company, if it were not making the stock donation, would
have to contribute to the Foundation in future years in order to maintain a
level amount of charitable grants and donations. Because the MHC is deemed to be
a "disqualified person" (defined under the Code), in order to avoid certain
excise tax provisions, which could be significant, the Foundation may not own
more than 2.0% of the issued and outstanding shares of Common Stock. The Bank
considered such excise tax provisions and determined that it would be prudent to
ensure that the initial contributions of Common Stock to the Foundation will
monitor the Foundation's ownership interest in Common Stock and will take
actions as may be appropriate in order to ensure continued compliance with the
safe-harbor.
The Foundation will receive working capital from any dividends that may
be paid on the Common Stock in the future, and subject to applicable federal and
state laws, loans collateralized by the Common Stock or from the proceeds of the
sale of any of the Common Stock in the open market from time to time as may be
permitted to provide the Foundation with additional liquidity. As a private
foundation under Section 501(c)(3) of the Code, the Foundation will be required
to distribute annually in grants or donations, a minimum of 5% of the average
fair market value of its net investment assets. One of the conditions imposed on
the gift of Common Stock by the Company is that the amount of Common Stock that
may be sold by the Foundation in any one year shall not exceed 5% of the average
market value of the assets held by the Foundation, except where the Board of
Directors of the Foundation determines that the failure to sell an amount of
Common Stock greater than such amount would result in a longer term reduction of
the value of the Foundation's assets and as such would jeopardize the
Foundation's capacity to carry out its charitable purposes. Upon completion of
the Reorganization and the Stock Issuance and the contribution of shares of
Common Stock to the Foundation, the Company would have 3,590,060, 4,223,600,
4,857,140 and 5,585,711 shares issued and outstanding based on the minimum,
midpoint and maximum of the Estimated Offering Range. Because the Company will
have an increased number of shares outstanding, the voting and ownership
interests of Minority Stockholders in the Company's Common Stock would be
diluted to 43.5% as compared to a 44.3% interest in the Company if the
Foundation was not established. For additional discussion of the dilutive
effect, see "Pro Forma Data."
Tax Considerations. The Company and the Bank have been advised by their
independent tax advisors that an organization created and operated for the above
charitable purposes would generally qualify as a Section 501(c)(3) exempt
organization under the Code, and further that such an organization would likely
be classified as a private foundation. This opinion presumes that the Foundation
will submit a timely request to the IRS to be recognized as an exempt
organization. As long as the Foundation files its application for recognition of
tax-exempt status within 15 months from the date of its organization, and
provided the IRS approves the application, the effective date of the
Foundation's status as a Section 501(c)(3) organization will be the date of its
organization. The Company's and the Bank's independent tax advisor, however, has
not rendered any advice on the
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regulatory condition to the contribution which requires that all shares of
Common Stock of the Company held by the Foundation must be voted in the same
ratio as all other outstanding shares of Common Stock of the Company on all
proposals considered by stockholders of the Company. Consistent with the
expected condition, in the event that the Company or the Foundation receives an
opinion of its legal counsel that compliance with this voting restriction would
have the effect of causing the Foundation to lose its tax-exempt status or
otherwise have a material and adverse tax consequence on the Foundation, or
subject the Foundation to an excise tax under Section 4941 of the Code, it is
expected that the OTS would waive such voting restriction upon submission of a
legal opinion(s) by the Company or the Foundation satisfactory to the OTS. See
"- Regulatory Conditions Imposed on the Foundation."
Under Delaware law, the Company is authorized by statute to make
charitable contributions and case law has recognized the benefits of such
contributions to a Delaware corporation. In this regard, Delaware case law
provides that a charitable gift must be within reasonable limits as to amount
and purpose to be valid. Under the Code, the Company is generally allowed a
deduction for charitable contributions made to qualifying donees within the
taxable year of up to 10% of its taxable income (with certain modifications) for
such year. Charitable contributions made by the Company in excess of the annual
deductible amount will be deductible over each of the five succeeding taxable
years, subject to certain limitations. The Company and the Bank believe that the
Reorganization presents a unique opportunity to establish and fund a charitable
foundation given the substantial amount of additional capital being raised in
the Reorganization. In making such a determination, the Company and the Bank
considered the dilutive impact of the contribution of Common Stock to the
Foundation on the amount of Common Stock available to be offered for sale in the
Reorganization. Based on such consideration, the Company and Bank believe that
the contribution to the Foundation in excess of the 10% annual deduction
limitation is justified given the Bank's capital position and its earnings, the
substantial additional capital being raised in the Stock Issuance and the
potential benefits of the Foundation to the communities served by the Bank. In
this regard, assuming the sale of shares at the maximum of the Estimated
Offering Range, the Company would have pro forma stockholders' equity of $52.9
million or 12.7% of pro forma consolidated assets and the Bank's pro forma
tangible, core and total risk-based capital ratios would be 9.9% and 17.7%,
respectively. See "Regulatory Capital," "Capitalization," "Comparison of
Valuation and Pro Forma Information with No Foundation" and "Pro Forma Data."
The Company and the Bank believe that the amount of the charitable contribution
is reasonable given the Company's and the Bank's pro forma capital positions. As
such, the Company and the Bank believe that the contribution does not raise
safety and soundness concerns.
The Company and the Bank have received an opinion of their independent
tax advisors that the Company's contribution of its own stock to the Foundation
would not constitute an act of self-dealing, and that the Company will be
entitled to a deduction in the amount of the fair market value of the stock at
the time of the contribution less the nominal par value that the Foundation is
required to pay to the Company for such stock, subject to the annual deduction
limitation described above. The Company, however, would be able to carry forward
any unused portion of the deduction for five years following the contribution,
subject to certain limitations. The Company's and the Bank's
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independent tax advisor, however, has not rendered advice as to fair market
value for purposes of determining the amount of the tax deduction. If the
Foundation would have been established in fiscal 1998, the Company would have
received tax benefit of approximately $273,000 (based on the Bank's pre-tax
income for fiscal 1998, an assumed tax rate of 34.0% and a deduction for the
contribution of Common Stock equal to $805,000). The Company is permitted under
the Code to carry over the excess contribution over the five-year period
following the contribution to the Foundation. Assuming the close of the
Offerings at the maximum of the Estimated Price Range, the Company estimates
that all of the contribution should be deductible over the six-year period. The
Company and/or the Bank may make further contributions to the Foundation
following the initial contribution. In addition, the Bank and the Company also
may continue to make charitable contributions to other qualifying organizations.
Any such decisions would be based on an assessment of, among other factors, the
financial condition of the Company and the Bank at that time, the interests of
stockholders and depositors of the Company and the Bank, and the financial
condition and operations of the Foundation.
Although the Company and the Bank have received an opinion of their
independent tax advisors that the Company is entitled to a deduction for the
charitable contribution, there can be no assurances that the IRS will recognize
the Foundation as a Section 501(c)(3) exempt organization or that a deduction
for the charitable contribution will be allowed. In such event, the Company's
tax benefit related to the contribution to the Foundation would be expensed
without tax benefit, resulting in a reduction in earnings in the year in which
the IRS makes such a determination. See "Risk Factors-Establishment of the
Foundation."
As a private foundation, earnings and gains, if any, from the sale of
Common Stock or other assets are generally exempt from federal and state
corporate income taxation. However, investment income, such as interest,
dividends and capital gains, of a private foundation will generally be subject
to a federal excise tax of 2.0%. The Foundation will be required to make an
annual filing with the IRS within four and one-half months after the close of
the Foundation's fiscal year to maintain its tax-exempt status. The Foundation
will be required to publish a notice that the annual information return will be
available for public inspection for a period of 180 days after the date of such
public notice. The information return for a private foundation must include,
among other things, an itemized list of all grants made or approved, showing the
amount of each grant, the recipient, any relationship between a grant recipient
and the Foundation's managers and a concise statement of the purpose of each
grant.
Regulatory Conditions Imposed on the Foundation. Establishment of the
Foundation is expected to be subject to the following conditions being agreed to
by the Foundation in writing as a condition to receiving the OTS' approval of
the Reorganization: (i) the Foundation will be subject to examination by the
OTS; (ii) the Foundation must comply with supervisory directives imposed by the
OTS; (iii) the Foundation will operate in accordance with written policies
adopted by its Board of Directors, including a conflict of interest policy; (iv)
any shares of Common Stock held by the Foundation must be voted in the same
ratio as all other shares of Common Stock voting on all proposals considered by
stockholders of the Company; provided, however, that, consistent with the
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condition, the OTS would waive this voting restriction under certain
circumstances if compliance with the voting restriction would: (a) cause a
violation of the law of the State of Delaware, and the OTS determines that
federal law would not preempt the application of the laws of Delaware to the
Foundation; (b) would cause the Foundation to lose its tax-exempt status or
otherwise have a material and adverse tax consequence on the Foundation; or (c)
would cause the Foundation to be subject to an excise tax under Section 4941 of
the Code; and (v) any shares of Common Stock subsequently purchased by the
Foundation will be aggregated with any shares repurchased by the Company or the
Bank for purposes of calculating the number of shares which may be repurchased
during the three-year period subsequent to Reorganization. In order for the OTS
to waive such voting restriction, the Company's or the Foundation's legal
counsel would be required to render an opinion satisfactory to the OTS. While
there is no current intention for the Company or the Foundation to seek a waiver
from the OTS from such restrictions, there can be no assurances that a legal
opinion addressing these issues could be rendered, or if rendered, that the OTS
would grant an unconditional waiver of the voting restriction. If the voting
restriction is waived or becomes unenforceable, the OTS may either impose a
condition that provides a certain portion of the members of the Foundation's
Board of Directors shall be persons who are not directors, officers or employees
of the Company, the Bank or any affiliate or impose such other conditions
relating to control of the Foundation's Common Stock as is determined by the OTS
to be appropriate at the time. In no event would the voting restriction survive
the sale of shares of the Common Stock held by the Foundation.
Various OTS regulations may be deemed to apply to the Foundation
including regulations regarding (i) transactions with affiliates, (ii) conflicts
of interest, (iii) capital distributions and (iv) repurchases of capital stock
within the three-year period subsequent to the Stock Issuance. Because only one
of the directors of the Company and the Bank is expected to serve as a director
of the Foundation, the Company and the Bank do not believe that the Foundation
should be deemed an affiliate of the Bank. The Company and the Bank anticipate
that the Foundation's affairs will be conducted in a manner consistent with the
OTS' conflict of interest regulations. The Bank has provided information to the
OTS demonstrating that the initial contribution of Common Stock to the
Foundation would be within the amount which the Bank would be permitted to make
as a capital distribution assuming such contribution is deemed to have been made
by the Bank.
Stock Pricing and Number of Shares to be Issued
The Plan of Reorganization requires that the purchase price of the
Common Stock must be based on the appraised pro forma market value of the Common
Stock, as determined on the basis of an independent valuation. The Bank has
retained RP Financial to make such valuation. For its services in making such
appraisal, RP Financial's fees and out-of-pocket expenses are estimated to be
$42,500. The Bank has agreed to indemnify RP Financial and any employees of RP
Financial who act for or on behalf of RP Financial in connection with the
appraisal against any and all loss, cost, damage, claim, liability or expense of
any kind (including claims under federal and state securities laws) arising out
of any misstatement or untrue statement of a material fact or an omission to
state a material fact in the information supplied by the Bank to RP Financial,
unless RP Financial is determined to be negligent or otherwise at fault.
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An appraisal has been made by RP Financial in reliance upon the
information contained in this Prospectus, including the Financial Statements. RP
Financial also considered the following factors, among others: the present and
projected operating results and financial condition of the Company and 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 similarly situated publicly traded mutual holding companies
located in Pennsylvania and the mid-Atlantic region; the aggregate size of the
offering of the Common Stock; the impact of the Reorganization on the Bank's net
worth and earnings potential; the proposed dividend policy of the Company and
the Bank; and the trading market for securities of comparable institutions and
general conditions in the market for such securities. In its review of the
appraisal provided by RP Financial, the Board of Directors reviewed the
methodologies and the appropriateness of the assumptions used by RP Financial in
addition to the factors enumerated above, and the Board of Directors believes
that such assumptions were reasonable.
On the basis of the foregoing, RP Financial has advised the Company and
the Bank that in its opinion, dated September 4, 1998, as amended on October 30,
1998 the estimated pro forma market value of the Common Stock on a fully
converted basis, assuming a contribution to a charitable foundation in an amount
equal to 4.0% of the shares sold, ranged from a minimum of $33.6 million to a
maximum of $45.4 million with a midpoint of $39.5 million. The Board of
Directors of the Bank determined that the Common Stock should be sold at $10.00
per share and that 44.3% of the to-be-outstanding shares (prior to the
contribution to the Foundation) should be offered to Minority Stockholders.
Based on the Estimated Valuation Range and the Purchase Price, the number of
shares of Common stock that the Company will issue will range from between
1,487,500 shares to 2,012,500 shares, with a midpoint of 1,750,000 shares. The
anticipated issuance of 43.5% of the shares of Common Stock sold in the Offering
to the Foundation as part of the Stock Issuance will result in shareholders
other than the MHC and the Foundation owning 43.6% of the shares of the Common
Stock outstanding at the conclusion of the Reorganization and Stock Issuance.
The remaining shares of the Company's Common Stock that are not sold in the
Offering or contributed to the Foundation will be issued to the MHC. The
Estimated Valuation Range may be amended with the approval of the OTS, if
required, or if necessitated by subsequent developments in the financial
condition of the Company and the Bank or market conditions generally, or to fill
the order of the ESOP. In the event the Estimated Valuation Range is updated to
amend the value of the Common Stock below $34.0 million or above $52.2 million
(the maximum of the Estimated Valuation Range, as adjusted by 15%), the new
appraisal will be filed with the Securities and Exchange Commission ("SEC") by
post-effective amendment.
Based upon current market and financial conditions and recent practices
and policies of the OTS, in the event the Company receives orders for Common
Stock in excess of $20.1 million (the maximum of the Estimated Offering Range)
and up to $23.1 million (the maximum of the Estimated Offering Range, as
adjusted by 15%), the Company may be required by the OTS to accept all such
orders. No assurances, however, can be made that the Company will receive orders
for Common Stock in excess of the maximum of the Estimated Offering Range or
that, if such orders are received,
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that all such orders will be accepted because the Company's final valuation and
number of shares to be issued are subject to the receipt of an updated appraisal
from RP Financial which reflects such an increase in the valuation and the
approval of such increase by the OTS. In addition, an increase in the number of
shares above 2,012,500 shares will first be used, if necessary, to fill the
order of the ESOP. There is no obligation or understanding on the part of
management to take and/or pay for any shares in order to complete the
Reorganization.
RP Financial's valuation is not intended, and must not be construed, as
a recommendation of any kind as to the advisability of purchasing such shares.
RP Financial did not independently verify the consolidated financial statements
and other information provided by the Bank, nor did RP Financial value
independently the assets or liabilities of the Bank. The valuation considers the
Bank as a going concern and should not be considered as an indication of the
liquidation value of the Bank. Moreover, because such valuation is necessarily
based upon estimates and projections of a number of matters, all of which are
subject to change from time to time, no assurance can be given that persons
purchasing Common Stock in the Offering will thereafter be able to sell such
shares at prices at or above the Purchase Price or in the range of the foregoing
valuation of the pro forma market value thereof.
Prior to completion of the Reorganization, the maximum of the Estimated
Offering Range may be increased up to 15% and the number of shares of Common
Stock may be increased to up to 2,314,375 shares to reflect changes in market
and financial conditions or to fill the order of the ESOP, without the
resolicitation of subscribers. See "- Limitations on Common Stock Purchases" as
to the method of distribution and allocation of additional shares that may be
issued in the event of an increase in the Estimated Offering Range to fill
unfilled orders in the Subscription Offering.
No sale of shares of Common Stock in the Reorganization may be
consummated unless prior to such consummation RP Financial confirms that nothing
of a material nature has occurred which, taking into account all relevant
factors, would cause it to conclude that the Purchase Price is materially
incompatible with the estimate of the pro forma market value of a share of
Common Stock upon consummation of the Reorganization. If such is not the case, a
new Estimated Offering Range may be set and a new Subscription and Community
Offering and/or Syndicated Community Offering may be held or such other action
may be taken as the Company and the Bank shall determine and the OTS may permit
or require.
Depending upon market or financial conditions following the
commencement of the Subscription Offering, the total number of shares of Common
Stock may be increased or decreased without a resolicitation of subscribers,
provided that the product of the total number of shares times the Purchase Price
is not below the minimum or more than 15% above the maximum of the Estimated
Offering Range. In the event market or financial conditions change so as to
cause the aggregate Purchase Price of the shares to be below the minimum of the
Estimated Offering Range or more than 15% above the maximum of such range,
purchasers will be resolicited (i.e., permitted to continue their orders, in
which case they will need to affirmatively reconfirm their subscriptions prior
to the
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expiration of the resolicitation offering or their subscription funds will be
promptly refunded with interest at the Bank's passbook rate of interest, or be
permitted to modify or rescind their subscriptions). Any change in the Estimated
Offering Range must be approved by the OTS. If the number of shares of Common
Stock issued in the Reorganization is increased due to an increase of up to 15%
in the Estimated Offering Range to reflect changes in market or financial
conditions or to fill the order of the ESOP, persons who subscribed for the
maximum number of shares will be given the opportunity to subscribe for the
adjusted maximum number of shares. See "- Limitations on Common Stock
Purchases."
An increase in the number of shares of Common Stock as a result of an
increase in the estimated pro forma market value would decrease both a
subscriber's ownership interest and the Company's pro forma net income and
stockholders' equity on a per share basis while increasing pro forma net income
and stockholders' equity on an aggregate basis. A decrease in the number of
shares of Common Stock would increase both a subscriber's ownership interest and
the Company's pro forma net income and stockholders' equity on a per share basis
while decreasing pro forma net income and stockholders' equity on an aggregate
basis. See "Risk Factors - Possible Increase in Number of Shares Issued in the
Reorganization" and "Pro Forma Data."
Copies of the appraisal report of RP Financial, including any
amendments thereto, and the detailed report of the appraiser setting forth the
method and assumptions for such appraisal are available for inspection at the
main office of the Bank and the other locations specified under "Additional
Information."
Subscription Offering and Subscription Rights
In accordance with the Plan of Reorganization and the related Plan of
Stock Issuance, rights to subscribe for the purchase of Common Stock have been
granted under the Plan of Stock Issuance to the following persons in the
following order of descending priority: (1) Eligible Account Holders, (2) the
ESOP, (3) Supplemental Eligible Account Holders, (4) Other Members and (5)
directors, officers and employees of the Bank. All subscriptions received will
be subject to the availability of Common Stock after satisfaction of all
subscriptions of all persons having prior rights in the Subscription Offering
and to the maximum and minimum purchase limitations set forth in the Plan of
Stock Issuance and as described below under "- Limitations on Common Stock
Purchases."
Priority 1: Eligible Account Holders. Each Eligible Account Holder will
receive, without payment therefor, first priority, nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of (i)
$150,000 (15,000 shares) of Common Stock, (ii) one- tenth of one percent (0.10%)
of the total offering of shares of Common Stock or (iii) 15 times the product
(rounded down to the next whole number) obtained by multiplying the total number
of shares of Common Stock to be issued by a fraction, of which the numerator is
the amount of the Eligible Account Holder's qualifying deposit and the
denominator of which is the total amount of qualifying deposits of all Eligible
Account Holders, in each case as of the close of business on June 30, 1997
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(the "Eligibility Record Date"), subject to the overall purchase limitations.
See "- Limitations on Common Stock Purchases."
If there are not sufficient shares available to satisfy all
subscriptions, shares first will be allocated among subscribing Eligible Account
Holders so as to permit each such Eligible Account Holder, to the extent
possible, to purchase a number of shares sufficient to make his total allocation
equal to the lesser of the number of shares subscribed for or 100 shares.
Thereafter, any shares remaining after each subscribing Eligible Account Holder
has been allocated the lesser of the number of shares subscribed for or 100
shares will be allocated among the subscribing Eligible Account Holders whose
subscriptions remain unfilled in the proportion that the amounts of their
respective eligible deposits bear to the total amount of eligible deposits of
all subscribing Eligible Account Holders whose subscriptions remain unfilled,
provided that no fractional shares shall be issued. Subscription Rights of
Eligible Account Holders will be subordinated to the priority rights of
Tax-Qualified Employee Stock Benefit Plans to purchase shares in excess of the
maximum of the Estimated Offering Range.
To ensure proper allocation of stock, each Eligible Account Holder must
list on his subscription order form all accounts in which he has an ownership
interest. Failure to list an account could result in fewer shares being
allocated than if all accounts had been 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 year
preceding June 30, 1997.
Priority 2: Employee Stock Ownership Plan. The ESOP will receive,
without payment therefor, second priority, nontransferable subscription rights
to purchase, in the aggregate, up to 10% of the Common Stock, including any
increase in the number of shares of Common Stock after the date hereof as a
result of an increase of up to 15% in the maximum of the Estimated Offering
Range. The ESOP intends to purchase 8% of the shares of Common Stock sold in the
Offering, or 119,000 shares and 161,000 shares based on the minimum and maximum
of the Estimated Offering Range, respectively. Subscriptions by the ESOP will
not be aggregated with shares of Common Stock purchased directly by or which are
otherwise attributable to any other participants in the Subscription and
Community Offerings, including subscriptions of any of the Bank's directors,
officers, employees or associates thereof. In the event that the total number of
shares offered in the Offering is increased to an amount greater than the number
of shares representing the maximum of the Estimated Offering Range ("Maximum
Shares"), the ESOP will have a priority right to purchase any such shares
exceeding the Maximum Shares up to an aggregate of 10% of the Common Stock sold
in the Offering. See "Management - Benefits - Employee Stock Ownership Plan."
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 Supplemental Eligible Account Holder
will receive, without payment therefor, third priority, nontransferable
subscription rights to subscribe for in the Subscription Offering up to the
greater of (i) $150,000 (15,000 shares) of Common Stock, (ii) one-tenth of one
percent (0.10%) of the total
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offering of shares of Common Stock or (iii) 15 times the product (rounded down
to the next whole number) obtained by multiplying the total number of shares of
Common Stock to be issued by a fraction, of which the numerator is the amount of
the Supplemental Eligible Account Holder's qualifying deposit and the
denominator of which is the total amount of qualifying deposits of all
Supplemental Eligible Account Holders, in each case as of the close of business
on ________, 1998 (the "Supplemental Eligibility Record Date"), subject to the
overall purchase limitations. See "- Limitations on Common Stock Purchases."
If there are not sufficient shares available to satisfy all
subscriptions of all Supplemental Eligible Account Holders, available shares
first will be allocated among subscribing Supplemental Eligible Account Holders
so as to permit each such Supplemental Eligible Account Holder, to the extent
possible, to purchase a number of shares sufficient to make his total allocation
equal to the lesser of the number of shares subscribed for or 100 shares.
Thereafter, any shares remaining available will be allocated among the
Supplemental Eligible Account Holders whose subscriptions remain unfilled in the
proportion that the amounts of their respective eligible deposits bear to the
total amount of eligible deposits of all subscribing Supplemental Eligible
Account Holders whose subscriptions remain unfilled, provided that no fractional
shares shall be issued.
Priority 4: Other Members. To the extent that there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the ESOP and Supplemental Eligible Account Holders, each Other Member
will receive, without payment therefor, fourth priority, nontransferable
subscription rights to subscribe for Common Stock in the Subscription Offering
up to the greater of (i) $150,000 (15,000 shares) of Common Stock or (ii)
one-tenth of one percent (0.10%) of the total offering of shares of Common
Stock, subject to the overall purchase limitations. See "- Limitations on Common
Stock Purchases."
In the event the Other Members subscribe for a number of shares which,
when added to the shares subscribed for by Eligible Account Holders, the ESOP
and Supplemental Eligible Account Holders, is in excess of the total number of
shares of Common Stock offered in the Offering, available shares first will be
allocated so as to permit each subscribing Other Member, to the extent possible,
to purchase a number of shares sufficient to make his total allocation equal to
the lesser of the number of shares subscribed for or 100 shares. Thereafter, any
remaining shares will be allocated among such subscribing Other Members on a pro
rata basis in the same proportion as each Other Member's subscription bears to
the total subscriptions of all subscribing Other Members, provided that no
fractional shares shall be issued.
Priority 5: Directors, Officers and Employees. To the extent that there
are sufficient shares remaining after satisfaction of all subscriptions by
Eligible Account Holders, the ESOP, Supplemental Eligible Account Holders and
Other Members, then directors, officers and employees of the Bank will receive,
without payment therefor, fifth priority, nontransferable subscription rights to
subscribe for, in this category, an aggregate of up to 15% of the shares of
Common Stock offered in the Subscription Offering. The ability of directors,
officers and employees to purchase Common Stock under this category is in
addition to rights which are otherwise available to them under the Plan
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as they may fall within higher priority categories, and the Plan generally
allows such persons to purchase in the aggregate up to 27% of Common Stock sold
in the Offering. See "- Limitations on Common Stock Purchases."
In the event of an oversubscription in this category, subscription
rights will be allocated among the individual directors, officers and employees
on a point system basis, whereby such individuals will receive subscription
rights in the proportion that the number of points assigned to each of them
bears to the total points assigned to all directors, officers and employees,
provided that no fractional shares shall be issued. One point will be assigned
for each year of service with the Bank, one point for each salary increment of
$5,000 per annum and five points for each office presently held in the Bank,
including directorships. For information as to the number of shares proposed to
be purchased by certain of the directors and officers, see "Proposed Management
Purchases."
Expiration Date for the Subscription Offering. The Subscription
Offering will expire at 12:00, noon, Eastern Time, on __________, 1998 (the
"Subscription Expiration Date"), unless extended for up to 45 days or for such
additional periods by the Company and the Bank as may be approved by the OTS.
The Subscription Offering may not be extended beyond _________, 2000.
Subscription rights which have not been exercised prior to the Subscription
Expiration Date (unless extended) will become void.
The Company and the Bank will not execute orders until at least the
minimum number of shares of Common Stock (1,487,500 shares) have been subscribed
for or otherwise sold. If all shares have not been subscribed for or sold within
45 days after the Subscription Expiration Date, unless such period is extended
with the consent of the OTS, all funds delivered to the Bank pursuant to the
Subscription Offering will be returned promptly to the subscribers with interest
and all withdrawal authorizations will be canceled. If an extension beyond the
45-day period following the Subscription Expiration Date is granted, the Company
and the Bank will notify subscribers of the extension of time and of any rights
of subscribers to modify or rescind their subscriptions.
Community Offering
To the extent that shares remain available for purchase after
satisfaction of all subscriptions of Eligible Account Holders, the ESOP,
Supplemental Eligible Account Holders, Other Members and directors, officers and
employees of the Bank, the Company and the Bank anticipate that they will offer
shares pursuant to the Plan to certain members of the general public, with
preference given to natural persons residing in Montgomery and Bucks Counties,
Pennsylvania (such natural persons referred to as "Preferred Subscribers"). Such
persons, together with associates of and persons acting in concert with such
persons, may purchase up to the greater of (i) $150,000 or 15,000 shares of
Common Stock, or (ii) one-tenth of one percent (0.10%) of the total offering of
shares of Common Stock, subject to the maximum purchase limitations. See "-
Limitations on Common Stock Purchases." This amount may be increased at the sole
discretion of the Bank up to 5% (provided that any such increased amount may not
exceed the maximum purchase limit provided to subscribers in the Subscription
Offering. See "- Limitations on Common Stock
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Purchases"). The opportunity to subscribe for shares of Common Stock in any
Community Offering category will be subject to the right of the Company and the
Bank, in their sole discretion, to accept or reject any such orders in whole or
in part either at the time of receipt of an order or as soon as practicable
following the Expiration Date. The Community Offering may be commenced at any
time subsequent to the Subscription Offering.
If there are not sufficient shares available to fill the orders of
Preferred Subscribers after completion of the Community Offering, such stock
will be allocated first to each Preferred Subscriber whose order is accepted by
the Company, in an amount equal to the lesser of 100 shares or the number of
shares subscribed for by each such Preferred Subscriber, if possible.
Thereafter, unallocated shares will be allocated among the Preferred Subscribers
whose accepted orders remain unsatisfied on an equal number of shares basis per
order until all orders have been filled or the remaining shares have been
allocated, provided that no fractional shares shall be issued. Orders for Common
Stock in the Community Offering will first be filled to a maximum of 2% of the
total number of shares of Common Stock sold in the Offering and thereafter any
remaining shares shall be allocated on an equal number of shares basis per order
until all orders have been filled. If there are any shares remaining, shares
will be allocated to other members of the general public who subscribe in the
Community Offering applying the same allocation described above for Preferred
Subscribers.
Syndicated Community Offering
As a final step in the Offering, the Plan of Stock Issuance provides
that, if feasible, all shares of Common Stock not purchased in the Subscription
and Community Offerings may be offered for sale to the general public in a
Syndicated Community Offering through a syndicate of registered broker-dealers
to be formed. The Bank expects to market any shares which remain unsubscribed
after the Subscription and Community Offerings through a Syndicated Community
Offering. The Company and the Bank have the right to reject orders in whole or
part in their sole discretion in the Syndicated Community Offering. Neither Webb
nor any registered broker-dealer shall have any obligation to take or purchase
any shares of Common Stock in the Syndicated Community Offering; however, Webb
has agreed to use its best efforts in the sale of shares in the Syndicated
Community Offering.
The price at which Common Stock is sold in the Syndicated Community
Offering will be the same price at which shares are offered and sold in the
Subscription and Community Offerings. No person will be permitted to subscribe
in the Syndicated Community Offering for more than $150,000 or 15,000 shares of
Common Stock, subject to the maximum purchase limitations. See "- Limitations on
Common Stock Purchases." This amount may be increased to up to 5% of the total
offering of shares in the Subscription Offering, provided that orders for Common
Stock in the Syndicated Community Offering will first be filled to a maximum of
2% of the total number of shares of Common Stock sold in the Offering.
Thereafter, any remaining shares will be allocated on an equal number of shares
basis per order until all orders have been filled.
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Webb may enter into agreements with broker-dealers ("Selected Dealers")
to assist in the sale of the shares in the Syndicated Community Offering,
although no such agreements exist as of the date of this Prospectus. No orders
may be placed or filled by or for a Selected Dealer during the Subscription
Offering. After the close of the Subscription Offering, Webb will instruct
Selected Dealers as to the number of shares to be allocated to each Selected
Dealer. Only after the close of the Subscription Offering and upon allocation of
shares to Selected Dealers may Selected Dealers take orders from their
customers. During the Subscription and Community Offerings, Selected Dealers may
only solicit indications of interest from their customers to place orders with
the Company as of a certain date ("Order Date") for the purchase of shares of
Common Stock. When, and if, Webb and the Bank believe that enough indications of
interest and orders have not been received in the Subscription and Community
Offerings to consummate the Reorganization, Webb will request, as of the Order
Date, Selected Dealers to submit orders to purchase shares for which they have
previously received indications of interest from their customers. Selected
Dealers will send confirmations of the orders to such customers on the next
business day after the Order Date. Selected Dealers will debit the accounts of
their customers on the "Settlement Date" which date will be three business days
from the Order Date. Customers who authorize Selected Dealers to debit their
brokerage accounts are required to have the funds for payment in their account
on but not before the Settlement Date. On the Settlement Date, Selected Dealers
will remit funds to the account established by the Bank for each Selected
Dealer. Each customer's funds so forwarded to the Bank, along with all other
accounts held in the same title, will be insured by the FDIC up to $100,000 in
accordance with applicable FDIC regulations. After payment has been received by
the Bank from Selected Dealers, funds will earn interest at the Bank's passbook
rate until the consummation or termination of the Reorganization. Funds will be
promptly returned, with interest, in the event the Reorganization is not
consummated as described above.
The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Bank with the
approval of the OTS. See "- Stock Pricing and Number of Shares to be Issued"
above for a discussion of rights of subscribers, if any, in the event an
extension is granted.
Persons in Nonqualified States or Foreign Countries
The Bank will make reasonable efforts to comply with the securities
laws of all states in the United States in which persons entitled to subscribe
for stock pursuant to the Plan of Stock Issuance reside. However, the Bank is
not required to offer stock in the Subscription Offering to any person who
resides in a foreign country or resides in a state of the United States with
respect to which: (a) the number of persons otherwise eligible to subscribe for
shares under the Plan of Stock Issuance who reside in such jurisdiction is
small; (b) the granting of subscription rights or the offer or sale of shares of
Common Stock to such persons would require any of the Company and the Bank or
their officers, directors or employees, under the laws of such jurisdiction, to
register as a broker, dealer, salesman or selling agent or to register or
otherwise qualify its securities for sale in such jurisdiction or to qualify as
a foreign corporation or file a consent to service of process in such
jurisdiction; and (c) such registration, qualification or filing in the judgment
of the Bank would be impracticable or unduly
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burdensome for reasons of cost or otherwise. Where the number of persons
eligible to subscribe for shares in one state is small, the Bank will base its
decision as to whether or not to offer the Common Stock in such state on a
number of factors, including but not limited to the size of accounts held by
account holders in the state, the cost of registering or qualifying the shares
or the need to register the Bank, its officers, directors or employees as
brokers, dealers or salesmen.
Limitations on Common Stock Purchases
The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased in the Offering:
(1) No fewer than 25 shares of Common Stock may be purchased,
to the extent such shares are available;
(2) Each Eligible Account Holder may subscribe for and
purchase in the Subscription Offering up to the greater of (i) $150,000
or 15,000 shares of Common Stock, (ii) one-tenth of one percent (0.10%)
of the total offering of shares of Common Stock or (iii) 15 times the
product (rounded down to the next whole number) obtained by multiplying
the total number of shares of Common Stock to be issued by a fraction,
of which the numerator is the amount of the qualifying deposit of the
Eligible Account Holder and the denominator is the total amount of
qualifying deposits of all Eligible Account Holders, in each case as of
the close of business on the Eligibility Record Date, subject to the
overall limitation in clause (7) below;
(3) The ESOP may purchase in the aggregate up to 10% of the
shares of Common Stock sold in the Stock Issuance, including any
additional shares issued in the event of an increase in the Estimated
Offering Range; although at this time it intends to purchase only 8% of
such shares;
(4) Each Supplemental Eligible Account Holder may subscribe
for and purchase in the Subscription Offering up to the greater of (i)
$150,000 or 15,000 shares of Common Stock, (ii) one-tenth of one
percent (0.10%) of the total offering of shares of Common Stock or
(iii) 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Common Stock to
be issued by a fraction, of which the numerator is the amount of the
qualifying deposit of the Supplemental Eligible Account Holder and the
denominator is the total amount of qualifying deposits of all
Supplemental
Eligible Account Holders, in each case as of the close of business on
the Supplemental Eligibility Record Date, subject to the overall
limitation in clause (7) below;
(5) Each Other Member or any Person purchasing shares of
Common Stock in the Community Offering may subscribe for and purchase
in the Subscription Offering or Community Offering, as the case may be,
up to the greater of (i) $150,000 or 15,000 shares
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of Common Stock or (ii) one-tenth of one percent (0.10%) of the total
offering of shares of Common Stock, subject to the overall limitation
in clause (7) below;
(6) Persons purchasing shares of Common Stock in the Community
Offering or Syndicated Community Offering may purchase in the Community
Offering or Syndicated Community Offering up to $150,000 or 15,000
shares of Common Stock, subject to the overall limitation in clause (7)
below;
(7) Except for the ESOP and certain Eligible Account Holders
and Supplemental Eligible Account Holders whose subscription rights are
based upon the amount of their deposits, the maximum number of shares
of Common Stock subscribed for or purchased in all categories of the
Offering by any person, together with associates of and groups of
persons acting in concert with such persons, shall not exceed $500,000
or 50,000 shares of Common Stock; and
(8) No more than 15% of the total number of shares offered for
sale in the Subscription Offering may be purchased by directors and
officers of the Bank in the fourth priority category in the
Subscription Offering. No more than 27% of the total number of shares
offered for sale in the Stock Issuance may be purchased by directors
and officers of the Bank and their associates in the aggregate,
excluding purchases by the ESOP.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members of
the Bank, the individual amount permitted to be subscribed for may be increased
up to a maximum of 5% of the number of shares sold in the Stock Issuance. If
such amount is increased, subscribers for the maximum amount will be, and
certain other large subscribers in the sole discretion of the Bank may be, given
the opportunity to increase their subscriptions up to the then applicable limit.
The term "associate" of a person is defined to mean (i) any corporation
or other organization (other than the Company, MHC and the Bank or a
majority-owned subsidiary of the Bank) 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, provided, however, that
such term shall not include any tax-qualified employee stock benefit plan of the
Company and the Bank in which such person has a substantial beneficial interest
or serves as a trustee or in a similar fiduciary capacity; and (iii) any
relative or spouse of such person, or any relative of such spouse, who either
has the same home as such person or who is a director or officer of the Bank or
any of their subsidiaries.
The term "acting in concert" is defined to mean (1) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement, or (2) 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
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other arrangement, whether written or otherwise. The Bank may presume that
certain persons are acting in concert based upon, among other things, joint
account relationships and the fact that such persons have filed joint Schedules
13D with the SEC with respect to other companies.
Marketing Arrangements
The Company and the Bank have retained Webb to consult with and to
advise the Bank, and to assist the Company, on a best efforts basis, in the
distribution of the shares of Common Stock in the Subscription and Community
Offering. The services that Webb will provide include, but are not limited to
(i) training the employees of the Bank who will perform certain ministerial
functions in the Subscription and Community Offering regarding the mechanics and
regulatory requirements of the stock offering process, (ii) managing the Stock
Information Center by assisting interested stock subscribers and by keeping
records of all stock orders, (iii) preparing marketing materials, and (iv)
assisting in the solicitation of proxies from the Bank's members for use at the
Special Meeting. For its services, Webb will receive a management fee of $40,000
and a success fee of 1.25% of the aggregate Purchase Price of the shares of
Common Stock sold in the Subscription Offering and Community Offering excluding
shares purchased by the ESOP, and officers, directors and employees of the Bank
and members of their immediate families as well as shares issued to the
Foundation. The success fee paid to Webb will be reduced by the amount of the
management fee. In the event that selected dealers are used to assist in the
sale of shares of Common Stock in the Community Offering, such dealers will be
paid a fee of up to 5.5% of the aggregate Purchase Price of the shares sold by
such dealers. The Bank has agreed to indemnify Webb against certain claims or
liabilities, including certain liabilities under the Securities Act, and will
contribute to payments Webb may be required to make in connection with any such
claims or liabilities.
Sales of shares of Common Stock will be made primarily by registered
representatives affiliated with Webb or by the broker-dealers managed by Webb.
Webb has undertaken that the shares of Common Stock will be sold in a manner
which will ensure that the distribution standards of the NYSE (round lots,
public shares, and aggregate market value) will be met. A Stock Information
Center will be established at the main office of the Bank. The Company will rely
on Rule 3a4-1 of the Exchange Act and sales of Common Stock will be conducted
within the requirements of such Rule, so as to permit officers, directors and
employees to participate in the sale of the Common Stock in those states where
the law so permits. No officer, director or employee of the Company or the Bank
will be compensated directly or indirectly by the payment of commissions or
other remuneration in connection with his or her participation in the sale of
Common Stock.
Willow Grove may utilize certain space in its offices for activities
related to the Offerings. OTS regulations prohibit securities sales activities
by the Company or the Bank unless certain OTS requirements are satisified and
the OTS does not object. Among other requirements, if the offices of the Bank or
any affiliate are utilized, no commissions, bonuses, or payments may be made to
employees (except standard compensation to securities personnel of registered
broker-dealers), no offers or sales may be made by tellers or at the teller
counter, sales activiites must be conducted in a segregated or separately
identifiable area of the Bank's offices apart from the area used by the general
public for deposit activities and offers and sales must be made only by regular,
full-time Bank employees or securities personnel who are subject to supervision
by a registered broker-dealer. In addition, subscribers must sign a
certification form acknowledging that the Common Stock is not federally insured
or guaranteed and that he or she has receivbed a copy of this prospectus and
understands the risks involved in purchasing any shares of Common Stock. The
Company and the Bank will comply with the above-described OTS regulation as well
as Federal and state securities laws.
Procedure for Purchasing Shares in the Subscription Offering
To ensure that each purchaser receives a prospectus at least 48 hours
before the Subscription Expiration Date (unless extended) in accordance with
Rule 15c2-8 of the Exchange Act, no prospectus will be mailed any later than
five days prior to such date or hand delivered any later than two days prior to
such date. Execution of the order form will confirm receipt or delivery in
accordance with Rule 15c2-8. Order forms will only be distributed with a
prospectus.
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To purchase shares in the Subscription Offering, an executed order form
with the required payment for each share subscribed for, or with appropriate
authorization for withdrawal from a deposit account at the Bank (which may be
given by completing the appropriate blanks in the order form), must be received
by the Bank by 12:00 noon, Eastern Time, on the Subscription Expiration Date
(unless extended). In addition, the Company and the Bank will require a
prospective purchaser to execute a certification in the form required by
applicable OTS regulations in connection with any sale of Common Stock. Order
forms which are not received by such time or are executed defectively or are
received without full payment (or appropriate withdrawal instructions) are not
required to be accepted. In addition, the Bank will not accept orders submitted
on photocopied or facsimilied order forms nor order forms unaccompanied by an
executed certification form. The Bank has the right to waive or permit the
correction of incomplete or improperly executed forms, but does not represent
that it will do so. Once received, an executed order form may not be modified,
amended or rescinded without the consent of the Bank, unless the Reorganization
has not been completed within 45 days after the end of the Subscription
Offering, unless such period has been extended.
In order to ensure that Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are properly identified as to their stock
purchase priority, depositors as of the close of business on the Eligibility
Record Date (June 30, 1997) or the Supplemental Eligibility Record Date
(_______, 1998) and depositors as of the close of business on the Voting Record
Date (_________, 1998) must list all accounts on the stock order form giving all
names in each account and the account numbers.
Payment for subscriptions may be made (i) in cash if delivered in
person, (ii) by check or money order or (iii) by authorization of withdrawal
from deposit accounts maintained with the Bank. No wire transfers will be
accepted. Interest will be paid on payments made by cash, check or money order
at the Bank's passbook rate of interest from the date payment is received until
completion or termination of the Reorganization. If payment is made by
authorization of withdrawal from deposit accounts, the funds authorized to be
withdrawn from a deposit account will continue to accrue interest at the
contractual rates until completion or termination of the Reorganization, but a
hold will be placed on such funds, thereby making them unavailable to the
depositor until completion or termination of the Reorganization.
If a subscriber authorizes the Bank to withdraw the amount of the
purchase price from his deposit account, the Bank will do so as of the effective
date of the Reorganization. The Bank will waive any applicable penalties for
early withdrawal from certificate accounts. If the remaining balance in a
certificate account is reduced below the applicable minimum balance requirement
at the time that the funds actually are transferred under the authorization, the
certificate will be canceled at the time of the withdrawal, without penalty, and
the remaining balance will earn interest at the passbook rate.
If the ESOP subscribes for shares during the Subscription Offering, the
ESOP will not be required to pay for the shares subscribed for at the time it
subscribes, but rather, may pay for such shares of Common Stock subscribed for
by it at the Purchase Price upon consummation of the
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Subscription and Community Offerings, if all shares are sold, or upon
consummation of the Syndicated Community Offerings if shares remain to be sold
in such offering, provided that there is in force from the time of its
subscription until such time, a loan commitment from an unrelated financial
institution or the Company to lend to the ESOP, at such time, the aggregate
Purchase Price of the shares for which it subscribed.
Owners of self-directed IRAs may use the assets of such IRAs to
purchase shares of Common Stock in the Subscription and Community Offerings
provided such IRAs are not maintained at the Bank. ERISA provisions and IRS
regulations require that officers, directors and 10% stockholders who use
self-directed IRA funds to purchase shares of Common Stock in the Offerings make
such purchases for the exclusive benefit of the IRAs. Any interested parties
wishing to use IRA funds for stock purchases are advised to contact the Stock
Sales Center at (215) ___- ____ for additional information.
Certificates representing shares of Common Stock purchased will be
mailed to purchasers at the last address of such persons appearing on the
records of the Bank, or to such other address as may be specified in properly
completed order forms, as soon as practicable following consummation of the
Reorganization. Any certificates returned as undeliverable will be disposed of
in accordance with applicable law.
Restrictions on Transfer of Subscription Rights and Shares
Pursuant to the rules and regulations of the OTS, no person with
subscription rights may transfer or enter into any agreement or understanding to
transfer the legal or beneficial ownership of the subscription rights issued
under the Plan of Stock Issuance 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 account. Each person exercising such subscription
rights will be required to certify that he is purchasing shares solely for his
own account and that he has no agreement or understanding regarding the sale or
transfer of such shares. Federal 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.
The Bank will refer to the OTS any situations that it believes may
involve a transfer of subscription rights and will not honor orders believed by
it to involve the transfer of such rights.
Delivery of Certificates
Certificates representing Common Stock issued in the Stock Issuance
will be mailed by the Company's transfer agent to the persons entitled thereto
at the addresses of such persons appearing on the stock order form as soon as
practicable following consummation of the Reorganization. Any certificates
returned as undeliverable will be held by the Company until claimed by persons
legally entitled thereto or otherwise disposed of in accordance with applicable
law. Until certificates for
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Common Stock are available and delivered to subscribers, such subscribers may
not be able to sell the shares of Common Stock for which they have subscribed,
even though trading of the Common Stock may have commenced.
Required Approvals
Various approvals of the OTS are required in order to consummate the
Reorganization. The OTS has approved the Plan of Reorganization, subject to
approval by the Bank's members and other standard conditions. The Company's
holding company application is currently pending.
The Company is required to make certain filings with state securities
regulatory authorities in connection with the issuance of Common Stock in the
Offering.
Judicial Review
Any person aggrieved by a final action of the OTS which approves, with
or without conditions, or disapproves a plan of reorganization may obtain review
of such action by filing in the court of appeals of the United States for the
circuit in which the principal office or residence of such person is located, or
in the United States Court of Appeals for the District of Columbia, a written
petition praying that the final action of the OTS be modified, terminated or set
aside. Such petition must be filed within 30 days after the publication of
notice of such final action in the Federal Register, or 30 days after the
mailing by the applicant of the notice to members as provided for in 12 C.F.R.
ss. 563b.6(c), whichever is later. The further procedure for review is as
follows: A copy of the petition is forthwith transmitted to the OTS by the clerk
of the court and thereupon the OTS files in the court the record in proceeding,
as provided in Section 2112 of Title 28 of the United States Code. Upon the
filing of the petition, the court has jurisdiction, which upon the filing of the
record is exclusive, to affirm, modify, terminate, or set aside in whole or in
part, the final action of the OTS. Review of such proceedings is as provided in
Chapter 7 of Title 5 of the United States Code. The judgment and decree of the
court is final, except that they are subject to review by the Supreme Court upon
certiorari as provided in Section 1254 of Title 28 of the United States Code.
Certain Restrictions on Purchase or Transfer of Shares After the Reorganization
All shares of Common Stock purchased in connection with the
Reorganization by a director or an officer of the Company and the Bank will be
subject to a restriction that the shares not be sold for a period of one year
following the Reorganization except in the event of the death of such director
or officer or pursuant to a merger or similar transaction approved by the OTS.
Each certificate for restricted shares will bear a legend giving notice of this
restriction on transfer, and instructions will be issued to the effect that any
transfer within such time period of any certificate or record ownership of such
shares other than as provided above is a violation of the restriction. Any
shares of Common Stock issued at a later date within this one year period as a
stock dividend, stock split or otherwise with respect to such restricted stock
will be subject to the same restrictions.
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Purchases of Common Stock of the Company by directors, executive
officers and their associates during the three-year period following completion
of the Reorganization may be made only through a broker or dealer registered
with the SEC, except with the prior written approval of the OTS. This
restriction does not apply, however, to negotiated transactions involving more
than 1% of the Company's outstanding Common Stock or to certain purchases of
stock pursuant to an employee stock benefit plan.
Pursuant to OTS regulations, the Company will generally be prohibited
from repurchasing any shares of the Common Stock within one year following
consummation of the Reorganization, although the OTS under its current policies
may approve a request to repurchase shares of Common Stock following the
six-month anniversary of the Reorganization. During the second and third years
following consummation of the Reorganization, the Company may not repurchase any
shares of its Common Stock other than pursuant to (i) an offer to all
stockholders on a pro rata basis which is approved by the OTS (provided,
however, that the MHC may be excluded with the approval of the OTS); (ii) the
repurchase of qualifying shares of a director, if any; (iii) purchases in the
open market by a tax-qualified or non-tax-qualified employee stock benefit plan
in an amount reasonable and appropriate to fund the plan; or (iv) purchases that
are part of an open-market stock repurchase program not involving more than 5%
of its outstanding capital stock during a 12-month period, if the repurchases do
not cause the Bank to become undercapitalized and the Bank provides to the
Regional Director of the OTS no later than 10 days prior to the commencement of
a repurchase program written notice containing a full description of the program
to be undertaken and such program is not disapproved by the Regional Director.
The OTS may permit stock repurchases in excess of such amounts prior to the
third anniversary of the Reorganization if exceptional circumstances are shown
to exist.
CERTAIN RESTRICTIONS ON ACQUISITION
OF THE COMPANY AND THE BANK
The principal federal regulatory restrictions which affect the ability
of any person, firm or entity to acquire the Company, the Bank or their
respective capital stock are described below. Also discussed are certain
provisions in the Company's Charter and Bylaws which may be deemed to affect the
ability of a person, firm or entity to acquire the Company.
Federal Law
The Change in Bank Control Act provides that no person, acting directly
or indirectly or through or in concert with one or more other persons, may
acquire control of a savings association unless the OTS has been given 60 days'
prior written notice. The HOLA provides that no company may acquire "control" of
a savings institution without the prior approval of the OTS. Any company that
acquires such control becomes a savings and loan holding company subject to
registration, examination and regulation by the OTS. Pursuant to federal
regulations, control of a savings institution is conclusively deemed to have
been acquired by, among other things, the acquisition of
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more than 25% of any class of voting stock of the institution or the ability to
control the election of a majority of the directors of an institution. Moreover,
control is presumed to have been acquired, subject to rebuttal, upon the
acquisition of more than 10% of any class of voting stock, or of more than 25%
of any class of stock, of a savings institution, where certain enumerated
"control factors" are also present in the acquisition. The OTS may prohibit an
acquisition of control if (i) it would result in a monopoly or substantially
lessen competition, (ii) the financial condition of the acquiring person might
jeopardize the financial stability of the institution, or (iii) the competence,
experience or integrity of the acquiring person indicates that it would not be
in the interest of the depositors or of the public to permit the acquisition of
control by such person. The foregoing restrictions do not apply to the
acquisition of a savings institution's capital stock by one or more
tax-qualified employee stock benefit plans, provided that the plan or plans do
not have beneficial ownership in the aggregate of more than 25% of any class of
equity security of the savings institution.
For a period of three years following consummation of the Stock
Issuance, OTS regulations generally prohibit, among other things, any person
from acquiring or making an offer to acquire, directly or indirectly, beneficial
ownership of more than 10% of the stock of the Company or the Bank without OTS
approval.
Mutual Holding Company Structure and the Company's Ownership of a Majority of
the Common Stock
For information relating to the mutual holding company form of
organization and the MHC's ownership of a majority of the Common Stock that
could discourage certain transactions which involve an actual or threatened
change in control of the Company or the Bank and perpetuate existing management,
see "Risk Factors - Factors Relating to Mutual Holding Company Structure" and
"The Reorganization."
Charter and Bylaws of the Company
The following discussion is a summary of certain provisions of the
Charter and Bylaws of the Company that relate to corporate governance. The
description is necessarily general and qualified by reference to the Charter and
Bylaws.
Classified Board of Directors. The Board of Directors of the Company is
required by the Charter and Bylaws to be divided into three classes which are as
equal in size as is possible, and one of such classes is required to be elected
annually by stockholders of the Company for three-year terms. A classified Board
of Directors promotes continuity and stability of management of the Company but
makes it more difficult for stockholders to change a majority of the directors
because it generally takes at least two annual elections of directors for this
to occur.
Authorized but Unissued Shares of Capital Stock. Following the
Offering, the Association will have authorized but unissued shares of Preferred
Stock and Common Stock. See "Description of Capital Stock." Although such shares
could be used by the Board of Directors of the Association
145
<PAGE>
to render more difficult or to discourage an attempt to obtain control of the
Association by means of a merger, tender offer, proxy contest or otherwise, it
is anticipated that such uses will be unlikely given the MHC's ownership of a
majority of the Common Stock.
Special Meetings of Stockholders. The Company's Charter provides that
for a period of five years following consummation of the Reorganization, special
meetings of stockholders may be called only upon direction of the Company's
Board of Directors, for matters relating to changes in control of the Company or
amendments to its charter.
Absence of Cumulative Voting. The Company's Charter provides that there
shall not be cumulative voting by stockholders for the election of the Company's
directors. The absence of cumulative voting rights effectively means that the
holders of a majority of the shares voted at a meeting of stockholders (i.e.,
the MHC) may, if they so choose, elect all directors of the Company to be
selected at that meeting, thus precluding minority stockholder representation on
the Company's Board of Directors.
Restrictions on Acquisitions of Securities. The Company's Charter
provides that for a period of five years from the effective date of the Stock
Issuance, no person other than the MHC may directly or indirectly offer to
acquire or acquire the beneficial ownership of more than 10% of any class of the
equity security of the Company. This provision does not apply to any
tax-qualified employee stock benefit plan of the Company or to an underwriter or
member of an underwriting or selling group involving the public sale or resale
of securities of the Company or a subsidiary thereof; provided, that upon
completion of the sale or resale, no such underwriter or member of the selling
group is a beneficial owner of more than 10% of any class of equity securities
of the Company. In addition, during such five-year period, no shares
beneficially owned in violation of the foregoing percentage limitation shall be
entitled to vote in connection with any matter submitted to stockholders for a
vote.
Procedures for Stockholder Nominations. The Company's Bylaws provide
that any stockholder desiring to make a nomination for the election of directors
or a proposal for new business at a meeting of stockholders must submit written
notice to the Secretary of the Company not less than 30 or more than 60 days in
advance of the meeting. The Bylaws further provide that if a stockholder seeking
to make a nomination or a proposal for new business fails to follow the
prescribed procedures, the chairman of the meeting may disregard the defective
nomination or proposal. Management believes that it is in the best interests of
the Company and its stockholders to provide sufficient time to enable management
to disclose to stockholders information about a dissident slate of nominations
for directors. This advance notice requirement may also give management time to
solicit its own proxies in an attempt to defeat any dissident slate of
nominations should management determine that doing so is in the best interest of
stockholders generally. Similarly, adequate advance notice of stockholder
proposals will give management time to study such proposals and to determine
whether to recommend to the stockholders that such proposals be adopted.
146
<PAGE>
Benefit Plans
In addition to the provisions of the Company's Charter and Bylaws
described above, certain benefit plans of the Company and the Bank adopted in
connection with the Reorganization and Stock Issuance contain provisions which
also may discourage hostile takeover attempts which the Boards of Directors of
the Bank might conclude are not in the best interests of the Company, the
Company and the Bank or the Company's stockholders. For a description of the
benefit plans and the provisions of such plans relating to changes in control of
the Company or the Bank, see "Management -- Benefits."
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
General
The Company is authorized to issue 25,000,000 shares of Common Stock
having a par value of $0.01 per share and 10,000,000 shares of preferred stock
having a par value of $0.01 per share (the "Preferred Stock"). The Company
currently expects to issue up to a maximum of 2,012,500 shares (2,314,375 shares
in the event that the maximum of the Estimated Offering Range is increased by
15%) of Common Stock and no shares of Preferred Stock in the Stock Issuance.
Each share of the Company's Common Stock will have the same relative rights as,
and will be identical in all respects with, each other share of Common Stock.
Upon payment of the Purchase Price for the Common Stock in accordance with the
Plan of Stock Issuance, all such stock will be duly authorized, fully paid and
nonassessable. Presented below is a description of all aspects of the Company's
capital stock which are deemed material to an investment decision with respect
to the Stock Issuance.
The Common Stock of the Company will represent nonwithdrawable capital,
will not be an account of an insurable type, and will not be insured by the
FDIC.
Common Stock
Distributions. The Company can pay dividends if, as and when declared
by its Board of Directors, subject to compliance with limitations which are
imposed by law. See "Dividend Policy" and "Waiver of Dividends by the MHC." The
holders of Common Stock of the Company will be entitled to receive and share
equally in such dividends as may be declared by the Board of Directors of the
Company out of funds legally available therefor. If the Company issues Preferred
Stock, the holders thereof may have a priority over the holders of the Common
Stock with respect to dividends.
Voting Rights. Upon Conversion, the holders of Common Stock of the
Company will possess exclusive voting rights in the Company. Each holder of
Common Stock will be entitled to one vote per share and will not have any right
to cumulate votes in the election of directors. Under certain circumstances,
shares in excess of 10.0% of the issued and outstanding shares of Common Stock
may be considered "Excess Shares" and, accordingly, not be entitled to vote. See
"Restrictions
147
<PAGE>
on Acquisition of the Company and the Bank." If the Company issues Preferred
Stock, holders of the Preferred Stock may also possess voting rights.
Liquidation. In the event of any liquidation, dissolution or winding up
of the Bank, the Company, as holder of the Bank's capital stock, would be
entitled to receive, after payment or provision for payment of all debts and
liabilities of the Bank (including all deposit accounts and accrued interest
thereon) and after distribution of the balance in the special liquidation
account to Eligible Account Holders and Supplemental Eligible Account Holders
(see "The Reorganization and Stock Issuance -- Liquidation Rights"), all assets
of the Bank available for distribution. In the event of liquidation, dissolution
or winding up of the Company, the holders of its Common Stock would be entitled
to receive, after payment or provision for payment of all its debts and
liabilities, all of the assets of the Company available for distribution. If
Preferred Stock is issued, the holders thereof may have a priority over the
holders of the Common Stock in the event of liquidation or dissolution.
Preemptive Rights. Holders of the Common Stock of the Company will not
be entitled to preemptive rights with respect to any shares which may be issued.
The Common Stock is not subject to redemption.
Preferred Stock
None of the shares of the Company's authorized Preferred Stock will be
issued in the Stock Issuance. Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine. The
Board of Directors can, without stockholder approval, issue preferred stock with
voting, dividend, liquidation and conversion rights which could dilute the
voting strength of the holders of the Common Stock and may assist management in
impeding an unfriendly takeover or attempted change in control. The Company has
no present plans to issue Preferred Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is
- -------------------.
EXPERTS
The financial statements of the Bank as of June 30, 1998 and 1997, and
for each of the years in the three-year period ended June 30, 1998, have been
included in this Prospectus in reliance upon the report of KPMG Peat Marwick
LLP, independent public accountants, appearing elsewhere herein and upon the
authority of said firm as experts in accounting and auditing.
148
<PAGE>
RP Financial has consented to the publication herein of the summary of
its report to the Bank setting forth its opinion as to the estimated pro forma
market value of the Common Stock upon Reorganization and its opinion with
respect to subscription rights.
LEGAL AND TAX OPINIONS
The legality of the Common Stock and the Federal income tax
consequences of the Reorganization will be passed upon for the Bank by Elias,
Matz, Tiernan & Herrick L.L.P., Washington, D.C., special counsel to the Bank
and the Company. The Pennsylvania income tax consequences of the Reorganization
will be passed upon for the Bank by KPMG Peat Marwick LLP. The federal income
tax consequences of certain matters relating to establishment of the Foundation
will be passed upon for the Bank by KPMG Peat Marwick LLP. Certain legal matters
will be passed upon for Charles Webb & Company by Stevens & Lee, Wayne,
Pennsylvania.
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, including
the Appraisal Report which is an exhibit to the Registration Statement, can be
examined without charge at the public reference facilities of the SEC located at
450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such material can
be obtained from the SEC at prescribed rates. In addition, the SEC maintains a
web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC, including the Company. The statements contained in this Prospectus
as to the contents of any contract or other document filed as an exhibit to the
Registration Statement summarize the provisions of such contract or other
document which are deemed material. However, such summaries are, of necessity,
brief descriptions thereof and are not necessarily complete; each such statement
is qualified by reference to such contract or document.
The Bank has filed Applications on Form MHC-1 and Form MHC-2 and an
Application H-(e)1 with the OTS with respect to the Reorganization and Stock
Issuance. This Prospectus omits certain information contained in those
applications. The Applications may be examined at the principal office of the
OTS, 1700 G Street, N.W., Washington, D.C. 20552, and at the Northeast Regional
Office of the OTS located at 10 Exchange Place, 18th Floor, Jersey City, New
Jersey 07302.
In connection with the Reorganization, the Company will register its
Common Stock with the SEC under Section 12 of the Exchange Act, and, upon such
registration, the Company and the holders of its 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
149
<PAGE>
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 Plan of Reorganization and Plan of Stock Issuance and the
Charter and Bylaws of the Company, the Bank and the MHC are available without
charge from the Bank. Requests for such information should be directed to:
Stockholder Relations, Willow Grove Bank, Welsh and Norristown Roads, Maple
Glen, Pennsylvania 19002.
150
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Public Accountants............................................ F-1
Statements of Financial Condition as of June 30, 1998 and 1997...................... F-2
Statements of Operations for the Years Ended June 30, 1998, 1997
and 1996........................................................................ 47
Statements of Changes in Equity for the Years Ended June 30,
1998, 1997 and 1996............................................................. F-3
Statements of Cash Flows for the Years Ended June 30, 1998, 1997
and 1996........................................................................ F-4
Notes to Financial Statements....................................................... F-5
</TABLE>
All schedules are omitted as the required information is not applicable or the
information is presented in the Financial Statements.
The financial statements of Willow Grove Bancorp, Inc. have been omitted because
Willow Grove Bancorp, Inc. has not yet issued any stock, has no assets or
liabilities, and has not conducted any business other than of an organizational
nature.
151
<PAGE>
[LETTERHEAD OF PEAT MARWICK LLP]
Independent Auditors' Report
The Board of Directors
Willow Grove Bank:
We have audited the accompanying statements of financial condition of Willow
Grove Bank (the Bank) as of June 30, 1998 and 1997, and the related statements
of operations, changes in equity, and cash flows for each of the years in the
three-year period ended June 30, 1998. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted audited standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Willow Grove Bank as of June
30, 1998 and 1997, and the results of its operations and its cash flows for each
of the years in the three-year period ended June 30, 1998, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
August 13, 1998
Philadelphia, Pennsylvania
F-1
<PAGE>
WILLOW GROVE BANK
Statements of Financial Condition
June 30, 1998 and 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Assets 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents:
Cash on hand and non-interest bearing deposits $2,932 $1,604
Interest bearing deposits 15,359 2,600
------ -----
Total cash and cash equivalents 18,291 4,204
Assets available for sale:
Securities (amortized cost of $47,984 in 1998 and
$46,248 in 1997) 48,111 45,766
Loans 12,152 6,173
Securities held to maturity (market
value of $3,998 in 1997) - 3,999
Loans (net of allowance for loan losses of $2,665
in 1998 and $1,678 in 1997) 315,705 284,596
Accrued income receivable 2,109 1,937
Real estate held for investment, net - 180
Property and equipment, net 4,772 3,824
Intangible assets 2,360 2,770
Other assets 1,874 1,230
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets $405,374 $354,679
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities and Equity
- ---------------------------------------------------------------------------------------------------------------------------
Deposits $340,793 $309,726
Notes payable - 500
Federal Home Loan Bank advances 21,000 6,000
Advance payments from borrowers for taxes 4,481 4,196
Accrued interest payable 389 288
Other liabilities 2,766 847
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities $369,429 $321,557
Commitments and contingencies (note 11)
Retained earnings (substantially restricted) 35,865 33,420
Net unrealized gain (loss) on securities available 80 (298)
for sale, net of taxes
- ---------------------------------------------------------------------------------------------------------------------------
Total Equity $35,945 $33,122
Total Liabilities and Equity $405,374 $354,679
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
WILLOW GROVE BANK
Statements of Changes in Equity
Years ended June 30, 1998, 1997, and 1996
<TABLE>
<CAPTION>
Net
Unrealized
Gain (Loss)
On Securities
Available
Retained for Sale Total
(Dollars in thousands) Earnings (net of taxes) Equity
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, June 30, 1995 $28,043 $377 $28,420
Change in net unrealized gain on securities available for - ($1,048) ($1,048)
sale, net of taxes
Net income $3,002 - $3,002
- -------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1996 $31,045 ($671) $30,374
- -------------------------------------------------------------------------------------------------------------------
Change in net unrealized loss on securities available for
sale, net of taxes - $373 $373
Net income $2,375 - $2,375
- -------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1997 $33,420 ($298) $33,122
- -------------------------------------------------------------------------------------------------------------------
Change in net unrealized gain on securities available for
sale, net of taxes - $378 $378
Net income $2,445 - $2,445
- -------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1998 $35,865 $80 $35,945
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
WILLOW GROVE BANK
Statements of Cash Flows
Years ended June 30, 1998, 1997 and 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net cash flows from operating activities:
Net income $2,445 $2,375 $3,002
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation 453 313 266
Amortization of premium and accretion of discount, net 85 46 81
Amortization of intangible assets 410 410 410
Provision for loan losses 993 185 210
Loss (gain) on sale of real estate held for investment 25 (16) (314)
Loss (gain) on sale of loans available for sale (69) (29) 66
(Gain) loss on sale of securities available for sale 105 8 (564)
Decrease in deferred loan fees (385) (59) (311)
Increase in accrued income receivable (172) (272) (151)
Decrease in real estate held for investment - 24 2
Increase in other assets (147) (10) (220)
Increase (decrease) in accrued interest payable 101 - (144)
Deferred income tax expense (benefit) (738) 30 199
Increase (decrease) in other liabilities 1,919 733 (419)
Originations and purchases of loans available for sale (36,396) (29,127) (37,211)
Proceeds from sale of loans available for sale 30,486 26,039 38,343
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities ($885) $650 $3,245
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net increase in loans ($31,706) ($39,323) ($29,966)
Purchase of securities available for sale (55,878) (14,296) (1,100)
Purchase of securities held to maturity - (3,999) -
Proceeds from maturities and calls of securities 3,999 - -
held to maturity
Proceeds from sales and calls of securities available 53,270 10,067 600
for sale
Principal repayments of securities available for sale 682 9,170 4,621
Principal repayments of securities held to maturity - - 3,075
Proceeds from sale of real estate held for investment 155 16 314
Purchase of property and equipment, net (1,401) (1,234) (895)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities ($30,879) ($39,599) ($23,351)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-4
<PAGE>
WILLOW GROVE BANK
Statements of Cash Flows, Continued
(Dollars in thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from financing activities:
Net increase in deposits $31,067 $42,030 $30,050
Net increase (decrease) in FHLB advances with 11,000 (5,000) (32,000)
original maturity less than 90 days
Net increase (decrease) in FHLB advances with 4,000 11,000 30,500
original maturity greater than 90 days
Repayment of FHLB advances with original maturity - (10,120) (11,000)
greater than 90 days
Net increase (decrease) in advance payments from 284 461 (33)
borrowers for taxes
Issuance (repayment) of notes payable (500) 500 -
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities $45,851 $38,871 $17,517
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $14,087 ($78) ($2,589)
Cash and cash equivalents:
Beginning of year $4,204 $4,282 $6,871
- -----------------------------------------------------------------------------------------------------------------------
End of year $18,291 $4,204 $4,282
- -----------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash and cash flow information:
Interest paid $14,966 $13,718 $12,513
Income taxes paid $1,854 $1,109 $1,595
- -----------------------------------------------------------------------------------------------------------------------
Noncash items:
Change in unrealized gain (loss) on securities available
for sale (net of taxes of $233, $229 and $378 $373 ($1,048)
$633) in 1998, 1997 and 1996, respectively
Securities transferred from held to maturity to
assets available for sale (see note 3) - - $54,739
Loans transferred from loans available for sale to
loans receivable - $2,089 $3,028
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
Description of Business
Willow Grove Bank (the Bank) provides a full range of banking services
through its seven branches in Dresher, Willow Grove, Maple Glen,
Warminster (2), Hatboro and Huntingdon Valley, Pennsylvania. All of the
branches are full-service and offer commercial and retail products.
These products include checking accounts (interest and non-interest
bearing), savings accounts, certificates of deposit, commercial and
consumer loans, real estate loans, and home equity loans. The Bank is
subject to competition from other financial institutions and other
companies that provide financial services. The Bank is subject to the
regulations of certain federal agencies and undergoes periodic
examinations by those regulatory authorities.
Basis of Financial Statement Presentation
The Bank has prepared its accompanying financial statements in
accordance with generally accepted accounting principles (GAAP) and
general practice within the banking industry. Certain amounts in prior
years have been reclassified for comparative purposes. Such
reclassification had no effect on net income.
In preparing the financial statements, the Bank is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities as of the date of the balance sheet and revenue and
expense for the period. Actual results could differ significantly from
those estimates. A material estimate that is particularly susceptible
to significant change in the near-term relates to the determination of
the allowance for loan losses. Management believes that the allowance
for loan losses is adequate.
Risks and Uncertainties
In the normal course of its business, the Bank encounters two
significant types of risk: economic and regulatory. There are three
main components of economic risk: interest rate risk, credit risk, and
market risk. The Bank is subject to interest rate risk to the degree
that its interest-bearing liabilities mature or reprice at different
speeds, or on different bases from its interest-earning assets. The
Bank's primary credit risk is the risk of default on the Bank's loan
portfolio that results from the borrowers inability or unwillingness to
make contractually required payments. The Bank's lending activities are
concentrated in Pennsylvania. The largest concentration of the Bank's
loan portfolio is located in Eastern Pennsylvania. The ability of the
Bank's borrowers to repay amounts owed is dependent on several factors,
including the economic conditions in the borrower's geographic region
and the borrower's financial condition. Market risk reflects changes in
the value of collateral underlying loans, the valuation of real estate
held by the Bank, the valuation of loans held for sale, securities
available for sale and mortgage servicing assets. The Bank is subject
to certain regulations as further described herein and in note 12.
Compliance with regulations causes the Bank to incur significant costs.
In addition, the possibility of future changes to such regulation
presents the risk that future costs will be incurred which may
materially impact the Bank.
Year 2000 Issues
Year 2000 issues result from the inability of many computer programs or
computerized equipment to accurately calculate, store or use a date
after December 31, 1999 (the "Year 2000 Issue"). The erroneous date can
be interpreted in a number of different ways; typically, the year 2000
is interpreted as the year 1900. Correctly identifying the year 2000 as
a leap year may also be an issue. These misidentifications could result
in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to
process transactions, track important customer account information,
provide convenient access to this information, or engage in normal
business operations.
F-6
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
In order to ready for the year 2000, the Bank has developed a Year 2000
Action and Assessment Plan (the "Action Plan") which was presented to
the Board of Directors during February 1998. The Action Plan was
developed using the guidelines outlined in the Federal Financial
Institutions Examination Council's "The Effect of 2000 on Computer
Systems." The Bank's Board of Directors assigned responsibility for the
Action Plan to the Bank's Year 2000 Committee (the "Committee") which
reports to the Board of Directors on a quarterly basis. The Action Plan
recognizes that the Bank's operating, processing and accounting
operations are computer reliant and could be affected by the Year 2000
Issue. The Bank is primarily reliant on third party vendors for its
computer output and processing, as well as other significant functions
and services (i.e., securities, safekeeping services, securities
pricing information, etc.). The Year 2000 Committee is currently
working with these third party vendors to assess their year 2000
readiness. The Bank also has commenced testing its data processing
systems for Year 2000 preparedness. Based upon the initial assessment,
management presently believes that with planned modifications to
existing software and hardware and planned conversions to new software
and hardware, the Bank's third party vendors are taking the appropriate
steps to ensure critical systems will function property. The Bank
currently expects such modifications and conversions and related
testing to be completed by December 31, 1998.
The Year 2000 Issue also affects certain of the Bank's customers,
particularly in the areas of access to funds and additional
expenditures to achieve compliance. The Bank has engaged in a program
of contacting its commercial customers regarding the customer's
awareness of the Year 2000 Issue.
The Bank has completed its own company-wide Year 2000 contingency plan.
Individual contingency plans concerning specific software and hardware
issues have been formulated for the specific departments of the Bank.
To the extent the Bank's systems are not fully Year 2000 compliant,
there can be no assurance that potential systems interruptions or the
cost necessary to update software would not have a materially adverse
effect on the Bank's business, financial condition, results of
operations and business prospects. Further, any Year 2000 failure on
the part of the Bank's customers could result in additional expense or
loss to the Bank.
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents
include cash and interest-bearing deposits with original maturities of
three months or less.
The Bank is required to maintain certain daily average balances in
accordance with Federal Reserve Bank requirements. The reserve balances
maintained in accordance with such requirements at June 30, 1998 and
1997 were $75,000 and $75,000, respectively.
Loans Available for Sale
Mortgage loans originated and intended for sale in the secondary market
are carried at the lower of cost or market calculated on an aggregate
basis, with any unrealized losses reflected in the statement of
operations. Loans transferred from loans available for sale to loans
receivable are transferred at the lower of cost or market value at the
date of transfer.
F-7
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
Securities
The Bank divides its securities portfolio into two segments: (a) held
to maturity and (b) available for sale. Securities in the held to
maturity category are accounted for at cost, adjusted for amortization
of premiums and accretion of discounts, using the level yield method,
based on the Bank's intent and ability to hold the securities until
maturity. Marketable securities included in the available for sale
category are accounted for at fair value, with unrealized gains or
losses, net of taxes, being reflected as adjustments to equity. The
fair value of marketable securities available for sale is determined
from publicly quoted market prices. Securities available for sale which
are not readily marketable, which include Federal Home Loan Bank of
Pittsburgh stock, are carried at cost which approximates liquidation
value.
At the time of purchase, the Bank makes a determination of whether or
not it will hold the securities to maturity, based upon an evaluation
of the probability of future events. Securities, which the Bank
believes may be involved in interest rate risk, liquidity, or other
asset/liability management decisions, which might reasonably result in
such securities not being held to maturity, are classified as available
for sale. If securities are sold, a gain or loss is determined by
specific identification method and is reflected in the operating
results in the period the trade occurs.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level that management
considers adequate to provide for inherent loan losses based on an
evaluation of known and inherent risks in the loan portfolio.
Management's judgment is based upon periodic evaluation of the
portfolio, past loss experience, current economic conditions, and other
relevant factors. While management uses the best information available
to make such evaluations, future adjustments to the allowance may be
necessary if economic conditions differ substantially from the
assumptions used in making the evaluation. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowance for loan losses. Such agencies
may require the Bank to recognize additions to the allowance based on
their judgment of information available to them at the time of their
examination.
A loan is considered to be impaired when, based on current information,
it is probable that the company will not receive all amounts due in
accordance with the contractual terms of the loan agreement. For
purposes of applying the measurement criteria for impaired loans, the
Bank excludes large groups of smaller balance homogeneous loans,
primarily consisting of residential real estate and consumer loans, as
well as commerical loans with balances of less than $100,000. Interest
income recognition on impaired loans ceases and any accrued interest is
reversed. Cash receipts on impaired loans are applied to principal.
Impaired loans are charged off when the Bank determines that
foreclosure is probable, and the fair value of the collateral is less
than the recorded investment of the impaired loan.
Mortgage Servicing Rights
The Bank recognizes mortgage servicing rights as assets, regardless of
how such assets were acquired.
Impairment of mortgage servicing rights is assessed based upon a fair
market valuation of those rights on a disaggregated basis. Impairment,
if any, is recognized in the statement of operations. There is no
impairment in the mortgage servicing rights at June 30, 1998 and 1997.
F-8
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
Real Estate Owned
Real estate acquired through foreclosure is recorded at the lower of
cost or fair value less estimated selling costs. Costs of holding
foreclosed property are usually capitalized to the extent that carrying
value does not exceed fair value less estimated selling costs. Holding
costs are charged to expense. Gains and losses on such sales are
charged to operations as incurred. There was no real estate owned as of
June 30, 1998 and 1997.
Loans, Loan Origination Fees, and Uncollected Interest
Loans are recorded at cost net of unearned discounts, deferred fees,
and allowances. Discounts or premiums on purchased loans are amortized
using the interest method over the remaining contractual life of the
portfolio, adjusted for actual prepayments. Loan origination fees and
certain direct origination costs are deferred and amortized using the
level yield method over the contractual life of the related loans as an
adjustment of the yield on the loans.
Interest receivable on loans is accrued to income as earned.
Non-accrual loans are loans on which the accrual of interest has ceased
because the collection of principal or interest payments is determined
to be doubtful by management. It is the policy of the Bank to
discontinue the accrual of interest and reverse any accrued interest
when principal or interest payments are delinquent more than 90 days
(unless the loan principal and interest are determined by management to
be fully secured and in the process of collection), or earlier if the
financial condition of the borrower raises significant concern with
regard to the ability of the borrower to service the debt in accordance
with the terms of the loan. Interest income on such loans is not
accrued until the financial condition and payment record of the
borrower demonstrates the ability to service the debt.
Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation and amortization. The Bank computes depreciation and
amortization using the straight-line method over the estimated useful
lives of the assets which range from 5 to 40 years. Significant
renovations and additions are capitalized. Leasehold improvements are
depreciated over the shorter of the useful lives of the assets or the
related lease term. When assets are retired or otherwise disposed of,
the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is reflected in income for the
period. The cost of maintenance and repairs is charged to expense as
incurred.
Intangible Assets
Intangible assets include a core deposit intangible and goodwill, which
represents the excess cost over fair value of assets acquired and
liabilities assumed. The core deposit intangible is being amortized to
expense over a ten-year life on an accelerated basis and goodwill is
being amortized to expense using the straight-line method over a period
of fifteen years. The carrying amount of intangible assets at June 30,
1998 and 1997 is net of accumulated amortization of $1.7 million and
$1.3 million, respectively.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled.
F-9
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
Recent Accounting Pronouncements
Reporting Comprehensive Income
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income. According to the statement, all items of
comprehensive income are to be reported in a financial statement that
is displayed with the same prominence as other financial statements.
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from nonowner sources. Along with net income, examples of
comprehensive income include foreign currency translation adjustments,
unrealized holding gains and losses on available-for-sale securities,
changes in the market value of a futures contract that qualifies as a
hedge of an asset reported at fair value, and minimum pension liability
adjustments. Currently, the comprehensive income of the Bank would
consist primarily of net income and unrealized holding gains and losses
on available-for-sale securities. This statement becomes effective for
fiscal years beginning after December 15, 1997.
Disclosures About Segments of an Enterprise and Related Information
In June 1997 the FASB issued SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information. This statement, which
supersedes SFAS No. 14, requires public companies to report financial
and descriptive information about their reportable operating segments
on both an annual and interim basis. SFAS No. 131 mandates disclosure
of a measure of segment profit/loss, certain revenue and expense items
and segment assets. In addition, the statement requires reporting
information on the entity's products and services, countries in which
the entity earns revenues and holds assets, and major customers. This
statement requires changes in disclosures only and would not affect the
financial condition operating results or equity of the Bank. This
statement becomes effective for fiscal years beginning after December
15, 1997.
Employer's Disclosures About Pensions and Other Post Retirement
Benefits
In February 1998 the FASB issued SFAS No. 132, "Employer's Disclosures
About Pensions and Other Post Retirement Benefits." This statement
revises employer's disclosures about pension and other postretirement
benefit plans. It does not change the measurement or recognition of
those plans. It standardizes the disclosure requirements for pensions
and other postretirement benefits to the extent practicable, requires
additional information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis, and
eliminates certain disclosures that are no longer useful. This
statement requires changes in disclosures only and would not affect the
financial condition, operating results, or equity of the Bank. This
statement becomes effective for fiscal years beginning after December
31, 1997.
Accounting for Derivative Instruments and Hedging Activities
In June 1998 the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as either assets
or liabilities in the statement of financial condition and measure
those instruments at fair value. The
F-10
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
accounting for changes in the fair value of a derivative depends on the
intended use of the derivative and the resulting designation. If
certain conditions are met, a derivative may be specifically designated
as (a) a hedge of certain exposure to changes in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (b) a
hedge of an exposure to variable cash flows of a forecasted
transaction, or (c) a hedge of a foreign currency exposure. This
Statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Earlier adoption is permitted. The
Company has not yet determined the impact, if any, of this Statement,
including its provisions for the potential reclassifications of
investment securities, on operations, financial condition, and equity.
However, the Company currently has no derivatives covered by this
statement and currently conducts no hedging activities.
F-11
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(2) Securities Available for Sale
Securities available for sale at June 30, 1998 and 1997 consisted of
the following (dollars in thousands):
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------------------
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity securities:
Mutual fund $7,010 - ($25) $6,985
Federal Home Loan Mortgage 100 $1 - 101
Corporation preferred stock
Federal Home Loan Mortgage 89 5 - 94
Corporation common stock
Federal National Mortgage 8 16 - 24
Association stock
Federal Home Loan Bank 2,733 - - 2,733
of Pittsburgh stock
U.S. Government and government 20,004 30 (35) 19,999
agency securities (matures
within six months)
Mortgage-backed securities:
Federal Home Loan Mortgage
Corporation 3 - - 3
Federal National Mortgage
Association 13,532 112 (100) 13,544
Government National
Mortgage Association 4,405 127 - 4,532
Municipal security 100 - (4) 96
- --------------------------------------------------------------------------------------------------------------------
Total $47,984 $291 ($164) $48,111
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
1997
---------------------------------------------------------------------------
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity securities:
Mutual fund $4,010 - - $4,010
Federal Home Loan Mortgage
Corporation preferred stock 100 1 - 101
Federal Home Loan Mortgage
Corporation common stock 8 10 - 18
Federal Home Loan Bank
of Pittsburgh stock 2,733 - - 2,733
U.S. Government and government
agency securities (matures
within six months) 7,009 42 (1) 7,050
Mortgage-backed securities:
Federal Home Loan Mortgage
Corporation 7,135 - (204) 6,931
Federal National Mortgage
Association 21,877 - (421) 21,456
Government National
Mortgage Association 3,376 91 - 3,467
- -------------------------------------------------------------------------------------------------------------------
Total $46,248 $144 ($626) $45,766
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
F-12
(Continued}
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(2) Continued
Proceeds from sales and calls of securities for the years ended June
30, 1998, 1997 and 1996 were $53.3 million, $10.1 million and $600,000,
respectively. Gross gains of $24,000, $44,000 and $564,000 were
realized in 1998, 1997 and 1996, respectively. There were gross losses
of $129,000 and $52,000 in 1998 and 1997 respectively, and no gross
losses in 1996.
Accrued interest receivable on securities amounted to $492,000 and
$395,000 at June 30, 1998 and 1997, respectively.
The unamortized premiums on mortgage-related securities amounted to
$257,000 and $253,000 as of June 30, 1998 and 1997, respecively. The
unearned discount on mortgage-related securities amounted to $1,000 and
$7,000 as of June 30, 1998 and 1997, respectively.
The amortized cost and estimated fair value of securities available for
sale at June 30, 1998, by contractual maturity, are shown below.
<TABLE>
<CAPTION>
Maturing Maturing
after one after 5
Maturing year but years but Maturing
within one within within 10 after 10
(Dollars in thousands) year 5 years years years Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Gov't/Gov't agency securities - $1,005 $7,001 $11,993 $19,999
Municipal securities:
PA school district - - - 96 96
-------------------------------------------------------------------------------
Total debt securities $1,005 $7,001 $12,089 $20,095
Equity securities $9,937
Mortgage backed securities $18,079
-------------------------------------------------------------------------------
Total securities at fair value - $1,005 $7,001 $12,089 $48,111
===============================================================================
Total securities at amortized cost - $1,000 $7,004 $12,100 $47,984
===============================================================================
Weighted average yield 6.75% 6.47%
</TABLE>
The Bank must maintain stock as a member of the Federal Home Loan Bank
of Pittsburgh (FHLB) of $2.7 million and $2.6 million as of June 30,
1998 and 1997, respectively.
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties. Substantially all of the U.S.
Government and Government agency securities are callable within one
year. Weighted average yields are based on market value.
As described in note 10, certain securities available for sale are
maintained to collateralize advances from the FHLB.
F-13
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(3) Securities Held to Maturity
In December 1995 the Bank's management transferred $54.7 million of
investments and mortgage-backed securities classified as held to
maturity to the assets available for sale portfolio, as permitted by
the FASB, at a net unrealized gain of $242,000. As of June 30, 1997,
the Bank classified certain government securities as held-to-maturity
investments. The investment securities held at June 30, 1997 matured
during fiscal year 1998 and no investments were classified as
held-to-maturity at June 30, 1998. Investment securities at June 30,
1997 consisted of the following:
<TABLE>
<CAPTION>
1997
- -------------------------------------------------------------------------------------------------------
Estimated
Amortized Unrealized Unrealized market
cost gains losses value
- -------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Investments:
U.S. Government and
Government Agency
Securities $3,999 $4 ($5) $3,998
- -------------------------------------------------------------------------------------------------------
</TABLE>
(4) Loans
Loans receivable as of June 30, 1998 and 1997 consisted of the
following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
First mortgage loans:
One-to-four family $230,980 $230,659
Multiple family and commercial 31,978 23,141
Construction 4,771 3,776
- --------------------------------------------------------------------------------------------------------------
Total real estate loans $267,729 $257,576
Consumer loans:
Home equity loans and lines of credit $41,366 $25,553
Automobile 898 940
Education 2,501 1,459
Unsecured lines of credit and loans 1,338 316
Other 193 209
- --------------------------------------------------------------------------------------------------------------
Total consumer loans $46,296 $28,477
Commercial loans and leases $5,437 $1,698
- --------------------------------------------------------------------------------------------------------------
Total loans $319,462 $287,751
Less:
Allowances for loan losses 2,665 1,678
Deferred loan origination fees 1,092 1,477
- --------------------------------------------------------------------------------------------------------------
Total loans, net $315,705 $284,596
- --------------------------------------------------------------------------------------------------------------
</TABLE>
As described in note 10, certain loans are maintained to collateralize
advances from the FHLB.
F-14
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(4) Continued
Included in loans receivable are loans on nonaccrual status in the
amounts of $1.3 million and $1.9 million at June 30, 1998 and 1997,
respectively. Interest income that would have been recognized on such
nonaccrual loans during the years ended June 30, 1998, 1997 and 1996
had they been current in accordance with their original terms is
$90,000, $111,000 and $99,000, respectively. Interest income that was
recognized on these nonaccrual loans during the years ended June 30,
1998, 1997 and 1996 totaled $46,000, $15,000 and $117,000,
respectively.
As of June 30, 1998 and 1997, the Bank had impaired loans with a total
recorded investment of $96,000 and $1.3 million, respectively, and an
average recorded investment for the years ended June 30, 1998, 1997 and
1996 of $464,000, $1.6 million and $1.7 million, respectively. As of
June 30, 1998 and 1997, the amount of recorded investment in impaired
loans for which there is a related allowance for credit losses and the
amount of related allowance is $96,000 and $1.3 million., respectively,
and $10,000 and $135,000, respectively. There were no impaired loans
for which there was no related allowance for credit losses at June 30,
1998 and 1997. No cash was collected on these impaired loans during the
year ended June 30, 1998, 1997, and 1996. No interest income was
recognized on such loans during the year ended June 30, 1998, 1997 and
1996.
The following is a summary of the activity in the allowance for loan
losses for the years ended June 30, 1998, 1997, and 1996:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Balance, beginning of year $1,678 $1,938 $1,728
Provision for loan losses 993 185 210
Charge-offs (6) (445) -
Recoveries - - -
- --------------------------------------------------------------------------------------------------------------
Balance, end of year $2,665 $1,678 $1,938
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(5) Mortgage Servicing Activity
A summary of mortgage servicing rights activity follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Years ended June 30,
(Dollars in thousands) 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $213 - -
Originated servicing rights 144 265 -
Amortization (106) (52) -
- ----------------------------------------------------------------------------------------------------------------
Balance, end of year $251 $213 -
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
F-15
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(5) Continued
At June 30, 1998, 1997, and 1996, the Bank serviced loans for others of
$66.4 million, $58.8 million, and $34.8 million, respectively. Loans
serviced by others for the Bank as of June 30, 1998, 1997, and 1996
were $2.9 million, $3.5 million, and $3.8 million, respectively.
(6) Deposits
Deposit balances by type with related interest rates consisted of the
following at June 30, 1998 and 1997:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1998 1997
--------------------------------- ------------------------------
Percent Percent
Amount of Total Amount of Total
- ----------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Savings accounts (passbook, $40,225 11.8% $36,373 11.7%
statement, clubs)
Money market accounts 20,487 6.0 19,715 6.4
Certificates of deposit less than 193,533 56.8 181,845 58.7
$100,000
Certificates of deposit greater than 38,469 11.3 34,982 11.3
$100,000 (1)
NOW accounts 25,638 7.5 23,527 7.6
Non-interest bearing deposits 22,441 6.6 13,284 4.3
- ---------------------------------------------------------------------------------------------------------------
$340,793 100.0% $309,726 100.0%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Deposit balances in excess of $100,000 are not federally insured.
While the certificates frequently are renewed at maturity rather than
paid out, a summary of certificates by contractual maturity at June 30,
1998 is as follows:
Years ended June 30,
-----------------------------------------------------------
(Dollars in thousands)
1999 $130,322
2000 50,945
2001 33,246
2002 4,633
2003 9,515
2004 and thereafter 3,341
-----------------------------------------------------------
$232,002
-----------------------------------------------------------
F-16
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(6) Continued
Interest on deposits for the years ended June 30, 1998, 1997, and 1996
consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
- ----------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Savings accounts $787 $768 $745
NOW accounts 916 803 721
Certificates 12,833 11,653 10,132
- ----------------------------------------------------------------------------------------
Total $14,536 $13,224 $11,598
- ----------------------------------------------------------------------------------------
</TABLE>
(7) Property and Equipment
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Depreciable June 30,
-------------------------------------
Lives 1998 1997
- ----------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Land $1,323 $1,059
Buildings 15 to 40 yrs. $3,928 $3,191
Furniture, fixtures, and equipment 5 to 7 yrs. $2,430 $2,030
- ----------------------------------------------------------------------------------------------------
Total $7,681 $6,280
Less accumulated depreciation ($2,909) ($2,456)
- ----------------------------------------------------------------------------------------------------
Property and equipment, net $4,772 $3,824
- ----------------------------------------------------------------------------------------------------
</TABLE>
Amounts charged to operating expense for depreciation for the years
ended June 30, 1998, 1997 and 1996 amounted to $453,000, $313,000 and
$266,000, respectively.
(8) Income Taxes
The Small Business Job Protection Act of 1996, enacted on August 20,
1996, provides for the repeal of the tax bad debt deduction computed
under the percentage of taxable income method. The repeal of the use of
this method is effective for tax years beginning after December 31,
1995. Prior to the change in law, the Bank had qualified under the
provisions of the Internal Revenue Code which permitted it to deduct
from taxable income an allowance for bad debts based on 8% of taxable
income.
Upon repeal, the Bank is required to recapture into income, over a
six-year period, the portion of its tax bad debt reserves that exceed
its base year reserves (i.e., tax reserves for tax years beginning
before 1988). The base year tax reserves, which may be subject to
recapture if the Bank ceases to qualify as a bank for federal income
tax purposes, are restricted with respect to certain distributions. The
Bank's total tax bad debt reserves at June 30, 1998 are approximately
$8.6 million, of which $6.2 million represents the base year amount and
$2.4 million is subject to recapture. The Bank has previously recorded
a deferred tax liability for the amount to be recaptured; therefore,
this recapture did not impact the statement of operations.
F-17
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(8) Continued
Income tax expense (benefit) for the years ended June 30, 1998, 1997
and 1996 consisted of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Current Deferred Total
- --------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
1998:
Federal $1,873 ($738) $1,135
State 232 -- 232
- --------------------------------------------------------------------------------------------
$2,105 ($738) $1,367
- --------------------------------------------------------------------------------------------
1997:
Federal $1,279 $30 $1,309
State 239 - 239
- --------------------------------------------------------------------------------------------
$1,518 $30 $1,548
- --------------------------------------------------------------------------------------------
1996:
Federal $1,220 $199 $1,419
State 325 - 325
- --------------------------------------------------------------------------------------------
$1,545 $199 $1,744
- --------------------------------------------------------------------------------------------
</TABLE>
The expense for income taxes differed from that computed at the
statutory federal corporate rate for the years ended June 30, 1998,
1997 and 1996 as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1998 1996 1997
--------------------- -------------------- ---------------------
Percentage Percentage Percentage
of pretax of pretax of pretax
Amount income Amount income Amount income
- ---------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
At statutory rate $1,296 34.0% $1,334 34.0% $1,614 34.0%
Adjustment resulting from:
State tax, net of federal
tax benefit 152 4.0 158 4.0 214 4.5
Low income housing tax credits (29) (0.6) (11) (0.3) (18) (0.4)
Other (52) (1.5) 67 1.7 (66) (1.4)
- ---------------------------------------------------------------------------------------------------------------
Income tax expense per
statements of operations $1,367 35.9% $1,548 39.4% $1,744 36.7%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
F-18
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(8) Continued
Significant deferred tax assets and liabilities of the Bank as of June
30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
- --------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Deferred loan fees $371 $502
Retirement plan reserves 271 -
Employee benefits 88 -
Other reserves 34 -
Intangible asset amortization 249 205
Capital loss carryover 85 -
Charitable contributions 107 33
Uncollected interest 45 41
Reserve for land held for investment - 77
Book bad debt reserves 906 571
Unrealized loss on securities available for sale - 189
- --------------------------------------------------------------------------------------
Gross deferred tax assets $2,156 $1,618
- --------------------------------------------------------------------------------------
Unrealized gain on securities available for sale ($51) -
Depreciation - (28)
Tax bad debt reserves in excess of base year (826) (826)
Investment in Joint Venture 4 6
Prepaid expenses (35) (32)
Originated mortgage servicing rights (85) (73)
- --------------------------------------------------------------------------------------
Gross deferred tax liabilities ($993) ($953)
- --------------------------------------------------------------------------------------
Net deferred tax asset $1,163 $665
- --------------------------------------------------------------------------------------
</TABLE>
The realizability of deferred tax assets is dependent upon a variety of
factors, including the generation of future taxable income, the
existence of taxes paid and recoverable, the reversal of deferred tax
liabilities and tax planning strategies. Based upon these and other
factors, management believes it is more likely than not that the Bank
will realize the benefits of these deferred tax assets.
(9) Benefit Plans
The Bank has a money purchase pension plan to which the Bank
contributes for all eligible employees, 7.5% of their base salary. Such
contributions were $182,000, $138,000, and $124,000 for the years ended
June 30, 1998, 1997 and 1996, respectively.
The Bank also has a 401(k) plan which covers all eligible employees and
permits them to make certain contributions to the plan on a pretax
basis. The Bank matches fifty cents for every dollar contributed by the
employees to this plan. Such contributions were $79,000, $66,000, and
$59,000 for the years ended June 30, 1998, 1997, and 1996,
respectively.
Effective June 30, 1998, the Bank adopted non-qualified supplemental
retirement plans for the Bank's Board of Directors (the Directors'
Plan) and for the Bank's president (the President's Plan). The
Directors' Plan provides for fixed annual payments to qualified
directors for a period of ten years from retirement. Benefits to be
paid accrue at the rate of 20% per year on completion of six full years
of service, with full benefit accrual at ten years of service. Credit
is given for past service. The President's Plan provides for
F-19
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(9) Continued
payments for a period of ten years beginning at retirement based on a
percentage of annual compensation not to exceed an established cap.
Full benefits become accrued at age 68 with partial vesting prior
thereto. Both plans provide for full payment in the event of a change
in control of the Bank. The costs of the Directors' Plan and
President's Plan were $566,000 and $234,000, respectively, for the year
ended June 30, 1998, which included the costs for past service required
under the plans.
(10) Federal Home Loan Bank Advances
Under terms of its collateral agreement with the Federal Home Loan Bank
of Pittsburgh ("FHLB"), the Bank maintains otherwise unencumbered
qualifying assets (principally qualifying 1-4 family residential
mortgage loans and U.S. Government and Agency mortgage-backed
securities, notes and bonds) in the amount of at least as much as its
advances from the FHLB. The Bank's FHLB stock is also pledged to secure
these advances.
At June 30, 1998 and 1997, such advances have contractual maturities as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Weighted
Average
Due by June 30, Rate June 30, 1998
- -----------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
1999 5.84% $11,000
2000 - -
2001 - -
2002 5.50% $6,000
2003 - -
Thereafter 5.21% $4,000
- -----------------------------------------------------------------------------------------------------
Total Federal Home Loan Bank advances 5.62% $21,000
- -----------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Weighted
Average
Due by June 30, Rate June 30, 1997
- -----------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
1998 - -
1999 - -
2000 - -
2001 - -
2002 5.50% $6,000
Thereafter - -
- -----------------------------------------------------------------------------------------------------
Total Federal Home Loan Bank advances 5.50% $6,000
- -----------------------------------------------------------------------------------------------------
</TABLE>
Substantially all of the above advances with contractual maturities
beyond one year are callable by the FHLB within one year of the
respective balance sheet dates.
F-20
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(11) Commitments and Contingencies
At June 30, 1998 and 1997, the Bank was committed to fund loans as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
June 30, 1998 1997
- ----------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Loans with fixed rates of interest $6,563 $19,144
Loans with variable rates of interest $8,299 $1,607
- ----------------------------------------------------------------------------------------------------
Total commitments to fund loans $14,862 $20,751
- ----------------------------------------------------------------------------------------------------
</TABLE>
The balance of commitments as of June 30, 1998 includes loans with
fixed rates of interest which range from 6.375% to 12.5%.
Financial Instruments With Off-Balance Sheet Risk
In the normal course of business, the Bank is a party to financial
instruments with off-balance sheet risk to meet the financing needs of
its customers. At June 30, 1998, the Bank is committed to the funding
of first mortgage loans of approximately $6.3 million, and construction
loans of approximately $7.6 million, and committed to commercial
business loans of approximately $877,000.
The Bank uses the same credit policies in extending commitments as it
does for on-balance sheet instruments. The Bank controls its exposure
to loss from these agreements through credit approval processes and
monitoring procedures. Commitments to extend credit are generally
issued for one year or less and may require payment of a fee. The total
commitment amounts do not necessarily represent future cash
disbursements, as many of the commitments expire without being drawn
upon. The Bank may require collateral in extending commitments, which
may include cash, accounts receivable, securities, real or personal
property, or other assets. For those commitments which require
collateral, the value of the collateral generally equals or exceeds the
amount of the commitment.
Concentration of Credit Risk
The Bank offers residential and construction real estate loans as well
as commercial and consumer loans. The Bank's lending activities are
concentrated in Pennsylvania. The largest concentration of the Bank's
loan portfolio is located in Eastern Pennsylvania. The ability of the
Bank's borrowers to repay amounts owed is dependent on several factors,
including the economic conditions in the borrower's geographic region
and the borrower's financial condition.
Legal Proceedings
The Bank is involved in routine legal proceedings occuring in the
normal course of business which, in the aggregate, are believed by
management to be immaterial to the financial condition of the Bank.
F-21
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(11) Continued
Other Commitments
In connection with the operation of seven of its branches, the Bank
leases certain office space. The leases are classified as operating
leases, with rent expense of $205,000, $124,000 and $84,000 for the
years ended June 30, 1998, 1997 and 1996, respectively. Minimum
payments over the remainder of the leases are summarized as follows:
Minimum
Lease
Year ended June 30, Payments
----------------------------------------------------------
(Dollars in thousands)
1999 $114
2000 108
2001 114
2002 99
2003 and thereafter 76
----------------------------------------------------------
$511
----------------------------------------------------------
(12) Regulatory Matters
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory, and possibly
additional discretionary actions by regulators that if undertaken,
could have a direct material effect on the Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance sheet items as calculated under
accounting practices. The Bank's capital amounts and classification are
also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain certain minimum amounts and
ratios (set forth in the table below). Management believes that the
Bank meets, as of June 30, 1998, all capital adequacy requirements to
which it is subject.
As of June 30, 1998, the most recent notification from the OTS
categorized the Bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well capitalized the
Bank must maintain minimum ratios as set forth in the table. There are
no conditions or events since that notification that management
believes have changed the institution's category.
F-22
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(12) Continued
The Bank's actual capital amounts and ratios are presented in the
following table.
<TABLE>
<CAPTION>
To be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual capital Purposes Action Provisions
---------------- ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
- ---------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of June 30, 1998:
Tangible capital $33,505 8.3% $6,038 1.5% N/A N/A%
(to tangible assets)
Core capital 33,505 8.3 12,075 3.0 $20,126 5.0
(to adjusted
tangible assets)
Tier I Capital 33,505 13.8 9,719 4.0 14,578 6.0
(to risk-
weighted assets)
Risk-based capital 36,169 14.9 19,438 8.0 24,297 10.0
(to risk-
weighted assets)
As of June 30, 1997:
Tangible capital $30,649 8.7 $5,286 1.5 N/A N/A
(to tangible assets)
Core capital 30,649 8.7 10,572 3.0 17,621 5.0
(to adjusted
tangible assets)
Tier I Capital 30,649 15.0 8,150 4.0 12,224 6.0
(to risk-
weighted assets)
Risk-based capital 32,327 15.9 16,299 8.0 20,374 10.0
(to risk-
weighted assets)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
F-23
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(12) Continued
On September 30, 1996, federal legislation was enacted which included
provisions for recapitalizing the Savings Association Insurance Fund
(SAIF) and the eventual merger of this fund with the Bank Insurance
Fund. In accordance therewith, the FDIC billed the Bank, in fiscal
1997, for a special assessment of $1.5 million based on the amount of
SAIF assessable deposits at an estimated assessment rate of 65.7 basis
points per $100 of insured deposits.
The Bank is not under any agreement with the regulatory authorities nor
is it aware of any current recommendations by the regulatory
authorities which, if they were to be implemented, would have a
material effect on liquidity, capital resources, or operations of the
Bank.
(13) Fair Value of Financial Instruments
The Bank's methods for determining the fair value of its financial
instruments as well as significant assumptions and limitations are set
forth below.
Limitations
Estimates of fair value are made at a specific point in time, based
upon, where available, relevant market prices and information about the
financial instrument. Such estimates do not include any premium or
discount that could result from offering for sale at one time the
Bank's entire holdings of a particular financial instrument. For a
substantial portion of the Bank's financial instruments, no quoted
market exists. Therefore, estimates of fair value are necessarily based
on a number of significant assumptions (many of which involve events
outside the control of management). Such assumptions include
assessments of current economic conditions, perceived risks associated
with these financial instruments and their counterparties, future
expected loss experience, and other factors. Given the uncertainties
surrounding these assumptions, the reported fair values represent
estimates only and, therefore, cannot be compared to the historical
accounting model. Use of different assumptions or methodologies is
likely to result in significantly different fair value estimates.
The estimated fair values presented neither include nor give effect to
the values associated with the Bank's banking or other businesses,
existing customer relationships, branch banking network, property,
equipment, goodwill, or certain tax implications related to the
realization of unrealized gains or losses. The fair value of
noninterest-bearing demand deposits, savings and NOW accounts, and
money market deposit accounts is equal to the carrying amount because
these deposits have no stated maturity. This approach to estimating
fair value excludes the significant benefit that results from the
low-cost funding provided by such deposit liabilities, as compared to
alternative sources of funding. As a consequence, this presentation may
distort the actual fair value of a banking organization that is a going
concern.
The following methods and assumptions were used to estimate the fair
value of each major classification of financial instruments at June 30,
1998 and 1997:
Cash and Cash Equivalents
Current carrying amounts approximate estimated fair value.
Securities Held to Maturity and Available for Sale
Current quoted market prices were used to determine fair value.
F-24
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(13) Continued
Loans
Fair values were estimated for portfolios of loans with similar
financial characteristics. Loans were segregated by type and each loan
category was further segmented by fixed and adjustable rate interest
terms. The estimated fair value of the segregated portfolios was
calculated by discounting cash flows based on estimated maturity and
prepayment speeds using estimated market discount rates that reflected
credit and interest risk inherent in the loans. The estimate of the
maturities and prepayment speeds was based on the Bank's historical
experience. Cash flows were discounted using market rates adjusted for
portfolio differences.
Accrued Income Receivable
Current carrying amounts approximate estimated fair value.
Deposits with No Stated Maturity (which consist of NOW, Money Market,
and Passbook Accounts)
Current carrying amounts approximate estimated fair value.
Certificates of Deposit
Fair value was estimated by discounting the contractual cash flows
using current market rates offered in the Bank's market area for
deposits with comparable terms and maturities.
Accrued Interest Payable
Current carrying amounts approximate estimated fair value.
Note Payable
Current carrying amount approximates estimated fair value.
FHLB Advances
Fair value was estimated using discounted cash flow analysis based on
the Bank's current incremental borrowing rate for similar types of
borrowing arrangements.
Commitments to Extend Credit
The majority of the Bank's commitments to extend credit carry current
market interest rates if converted to loans. Because commitments to
extend credit are generally unassignable by either the Bank or the
borrower, they only have value to the Bank and the borrower. The
estimated fair value approximates the recorded deferred fee amounts.
F-25
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(13) Continued
The carrying amounts and estimated fair values of the Bank's financial
instruments, including off-balance sheet financial instruments, were as
follows at June 30, 1998 and 1997 (dollars in thousands):
<TABLE>
<CAPTION>
1998
-------------------------------------
Carrying Estimated
Assets Amount Fair Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $18,291 $18,291
Securities available for sale $48,111 $48,111
Loans available for sale $12,152 $12,205
Loans, net $315,705 $320,168
Accrued income receivable $2,109 $2,109
- -------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------
Deposits with no stated maturity $108,791 $108,791
Certificates $232,002 $233,677
FHLB advances $21,000 $21,119
Accrued interest payable $389 $389
- -------------------------------------------------------------------------------------------
</TABLE>
Off-Balance Sheet Financial Instruments:
<TABLE>
<CAPTION>
Contract Estimated
Amount Fair Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit $14,862 $178
- -------------------------------------------------------------------------------------------
</TABLE>
F-26
(Continued}
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(13) Continued
<TABLE>
<CAPTION>
1997
-------------------------------------
Carrying Estimated
Assets Amount Fair Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $4,204 $4,204
Securities available for sale $45,766 $45,766
Securities held to maturity $3,999 $3,998
Loans available for sale $6,173 $6,173
Loans, net $284,596 $289,762
Accrued income receivable $1,937 $1,937
- ----------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------
Deposits with no stated maturity $92,899 $92,899
Certificates of deposit $216,827 $218,839
FHLB advances $6,000 $5,998
Note payable $500 $500
Accrued interest payable $288 $288
- ----------------------------------------------------------------------------------------------------
</TABLE>
Off Balance Sheet Financial Instruments:
<TABLE>
<CAPTION>
Contract Estimated
Amount Fair Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit $20,752 $113
- ----------------------------------------------------------------------------------------------
</TABLE>
(14) Subsequent Event
On July 28, 1998, the Board of Directors of the Bank adopted the Plan
of Reorganization (the "Plan") pursuant to which the Bank will
reorganize into the federal mutual holding company form of organization
as a wholly-owned subsidiary of a federal corporation (the "Company"),
which in turn, will be a majority-owned subsidiary of a federal mutual
holding company (collectively, the "Conversion"). Pursuant to the Plan,
the Company will offer stock to eligible account holders as of June 30,
1997 in an amount less than 50% of the to-be issued and outstanding
stock.
The Company plans to establish an ESOP for the benefit of eligible
employees, to become effective upon the Conversion. The ESOP intends to
purchase up to 8% of the Common Stock issued in the Conversion
utilizing proceeds of a loan from the Company or a third party lender.
The loan will be repaid over a period of 10 years and the collateral
for the loan will be the common stock purchased by the ESOP.
Pursuant to the Plan, the Company intends to establish a Charitable
Foundation ("Foundation") in connection with the Conversion. The Plan
provides that the Bank and the Company will create the Foundation and
donate an amount of the Company's common stock equal to 4% of the
common stock to
F-27
(Continued)
<PAGE>
WILLOW GROVE BANK
Notes to Financial Statements
- -------------------------------------------------------------------------------
(14) Continued
be sold in the Conversion. The Foundation will be dedicated to
charitable purposes within the communities in which the Bank operates
and to complement the Bank's existing community activities.
Establishment of the Foundation is subject to the approval of the
Bank's depositors at the special meeting being held to vote upon the
Conversion.
The Foundation will submit a request to the Internal Revenue Service to
be recognized as a tax-exempt organization and would likely be
classified as a private foundation. A contribution of common stock to
the Foundation by the Company would be tax deductible, subject to a
limitation based on 10 percent of the Company's taxable income. The
Company, however, would be able to carry forward any unused portion of
the deduction for five years following the contribution. Upon funding
the Foundation, the Company will recognize an expense in the full
amount of the contribution, offset in part by the corresponding benefit
for the tax deduction, during the quarter in which the contribution is
made.
The Bank may provide support services to the Foundation including, but
not limited to, employee time, office space and accounting support. The
Bank expects to provide these services without compensation, however,
expenses incurred on behalf of the Foundation are not expected to be
significant to the operations of the Bank.
At the time of Conversion, the Bank will establish a liquidation
account in an amount equal to its equity as reflected in the latest
balance sheet used in the final conversion prospectus. The liquidation
account will be maintained for the benefit of eligible account holders
and supplemental eligible account holders who continue to maintain
their accounts at the Bank after the Conversion. In the event of a
complete liquidation of the Bank, each eligible account holder and
supplemental eligible account holder will be entitled, so long as they
remain depositors of the Bank, to receive a distribution from the
liquidation account in an amount proportionate to their membership or
liquidation rights as of the date of the conversion, solely with
respect to the mutual holding company.
The costs associated with Conversion will be deferred and will be
deducted from the proceeds upon the sale and issuance of stock. In the
event the Conversion is not consummated, costs incurred will be charged
to expense. At June 30, 1998, there were no deferred conversion costs.
After the Conversion, the Bank may not declare or pay dividends on its
stock if such declaration and payment would violate statutory or
regulatory requirements.
F-28
<PAGE>
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offering made hereby, and, if given or made,
such information shall not be relied upon as having been authorized by the
Company, the Bank or Charles Webb & Company. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby to any person in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful.
Neither the delivery of this Prospectus nor any sale hereunder shall under any
circumstances create any implication that there has been no change in the
affairs of the Company or the Bank since any of the dates as of which
information is furnished herein or since the date hereof.
Table of Contents
Page
------
Prospectus Summary..............................
Selected Consolidated Financial Information
and Other Data................................
Risk Factors....................................
Willow Grove Bancorp, Inc.......................
Willow Grove Bank...............................
Willow Grove Mutual Holding Company.............
Use of Proceeds.................................
Dividend Policy.................................
Waiver of Dividends by the MHC..................
MHC Conversion to Stock Form....................
Market for the Common Stock.....................
Regulatory Capital.............................
Capitalization..................................
Pro Forma Data..................................
Comparison of Valuation and Pro Forma
Information with no Foundation................
Management's Discussion and Analysis of Financial
Condition and Results of Operations...........
Business of Willow Grove Bank...................
Regulation......................................
Taxation........................................
Management......................................
Proposed Management Purchases...................
Reorganization and Stock Issuance...............
Certain Restrictions on Acquisition of the
Company and the Bank..........................
Description of Capital Stock....................
Transfer Agent and Registrar....................
Experts.........................................
Legal and Tax Opinions..........................
Additional Information..........................
Index to Financial Statements...................
Until __________ ___, 199__ (90 days after the date of this Prospectus), 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.
Willow Grove Bancorp, Inc.
(Holding Company for
Willow Grove Bank)
Up to 2,433,400 Shares
Common Stock
---------------------------
PROSPECTUS
---------------------------
Charles Webb & Company
_______________, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution (1).
SEC filing fees...................................... $ 8,727
OTS filing fees...................................... 28,800
Nasdaq filing fees................................... 43,415
Printing, postage and mailing ....................... 200,000
Legal fees .......................................... 125,000
Blue Sky filing fees and expenses.................... 5,000
Accounting fees...................................... 175,000
Appraiser's fees..................................... 42,500
Conversion agent fees and expenses................... 20,000
Transfer agent fees and expenses..................... 20,000
Miscellaneous........................................ 56,558
--------
Total................................................ $725,000
========
----------------------
In addition to the foregoing expenses, Charles Webb & Company, a
Division of Keefe, Bruyette & Woods, Inc. will receive fees based on the number
of shares of Common Stock sold in the Reorganization and Stock Issuance, plus
expenses. Based upon the assumptions and the information set forth under "Pro
Forma Data" and the "Reorganization - Marketing Arrangements" in the Prospectus,
it is estimated that such fees will amount to $147,000, $179,000, $211,000 and
$247,000 in the event that 1,564,000 shares, 1,840,000 shares, 2,116,000 shares
and 2,433,400 shares of Common Stock are sold in the Reorganization and Stock
Issuance, respectively.
Item 14. Indemnification of Directors and Officers.
Federal Regulations define areas for indemnity coverage by Willow Grove
Bank (the "Bank") 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 Bank shall be indemnified by
the Bank, as the case may be, for:
(i) Any amount for which such person becomes liable under a judgment in
such action; and
(ii) Reasonable costs and expenses, including reasonable attorney's
fees, actually paid or incurred by such person in defending or settling such
action, or in enforcing his or her rights to indemnification if the person
attains a favorable judgment in such enforcement action.
(b) Indemnification provided for in subparagraph (a) shall be made to
such officer or director only if the requirements of this subparagraph are met:
II-1
<PAGE>
(i) The Bank shall make the indemnification provided by subparagraph
(a) in connection with any such action which results in a final judgment on the
merits in favor of such officer or director.
(ii) The Bank shall make the indemnification provided by subparagraph
(a) in case of settlement of such action, final judgment against such director
or officer or final judgment in favor of such director or officer other than on
the merits, if a majority of the disinterested directors of the Bank determines
that such a director or officer was acting in good faith within the scope of his
or her employment or authority as he or she could reasonably have rerceived it
under the circumstances and for a purpose which he or she could reasonably have
believed under the circumstances was in the best interest of the Bank or its
members.
(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) "final judgment" means a judgment, decree, or order which is not
appealable and as to which the period for appeal has expired with no appeal
taken;
(iii) "settlement" includes the entry of a judgment by consent or by
confession or a plea of guilty or nolo contendere.
The Bank has a directors and officers liability policy providing for
insurance against certain liabilities incurred by directors and officers of the
Bank while serving in their capacities as such.
Item 15. Recent Sales of Unregistered Securities
Not applicable.
II-2
<PAGE>
Item 16. Exhibits and Financial Statements Schedules
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(a) List of Exhibits (filed herewith unless otherwise noted)
<TABLE>
<S> <C>
1.1 *Engagement Letter with Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc.
1.2 Form of Agency Agreement with Charles Webb & Company, a Division of Keefe, Bruyette & Woods,
Inc.
2.1 *Plan of Reorganization
2.2 *Plan of Stock Issuance
3.1 Federal Stock Charter of Willow Grove Bancorp, Inc.
3.2 Bylaws of Willow Grove Bancorp, Inc.
3.3 *Federal Stock Charter of Willow Grove Bank
3.4 *Bylaws of Willow Grove Bank
3.5 Charter of Willow Grove Bank Mutual Holding Company
3.6 Bylaws of Willow Grove Mutual Holding Company
4.1 Form of Stock Certificate of Willow Grove Bancorp, Inc.
5.0 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. re: legality
8.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. re: Federal tax matters
8.2 Opinion of KPMG Peat Marwick
8.3 *Letter of RP Financial, LC. re: Subscription Rights
10.1 *Draft form of Employment Agreement to be entered into between Willow Grove Bank
and Frederick A. Marcell, Jr.
10.2 *Draft form of Employment Agreement to be entered into between Willow Grove Bank
and each of Thomas M. Fewer, John J. Foff, Jr. and John T. Powers.
10.3 *Supplemental Executive Retirement Agreement
10.4 *Non-Employee Director's Retirement Plan
23.1 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibits 5.0 and 8.1, respectively)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of RP Financial, LC.
24.0 Power of Attorney, included in signature pages.
27.0 *Financial Data Schedule
99.1 Appraisal Report of RP Financial, LC.
99.2 Subscription Order Form and Instructions
99.3 Additional Solicitation Material
99.4 Proxy Statement and Form of Proxy
99.5 Appraisal Report Update from RP Financial, LC, dated as of October 30, 1998
</TABLE>
- ----------------
* Previously filed.
** To be filed by amendment.
(b) Financial Statement Schedules
All schedules have been omitted as not applicable or not required under
the rules of Regulation S-X.
II-3
<PAGE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement, certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
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 of 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Form S-1 Registration Statement as amended to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
Commonwealth of Pennsylvania on November 3, 1998.
Willow Grove Bancorp, Inc.
(In organization)
By: /s/ Frederick A. Marcell, Jr.
-------------------------------------
Frederick A. Marcell, Jr.
President and Chief Executive Officer
<TABLE>
<CAPTION>
Name Title Date
- ----------------------------- ------------------------ -------------------
<S> <C> <C>
/s/ Frederick A. Marcell, Jr. President and Chief November 3, 1998
- ----------------------------- Executive Officer
Frederick A. Marcell, Jr.
/s/ John J. Foff, Jr. Senior Vice President and November 3, 1998
- ----------------------------- Chief Financial Officer
John J. Foff, Jr.
/s/ Lewis W. Hull* Director November 3, 1998
- -----------------------------
Lewis W. Hull
/s/ William W. Langan* Chairman of the Board November 3, 1998
- -----------------------------
William W. Langan
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Name Title Date
- ----------------------------- ------------------------ -------------------
<S> <C> <C>
/s/ Stanley B. Kitzelman* Director November 3, 1998
- -----------------------------
Stanley B. Kitzelman
/s/ A. Brent O'Brien* Director November 3, 1998
- -----------------------------
A. Brent O'Brien
/s/ William W. Weihenmayer* Director November 3, 1998
- -----------------------------
William W. Weihenmayer
/s/ J. Ellwood Kirk* Director November 3, 1998
- -----------------------------
J. Ellwood Kirk
/s/ Charles F. Kremp, 3rd* Director November 3, 1998
- -----------------------------
Charles F. Kremp, 3rd
/s/ Samuel H. Ramsey, III* Director November 3, 1998
- -----------------------------
Samuel H. Ramsey, III
</TABLE>
- -----------------
* By Frederick A. Marcell, Jr. pursuant to power of attorney.
II-6
Exhibit 1.2
Willow Grove Bancorp, Inc.
(a Pennsylvania Corporation)
2,116,000 Shares
(Subject to Increase up to 2,433,000 Shares)
COMMON STOCK ($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
_________________, 1998
Charles Webb & Company
211 Bradenton Avenue
Dublin, Ohio 43017
Ladies and Gentlemen:
Willow Grove Bancorp, a federal corporation in formation (the
"Holding Company"), Willow Grove, M.H.C., a federal mutual holding company in
formation (the "MHC") and Willow Grove Bank (the "Bank") (collectively, the
"Primary Parties") hereby confirm, jointly and severally, their agreement with
Charles Webb & Company (the "Agent"), as follows:
Section 1. The Offering. The Holding Company is offering up to
2,116,000 shares of common stock, par value $.01 per share (the "Common Stock")
(subject to an increase up to 2,433,400 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 bank to a stock
savings bank and wholly-owned subsidiary of the Holding Company (the
"Reorganization"), all pursuant to the Plan of Reorganization from a Mutual
Savings Bank 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 45.3% of the outstanding Common Stock and the
MHC will own 54.7% 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
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Conversion Shares is increased 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 1,564,000 and 2,116,000 shares (subject to an increase up to 2,433,400
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 June 30, 1997 ("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"); (4) depositors (other than Eligible Account Holders
and Supplemental Eligible Account Holders) and borrowers of the Bank as of the
date for determining members entitled to vote on the approval of the Plan (the
"Voting Record Date") (collectively, "Other Members") and (5) employees,
officers and directors of the Bank, subject to the priorities and purchase
limitations set forth in the Plan. The Holding Company may offer all shares of
Common Stock offered but not subscribed for in the Subscription Offering, if
any, in the Direct Community Offering to members of the general public. 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 Bank
of Securities Dealers, Inc. ("NASD").
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (File No.
333-63737) 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, Department of the Treasury (the "OTS"), pursuant to Title
12, Parts 575 and 563b of the Code of Federal Regulations (the "MHC
Regulations"), a Notice of Mutual
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Holding Company Reorganization and Application for Approval of an Issuance by a
Subsidiary of a Mutual Holding Company, including exhibits and 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 Interim Two and
the merger of Interim Two 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."
Section 2. Appointment of the Agent. Subject to the terms and
conditions of this Agreement, the Primary Parties hereby appoint Webb as their
financial advisor and marketing agent to utilize its best efforts to solicit
subscriptions for Shares of the Company's Common Stock and to advise and assist
the Company and the Bank with respect to the Company's sale of the Shares in the
Offering.
On the basis of the representations and warranties and subject to the
terms and conditions of this Agreement, the Agent accepts such appointment and
agrees to consult with and advise the Primary Parties as to the matters set
forth in the letter agreement ("Letter Agreement"), dated July 14, 1998 between
the Bank and Webb (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 will be offered by means of Order Forms as described in the
Prospectus. Except as provided in the paragraph below, the appointment of the
Agent hereunder shall terminate upon completion of the Offerings.
Webb agrees to act as financial advisor to the Primary Parties for a
period of one year following the consummation of the Conversion for no
additional fee to render general advice on financial matters, including dividend
policy, and share repurchase programs, assistance with shareholder reporting and
shareholder relations matters, general advice on mergers and acquisitions, and
other related financial matters which are brought to the attention of the
Primary Parties. Thereafter, 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 that time. Should discussions commence for a
specific acquisition transaction by, or a sale of, the Primary Parties during
the period in which the Agent is acting as financial advisor, the general
financial advisory relationship as set forth in this paragraph will terminate
with
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respect to the specific transaction. If the Primary Parties and the Agent wish
to have the Agent initiate, negotiate and/or process a specific transaction, an
appropriate fee will be negotiated at that time.
Section 3. Refund of Purchase Price. In the event that the Conversion
is not consummated for any reason, including but not limited to the inability to
sell the Common Stock during the Offerings (including any permitted extension
thereof), this Agreement shall terminate and any persons who have subscribed for
any of the shares of Common Stock shall have refunded to them the full amount
which has been received from such person, together with interest at the Bank's
current passbook rate, from the date payment is received 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, as applicable, 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 as agents under this Agreement,
the Agent will receive the following fees from the Primary Parties.
(a) A management fee to Webb in the amount of $40,000 payable
in four consecutive monthly installments of $10,000, commencing with the signing
of the Letter Agreement. Such fees shall be deemed to be earned when due. Should
the Conversion be terminated for any reason not attributable to the action or
inaction of the Agent, the Agent shall have earned and be entitled to be paid
fees accruing through the stage at which point the termination occurred. Webb
acknowledges receipt of $_________ as of the date hereof.
(b) A fee of 1.5% of the aggregate Purchase Price of the
Shares sold in the Subscription Offering and the Community Offering, excluding
those shares purchased by the Bank's officers, directors or employees (or
members of their immediate families) or by any Tax-Qualified Employee Plan
(except IRA's) created by the Primary Parties for some or all of its directors
or employees. The management fee described in Section 4(a) shall be deducted
from the fee in this section.
(c) A fee not to exceed 5.5% of the aggregate Purchase Price
of the Shares sold by Assisting Brokers in any extension of the Offerings and
the Agent will pay Assisting Brokers which assisted in the subscription or
purchase of Shares in the
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Syndicated Public Offering, a fee competitive with gross underwriting discounts
charged at such time for comparable amounts of stock sold at a comparable price
per share in a similar market environment. The decision to utilize Assisting
Brokers will be made jointly by the Agent on the one hand, and the Primary
Parties, on the other hand. In the event, with respect to any stock purchases,
fees are paid pursuant to subsection 4(c), such fees shall be paid in lieu of,
and not in addition to, payments to the Agent pursuant to subsections 4(a) and
4(b).
The fees specified in subsections (b), (c) and (d) shall be payable in
same-day funds on the Closing Date.
Section 5. Closing. If the minimum number of the shares of Common Stock
permitted to be sold-in the Conversion on the basis of the most recent updated
Conversion appraisal are subscribed for at or before the termination of the
Offerings and the other conditions to the completion of the Conversion are
satisfied, the Holding Company agrees to issue on the Closing Date the shares of
Common Stock which have been sold against payment therefor from the escrow or
other accounts maintained for the subscribers as set forth in the Plan and to
deliver certificates evidencing ownership of such shares of Common Stock 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
counsel to the Holding Company, or at such other place as shall be agreed upon
among the Holding Company, the Bank and the Agent at 10:00 a.m. on a 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 Holding Company, the
Bank 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 by
telephone, confirmed in writing, when funds shall have been received for the
minimum number of shares of the Common Stock. The date upon which the Holding
Company shall release the Shares for delivery in accordance with the terms
hereof is referred to herein as the "Closing Date."
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 Primary Parties have all such power, authority,
authorizations, approvals and orders as may be
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required to enter into this Agreement, to carry out the provisions and
conditions hereof and to issue and sell the capital stock of the Bank to the
Holding Company and the Shares to be sold by the Holding Company as provided
herein and as described in the Prospectus. The consummation of the Conversion,
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 Holding Company and the Bank
and this Agreement has been validly executed and delivered by the Holding
Company and the Bank and is the valid, legal and binding agreement of the
Holding Company and the Bank 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) As of the Closing Date, the Bank shall have completed all
conditions precedent to the Conversion 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 Conversion
imposed upon it by the OTS as set forth in correspondence received from the OTS.
The Plan has been approved by the OTS, and to the best knowledge of the Bank, no
person has challenged or sought to obtain judicial review of the actions of the
OTS in approving the Conversion pursuant to Section 5(i)(2)(B) of the HOLA or
any other statute or regulation.
(c) 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 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.
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(d) The MHC does not own any equity securities or any equity
interest in any business enterprise except as described in the Prospectus.
(e) The MHC is not authorized to issue any shares of capital
stock.
(f) The Registration Statement was declared effective by the
Commission on _____________________; and no stop order has been issued with
respect thereto and no proceedings therefor have been initiated or to the best
knowledge of the Bank 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 requirements of 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 Holding Company or the Bank 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 or mailed to the Commission for filing 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 Holding Company or
the Bank 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 6A shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Holding Company or the Bank by the Agent expressly regarding the Agent for use
under the caption "The Conversion - Marketing Arrangements" 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.
(g) The MHC Application, including the Prospectus, was
approved by the OTS on ___________________; and the Proxy Statement of the Bank
and the Prospectus have been approved for use by the OTS. At the time of the
approval of the Application, including the Prospectus, by the OTS (including any
amendment or supplement thereto) and at all times subsequent thereto until the
Closing Date, the Application, including the Prospectus, will comply as to form
in all material respects with the Conversion Regulations and any other
applicable rules and regulations of the
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OTS (except as modified or waived in writing by the OTS). The Application,
including the Prospectus (including any amendment or supplement thereto), 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 shall not apply to statements or omissions made in reliance upon and
in conformity with written information furnished to the Bank by the Agent
expressly regarding the Agent for use in the Prospectus contained in the
Application under the caption "The Conversion -- Marketing Arrangements" 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.
(h) No order has been issued by the OTS, the Commission or the
FDIC (and hereinafter reference to the FDIC shall include the SAIF), 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 Conversion is, to the
best knowledge of the Primary Parties, pending or threatened.
(i) At the Closing Date, the Plan will have been adopted by
the Board of Directors of the Primary Parties, the Primary Parties will have
completed all conditions precedent to the Conversion 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 Conversion imposed upon the Holding Company or
the Bank by the OTS, the Commission or any other regulatory authority and in the
manner described in the Prospectus. At the Closing Date, to the best knowledge
of the Primary Parties, no person will have sought to obtain review of the final
action of the OTS in approving the Plan or in approving the Conversion or the
Holding Company Application pursuant to the HOLA or any other statute or
regulation.
(j) The Holding Company has filed with the OTS the Holding
Company Application and has received, as of the Closing Date, approval of its
acquisition of the Bank from the OTS.
(k) RP Financial, which prepared the appraisal, has advised
the Holding Company and the Bank in writing that it is independent with respect
to each within the meaning of the Conversion Regulations.
(l) KPMG Peat Marwick, LLP which certified the financial
statements filed as part of the Registration Statement
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and the Application, have advised the Holding Company and the Bank in writing
that they are, with respect to the Holding Company and the Bank, independent
certified public accountants 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.
(m) The financial statements and the schedules and notes
thereto which are included in the Registration Statement and which are a part of
the Prospectus present fairly the financial position 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 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 and are consistent with the most recent financial
statements and other reports filed by the Bank with the OTS and the FDIC except
that accounting principles employed in such filings conform to requirements of
such authorities and not necessarily to GAAP. The other financial, statistical
and pro forma information and related notes included in the Prospectus fairly
present 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.
(n) 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 the Holding Company or the Bank or of
the Holding Company and the Bank considered as one enterprise, whether or not
arising in the ordinary course of business; (ii) there has not been any material
increase in the aggregate amount of loans past due ninety (90) days or more,
real estate acquired by foreclosure or loans characterized as "in substance
foreclosure" or any change in total assets of the Bank in an amount greater than
$10.0 million; 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 the Holding
Company or the Bank, other than those in the ordinary course of business; and
(iv) the capitalization, liabilities, assets, properties and business of the
Holding Company and the Bank conform in all material respects to the
descriptions thereof contained in the Prospectus and, neither the Bank nor the
Holding Company has any material liabilities of any kind, contingent or
otherwise, except as set forth in or contemplated by the Registration Statement
and the Prospectus.
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(o) The Holding Company is a corporation duly organized and in
good standing under the laws of the State of Delaware, 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 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 Holding Company and the Bank
considered as a whole.
(p) The Bank is a duly organized and validly existing
federally chartered savings bank in mutual form and upon the Conversion will
become a duly organized and validly existing federally chartered savings bank in
stock form, in both instances 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 Holding Company and
the Bank 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 Conversion 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 described in
the Prospectus.
(q) The Bank is a member of the Federal Home Loan Bank of
Pittsburgh ("FHLB of Pittsburgh"); the deposit accounts of the Bank are insured
by the FDIC up to applicable limits; and upon the Conversion, the liquidation
account for the benefit of Eligible Account Holders and Supplemental Eligible
Account Holders will be duly established in accordance with the Conversion
Regulations.
(r) Upon Conversion, the authorized, issued and outstanding
equity capital of the Holding Company will be as described 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; the shares of Common
Stock to be subscribed for in the Offerings 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
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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 of Common Stock is not subject to preemptive rights; 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 purchaser thereof against payment therefor, subject to such claims as may be
asserted against the purchasers thereof by third party claimants.
(s) As of the date hereof and as of the Closing Date, neither
the MHC, the Holding Company nor the Bank is in violation of its certificate of
incorporation or charter, respectively, or its bylaws (and the Bank will not be
in violation of its charter or bylaws in capital stock form as of the Closing
Date) 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 it is a party or by which it,
or any of its property, may be bound which would result in a material adverse
change in the condition (financial or otherwise), earnings, capital, properties
or business affairs of the Primary Parties considered as one enterprise or which
would materially affect their properties or assets. The consummation of the
transactions herein contemplated will not (i) conflict with or constitute a
breach of, or default under, the certificate of incorporation and bylaws of the
Holding Company, the charter and bylaws of the Bank (in either mutual or capital
stock form), the certificate of incorporation and bylaws of the MHC or
materially conflict with or constitute a material breach of, or default under
any material contract, lease or other instrument to which the Primary Parties
have a beneficial interest, or any applicable law, rule, regulation or order
that is material to the financial condition of the Primary Parties on a
consolidated basis; (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 Primary Parties on a consolidated
basis; or (iii) with the exception of the liquidation account established in the
Conversion, result in the creation of any material lien, charge or encumbrance
upon any property of the Primary Parties.
(t) 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 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 the Primary Parties are 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 considered as one enterprise, and such
agreements are in
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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 the Holding Company, the Bank, or the MHC is alleged to be in
default thereunder under circumstances where such action or proceeding, if
determined adversely to the Primary Parties, as the case may be, would have a
material adverse effect upon the Primary Parties considered as one enterprise.
(u) The Primary Parties have good and marketable title to all
assets which are material to the business 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 business of the Primary Parties taken as a whole; and all of the
leases and subleases which are material to the business of the Primary Parties,
as described in the Registration Statement or Prospectus, are in full force and
effect.
(v) 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 material respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions, directives
and orders of the OTS, the Commission and the FDIC) and, except as set forth in
the Prospectus, 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 of either of the Primary Parties, threatened,
which would reasonably be expected to materially and adversely affect the
Conversion, 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 or in the earnings, capital,
properties or business affairs of the Primary Parties considered as one
enterprise.
(w) Bank has received an opinion of its special counsel, Elias
Matz Tiernan & Herrick LLP ("Elias Matz") with respect to the federal income tax
consequences of the Conversion of the Bank from mutual to stock form, as
described in the Registration Statement and the Prospectus, and an opinion from
KPMG Peat Marwick, LLP with respect to the Commonwealth of Pennsylvania tax
consequences of the proposed transaction; and the facts and representations upon
which such opinions are based are truthful, accurate and complete, and neither
the Bank, the MHC, nor the Holding Company will take any action inconsistent
therewith.
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(x) The Primary Parties have timely filed all required federal
and state tax returns, have paid all taxes that have become due and payable in
respect of such returns, except where permitted to be extended, have made
adequate reserves for similar future tax liabilities and no deficiency has been
asserted with respect thereto by any taxing authority.
(y) 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 or
exemption under the securities or blue sky laws of the various states in which
the shares are to be offered and except as may be required under the rules and
regulations of the NASD and/or the Nasdaq.
(z) The Primary Parties have made appropriate arrangements for
placing the funds received from subscriptions for Shares in special interest
bearing accounts with the Bank until all Shares are sold and paid for, with
provision for refund to the purchasers in the event that the Conversion is not
completed for whatever reason or for delivery to the Holding Company if all
Shares are sold.
(aa) Prior to the Conversion, the Bank was not authorized to
issue shares of capital stock and neither the Holding Company, the MHC, nor the
Bank has: (i) issued any securities within the last 18 months (except for notes
to evidence other bank loans and reverse repurchase agreements or other
liabilities); (ii) had any material 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 proposed offerings and routine purchases and sales of
U.S. government and agency and other securities; (iii) entered into a financial
or management consulting agreement except as contemplated hereunder; or (iv)
engaged any intermediary between the Agent and the Primary Parties in connection
with the offering of Shares, and no person is being compensated in any manner
for such service.
(ab) To the best knowledge of the Primary Parties, neither the
Primary Parties nor the employees of the Primary Parties have made any payment
of funds of the Primary Parties as a loan to any person for the purchase of the
Shares.
Any certificates signed by an officer 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.
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Section 6.B. Representations and Warranties of the Agent.
Webb represents and warrants to the Company and the Bank that:
(a) Webb is a corporation and is validly existing in good
standing under the laws of the State of Ohio 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 Webb, and this Agreement has
been duly and validly executed and delivered by Webb and is the legal, valid and
binding agreement of Webb, enforceable in accordance with its terms.
(c) Each of Webb and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly authorized and
empowered, and shall have all licenses, approvals and permits necessary to
perform such services.
(d) The execution and delivery of this Agreement by Webb, the
consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will not conflict with, or result in a breach of,
any of the terms, provisions or conditions of, or constitute a default (or event
which with notice or lapse of time or both would constitute a default) under,
the certificate of incorporation of Webb or any agreement, indenture or other
instrument to which Webb is a party or by which it or its property is bound.
(e) No action, suit, charge or proceeding is pending, or to
the knowledge of Webb threatened, against Webb which, if determined adversely to
Webb, would have a material adverse effect upon the ability of Webb to perform
obligations under this Agreement.
(f) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by Webb of this Agreement, except as may have been
received.
Section 7.A. Covenants of the Primary Parties. The Primary
Parties hereby jointly and severally covenant with the Agent as
follows:
(a) The Holding Company has filed the Registration Statement
with the Commission. 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
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supplement to which amendment the Agent or its counsel shall
reasonably object.
(b) The Primary Parties have filed the OTS Applications. The
Primary Parties will not, at any time after the date the OTS Applications are
approved, file any amendment or supplement to the OTS Applications 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
any post-effective amendment to the Registration Statement to be declared
effective by the Commission and any post-effective amendment to the Application
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 Applications, as
amended, have been approved by the OTS; (iii) of the receipt of any comments
from the Commission, the OTS, the FDIC or any other governmental entity with
respect to the Conversion or the transactions contemplated by this Agreement;
(iv) of any request by the Commission, the OTS, the FDIC or any other
governmental entity for any amendment or supplement to the Registration
Statement or the Application or for additional information; (v) of the issuance
by the Commission, the OTS, the FDIC 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 Holding Company and the
Bank under the Conversion Regulations or other applicable law, or the threat of
any such action; (vi) 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 (vii) of the occurrence of any event
mentioned in paragraph (g) 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 such order 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 provide the Agent and its counsel
notice of its intention to file, and reasonable time to review prior to filing
any amendment or supplement to the Primary Parties' Applications and will not
file any such amendment or supplement to which the Agent shall reasonably object
or which shall be reasonably disapproved by its counsel.
(e) The Primary Parties will deliver to the Agent and to its
counsel conformed copies of each of the following documents, with all exhibits:
the Application, the Holding Company Application and the MHC Application, as
originally filed and of each amendment or supplement thereto, and the
Registration
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Statement, as originally filed and each amendment thereto. Further, the Holding
Company and the Bank will deliver such additional 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.
(f) The Primary Parties will comply in all material respects
with any and all terms, conditions, requirements and provisions with respect to
the Conversion 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 (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
FDIC, 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.
(g) If any event relating to or affecting the Primary Parties
shall occur, as a result of which it is necessary, in the reasonable opinion of
counsel for the Primary Parties or for the Agent, to amend or supplement the
Registration Statement or the Prospectus in order to make them not misleading in
light of the circumstances existing at the time of their use, the Primary
Parties will, at their expense, forthwith 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 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, the Primary Parties each will furnish such information with respect
to itself as the Agent may from time to time reasonably request.
(h) 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 under the applicable securities laws of
the jurisdictions in which the Subscription Offering and Public Offering will be
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conducted; provided, however, that the Holding Company shall not be obligated to
file any general consent to service of process or to qualify to do business in
any jurisdiction in which it is not 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.
(i) The liquidation account for the benefit of account holders
as of June 30, 1997 and September 30, 1998 will be duly established and
maintained in accordance with the requirements of the OTS, and such Eligible
Account Holders and Supplemental Eligible Account Holders who continue to
maintain their savings accounts in the Bank will have an inchoate interest in
their pro rata portion of the liquidation account which shall have a priority
superior to that of the holders of shares of Common Stock in the event of a
complete liquidation of the Bank.
(j) The Primary Parties 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.
(k) For the period of three years from the date of this
Agreement, the Holding Company and the MHC will furnish to the Agent upon
request (i) a copy of each report of the Holding Company and MHC 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 and MHC 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, and (iii) from time to time, such other
publicly available information concerning the Primary Parties as the Agent may
reasonably request.
(l) 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."
(m) Prior to the Closing Date, Primary Parties will inform the
Agent of any event or circumstances of which it is 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.
(n) The Primary Parties will distribute the Prospectus or
other offering materials in connection with the offering and
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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.
(o) The Holding Company shall register its Common Stock under
Section 12(g) of the 1934 Act, concurrent with the effective date of the
Registration Statement. 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.
(p) For so long as the Holding Company's 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).
(q) The Holding Company will comply with the provisions of
Rule 158 of the 1933 Act.
(r) The Holding Company will file with the Commission such
reports on Form SR as may be required pursuant to Rule 463 under the 1933 Act.
(s) The Holding Company will use its best efforts to obtain
approval for and maintain quotation of the Common Stock on the Nasdaq National
Market effective on or prior to the Closing Date.
(t) The Bank will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares in the Offerings 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 Bank's obligation to refund payments
received from persons subscribing for or ordering Shares in the 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 with the Plan and as described in the
Prospectus. The Bank 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 Bank 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.
(u) The Holding Company and the MHC will each promptly
register as a savings and loan holding company under the HOLA.
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(v) 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."
(w) 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.
(x) The Primary Parties will not amend the Plan of Conversion
without notifying the Agent prior thereto.
(y) The Holding Company shall provide the Agent with any
information necessary to carry out the allocation of the Shares in the event of
an oversubscription and such information shall be accurate and reliable in all
material respects.
(z) The Holding Company will not deliver the Shares until the
Holding Company and the Bank have satisfied or caused to be satisfied each
condition set forth in Section 9A hereof, unless such condition is waived in
writing by the Agent.
Section 7.B. Covenants of Agent. Webb hereby covenants
with the Company and the Bank as follows:
(a) During the period when the Prospectus is used, Webb will
comply, in all material respects and at its own expense, with all requirements
imposed upon it by the OTS and, to the extent applicable, by the 1933 Act and
the rules and regulations promulgated thereunder.
(b) Webb will distribute any Prospectus or offering materials
in connection with the offering and sale of the Common Stock only in accordance
with the Conversion Regulations and the requirements of the 1933 Act and 1934
Act and the rules and regulations promulgated thereunder; and
(c) Webb shall perform the calculations process in connection
with the allocation of shares in the event of an over-subscription.
Section 8. Payment of Expenses. Whether or not the Conversion is
completed or the sale 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
Application; (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
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of the Shares for offer and sale by the Holding Company 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; and (e)
the reasonable expenses of the Agent, including without limitation, accounting,
communications, and travel expenses. Any such expense incurred by the Agent
shall be reimbursed by the Primary Parties. If this Agreement is terminated in
accordance with the provisions of Sections 3, 9, or 13, the Bank will pay the
Agent the fees earned pursuant to Section 4 and will reimburse the Agent for the
reasonable expenses of the Agent, including without limitation accounting,
communication, and travel expenses. Non-legal expenses shall not exceed $5,000
without the prior approval of the Holding Company or the Bank.
Section 9.A. Conditions to the Agent's Obligations. The obligations of
the Agent hereunder and the occurrence of the Closing and the Conversion 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 Offerings and at and as of the Closing Date, true and
correct in all material respects, the condition that the Primary Parties shall
have performed in all material respects all of their obligations hereunder to be
performed on or before such dates and to the following further conditions:
(a) The Registration Statement shall have been declared
effective by the Commission and the Application approved by the OTS not later
than 5:30 p.m. on the date of this Agreement, 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 the Company's
or the Bank's 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 Conversion shall have been issued or
proceedings therefor initiated or, to the Company's or Bank's 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 Elias Matz, special counsel for the Primary Parties, 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 laws of the
Commonwealth of Pennsylvania, with corporate power and authority to own its
properties and to conduct its business as described in the Prospectus, and to
such counsel's
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knowledge 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
Holding Company.
(ii) The Bank is a duly organized and
validly existing federally chartered mutual savings bank and, at the Closing
Date, upon satisfaction of the conditions set forth in the Plan, will become a
duly organized and validly existing federally chartered stock savings bank 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 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
Pittsburgh and the savings accounts of the Bank are insured by the FDIC up to
the maximum amount allowed by law and to such counsel's knowledge no proceedings
for the termination or revocation of such insurance are pending or threatened;
and the description of the liquidation account as set forth in the Prospectus
under the caption "The Conversion - Effects of Conversion to Stock Form on
Depositors and Borrowers of the Bank - Liquidation Rights" has been reviewed by
such counsel and, to the extent that such information constitutes matters of law
or legal conclusions, is accurate in all material respects.
(iv) The MHC has been duly organized and is
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.
(v) Upon Conversion, the authorized, issued
and outstanding capital stock of the Holding Company and the Bank will be as 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, the shares of Common Stock of the Holding Company to be subscribed for in
the Offerings 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 the issuance of the shares of Common Stock is not subject to
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preemptive rights, 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 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 as
required by the directors of the Bank and members of the Bank.
(viii) Subject to the satisfaction of the
conditions to the OTS's approval of the Conversion, the MHC Application and the
Holding Company Application to acquire the Bank, no further approval,
registration, authorization, consent or other order of any federal 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 Conversion (other than compliance with state securities or
Blue Sky laws as to which such counsel need express no opinion and other than as
may be required under the rules and regulations of the NASD or the Nasdaq
System).
(ix) The Application, including the
Prospectus as filed with the OTS, has been approved by the OTS. The OTS has
issued its order of approval under the savings and loan holding company
provisions of the HOLA, and 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
Conversion are set forth in the Prospectus under the caption "The
Conversion-Income Tax Consequences." The information in the Prospectus under the
caption "The Conversion-Income Tax Consequences" has been reviewed by such
counsel and fairly
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describes such opinions rendered by Elias Matz 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 such description describes in all material
respects the rights of the holders thereof, the information in the Prospectus
under the captions "Restrictions on Acquisitions of Stock and Related Takeover
Defensive Provisions" and "Description of Capital Stock," to the extent that
they constitute matters of law or legal conclusions, has been prepared by such
counsel and is accurate in all material respects; 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 Application,
including the Prospectus contained therein, was approved, the Application (as
amended or supplemented) complied as to form in all material respects with the
requirements of the Conversion Regulation 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 Application or
in approving the Holding Company Application.
(xiv) At the time that the Registration
Statement became effective (i) the Registration Statement (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; and (ii) the
Prospectus (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) complied
as to form in all material respects with the requirements of the 1933 Act and
the rules and regulations promulgated thereunder, the Conversion Regulations,
the rules, regulations and decisions and orders of the OTS, except as modified
or waived in writing by the OTS.
(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
Conversion or the offer, sale or issuance of the Shares.
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(xvi) The information in the Prospectus
under the captions "Regulation," "The Conversion" and "Legal Matters," to the
extent that it constitutes matters of law, summaries of legal matters, documents
or proceedings, or legal conclusions, has been prepared 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) To the best of counsel's knowledge,
the Primary Parties have obtained all material licenses, permits and other
governmental authorizations required for the conduct of their respective
businesses as described in the Registration Statement and the Prospectus, except
where the failure to obtain such licenses, permits and other governmental
authorizations would not 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, and all such licenses, permits and other
governmental authorizations are in full force and effect and the Primary Parties
are in all material respects complying therewith.
(xviii) The Holding Company, the MHC nor the
Bank is in violation of its certificate of incorporation or its charter,
respectively, or its bylaws (and the Bank will not be in violation of its
charter or bylaws in stock form upon consummation of the Conversion) or to the
best of such counsel's knowledge, in violation of any material obligation,
agreement, covenant or condition contained in any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it is a party
or by which it or its property may be bound, 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; the
execution and delivery of this Agreement by the Primary Parties, the incurrence
of the obligations herein set forth and the consummation of the transactions
contemplated herein, will not materially conflict with, constitute a material
breach of, or default under, or result in the creation or imposition of any
material lien, charge or encumbrance upon any property or assets of the Primary
Parties which are material to their business considered as one enterprise,
pursuant to any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Primary Parties are a party or by which any of
them may be bound, or to which any of the property or assets of the Primary
Parties are subject. In addition, such action will not result in any material
violation of the provisions of the certificate of incorporation or bylaws 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.
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(xix) To the best of counsel's knowledge,
the Primary Parties are not in violation in any material respect of any
directive from the OTS or the FDIC to make any material change in the method of
conducting their business.
(2) The letter of Elias Matz, special counsel for the
Holding Company and the Bank, in form and substance to the effect that:
In addition, during the preparation of the Registration Statement and
the Prospectus, Elias Matz 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, although
Elias Matz is not passing upon and does not assume the accuracy of the
statements contained in the Registration Statement and Prospectus, on the basis
of the foregoing without independent verification (relying as to materiality as
to factual matters on certificates of officers and other factual representations
by the Primary Parties), nothing has come to the attention of Elias Matz that
caused Elias Matz to believe that the Registration Statement at the time it was
declared effective by the SEC or the Prospectus as of its date, 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).
The opinion shall be limited to matters governed by the laws of the
United States or the Commonwealth of Pennsylvania. 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 or the Commonwealth of Pennsylvania,
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 Company and the Bank and public officials; provided copies of any such
opinion(s) or certificates of public officials are delivered to you together
with the opinion to be rendered hereunder by special counsel to the Company and
the Bank. The opinion of such counsel for the Company shall state that it has no
reason to believe that the Agent is not justified in relying thereon.
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(3) The favorable opinion, dated as of the Closing
Date, of Stevens & Lee, P.C., 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 Holding Company and
the Bank 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, (i) 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 Application or Item 10 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; (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 and 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 latest
unaudited consolidated financial statements included in the Prospectus to a
specified date not more than five business days prior to the date hereof, there
was any material increase in borrowings (defined as advances from the Federal
Home Loan Bank of Pittsburgh, securities sold under agreements to repurchase and
any other form of debt other than deposits) of the Primary Parties (other than
as disclosed in the Prospectus or in the ordinary course of business); 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
26
<PAGE>
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 (f), they have compared with the general accounting
records of the Holding Company and/or the Bank, as applicable, which are subject
to the internal controls of the Holding Company and/or the Bank, as applicable,
accounting system and other data prepared by the Holding Company and/or the
Bank, as applicable, directly from such accounting records, to the extent
specified in such letter, such amounts and/or percentages set forth in the
Prospectus as the 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 letters 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 (f) of this Section 9A, the "specified date" referred to in clause
(ii)(B) thereof to be a date specified in such letter, which shall not be more
than five 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
Holding Company, the MHC and the Bank, dated the Closing Date, to the effect
that (i) they have carefully 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 Holding Company or the
Bank, considered as one enterprise, whether or not arising in the ordinary
course of business; (iii) the representations and warranties contained in
Section 6A 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
27
<PAGE>
including the conditions contained in this Section 9A; (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 Offerings, the
Conversion, the acquisition of all of the shares of the Bank by the Holding
Company or the effectiveness 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, the FDIC, 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 Conversion.
(g) At the Closing Date, the Agent shall receive a letter from
RP Financial dated as of the Closing Date, confirming its appraisal.
(h) The Primary Parties shall not 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 in the long-term debt of the Primary Parties other than debt
incurred in relation to the purchase of Shares by the Holding Company's or
Bank's tax-qualified employee plans, or any material change, or any development
involving a prospective material change in, or affecting the general affairs of,
management, financial position, stockholders' equity or results of operations 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 Offerings
or the delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
(i) 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 the Primary Parties independently, or of the Primary Parties, considered as
one enterprise, from that 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,
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) the Primary Parties
shall not have received from the OTS or
28
<PAGE>
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 earnings, capital,
properties or business affairs of the Primary Parties considered as one
enterprise; (iv) 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 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 have been
qualified or registered for offering and sale under the securities or blue sky
laws of the jurisdictions as to which the Primary Parties shall have agreed.
(j) 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 Application, (ii) a copy of the order from the Commission
declaring the Registration Statement effective, (iii) a copy of certificate of
existence for the Bank from the OTS, (iv) a certificate of good standing from
the Commonwealth of Pennsylvania evidencing the good standing of the Holding
Company, (v) a copy of the letter from the OTS approving the Holding Company
Application, and (vi) a copy of the letter from the OTS approving the MHC
application.
(k) As soon as available after the Closing Date, the Agent
shall receive a certified copy of the Bank's stock charter.
(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; (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
29
<PAGE>
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 Offerings or the delivery of the Shares on
the terms and in the manner contemplated in the Registration Statement and the
Prospectus.
Section 9.B. Conditions to the Holding Company and the Bank's
Obligations. The obligations of the Primary Parties hereunder are subject to the
accuracy of the representations, warranties and covenants of the Agent, to the
performance by the Agent of its obligations hereunder and to the satisfaction of
the conditions contained in Paragraph (a) of Section 9A hereunder.
Section 10. Indemnification.
(a) The Primary Parties agree to indemnify and hold harmless
the Agent, its officers, directors, agents, 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), joint or several, that the Agent or any of them may suffer or to
which the Agent and any such persons may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Agent and any
such persons upon written demand for any reasonable expenses (including fees and
disbursements of counsel) incurred by the Agent or any of 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 (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 Application, or any
blue sky application or other instrument or document of the Primary Parties or
based upon written information supplied by 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 Application"), or any
application or other document, advertisement, or communication ("Sales
Information") prepared, made or executed by or on behalf of the Primary Parties
with its consent or based upon written information furnished by or on behalf of
the Holding Company or the Bank, 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 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
30
<PAGE>
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 Application, any Blue Sky Application or
Sales Information or other documentation distributed in connection with the
Conversion; 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
Application, the Blue Sky Application or Sales Information or other
documentation distributed in connection with the Conversion made in reliance
upon and in conformity with written information furnished to the Holding Company
or the Bank by the Agent with respect to the Agent expressly for use in the
Registration Statement (or any amendment or supplement thereto) or Prospectus
(or any amendment or supplement thereto) under the caption "The Conversion -
Marketing Arrangements" therein 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 actions taken or omitted to be
taken by the Agent in bad faith or from the Agent's gross negligence, and the
Agent agrees to repay to the Holding Company any amounts advanced by it to the
Agent in connection with matters as to which the Agent is found not to be
entitled to indemnification hereunder. Notwithstanding the foregoing, the
indemnification provided for in this paragraph (a) shall not apply to the Bank
to the extent that such indemnification by the Bank would constitute a covered
transaction under Section 23A of the Federal Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the
Holding Company, its directors and officers, agents, servants and employees and
each person, if any, who controls the Holding Company within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses), joint or several which they, or any of 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
Application, the Holding Company Application or any Blue Sky Application 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
31
<PAGE>
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 Holding Company by the
Agent expressly for use under the caption "The Conversion -- Marketing
Arrangements" therein or statistical information regarding the Holding Company
prepared by the Agent for use in the Sales information except for information
derived from the Prospectus.
(c) The Agent agrees to indemnify and hold harmless the MHC,
its directors and officers, agents, servants and employees and each person, if
any, who controls the MHC 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), joint
or several which they, or any of 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 Application, the MHC Application or any Blue Sky
Application 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 MHC by the Agent expressly
for use under the caption "The Conversion -- Marketing Arrangements" therein or
statistical information regarding the MHC prepared by the Agent for use in the
Sales information except for information derived from the Prospectus.
(d) 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 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
32
<PAGE>
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 (and any special counsel that said firm may retain) 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.
(e) The agreements contained in this Section 10 and in Section
11 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 or controlling persons, agents or employees or by or on
behalf of the Primary Parties or any officers, directors or controlling persons,
agents or employees of the Primary Parties or any controlling person, director
or officer 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, as the case may be, the
Primary Parties, or the Agent, as the case may be, shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses incurred in connection therewith and any amount paid in
settlement of any action, suit or proceeding of any claims asserted, but after
deducting any contribution received by the Primary Parties or the Agent, as the
case may be from persons other than the other party thereto, who may also be
liable for contribution) in such proportion so that 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) bears to the
gross proceeds received by the Primary Parties from the sale of the Shares in
the Offerings and the Primary Parties shall be responsible for the balance. If,
however, the allocation provided above is not permitted by applicable law or
33
<PAGE>
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 shall
be deemed to be in the same proportion as the total gross proceeds from the
Offerings (before deducting expenses) received by the Holding Company bear to
the total fees (not including expenses) received by the Agent. 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 Holding
Company and/or the Bank 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 Holding
Company 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.
It is understood 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 obligations of the Primary Parties, and the Agent under this Section 11 and
under Section 10 shall be in addition to any liability which the Primary
Parties, and the Agent may otherwise have. For purposes of this Section 11, each
of the Agent's, the Primary Parties' officers and directors and each person, if
any, who controls the Agent or 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
34
<PAGE>
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
controlling person, 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, the Primary Parties, and any indemnified person shall be entitled to
the benefit of the respective agreements, indemnities, warranties and
representations.
Section 13. Termination. Webb may terminate this Agreement
by giving the notice indicated below in this Section at any time
after this Agreement becomes effective as follows:
(a) In the event the Holding Company fails to sell the minimum
number of the 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 Bank to each
person who has subscribed for or ordered any of the Shares the full amount which
it may have received from such person, together with interest 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 9A 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 or by telegram at any time at or prior to the Closing
Date, and, any such cancellation shall be without liability of any party to any
other party except as otherwise provided in Sections 3, 4, 8, 10 and 11 hereof.
(c) If Webb elects to terminate this Agreement as provided in
this Section, the Primary Parties shall be notified by the Agent as provided in
Section 14 hereof.
35
<PAGE>
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 Webb shall be
directed to Charles Webb & Company at 211 Bradenton Avenue, Dublin, Ohio 43017,
Attention: Mr. Charles R. Webb (with a copy to Jeffrey P. Waldron, Esquire,
Stevens & Lee, One Glenhardie Corporate Center, 1275 Drummers Lane, P.O. Box
236, Wayne, Pennsylvania 19087-0236), and notices to the Primary Parties shall
be directed to Willow Grove Bank, Welsh and Norristown Roads, Maple Glen,
Pennsylvania 19002-8030, Attention: Frederick A. Marcell, Jr., Chairman of the
Board and Chief Executive Officer (with a copy to Hugh Wilkinson, Esquire,
Elias, Matz, Tiernan & Herrick L.L.P., 734 15th Street N.W., 12th Floor,
Washington, D.C. 20005.)
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 Invalid. 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.
Section 17. Construction. This Agreement shall be
construed in accordance with the laws of the Commonwealth of
Pennsylvania.
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
36
<PAGE>
a binding agreement between you and us in accordance with its terms.
Very truly yours,
WILLOW GROVE BANK WILLOW GROVE BANCORP (Information)
By: By:
---------------------------- -----------------------------
Frederick A. Marcell, Jr. Frederick A. Marcell, Jr.
Chairman of the Board Chairman of the Board
and Chief Executive Officer and Chief Executive Officer
Date:
--------------------------
The foregoing Agency WILLOW GROVE M.H.C. (Information)
Agreement is hereby confirmed
and accepted as of the date By:
first set and above written. -----------------------------
Frederick A. Marcell, Jr.
Chairman of the Board
and Chief Executive Officer
CHARLES WEBB & COMPANY
By:
-----------------------------
Patricia A. McJoynt,
Executive Vice President and
Chief Operating Officer
Date:
---------------------------
37
<PAGE>
Willow Grove Bancorp, Inc.
(A Pennsylvania Corporation)
Up to 2,443,400 Shares
(Par Value $.01 Per Share)
SELECTED DEALERS' AGREEMENT
_______________, 1997
Ladies and Gentlemen:
We have agreed to assist Willow Grove Bancorp, Inc. (the "Company"), a
Pennsylvania corporation, in connection with the offer and sale of up to
2,443,400 shares of the Company's common stock, $0.01 par value (the "Common
Stock"). These shares are to be issued in connection with the reorganization of
the Bank from a mutual savings bank to a stock savings bank and wholly-owned
subsidiary of the Holding Company (the "Reorganization") in accordance with the
Plan of Reorganization from a Mutual Savings Bank to Mutual Holding Company and
Agreement and Stock Issuance Plan (the "Plan"). Under the Plan, the Holding
Company will become, upon consummation of the reorganization, a majority owned
subsidiary of Willow Grove, M.H.C., a federally chartered mutual holding
company. The offering price per share 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 September 17, 1998 (the "Prospectus").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Prospectus.
In connection with the Conversion, the Company is offering the Common
Stock in a Subscription Offering (to the Eligible Account Holders, Tax-qualified
Employee Plans, Supplemental Eligible Account Holders, Other Members of the
Bank, and to directors, officers and employees of the Bank) and in a Public
Offering to members of the general public (Other Subscribers). The Common Stock
is also being offered in accordance with the Plan by a selling group of
broker-dealers.
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 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 a maximum
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purchase limitation of $200,000 of the Common Stock offered in the Conversion
exclusive of an increase in the total number of shares issued pursuant to an
increase in the Estimated Valuation Range (as defined in the Plan). It is
understood, of course, that payment of your fee will be made to you directly by
the Company for the Common Stock sold on behalf of the Company by you, as
evidenced in accordance with the preceding sentence. As soon as practicable
after the closing date of the offering, the Company will remit to you the fees
to which you are entitled hereunder.
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 25 of such Article III as it applies to non-member brokers
or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and
we, acting on behalf of the Company, reserve the right in our uncontrolled
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
other person is authorized by the Company or by us to give any information or
make any representations other than those contained in the Prospectus in
connection with the sale of any of the Common Stock. No selected dealer is
authorized to act as agent for us when soliciting offers to buy the Common Stock
from the public or otherwise. No selected dealer shall engage in any stabilizing
(as defined in Rule 10b-7 promulgated under the Securities Exchange Act of 1934)
with respect to the Company's 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
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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 Bank
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 acknowledgements 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 fifth business day (the "debit
date") following receipt of the confirmation referred to in (i), and (iv) we
will forward completed order forms together with such funds to the Bank 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 this 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 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
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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 Ohio.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Charles Webb & Company,
211 Bradenton, Dublin, Ohio 43017-3514. The enclosed duplicate copy will
evidence the agreement between us.
CHARLES WEBB & COMPANY
By:
--------------------------
Patricia A. McJoynt
Executive Vice President
Agreed and accepted as of ________________, 1997
- ---------------------------------
By:
----------------------
4
Exhibit 3.1
FEDERAL STOCK CHARTER - SUBSIDIARY HOLDING COMPANY
WILLOW GROVE BANCORP, INC.
Section 1. Corporate Title. The full corporate title of the MHC
subsidiary holding company is Willow Grove Bancorp, Inc. (the "Company").
Section 2. Domicile. The domicile of the Company shall be in the city
of Maple Glen in the State of Pennsylvania.
Section 3. Duration. The duration of the Company is perpetual.
Section 4. Purpose and Powers. The purpose of the Company is to pursue
any or all of the lawful objectives of a federal mutual holding company
chartered under Section 10(o) of the Home Owners' Loan Act, 12 U.S.C. 1467a(o),
and to exercise all of the express, implied, and incidental powers conferred
thereby and by all acts amendatory thereof and supplemental thereto, subject to
the Constitution and laws of the United States as they are now in effect, or as
they may hereafter be amended, and subject to all lawful and applicable rules,
regulations, and orders of the Office of Thrift Supervision (the "Office").
Section 5. Capital Stock. The total number of shares of all classes of
the capital stock which the Company has the authority to issue is 35,000,000, of
which 25,000,000 shares shall be common stock, par value $0.01 per share, and of
which 10,000,000 shares shall be preferred stock. The shares may be issued from
time to time as authorized by the board of directors without the approval of the
shareholders, except as otherwise provided in this Section 5 or to the extent
that such approval is required by governing law, rule, or regulation. The
consideration for the issuance of the shares shall be paid in full before their
issuance and shall not be less than the par value. Neither promissory notes nor
future services shall constitute payment or part payment for the issuance of
shares of the Company. The consideration for the shares shall be cash, tangible
or intangible property (to the extent direct investment in such property would
be permitted to the Company), labor or services actually performed for the
Company, or any combination of the foregoing. In the absence of actual fraud in
the transaction, the value of such property, labor, or services, as determined
by the board of directors of the Company, shall be conclusive. Upon payment of
such consideration, such shares shall be deemed to be fully paid and
nonassessable. In the case of a stock dividend, that part of the retained
earnings of the Company which is transferred to common stock or paid-in capital
accounts upon the issuance of shares as a share dividend shall be deemed to be
the consideration for their issuance.
Except for shares issued in the initial organization of the Company, no
shares of capital stock (including shares issuable upon conversion, exchange or
exercise of other securities) shall be issued, directly or indirectly, to
officers, directors, or controlling persons (except for shares issued to Willow
Grove Mutual Holding Company (the "MHC"), the parent mutual holding company of
the Company) of the Company other than as part of a general public offering or
as qualifying shares to a director, unless their issuance or the plan under
which they would be issued has been approved by a majority of the total votes
eligible to be cast at a legal meeting.
<PAGE>
Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to more than one vote per share; provided,
that this restriction on voting separately by class or series shall not apply:
(i) To any provision which would authorize the holders of
preferred stock, voting as a class or series, to elect some members of the board
of directors, less than a majority thereof, in the event of default in the
payment of dividends on any class or series of preferred stock;
(ii) To any provision which would require the holders of
preferred stock, voting as a class or series, to approve the merger or
consolidation of the Company with another corporation or the sale, lease or
conveyance (other than by mortgage or pledge) of properties or business in
exchange for securities of a corporation other than the Company if the preferred
stock is exchanged for securities of such other corporation; provided, that no
provision may require such approval for transactions undertaken with the
assistance or pursuant to the direction of the Office or the Federal Deposit
Insurance Corporation;
(iii) To any amendment which would adversely change the
specific terms of any class or series of capital stock as set forth in this
Section 5 (or in any supplementary sections hereto), including any amendment
which would create or enlarge any class or series ranking prior thereto in
rights and preferences. An amendment which increases the number of authorized
shares of any class or series of capital stock, or substitutes the surviving
entity in a merger or consolidation for the Company, shall not be considered to
be such an adverse change.
A description of the different classes and series (if any) of the
Company's capital stock and a statement of the designations, and the relative
rights, preferences and limitations of the shares of each class of and series
(if any) of capital stock are as follows:
A. Common Stock. Except as provided in this Section 5 (or in any
supplementary sections hereto) the holders of the common stock shall exclusively
possess all voting power. Each holder of shares of common stock shall be
entitled to one vote for each share held by such holder, and there shall be no
cumulative voting for the election of directors.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock having
preference over the common stock as to payment of dividends, the full amount of
dividends and of sinking fund, retirement fund or other retirement payments, if
any, to which such holders are respectively entitled in preference to the common
stock, then dividends may be paid on the common stock and on any class or series
of stock entitled to participate therewith as to dividends out of any assets
legally available for the payment of dividends.
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In the event of any liquidation, dissolution or winding up of the
Company, the holders of the common stock (and the holders of any class or series
of stock entitled to participate with the common stock in the distribution of
assets) shall be entitled to receive, in cash or in kind, the assets of the
Company available for distribution remaining after: (i) payment or provision for
payment of the Company's debts and liabilities; (ii) distributions or provisions
for distributions in settlement of any liquidation account; and (iii)
distributions or provisions for distributions to holders of any class or series
of stock having preference over the common stock in the liquidation, dissolution
or winding up of the Company. Each share of common stock shall have the same
rights as and be identical in all respects with all the other shares of common
stock.
B. Preferred Stock. The Company may provide in supplementary sections
to its charter for one or more classes of preferred stock, which shall be
separately identified. The shares of any class may be divided into and issued in
series, with each series separately designated so as to distinguish the shares
thereof from the shares of all other series and classes. The terms of each
series shall be set forth in a supplementary section to the charter. All shares
of the same class shall be identical, except as to the following relative rights
and preferences, as to which there may be variations between different series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so, from
which date(s), the payment date(s) for dividends, and the participating or other
special rights, if any, with respect to dividends;
(c) The voting powers, full or limited, if any, of shares of such
series;
(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which, such shares may be
redeemed;
(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution, or winding up of the
Company;
(f) Whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or redemption of
such shares, and if so entitled, the amount of such fund and the manner of its
application, including the price(s) at which such shares may be redeemed or
purchased through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the Company
and, if so, the conversion price(s) or the rate(s) of exchange, and the
adjustments thereof, if any, at which such conversion or exchange may be made,
and any other terms and conditions of such conversion or exchange;
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(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial preferred
stock and whether such shares may be reissued as shares of the same or any other
series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The board of directors shall have authority to divide, by the adoption
of supplementary charter sections, any authorized class of preferred stock into
series and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established
by a supplementary charter section adopted by the board of directors, the
Company shall file with the Secretary of the Office a dated copy of that
supplementary section of this charter establishing and designating the series
and fixing and determining the relative rights and preferences thereof.
Section 6. Preemptive Rights. Holders of the capital stock of the
Company shall not be entitled to preemptive rights with respect to any shares of
the Company which may be issued.
Section 7. Directors. The Company shall be under the direction of a
board of directors. The authorized number of directors, as stated in the
Company's bylaws, shall not be fewer than five nor more than 15, except when a
lesser or greater number is approved by the Director of the Office, or his or
her delegate.
Section 8. Certain Restrictions. Not withstanding anything contained in
the Company's charter or bylaws to the contrary, until for a period of five
years from the effective date of the reorganization of Willow Grove Bank as a
subsidiary of the Company, the following provisions shall apply:
A. Beneficial Ownership Limitation. No person, other than MHC, the
parent mutual holding company of the Company, shall directly or indirectly offer
to acquire the beneficial ownership of more than 10 percent of the common stock
of the Company. This limitation shall not apply to the purchase of shares by
underwriters in connection with a public offering, or the purchase of shares by
a tax-qualified employee stock benefit plan which is exempt from the approval
requirements under Section 574.3(c)(1)(vi) of the Office's regulations.
In the event shares are acquired in violation of this Section 8, all
shares beneficially owned by any person in excess of 10% shall be considered
excess shares and shall not be counted as shares
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entitled to vote and shall not be voted by any person or counted as voting
shares in connection with any matters submitted to the shareholders for a vote.
For purposes of this Section 8, the following definitions apply:
(1) The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint stock company, a
trust, an unincorporated organization or similar company, a syndicate or any
other group formed for the purpose of acquiring, holding or disposing of the
common stock of the Company.
(2) The term "offer" includes every offer to buy or otherwise acquire,
solicitation of an offer to sell, tender offer for, or request or invitation for
tender of, a security or interest in a security for value.
(3) The term "acquire" includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise.
(4) The term "acting in concert" means (a) the knowing participation in
a joint activity or conscious parallel action towards a common goal whether or
not pursuant to an express agreement, or (b) a combination or pooling of voting
or other interests in the securities of an issuer for a common purpose pursuant
to any contract, understanding, relationship, agreement or other arrangements,
whether written or otherwise.
B. Call for Special Meeting. Special meetings of shareholders relating
to changes in control of the Company or amendments to its charter shall be
called only upon direction of the board of directors.
Section 9. Amendment of Charter. Except as provided in Section 5, no
amendment, addition, alteration, change or repeal of this charter shall be made,
unless such is proposed by the board of directors of the Company, approved by
the shareholders by a majority of the votes eligible to be cast at a legal
meeting, unless a higher vote is otherwise required, and approved or preapproved
by the Office.
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WILLOW GROVE BANCORP, INC.
Attest: _________________________________ By: ________________________________
Mary Rossi Frederick A. Marcel
Secretary President and Chief Executive
Officer
OFFICE OF THRIFT SUPERVISION
Attest: _________________________________ By: ________________________________
Secretary of the Office of Thrift Director of the Office of Thrift
Supervision Supervision
Effective Date: __________
6
Exhibit 3.2
BYLAWS
WILLOW GROVE BANCORP, INC.
ARTICLE I - Home Office
The home office of Willow Grove Bancorp, Inc. (the "Company") shall be
in the city of Maple Glen in the county of Montgomery in the State of
Pennsylvania.
ARTICLE II - Shareholders
Section 1. Place of Meetings. All annual and special meetings of
shareholders shall be held at the home office of the Company or at such other
place as the board of directors may determine.
Section 2. Annual Meeting. A meeting of the shareholders of the Company
for the election of directors and for the transaction of any other business of
the Company shall be held annually within 150 days after the end of the
Company's fiscal year on the fourth Tuesday in October, if not a legal holiday,
and if a legal holiday, then on the next day following which is not a legal
holiday, at 10:00 A.M., Eastern Time, or at such other date and time within such
150-day period as the board of directors may determine.
Section 3. Special Meetings. Subject to the limitations set forth in
Section 8 of the Company's charter, special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by the regulations of the
Office of Thrift Supervision (the "Office"), may be called at any time by the
chairman of the board, the president, or a majority of the board of directors,
and shall be called by the chairman of the board, the president, or the
secretary upon the written request of the holders of not less than one-tenth of
all of the outstanding capital stock of the Company entitled to vote at the
meeting. Such written request shall state the purpose or purposes of the meeting
and shall be delivered to the home office of the Company addressed to the
chairman of the board, the president, or the secretary.
Section 4. Conduct of Meetings. Annual and special meetings shall be
conducted in accordance with the most current edition of Robert's Rules of Order
unless otherwise prescribed by regulations of the Office or these bylaws or the
board of directors adopts another written procedure for the conduct of meetings.
The board of directors shall designate, when present, either the chairman of the
board or president to preside at such meetings.
Section 5. Notice of Meetings. Written notice stating the place, day
and hour of the meeting and the purpose(s) for which the meeting is called shall
be delivered not fewer than 20 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the chairman of
the board, the president, or the secretary, or the directors calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the mail,
addressed to the shareholder at the address as it appears
<PAGE>
on the stock transfer books or records of the Company as of the record date
prescribed in Section 6 of this Article II with postage prepaid. When any
shareholders' meeting, either annual or special, is adjourned for 30 days or
more, notice of the adjourned meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the time and
place of any meeting adjourned for less than 30 days or of the business to be
transacted at the meeting, other than an announcement at the meeting at which
such adjournment is taken.
Section 6. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the board of directors shall fix in advance a date as the record date for any
such determination of shareholders. Such date in any case shall be not more than
60 days and, in case of a meeting of shareholders, not fewer than 10 days prior
to the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment.
Section 7. Voting Lists. At least 20 days before each meeting of the
shareholders, the officer or agent having charge of the stock transfer books for
shares of the Company shall make a complete list of the shareholders of record
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address and the number of shares held by each. This
list of shareholders shall be kept on file at the home office of the Company and
shall be subject to inspection by any shareholder of record or the shareholder's
agent at any time during usual business hours for a period of 20 days prior to
such meeting. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to inspection by any shareholder of
record or any shareholder's agent during the entire time of the meeting. The
original stock transfer book shall constitute prima facie evidence of the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders. In lieu of making the shareholder list available for
inspection by shareholders as provided in the preceding paragraph, the board of
directors may elect to follow the procedures prescribed in ss. 552.6(d) of the
Office's regulations as now or hereafter in effect.
Section 8. Quorum. A majority of the outstanding shares of the Company
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
is represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to constitute less than a quorum. If a quorum is present, the
affirmative vote of the majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders,
unless the vote of a greater number of
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shareholders voting together or voting by classes is required by law or the
charter. Directors, however, are elected by a plurality of the votes cast at an
election of directors.
Section 9. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney in fact. Proxies may be given telephonically or
electronically as long as the holder uses a procedure for verifying the identity
of the shareholder. Proxies solicited on behalf of the management shall be voted
as directed by the shareholder or, in the absence of such direction, as
determined by a majority of the board of directors. No proxy shall be valid more
than eleven months from the date of its execution except for a proxy coupled
with an interest.
Section 10. Voting of Shares in the Name of Two or More Persons. When
ownership stands in the name of two or more persons, in the absence of written
directions to the Company to the contrary, at any meeting of the shareholders of
the Company, any one or more of such shareholders may cast, in person or by
proxy, all votes to which such ownership is entitled. In the event an attempt is
made to cast conflicting votes, in person or by proxy, by the several persons in
whose names shares of stock stand, the vote or votes to which those persons are
entitled shall be cast as directed by a majority of those holding such stock and
present in person or by proxy at such meeting, but no votes shall be cast for
such stock if a majority cannot agree.
Section 11. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by any officer, agent, or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian, or conservator may be voted by him or her,
either in person or by proxy, without a transfer of such shares into his or her
name. Shares standing in the name of a trustee may be voted by him or her,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him or her without a transfer of such shares into his or her name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer into his or her name if authority to do so is contained in
an appropriate order of the court or other public authority by which such
receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Company nor shares
held by another corporation, if a majority of the shares entitled to vote for
the election of directors of such other corporation are held by the Company,
shall be voted at any meeting or counted in determining the total number of
outstanding shares at any given time for purposes of any meeting.
Section 12. Cumulative Voting. Subject to the provisions of Section 8
of the Company's charter, every shareholder entitled to vote at an election for
directors shall have the right to vote, in
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person or by proxy, the number of shares owned by the shareholder for as many
persons as there are directors to be elected and for whose election the
shareholder has a right to vote, or to cumulate the votes by giving one
candidate as many votes as the number of such directors to be elected multiplied
by the number of shares shall equal or by distributing such votes on the same
principle among any number of candidates.
Section 13. Inspectors of Election. In advance of any meeting of
shareholders, the board of directors may appoint any person other than nominees
for office as inspectors of election to act at such meeting or any adjournment.
The number of inspectors shall be either one or three. Any such appointment
shall not be altered at the meeting. If inspectors of election are not so
appointed, the chairman of the board or the president may, or on the request of
not fewer than 10 percent of the votes represented at the meeting shall, make
such appointment at the meeting. If appointed at the meeting, the majority of
the votes present shall determine whether one or three inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment by the board of
directors in advance of the meeting or at the meeting by the chairman of the
board or the president.
Unless otherwise prescribed by regulations of the Office, the duties of
such inspectors shall include: determining the number of shares and the voting
power of each share, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies; receiving votes,
ballots, or consents; hearing and determining all challenges and questions in
any way arising in connection with the rights to vote; counting and tabulating
all votes or consents; determining the results; and such acts as may be proper
to conduct the election or vote with fairness to all shareholders.
Section 14. Nominating Committee. The board of directors shall act as a
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the death
or other incapacity of a management nominee, the nominating committee shall
deliver written nominations to the secretary at least 20 days prior to the date
of the annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the Company. No nominations for directors
except those made by the nominating committee shall be voted upon at the annual
meeting unless other nominations by shareholders are made in writing and
delivered to the secretary of the Company at least five days prior to the date
of the annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the Company. Ballots bearing the names of
all persons nominated by the nominating committee and by shareholders shall be
provided for use at the annual meeting. However, if the nominating committee
shall fail or refuse to act at least 20 days prior to the annual meeting,
nominations for directors may be made at the annual meeting by any shareholder
entitled to vote and shall be voted upon.
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Section 15. New Business. Proposals for any new business to be taken up
at any annual or special meeting of shareholders may be made by the board of
directors of the Company or by any shareholder of the Company entitled to vote
generally in the election of directors. In order for a shareholder of the
Company to make any such proposals, he or she shall give notice thereof in
writing, delivered or mailed by first class United States mail, postage prepaid,
to the secretary of the Company not less than 30 days nor more than 60 days
prior to any such meeting; provided, however, that if less than 30 days' notice
of the meeting is given to shareholders, such written notice shall be delivered
or mailed, as prescribed, to the secretary of the Company not later than the
close of the tenth day following the day on which notice of the meeting was
mailed to shareholders.
Each such notice given by a shareholder to the secretary of the Company
with respect to business proposals to bring before a meeting shall set forth in
writing as to each matter: (i) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
meeting; (ii) the name and address, as they appear on the subsidiary holding
company's books, of the shareholder proposing such business; (iii) the class and
number of shares of the Company which are beneficially owned by the shareholder;
and (iv) any material interest of the shareholder in such business.
Notwithstanding anything in these Articles to the contrary, no business shall be
conducted at the meeting except in accordance with the procedures set forth in
this Section 15 of Article II.
The chairman of the annual or special meeting of shareholders may, if
the facts warrant, determine and declare to such meeting that a proposal was not
made in accordance with the foregoing procedure, and, if he should so determine,
he shall so declare to the meeting and the defective proposal shall be
disregarded and laid over for action at the next succeeding adjourned, special
or annual meeting of the shareholders taking place thirty days or more
thereafter. This provision shall not require the holding of any adjourned or
special meeting of shareholders for the purpose of considering such defective
proposal.
Section 16. Informal Action by Shareholders. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of shareholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter.
ARTICLE III - Board of Directors
Section 1. General Powers. The business and affairs of the Company
shall be under the direction of its board of directors. The board of directors
shall annually elect a chairman of the board and a president from among its
members and shall designate, when present, either the chairman of the board or
the president to preside at its meetings.
Section 2. Number and Term. The board of directors shall consist of
nine members, and shall be divided into three classes as nearly equal in number
as possible. The members of each class
5
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shall be elected for a term of three years and until their successors are
elected and qualified. One class shall be elected by ballot annually.
Section 3. Regular Meetings. A regular meeting of the board of
directors shall be held without other notice than this bylaw following the
annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place, for the holding of additional regular meetings
without other notice than such resolution. Directors may participate in a
meeting by means of a conference telephone or similar communications device
through which all persons participating can hear each other at the same time.
Participation by such means shall constitute presence in person for all
purposes.
Section 4. Special Meetings. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, the president,
or one-third of the directors. The persons authorized to call special meetings
of the board of directors may fix any place as the place for holding any special
meeting of the board of directors called by such persons. Members of the board
of directors may participate in special meetings by means of conference
telephone or similar communications equipment by which all persons participating
in the meeting can hear each other. Such participation shall constitute presence
in person for all purposes.
Section 5. Notice. Written notice of any special meeting shall be given
to each director at least 24 hours prior thereto when delivered personally or by
telegram or at least five days prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall be
deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed, when delivered to the telegraph company if sent by telegram,
or when the Company receives notice of delivery if electronically transmitted.
Any director may waive notice of any meeting by a writing filed with the
secretary. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 6. Quorum. A majority of the number of directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the board of directors; but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time. Notice of any adjourned meeting shall be
given in the same manner as prescribed by Section 5 of this Article III.
Section 7. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the Office
or by these bylaws.
6
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Section 8. Action Without a Meeting. Any action required or permitted
to be taken by the board of directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors.
Section 9. Resignation. Any director may resign at any time by sending
a written notice of such resignation to the home office of the Company addressed
to the chairman of the board or the president. Unless otherwise specified, such
resignation shall take effect upon receipt by the chairman of the board or the
president. More than three consecutive absences from regular meetings of the
board of directors, unless excused by resolution of the board of directors,
shall automatically constitute a resignation, effective when such resignation is
accepted by the board of directors.
Section 10. Vacancies. Any vacancy occurring on the board of directors
may be filled by the affirmative vote of a majority of the remaining directors
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve only until the next election of
directors by the shareholders. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election by the board of
directors for a term of office continuing only until the next election of
directors by the shareholders.
Section 11. Compensation. Directors, as such, may receive a stated
salary for their services. By resolution of the board of directors, a reasonable
fixed sum, and reasonable expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the board of directors. Members
of either standing or special committees may be allowed such compensation for
attendance at committee meetings as the board of directors may determine.
Section 12. Presumption of Assent. A director of the Company who is
present at a meeting of the board of directors at which action on any Company
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent or abstention shall be entered in the minutes of the meeting
or unless he or she shall file a written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the Company within
five days after the date a copy of the minutes of the meeting is received. Such
right to dissent shall not apply to a director who voted in favor of such
action.
Section 13. Removal of Directors. At a meeting of shareholders called
expressly for that purpose, any director may be removed only for cause by a vote
of the holders of a majority of the shares then entitled to vote at an election
of directors. If less than the entire board is to be removed, no one of the
directors may be removed if the votes cast against the removal would be
sufficient to elect a director if then cumulatively voted at an election of the
class of directors of which such director is a part. Whenever the holders of the
shares of any class are entitled to elect one or more directors by the
provisions of the charter or supplemental sections thereto, the provisions of
this section shall apply, in respect to the removal of a director or directors
so elected, to the vote of the holders of the outstanding shares of that class
and not to the vote of the outstanding shares as a whole.
7
<PAGE>
ARTICLE IV - Executive And Other Committees
Section 1. Appointment. The board of directors, by resolution adopted
by a majority of the full board, may designate the chief executive officer and
two or more of the other directors to constitute an executive committee. The
designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
Section 2. Authority. The executive committee, when the board of
directors is not in session, shall have and may exercise all of the authority of
the board of directors, except to the extent if any, that such authority shall
be limited by the resolution appointing the executive committee; and except also
that the executive committee shall not have the authority of the board of
directors with reference to: the declaration of dividends; the amendment of the
charter or bylaws of the Company, or recommending to the shareholders a plan of
merger, consolidation, or conversion; the sale, lease, or other disposition of
all or substantially all of the property and assets of the Company otherwise
than in the usual and regular course of its business; a voluntary dissolution of
the Company; a revocation of any of the foregoing; or the approval of a
transaction in which any member of the executive committee, directly or
indirectly, has any material beneficial interest.
Section 3. Tenure. Subject to the provisions of Section 8 of this
Article IV, each member of the executive committee shall hold office until the
next regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
Section 4. Meetings. Regular meetings of the executive committee may be
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating the
place, date, and hour of the meeting, which notice may be written or oral. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 6. Action Without a Meeting. Any action required or permitted
to be taken by the executive committee at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the members of the executive committee.
Section 7. Vacancies. Any vacancy in the executive committee may be
filled by a resolution adopted by a majority of the full board of directors.
8
<PAGE>
Section 8. Resignations and Removal. Any member of the executive
committee may be removed at any time with or without cause by resolution adopted
by a majority of the full board of directors. Any member of the executive
committee may resign from the executive committee at any time by giving written
notice to the president or secretary of the Company. Unless otherwise specified,
such resignation shall take effect upon its receipt; the acceptance of such
resignation shall not be necessary to make it effective.
Section 9. Procedure. The executive committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information at
the meeting held next after the proceedings shall have occurred.
Section 10. Other Committees. The board of directors may by resolution
establish an audit, loan, or other committee composed of directors as they may
determine to be necessary or appropriate for the conduct of the business of the
Company and may prescribe the duties, constitution, and procedures thereof.
ARTICLE V - Officers
Section 1. Positions. The officers of the Company shall be a president,
one or more vice presidents, a secretary, and a treasurer or comptroller, each
of whom shall be elected by the board of directors. The board of directors may
also designate the chairman of the board as an officer. The offices of the
secretary and treasurer or comptroller may be held by the same person and a vice
president may also be either the secretary or the treasurer or comptroller. The
board of directors may designate one or more vice presidents as executive vice
president or senior vice president. The board of directors may also elect or
authorize the appointment of such other officers as the business of the Company
may require. The officers shall have such authority and perform such duties as
the board of directors may from time to time authorize or determine. In the
absence of action by the board of directors, the officers shall have such powers
and duties as generally pertain to their respective offices.
Section 2. Election and Term of Office. The officers of the Company
shall be elected annually at the first meeting of the board of directors held
after each annual meeting of the shareholders. If the election of officers is
not held at such meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has been duly elected
and qualified or until the officer's death, resignation, or removal in the
manner hereinafter provided. Election or appointment of an officer, employee, or
agent shall not of itself create contractual rights. The board of directors may
authorize the Company to enter into an employment contract with any officer in
accordance with regulations of the Office; but no such contract shall impair the
right of the board of directors to remove any officer at any time in accordance
with Section 3 of this Article V.
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<PAGE>
Section 3. Removal. Any officer may be removed by the board of
directors whenever in its judgment the best interests of the Company will be
served thereby, but such removal, other than for cause, shall be without
prejudice to the contractual rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
Section 5. Remuneration. The remuneration of the officers shall be
fixed from time to time by the board of directors.
ARTICLE VI - Contracts, Loans, Checks, and Deposits
Section 1. Contracts. To the extent permitted by regulations of the
Office, and except as otherwise prescribed by these bylaws with respect to
certificates for shares, the board of directors may authorize any officer,
employee, or agent of the Company to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Company. Such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the Company
and no evidence of indebtedness shall be issued in its name unless authorized by
the board of directors. Such authority may be general or confined to specific
instances.
Section 3. Checks, Drafts, Etc. All checks, drafts, or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the Company shall be signed by one or more officers, employees or agents
of the Company in such manner as shall from time to time be determined by the
board of directors.
Section 4. Deposits. All funds of the Company not otherwise employed
may be deposited from time to time to the credit of the Company in any duly
authorized depositories as the board of directors may select.
ARTICLE VII - Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares of
capital stock of the Company shall be in such form as shall be determined by the
board of directors and approved by the Office. Such certificates shall be signed
by the chief executive officer or by any other officer of the Company authorized
by the board of directors, attested by the secretary or an assistant secretary,
and sealed with the corporate seal or a facsimile thereof. The signatures of
such officers upon a certificate may be facsimiles if the certificate is
manually signed on behalf of a transfer agent or a registrar other than the
Company itself or one of its employees. Each certificate for shares of capital
stock shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares are issued, with the number of shares
and date of issue, shall be entered on the
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<PAGE>
stock transfer books of the Company. All certificates surrendered to the Company
for transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares has been surrendered and
canceled, except that in the case of a lost or destroyed certificate, a new
certificate may be issued upon such terms and indemnity to the Company as the
board of directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of capital stock of
the Company shall be made only on its stock transfer books. Authority for such
transfer shall be given only by the holder of record or by his or her legal
representative, who shall furnish proper evidence of such authority, or by his
or her attorney authorized by a duly executed power of attorney and filed with
the Company. Such transfer shall be made only on surrender for cancellation of
the certificate for such shares. The person in whose name shares of capital
stock stand on the books of the Company shall be deemed by the Company to be the
owner for all purposes.
ARTICLE VIII - Fiscal Year
The fiscal year of the Company shall end on the 30th day of June of
each year. The appointment of accountants shall be subject to annual
ratification by the shareholders.
ARTICLE IX - Dividends
Subject to the terms of the Company's charter and the regulations and
orders of the Office, the board of directors may, from time to time, declare,
and the Company may pay, dividends on its outstanding shares of capital stock.
ARTICLE X - Corporate Seal
The board of directors shall provide a Company seal which shall contain
the name of the Company. The year of incorporation or an emblem may appear in
the center.
ARTICLE XI - Corporate Governance
To the extent not inconsistent with applicable federal statutes and
regulations and safety and soundness, the Company elects to follow the corporate
governance procedures of the laws of the Commonwealth of Pennsylvania.
ARTICLE XII - Amendments
These bylaws may be amended in a manner consistent with regulations of
the Office and shall be effective after: (i) approval of the amendment by a
majority vote of the authorized board of directors, or by a majority vote of the
votes cast by the shareholders of the Company at any legal meeting, and (ii)
receipt of any applicable regulatory approval. When the Company fails to meet
its quorum requirements, solely due to vacancies on the board, then the
affirmative vote of a majority of the sitting board will be required to amend
the bylaws.
11
Exhibit 3.5
MUTUAL HOLDING COMPANY CHARTER
WILLOW GROVE MUTUAL HOLDING COMPANY
Section 1: Corporate Title. The name of the mutual holding company
hereby chartered is Willow Grove Mutual Holding Company (the "Mutual Company").
Section 2: Duration. The duration of the Mutual Company is perpetual.
Section 3: Purpose and Powers. The purpose of the Mutual Company is to
pursue any or all of the lawful objectives of a federal mutual savings and loan
holding company chartered under section 10(o) of the Home Owners' Loan Act, 12
U.S.C. ss.1467a(o), and to exercise all of the express, implied, and incidental
powers conferred thereby and all acts amendatory thereof and supplemental
thereto, subject to the Constitution and the laws of the United States as they
are now in effect, or as they may hereafter be amended, and subject to all
lawful and applicable rules, regulations, and orders of the Office of Thrift
Supervision ("Office").
Section 4: Capital. The Mutual Company shall have no capital stock.
Section 5: Members. All holders of the savings, demand, or other
authorized accounts of Willow Grove Bank (including any successor thereto, the
"Bank") are members of the Mutual Company. With respect to all questions
requiring action by the members of the Mutual Company, each holder of an account
in the Bank shall be permitted to cast one vote for each $100, or fraction
thereof, of the withdrawal value of the member's account. In addition, borrowers
from the Bank as of the effective date of this charter who have continuously
been borrowers from the Bank since May 15, 1995 shall be entitled to one vote
for the period of time during which such borrowings are in existence, in
addition to such other votes as such borrower member otherwise may have. No
member, however, shall cast more than 1,000 votes. Voting may be by proxy,
subject to the rules and regulations of the Office. Any number of members
present and voting, represented in person or by proxy, at a regular or special
meeting of the members shall constitute a quorum. A majority of all votes cast
at any meeting of the members shall determine any question, subject to the rules
and regulations of the Office. All accounts shall be nonassessable.
Section 6: Directors. The Mutual Company shall be under the direction
of a board of directors. The authorized number of directors shall not be fewer
than five nor more than 15, as fixed in the Mutual Company's bylaws, except that
the number of directors may be increased to a number greater than 15 with the
prior approval of the Office. Each director of the Mutual Company shall be a
member of the Mutual Company. Members of the Mutual Company shall elect the
directors, provided that, in the event of a vacancy on the board, the board of
directors may fill such vacancy, if the members of the Mutual Company fail to do
so, by electing a director to serve until the next annual meeting of members.
Directors shall be elected for periods of three years and until their
<PAGE>
successors are elected and qualified, except that provision shall be made for
the election of approximately one-third of the board each year.
Section 7: Capital, Surplus, and Distribution of Earnings. The Mutual
Company may distribute net earnings to account holders of the Bank on such basis
and in accordance with such terms and conditions as may from time to time be
authorized by the Director of the Office, provided that the Mutual Company may
establish minimum account balance requirements for account holders to be
eligible for distributions of earnings.
All holders of accounts of the Bank shall be entitled to equal
distribution of the assets of the Mutual Company, pro rata to the value of their
accounts in the Bank, in the event of a voluntary or involuntary liquidation,
dissolution, or winding up of the Mutual Company.
Section 8: Amendment. Adoption of any preapproved charter amendment
pursuant to the Office's rules and regulations shall be effective upon filing
the amendment with the Office in accordance with regulatory procedures, after
such preapproved amendment has been submitted to and approved by the members at
a legal meeting. Any other amendment, addition, change or repeal of this charter
must be submitted to and preliminarily approved by the Office prior to
submission to and approval by the members at a legal meeting. Any amendment,
addition, alteration, change, or repeal so acted upon and approved shall be
effective upon filing with the Office in accordance with regulatory procedures.
WILLOW GROVE MUTUAL HOLDING
COMPANY
Attest: By:
---------------------- -----------------------------
Mary Rossi Frederick A. Marcell, Jr.
Secretary President and Chief Executive
Officer
OFFICE OF THRIFT SUPERVISION
Attest: By:
---------------------- -----------------------------
Effective Date:
-------------------
2
Exhibit 3.6
BYLAWS
WILLOW GROVE MUTUAL HOLDING COMPANY
Section 1: Annual Meeting of Members. The annual meeting of the members
of Willow Grove Mutual Holding Company (the "Mutual Company") for the election
of directors and for the transaction of any other business of the Mutual Company
shall be held, as designated by the board of directors, at a location within the
Commonwealth of Pennsylvania at 9:00 a.m., Eastern Time, on the fourth Tuesday
in October of each calendar year, if not a legal holiday, or if a legal holiday,
then on the next succeeding day not a legal holiday. The annual meeting may be
held at such other times on such day or at such other place in the Commonwealth
of Pennsylvania as the board of directors may determine. At each annual meeting,
the officers shall make a full report of the financial condition of the Mutual
Company and of its progress for the preceding year and shall outline a program
for the succeeding year.
Section 2: Special Meetings of Members. Special meetings of the members
of the Mutual Company may be called at any time by the president or the board of
directors and shall be called by the president, a vice president, or the
secretary upon the written request of members of record, holding in the
aggregate at least one-tenth of the capital of the Mutual Company. Such written
request shall state the purpose of the meeting and shall be delivered at the
principal place of business of the Mutual Company addressed to the president.
Annual and special meetings shall be conducted in accordance with the most
current edition of Robert's Rules of Order.
Section 3: Notice of Meeting of Members.
(a) Notice of each annual meeting shall be either published once a week
for the two successive calendar weeks (in each instance on any day of the week)
immediately prior to the week in which such annual meeting shall convene, in a
newspaper printed in the English language and of general circulation in the city
or county in which the principal place of business of the Mutual Company is
located, or mailed postage prepaid at least 15 days and not more than 45 days
prior to the date on which such annual meeting shall convene, to each of its
members of record at the last address appearing on the books of the Mutual
Company. Such notice shall state the name of the Mutual Company, the place of
the annual meeting, the date and time when it shall convene, and the matters to
be considered. A similar notice shall be posted in a conspicuous place in each
of the offices of the Mutual Company during the 14 days immediately preceding
the date on which such annual meeting shall convene. If any member, in person or
by authorized attorney, shall waive in writing notice of any annual meeting of
members, notice thereof need not be given to such member.
(b) Notice of each special meeting shall be either published once a
week for the two consecutive calendar weeks (in each instance on any day of the
week) immediately prior to the week in which such special meeting shall convene,
in a newspaper printed in the English language and of
<PAGE>
general circulation in the city or county in which the principal place of
business of the Mutual Company is located, or mailed postage prepaid at least 15
days and not more than 45 days prior to the date on which such special meeting
shall convene to each of its members of record at the member's last address
appearing on the books of the Mutual Company. Such notice shall state the name
of the Mutual Company, the purpose(s) for which the meeting is called, the place
of the special meeting and the date and time when it shall convene. A similar
notice shall be posted in a conspicuous place in each of the offices of the
Mutual Company during the 14 days immediately preceding the date on which such
special meeting shall convene. If any member, in person or by authorized
attorney, shall waive in writing notice of any special meeting of members,
notice thereof need not be given to such member.
Section 4: Fixing of Record Date. For the purpose of determining
members entitled to notice of or to vote at any meeting of members or any
adjournment thereof, or in order to make a determination of members for any
other proper purpose, the board of directors shall fix in advance a record date
for any such determination of members. Such date shall be not more than 60 days
nor fewer than 10 days prior to the date on which the action, requiring such
determination of members, is to be taken. The members entitled to participate in
any such action shall be the members of record on the books of the Mutual
Company on such record date. The number of votes which each member shall be
entitled to cast at any meeting of the members shall be determined from the
books of the Mutual Company as of such record date. Any member as of such record
date who ceases to be a member prior to such meeting shall not be entitled to
vote at that meeting.
Section 5: Voting by Proxy. Voting at any annual or special meeting of
the members may be by proxy pursuant to the rules and regulations of the Office,
provided, that no proxies shall be voted at any meeting unless such proxies
shall have been placed on file with the secretary of the Mutual Company, for
verification, prior to the convening of such meeting. All proxies with a term
greater than eleven months or solicited at the expense of the Mutual Company
must run to the board of directors as a whole, or to a committee appointed by a
majority of such board.
Section 6: Communication Between Members. Communication between members
shall be subject to any applicable rules or regulations of the Office.
Section 7: Number of Directors. The number of directors of the Mutual
Company shall be nine.
Section 8: Meetings of the Board. The board of directors shall meet
regularly without notice at the principal place of business of the Mutual
Company at least once each month at an hour and date fixed by resolution of the
board, provided that the place of meeting may be changed by the directors.
Special meetings of the board may be held at any place specified in a notice of
such meeting and shall be called by the secretary upon the written request of
the chairman or of three directors. All special meetings shall be held upon at
least three days' written notice to each director unless notice is waived in
writing before or after such meeting. Such notice shall state the place, date,
time and purposes of such meeting. A majority of the authorized directors shall
constitute a
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<PAGE>
quorum for the transaction of business. The act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the board.
Action may be taken without a meeting if unanimous written consent is obtained
for such action. The meetings shall be under the direction of a chairman,
appointed annually by the board, or in the absence of the chairman, the meetings
shall be under the direction of the president.
Section 9: Officers, Employees and Agents. Annually at the meeting of
the board of directors of the Mutual Company next following the annual meeting
of the members of the Mutual Company, the board shall elect a president, one or
more vice presidents, a secretary, and treasurer; provided, that the offices of
president and secretary may not be held by the same person and a vice president
may also be the treasurer. The board may appoint such additional officers,
employees, and agents as it may from time to time determine. The term of office
of all officers shall be one year or until their respective successors are
elected and qualified; but any officer may be removed at any time by the board.
In the absence of designation from time to time of powers and duties by the
board, the officers shall have such powers and duties as generally pertain to
their respective offices.
Any indemnification by the Mutual Company of the Mutual Company's
personnel is subject to any applicable rules or regulations of the Office.
Section 10: Resignation or Removal of Directors. Any director may
resign at any time by sending a written notice of such resignation to the office
of the Mutual Company delivered to the secretary. Unless otherwise specified
therein such resignation shall take effect upon receipt by the secretary. More
than three consecutive absences from regular meetings of the board, unless
excused by resolution of the board, shall automatically constitute a
resignation, effective when such resignation is accepted by the board.
At a meeting of members called expressly for that purpose, directors or
the entire board may be removed, only with cause, by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors.
Section 11: Powers of the Board. The board of directors shall have the
power: (a) By resolution, to appoint from among its members and remove an
executive committee, which committee shall have and may exercise the powers of
the board between the meetings of the board, but no such committee shall have
the authority of the board to amend the charter or bylaws, adopt a plan of
merger, consolidation, dissolution, or provide for the disposition of all or
substantially all the property and assets of the Mutual Company. Such committee
shall not operate to relieve the board, or any member thereof, of any
responsibility imposed by law;
(b) To appoint and remove by resolution the members of such other
committees as may be deemed necessary and prescribe the duties thereof;
3
<PAGE>
(c) To fix the compensation of directors, officers, and employees; and
to remove any officer or employee at any time with or without cause; and
(d) To exercise any and all of the powers of the Mutual Company not
expressly reserved by the charter to the members.
Section 12: Execution of Instruments, Generally. All documents and
instruments or writings of any nature shall be signed, executed, verified,
acknowledged, and delivered by such officers, agents, or employees of the Mutual
Company or any one of them and in such manner as from time to time may be
determined by resolution of the board. All notes, drafts, acceptances, checks,
endorsements, and all evidences of indebtedness of the Mutual Company whatsoever
shall be signed by such officer or officers or such agent or agents of the
Mutual Company and in such manner as the board may from time to time determine.
Endorsements for deposit to the credit of the Mutual Company in any of its duly
authorized depositories shall be made in such manner as the board may from time
to time determine. Proxies to vote with respect to shares or accounts of other
associations or stock of other corporations owned by, or standing in the name
of, the Mutual Company may be executed and delivered from time to time on behalf
of the Mutual Company by the president or a vice president and the secretary or
an assistant secretary of the Mutual Company or by any other persons so
authorized by the board.
Section 13: Nominating Committee. The chairman, at least 30 days prior
to the date of each annual meeting, shall appoint a nominating committee of
three persons who are members of the Mutual Company. Such committee shall make
nominations for directors in writing and deliver to the secretary such written
nominations at least 15 days prior to the date of the annual meeting, which
nominations shall then be posted in a prominent place in the principal place of
business for the 15-day period prior to the date of the annual meeting. Provided
such committee is appointed and makes such nominations, no nominations for
directors except those made by the nominating committee shall be voted upon at
the annual meeting unless other nominations by members are made in writing and
delivered by the secretary of the Mutual Company at least 10 days prior to the
date of the annual meeting, which nominations shall then be posted in a
prominent place in the principal place of business for the 10-day period prior
to the date of the annual meeting. Ballots bearing the names of all persons
nominated by the nominating committee and by other members prior to the annual
meeting shall be provided for use by the members at the annual meeting. If at
any time the chairman shall fail to appoint such nominating committee, or the
nominating committee shall fail or refuse to act at least 15 days prior to the
annual meeting, nominations for directors may be made at the annual meeting by
any member and shall be voted upon.
Section 14: New Business. Any new business to be taken up at the annual
meeting, including any proposal to increase or decrease the number of directors
of the Mutual Company, shall be stated in writing and filed with the secretary
of the Mutual Company at least 30 days before the date of the annual meeting,
and all business so stated, proposed, and filed shall be considered at the
annual meeting; but no other proposal shall be acted upon at the annual meeting.
Any member may make any other proposal at the annual meeting and the same may be
discussed and considered; but
4
<PAGE>
unless stated in writing and filed with the secretary 30 days before the
meeting, such proposal shall be laid over for action at an adjourned, special,
or regular meeting of the members taking place at least 30 days thereafter. This
provision shall not prevent the consideration and approval or disapproval at the
annual meeting of the reports of officers and committees, but in connection with
such reports no new business shall be acted upon at such annual meeting unless
stated and filed as herein provided.
Section 15: Seal. The seal shall be two concentric circles between
which shall be the name of the Mutual Company. The year of incorporation, the
word "incorporated," or an emblem may appear in the center.
Section 16: Corporate Governance. To the extent not inconsistent with
applicable federal statutes and regulations and safety and soundness, the Mutual
Company elects to follow the corporate governance procedures of the laws of the
Commonwealth of Pennsylvania.
Section 17: Amendment. Adoption of any bylaw amendment pursuant to the
Office's regulations, as long as consistent with applicable law, rules and
regulations, and which adequately addresses the subject and purpose of the
stated bylaw section, shall be effective upon filing with the Office in
accordance with the regulatory procedures after such amendment has been approved
by a two-thirds affirmative vote of the authorized board, or by a vote of the
members of the Mutual Company.
5
Exhibit 4.1
(FORM OF STOCK CERTIFICATE - FRONT SIDE)
NUMBER SHARES
COMMON STOCK CUSIP
See reverse for
certain definitions
WILLOW GROVE BANCORP, INC.
INCORPORATED UNDER THE LAWS OF THE UNITED STATES
This certifies that ___________________________________ is the
registered holder of _________________ fully paid and non-assessable shares of
the Common Stock, par value $.01 per share, of Willow Grove Bancorp, Inc., Maple
Glen, Pennsylvania (the "Corporation"), incorporated under the laws of the
United States.
The shares evidenced by this Certificate are transferable only on the
books of the Corporation by the holder hereof, in person or by a duly authorized
attorney or legal representative, upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented hereby are subject to all
the provisions of the Charter and Bylaws of the Corporation and any and all
amendments thereto. The shares represented by this certificate are not deposits
or accounts and are not federally insured or guaranteed. This Certificate is not
valid unless countersigned by the Transfer Agent and registered by the
Registrar.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the facsimile signatures of its duly authorized officers and has
caused its facsimile seal to be affixed hereto.
Dated:
(SEAL)
- ----------------------- -------------------------------------
John T. Powers Frederick A. Marcell, Jr.
Corporate Secretary President and Chief Executive Officer
<PAGE>
(FORM OF STOCK CERTIFICATE - BACK SIDE)
The Corporation is authorized to issue more than one class of stock,
including a class of preferred stock which may be issued in one or more series.
The Corporation will furnish to any stockholder, upon written request and
without charge, a full statement of the designations, preferences, limitations
and relative rights of the shares of each class authorized to be issued and,
with respect to the issuance of any preferred stock to be issued in series, the
relative rights, preferences and limitations between the shares of each series
so far as the rights, preferences and limitations have been fixed and determined
and the authority of the Board of Directors to fix and determine the relative
rights, preferences and limitations of subsequent series.
The Charter of the Corporation includes a provision which generally
prohibits any person (including an individual, company or group acting in
concert) from directly or indirectly offering to acquire or acquiring the
beneficial ownership of more than 10% of any class of equity securities of the
Corporation. In the event that stock is acquired in violation of this 10%
limitation, the excess shares will no longer be counted in determining the total
number of outstanding shares for purposes of any matter involving stockholder
action and the Board of Directors of the Corporation may cause such excess
shares to be transferred to an independent trustee for sale in the open market
or otherwise, with the expenses of such sale to be paid out of the proceeds of
the sale.
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT - Custodian under
------------------------ -------------------
(Cust) (Minor)
Uniform Gifts to Minors Act
----------------------
(State)
Additional abbreviations may also be used though not in the above list.
<PAGE>
For value received,______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAXPAYER IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------------
| |
| |
- -----------------------------------------------
- ---------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
___________________ shares of Common Stock represented by this Certificate, and
do hereby irrevocably constitute and appoint _______________ as Attorney, to
transfer the said shares on the books of the within named Corporation, with full
power of substitution.
Dated __________ ___, __
--------------------------------
Signature
--------------------------------
Signature
NOTICE: The signature(s) to this assignment must correspond with the name(s) as
written upon the face of this Certificate in every particular, without
alteration or enlargement, or any change whatever. The signature(s) should be
guaranteed by an eligible guarantor institution (bank, stockbroker, savings and
loan association or credit union) with membership in an approved signature
medallion program, pursuant to S.E.C. Rule 17Ad-15.
Exhibit 5.0
<TABLE>
<S> <C> <C>
LAW OFFICES
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
TIMOTHY B. MATZ 12TH FLOOR JEFFREY D. HAAS
STEPHEN M. EGE 734 15TH STREET, N.W. KEVIN M. HOULIHAN
RAYMOND A. TIERNAN WASHINGTON, D.C. 20005 KENNETH B. TABACH
W. MICHAEL HERRICK _______ PATRICIA J. WOHL
GERARD L. HAWKINS JEFFREY R. HOULE
NORMAN B. ANTIN TELEPHONE: (202) 347-0300 FIORELLO J. VICENCIO*
JOHN P. SOUKENIK* FACSIMILE: (202) 347-2172 DAVID TEEPLES
GERALD F. HEUPEL, JR. WWW.EMTH.COM CRISTIN ZEISLER
JEFFREY A. KOEPPEL ANDREW ROSENSTEIN*
DANIEL P. WEITZEL _____________________
PHILIP ROSS BEVAN ALLIN P. BAXTER
HUGH T. WILKINSON JACK I. ELIAS
SHERYL JONES ALU
</TABLE>
*NOT ADMITTED IN D.C.
November 2, 1998
VIA EDGAR
Board of Directors
Willow Grove Bancorp, Inc.
Welsh and Norristown Roads
Maple Glen, Pennsylvania 19002
Gentlemen:
We have acted as special counsel to Willow Grove Bancorp, Inc., a
Federal corporation in organization (the "Company"), in connection with the
preparation and filing with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended, of the Registration Statement on Form
S-1 (the "Registration Statement"), relating to the issuance of up to 2,530,736
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), in connection with the reorganization of Willow Grove Bank, a Federally
chartered mutual savings bank (the "Bank"), into the federal mutual holding
company form of ownership, whereby the Bank will convert to a federally
chartered stock savings bank as a wholly owned subsidiary of the Company, and
the Company will become a majority-owned subsidiary of Willow Grove Mutual
Holding Company (the "MHC"), a federally chartered mutual holding company (the
"Reorganization"). The shares of Common Stock are being offered hereby pursuant
to the Company's Plan of Stock Issuance (the "Plan of Stock Issuance"), which is
an integral part of the Bank's Plan of Reorganization from Mutual Savings Bank
to Mutual Holding Company (the "Plan of Reorganization"). In this regard, we
have examined the Federal Stock Charter and Bylaws of the Company, resolutions
of the Board of Directors of the Bank, the Plan of Reorganization, the Plan of
Stock Issuance, and such other documents and matters of law as we deemed
appropriate for the purposes of this opinion.
<PAGE>
Based upon the foregoing, we are of the opinion as of the date hereof
that the Common Stock has been duly and validly authorized, and when issued in
accordance with the terms of the Plan of Stock Issuance, and upon the receipt of
the consideration required thereby, will be legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement and to the references to this firm under the
heading "Legal and Tax Opinions" in the Prospectus contained in the Registration
Statement.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Hugh T. Wilkinson
-----------------------------
Hugh T. Wilkinson, a Partner
Exhibit 8.1
November 3, 1998
Board of Directors
Willow Grove Bank
Welsh and Norristown Roads
Maple Glen, Pennsylvania 19002
Re: Mutual Holding Company Formation and Stock Issuance
Gentlemen:
We have been requested as special counsel to Willow Grove Bank, a
federally chartered mutual savings bank to express our opinion concerning the
Federal income tax consequences relating to the proposed conversion of the Bank
from a mutual savings bank (the "Bank") to a Federally chartered stock savings
bank to be called Willow Grove Bank (the "Stock Bank") and the formation of
Willow Grove Mutual Holding Company, a Federal mutual holding company (the
"Mutual Holding Company") which will acquire the stock of the Stock Bank and
subsequently contribute the Stock Bank's stock to Willow Grove Bancorp, Inc.
(the "Stock Holding Company").
For the purposes of this opinion, we have examined such documents and
questions of law as we have considered necessary and appropriate, including but
not limited to: the Plan of Reorganization (as defined below) and the Plan of
Stock Issuance (as defined below), each as adopted by the Bank's Board of
Directors on July 28, 1998, as well as certain other documents 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.
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 2
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 Reorganization,
and that the various representations and warranties which are provided to us 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 Reorganization under
Federal income tax laws, except on the basis of the documents and assumptions
described above and we express no opinion concerning tax matters relating to the
Reorganization under state or local tax laws.
For purposes of this opinion, we are relying on the representations
provided to us by the Bank, which are incorporated herein by reference.
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.
Additionally, we reviewed certain Internal Revenue Service (the "IRS") rulings
which analyze transactions similar in form and are based upon fact patterns
substantially identical to the transaction contemplated herein. See PLR
98-25-025 (June 16, 1998); PLR 97-41-020 (Oct. 10, 1997); and PLR 97-35-028
(Aug. 29, 1997). 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.
In rendering our opinions, we have assumed that the persons and
entities identified in the Plan of Reorganization will at all times comply with
the requirements of Code Sections 368 and 351, the other applicable state and
Federal laws and the representations of the Bank. In addition, we have assumed
that the activities of the persons and entities identified in the Plan of
Reorganization will be conducted strictly in accordance with the Plan of
Reorganization. Any variations may affect the opinions we are rendering.
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.
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 3
BACKGROUND
As a Federally chartered mutual savings bank, the Bank, in mutual form,
has no authorized capital stock. Holders of its Deposit Accounts possess certain
liquidation rights, voting rights and other incidents of equity ownership in the
Bank (the "Account Holders"). In the event of liquidation, Account Holders have
the right to share pro rata in any liquidation proceeds distributed.
Additionally, certain of the Bank's borrowers are also members of the Bank (The
"Borrower Members") and possess voting rights. All interests held by members of
the Bank cease when such members close their accounts or pay off their loans, as
the case may be.
Pursuant to the Plan of Reorganization, the Stock Holding Company will
be incorporated under Federal law for the purpose of serving as the Bank's
savings institution holding company. Subsequent to the Reorganization, the Stock
Holding Company will have no significant assets other than the outstanding
capital stock of the Stock Bank, the Offerings (as defined below) net proceeds
(after deducting any amounts infused into Stock Bank, certain expenses
associated with the offering and used to fund the Stock Holding Company's
Employee Stock Ownership Plan [the "ESOP"]), and a note receivable from the
ESOP. The Stock Holding Company's principal business will be overseeing the
business of the Bank and investing the portion of the net proceeds retained by
it.
Further, the Bank will organize the Mutual Holding Company as a Federal
mutual holding company with the powers set forth in its proposed charter and
bylaws. As long as they remain Account Holders, 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 Mutual Holding Company
after the Reorganization. All persons who become Account Holders after the
Reorganization will also have membership rights with respect to the Mutual
Holding Company. Borrower Members who possessed membership rights in the Bank
prior to the Reorganization will retain similar rights in the Mutual Holding
Company for so long as their loans remain outstanding. Accordingly, members of
the Mutual Holding Company (consisting solely of Account Holders and Borrower
Members) shall have exclusive authority to elect the board of directors of the
Mutual Holding Company for so long as the Mutual Holding Company remains a
mutual institution.
The Mutual Holding Company's principal assets will be the shares of the
Stock Holding Company's common stock (the "Common Stock") received pursuant to
the Plan of Reorganization and monies received as its initial capitalization.
Immediately after consummation of the Plan of Reorganization, it is expected
that the Mutual Holding Company will not engage in any business activity other
than its investment in, and control of, a majority of the shares of Common Stock
of the Stock Holding Company. The Mutual Holding Company will be a mutual
corporation chartered under Federal law and regulated by the Office of Thift
Supervision (the "OTS"). The Mutual Holding Company will be subject to the
limitations and restrictions imposed on savings and loan holding companies by
Section 10(o)(5) of the Home Owners' Loan Act, as amended ("HOLA").
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 4
PROPOSED TRANSACTION
The Board of Directors of the Bank adopted a Plan of Reorganization
From Mutual Savings Bank to Mutual Holding Company on July 28, 1998 (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 the HOLA and OTS regulations. Pursuant to the Plan of
Reorganization, the following steps will occur on approximately the same date:
(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 ("Stock Holding Company"); and
(iii) Interim One will also organize another interim Federal stock
savings bank as its wholly owned subsidiary ("Interim Two").
The following transactions will occur simultaneously:
(iv) The Bank will convert its charter to a Federal stock savings
bank charter and become a stock savings bank ("Stock Bank").
Such charter conversion is hereinafter referred to as the
"Bank Conversion." In the Bank Conversion, members of the Bank
will constructively receive ownership interests in the Stock
Bank in exchange for their mutual interests in the Bank;
(v) Interim One will cancel its outstanding stock and convert its
charter to a Federal mutual holding company charter and
thereby become the "Mutual Holding Company;"
(vi) Interim Two will merge with and into the Stock Bank with the
Stock Bank surviving. In connection with the merger, the
shares of Interim Two common stock owned by the Mutual Holding
Company prior to the merger shall be converted into and become
shares of Stock Bank common stock and the former members of
the Bank who constructively hold ownership interests in the
Stock Bank will be deemed to transfer their ownership
interests in the Stock Bank to the Mutual Holding Company in
exchange for membership/mutual interests in the Mutual Holding
Company;
(vii) The Mutual Holding Company will contribute all of the Stock
Bank's outstanding shares of common stock to the Stock Holding
Company, its wholly owned subsidiary; and
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 5
(viii) Immediately following the contribution set forth in
subparagraph (vii), above, the Stock Holding Company will,
subject to the provisions of the Plan of Reorganization and
the Plan of Stock Issuance, sell approximately 44% of its
Common Stock in a Subscription Offering and, if applicable,
Community Offering (as such terms are defined in the Plan of
Stock Issuance and collectively referred to as the
"Offering").
The above-described 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
Mutual Holding Company 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 membership rights solely with respect
to the Mutual Holding Company so long as they continue to hold deposit accounts
with the Stock Bank.
The shares of Interim Two common stock owned by the Mutual Holding
Company prior to the Reorganization shall be converted into and become shares of
common stock of the Stock Bank on the Effective Date. The ownership interests in
the Stock Bank constructively received by the former members of the Bank will be
converted into ownership interests of the Mutual Holding Company. As a result,
the Stock Bank will be a wholly owned subsidiary of the Stock Holding Company,
which will be a wholly-owned subsidiary of the Mutual Holding Company. The
Mutual Holding Company will not have any authorized capital stock.
The Stock Holding Company will have the power to issue shares of
capital stock (including common and preferred stock) to persons other than the
Mutual Holding Company. So long as the Mutual Holding Company is in existence,
however, the Mutual Holding Company must own at least a majority of the voting
stock of the Stock Holding Company.
Under the Plan of Stock Issuance and in accordance with regulations of
the OTS, the shares of Common Stock will first be offered through the
Subscription Offering pursuant to non-transferable subscription rights on the
basis of preference categories in the following order of priority:
(1) Eligible Account Holders;
(2) Tax-Qualified Employee Stock Benefit Plans;
(3) Supplemental Eligible Account Holders;
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 6
(4) Other Members; and
(5) Officers, directors and employees of the Bank.
Any shares of Common Stock not subscribed for in the Subscription
Offering may be offered in a Community Offering and, if necessary, syndicated
community offering.
In connection with the Plan of Reorganization, the Plan of Stock
Issuance provides that the Bank and the Stock Holding Company will form a
charitable foundation to be named The Willow Grove Foundation (the
"Foundation"). The Foundation will be incorporated under Delaware law as a
non-stock corporation, and the Stock Holding Company will contribute to the
Foundation a number of shares of Common Stock equal to 4.0% of the shares of
Common Stock sold in the offering pursuant to the Plan of Stock Issuance.
The Foundation will be dedicated to supporting charitable organizations
within the communities served by the Bank. The Foundation will submit a request
to the IRS to be recognized as an exempt organization under Code Section
501(c)(3).
OPINIONS
Based on the forgoing and in reliance thereon, and subject to the
conditions, facts, representations and assumptions set forth herein, we are of
the opinion that:
With respect to the Bank Conversion:
1. The Bank Conversion 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 Code. (Rev. Rul. 80-105, 1980-1 C.B. 78.).
2. No gain or loss will be recognized by the Bank or Stock
Bank in the Bank Conversion. (Code Sections 361(a) and 357(a),
1032(a)).
3. The Stock Bank's holding period for the assets received
from the Bank will include the period during which such assets were
held by the Bank. (Code Section 1223(2)).
4. The Stock Bank's basis in the assets of the Bank will be
the same as the basis of such assets in the hands of the Bank
immediately prior to the proposed transaction. (Code Section 362(b)).
5. The Stock Bank will succeed to and take into account the
Bank's earnings and profits, as of the date of the proposed
transaction. (Code Section 381).
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 7
With respect to the contribution of ownership interests in
Stock Bank to the Mutual Holding Company for membership interests in
the Mutual Holding Company (the "351 Transaction"):
6. The exchange of ownership interests in the Stock Bank for
membership interests in the Mutual Holding Company will constitute a
tax-free exchange of property solely for voting "stock" pursuant to
Section 351 of the Code. Membership interests in the Mutual Holding
Company will be treated as "stock" within the meaning of Code Section
351(a).
7. No gain or loss will be recognized by mutual interest
holders of the Bank on the transfer of their ownership interests in the
Bank solely for a constructive ownership interest in the Stock Bank
followed by an exchange of their ownership interests in the Stock Bank
solely for membership interests in the Mutual Holding Company. (Code
Section 351(a)).
8. The basis in the membership interests of the Mutual Holding
Company received in the transaction will be the same as the basis of
the property transferred in exchange therefor, reduced by the sum of
the liabilities assumed by the Mutual Holding Company or to which
assets transferred are taken subject. (Code Section 358(a)(1)).
9. The Mutual Holding Company will recognize no gain or loss
upon the receipt of property from the owners of Stock Bank in exchange
for membership interests in the Mutual Holding Company. (Code Section
1032(a)).
10. The Mutual Holding Company's basis in the property
received from the owners of Stock Bank will be the same as the basis of
such property in the hands of the owners of Stock Bank immediately
prior to the 351 Transaction. (Code Section 362(a)).
11. The Mutual Holding Company's holding period for the
property received from the owners of Stock Bank will include the period
during which such property was held by the owners of Stock Bank. (Code
Section 1223(2)).
With respect to the transfer of the Stock Bank's common stock
by the Mutual Holding Company to the Stock Holding Company and cash
contributions from the Stock Holding Company to the Stock Bank:
12. The transfer by the Mutual Holding Company of the common
stock of the Stock Bank, a wholly owned subsidiary, to its other wholly
owned subsidiary, the Stock Holding Company, will constitute a tax-free
exchange of property solely for voting stock pursuant to Code Section
351. The Mutual Holding Company will not receive additional shares of
Common Stock in this exchange because, at the time of the transfer, the
Mutual Holding Company will already own all of the outstanding shares
of Common Stock and the issuance of additional shares of Common Stock
would have no substantive effect.
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 8
13. The Mutual Holding Company will recognize no gain or loss
upon the transfer of Stock Bank common stock to the Stock Holding
Company. (Code Section 351(a)).
14. The Stock Holding Company will recognize no gain or loss
on its receipt of Stock Bank common stock. (Code Section 1032(a)).
15. The Stock Holding Company's basis in the Stock Bank common
stock will equal the basis of the Stock Bank common stock in the Mutual
Holdings Company's hands immediately before the exchange. (Code Section
362(a)).
16. The Mutual Holding Company will increase its basis in its
shares of Common Stock by the Mutual Holding Company's basis in its
Stock Bank common stock. (Code Section 358(a)).
17. The Stock Holding Company's holding period for the shares
of Stock Bank common stock received from the Mutual Holding Company
will include the period that the Mutual Holding Company held, or is
deemed to have held, the shares. (Code Section 1223(2)).
18. No gain or loss will be recognized by the Stock Bank upon
its receipt of money from the Stock Holding Company. (Code Section
1032(a)). The Stock Holding Company will not receive additional shares
of Common Stock in exchange for any such money received because the
issuance of additional Stock Bank common stock to the Stock Holding
Company would be meaningless. The Stock Holding Company will be
transferring solely cash to the Stock Bank and therefore will not
recognize any gain or loss upon such transfer. (Code Section 351(a);
Rev. Rul. 69-357, 1969-1 C.B. 101).
With respect to depositors of the Bank and the issuance of
Common Stock pursuant to the Plan of Stock Issuance:
19. No gain or loss will be recognized by the Stock Holding
Company upon its receipt of money in exchange for shares of the Common
Stock (Code Section 1032(a)).
20. No gain or loss will be recognized by Eligible Account
Holders, Supplemental Eligible Account Holders or Other Members of the
Bank upon the issuance to them of deposit accounts in the Stock Bank in
the same dollar amount and on the same terms and conditions in exchange
for their deposit accounts in the Bank held immediately prior to the
Reorganization. (Code Section 1001(a); Treas. Reg. Section
1.1001-1(a)).
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 9
21. The tax basis of the savings accounts of the Eligible
Account Holders, Supplemental Eligible Account Holders, and Other
Members in the Stock Bank received as part of the Reorganization will
equal the tax basis of such account holders' corresponding deposit
accounts in the Bank surrendered in exchange therefor. (Code Section
1012).
22. Each depositor of the Bank will recognize gain upon the
receipt of his or her subscription rights deemed to have been received
for Federal income tax purposes, but only to the extent of the excess
of the fair market value of a depositor's interest in such subscription
rights over the depositor's basis in the former interests in the Bank
other than deposit accounts. Any such gain realized in the Stock
Issuance would be subject to immediate recognition.
23. No gain or loss will be recognized upon the exercise of a
subscription right in the Reorganization. (Rev. Rul. 56-572, 1956-2
C.B. 182).
24. The basis of the shares of Common Stock acquired in the
Offering will be equal to the purchase price of such shares, increased,
in the case of such shares acquired pursuant to the exercise of
subscription rights, by the fair market value, if any, of the
subscription rights exercised. (Code Section 1012).
25. The holding period of the Common Stock acquired pursuant
to the exercise of subscription rights will commence on the date on
which the subscription rights are exercised. (Code Section 1223(6)).
The holding period of the Common Stock acquired in the Community
Offering will commence on the date following the date on which such
stock is purchased. (Rev. Rul. 70-598, 1970-2 C.B. 168; Rev. Rul.
66-97, 1966-1 C.B. 190).
26. The establishment of the Foundation by the Bank and the
Stock Holding Company and the subsequent contribution of shares of
Common Stock to the Foundation by the Stock Holding Company will not
affect any of the foregoing opinions.
* * *
The opinions expressed above are limited to the income tax consequences
of the Reorganization under current Federal tax laws. Further, our opinions are
based upon research of the Code, applicable Treasury Regulations, current
published administrative decisions of the IRS, existing judicial decisions as of
the date hereof and representations made by the Bank's management. No assurance
can be given that legislative, administrative or judicial decisions or
interpretations may not be forthcoming that will significantly change the
opinions set forth herein. We express no opinions other than those stated
immediately above as our opinions.
<PAGE>
Board of Directors
Willow Grove Bank
November 3, 1998
Page 10
We hereby consent to the filing of this opinion as an exhibit to the
Bank's Form MHC-1 and MHC-2 Notice of Mutual Holding Company Reorganization and
Application for Approval of a Minority Stock Issuance by a Subsidiary of Mutual
Holding Company as filed with the OTS and to the Stock Holding Company's
Registration Statement on Form S-1 as filed with the Securities and Exchange
Commission. We also consent to the references to our firm in the Prospectus
contained in the Forms MHC-1 and MHC-2 and Form S-1 under the captions "The
Reorganization and Stock Issuance - Effects of the Reorganization - Tax Effects"
and "Legal and Tax Opinions," and to the summary of our opinion in such
Prospectus.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Raymond A. Tiernan
--------------------------------
Raymond A. Tiernan, a Partner
Exhibit 8.2
KPMG Peat Marwick LLP
1600 Market Street Telephone 215 299 3100 Telefax 215 299 3150
Philadelphia, PA 19103-7212 Telex 4973852
October 30, 1998
The Board of Directors
Willow Grove Bank
Welsh and Norristown Roads
Maple Glen, Pennsylvania 19002
Gentlemen:
You have requested the opinion of KPMG Peat Marwick, LLP (KPMG) as to certain
state income tax consequences to Willow Grove Bank (the Bank), Willow Grove
Bancorp, Inc. (the Stock Holding Company), Willow Grove Mutual Holding Company
(the MHC) and Eligible Account Holders or Supplemental Eligible Account Holders
of the Bank, resulting from the proposed reorganization of the Bank, whereby the
Bank will convert to a federally chartered stock savings bank as a wholly owned
subsidiary of the Stock Holding Company, and the Stock Holding Company will
become a majority-owned subsidiary of the MHC, a federally chartered mutual
holding company (the Reorganization).
In preparing this opinion letter, we have relied, in part, upon certain factual
descriptions provided in the PLAN OF REORGANIZATION adopted by the Bank, the
Stock Holding Company, and the MHC, as well as the facts and representations
which are provided below under the headings "STATEMENT OF FACTS" and
"REPRESENTATIONS". If any fact or representation contained herein is not
complete or accurate it is important that we be notified immediately in writing
as this may cause us to change our opinion.
STATEMENT OF FACTS
Willow Grove Bank, a federally chartered mutual savings bank organized and
operated in the Commonwealth of Pennsylvania, desires to convert to a federal
stock institution which similarly, will be organized and operated under the laws
of the Commonwealth of Pennsylvania. The conversion will be accomplished by the
use of a holding company to hold the stock of the Bank. The Stock Holding
Company, a federally chartered corporation operating in the Commonwealth of
Pennsylvania, will become a majority-owned subsidiary of the MHC and will offer
for sale, through a subscription offering and a syndicated community offering,
remaining shares of its common stock. The Stock Holding Company will authorize
25 million shares of common stock, with a par value of $.01 per share. In
addition, the Stock Holding Company will authorize 10 million shares of
preferred stock, with a par value of $.01 per share. Based upon preliminary
estimates provided by the Bank, the Stock Holding Company will initially issue
between 1,564,000 and 2,116,000 of their authorized shares of common stock. The
MHC will own more than a majority (54.7%) of the issued and outstanding shares
of common stock of the Stock Holding Company.
The Plan of Stock Issuance, in connection with the Reorganization, provides that
non-transferable rights to subscribe for the common stock of the Stock Holding
Company will be granted, in order of priority: (i) to each of the Bank's
Eligible Account Holders (depositors
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KPMG Peat Marwick LLP
The Board of Directors
Willow Grove Bank
October 30, 1998
Page 2
whose accounts in the Bank totaled $50 or more on June 30, 1997), (ii) to the
Stock Holding Company's employee stock ownership plan (ESOP), which intends to
subscribe for up to 8% of the common stock issued in connection with the
Reorganization, (iii) to each of the Bank's Supplemental Eligible Account
Holders (depositors whose accounts in the Bank totaled $50 or more on the
Supplemental Eligibility Record Date), (iv) to certain other members of the Bank
as of the close of business on the voting record date, and (v) to the directors,
officers and employees of the Bank. The Stock Holding Company will offer its
shares of common stock not subscribed for in the above subscription offering for
sale in a community offering or, if necessary, in a syndicated community
offering, to certain members of the general public with preference given to
institutional investors and/or natural persons residing in the boroughs or
counties in which the Bank maintains an office.
RP Financial has issued an opinion stating that, pursuant to its valuation, the
subscription rights have no value based on the fact that such rights are
acquired by the recipients without cost, are nontransferable and of short
duration, and afford the recipients the right only to purchase the Stock Holding
Company stock at a price equal to its estimated fair market value, which will be
the same price as the actual purchase price for any unsubscribed shares of Stock
Holding Company stock.
In the event of a complete liquidation of the Bank in its present mutual form,
each depositor would receive his pro rata share of any assets of the Bank
remaining after payment of claims of all creditors (including the claims of all
depositors to the withdrawal value of their accounts). Each depositor's pro rata
share of such remaining assets would be in the same proportion as the value of
his deposit account was to the total value of all deposit accounts in the Bank
at the time of liquidation.
Upon the change in legal form of the Bank to a stock institution, a "liquidation
account" will be created for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders in an amount equal to its net worth as of
the latest practicable date prior to reorganization. Each Eligible Account
Holder and Supplemental Eligible Account Holder, if they were to continue to
maintain their deposit account at the Bank, would be entitled to receive a
payment for their respective interest in the liquidation account prior to any
payment made to the stockholder upon a complete liquidation of the Bank. Each
Eligible Account Holder and Supplemental Eligible Account Holder will have an
initial interest in the liquidation account for each deposit account, including
regular accounts, transaction accounts such as NOW accounts, money market
deposit accounts, and certificates of deposits, with a balance of $50 or more
held in the Bank on June 30, 1997 and the Supplemental Eligibility Record Date,
respectively. Each Eligible Account Holder's and Supplemental Eligible Account
Holder's interest in the total liquidation account will be based on the
proportion that the balance of their deposit account bore on the eligibility
date to the balance of all deposit accounts in the Bank on such date.
If, however, on any annual closing date subsequent to the Eligibility Record
Date or Supplemental Eligibility Record Date, the amount of Qualifying Deposit
of an Eligible Account
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KPMG Peat Marwick LLP
The Board of Directors
Willow Grove Bank
October 30, 1998
Page 3
Holder or Supplemental Eligible Account Holder is less than the amount of the
Qualifying Deposit of such Eligible Account Holder or Supplemental Eligible
Account Holder as of the Eligibility Record Date or Supplemental Eligibility
Record Date, respectively, or less than the amount of the Qualifying Deposits as
of the previous annual closing date, then the interest in the liquidation
account relating to such Deposit would be reduced by the proportion of any such
reduction, and such interest will cease to exist if such Qualifying Deposit
accounts are closed. In addition, no interest in the liquidation account would
ever be increased despite any subsequent increase in the related Qualifying
Deposit. Any assets remaining after the above liquidation rights of Eligible
Account Holder and Supplemental Eligible Account Holders are satisfied would be
distributed to the Stock Holding Company as the sole stockholder of the Bank. In
the event of a liquidation or dissolution of the MHC following consummation of
the Reorganization, holders of deposit accounts in the Bank would be entitled,
pro rata to the value of their accounts, to distribution of any assets of the
MHC remaining after claims of all creditors of the MHC are satisfied.
Stockholders of the Stock Holding Company will have no liquidation or other
rights with respect to the MHC in their capacities as such.
REPRESENTATIONS
KPMG is relying on the following representations in rendering the opinions
contained herein. It is understood that KPMG has not independently verified the
accuracy of any of these representations:
(1) External legal counsel (Elias, Matz, Tiernan & Herrick L.L.P.) has
opined that for federal income tax purposes no gain or loss will be
recognized as a result of the proposed Reorganization by either the
Bank, the Stock Holding Company or the MHC, and that the proposed
reorganization of the Bank from a mutual savings bank to a stock
savings bank qualifies as a tax-free reorganization for federal income
tax purposes pursuant to Section 368(a)(1)(F) of the Internal Revenue
Code.
(2) External legal counsel has opined that for federal income tax
purposes, no gain or loss will be recognized by Eligible Account
Holders and Supplemental Eligible Account Holders or other members of
the Bank upon the issuance to them of deposit accounts in the stock
Bank in the same dollar amount and the same terms and conditions in
exchange for their deposit accounts in the Bank held immediately prior
to the Reorganization.
(3) External legal counsel has opined that for federal income tax
purposes, Eligible Account Holders and Supplemental Eligible Account
Holders of the Bank will recognize gain upon the receipt of his or her
subscription rights deemed to have been received for federal income tax
purposes, but only to the extent of the excess of the fair market value
of a Holder's interest in such subscription rights over the Holder's
basis in the former interests in the Bank other than deposit accounts.
Gain realized, if any, by the Eligible Account Holders and Supplemental
Eligible Account Holders of the Bank on the
<PAGE>
KPMG Peat Marwick LLP
The Board of Directors
Willow Grove Bank
October 30, 1998
Page 4
distribution to them of nontransferable subscription rights to purchase
the Stock Holding Company stock will be subject to immediate
recognition.
(4) Based on the opinion of RP Financial, the nontransferable
subscription rights do not have any value.
(5) No gain or loss will be recognized by the Bank under Generally
Accepted Accounting Principles (GAAP) as a result of the Reorganization
and the purchase accounting method will not be used by the Bank to
account for the transaction in accordance with GAAP.
(6) The Bank is a federally chartered savings institution. The Bank
conducts its operations solely in the Commonwealth of Pennsylvania.
(7) The MHC and the Stock Holding Company are federally chartered
corporations operating in the Commonwealth of Pennsylvania. The MHC
will own more than a majority of the issued and outstanding shares of
common stock of the Stock Holding Company. The Stock Holding Company
has been organized at the direction of the Bank to become a savings and
loan holding company and own all of the Bank's capital stock to be
issued upon its reorganization from mutual form to stock form. Both the
MHC and the Stock Holding Company conduct their business activities
solely in the Commonwealth of Pennsylvania.
STATE INCOME TAX OPINION
Pennsylvania Corporate Net Income Tax
Statement of Facts, Representations and Discussion - Pennsylvania Corporate Net
Income Tax (CNI)
Pennsylvania Corporate Net Income Tax (CNI) is imposed on domestic and foreign
corporations and business trusts for the privilege of doing business, carrying
on activities, or having capital employed or used or owning property in
Pennsylvania (72 P.S. ss. 7402, Act of March 4, 1971, P.L. 6). Certain entities
are specifically excluded from the tax including building and loan associations,
banks, bank and trust companies, national banks, savings institutions, trust
companies, insurance and surety companies and PA S corporations (72 P.S. ss.
7401(1)). The MHC and the Stock Holding Company are not entities that are exempt
from CNI taxation under one of the above exceptions. Accordingly, the MHC and
the Stock Holding Company are subject to CNI taxation.
The computation of Pennsylvania taxable income begins with federal taxable
income before any net operating loss and special deductions, reported on federal
Form 1120 (72 P.S. ss. 7401(3)1(a)
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KPMG Peat Marwick LLP
The Board of Directors
Willow Grove Bank
October 30, 1998
Page 5
& 61 Pa. Code ss. 153.11(a)). Certain modifications are made to federal taxable
income to arrive at Pennsylvania taxable income.
Adjustments that would increase Pennsylvania taxable income include:
- certain tax preference items under the federal alternative minimum
taxation system that are not deductible for Pennsylvania CNI purposes
(72 P.S. ss. 7401(3)1(d));
- foreign and state income taxes(72 P.S. ss. 7401(3)1(o));
- employment incentive payments (Section 491(a), Act of June 13, 1967,
P.L. 31); and
- expenses related to interest on federal obligations (72 P.S. ss.
7401(3)1(b.1)).
Adjustments that would decrease Pennsylvania taxable income include:
- the dividends received deduction (72 P.S. ss. 7401(3)1(b));
- interest on federal obligations (72 P.S. ss. 7401(3)1(b.1));
- wages related to federal tax credits (72 P.S. ss. 7401(3)1(c) & 61 Pa
Code ss. 153.12);
- foreign dividend gross up (72 P.S. ss. 7401(3)1(b));
- additional capital loss or contributions deductions for corporations
participating in a federal consolidated return filing (72 P.S. ss.
7404);
- depreciation adjustments (72 P.S. ss. 7401(3)1(h) & 61 Pa Code ss.
153.14(3)&(4)); and
- Pennsylvania net operating loss deductions (72 P.S. ss. 7401(4)(a)).
As opined by external legal counsel, for federal income tax purposes, no gain or
loss will be recognized in the proposed Reorganization by the MHC or the Stock
Holding Company. In addition, the transaction does not give rise to any positive
or negative adjustments required to be made for Pennsylvania CNI purposes.
OPINION
Based solely on the Statement of Facts, Representations, and Discussions set
forth in this opinion letter, it is the opinion of KPMG that no Pennsylvania
Corporate Net Income Tax will arise to the MHC or the Stock Holding Company as a
result of the Reorganization.
Pennsylvania Mutual Thrift Institutions Tax
Statement of Facts, Representations and Discussion - Pennsylvania Mutual Thrift
Institutions Tax (MTIT)
Section 1501 of the Pennsylvania Mutual Thrift Institutions Tax Act (72 P.S. ss.
8501; the Act) defines a mutual thrift institution as every:
(1) savings bank without capital stock;
(2) building and loan association;
<PAGE>
KPMG Peat Marwick LLP
The Board of Directors
Willow Grove Bank
October 30, 1998
Page 6
(3) savings and loan association; and
(4) savings institutions having capital stock.
The Bank has represented that it qualifies as a savings institution with capital
stock and is therefore, subject to the MTIT.
The Act provides for a mutual thrift institution to compute its tax based on
separate company net income computed in accordance with Generally Accepted
Accounting Principles (GAAP), subject to certain defined exceptions (72 P.S. ss.
8502(c)).
One of the exceptions, as provided in the Act (72 P.S. ss. 8502(c)(3))provides
that:
"In the case of a business combination entered into after December 31, 1986,
which is treated as a reorganization for purposes of section 368 of the Internal
Revenue Code of 1986, or a similar successor provision, and accounted for under
the purchase accounting method, net earnings or loss shall be determined as
though the acquisition has been accounted for under the pooling of interest
method."
It has been represented to KPMG that upon the Reorganization, no gain or loss
will be recognized by the Bank under Generally Accepted Accounting Principles
(GAAP) as a result of the Reorganization and the purchase accounting method will
not be used by the bank to account for the transaction in accordance with GAAP.
OPINION
Based solely on the Statement of Facts, Representations, and Discussions set
forth in this opinion letter, it is the opinion of KPMG that the following
Pennsylvania Mutual Thrift Institutions Tax consequences will occur as a result
of the above Reorganization:
(1) The Bank will not recognize any gain or loss as a result of the
proposed Reorganization.
(2) The Bank will continue to file a Pennsylvania Mutual Thrift
Institution Tax Return, with the basis of the Bank's taxable income to
be determined under GAAP. The purchase accounting method will not be
used to account for the transaction.
Pennsylvania Personal Income Tax
Statement of Facts, Representations and Discussion - Pennsylvania Personal
Income Tax
External legal counsel has opined that for federal income tax purposes, no gain
or loss will be recognized by Eligible Account Holders and Supplemental Eligible
Account Holders or other
<PAGE>
KPMG Peat Marwick LLP
The Board of Directors
Willow Grove Bank
October 30, 1998
Page 7
members of the Bank upon the issuance to them of deposit accounts in the stock
Bank in the same dollar amount and the same terms and conditions in exchange for
their deposit accounts in the Bank held immediately prior to the Reorganization.
External legal counsel has opined that for federal income tax purposes, Eligible
Account Holders and Supplemental Eligible Account Holders of the Bank will
recognize gain upon the receipt of his or her subscription rights deemed to have
been received for federal income tax purposes, but only to the extent of the
excess of the fair market value of a Holder's interest in such subscription
rights over the Holder's basis in the former interests in the Bank other than
deposit accounts. Gain realized, if any, by the Eligible Account Holders and
Supplemental Eligible Account Holders of the Bank on the distribution to them of
nontransferable subscription rights to purchase the Stock Holding Company stock
will be subject to immediate recognition.
RP Financial has issued an opinion stating that, pursuant to its valuation, the
subscription rights have no value based on the fact that such rights are
acquired by the recipients without cost, are nontransferable and of short
duration, and afford the recipients the right only to purchase the Stock Holding
Company stock at a price equal to its estimated fair market value, which will be
the same price as the actual purchase price for any unsubscribed shares of Stock
Holding Company stock.
Pennsylvania personal income tax is imposed on eight specified categories of
income received by individuals. Income is taxable if it emanates from one of the
following classes (72 P.S.
ss. 7303(a)):
(1) Compensation;
(2) Net profits from the operation of a business, profession or other
activity;
(3) Net gains from the sale, exchange or other disposition of real or
personal property;
(4) Net gains or income from or in the form of rents, royalties,
patents and copyrights;
(5) Dividends;
(6) Interest;
(7) Gambling and lottery winnings other than prizes of the Pennsylvania
State Lottery;
or
(8) Net gains or interest obtained through estates and trusts.
Consistent with federal treatment, Pennsylvania affords similar tax-free
treatment with respect to tax-free reorganizations pursuant to Section
368(a)(1)(F) of the Internal Revenue Code (72 P.S. ss.7303(a)(3)). Accordingly,
the Reorganization would not give rise to any income that would emanate from any
one of the above eight classes.
OPINION
Based solely on the Statement of Facts, Representations, and Discussions set
forth in this opinion letter, it is the opinion of KPMG that for Pennsylvania
Personal Income Tax purposes:
<PAGE>
KPMG Peat Marwick LLP
The Board of Directors
Willow Grove Bank
October 30, 1998
Page 8
(1) No gain or loss will be recognized by Eligible Account Holders and
Supplemental Eligible Account Holders or other members of the Bank upon
the issuance to them of deposit accounts in the stock Bank in the same
dollar amount and the same terms and conditions in exchange for their
deposit accounts in the Bank held immediately prior to the
Reorganization.
(2) No gain or loss will be recognized by Eligible Account Holders and
Supplemental Eligible Account Holders of the Bank upon the distribution
to them of the nontransferable subscription rights to purchase shares
of stock in the Stock Holding Company, provided that the amount paid
for the Stock Holding Company common stock is equal to the fair market
value of such stock. Gain realized, if any, by the Eligible Account
Holders and Supplemental Eligible Account Holders of the Bank on the
distribution to them of nontransferable subscription rights to purchase
the Stock Holding Company stock will be recognized but only in an
amount not in excess of the fair market value of such subscription
rights. Eligible Account Holders and Supplemental Eligible Account
Holders of the Bank will not realize any taxable income for state
income tax purposes as a result of the exercise by them of the
nontransferable subscription rights.
*************
The opinions expressed above are rendered with respect to the specific matters
discussed herein and we express no opinion with respect to any other federal or
state income tax, or other state and local taxes, or legal aspect of the merger.
Our opinions are based on the completeness and accuracy of the above-stated
facts and representations. If any of the foregoing are not entirely complete or
accurate, it is imperative that we be informed immediately in writing, as the
inaccuracy or incompleteness could have a material effect on our conclusions. We
are relying upon the relevant provisions of Article III, Article IV, and Article
XV of the Pennsylvania Tax Reform Code of 1971, Act of March 4, 1971, P.L.6;
Title 8, Chapter 1 of the Delaware General Corporation Law; the Internal Revenue
Code of 1986, as amended, the regulations thereunder, and judicial and
administrative interpretations thereof, which are subject to change or
modification by subsequent legislative, regulatory, administrative, or judicial
decisions. Any such changes could also have an effect on the validity of our
opinions. The opinions contained herein are not binding upon the Internal
Revenue Service, any other tax authority or any court, and no assurance can be
given that a position contrary to that expressed herein will not be asserted by
a tax authority and ultimately sustained by a court. Unless you specifically
request otherwise, we will not update these opinions for subsequent changes or
modifications to the law and regulations, or to the judicial and administrative
interpretations thereof.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
October 30, 1998
Exhibit 23.2
KPMG Peat Marwick LLP
1600 Market Street
Philadelphia, PA 19103-7212
The Board of Directors
Willow Grove Bank:
We consent to the use of our reports included herein and to the reference to our
firm under the heading of "Experts", "Legal and Tax Opinions", and "Effects of
Reorganization-Tax Effects", in the prospectus of Willow Grove Bancorp, Inc.,
which is a part of the Registration Statement on Pre-effective Amendment No. 1
to Form S-1 for Willow Grove Bancorp, Inc. and a part of Amendment No. 1 to Form
MHC-1 and Amendment No. 1 to Form MHC-2 for Willow Grove Bank.
We also consent to the inclusion herein of our tax opinion dated October 30,
1998, relating to the Pennsylvania income tax implications of the
reorganization.
/s/ KPMG Peat Marwick LLP
October 30, 1998
Philadelphia, Pennsylvania
Exhibit 23.3
RP FINANCIAL, L.C.
- ---------------------------------------
Financial Services Industry Consultants
October 30, 1998
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 Willow Grove Bank, Maple Glen,
Pennsylvania, and any amendments thereto, and in the Form S-1 Registration
Statement and any amendments thereto for Willow Grove 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 Willow Grove Bancorp, Inc.
Respectfully submitted,
RP FINANCIAL, INC.
/s/ Ronald S. Riggins
Ronald S. Riggins
President
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
EXHIBIT 99.1
- -------------------------------------------------------------------------------
PRO FORMA VALUATION REPORT
MUTUAL HOLDING COMPANY
STOCK OFFERING
WILLOW GROVE BANK
MAPLE GLEN, PENNSYLVANIA
DATED AS OF:
SEPTEMBER 4, 1998
- -------------------------------------------------------------------------------
PREPARED BY:
RP FINANCIAL, LC.
1700 NORTH MOORE STREET
SUITE 2210
ARLINGTON, VIRGINIA 22209
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
FINANCIAL SERVICES INDUSTRY CONSULTANTS
SEPTEMBER 4, 1998
BOARD OF DIRECTORS
WILLOW GROVE BANK
WELSH AND NORRISTOWN ROADS
MAPLE GLEN, PENNSYLVANIA 19002-8030
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 WILLOW GROVE BANK, MAPLE
GLEN, PENNSYLVANIA ("WILLOW GROVE" 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, WILLOW GROVE WILL BECOME A WHOLLY-OWNED
SUBSIDIARY OF WILLOW GROVE BANCORP, INC. (THE "HOLDING COMPANY"), A DELAWARE
CORPORATION, AND WILLOW GROVE BANCORP, INC. WILL ISSUE A MAJORITY OF ITS COMMON
stock to Willow Grove, MHC (the "MHC"), and sell a minority of its common stock
to the public. The above structure reflects a "two-tier" mutual holding company
structure, given the 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 to be sold to the public will approximate 56 percent of the shares issued
in the offering, and the number of shares issued to the MHC will approximate 44
percent of the shares issued in the offering. In addition, the Holding Company
intends to donate to a private charitable foundation, immediately following the
completion of the stock offering, authorized but unissued shares of the Holding
Company stock equal to 4 percent of the number of shares sold in the offering.
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
RP Financial, LC.
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 newly-formed employee stock ownership plan
("ESOP"), Supplemental Eligible Account Holders, and Other Members 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
50 percent of 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 extend a loan to the ESOP to
fund purchases of stock up to 8 percent of the offering amount 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 corporate reorganization and 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 June 30, 1994 through 1998 and due
diligence related discussions with the Bank's management; KPMG Peat Marwick, the
Bank's independent auditor; Elias Matz Tiernan & Herrick, the Bank's counsel for
the MHC reorganization and stock offering; and Charles Webb & Company, a
division of Keefe Bruyette & Woods, Inc., the Bank's financial and marketing
advisors in connection with the Holding Company's stock offering. All
conclusions set forth in the Appraisal were reached independently from such
discussions. In addition, where appropriate, we have considered information
based on other available published sources that we believe are reliable. While
we believe the information and data gathered from all these sources are
reliable, we cannot guarantee the accuracy and completeness of such information.
<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 publicly-traded mutual
holding companies. We have also considered the expected market for the Holding
Company'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 at this time. 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 Willow Grove'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 offering shares in a full conversion
offering was $41,500,000 at the midpoint, equal to 4,150,000 shares issued at a
per share value of $10.00, incorporating the dilutive impact of the contribution
of 4 percent of the shares to a charitable foundation immediately following the
completion of the offering. Pursuant to conversion guidelines, the 15 percent
offering range indicates a minimum value of $35,275,000, and a maximum value of
$47,725,000. Based on the $10.00 per share offering price determined by the
Board, this valuation range equates to an offering of 3,527,500 shares at the
minimum to 4,772,500 shares at the maximum. In the event that the appraised
value is subject to an increase, up to 5,488,375 shares may be issued at an
issue price of $10.00 per share, for an aggregate market value of $54,883,750,
without a resolicitation. As a result of the contribution to a charitable
foundation, the total shares issued and aggregate market value increases
following the contribution of shares to the charitable foundation as follows,
all based on $10.00 per share: minimum market value and shares of $36,686,000
and 3,668,600, respectively; midpoint market value and shares of $43,160,000 and
4,316,000, respectively; maximum market value and shares of $49,634,000 and
4,963,400, respectively; and supermaximum market value and shares of $57,079,100
and 5,707,910, respectively. The Board of Directors has established a public
offering range such that the public ownership of the Holding Company will
constitute a 44 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 $15,640,000 at the minimum, $18,400,000 at the
midpoint, $21,160,000 at the maximum and $24,334,000 at the supermaximum. Based
on the public offering range, and inclusive of the shares issued to the
Foundation, the public ownership of the shares will represent 45.31 percent of
the shares issued in the reorganization, with the MHC owning the majority of the
shares.
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
<PAGE>
RP Financial, LC.
Board of Directors
September 4, 1998
Page 5
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. 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
WILLOW GROVE BANK
Maple Glen, Pennsylvania
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
- ------------ ------
<S> <C>
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
Introduction 1.1
Establishment of a Charitable Foundation 1.2
Strategic Overview 1.3
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 1.19
Funding Composition and Strategy 1.20
Year 2000 Compliance 1.21
Legal Proceedings 1.21
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 3.14
Interest Rate Risk 3.14
Summary 3.17
</TABLE>
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
WILLOW GROVE BANK
Maple Glen, Pennsylvania
(continued)
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
----------- ------
<S> <C>
CHAPTER FOUR VALUATION ANALYSIS
Introduction 4.1
Appraisal Guidelines 4.1
RP Financial Approach to the Valuation 4.1
Valuation Analysis 4.2
1. Financial Condition 4.3
2. Profitability, Growth and Viability of Earnings 4.4
3. Asset Growth 4.5
4. Primary Market Area 4.5
5. Dividends 4.6
6. Liquidity of the Shares 4.8
7. Marketing of the Issue 4.8
A. The Public Market 4.9
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") 4.29
3. Price-to-Assets ("P/A") 4.31
Valuation Conclusion 4.31
</TABLE>
<PAGE>
RP Financial, LC.
LIST OF TABLES
WILLOW GROVE BANK
Maple Glen, Pennsylvania
<TABLE>
<CAPTION>
TABLE
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
<S> <C> <C>
1.1 Historical Balance Sheets 1.7
1.2 Historical Income Statements 1.12
2.1 Summary Demographic Data 2.3
2.2 Major Employers in Montgomery and Bucks Counties 2.4
2.3 Unemployment Trends 2.5
2.4 Deposit Summary 2.6
2.5 Deposit Market Share 2.8
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 3.15
3.6 Interest Rate Risk Measures and Net Interest Income Volatility 3.16
4.1 Peer Group Market Area Comparative Analysis 4.7
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 4.30
4.6 Market Pricing of Mutual Holding Companies 4.33
</TABLE>
<PAGE>
RP Financial, LC.
Page 1.1
I. OVERVIEW AND FINANCIAL ANALYSIS
Introduction
Willow Grove Bank ("Willow Grove" or the "Bank") is a
federally-chartered mutual savings bank which conducts operations out of its
executive offices in Maple Glen, Pennsylvania, and a total of 7 retail office
facilities including its main office. Willow Grove's markets in eastern
Pennsylvania are within the Philadelphia metropolitan area and the Bank's main
office is situated approximately 20 miles north of downtown Philadelphia. Willow
Grove's markets in Montgomery and Bucks Counties are suburban markets with broad
employment bases but which also serve as bedroom communities for Philadelphia
and other nearby areas. Residents of the Bank's markets are typically middle to
upper middle class, and the number of individuals with incomes below the poverty
level in Montgomery and Bucks Counties is limited.
Willow Grove was organized in 1909 and has a long history of service to
its primary market. Currently, Willow Grove 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, Willow Grove had total assets of $405.4
million, total deposits of $340.8 million, and total equity of $35.9 million,
equal to 8.87 percent of total assets. Excluding $2.4 million of intangible
assets, tangible equity totaled $33.6 million, or 8.28 percent of assets, as of
June 30, 1998. For the twelve months ended June 30, 1998, the Bank reported net
income of $2.4 million for a return of 0.65 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, Willow Grove will become a wholly-owned
subsidiary of Willow Grove Bancorp, Inc., a Delaware corporation, and Willow
Grove Bancorp, Inc. will issue a majority of its common stock to Willow Grove
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
<PAGE>
RP Financial, LC.
Page 1.2
net conversion proceeds. Immediately after consummation of the Reorganization,
it is not anticipated that the MHC or the Holding Company will engage in any
business activity other than ownership of their respective subsidiaries.
The assets and liabilities of the stock subsidiaries will be
substantially equivalent to those of Willow Grove prior to the reorganization.
The MHC will own a controlling interest in the Holding Company of at least 51
percent, and the Holding Company will be the sole subsidiary of the MHC. The
Holding Company will also own 100 percent of the Bank's outstanding stock.
Establishment of a Charitable Foundation
In order to enhance the Bank's existing historically strong service and
reinvestment activities in the local community, the Plan of Conversion provides
for the establishment of The Willow Grove Foundation (the "Foundation"), which
will be a private charitable foundation in connection with the conversion. The
Plan provides that the Bank and the Holding Company will create the Foundation
and fund it with shares of common stock contributed by the Holding Company from
authorized but unissued shares in an amount equal to 4 percent of the shares
sold in the offering. The Bank believes that the conversion transaction provides
a unique opportunity to put its well-regarded name on an entity that has
significant value -- an opportunity for corporate activities outside of core
banking. The Foundation is intended to complement the Bank's existing community
reinvestment activities and will be dedicated to the promotion of charitable
purposes and community development activities within the communities served by
the Bank. Funding the Foundation with shares of common stock of Willow Grove
Bancorp will enable the local community served to share in the growth and the
profitability of the Holding Company over the long term through dividends and
price appreciation. As such, the Bank believes the Foundation will generate a
high level of community goodwill toward the Holding Company, increase the Bank's
local visibility and further enhance the Bank's strong reputation for community
service, thereby strengthening Willow Grove's community banking franchise.
The formation and issuance of shares to the Foundation will result in
dilution of pro forma book value and earnings per share, as the Holding Company
will not receive proceeds from the shares issued to the Foundation.
<PAGE>
RP Financial, LC.
Page 1.3
Strategic Overview
Throughout much of its corporate history, Willow Grove'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
Montgomery and Bucks Counties in southeastern Pennsylvania. In this regard,
Willow Grove has historically pursued a residential lending strategy typical of
a thrift institution, with a moderate level of diversification into construction
lending, commercial real estate lending and some secondary market loan sales.
However, following the employment of the Bank's current managing officer in
1992, the management of Willow Grove began to undertake a reorientation of the
Bank's operations to a community-oriented institution with a relatively broader
line of commercial and consumer products. Additionally, pursuant to this
strategy, Willow Grove has sought to emphasize a community bank operating
strategy, emphasizing service, its local orientation and a relatively broad
array of products and services. Accordingly, Willow Grove 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) selling lower yielding mortgages (generally conforming loans)
into the secondary market.
Since Willow Grove 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"), Willow Grove has
been required to develop the infrastructure required to undertake more
diversified lending. In this regard, management has developed extensive policies
and procedures pertaining to credit standards and the administration of
commercial accounts. Additionally, Willow Grove has employed a total of 3 loan
officers with commercial lending experience to build the Bank's commercial
lending business and may likely seek to employ additional loan officers in the
future as the Bank's commercial orientation continues to expand. Other steps
taken to facilitate the development of commercial accounts include more
intensive marketing and the institution of various incentive programs for Bank
personnel. 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 moderate as
<PAGE>
RP Financial, LC.
Page 1.4
commercial and multi-family real estate loans and C&I loans totaled $37.4
million, or 11.0 percent of total loans as of June 30, 1998.
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 ($241.1 million, or 71.6 percent of total
loans as of June 30, 1998). In order to control expenses and enhance efficiency,
commencing several years ago, Willow Grove began outsourcing substantially all
of its residential mortgage loan originations through the utilization of a
network of approximately 25 loan correspondents. One correspondent, who
generates approximately one-half of the residential mortgage loan volume,
originates loans to walk-in customers in the Bank's offices, with such loans
originated in Willow Grove's name. The balance of the residential mortgage loans
are purchased from the remaining correspondents. Lower yielding fixed rate
mortgages (typically conforming loans) are generally originated/purchased for
resale in the secondary market. Shorter term and non-conforming loans (typically
not non-conforming due to credit characteristics) are retained if they meet
Willow Grove's underwriting criteria.
The balance of Willow Grove's interest-earning assets are primarily
comprised of a modest balance of cash and short- to intermediate-term investment
securities, all of which are classified as available for sale ("AFS"). Willow
Grove's general philosophy is to deploy funds into loans and maintain moderate
balances of cash and investments, which are typically lower yielding.
Over the last five fiscal years, Willow Grove has been seeking to
expand loans and deposits with the dual objectives of serving the financial
needs of its community and in order to enhance earnings and franchise value.
Accordingly, asset growth since the end of fiscal 1994 has equaled a compounded
annual rate of 14.9 percent. Asset growth has been bolstered by the acquisition
of 2 branches and approximately $40 million of deposits from the Resolution
Trust Corporation ("RTC") in fiscal 1994. Additionally, the Bank has added two
de novo branches over the last several fiscal years. Willow Grove is currently
negotiating for the purchase of two offices (fixed assets only) from a
commercial bank, both of which are in Montgomery County. Additionally,
management will be seeking to open approximately 1 to 2 new offices per year
over the next several years in as yet unidentified locations.
<PAGE>
RP Financial, LC.
Page 1.5
In the future, the Bank expects to explore other potential expansion
opportunities, including acquisitions. Management believes that the additional
capital raised in the 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 Willow
Grove's depositors reside in Bucks and Montgomery Counties.
Management expects that the future activities of the Bank will continue
to focus on products and services which have facilitated asset, equity and
earnings growth to date. Specifically, the largest segment of Willow Grove's
business will continue to be an orientation towards retail deposit products and
retail banking services, building commercial account relationships, while
continuing to invest in 1-4 family residential mortgage loans.
A key reason for the stock offering is to position the Bank financially
so that it can capitalize on its position as a community-oriented alternative to
the larger regional and out-of-market bank competitors, through an emphasis on
lower fees and higher level of service.
Management believes that the stock offering will support Willow Grove's
efforts to broaden its product line and pursue long term growth. The near-term
deployment of the net offering proceeds is as follows:
Willow Grove Bancorp. Willow Grove 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 and/or callable investment
securities with maturities ranging up to five 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.
Willow Grove. 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 the Bank's 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)
<PAGE>
RP Financial, LC.
Page 1.6
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.
On a pro forma basis, Willow Grove will maintain a strong capital
position. The Board of Directors has determined to pursue a strategy of
controlled growth in its southeastern Pennsylvania 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 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
Over the last 5 years, Willow Grove has implemented a strategy of
controlled growth and expansion, both through internal growth at existing
branches, as well as through the acquisition of branches from the RTC and de
novo branching. The impact of this strategy is evidenced in the summary balance
sheet data set forth in Table 1.1, which shows that Willow Grove's total assets
increased from $232.5 million at the end of fiscal 1994, to $405.4 million at
the end of fiscal 1998, which reflects a 14.9 percent compounded annual
increase. Asset growth has been deployed into portfolio loans, which increased
both in dollar terms and as a percent of assets to equal $315.7 million, equal
to 77.9 percent of assets at June 30, 1998. Conversely, the balance of cash and
investments has diminished in light of the strong loan growth.
The Bank's assets are funded through a combination of deposits,
borrowings and retained earnings. Deposits have always comprised the majority of
funding liabilities and increased at a 13.7 compounded annual rate since 1994,
while borrowings have fluctuated based on their cost relative to deposits, the
Bank's liquidity requirements, and interest rate risk considerations. In the
future, Willow Grove may utilize FHLB advances more heavily in several
<PAGE>
RP Financial, LC.
Page 1.7
Table 1.1
Willow Grove Bank
Historical Balance Sheets
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
For the Fiscal Year Ended June 30,
----------------------------------------------------------------------------
1994 1995 1996
---------------------- ---------------------- ----------------------
Amount Pct Amount Pct Amount Pct
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Total Amount of:
Assets $232,551 100.00% $293,589 100.00% $312,326 100.00%
Cash and Cash Equivalents 6,488 2.79% 6,871 2.34% 4,282 1.37%
Investment Securities - HTM 61,341 26.38% 55,480 18.90% 0 0.00%
Investment Securities - AFS 180 0.08% 742 0.25% 50,163 16.06%
Loans Available for Sale 562 0.24% 9,370 3.19% 5,140 1.65%
Loans Receivable (net) 151,341 65.08% 210,212 71.60% 243,310 77.90%
Goodwill 4,002 1.72% 3,591 1.22% 3,181 1.02%
Real Estate Held for Investment 206 0.09% 206 0.07% 204 0.07%
Deposits 204,022 87.73% 237,645 80.94% 267,071 85.51%
Borrowed Funds 120 0.05% 22,620 7.70% 10,120 3.24%
Total Equity 24,615 10.58% 28,420 9.68% 30,374 9.73%
Total Tangible Equity 20,613 8.86% 24,829 8.46% 27,193 8.71%
Loans/Deposits 74.45% 92.46% 93.03%
IEA/IBL (Average) 110.26% 108.78% 108.74%
Non-Performing Assets/Assets 0.28% 0.20% 0.87%
Allow. for Loan Losses as a % of:
Non-Performing Loans 257.41% 291.89% 71.70%
Loans Receivable, Net 1.08% 0.81% 0.79%
<CAPTION>
For the Fiscal Year Ended June 30, Compounded
------------------------------------------------- Annual
1997 1998 Growth Rate
---------------------- ---------------------- -----------
Amount Pct Amount Pct Pct
($000) (%) ($000) (%) (%)
<S> <C> <C> <C> <C> <C>
Total Amount of:
Assets $354,679 100.00% $405,373 100.00% 14.90%
Cash and Cash Equivalents 4,204 1.19% 18,291 4.51% 29.58%
Investment Securities - HTM 3,999 1.13% 0 0.00% -100.00%
Investment Securities - AFS 45,766 12.90% 48,111 11.87% 304.34%
Loans Available for Sale 6,173 1.74% 12,152 3.00% 115.63%
Loans Receivable (net) 284,596 80.24% 315,705 77.88% 20.18%
Goodwill 2,770 0.78% 2,360 0.58% N.M.
Real Estate Held for Investment 180 0.05% 0 0.00% -100.00%
Deposits 309,726 87.33% 340,793 84.07% 13.69%
Borrowed Funds 6,500 1.83% 21,000 5.18% N.M.
Total Equity 33,122 9.34% 35,945 8.87% 9.93%
Total Tangible Equity 30,351 8.56% 33,584 8.28% 8.08%
Loans/Deposits 93.88% 96.49%
IEA/IBL (Average) 108.06% 108.23%
Non-Performing Assets/Assets 0.54% 0.37%
Allow. for Loan Losses as a % of:
Non-Performing Loans 87.62% 178.98%
Loans Receivable, Net 0.58% 0.83%
</TABLE>
Source: Willow Grove's prospectus.
<PAGE>
RP Financial, LC.
Page 1.8
ways as follows: (1) in order to "pre-fund" the offering proceeds (i.e., invest
the anticipated funds to be received in the conversion over a period of time
leading up to the completion of 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 1994,
reflecting the retention of Willow Grove's earnings. However, the equity/assets
ratio has diminished since fiscal 1994, as asset growth outstripped the rate of
equity growth and, as of June 30, 1998, the equity/assets ratio approximated 8.9
percent. The Bank's equity contained a small amount of intangibles as of June
30, 1998, resulting from prior branch acquisitions; tangible equity equaled
$33.6 million, or 8.3 percent of assets as of June 30, 1998.
Loans Receivable
Loans receivable totaled $315.7 million, or 77.9 percent of total
assets, as of June 30, 1998, which reflects steady growth since the end of
fiscal 1994, both in terms of the dollar balance and as a percent of assets. In
this regard, the loans to assets ratio has increased from 65.1 percent to 77.9
percent since the end of fiscal 1994. Currently, 1-4 family mortgage loans
comprise the largest segment of the loan portfolio, equal to 72 percent of total
loans. The residential mortgage loan portfolio consists primarily of adjustable
rate mortgage ("ARM") loans and relatively higher yielding fixed rate mortgage
loans. In this regard, the Bank will retain longer term non-conforming loans if,
in management's assessment, the yield is sufficiently above the rate for
conforming loans to justify the increased credit and interest rate risk inherent
in such loans. It is the Bank's current practice to sell the majority of longer
term loans which conform to the guidelines of the major secondary market
agencies.
Notwithstanding the reorientation of Willow Grove'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 97 percent of total loans.
Commercial loans currently approximate 1.6 percent of total loans which
represents an increase from a balance of 0.2 percent of loans at the end of
fiscal 1994, while consumer loans have increased modestly to equal 1.5 percent
of assets.
<PAGE>
RP Financial, LC.
Page 1.9
In addition to portfolio loans, Willow Grove has maintained a
portfolio of loans classified as available for sale ("AFS") in connection with
the Bank's secondary market activities. The balance of the AFS loan portfolio
has fluctuated over the last five fiscal years based on various factors,
including the level of interest rates and the volume of loan originations and
purchases. As of June 30, 1998, the balance of loans held for sale totaled $12.2
million, equal to 3.0 percent of assets, which reflects an increase to prior
year levels. As of June 30, 1998, the Bank was servicing $66.4 million of loans
for others.
Investment and Mortgage Backed Securities
It is management's preference to deploy the majority of the Bank's
assets into loans while maintaining cash and investments at moderate levels,
primarily for liquidity purposes. The Bank anticipates initially reinvesting the
net conversion proceeds into investments with short-term maturities, pending
longer-term deployment into other investments and loans. Willow Grove
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 $18.3 million, equal to 4.5 percent of assets. AFS
investment securities totaled $48.1 million, equal to 11.9 percent of assets.
The majority of the Bank's investments consist primarily of U.S. Agency
securities (primarily callable securities), mortgage-backed securities including
CMOs and equity securities (including a mutual fund investing in ARM mortgage
loans).
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 not expected to exceed
moderate levels. The level of cash and investments is expected to increase
initially following conversion, although it is management's expectation that
such funds at the Bank level will gradually be redeployed into lending
activities.
Funding Structure
The Bank's assets were funded with a combination of deposits,
borrowings and retained earnings at June 30, 1998. Retail deposits have
consistently met the substantial portion Willow Grove's funding needs. Since
fiscal year-end 1994, deposits have grown at a
<PAGE>
RP Financial, LC.
Page 1.10
13.7 percent annual rate, with the largest portion of the growth concentrated in
certificates of deposit ("CDs"), although CDs have declined modestly as a
percentage of the total portfolio. CDs comprised the largest component of the
Bank's deposit base, equaling 68.1 percent of total deposits as of June 30,
1998. In this regard, Willow Grove's deposit mixture has changed somewhat over
the last several fiscal years as CDs have declined from 71.4 percent, as NOW and
passbook accounts reflect a growing portion of the deposit base.
The Bank has not extensively utilized borrowed funds over the last
five fiscal years. As of June 30, 1998, borrowed funds outstanding totaled $21.0
million and consisted solely of FHLB-Pittsburgh advances. It is management's
preference to rely on deposits to fund operations, however, the Bank utilizes
borrowings under several circumstances: (1) when such funds are priced
attractively relative to deposits; (2) to lengthen the duration of liabilities;
(3) to enhance earnings when attractive arbitrage opportunities arise (i.e., the
Bank is considering employing borrowings to fund the purchase of investments at
a spread on a post-offering basis); and (4) to generate additional liquid funds,
if required.
Capital
Earnings since the end of fiscal 1994 have led to annual equity
growth of 9.9 percent. As a result of the completion of the branch acquisition
in 1994, a core deposit intangible was created, which is being amortized into
expense. The balance of the core deposit intangible equaled $2.4 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 conversion proceeds will serve to further strengthen
Willow Grove's capital position.
equired Actual
Capital Capital Excess
------- ------- ------
($000) ($000) ($000)
Tangible Capital $6,074 $33,504 $27,430
Core Capital 16,198 33,504 17,306
Risk-Based Capital 19,438 36,169 16,731
Source: Prospectus.
<PAGE>
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Page 1.11
Income and Expense Trends
Table 1.2 shows the Bank's historical income statements for the fiscal
years from 1994 through 1998. Overall, Willow Grove's net income before
extraordinary items ranged from a low of $2.4 million in the most recent fiscal
year, equal to 0.65 percent of average assets, to a high of $3.7 million, equal
to 1.66 percent of average assets in fiscal 1994. Willow Grove's recurring
earnings have fluctuated over the last five fiscal years as a result of a number
of factors including changing spreads, and due to higher loan loss provisions
and expenses in the most recent fiscal year. Although the Bank has been
expanding assets at a relatively strong rate, profitability has not kept pace.
The components of profitability are explored below.
Net Interest Income
Willow Grove's ratio of net interest income to average assets
decreased modestly between fiscal 1994 and 1996, from 3.89 percent to 3.31
percent, respectively, primarily as a result of a rising cost of funds which
outpaced the increase in asset yields. Subsequently, in fiscal 1997 and 1998,
the net interest income ratio increased as funding costs eased with a decline in
the proportion of CDs (see Exhibit I-5 for details regarding the Bank's yields
and costs). Overall, net interest income approximated $13.5 million, equal to
3.59 percent of average assets, for the fiscal year ended June 30, 1998,
reflecting the spread improvement from 3.02 percent in fiscal 1996 to 3.36
percent in fiscal 1998.
Non-Interest Income
Other income has shown an upward trend in dollar terms since fiscal
1995, from $485,000 to $820,000 for fiscal 1998, reflecting Willow Grove's
balance sheet growth, expansion of overall business volumes and increase in the
portfolio of loans serviced for others. At the same time, non-interest income as
a percent of average assets has increased at a comparatively modest pace and
remains low in comparison to industry averages, partially reflecting Willow
Grove's outsourcing of the residential loan origination function. Willow Grove'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
<PAGE>
RP Financial, LC.
Page 1.12
Table 1.2
Willow Grove Bank
Historical Income Statements
<TABLE>
<CAPTION>
For the Fiscal Year Ended June 30,
-----------------------------------------------------------------------------------
1994 1995 1996
----------------------- ---------------------- ----------------------
Amount Pct(1) Amount Pct(1) Amount Pct(1)
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Interest Income $ 15,630 6.98% $ 19,848 7.41% $ 22,105 7.51%
Interest Expense (6,920) -3.09% (10,207) -3.81% (12,370) -4.20%
Net Interest Income $ 8,710 3.89% $ 9,641 3.60% $ 9,735 3.31%
Provision for Loan Losses (156) -0.07% (60) -0.02% (210) -0.07%
Net Interest Income after Provisions $ 8,554 3.82% $ 9,581 3.58% $ 9,525 3.24%
Other Operating Income 1,500 0.67% 485 0.18% 433 0.15%
Community Enrichment Program Expense - 0.00% - 0.00% - 0.00%
Operating Expense (4,179) -1.87% (5,598) -2.09% (6,025) -2.05%
Net Operating Income $ 5,875 2.62% $ 4,468 1.67% $ 3,933 1.34%
Net Gain(Loss) on Sale of Land $ - 0.00% $ 412 0.15% $ 314 0.11%
Net Gain(Loss) on Sale of AFS Securities - 0.00% 612 0.23% 564 0.19%
Net Gain(Loss) on Sale of AFS Loans - 0.00% 44 0.02% (66) -0.02%
Directors Retirement Program Expense - 0.00% - 0.00% - 0.00%
Special SAIF Assessment - 0.00% - 0.00% - 0.00%
Total Non-Operating Income/(Expense) $ - 0.00% $ 1,068 0.40% $ 812 0.28%
Net Income Before Tax $ 5,875 2.62% $ 5,536 2.07% $ 4,745 1.61%
Income Taxes (2,157) -0.96% (2,109) -0.79% (1,743) -0.59%
Net Income (Loss) Before Extraord. Items $ 3,718 1.66% $ 3,428 1.28% $ 3,002 1.02%
Cumulative Effect of Change in
Accounting for Income Taxes 333 0.15% - 0.00% - 0.00%
Net Income (Loss) $ 4,051 1.81% $ 3,428 1.28% $ 3,002 1.02%
Estimated Core Net Income
Net Income $ 3,718 1.66% $ 3,428 1.28% $ 3,002 1.02%
Addback(Deduct): Non-Recurring (Inc)/Exp - 0.00% (1,068) -0.40% (812) -0.28%
Tax Effect (1) - 0.00% 407 0.15% 298 0.10%
Estimated Core Net Income $ 3,718 1.66% $ 2,766 1.03% $ 2,489 0.85%
Memo:
Expense Coverage Ratio (2) 208.42% 172.22% 161.58%
Efficiency Ratio (3) 40.93% 55.28% 59.25%
Effective Tax Rate 36.71% 38.10% 36.73%
<CAPTION>
For the Fiscal Year Ended June 30,
-----------------------------------------------------
1997 1998
----------------------- ----------------------
Amount Pct(1) Amount Pct(1)
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Interest Income $ 25,423 7.60% $ 28,604 7.60%
Interest Expense (13,817) -4.13% (15,097) -4.01%
Net Interest Income $ 11,606 3.47% $ 13,507 3.59%
Provision for Loan Losses (185) -0.06% (993) -0.26%
Net Interest Income after Provisions $ 11,421 3.41% $ 12,514 3.33%
Other Operating Income 749 0.22% 820 0.22%
Community Enrichment Program Expense (259) -0.08% (373) -0.10%
Operating Expense (6,381) -1.91% (8,289) -2.20%
Net Operating Income $ 5,530 1.65% $ 4,672 1.24%
Net Gain(Loss) on Sale of Land $ 16 0.00% $ (24) -0.01%
Net Gain(Loss) on Sale of AFS Securities (8) 0.00% (105) -0.03%
Net Gain(Loss) on Sale of AFS Loans 29 0.01% 69 0.02%
Directors Retirement Program Expense - 0.00% (800) -0.21%
Special SAIF Assessment (1,644) -0.49% - 0.00%
Total Non-Operating Income/(Expense) $ (1,607) -0.48% $ (860) -0.23%
Net Income Before Tax $ 3,923 1.17% $ 3,812 1.01%
Income Taxes (1,548) -0.46% (1,367) -0.36%
Net Income (Loss) Before Extraord. Items $ 2,375 0.71% $ 2,445 0.65%
Cumulative Effect of Change in
Accounting for Income Taxes - 0.00% - 0.00%
Net Income (Loss) $ 2,375 0.71% $ 2,445 0.65%
Estimated Core Net Income
Net Income $ 2,375 0.71% $ 2,445 0.65%
Addback(Deduct): Non-Recurring (Inc)/Exp 1,607 0.48% 860 0.23%
Tax Effect (1) (634) -0.19% (308) -0.08%
Estimated Core Net Income $ 3,348 1.00% $ 2,997 0.80%
Memo:
Expense Coverage Ratio (2) 174.79% 155.93%
Efficiency Ratio (3) 53.74% 60.46%
Effective Tax Rate 39.46% 35.86%
</TABLE>
(1) Reflects effective tax rate for each period.
(2) Net interest income divided by operating expenses plus community enrichment
program expense.
(3) Operating expenses plus community enrichment program expense as a percent of
the sum of net interest income and other operating income (excluding gains
on sale).
Source: Willow Grove's prospectus.
<PAGE>
RP Financial, LC.
Page 1.13
emphasizing non-traditional products and services such as mutual fund and
annuity sales. However, any growth in the level of non-interest operating income
is expected to be gradual.
Community Enrichment Program
As a mutual institution, Willow Grove implemented a Community
Enrichment Program in 1997 which entailed the discretionary contribution of
funds to charitable and community works and projects. Such charitable donations
totaled $259,000 and $373,000, respectively, in fiscal 1997 and fiscal 1998. In
conjunction with the mutual holding company reorganization and minority stock
offering, the Bank will be establishing the Willow Grove Foundation with Holding
Company stock equal to 4 percent of the shares offered. It is expected that the
Foundation will contribute to many of the same types of programs and entities as
the Community Enrichment Program, and thus the Bank's charitable contributions
may diminish. At the same time, the Board remains committed to maintaining
Willow Grove's status as a good corporate citizen and believes it likely that
some charitable donations will continued to be made by the Bank to supplement
the giving by the Foundation.
Operating Expenses
Operating expenses (excluding the Community Enrichment Program, the
special SAIF assessment and Directors Retirement program expense) increased in
dollar terms for the period from fiscal 1994 to 1998, although relatively strong
asset growth limited the increase in the operating expense ratio (Note:
operating expenses for the Bank hereinafter exclude these same items). For the
twelve months ended June 30, 1998, operating expenses totaled $8.3 million,
equal to 2.20 percent of average assets.
Operating expenses increased in fiscal 1998 to equal $8.3 million,
or 2.20 percent of assets, partially as a result of strong balance sheet growth
and expansion of overall business volumes achieved during the year.
Additionally, there were several unusual expenditures which may not recur to the
same extent in the future related to employee incentive compensation, addressing
the Year 2000 issue, establishment of a reserve for a legal contingency among
other factors. Accordingly, Willow Grove expects that there may be some
reduction in the operating expense ratio in fiscal 1999. At the same time,
operating expenses are expected to increase
<PAGE>
RP Financial, LC.
Page 1.14
following the reorganization and offering as a result of the leveraged ESOP
amortization expense, public company legal, accounting and printing/mailing
costs and expansion of fixed assets. The Bank anticipates that it may have its
offer to lease two former offices of a commercial bank accepted, which will
result in increased staffing, lease expense and other operating costs. Also,
Willow Grove is targeting to open one to two additional branch offices per year
into the foreseeable future.
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 due
to a change in the methodology employed to determine the adequacy of valuation
allowances, loan loss provisions increased in the most recent fiscal year to
equal $993,000, or 0.26 percent of average assets. Management anticipates that
the level of loan loss provisions may be lower in fiscal 1999 relative to the
level reported in fiscal 1998. 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, the Bank is accruing $90,000 of loan loss provisions quarterly.
Non-Operating Items
Non-operating income and expenses have had a varying impact on
earnings over the last five fiscal years. In fiscal 1995 and 1996, non-operating
items consisted of gains on the sale of assets and totaled $1.1 million and
$812,000, respectively. In fiscal 1997 and 1998, Willow Grove reported
non-operating losses equal to $1.6 million and $860,000, respectively,
consisting primarily of the special SAIF assessment and the expense related to
the establishment of the directors retirement program.
Taxes
The Bank's tax rate has ranged from approximately 35.9 to 39.5
percent over the last 5 years. Willow Grove is in a fully taxable position with
respect to both federal and state income taxes.
<PAGE>
RP Financial, LC.
Page 1.15
Efficiency Ratio
The Bank's efficiency ratio during 1995 and 1996 deteriorated
largely due to a reduction in both the net interest income and other operating
income ratios, coupled with an increase in the operating expense ratio. Over the
past two years, the Bank's efficiency ratio has shown some volatility with the
fiscal 1998 deterioration largely attributable to an increase in certain
operating expense items (some of which were one-time expenses). On a
post-offering basis, the efficiency ratio is expected to show some improvement
as the net interest ratio increases with the reinvestment of proceeds, although
the increased operating expenses (reflecting the public company and stock plans
expense and potential branching) will limit the improvement.
Interest Rate Risk Management
Willow Grove manages interest rate risk primarily from the asset side
of the balance sheet. To control interest rate risk, Willow Grove 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 lower yielding residential mortgages originated into the
secondary market; (3) striving to fund operations through comparatively low cost
retail deposits; (4) and by building the balance of lower-rate/fee-generating
transaction accounts.
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 (through gains if any and future
servicing revenues), thereby reducing the reliance on net interest income for
overall earnings. The gap analysis set forth in Exhibit I-6 reflects the impact
of the foregoing strategies on the Bank's repricing structure. The gap measures
indicate a liability sensitive position with a cumulative gap-to-assets ratio
equal to negative 11.1 percent in the one year or less bucket and negative 13.4
percent in the three year or less period. Similarly, a rate shock analysis (see
Exhibit I-7) also reflects a liability sensitive position with increases in net
interest income and market value generally reflected under lower rate scenarios.
<PAGE>
RP Financial, LC.
Page 1.16
Overall, the data suggests the Bank's earnings would be negatively
impacted by rising interest rates, although the Bank has been somewhat
successful in reducing its exposure to interest rate risk. 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.
Lending Activities and Strategy
Willow Grove's lending strategy has been developed to take advantage
of: (1) the Bank's historical strengths in the areas of permanent residential
mortgage; (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 Willow Grove's largest competitors
and provided the Bank with the opportunity to employ experienced commercial
lenders.
Willow Grove's lending operations consist of four major segments as
follows: (1) construction lending which provides high yielding, short-term
assets; (2) portfolio mortgage lending; (3) commercial lending in conjunction
with the recently implemented business banking strategy; and (4) secondary
market operations in which Willow Grove originates or purchases loans for
resale. Such lending strategy is consistent with Willow Grove's community bank
orientation, as evidenced in the Bank's loan portfolio composition (see Exhibits
I-8). As of June 30, 1998, permanent mortgage loans secured by 1-4 family
properties totaled $243.1 million, or 71.4 percent of loans, and construction
loans totaled $13.6 million, or 4.0 percent of total loans. Together,
construction and permanent residential mortgage loans comprised 75.4 percent of
Willow Grove's total loan portfolio while home equity loans comprised an
additional 12.1 percent of total loans.
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 $32.0
million, equal to 9.4 percent of loans. Non-mortgage loans, including commercial
and consumer loans, which represent a small albeit
<PAGE>
RP Financial, LC.
Page 1.17
growing portion of the loan portfolio, amounted to $10.4 million, equal to 3.1
percent of total loans.
Willow Grove originates both fixed rate and adjustable rate 1-4 family
loans; the Bank's general philosophy is to seek to originate or purchase
adjustable rate loans and/or higher yielding fixed rate loans. Generally,
conforming loans which have lower yields are sold to Fannie Mae or Freddie Mac,
with the retention of servicing dependent upon pricing.
The Bank originates one-to-four family loans up to a loan-to-value
("LTV") ratio of 95.0 percent, with private mortgage insurance ("PMI") being
required for loans in excess of a 80.0 percent LTV ratio. The substantial
portion of 1-4 family mortgage loans originated and/or purchased by Willow Grove
are secured by residences in the local market. In this regard, most purchased
loans are originated by approximately 25 local loan brokers with which Willow
Grove has established relationships.
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 lending has been a modest part of overall lending
operations over the last several years. Willow Grove originates construction
loans as it seeks to participate in the growth occurring in the market, shorten
the average duration of assets, and support asset yields. The majority of the
Bank's construction lending is in Montgomery and Bucks Counties. The Bank
originates both loans on pre-sold homes as well as builder loans, with the
amount of builder loans outstanding at any one time generally in the range of 4
to 6.
In conjunction with its construction lending, the Bank has also made
land development loans. Land development loans are typically tied to the
construction of residential housing and is 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. Land development and construction
loans are secured by a lien on the property and made with a variety of fixed and
adjustable terms and are made with maximum loan-to-value ratios of 80 percent of
the improved value of the property. The Bank may finance the acquisition,
development and construction of multi-million dollar projects
<PAGE>
RP Financial, LC.
Page 1.18
but the typical project is much smaller and all such loans will be secured by
properties in its local markets. The Bank seeks to obtain personal guarantees
from the principals of its corporate borrowers.
Willow Grove has and will continue to make loans for the purchase or
financing of various types of multi-family and commercial real estate loans.
Willow Grove's commercial real estate and multi-family loan portfolios are
largely comprised of loans originated in-house and secured by properties in the
primary market in southeastern Pennsylvania. At June 30, 1998, the balance of
multi-family and commercial mortgage loans equaled $32.0 million, 9.4 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. The typical balance
of a multi-family or commercial mortgage loan ranges between $500,000 to $2.0
million. Management typically limits the maximum loan-to-value ratio for a
newly-constructed building to 80 percent and seeks a 75 percent ratio for an
existing structure. Consistent with the broad product line appropriate for a
community bank, Willow Grove'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 commercial
loan portfolio, and equaled approximately 5.4 million, or 1.6 percent of total
loans, as of June 30, 1998. Willow Grove intensified its efforts to increase the
commercial loan portfolio commencing in 1994 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. Most line of credit and
business term loans are secured by real estate and other assets such as
inventory or accounts receivable. Unsecured business loans are generally
reserved for customers with very strong financial conditions and a demonstrated
capacity to repay their obligations.
Exhibit I-10, which shows the Bank's loan originations, repayments and
sales over the past three fiscal years, highlights Willow Grove's recent
emphasis on commercial and home
<PAGE>
RP Financial, LC.
Page 1.19
equity lending. In this regard, originations excluding 1-4 permanent residential
mortgage loans (but including home equity loans) equaled $24.2 million in fiscal
1996, and increased to $58.5 million in fiscal 1998. Additionally, loan growth
has been facilitated by expanded originations and purchases experienced
recently. The increase has been realized through increased staffing and
marketing for the origination and processing of non-residential loans, and by
the utilization of approximately 25 correspondents responsible for generating
the Bank's residential loan originations and purchases.
Although the volume of loan originations and purchases has increased,
the level of loan sales (consisting primarily of residential mortgage loan
sales) has remained relatively stable, and totaled $30.4 million in fiscal 1998.
The more limited growth of sales is the result of the Bank's objectives for
portfolio growth and the level of competition (substantially all loans sold are
originated through brokers who may have numerous conduits through which to sell
to the secondary market). The portfolio of residential loans serviced for others
approximated $66.4 million at June 30, 1998.
Asset Quality
Willow Grove's asset quality has been strong over the last five fiscal
years, notwithstanding the growth of the Bank's loan portfolio, including growth
in higher risk-weight loans. Specifically, as reflected in Exhibit I-11, the
balance of non-performing assets ("NPAs") increased to 0.87 percent of assets in
fiscal 1996, largely due to the Bennett Funding insolvency, and has subsequently
diminished to $1.5 million of non-performing loans, or 0.37 percent of assets,
as of June 30, 1998. At that date, the Bank's loan loss reserves equaled $2.665
million, or 0.83 percent of the net loan portfolio; the reserve coverage as a
percent of NPAs was 179 percent. While Willow Grove's historical delinquency
rate and loss experience suggest limited credit risk exposure for the Bank, the
recent growth of the loan portfolio, particularly in higher risk-weight loans,
tends to increase the Bank's credit risk exposure relative to historical levels.
<PAGE>
RP Financial, LC.
Page 1.20
Funding Composition and Strategy
Deposits have consistently been the Bank's primary source of funds, and
as of June 30, 1998, totaled $340.8 million, which reflects 13.7 percent
compounded annual growth since the end of fiscal 1994. As discussed previously,
the Bank has implemented a growth and expansion strategy over the last five
fiscal years with the objective of building the franchise and leveraging
capital. Growth and entry into new markets has been facilitated by the purchase
of two branches from the RTC and the opening of two new de novo offices to
increase the total number of retail offices to seven. Management believes that
Willow Grove's deposit pricing places the Bank in the middle of the range of the
local competition. Notwithstanding pricing deposits "at the market", Willow
Grove has been successful in growing its deposit base as a result of economic
and population growth in the local markets and attracting new customers as a
result of consolidation in the local banking industry.
Lower costing savings and transaction accounts comprised approximately
32 percent of Willow Grove's deposits, totaling $108.8 million at June 30, 1998.
The proportion of savings and transaction accounts reflects a modest increase
since fiscal 1996 partially as a result of implementation of the community bank
strategy which has resulted in the generation in a modest level of transaction
accounts. 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, 1998, borrowed funds totaled $21.0 million and consisted
solely of FHLB advances. The level of borrowings have fluctuated over time based
on their cost relative to deposits, the Bank's liquidity requirements, and
interest rate risk considerations. In the future, Willow Grove 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 received in the
conversion over a period of time leading up to the completion of the offering)
and repay such advances with the offering proceeds; and (2) in connection with
potential leveraging and/or interest rate risk management strategies.
The Bank utilizes borrowings primarily for the purpose of generating
additional liquidity and typically employs either FHLB advances or reverse
repurchase agreements.
<PAGE>
RP Financial, LC.
Page 1.21
Year 2000 Compliance
Willow Grove is reliant on third party vendors for its data processing
needs as well as certain other significant functions and services. Additionally,
Willow Grove 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
timely basis. While Willow Grove 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 Willow
Grove 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
Other than the routine legal proceedings that occur in the Bank's
ordinary course of business, the Bank is not involved in litigation which is
expected to have a material impact on the Bank's financial condition or
operations.
<PAGE>
RP Financial, LC.
Page 2.1
II. MARKET AREA
Introduction
Chartered in 1909 and operating continuously since that time in
Montgomery and Bucks County in eastern Pennsylvania, Willow Grove currently
conducts operations out of its main office in Maple Glen, Pennsylvania, and a
total of six branch offices. Willow Grove's markets in eastern Pennsylvania are
within the Philadelphia metropolitan area and the Bank's main office is situated
approximately 20 miles north of downtown Philadelphia. Both counties in the
market area are included in the Philadelphia Metropolitan Statistical Area
("MSA"), although the MSA also encompasses two additional nearby counties in
Pennsylvania and three counties in New Jersey. Willow Grove is currently
negotiating to lease two new office locations which were formerly offices of a
commercial bank, both of which are in Montgomery County.
The Philadelphia MSA is the nation's fourth largest metropolitan area
in terms of total population. Based on 1998 estimated census data, the
population of the entire MSA was estimated at 4.9 million. The Pennsylvania
counties included in the MSA had an estimated population of 3.7 million, which
constitutes nearly one-third of Pennsylvania's total population. The
Philadelphia area economy is typical of most large Northeast and Midwest cities
where the traditional manufacturing-based economy has diminished somewhat to be
replaced with service sector growth. The growth in service employment in
Philadelphia area has enhanced the MSA's economic diversity, and employment in
the market area today is derived from a number of different employment sectors.
Montgomery and Bucks Counties where Willow Groves branches are located
serve as bedroom communities for commuters to nearby Philadelphia although local
employment has continued to grow as many businesses have found suburban
locations to be attractive. Overall, the economy of Montgomery and Bucks
Counties has improved significantly since the early 1990s. Unemployment rates
are relatively low and housing prices appear to be rising modestly.
Over the past several decades, the Philadelphia MSA has become a major
center for financial services, and Willow Grove competes with a number of very
large financial institutions that are either headquartered or maintain offices
in southeastern Pennsylvania. Some of the
<PAGE>
RP Financial, LC.
Page 2.2
larger commercial banks operating in the MSA include First Union Corporation,
PNC Bank Corp and Mellon Bank Corp. Willow Grove also competes with a number of
large savings institutions who maintain branches in or are headquartered in
southeastern Pennsylvania, including Sovereign Bank and Commonwealth Bank.
Overall, the magnitude of the competition that Willow Grove faces is apparent
when it is considered that as of June 30, 1997, there were over 500 financial
institution branches in Montgomery and Bucks Counties. These numbers do not
include competition derived from mortgage banking companies, investment houses,
mutual funds and other sources.
Future growth opportunities for Willow Grove depend on several
different growth indicators in the market area, particularly the future growth
and stability of the regional economy (in particular the areas surrounding the
Bank's office locations), demographic growth trends, and the nature and
intensity of the competitive environment. These factors have been briefly
examined in the following pages to help determine the growth potential that
exists for the Bank and the relative economic health of Willow Grove's market
area. The growth potential and the stability provided by the market area have a
direct bearing on the market value of the Bank, and will be factored into our
valuation analysis accordingly.
Market Area Demographics
Demographic growth trends for Montgomery and Bucks Counties 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 has generally exhibited relatively
comparable population and household growth trends relative to the national
averages but relatively higher growth rates in comparison to the state and
Philadelphia MSA average. Overall, Montgomery and Bucks Counties appear to
provide relatively attractive growth potential for a community banking concern
like Willow Grove as: (1) both counties posted positive growth in population and
number of households during 1990 through 1997, and such trends are projected to
continue to through 2002; (2) Montgomery and Bucks Counties exhibit 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 Willow
Grove's markets possess income levels well in excess of the state and national
average.
<PAGE>
RP Financial, LC.
Page 2.3
Table 2.1
Willow Grove Savings Bank
Summary Demographic Data
<TABLE>
<CAPTION>
Year
----------------------------------------------- Growth Rate Growth Rate
Population (000) 1990 1998 2002 1990-98 1998-2002
---------------- ---- ---- ---- ------- ---------
<S> <C> <C> <C> <C> <C>
United States 248,710 267,805 281,209 1.1% 1.0%
Pennsylvania 11,882 12,018 12,089 0.1% 0.1%
Philadelphia MSA 4,922 4,939 4,955 0.0% 0.1%
Bucks County 541 587 615 1.0% 1.2%
Montgomery County 678 717 740 0.7% 0.8%
Households (000)
----------------
United States 91,947 99,020 104,001 1.1% 1.0%
Pennsylvania 4,496 4,603 4,670 0.3% 0.4%
Philadelphia MSA 1,801 1,825 1,842 0.2% 0.2%
Bucks County 191 210 223 1.2% 1.4%
Montgomery County 255 275 287 0.9% 1.1%
Household Income (000)
---------------------
United States $29,199 $36,961 $42,042 3.4% 2.6%
Pennsylvania 29,049 37,757 44,032 3.3% 3.9%
Philadelphia MSA NA 47,879 56,285 NA 4.1%
Bucks County 40,418 58,032 69,532 4.6% 4.6%
Montgomery County 41,479 54,799 60,866 3.5% 2.7%
Per Capita Income - ($)
-----------------------
United States $13,179 $18,100 ---- 4.6% N/A
Pennsylvania 12,973 18,732 ---- 4.7% N/A
Philadelphia MSA NA 22,890 ---- NA N/A
Bucks County 15,869 25,728 ---- 6.2% N/A
Montgomery County 18,544 28,285 ---- 5.4% N/A
</TABLE>
<TABLE>
<CAPTION>
1998 Age Distribution(%) 0-14 Years 15-24 Years 25-44 Years 45-64 Years 65+ Year Median Age
------------------------ ---------- ----------- ----------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
United States 21.7 13.6 31.4 20.5 12.7 34.8
Pennsylvania 19.8 12.7 29.9 21.8 15.8 37.4
Philadelphia MSA 21.2 12.5 31.3 21.2 13.8 36.0
Bucks County 21.6 11.5 32.8 22.4 11.8 36.1
Montgomery County 18.9 11.1 31.5 22.9 15.5 38.2
Less Than $15,000 to $25,000 to $50,000 to $100,000 to
1998 HH Income Dist.(%) $15,000 25,000 $50,000 $100,000 $150,000 $150,000+
----------------------- ------- ------ ------- -------- -------- ---------
United States 17.7 14.4 33.5 26.5 5.4 2.6
Pennsylvania 20.2 13.9 31.3 25.9 5.5 3.2
Philadelphia MSA 12.0 9.9 30.3 33.5 9.3 4.9
Bucks County 5.8 6.6 27.9 40.9 13.0 5.8
Montgomery County 6.9 8.4 29.2 36.2 11.3 8.0
</TABLE>
Source: CACI.
<PAGE>
RP Financial, LC.
Page 2.4
Notwithstanding the positive attributes of the foregoing 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 approximately 1 percent
annually through 2002.
Local Economy
The work force in Willow Grove's markets is reflective of its suburban
character with a relatively high proportion of professional, technical and
managerial jobs. Growth in these areas has been the result of their identity as
relatively attractive suburban areas proximate to Philadelphia and as a result
of the development of suburban office parks. Table 2.2 sets forth a listing of
the largest employers in Montgomery and Bucks Counties.
Table 2.2
Willow Grove Bank
Major Employers in Montgomery and Bucks Counties
<TABLE>
<CAPTION>
Employer Employees
-------- ---------
<S> <C>
Bucks County
Grand View Hospital 1,500
Rohm & Haas, Delaware Valley, Inc. 1,363
Union Fidelity Life Insurance Company 1,170
USX Corp., Fairless Works 1,060
Woods Services 975
Charming Products, Inc. 954
CoreStates Bank 953
St. Mary Medical Center 870
Lower Bucks Hospital 791
Doylestown Hospital 705
Montgomery County
Rhone-Poulenc Rorer, Inc. 2,500
State Correctional Institute 1,216
Knoll International 1,200
Pottstown Memorial Medical Center 980
PECO Energy Company 700
</TABLE>
Source: Local Chambers of Commerce.
<PAGE>
RP Financial, LC.
Page 2.5
Unemployment trends in the market area and Pennsylvania are displayed
in Table 2.3. The Montgomery and Bucks County unemployment rates were lower than
Pennsylvania and national averages as of June 1997 and June 1998, evidence of
the relatively stable and generally healthy economy of the market area served by
the Bank.
Table 2.3
Willow Grove Bank
Unemployment Trends(1)
<TABLE>
<CAPTION>
June 1997 June 1998
Region Unemployment Unemployment
------ ------------ ------------
<S> <C> <C>
United States 5.2% 4.7%
Pennsylvania 5.3 4.4
Philadelphia MSA 5.0 4.3
Bucks County 4.2 3.4
Montgomery County 3.8 3.0
</TABLE>
Unemployment rates are not seasonally adjusted.
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 Willow Grove 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 Philadelphia metropolitan area and Montgomery and Bucks Counties. Table
2.4 displays deposit market trends over the past several years for Bucks and
Montgomery Counties, with additional data presented for the State of
Pennsylvania. The data indicates that deposit growth in the Bank's primary
market area between 1995 and 1997 was limited although the deposit market share
for
<PAGE>
RP Financial, LC.
Page 2.6
Table 2.4
Willow Grove Bank
Deposit Summary
<TABLE>
<CAPTION>
As of June 30,
-----------------------------------------------------------------------------
1995 1997
------------------------------------- ------------------------------------- Deposit
Market Number of Market No. of Growth Rate
Deposits Share Branches Deposits Share Branches 1995-1997
(Dollars In Thousands) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
State of Pennsylvania $159,309,393 100.0% 4,440 $171,766,753 100.0% 4,474 3.8%
Commercial Banks 133,487,991 83.8% 3,706 143,735,475 83.7% 3,675 3.8%
Savings Institutions 25,821,402 16.2% 734 28,031,278 16.3% 799 4.2%
Bucks County $6,545,390 100.0% 193 $6,843,465 100.0% 200 2.3%
Commercial Banks 5,074,846 77.5% 148 5,111,800 74.7% 145 0.4%
Savings Institutions 1,470,544 22.5% 45 1,731,665 25.3% 55 8.5%
Willow Grove Bank (1) 36,131 2.5% 1 49,712 2.9% 2 17.3%
Willow Grove Bank (2) 0.6% 0.7%
Montgomery County $11,818,434 100.0% 305 $11,445,530 100.0% 322 -1.6%
Commercial Banks 9,204,829 77.9% 235 8,462,883 73.9% 236 -4.1%
Savings Institutions 2,613,605 22.1% 70 2,982,647 26.1% 86 6.8%
Willow Grove Bank (1) 201,513 7.7% 4 260,015 8.7% 4 13.6%
Willow Grove Bank (2) 1.7% 2.3%
</TABLE>
(1) Percent of savings institution deposits.
(2) Percent of total deposits.
Source: FDIC; OTS.
<PAGE>
RP Financial, LC.
Page 2.7
savings institutions increased. The relatively low deposit growth in Willow
Grove's markets, notwithstanding the relatively favorable economic conditions,
is a reflection of disintermediation as funds continue to flow directly to the
stock and bond markets. Notwithstanding the strengthening market share of
savings institutions, commercial banks hold a dominant market share in Bucks and
Montgomery Counties, equal to 75 percent and 74 percent of deposits,
respectively.
Competition for deposits in Pennsylvania in general is intense, as the
overall size and stability of the Pennsylvania market makes it very attractive
to financial institutions. In fact, a several large superregional institutions
operate in the Bank's markets as well as a relatively large number of community
banks. Willow Grove recorded annual deposit growth of 13.71 percent during the
period covered in Table 2.4, which was a function of the Bank's targeted growth
objectives and which was well in excess of the market average, resulting in an
increased market share for the Bank.
The level of competition in Bucks and Montgomery Counties is evidenced
by deposit market share data set forth in Table 2.5. As of June 30, 1997, Willow
Grove ranked ninth in total deposits in Montgomery County and 27th in deposits
in Bucks County.
<PAGE>
RP Financial, LC.
Page 2.8
Table 2.5
Willow Grove Bank
Deposit Market Share
<TABLE>
<CAPTION>
Deposits as of
Institution June 30, 1997 Market Share
----------- -------------- ------------
($000) (%)
<S> <C> <C>
Bucks County
Corestates $2,073,528 27.48%
PNC Bank 553,889 7.34
Mellon Bank 522,973 6.93
Philadelphia Telco Credit Union 386,322 5.12
First Union 353,717 4.69
Montgomery County
Corestates 2,349,733 20.76%
PNC Bank 1,488,786 13.16
Mellon 1,218,574 10.77
Harleysville National 624,258 5.52
Commonwealth Bank 591,285 5.22
</TABLE>
Source: FDIC.
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, although Willow
Grove will seek to offset this by branching into new markets and potentially
offering non-traditional services to serve its customers more completely.
<PAGE>
RP Financial, LC.
Page 3.1
III. PEER GROUP ANALYSIS
This chapter presents an analysis of Willow Grove'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 Willow Grove 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 Willow Grove and
the Peer Group, will then be used as a basis for the valuation of Willow Grove'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 Willow Grove's valuation
should be comprised of the subsidiary institutions of mutual holding companies.
The Peer Group is consistent with the
<PAGE>
RP Financial, LC.
Page 3.2
regulatory guidelines, and other recently completed MHC transactions. Further,
the Peer Group should be comprised of only those MHC institutions whose common
stock is either listed on a national exchange or is NASDAQ listed, since the
market for companies trading in this fashion is regular and reported. We believe
non-listed MHC institutions are inappropriate for the Peer Group, since the
trading activity for thinly-traded stocks is typically highly irregular in terms
of frequency and price and may not be a reliable indicator of market value. We
have excluded from the Peer Group those public MHC institutions that are
currently pursuing a "second step" conversion and/or companies whose market
prices appear to be distorted by speculative factors or unusual operating
conditions. The universe of all publicly-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 Willow Grove. The differences between the Peer Group's reported
financial data and the financial data of Willow Grove 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 Pennsylvania-based MHC institutions with capital,
earnings, credit quality and interest rate risk comparable to Willow Grove.
However, the universe of 22 publicly-traded MHC institutions only includes four
institutions headquartered in Pennsylvania. 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 Willow Grove 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 Willow
Grove, we believe such companies form a good basis for the valuation of Willow
Grove, 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.
Page 3.5
RP FINANCIAL, LC.
-------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 3.1
Peer Group of Publicly-Traded Thrifts
September 9, 1998(1)
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>
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: 10/07/98
<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%
</TABLE>
(1) Based on market prices as of September 4, 1998.
The following sections present a comparison of Willow Grove'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 Willow Grove and
the Peer Group. Willow Grove's ratios reflect June 30, 1998 figures, and the
Peer Group's, unless otherwise indicated for the Peer Group companies. Willow
Grove's net worth base of 8.9 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. Willow Grove's
capital base contained a small amount of intangibles, equal to 0.6 percent of
assets, which reduced tangible equity to 8.3 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
<PAGE>
RP Financial, LC.
Page 3.7
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of June 30, 1998
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
-------------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref. Stock
----------- ----- ---- -------- -------- ----- ----- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
-----------------
June 30, 1998 11.9 80.9 4.5 84.1 5.2 0.0 8.9 0.6 8.3 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 PA 25.8 58.7 12.5 66.1 21.8 0.0 9.8 0.3 9.5 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>
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
----------------------------------------------------------- --------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits & Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ----- -------- --------- ----- ------- -------- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
-----------------
June 30, 1998 14.29 NM 7.23 10.03 NM 8.52 10.65 8.27 8.27 14.89
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 PA 19.91 21.92 15.21 9.66 29.15 5.48 5.22 8.95 9.21 20.30
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 19.10 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
may be realized through leverage and lower funding costs. However, at the same
time, the Bank's higher pro forma capital position will likely result in a
decline in return on equity. Both the Bank's and the Peer Group's capital ratios
reflected capital surpluses over the regulatory capital requirements, with the
Peer Group's ratios currently indicating greater capital surpluses.
The interest-earning asset compositions for the Bank and the Peer Group
were somewhat similar, with loans constituting the bulk of interest-earning
assets for both Willow Grove and the Peer Group. Willow Grove's asset
composition reflects management's preference for loans as loans comprised 80.9
percent of assets for the Bank versus an average of 59.5 percent of assets for
the Peer Group. Comparatively, the Bank's cash and investments-to-assets ratio
was lower than the comparable ratio for Peer Group (11.9 percent of assets
versus 24.4 percent for the Peer Group) while MBS were also lower, equal to 4.5
percent of assets for the Bank versus 12.9 percent for the Peer Group on
average. Overall, Willow Grove's interest-earning assets amounted to 97.3
percent of assets, which was higher than the comparative Peer Group ratio of
96.8 percent.
Willow Grove's funding liabilities reflected a funding strategy that
was similar to that of the Peer Group's funding composition. The Bank's deposits
equaled 84.1 percent of assets, which was above the Peer Group average of 74.0
percent. Borrowings were utilized to a lesser degree by Willow Grove, with the
Bank and the Peer Group posting borrowings-to-assets ratios of 5.2 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 89.3 and 84.1 percent, respectively, with the Peer Group's lower ratio
being supported by maintenance of a higher capital position.
A key measure of balance sheet strength for a thrift institution is its
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 109.0 percent. The
additional capital realized from stock proceeds should serve to provide Willow
Grove with an IEA/IBL ratio that is comparable to the level currently maintained
by the Peer Group, as the interest-free capital realized in Willow Grove'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. Willow Grove's growth rates are based on annual growth for
the twelve 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. Willow Grove and the Peer Group posted comparable asset growth
rates approximating 14 percent. The Bank realized growth in investment
securities and loans while MBS diminished, while the Peer Group realized growth
in all major asset categories.
Deposit growth of 10.0 percent funded most of Willow Grove's asset
growth, which exceeded the Peer Group's deposit growth rate of 6.38 percent.
Borrowings increased at a relatively rapid rate for the Bank, albeit from a
relatively modest beginning balance. Conversely, borrowings diminished for most
of the Peer Group companies.
Capital growth rates posted by the Bank and the Peer Group equaled
positive 8.5 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 increased equity in the ROE
calculation and due to possible dividends and stock repurchases.
Income and Expense Components
Willow Grove and the Peer Group reported net income to average assets
ratios of 0.65 percent and 0.85 percent, respectively (see Table 3.3), based on
earnings for the twelve months ended June 30, 1998 for Willow Grove, and June
30, 1998 for the Peer Group companies, unless otherwise indicated. The higher
return posted by the Peer Group was due primarily to net non-operating expenses
posted by Willow Grove. In terms of core earnings measures, the Bank maintained
a slightly higher net interest margin than the Peer Group which is substantially
offset by Willow Grove's lower level of non-interest income and greater loan
loss provisions.
The Bank's slightly stronger net interest margin resulted primarily
from maintaining a higher interest income ratio, which is partially offset by a
higher ratio of interest expense as a percent of assets. Willow Grove's higher
interest income ratio was supported by maintaining a
<PAGE>
RP Financial, LC.
Page 3.10
RP FINANCIAL, LC.
---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended 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>
Willow Grove Bank
-----------------
June 30, 1998 0.65 7.60 4.07 3.59 0.26 3.33 0.00 0.00 0.22 0.22
SAIF-Insured Thrifts 0.91 7.40 4.14 3.26 0.13 3.13 0.10 0.01 0.31 0.43
All Public Companies 0.93 7.39 4.08 3.32 0.13 3.19 0.10 0.01 0.32 0.44
State of PA 0.86 7.35 4.18 3.17 0.16 3.02 0.06 0.00 0.37 0.43
Comparable Group Average 0.85 7.09 3.94 3.14 0.11 3.03 0.15 0.00 0.25 0.39
Mid-Atlantic Companies 0.75 7.03 3.98 3.05 0.09 2.96 0.05 0.00 0.20 0.25
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 1.57 7.10 3.52 3.58 0.25 3.32 0.92 -0.01 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
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
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) 1.19 7.00 4.15 2.86 0.01 2.85 0.00 0.00 0.11 0.11
LIBB Liberty Bancorp MHC of NJ (47)(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)(1) 0.87 6.49 3.54 2.95 0.12 2.83 0.16 0.00 0.32 0.48
NWSB Northwest Bcrp MHC of PA (30.8) 0.94 7.67 4.18 3.50 0.18 3.32 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
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
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)(1) 1.93 7.69 3.68 4.01 0.00 4.01 0.01 0.01 0.15 0.17
PBCT Peoples Bank, MHC of CT (41.2) 1.22 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>
<PAGE>
<TABLE>
<CAPTION>
G&A/Other Exp. Non-Op. Items Yields, Costs, and Spreads
--------------- -------------- --------------------------
MEMO: MEMO:
G&A Goodwill Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Expense Amort. Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------- ------ ----- ----- --------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
- -----------------
June 30, 1998 2.20 0.11 -0.23 0.00 7.85 4.49 3.36 3,719 35.86
SAIF-Insured Thrifts 2.20 0.02 0.07 0.00 7.51 4.75 2.76 4,316 36.77
All Public Companies 2.23 0.03 0.07 0.00 7.49 4.67 2.82 4,288 36.81
State of PA 2.17 0.03 0.05 0.00 7.61 4.77 2.84 4,796 35.54
Comparable Group Average 2.22 0.02 0.11 0.00 7.02 4.41 2.61 4,450 37.02
Mid-Atlantic Companies 2.13 0.03 0.04 0.00 6.77 4.27 2.51 4,646 36.86
Mid-West Companies 2.30 0.00 0.15 0.00 7.68 4.85 2.84 3,079 37.58
New England Companies 2.67 0.03 0.45 0.00 7.42 4.27 3.15 5,916 35.81
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 4,164 37.98
SKBO First Carnegie MHC of PA (45.0) 1.88 0.00 -0.18 0.00 7.07 5.14 1.93 7,663 65.46
HARS Harris Fin. MHC of PA (24.9) 1.76 0.11 0.22 0.00 7.36 5.20 2.16 4,168 36.07
LFED Leeds Fed Bksr MHC of MD (36.3)(1) 1.08 0.00 0.00 0.00 7.14 5.08 2.06 11,074 36.81
LIBB Liberty Bancorp MHC of NJ (47)(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)(1) 2.03 0.00 0.07 0.00 7.37 4.43 2.94 3,548 35.04
NWSB Northwest Bcrp MHC of PA (30.8) 2.09 0.08 0.05 0.00 7.90 4.66 3.24 2,962 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
SBFL SB Fngr Lakes MHC of NY (33.1) 2.52 0.00 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) 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) 1.22 0.00 0.01 0.00 7.80 4.79 3.01 9,182 35.07
PBCT Peoples Bank, MHC of CT (41.2) 4.12 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>
(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
higher level of interest-earning assets as a percent of total assets (97.3
percent versus 96.8 percent for the Peer Group), as well as a higher yield
earned on interest-earning assets (7.85 percent versus 7.02 percent for the Peer
Group). Willow Grove's higher yield earned on interest-earning assets was
supported by the relatively high proportion of loans as well as the Bank's
propensity to hold higher yielding fixed rate loans including non-conforming
loans in portfolio. The higher interest expense ratio reported by the Bank was
affected by the higher level of interest-bearing liabilities maintained by the
Bank (89.0 percent versus 84.1 percent for the Peer Group), supported by a
slightly higher cost of funds (4.49 percent versus 4.41 percent for the Peer
Group). Following the infusion of offering proceeds, the Bank's comparative
advantage with respect to maintaining a lower interest expense ratio should
increase due to the decline in the level of interest-bearing liabilities being
utilized to fund assets. Overall, Willow Grove and the Peer Group reported net
interest income to average assets ratios of 3.59 percent and 3.14 percent,
respectively.
In another key area of core earnings strength, the Bank maintained a
similar level of operating expenses relative to the Peer Group. For the period
covered in Table 3.3, the Bank and the Peer Group recorded operating expense to
average assets ratios of 2.20 percent and 2.22 percent, respectively. However,
intangible amortization was higher for Willow Grove, equal to 0.11 percent of
assets versus an average of 0.02 for the Peer Group. In the future, Willow Grove
expects that operating costs may diminish as there were several unusual
expenditures in trailing twelve month earnings which may not recur to the same
extent in the future. Such costs were related to employee incentive
compensation, addressing the Year 2000 issue, establishment of a reserve for a
legal contingency among other factors. Accordingly, Willow Grove expects that
there may be some downward impetus to expenses in fiscal 1999.
At the same time, operating expenses are expected to increase following
the conversion as a result of the leveraged ESOP amortization expense; public
company legal, accounting and printing/mailing costs; and expansion of fixed
assets. The Bank anticipates that its proposed lease for two former offices of a
commercial bank may likely be accepted, which will result in increased staffing,
depreciation and other operating costs. Also, Willow Grove is targeting to open
one to two additional branch offices per year into the foreseeable future.
<PAGE>
RP Financial, LC.
Page 3.12
The Bank's Community Enrichment Program expense ratio of 10 basis
points (not reflected in any column in Table 3.3 due to lack of comparable
itemized expenses, if any, for the Peer Group) also impacted Willow Grove's
comparative profitability.
Sources of non-interest operating income were a lower contributor to
the Bank's earnings in comparison to the Peer Group, with such income amounting
to 0.22 percent and 0.39 percent of Willow Grove's and the Peer Group's average
assets, respectively, reflecting the Peer Group's higher proportion of loans
serviced for others. Taking non-interest operating income into account in
comparing the Bank's and the Peer Group's earnings, Willow Grove's efficiency
ratio (operating expenses, net of amortization of intangibles, as a percent of
the sum of non-interest operating income and net interest income) of 60.5
percent was more favorable than the Peer Group's efficiency ratio of 62.9
percent.
Loss provisions were a larger factor in the Bank's earnings, amounting
to 0.26 percent and 0.11 percent of average assets for Willow Grove and the Peer
Group, respectively. Generally, both are favorable credit quality measures.
Non-operating expenses equal to 0.23 percent were reported by the Bank
and consisted primarily of the $800,000 expense related to the funding of the
Directors Retirement Plan, which is expected to be a one-time expenditure. The
Peer Group reported net non-operating gains equal to 0.11 percent of assets,
which were largely comprised of gains on the sale of loans and investments. Such
gains are subject to notable volatility due to fluctuations in market and other
interest rates, and, thus are not viewed as being a recurring source of income
for the Peer Group. Similarly, the non-operating expenses for the Bank are
expected to be non-recurring and will be excluded from the calculation of the
valuation earnings base.
The Bank's and the Peer Group's pre-tax earnings were similarly
impacted by taxes, with Willow Grove and the Peer Group posting effective tax
rates of 35.9 percent and 37.0 percent, respectively.
Loan Composition
Table 3.4 presents data related to the loan composition of Willow Grove
and the Peer Group. In broad terms, Willow Grove's loan portfolio composition
compared closely to the Peer
<PAGE>
RP Financial, LC.
Page 3.13
__________________________________________
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of June 30, 1998
<TABLE>
<CAPTION>
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>
Willow Grove Bank 5.23 70.28 3.67 10.75 1.57 13.38 59.94
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 Bks 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.
Page 3.14
Group's portfolio. Specifically, residential mortgages and MBS comprised 75.51
percent of loans and MBS for Willow Grove and 70.90 percent of loans and MBS for
the Peer Group. In this regard, the Bank's higher ratio of residential loans was
partially offset by the lower ratio of MBS.
The Bank and the Peer Group's loan portfolios reflect a similar level
of diversification into high risk-weight loans. Willow Grove's lending
diversification has consisted primarily of commercial real estate/multi-family
loans and home equity/consumer loans. The Peer Group's portfolio was more
broadly diversified to include a higher ratio of commercial real estate and
commercial business loans. Construction and land loans were at similar levels
for both the Bank and the Peer Group. Overall, the Bank maintains a higher ratio
of risk-weighted assets to total assets in comparison to the Peer Group, equal
to 59.94 percent and 52.84 percent, respectively.
Credit Risk
Table 3.5 reflects the relative credit risk factors of Willow Grove and
the Peer Group companies. In the financial analysis of the Bank included in
Section One, we noted that Willow Grove's asset quality has been strong as the
level of non-performing assets has been low and the level of credit related
losses has been low over the last several years. The Peer Group's asset quality
is also relatively favorable although the level of non-performing assets,
chargeoffs, and coverage ratios are modestly less favorable than those reported
by the Bank. 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 0.37 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 similarly low, equal to 0.47 percent and 0.58 percent of loans,
respectively. The Bank also maintains a similar reserve coverage ratio. We
believe that Willow Grove has greater credit risk however, in view of the growth
in the non-residential portfolio and limited seasoning of such loans.
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, Willow
<PAGE>
RP Financial, LC.
Page 3.15
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.5
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of June 30, 1998 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
----------- ------ ------ ----- ----- ---- ------ --------- -----
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank 0.00 0.37 0.47 0.83 178.86 178.86 6 0.00
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 PA 0.17 0.64 0.61 0.89 224.80 126.11 443 0.18
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 3.13
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>
Willow Grove Bank 8.3 109.0 2.7
SAIF-Insured Thrifts 13.1 114.3 3.3
All Public Companies 12.8 113.7 3.4
State of PA 9.6 110.5 3.0
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
</TABLE>
<PAGE>
<TABLE>
<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>
Willow Grove Bank -21 7 10 2 -3 23
SAIF-Insured Thrifts -4 -0 -3 -4 2 3
All Public Companies -3 -1 -3 -4 1 3
State of PA -7 3 -6 -3 -1 6
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 3.14
Grove's interest rate risk characteristics were considered to be slightly less
favorable than the Peer Group's. In particular, Willow Grove'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, Willow Grove'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 Willow Grove 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 Willow Grove or the Peer Group were viewed as having significant
interest rate risk exposure in their respective net interest margins. Willow
Grove reported generally positive trends in the net interest margin in recent
periods, as interest income increased due to higher loan yields. The stability
of the Bank's net interest margin should be enhanced by the infusion of stock
proceeds, as interest rate sensitive liabilities will be funding a lower portion
of Willow Grove'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 Willow
Grove. 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 Willow Grove.
<PAGE>
RP Financial, LC.
Page 4.1
IV. VALUATION ANALYSIS
Introduction
This chapter presents the valuation analysis and methodology used to
determine Willow Grove'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 Willow Grove, the market value of the stocks of public MHC
institutions, or Willow Grove'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 Willow Grove 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:
o Overall A/L Composition. While both fund lending primarily with
retail deposits, the Bank's IEA composition reflects a higher
concentration of loans and lower proportion of MBS. While both
have similar diversification into higher risk weight loans,
Willow Grove maintains a higher risk-weighted assets to total
assets ratio primarily owing to the greater proportion of
loans. 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.
o Credit Quality. Credit quality measures reflect limited credit
risk historically for both. Willow Grove maintained a lower
ratio of NPAs and a similar reserve coverage ratio in
comparison to the Peer Group. In view of Willow Grove's recent
loan growth, the emphasis in diversification into higher
risk-weight loans, and the relatively greater proportion of
loans to assets overall, the Bank's credit risk profile appears
to be higher than the Peer Group.
o Balance Sheet Liquidity. Willow Grove currently maintains a
lower level of cash, investments and MBS. 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. Willow Grove 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
o Equity Capital. The Bank operates with a lower pre-conversion
equity capital ratio than the Peer Group; even with the pro
forma level of equity capital, the Bank has less capitalization
and resulting leverage capacity.
On balance, we believe a slight downward adjustment for the Bank is
warranted for the comparative credit risk profile.
2. Profitability, Growth and Viability of Earnings
Earnings are a key factor in determining pro forma market value, as the
level and risk characteristics of an institution's earnings stream and the
prospects and ability to generate future earnings heavily influence the multiple
the investment community will pay for earnings. The major factors considered in
the valuation are described below.
o Reported Earnings. Willow Grove reported lower profitability
than the Peer Group, primarily reflecting the impact of
non-operating expenses versus non-operating gains reported by
the Peer Group.
o Core Earnings. On a core basis, adjusting for non-operating
items for both, the Bank remains at a disadvantage, even after
taking into account the pro forma benefit of the offering.
While certain operating expense items are expected to decline,
the public company and stock plans expense, coupled with the
branching strategy cost, are expected to place upward pressure
on the Bank's operating expense ratio.
o Interest Rate Risk. Willow Grove's greater perceived interest
rate risk posture should be partially moderated by the
anticipated redeployment of the stock proceeds into
interest-earning assets.
o Credit Risk. Loss provisions had a greater impact on Willow
Grove's earnings for the past year. In view of the limited
seasoning of the portfolio due to recent growth, particularly
in high risk-weight loans, and higher loans/assets ratio,
Willow Grove appears to have a higher credit risk profile. Such
risk is partially mitigated by Willow Grove's favorable loss
experience and comparatively lower level of NPAs currently.
o Earnings Growth Potential. Several factors were considered in
assessing earnings growth potential. The higher expected pro
forma capital position is expected to enable the Bank to
continue expansion in the asset base. The expected continued
<PAGE>
RP Financial, LC.
Page 4.5
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.
o 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. Willow Grove's pro forma
core ROE is anticipated to be consistent with the Peer Group
average on a fully-converted basis.
Overall, Willow Grove'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
Willow Grove exhibited comparable asset growth rate relative to the
Peer Group during the period covered in our comparative analysis (positive 14.3
percent versus positive 14.2 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, Willow
Grove'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 Philadelphia
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. Willow
Grove's primary market area for deposits and loans is considered to be in
Montgomery 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
<PAGE>
RP Financial, LC.
Page 4.6
Table 4.1). On average, the Peer Group companies maintained a larger deposit
market share than the Bank in the respective primary market areas, indicating a
competitive advantage for the Peer Group companies 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.
5. Dividends
While the Board has not indicated its intention to commence payment of
a cash dividend following the stock offering, Willow Grove'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 Willow Grove 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 Willow Grove 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
<PAGE>
RP Financial, LC.
Page 4.7
Table 4.1
Peer Group Market Area Comparative Analysis
<TABLE>
<CAPTION>
Population Proj.
----------------- Pop. 1990-97
Institution County 1990 1997 2002 % Change
- ----------- ------ ---- ---- ---- --------
(000) (000)
<S> <C> <C> <C> <C> <C>
Alliance Bank MHC of PA Delaware 548 547 547 -0.1%
BCSB Bankcorp MHC of MD Baltimore 692 724 743 4.7%
Brookline Bncrp MHC of MA Norfolk 616 641 658 4.0%
Fidelity FSB, MHC of FL Palm Beach 864 1,012 1,115 17.2%
First Carnegie MHC of PA Allegheny 1,336 1,286 1,252 -3.8%
Gaston Bancorp MHC of NC Gaston 175 184 190 5.0%
Harris SB MHC of PA Dauphin 238 248 255 4.2%
Jacksonville SB MHC of IL Morgan 36 36 36 -0.4%
Leeds FSB MHC of MD Baltimore 692 721 741 4.2%
Liberty Bancorp MHC of NJ MIddlesex 672 714 740 6.3%
Niagara Bancorp MHC of NY Niagara 221 221 221 0.1%
Northwest Bancorp MHC of PA Warren 45 44 44 -1.2%
Pathfinder BC MHC of NY Oswego 122 126 128 3.1%
People Home SB MHC of PA Beaver 186 187 187 0.3%
Peoples Bank MHC of CT Fairfield 828 836 842 1.1%
Pulaski SB MHC of NJ Union 494 498 501 0.9%
SB of Finger Lakes MHC of NY Ontario 95 100 104 5.3%
Wayne S&L Co MHC of OH Wayne 101 110 115 8.2%
Webster City FSB MHC of IA Hamilton 16 16 16 0.4%
-- -- -- ----
Averages: 420 434 444 3.1%
Medians: 238 248 255 3.1%
Willow Grove Montgomery 678 714 738 5.2%
<CAPTION>
Per Capita Income
------------------- Deposit
1997-2002 % State Market
Institution % Change Median Age Amount Average Share(1)
- ----------- -------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
Alliance Bank MHC of PA -0.1% 36.6 22,326 123.9% 2.7%
BCSB Bankcorp MHC of MD 2.6% 37.4 21,564 100.1% 2.0%
Brookline Bncrp MHC of MA 2.7% 36.8 24,273 119.5% 5.2%
Fidelity FSB, MHC of FL 10.1% 40.9 21,754 126.2% 3.8%
First Carnegie MHC of PA -2.6% 38.8 18,708 103.9% 0.2%
Gaston Bancorp MHC of NC 3.3% 35.0 17,027 97.2% 9.6%
Harris SB MHC of PA 2.8% 37.4 18,993 105.4% 6.6%
Jacksonville SB MHC of IL -0.3% 36.1 16,672 84.5% 19.7%
Leeds FSB MHC of MD 2.8% 37 21,680 102.1% 2.0%
Liberty Bancorp MHC of NJ 3.7% 35.3 24,920 102.2% 1.0%
Niagara Bancorp MHC of NY 0.1% 36.2 13,239 71.5% 13.9%
Northwest Bancorp MHC of PA -0.9% 38.3 15,543 86.3% 26.6%
Pathfinder BC MHC of NY 2.1% 32.1 12,294 66.4% 18.2%
People Home SB MHC of PA 0.2% 39.2 13,741 76.3% 7.9%
Peoples Bank MHC of CT 0.7% 37.4 27,087 129.1% 24.5%
Pulaski SB MHC of NJ 0.6% 37.2 24,441 101.0% 0.5%
SB of Finger Lakes MHC of NY 3.5% 35.7 15,101 81.6% 13.1%
Wayne S&L Co MHC of OH 5.2% 34.1 16,017 92.9% 10.8%
Webster City FSB MHC of IA 0.0% 39.1 16,204 98.7% 24.1%
---- ---- ------ ----- -----
1.9% 36.9 19,031 98.4% 10.1%
2.1% 37.0 18,708 100.1% 7.9%
Willow Grove 3.4% 37.8 27,526 146.4% 2.2%
</TABLE>
(1) Total institution deposits in headquarters county as percent of total county
deposits.
Sources: CACI, SNL Securities
<PAGE>
RP Financial, LC.
Page 4.8
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. Willow Grove 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.
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
that will approximate the Peer Group median, while Willow Grove's market
capitalization will also approximate the Peer Group 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
<PAGE>
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Page 4.9
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 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
<PAGE>
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Page 4.10
September. However, most of the initial gains were erased by news of rising
tensions between Iraq and Iran.
Congressional testimony by the Federal Reserve Chairman, in
which he indicated that it would be difficult to maintain the current balance
between tight labor markets and low inflation, caused stock and bond prices to
skid in mid-October 1997. Disappointing third quarter earnings in the technology
sector sharpened the sell-off in the stock market, with the Dow Jones Industrial
Average posting consecutive losses of more than 1.0 percent on October 16 and
17.
Stocks bounced back in early-week trading the following week,
reflecting positive third quarter earnings surprises posted by some of the blue
chip stocks. However, the recovery was abbreviated by global selling pressure,
which was led by the decline in the Hong Kong stock market, as the DJIA posted a
two-day loss approximating 320 points on October 23 and 24, 1997. The sell-off
in the world financial markets turned into a rout on the following Monday, with
a 5.8 percent decline in the Hong Kong stock market fueling the largest ever
point decline in the DJIA. On October 27, the DJIA declined 554 points or 7.2
percent. While the selling was broad based, technology stocks sensitive to Asian
demand experienced some of the sharpest declines. The turmoil in the stock
market provided for a sharp rally in U.S. Treasury bonds, reflecting a flight to
quality by skittish investors. The stock market recovered strongly the day after
the record breaking point decline, as the DJIA surged a record breaking 337
points on October 28. Comparatively, bond prices declined sharply on October 28,
as investors pulled out of the Treasury market to reinvest into the stock
market.
Market conditions remained uneven through the week ended
October 31, 1997, which was followed by a soaring stock market on November 3,
1997. The DJIA posted a 232 point increase on November 3, which was supported by
a resurgence in the Hong Kong market. Following the one day rally, volatility
returned to the stock market through mid-November. The market's uneven
performance was largely attributable to the ongoing influence of the
international markets, particularly the Asian and Latin American markets. In
mid-November, the yield on the 30-year bellwether Treasury issue approached 6.0
percent, its lowest level since February 1996. Advances in the bond market
provided for a generally positive stock market environment in the second half of
November, with bank and technology issues being among the
<PAGE>
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Page 4.11
strongest performers. Renewed confidence that the Asian governments would
control the region's financial problems furthered the stock market rally in
early-December. Despite a sell-off in the bond market caused by the November
unemployment rate dropping to its lowest level since October 1973, the DJIA
showed surprising strength and closed almost 99 points higher on December 5,
1997. Stocks declined the following week, as earnings concerns, particularly in
the technology sector, overshadowed a rally in the bond market. Positive
inflation news and world market turmoil caused investors to dump stocks in favor
of bonds, which served to push the yield on the bellwether 30-year Treasury bond
below 6.0 percent in mid-December. Bond prices were also boosted by the Federal
Reserve's decision to leave interest rates unchanged at its mid-December
meeting, which also provided for a modest recovery in the stock market. In
late-December, investors dumped stocks on earnings concerns, while a flight to
quality pushed bond prices higher. The stock market surged higher at year end,
as worries about South Korea's financial crisis eased.
Led by a rally in the bond market, stocks continued to move
higher at the beginning of 1998. However, turmoil in the Asian markets and the
uncertain outlook for fourth quarter earnings provided for an uneven stock
market through most of January and into early-February. For example, the Dow
Jones Industrial Average ("DJIA") plunged 222 points on January 9, 1998, due to
fourth quarter profit worries and economic turmoil in Southeast Asia.
Comparatively, a rally in the Asian markets propelled the DJIA 201 points higher
on February 2, 1998. In general, a rebound in the Asian markets and favorable
fourth quarter earnings served to the push the stock market higher during the
second half of January and into early-February. In contrast, bond prices edged
lower over the same time period, as the labor market remained tight as indicated
by a sharp increase in labor costs during the fourth quarter of 1997 and a
larger than expected increase in the number of jobs added during December 1997.
Strength primarily in technology stocks pushed the DJIA to a
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
<PAGE>
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Page 4.12
the positive market environment through the end of February, with blue chip
stocks leading the advance.
At the beginning of March 1998, signs of a strengthening
economy pushed the 30-year bellwether bond above 6.0 percent for the first time
in three months. Earnings concerns, particularly in the technology sector,
provided for an uneven stock market in early-March. Despite a decline in the
February unemployment rate to 4.6 percent, bond prices advanced on news of a
loss of jobs in the manufacturing sector and stocks moved higher as technology
issues rallied. Both bond and stock prices 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
<PAGE>
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Page 4.13
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 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
<PAGE>
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Page 4.14
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 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.
<PAGE>
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Page 4.15
The positive trend in thrift prices was not sustained at the
beginning of 1998, as thrift prices moved sharply lower during early-January
trading. From January 2, 1998 to January 9, 1998, the SNL Index for all
publicly-traded thrifts declined from 810.5 to 720.2, or 11.1 percent. The
sell-off in thrift stocks was prompted by concerns that the flattening yield
curve would put pressure on earnings, particularly among institutions which
maintained high concentrations of mortgage loans. Thrift prices recovered
somewhat during the second half of January, with the upward trend becoming more
pronounced in early-February. Fourth quarter earnings, which generally met
expectations, and acquisition news led the recovery in thrift prices. The
ongoing trend of consolidation was highlighted by the proposed merger between
First Nationwide Holdings ($30.9 billion in assets) and Golden State Bancorp
($16.0 billion in assets), which was announced in early-February. Stable
interest rates and acquisitions provided for a mildly positive increase in
thrift stocks during the balance of February.
Thrift issues continued to edge higher during the first half
of March 1998, reflecting improving fundamentals and improving expectations of
favorable first quarter earnings. The announcement of Washington Mutual's
acquisition of H.F. Ahmanson for 390 percent of book value on March 17, 1998
provided a more notable boost to thrift prices, particularly the stocks of the
California-based institutions. Thrift issues traded in a narrow range in
late-March 1998, reflecting uncertainty over the possibility of higher interest
rates and forthcoming first quarter earnings.
The Federal Reserve's decision to leave interest rates
unchanged at its late-March meeting, along with the mega mergers occurring
within the financial services sector, provided for a positive trend in thrift
prices during the first half of April 1998. However, bank and thrift issues
experienced selling pressure in late-April, reflecting speculation of higher
interest rates which triggered a sell-off in the overall market. Likewise,
thrift stocks followed the overall market higher in early-May, as the inflation
data contained in the first quarter growth numbers provided for an improved
interest rate outlook. Speculation of higher interest rates translated into a
fairly flat market for thrift issues through mid-May. Thrift stocks eased lower
in late-May, reflecting the decline in the overall stock market.
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Page 4.16
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 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
<PAGE>
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Page 4.17
are based on reported financials. The distinction between pricing of converting
and existing issues is perhaps no clearer than in the case of the price/tangible
book ("P/TB") ratio in that the P/TB ratio of a converting thrift will typically
always result in a discount to tangible book value whereas in the current market
for existing thrifts the P/TB reflects a premium to tangible book value.
Therefore, it is appropriate to also consider the market for new issues, both at
the time of the conversion and in the aftermarket.
In general, the market environment for converting thrift
issues was highly receptive throughout 1997, with most converting issues being
oversubscribed and trading higher in initial trading activity. 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.
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Page 4.18
Table 4.2
Pricing Characteristics and After-Market Trends
Recent Conversions Completed (Last Three Months)
<TABLE>
<CAPTION>
Institutional Information Pre-Conversion Data Offering Information
-------------------------------
Financial Info. Asset Quality
- ------------------------------------------------------------ ---------------- ------------- -------------------------
Conversion Equity/ NPAs/ Res. Gross % of Exp./
Institution State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc.
- ----------- ----- ---------- ------ ------ ------- ------ ---- ----- ---- -----
($Mil) (%) (%)(2) (%) ($Mil.) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
CFS Bancorp, Inc. IN* 07/24/98 CITZ $1,267 7.68% 0.97% 43% $178.5 132% 1.8%
Carnegie Financial Corp. PA 07/13/98 Pink 17 7.05% 3.12% 233% 2.4 132% 10.9%
United Community Financial OH 07/09/98 UCFC 1,049 13.73% 0.98% 59% 334.7 132% 1.3%
PCB Holding Company IN 07/02/98 Pink 22 9.51% 0.00% N.M. 4.0 132% 7.9%
Hudson River Bancorp NY* 07/01/98 HRBT 665 10.13% 2.66% 46% 173.4 132% 1.7%
First Kansas Financial Corp. KS 06/29/98 FKAN 94 7.36% 0.05% 398% 15.5 132% 3.2%
Anson Bancorp, Inc. NC 06/26/98 Pink 21 18.46% 1.25% 37% 5.9 89% 8.3%
Averages - Standard Conversions: $ 448 10.56% 1.29% 136% $102.0 126% 5.0%
Medians - Standard Conversions: $ 94 9.51% 0.98% 53% $ 15.5 132% 3.2%
Second-Step Conversions
Homestead Financial, Inc. LA* 07/20/98 HSTD $ 62 9.72% 0.97% 43% $ 11.2 132% 4.1%
PSB Bancorp PA* 07/17/98 PSBI 134 11.58% 1.97% 9% 16.1 115% 3.0%
Thistle Group Holdings PA 07/14/98 THTL 281 10.41% 0.27% 133% 78.6 100% 1.7%
Averages - 2nd Step Conversions: $ 159 10.57% 1.07% 62% $ 35.3 116% 2.9%
Medians - 2nd Step Conversions: $ 134 10.41% 0.97% 43% $ 16.1 115% 3.0%
Averages - All Conversions: $ 361 10.56% 1.22% 111% $ 82.0 123% 4.4%
Medians - All Conversions: $ 114 9.93% 0.98% 46% $ 15.8 132% 3.1%
<CAPTION>
Institutional Information Contribution to Insider Purchases
Charitable Found
- ------------------------------------------------------------ ----------------- -----------------------
Benefit Plans
--------------- Initial
Conversion % of Recog. Mgmt. & Dividend
Institution State Date Ticker Form Offering ESOP Plans Dirs. Yield
- ----------- ----- ---------- ------ ---- -------- ---- ------ ------- --------
(%) (%) (%) (%)(3) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
CFS Bancorp, Inc. IN* 07/24/98 CITZ Stock 1.70% 8.0% 4.0% 3.3% 0.00%
Carnegie Financial Corp. PA 07/13/98 Pink N.A. N.A. 8.0% 4.0% 12.8% 0.00%
United Community Financial OH 07/09/98 UCFC Stock 5.00% 8.0% 4.0% 0.1% 0.00%
PCB Holding Company IN 07/02/98 Pink N.A. N.A. 0.0% 4.0% 6.7% 0.00%
Hudson River Bancorp NY* 07/01/98 HRBT N.A. N.A. 8.0% 4.0% 1.6% 0.00%
First Kansas Financial Corp. KS 06/29/98 FKAN N.A. N.A. 8.0% 4.0% 5.7% 0.00%
Anson Bancorp, Inc. NC 06/26/98 Pink N.A. N.A. 0.0% 4.0% 9.2% 0.00%
Averages - Standard Conversions: N.A. N.A. 5.7% 4.0% 5.6% 0.00%
Medians - Standard Conversions: N.A. N.A. 8.0% 4.0% 5.7% 0.00%
Second-Step Conversions
Homestead Financial, Inc. LA* 07/20/98 HSTD N.A. N.A. 8.0% 4.0% 2.9% 2.00%
PSB Bancorp PA* 07/17/98 PSBI N.A. N.A. 8.0% 4.0% 3.3% 0.00%
Thistle Group Holdings PA 07/14/98 THTL N.A. N.A. 8.0% 4.0% 5.6% 0.00%
Averages - 2nd Step Conversions: N.A. N.A. 8.0% 4.0% 3.9% 0.67%
Medians - 2nd Step Conversions: N.A. N.A. 8.0% 4.0% 3.3% 0.00%
Averages - All Conversions: N.A. N.A. 6.4% 4.0% 5.1% 0.20%
Medians - All Conversions: N.A. N.A. 8.0% 4.0% 4.4% 0.00%
<CAPTION>
Institutional Information Pro Forma Data
-----------------------------------------------
Pricing Ratios(4) Financial Charac.
- ------------------------------------------------------------ --------------------- -------------------
Conversion Core IPO
Institution State Date Ticker P/TB P/E(5) P/A ROA TE/A ROE Price
- ----------- ----- ---------- ------ ---- ------ --- --- ---- --- -----
(%) (x) (%) (%) (%) (%) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
CFS Bancorp, Inc. IN* 07/24/98 CITZ 91.9% 28.0x 16.0% 0.6% 16.3% 3.6% $10.00
Carnegie Financial Corp. PA 07/13/98 Pink 79.2% N.M. 12.9% N.M. 16.3% N.M. 10.00
United Community Financial OH 07/09/98 UCFC 80.2% 17.4 25.9% 1.5% 32.3% 4.6% 10.00
PCB Holding Company IN 07/02/98 Pink 71.0% 22.2 15.6% 0.7% 21.9% 3.2% 10.00
Hudson River Bancorp NY* 07/01/98 HRBT 82.0% 21.4 21.9% 0.9% 26.7% 3.3% 10.00
First Kansas Financial Corp. KS 06/29/98 FKAN 77.2% 16.3 14.4% 0.9% 18.7% 4.7% 10.00
Anson Bancorp, Inc. NC 06/26/98 Pink 64.7% 19.9 22.2% 1.1% 34.3% 3.3% 10.00
Averages - Standard Conversions: 78.0% 20.9x 18.4% 1.0% 23.8% 3.8% $10.00
Medians - Standard Conversions: 79.2% 20.7x 16.0% 0.9% 21.9% 3.5% $10.00
Second-Step Conversions
Homestead Financial, Inc. LA* 07/20/98 HSTD 96.1% 28.2x 20.8% 0.7% 21.7% 3.4% $10.00
PSB Bancorp PA* 07/17/98 PSBI 106.3% 27.1 21.1% 0.8% 19.8% 3.9% 10.00
Thistle Group Holdings PA 07/14/98 THTL 92.7% 19.0 25.8% 1.4% 27.8% 4.9% 10.00
Averages - 2nd Step Conversions: 98.4% 24.8x 22.6% 1.0% 23.1% 4.1% $10.00
Medians - 2nd Step Conversions: 96.1% 27.1x 21.1% 0.8% 21.7% 3.9% $10.00
Averages - All Conversions: 84.1% 22.2x 19.7% 1.0% 23.6% 3.9% $10.00
Medians - All Conversions: 81.1% 21.4x 20.9% 0.9% 21.8% 3.6% $10.00
<CAPTION>
Institutional Information Post-IPO Pricing Trends
-----------------------------------------------------------
Closing Price:
- ------------------------------------------------------------ -----------------------------------------------------------
First After After
Conversion Trading % First % First %
Institution State Date Ticker Day Change Week(6) Change Month(7) Change
- ----------- ----- ---------- ------ ------- ------ ------- ------ -------- ------
($) (%) ($) (%) ($) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
CFS Bancorp, Inc. IN* 07/24/98 CITZ $11.44 14.4% $10.81 8.1% $10.00 0.0%
Carnegie Financial Corp. PA 07/13/98 Pink 11.81 18.1% 10.25 2.5% 10.94 9.4%
United Community Financial OH 07/09/98 UCFC 15.00 50.0% 16.00 60.0% 15.75 57.5%
PCB Holding Company IN 07/02/98 Pink 11.50 15.0% 12.12 21.2% 10.88 8.7%
Hudson River Bancorp NY* 07/01/98 HRBT 12.56 25.6% 13.50 35.0% 13.38 33.8%
First Kansas Financial Corp. KS 06/29/98 FKAN 12.31 23.1% 12.25 22.5% 11.63 16.3%
Anson Bancorp, Inc. NC 06/26/98 Pink 12.00 20.0% 12.06 20.6% 12.37 23.7%
Averages - Standard Conversions: $12.37 23.7% $12.43 24.3% $12.13 21.3%
Medians - Standard Conversions: $12.00 20.0% $12.12 21.2% $11.63 16.3%
Second-Step Conversions
Homestead Financial, Inc. LA* 07/20/98 HSTD $ 9.31 -6.9% $ 9.25 -7.5% $ 8.44 -15.6%
PSB Bancorp PA* 07/17/98 PSBI 9.19 -8.1% 9.13 -8.8% 7.81 -21.9%
Thistle Group Holdings PA 07/14/98 THTL 9.94 -0.6% 9.81 -1.9% 9.00 -10.0%
Averages - 2nd Step Conversions: $ 9.48 -5.2% $ 9.40 -6.1% $ 8.42 -15.8%
Medians - 2nd Step Conversions: $ 9.31 -6.9% $ 9.25 -7.5% $ 8.44 -15.6%
Averages - All Conversions: $11.51 15.1% $11.52 15.2% $11.02 10.2%
Medians - All Conversions: $11.66 16.6% $11.44 14.4% $10.91 -15.6%
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not Applicable, Not Available.
(1) Non-OTS regulated thrift. (5) Excludes impact of special SAIF assessment on earnings.
(2) As reported in summary pages of prospectus. (6) Latest price if offering less than one week old.
(3) As reported in prospectus. (7) Latest price if offering more than one week but less than one month old.
(4) Does not take into account the adoption of (8) Simultaneously converted to commercial bank charter
SOP 93-6.
September 4, 1998
</TABLE>
<PAGE>
RP Financial, LC.
Page 4.19
Table 4.3
Market Pricing Comparatives
Prices As of September 4, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Core Book --------------------------------------- -----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------ -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<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
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ ---------------- ---------------
Financial Institution Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------ ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,095 13.81 0.63 0.90 7.73 0.86 7.24
All Public Companies 1,186 13.56 0.63 0.93 8.21 0.89 7.67
Special Selection Grouping(8) 600 23.49 0.56 0.96 4.05 0.99 4.17
State of MA 630 11.46 0.42 1.17 12.18 1.07 10.76
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Core Book --------------------------------------- -----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Comparable Group Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
- ---------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------ -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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>
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
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 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.
<PAGE>
RP Financial, LC.
Page 4.21
Price Performance of MHC Offerings Completed in 1998
(Includes Publicly Traded Institutions Only)
IPO IPO 9/4/98 Pct.
Issue Date P/B(1) Price Price Change
---------- ------ ----- ----- ------
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.
Source: Public filings and RP Financial calculations.
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
Willow Grove's stock price of recently completed and pending acquisitions of
other savings institutions operating in Pennsylvania. As shown in Exhibit IV-4,
there were 8 Pennsylvania thrifts acquired since 1996.
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 Willow Grove's market was deemed to
have a minimal valuation impact for three reasons. First, Willow Grove'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, Willow Grove could not become an acquisition target for at
least one year following a
<PAGE>
RP Financial, LC.
Page 4.22
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.
8. Management
Willow Grove'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
Willow Grove's Board of Directors and executive management. While the Bank does
not have extensive management depth, given its 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, Willow Grove 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 Willow Grove and the Peer Group was in the area of
regulatory policy regarding dividend waivers (see the discussion above for
"Dividends"). The
<PAGE>
RP Financial, LC.
Page 4.23
Bank and a majority of the Peer Group members are subject to minority dilution
in a second step conversion because of the current dividend waiver policy, while
a minority of the Peer Group companies are not subject to the current policy
regarding dividend waivers as the result of "grandfathering" under the previous
OTS guidelines. Because a downward adjustment was already applied for this
factor in the "Dividends" section of this appraisal, no further adjustment has
been applied for the effect of government regulation and regulatory reform.
Summary of Adjustments
Overall, based on the factors discussed above, we concluded that the
Bank's pro forma market value should be discounted relative to the Peer Group as
follows:
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
<PAGE>
RP Financial, LC.
Page 4.24
characteristics of MHC shares have provided MHC shares with different trading
characteristics versus fully-converted companies. To account for the unique
trading characteristics of MHC shares, RP Financial has placed the financial
data and pricing ratios of the Peer Group on a fully-converted basis to make
them comparable for valuation purposes. Using the per share and pricing
information of the Peer Group on a fully-converted basis accomplishes two
things. First, such figures eliminate the distortions resulting when trying to
compare institutions that have a different public ownership interests
outstanding. Secondly, such an analysis provides ratios that are comparable to
the pricing information of fully-converted public companies, and more
importantly, are directly applicable to determining the pro forma market value
range of the 100 percent ownership interest in Willow Grove 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 Willow Grove. 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 Willow Grove's to-be-issued
stock -- price/earnings ("P/E"), price/book ("P/B"), and
<PAGE>
RP Financial, LC.
Page 4.25
RP Financial, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Table 4.4
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 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
PBCH 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>
Impact of Second Step Conversion Pro Forma Share Data (Fully Converted)
---------------------------------------- --------------------------------------
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 95.92
BCSB 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
PBCH 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
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 Willow Grove'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 Willow Grove's offering
circular for offering expenses. The assumptions utilized in the pro forma
analysis in calculating the Bank's full conversion value are described more
fully below.
o 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.
o Effective Tax Rate. The Bank, in consultation with its outside
auditors, has determined the marginal effective tax rate on the
net reinvestment benefit of the conversion proceeds to be 39
percent based on the statutory Federal and state tax rate.
o Reinvestment Rate. The pro forma section in the prospectus
incorporates a 5.37 percent reinvestment rate, equivalent to
the one year U.S. Treasury rate prevailing as of June 30, 1998.
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.
o Stock Benefit Plans. The assumptions for the stock benefit
plans, i.e., the Employee Stock Ownership Plan ("ESOP") and
Recognition Plan ("Recognition Plan"), are consistent with the
structure as approved by the Bank's Board and the disclosure in
the pro forma section of the prospectus. Specifically, the ESOP
is assumed to purchase 8 percent of the stock in conversion at
the initial public offering price, with the Holding Company
funded ESOP loan amortized on a straight-line basis over 10
years. The Recognition Plan is assumed to purchase 4 percent of
the stock in the aftermarket at a price equivalent to the
initial public offering price (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.
<PAGE>
RP Financial, LC.
Page 4.27
o Capitalization of the MHC. Pursuant to the proposed transaction
structure, the MHC will be capitalized with $100,000 of cash.
o Funding of the Foundation. The Holding Company intends to
donate to a charitable foundation, immediately following the
Conversion, authorized but unissued shares of the Holding
Company stock equal to 4 percent of the number of shares of
Conversion Stock issued in the conversion. The pro forma
after-tax impact of the foundation structure at an estimated 34
percent rate has been incorporated into RP Financial's pro
forma valuation.
In our estimate of value, we assessed the relationship of the pro forma
pricing ratios relative to the Peer Group and the recent conversions.
RP Financial's valuation placed an emphasis on the following:
o P/E Approach. The P/E approach is generally the best indicator
of long-term value for a stock. Given the similarities between
the Bank's and the Peer Group's earnings composition and
overall financial condition, the P/E approach was carefully
considered in this valuation. At the same time, since reported
earnings for the 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.
o P/B Approach. P/B ratios have generally served as a useful
benchmark in the valuation of thrift stocks, with the greater
determinant of long term value being earnings. RP Financial
considered the P/B approach to be a reliable indicator of value
given current market conditions, particularly the market for
new conversions (many of the recent conversions have reported
less meaningful P/E ratios).
o P/A Approach. P/A ratios are generally a less reliable
indicator of market value, as investors do not place
significant weight on the size of total assets as a determinant
of market value. Investors place significantly greater weight
on book value and earnings, which have received greater weight
in our valuation analysis. Furthermore, this approach as set
forth in the regulatory valuation guidelines does not take into
account the amount of stock purchases funded by deposit
withdrawals, thus understating the pro forma P/A ratio. At the
same time, the P/A ratio is an indicator of franchise value,
and, in the case of highly capitalized institutions, the high
P/A ratios may limit the investment community's willingness to
pay market multiples for earnings or book value when ROE is
expected to be low.
The Bank has adopted Statement of Position ("SOP") 93-6, which will
cause earnings per share computations to be based on shares issued and
outstanding excluding unreleased ESOP
<PAGE>
RP Financial, LC.
Page 4.28
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, taking into
account the dilutive impact of the 4 percent contribution to a charitable
foundation subsequent to the completion of the offering, was $41,500,000 at the
midpoint, equal to 4,150,000 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 $35,275,000, and a maximum value of
$47,725,000. Based on the $10.00 per share offering price determined by the
Board, this valuation range equates to an offering of 3,527,500 shares at the
minimum to 4,772,500 shares at the maximum. In the event that the appraised
value is subject to an increase, up to 5,488,375 shares may be sold at an issue
price of $10.00 per share, for an aggregate market value of $54,883,750, without
a resolicitation.
After taking into account the shares contributed to the charitable
foundation immediately following the conversion offering, the market value of
all shares would be as follows:
Total Aggregate
Shares Issued(1) Market Value(1)(2)
---------------- ------------------
Minimum 3,668,600 $36,686,000
Midpoint 4,316,000 43,160,000
Maximum 4,963,400 49,634,000
Supermaximum 5,707,910 57,079,100
(1) Includes offering shares plus 4 percent shares contributed to
a charitable foundation.
(2) Based on a $10.00 per share price.
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 Willow Grove'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
<PAGE>
RP Financial, LC.
Page 4.29
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 31.2 and 29.9 percent has been applied to the reported
and tangible P/B ratio (fully converted basis) for Willow Grove at the midpoint
versus the Peer Group average. At the midpoint value, Willow Grove exhibited pro
forma reported and tangible P/B ratios (fully converted basis) equaled 60.13
percent and 62.17 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 70.48 percent reflects a discount of 20.53 percent and a lesser
discount relative to the recently converted MHCs).
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. Willow Grove's reported earnings were
$2,445,000 for the twelve months ended June 30, 1998. After eliminating all
non-recurring items from the Bank's earnings (see Table 1.1), we arrived at our
core earnings figure for valuation purposes of $2,997,000. (Note: similar
adjustments were applied to the Peer Group's earnings in the calculation of core
earnings, see Exhibit IV-8).
Based on Willow Grove'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 $41,500,000
midpoint value was 11.52 times, which is at a discount of 41.4 percent relative
to the Peer Group average (fully converted basis) of 19.66 times core
<PAGE>
RP Financial, LC.
- ---------------------------------------
Financial Services Indusry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.5
Public Market Pricing
Willow Grove Bank and the Comparables
As of September 4, 1998
<TABLE>
<CAPTION>
Market
Capitalization Per Share Data Pricing Ratios(3) Dividends(4)
-------------- -------------- -------------------------------------- -----------------------
Core Book
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
-------- ------ ------ ------ ---- ----- ------ ----- ------ ------ ------ --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
- -----------------
Superrange 10.00 57.08 0.60 14.60 16.60 68.49 12.61 70.48 14.31 0.00 0.00 0.00
Range Maximum 10.00 49.63 0.67 15.55 15.00 64.33 11.11 66.36 12.86 0.00 0.00 0.00
Range Midpoint 10.00 43.16 0.74 16.63 13.51 60.13 9.78 62.17 11.52 0.00 0.00 0.00
Range Minimum 10.00 36.69 0.84 18.10 11.90 55.24 8.42 57.28 10.09 0.00 0.00 0.00
SAIF-Insured Thrifts(7)
- -----------------------
Averages 16.07 135.28 0.89 13.33 17.48 126.92 16.12 131.27 18.12 0.30 1.86 29.37
Medians --- --- --- --- 16.65 113.70 15.20 117.62 17.59 --- --- ---
All Non-MHC State of PA(7)
- --------------------------
Averages 16.21 165.85 1.03 12.07 15.86 138.05 13.16 144.15 16.92 0.26 1.55 26.32
Medians --- --- --- --- 15.29 129.77 12.63 135.82 15.85 --- --- ---
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 0.27 1.65 30.31
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 0.00 0.00 0.00
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 0.00 0.00 0.00
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 0.20 1.84 32.26
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 1.00 4.17 NM
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 0.30 2.73 50.85
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 0.20 1.78 43.48
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 0.22 1.59 30.99
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 0.30 1.97 54.55
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 0.56 3.56 60.87
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 0.00 0.00 0.00
NBCP Niagara Bancorp of NY MHC (45.4)11.25 334.76 0.62 13.59 17.58 87.78 23.03 82.78 18.15 0.00 0.00 0.00
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 0.16 1.47 25.00
PBHC Pathfinder BC MHC of NY (45.2) 13.25 37.51 0.62 14.56 18.66 90.94 17.38 99.25 21.37 0.20 1.51 32.26
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 0.84 3.62 71.19
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 0.28 1.90 35.44
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 0.30 2.31 43.48
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 0.00 0.00 0.00
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 0.62 2.92 65.26
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 0.00 0.00 0.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ -------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------ ------ ------- ----- ----- ----- ----
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
- -----------------
Superrange 453 18.41 0.33 0.76 4.12 0.88 4.79
Range Maximum 447 17.28 0.33 0.74 4.29 0.86 5.00
Range Midpoint 441 16.27 0.34 0.72 4.45 0.85 5.22
Range Minimum 436 15.24 0.34 0.71 4.64 0.83 5.47
SAIF-Insured Thrifts(7)
- -----------------------
Averages 1,095 13.80 0.63 0.90 7.73 0.86 7.24
Medians --- --- --- --- --- --- ---
All Non-MHC State of PA(7)
- --------------------------
Averages 1,479 10.30 0.62 0.88 10.13 0.89 9.97
Medians --- --- --- --- --- --- ---
Publicly-Traded MHC Institutions, Full Conversion Basis
- -------------------------------------------------------
Averages 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) 312 20.53 1.06 1.03 4.80 1.03 4.80
BCSB BCSB Bankcorp MHC of MD (38.6) 307 25.45 NA 1.05 4.14 1.05 4.14
BRKL Brookline Bncp MHC of MA(47.0) 962 43.24 0.60 2.11 6.04 2.11 6.04
FFFL Fidelity Bcsh MHC of FL (47.9) 1,541 10.60 0.27 0.78 6.28 0.66 5.31
SKBO First Carnegie MHC of PA(45.0) 158 23.11 0.59 0.76 3.28 0.86 3.72
GBNK Gaston Fed Bncp MHC of NC(47.0 226 28.43 0.50 0.97 4.58 0.91 4.30
HARS Harris Fin. MHC of PA (24.9) 2,630 18.76 0.66 1.10 5.70 0.97 5.00
JXSB Jcksnville SB,MHC of IL (45.6) 183 17.19 0.68 0.78 4.54 0.58 3.37
LFED Leeds Fed Bksr MHC of MD (36.3 344 27.35 0.03 1.43 5.17 1.43 5.17
LIBB Liberty Bancorp MHC of NJ (47) 273 18.87 0.35 0.77 4.08 0.74 3.93
NBCP Niagara Bancorp of NY MHC (45.4)1,453 27.83 0.29 1.31 4.71 1.27 4.56
NWSB Northwest Bcrp MHC of PA (30.8 2,850 18.27 0.50 1.20 6.05 1.16 5.87
PBHC Pathfinder BC MHC of NY (45.2) 216 19.12 1.30 0.95 4.93 0.83 4.30
PBCT Peoples Bank, MHC of CT (41.2) 9,833 16.12 0.70 1.37 8.43 0.83 5.10
PHSB Ppls Home SB, MHC of PA (45.0) 246 19.51 0.32 0.98 5.09 0.92 4.79
PLSK Pulaski SB, MHC of NJ (47.0) 200 17.32 0.63 0.70 4.01 0.74 4.25
SBFL SB Fngr Lakes MHC of NY (33.1) 288 17.92 0.32 0.71 3.76 0.63 3.34
WAYN Wayne Svgs Bks MHC of OH (48.2 283 17.06 0.49 0.91 5.32 0.85 4.95
WCFB Wbstr Cty FSB MHC of IA (45.6) 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 effected basis. Public MHC data reflects additional
earnings from reinvestment of proceeds of second step conversion.
(3) P/E = Price to Earings; 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 informaiton 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 4.31
earnings. At the supermaximum of the range, the Bank's core P/E
multiple is discounted by 27.2 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, Willow Grove's full
conversion value equaled 9.78 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 48.4 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, taking into account the dilutive impact of the 4 percent
contribution to a charitable foundation subsequent to the completion of the
offering, was $41,500,000 at the midpoint, equal to 4,150,000 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 $35,275,000, and a maximum
offering value of $47,725,000. Based on the $10.00 per share offering price
determined by the Board, this valuation range equates to an offering of
3,527,500 shares at the minimum to 4,772,500 shares at the maximum. In the event
that the appraised value is subject to an increase, up to 5,488,375 shares may
be sold in the offering at an issue price of $10.00 per share, for an aggregate
market value of $54,883,750, without a resolicitation. The total shares issued
and aggregate market value of the shares increases following the contribution of
4 percent of the shares to a charitable foundation, as follows:
<PAGE>
RP Financial, LC.
- ------------------
Page 4.32
Total Aggregate
Shares Issued(1) Market Value(1)(2)
--------------- ------------------
Minimum 3,668,600 $36,686,000
Midpoint 4,316,000 43,160,000
Maximum 4,963,400 49,634,000
Supermaximum 5,707,910 57,079,100
(3) Includes offering shares plus 4 percent shares contributed to
a charitable foundation.
(4) Based on a $10.00 per share price.
The Board of Directors has established a public offering range such
that the public ownership of the Holding Company will constitute a 44 percent
ownership interest prior to the issuance of shares to the Foundation.
Accordingly, the offering range to the public of the minority stock will range
from $15,640,000 at the minimum, to $18,400,000 at the midpoint, $21,160,000 at
the maximum and $24,334,000 at the supermaximum of the valuation range, all
based on a $10.00 per share offering price. Based on the public offering range,
and inclusive of the shares issued to the Foundation, the public ownership of
the shares will represent 45.31 percent of the shares issued in the
reorganization, with the MHC owning the majority of the shares. The pro forma
valuation calculations relative to the Peer Group (fully converted basis) are
shown in Table 4.5 and are detailed in Exhibit IV-6 and Exhibit IV-7; the pro
forma valuation calculations relative to the Peer Group based on reported
financials are shown in Table 4.6 and are detailed in Exhibits IV-10 and IV-11.
<PAGE>
RP Financial, LC.
- ----------------------------------------
Page 4.33
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.6
Public Market Pricing
Willow Grove Bank and the Comparables
As of September 4, 1998
<TABLE>
<CAPTION>
Market
Capitalization Per Share Data Pricing Ratios(3) Dividends(4)
-------------- -------------- -------------------------------------- -----------------------
Core Book
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
-------- ------ ------ ------ ---- ----- ------ ----- ------ ------ ------ --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
- -----------------
Superrange 10.00 25.31 0.52 10.15 19.41 98.48 13.11 102.76 16.29 0.00 0.00 0.00
Range Maximum 10.00 22.01 0.58 11.10 17.24 90.09 11.47 94.21 14.41 0.00 0.00 0.00
Range Midpoint 10.00 19.14 0.65 12.19 15.27 82.04 10.03 85.98 12.73 0.00 0.00 0.00
Range Minimum 10.00 16.27 0.76 13.66 13.22 73.20 8.58 76.90 10.99 0.00 0.00 0.00
SAIF-Insured Thrifts(7)
- -----------------------
Averages 16.07 135.28 0.89 13.33 17.48 126.92 16.12 131.27 18.12 0.30 1.86 29.37
Medians --- --- --- --- 16.65 113.70 15.20 117.62 17.59 --- --- ---
All Non-MHC State of PA(7)
- --------------------------
Averages 15.48 153.13 0.97 11.72 16.02 134.98 13.22 140.59 17.44 0.24 1.42 24.03
Medians --- --- --- --- 15.29 129.77 12.63 135.82 15.85 --- --- ---
Comparable Group Averages
- -------------------------
Averages 14.48 80.56 0.51 9.17 24.62 162.73 21.11 168.72 25.52 0.27 1.65 12.62
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 0.00 0.00 0.00
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 0.00 0.00 0.00
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 0.20 1.84 20.00
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 1.00 4.17 NM
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 0.30 2.73 31.40
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 0.20 1.78 31.32
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 0.22 1.59 12.43
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 0.30 1.97 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 0.56 3.56 NM
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 0.00 0.00 0.00
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 0.00 0.00 0.00
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 0.16 1.47 11.21
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 0.20 1.51 21.01
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 0.84 3.62 NM
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 0.28 1.90 21.72
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 0.30 2.31 27.63
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 0.00 0.00 0.00
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 0.62 2.92 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 0.00 0.00 0.00
<PAGE>
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ -------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------ ------ ------- ----- ----- ----- ----
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
- -----------------
Superrange 426 13.31 0.35 0.68 5.07 0.80 6.05
Range Maximum 423 12.74 0.35 0.67 5.23 0.80 6.25
Range Midpoint 421 12.23 0.35 0.66 5.37 0.79 6.45
Range Minimum 418 11.72 0.36 0.65 5.53 0.78 6.66
SAIF-Insured Thrifts(7)
- -----------------------
Averages 1,095 13.80 0.63 0.90 7.73 0.86 7.24
Medians --- --- --- --- --- --- ---
All Non-MHC State of PA(7)
- --------------------------
Averages 1,363 10.69 0.64 0.86 9.69 0.88 9.60
Medians --- --- --- --- --- --- ---
Comparable Group Averages
- -------------------------
Averages 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) 277 10.67 1.06 0.77 6.87 0.77 6.87
BCSB BCSB Bankcorp MHC of MD (38.6) 274 16.27 NA 0.80 4.95 0.80 4.95
BRKL Brookline Bncp MHC of MA(47.0) 817 33.21 0.60 1.92 8.85 1.92 8.85
FFFL Fidelity Bcsh MHC of FL (47.9) 1,468 6.15 0.27 0.65 8.98 0.52 7.18
SKBO First Carnegie MHC of PA(45.0) 146 16.79 0.59 0.57 3.37 0.68 4.03
GBNK Gaston Fed Bncp MHC of NC(47.0 203 20.28 0.50 0.73 5.92 0.66 5.39
HARS Harris Fin. MHC of PA (24.9) 2,326 8.12 0.66 0.84 10.33 0.68 8.41
JXSB Jcksnville SB,MHC of IL (45.6) 170 10.54 0.68 0.59 5.68 0.38 3.60
LFED Leeds Fed Bksr MHC of MD (36.3 299 16.50 0.03 1.18 7.20 1.18 7.20
LIBB Liberty Bancorp MHC of NJ (47) 255 13.12 0.35 0.61 4.66 0.58 4.42
NBCP Niagara Bancorp of NY MHC(45.4) 1,296 19.08 0.29 1.10 5.78 1.06 5.54
NWSB Northwest Bcrp MHC of PA (30.8 2,547 8.55 0.50 0.95 10.36 0.90 9.91
PBHC Pathfinder BC MHC of NY (45.2) 198 11.89 1.30 0.75 6.37 0.62 5.27
PBCT Peoples Bank, MHC of CT (41.2) 9,105 9.42 0.70 1.22 13.58 0.63 7.05
PHSB Ppls Home SB, MHC of PA (45.0) 227 12.67 0.32 0.80 6.62 0.73 6.09
PLSK Pulaski SB, MHC of NJ (47.0) 188 11.82 0.63 0.54 4.57 0.59 4.96
SBFL SB Fngr Lakes MHC of NY (33.1) 258 8.46 0.32 0.42 4.65 0.33 3.65
WAYN Wayne Svgs Bks MHC of OH (48.2 259 9.53 0.49 0.71 7.52 0.64 6.80
WCFB Wbstr Cty FSB MHC of IA (45.6) 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>
EXHIBITS
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS
Exhibit
Number Description
- ------ -----------
I-1 Map of Office Locations
I-2 Willow Grove Bank's Audited Financial Statements
I-3 Key Operating Ratios
I-4 Investment Portfolio Composition
I-5 Yields and Costs
I-6 Gap Analysis
I-7 Net Portfolio Value Analysis
I-8 Loan Portfolio Composition
I-9 Contractual Maturity by Loan Type
I-10 Loan Originations, Purchases, and Sales
I-11 Non-Performing Assets
I-12 Loan Loss Allowance Activity
I-13 Deposit Composition
I-14 Time Deposit Rate/Maturity
I-15 Borrowed Funds
II-1 List of Branch Offices
II-2 Historical Interest Rates
<PAGE>
RP Financial, LC.
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
Willow Grove Bank
Map of Office Locations
<PAGE>
EXHIBIT I-2
Willow Grove Bank
Audited Financial Statements
[Incorporated by Reference]
<PAGE>
EXHIBIT I-3
Willow Grove Bank
Key Operating Ratios
<TABLE>
<CAPTION>
At or For the Year Ended June 30,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Performance Ratios:
Return on average assets................... 0.65% 0.71% 1.02% 1.28% 1.97%
Return on average equity................... 6.81 7.54 10.11 12.73 17.67
Average interest-earning assets to average
interest-bearing liabilities............. 108.22 108.06 108.74 108.78 110.26
Interest rate spread(3).................... 3.36 3.21 3.02 3.35 4.01
Net interest margin(3)..................... 3.71 3.56 3.40 3.69 4.36
Efficiency ratio(4) ....................... 66.32 66.85 54.86 50.01 40.93
Asset Quality Ratios:
Nonperforming assets to total assets at end
of period(5)............................. 0.37% 0.54% 0.87% 0.20% 0.28%
Allowance for loan losses to nonperforming
loans at end of period................... 178.98 87.62 71.70 291.89 257.41
Allowance for loan losses to total loans at
end of period............................ 0.83 0.58 0.79 0.81 1.08
Capital and Other Ratios:
Average equity to average assets........... 9.59% 9.39% 10.09% 10.02% 11.17%
Tangible equity to assets at end of
period................................. 8.32 8.70 9.00 8.60 9.02
Total capital to risk-weighted assets...... 14.89 15.87 16.06 18.17 20.13
</TABLE>
- ----------
(1) Does not include loans which are available for sale.
(2) With the exception of end of period ratios and ratios for the years ended
December 31, 1994 and 1995, ratios are based on average daily balances
during the respective periods. Ratios for 1994 and 1995 are based on
average month-end balances.
(3) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities; net interest margin represents net interest
income as a percentage of average interest-earning assets.
(4) The efficiency ratio reflects non-interest expenses as a percentage of the
aggregate of net interest income and non-interest income.
(5) Nonperforming assets consist of non-accrual loan and accruing loans more
than 90 days past due. The Bank had no real estate acquired through
foreclosure or by deed-in-lieu thereof ("REO") at any of the year ends.
<PAGE>
EXHIBIT I-4
Willow Grove Bank
Investment Portfolio Composition
<TABLE>
<CAPTION>
At June 30,
--------------------------------------------------------------------------
1998 1997 1996
---------------------- ------------------------ ------------------------
Carrying Fair Carrying Fair Carrying Fair
Value Value Value Value Value Value
---------- ---------- ---------- ----------- ---------- -----------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Available for sale (at fair value)
Equity securities........................ $ 9,940 $ 9,937 $ 6,851 $ 6,862 $ 2,543 $ 2,548
U.S. Government and government
agency securities(1).................. 20,104 20,095 7,009 7,050 1,000 999
Mortgage-related securities.............. 17,940 18,079 32,388 31,854 47,702 46,616
------- ------- ------- ------- ------- -------
$47,984 $48,111 $46,248 $45,766 $51,245 $50,163
======= ======= ======= ======= ======= =======
</TABLE>
- ----------
(1) Includes a municipal bond with a face amount of $100,000.
<PAGE>
EXHIBIT I-5
Willow Grove Bank
Yields and Costs
<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------
1998
---------------------------------------
Average
Yield/Cost at Average Yield/
June 30, 1998 Balance Interest Cost
------------- ------------- ---------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(1):
Real estate mortgage loans.................. 7.89% $303,458 $24,824 8.18%
Non-mortgage consumer loans................. 9.08 4,038 254 6.29
Commercial business loans................... 9.32 3,423 278 8.12
-------- -------
Total loans............................... 7.93 310,919 25,356 8.16
Securities................................... 5.97 46,336 2,923 6.31
Other interest-earning assets(2)............. 6.11 6,961 325 4.67
-------- -------
Total interest-earning assets............. 7.66 364,216 28,604 7.85
-------
Noninterest-earning assets..................... 10,364
--------
Total assets.............................. $374,580
========
Interest-bearing liabilities:
Deposits:
NOW and money market accounts............. 1.43% $ 60,144 $ 916 1.52%
Savings accounts.......................... 2.10 36,984 787 2.13
Certificates of deposit................... 5.62 226,340 12,833 5.67
-------- -------
Total deposits.......................... 4.36 323,468 14,536 4.49
Total borrowings............................. 5.62 9,794 529 5.40
Total escrows................................ 2.00 3,274 32 1.01
-------- -------
Total interest-bearing liabilities........... 4.40 336,536 15,097 4.49
-------
Noninterest bearing liabilities(3)............. 2,133
--------
Total liabilities....................... 338,669
Retained earnings.............................. 35,911
--------
Total liabilities and equity............ $374,580
========
Net interest-earning assets.................... $ 27,680
========
Net interest income/interest rate spread....... $13,507 3.36%
======= ======
Net interest margin............................ 3.71%
======
Ratio of average interest-earning assets
to average interest-bearing liabilities...... 108.22%
======
<CAPTION>
Year Ended June 30,
-----------------------------------------------------------------------------
1997 1996
----------------------------------- ---------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
---------- --------- --------- ------------ ---------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(1):
Real estate mortgage loans.................. $273,423 $22,208 8.12% $225,084 $18,256 8.11%
Non-mortgage consumer loans................. 2,635 164 6.22 1,688 118 6.99
Commercial business loans................... 1,743 2 0.11 1,459 82 5.62
-------- ------- -------- -------
Total loans............................... 277,801 22,374 8.05 228,231 18,456 8.09
Securities................................... 44,811 2,877 6.42 54,596 3,478 6.37
Other interest-earning assets(2)............. 3,641 172 4.72 3,428 171 4.99
-------- ------- -------- -------
Total interest-earning assets............. 326,253 25,423 7.79 286,255 22,105 7.72
------- -------
Noninterest-earning assets..................... 9,121 8,317
-------- --------
Total assets.............................. $335,374 $294,572
======== ========
Interest-bearing liabilities:
Deposits:
NOW and money market accounts............. $ 47,784 $ 803 1.68 $ 37,882 $ 721 1.90
Savings accounts.......................... 34,690 768 2.21 32,810 745 2.27
Certificates of deposit................... 205,792 11,653 5.66 176,777 10,132 5.73
-------- ------- -------- -------
Total deposits.......................... 288,266 13,224 4.59 247,469 11,598 4.69
Total borrowings............................. 10,567 555 5.25 12,956 729 5.63
Total escrows................................ 3,091 38 1.23 2,812 43 1.53
-------- ------- -------- -------
Total interest-bearing liabilities........... 301,924 13,817 4.58 263,237 12,370 4.70
------- -------
Noninterest bearing liabilities(3)............. 1,948 1,627
-------- --------
Total liabilities....................... 303,872 264,864
Retained earnings.............................. 31,502 29,708
-------- --------
Total liabilities and equity............ $335,374 $294,572
======== ========
Net interest-earning assets.................... $ 24,329 $ 23,018
======== ========
Net interest income/interest rate spread....... $11,606 3.21% $ 9,735 3.02%
======= ====== ======= ======
Net interest margin............................ 3.56 3.40%
====== ======
Ratio of average interest-earning assets
to average interest-bearing liabilities...... 108.06% 108.74%
====== ======
</TABLE>
- ----------
(1) The average balance of loans receivable includes loans available for sale
and nonperforming loans, interest on which is recognized on a cash basis.
(2) Includes money market accounts and interest-earning bank deposits.
(3) Consists primarily of demand deposit accounts.
<PAGE>
EXHIBIT I-6
Willow Grove Bank
Gap Analysis
<TABLE>
<CAPTION>
More Than
Three to More Than Three Years
Within Three Twelve One Year to to Five Over Five
Months Months Three Years Years Years Total
------------- ------------ ------------ ------------ ------------ -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Cash and interest-earning deposits...... $18,291 $ -- $ -- $ -- $ -- $ 18,291
Investment securities(1)................ 12,207 -- 2,004 5,000 10,833 30,044
Mortgage-related securities(2) ......... 8,478 1,800 2,146 4,800 716 17,939
Loans(3)(4)............................. 46,642 69,147 91,317 73,117 49,942 330,125
------- -------- -------- ------- ------- --------
Total interest-earning assets......... $82,618 $ 70,947 $ 95,467 $82,917 $61,451 $366,440
======= ======== ======== ======= ======= ========
Interest-bearing liabilities:
Escrow accounts......................... 2,913 1,568 -- -- -- 4,481
Money market accounts(5)................ 15,365 3,842 960 240 80 20,487
Savings accounts........................ 6,034 5,129 4,359 3,705 20,998 40,225
NOW accounts(5)......................... 15,866 10,630 7,122 4,772 9,689 48,079
Certificates of deposit(5).............. 32,972 97,350 84,191 14,148 3,341 232,002
Borrowings(6)........................... 7,000 4,000 -- 6,000 4,000 21,000
------- -------- -------- ------- ------- --------
Total interest-bearing liabilities.... $80,150 $122,519 $ 96,632 $28,865 $38,108 $366,274
======= ======== ======== ======= ======= ========
Excess (deficiency) of interest-earning
assets over interest-bearing liabilities.. $5,468 $(51,522) $ (1,165) $54,052 $23,343 $ 30,126
======= ======== ======== ======= ======= ========
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities....................... $5,468 $(45,104) $(47,269) $ 6,783 $30,126
======= ======== ======== ======= =======
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities as a percent of
total assets.............................. 1.35% (11.37)% (11.66)% 1.67% 7.43%
==== ====== ====== ==== ====
Ratio of interest-earning assets to interest
bearing liabilities........................ 106.82% 57.91% 98.79% 287.26% 161.25%
====== ===== ===== ====== ======
</TABLE>
- --------------
(1) Includes $20.0 million of callable agency securities for which the expected
repayment schedule is based on management's estimates given the current
interest rate environment.
(2) Repayments are based on management's estimates given the current interest
rate environment.
(3) Adjustable-rate loans are included in the period in which interest rates
are next scheduled to adjust rather than in the period in which they are
due, and fixed-rate loans are included in the periods in which they are
scheduled to be repaid, based on scheduled amortization, in each case as
adjusted for management's estimates of pre-payments.
(4) Includes available for sale loans. Balances have been reduced for
non-performing loans, which amounted to $1.5 million at June 30, 1998.
(5) Although the Bank's NOW accounts, passbook savings accounts and money
market deposit accounts are subject to immediate withdrawal, management
considers a substantial amount of such accounts to be core deposits having
significantly longer effective maturities. The decay rates used on these
accounts are based on management estimates and should not be regarded as
indicative of the actual withdrawals that may be experienced by the Bank.
(6) Borrowings consist of FHLB advances and are stated at contractual maturity.
A substantial amount of such advances could be called for repayment within
one year.
<PAGE>
EXHIBIT I-7
Willow Grove Bank
Net Portfolio Value Analysis
<TABLE>
<CAPTION>
Estimated Change in
-----------------------------------------------------------------------
Change (in Basis Points) in Net Interest Income
Interest Rates(1) (next four quarters) MVPE
------------------------------- ------------------------------- ------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
+400 (32)% $(4,414) (65)% $(29,254)
+300 (24) (3,355) (48) (21,520)
+200 (15) (2,055) (30) (13,523)
+100 (6) (858) (13) (5,917)
0
-100 8 1,089 8 3,607
-200 8 1,182 11 4,955
-300 16 2,271 16 7,060
-400 16 2,271 23 10,449
</TABLE>
- -------------
(1) Assumes an instantaneous uniform change in interest rates at all
maturities.
<PAGE>
EXHIBIT I-8
Willow Grove Bank
Loan Portfolio Composition
<TABLE>
<CAPTION>
At June 30,
------------------------------------------------------------------------------------------
1998 1997 1996
------------------------- ------------------------ ------------------------
Percent of Percent of Percent of
Amount Total Amount Total Amount Total
------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Single-family residential(1)..... $243,131 71.4% $236,832 78.1% $208,877 79.6%
Multi-family residential......... 7,500 2.2 7,686 2.5 4,565 1.7
Commercial real estate........... 24,478 7.2 15,455 5.1 14,904 5.7
Construction..................... 13,627 4.0 13,120 4.3 13,766 5.2
Home equity...................... 41,366 12.1 25,553 8.4 16,184 6.2
-------- ----- -------- ------ -------- -----
Total mortgage loans........... 330,102 96.9 298,646 98.4 258,276 98.4
Non-mortgage consumer loans......... 4,930 1.5 2,924 1.0 2,173 0.9
Commercial business loans........... 5,437 1.6 1,698 0.6 1,841 0.7
-------- ----- -------- ------ -------- -----
Total loans receivable......... 340,469 100.0% 303,268 100.0% 262,290 100.0%
===== ====== =====
Less:
Undisbursed portion of loan
proceeds....................... (8,856) (9,344) (10,341)
Allowance for loan losses......... (2,665) (1,678) (1,938)
Deferred loan fees................ (1,091) (1,477) (1,536)
------- -------- --------
Loans receivable, net............... $327,857 $290,769 $248,475
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
At June 30,
-------------------------------------------------------------
1995 1994
------------------------------ --------------------------
Percent of Percent of
Amount Total Amount Total
-------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Mortgage loans: $192,168 84.8% $130,310 81.7%
Single-family residential(1)..... 4,203 1.9 4,049 2.6
Multi-family residential......... 9,411 4.2 12,992 8.2
Commercial real estate........... 8,470 3.7 5,328 3.3
Construction..................... 10,494 4.6 5,693 3.5
Home equity...................... -------- ----- ------- -----
224,746 99.2 158,372 99.3
Total mortgage loans........... 1,281 0.5 788 0.5
Non-mortgage consumer loans......... 672 0.3 275 0.2
Commercial business loans........... -------- ----- -------- -----
226,699 100.0% 159,435 100.0%
Total loans receivable......... ===== =====
Less:
Undisbursed portion of loan (3,541) (4,073)
proceeds....................... (1,728) (1,668)
Allowance for loan losses......... (1,848) (1,790)
Deferred loan fees................ -------- --------
$219,582 $151,904
Loans receivable, net............... ======== ========
</TABLE>
- -----------------------------
(1) Includes loans available for sale of $12.2 million, $6.2 million, $5.1
million, $9.4 million and $600,000, respectively, at June 30, 1998, 1997,
1996, 1995 and 1994.
<PAGE>
EXHIBIT I-9
Willow Grove Bank
Contractual Maturity by Loan Type
<TABLE>
<CAPTION>
At June 30, 1998
--------------------------------------------------------------------------------------
Multi-
Family Non-
Single-Family Commercial Mortgage Commercial Total
Residential Real Estate Construction Consumer Business Loans
--------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Amounts due in:
One year or less............ $ 299 $ 1,676 $ 8,808 $ 98 $2,589 $ 13,470
After one year:
More than one year to
three years......... 2,595 1,398 4,009 963 170 9,135
More than three years to
five years........... 14,460 4,443 - 1,338 935 21,173
More than 5 years to 10
years................ 25,716 12,228 410 630 1,669 40,653
More than 10 years to 20
years................ 72,850 6,386 - 1,863 74 81,173
More than 20 years....... 68,578 5,847 400 41 -- 174,866
-------- ------- ------- ------ ------ --------
Total Amount Due....... $284,498 $31,978 $13,627 $4,930 $5,437 $340,470
======== ======= ======= ====== ====== ========
</TABLE>
<PAGE>
EXHIBIT I-10
Willow Grove Bank
Loan Originations, Purchases, and Sales
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------
1998 1997 1996
--------------- --------------- ------------
(In Thousands)
<S> <C> <C> <C>
Total loans held at beginning of period(1)........... $303,268 $262,290 $226,699
======== ======= =======
Originations of loans for portfolio:
Mortgage loans:
Single-family residential....................... $ 33,653 $ 31,007 $ 35,246
Multi-family residential........................ -- 1,000 1,510
Commercial real estate.......................... 11,591 6,298 3,107
Construction.................................... 13,020 4,708 6,604
Home equity..................................... 23,400 16,487 10,328
Non-mortgage consumer loans....................... 3,800 1,717 412
Commercial business loans......................... 6,668 297 2,216
-------- -------- --------
Transfer of loans from available for sale
("AFS") to portfolio.............................. -- 2,089 3,028
-------- -------- --------
Total originations of and transfers to
loans for portfolio........................ 92,132 63,603 62,451
-------- -------- --------
Origination of loans AFS............................. 30,341 16,922 19,955
Transfer of loans AFS to portfolio................... -- (2,089) (3,028)
-------- -------- --------
Total origination of loans.................... 122,473 78,436 79,378
-------- -------- --------
Purchases of loans for portfolio:
Single-family residential......................... 19,836 16,677 7,887
Commercial real estate............................ 600 -- --
Construction...................................... -- 956 2,824
Home equity....................................... 3,988 -- --
Purchases of AFS loans: 6,055 12,205 17,256
-------- -------- --------
Total purchases of loans.......................... 30,479 29,838 27,967
-------- -------- --------
Repayments........................................... 85,328 40,841 33,279
Charge-offs of loans for portfolio................... 6 445 --
Sales of AFS loans................................... 30,417 26,010 38,475
-------- -------- --------
Net activity in loans for portfolio.................. 37,201 40,978 35,591
-------- -------- --------
Total loans at end of period(1)...................... $340,469 $303,268 $262,290
======== ======== ========
</TABLE>
- ------------------
(1) Includes loans available for sale.
<PAGE>
EXHIBIT I-11
Willow Grove Bank
Non-Performing Assets
<TABLE>
<CAPTION>
At June 30,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------- ------------- ----------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Accruing loans 90 days or more past due:
Mortgage loans........................ $ 142 $ 124 $ 101 $ -- $ --
Total............................... 142 124 101 -- --
------ ------ ------ ---- ----
Non-accrual loans:
Mortgage loans:
Single-family residential........... 1,249 374 655 497 495
Multi-family residential............ -- -- -- -- --
Commercial real estate.............. -- 54 55 95 153
Construction........................ -- -- -- -- --
Home equity......................... -- -- 73 -- --
Non-mortgage consumer loans........... 2 17 34 -- --
Commercial business loans............. 96 1,346 1,786 -- --
------ ------ ------ ---- ----
Total non-accruing loans............ 1,347 1,791 2,603 592 648
------ ------ ------ ---- ----
Total non-performing loans.......... 1,489 1,915 2,704 592 648
------ ------ ------ ---- ----
Other real estate owned, net............. -- -- - - --
------ ------ ------ ---- ----
Total non-performing assets......... $1,489 $1,915 $2,704 $592 $648
====== ===== ====== ==== ====
Performing troubled debt
restructurings........................ -- -- -- -- --
------ ------ ------ ---- ----
Total non-performing assets and
troubled debt restructurings...... $1,489 $1,915 $2,704 $592 $648
====== ====== ====== ==== ====
Non-performing loans to total loans...... 0.47% 0.67% 1.11% 0.28% 0.42%
Non-performing assets to total assets.... 0.37% 0.54% 0.87% 0.20% 0.28%
</TABLE>
<PAGE>
EXHIBIT I-12
Willow Grove Bank
Loan Loss Allowance Activity
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Allowance at beginning of period ............... $1,678 $1,938 $1,728 $1,668 $1,512
------ ------ ------ ------ ------
Provisions ..................................... 993 185 210 60 156
Charge-offs:
Mortgage loans ............................ -- -- -- -- --
Non-mortgage consumer loans ............... 6 5 -- -- --
Commercial business loans ................. -- 440 -- -- --
------ ------ ------ ------ ------
Total charge-offs ....................... 6 445 -- -- --
Recoveries .................................. -- -- -- -- --
------ ------ ------ ------ ------
Allowance at end of period ..................... $2,665 $1,678 $1,938 $1,728 $1,668
====== ====== ====== ====== ======
Allowance for loan losses to total
nonperforming loans at end of
period ...................................... 178.98% 87.62% 71.67% 291.89% 257.41%
====== ===== ===== ====== ======
Allowance for loan losses to total loans
at end of period ............................ 0.83% 0.58% 0.79% 0.81% 1.08%
==== ==== ==== ==== ====
Ratio of charge-offs to average loans .......... 0.002% 0.16% N/A N/A N/A
===== ====
</TABLE>
<PAGE>
EXHIBIT I-13
Willow Grove Bank
Deposit Composition
<TABLE>
<CAPTION>
June 30,
-------------------------------------------------------------------------------------------
1998 1997 1996
-------------------------- ---------------------------- ----------------------------
Amount Percentage Amount Percentage Amount Percentage
------------ ---------- ----------- ----------- ----------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Savings accounts.......... $ 40,225 11.80% $ 36,373 11.74% $ 33,805 12.63%
Certificates of deposit... 232,002 68.08 216,827 70.01 191,141 71.40
Money market accounts..... 20,487 6.01 19,715 6.36 17,412 6.50
NOW accounts.............. 48,079 14.11 36,811 11.89 25,337 9.47
-------- ------ -------- ------ -------- ------
Total................. $340,793 100.00% $309,726 100.00% $267,695 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
<PAGE>
EXHIBIT I-14
Willow Grove Bank
Time Deopost Rate/Maturity
<TABLE>
<CAPTION>
Over Six Over One Over Two
Months Year Years
Six Months Through One Through Through Over Three
and Less Year Two Years Three Years Years
--------------- ---------------- -------------- --------------- -------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
0.00% to 1.99%............. $ -- $ -- $ -- $ -- $ --
2.00% to 2.99%............. 132 -- -- -- --
3.00% to 3.99%............. 12 -- -- -- --
4.00% to 4.99%............. 19,274 17,232 4,755 -- --
5.00% to 6.99%............. 49,292 42,570 44,882 27,798 16,316
7.00% to 8.99%............. 379 848 1,285 5,448 1,173
9.00% to 10.99% ........... 216 367 23 -- --
11.00% and over............ -- -- -- -- --
------- ------- ------- ------- -------
Total.................. $69,305 $61,017 $50,945 $33,246 $17,489
======= ======= ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT I-15
Willow Grove Bank
Borrowed Funds
<TABLE>
<CAPTION>
At or For the Year Ended June 30,
---------------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
FHLB advances: (Dollars in Thousands)
<S> <C> <C> <C>
Average balance outstanding........................... $ 9,531 $10,349 $12,956
Maximum amount outstanding at any
month-end during the period.......................... 21,000 16,120 16,120
Balance outstanding at end of period.................. 21,000 6,000 10,120
Average interest rate during the period............... 5.55% 5.36% 5.60%
Average interest rate at end of period................ 5.62% 5.50% 5.25%
Other:
Average balance outstanding........................... $ 263 $ 217 $ --
Maximum amount outstanding at any
month-end during the period.......................... 500 500 --
Balance outstanding at end of period.................. -- 500 --
Average interest rate during the period............... --% --% --%
Average interest rate at end of period................ --% --% --%
</TABLE>
<PAGE>
EXHIBIT II-1
Willow Grove Bank
List of Branch Offices
<TABLE>
<CAPTION>
Net Book Value of
Property and
Lease Leasehold
Owned or Expiration Improvements at Deposits at
Location(1) Leased Date June 30, 1998 June 30, 1998
- ------------------------------------ ----------- ------------ --------------------- ----------------------
(In Thousands)
<S> <C> <C> <C> <C>
Executive Office:
Welsh & Norristown Roads(1)
Maple Glen, PA 19002-8030 Owned N/A $1,884 $96,602
Branch Offices:
1555 West Street Road
Warminster, PA 18974-3103 Leased 01/2001 7 46,147
1141 Ivyland Road
Warminster, PA 18974-2048 Leased 06/2004 39 12,468
9 Easton Road
Willow Grove, PA 19090-0905 Owned N/A 690 109,381
715 Twining Road(2)
Dresher, PA 19025-1894 Leased 09/1998 -- 34,398
761 Huntingdon Pike
Huntingdon, PA 19006-8399 Owned N/A 350 33,672
2 N. York Road
Hatboro, PA 19040-3201 Leased 05/2002 196 8,125
</TABLE>
- ---------------------------
(1) Includes adjacent nine acre property that could be used for future
expansion.
(2) Office was relocated to 701 Twining Road on July 13, 1998.
<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
September 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) ($) ($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
September 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
- ------ ------------------------------ ------ ---------------- --------- ------ ------- ------ ----- ------ ------
($Mil) ($) ($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
September 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) ($) ($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
September 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
- ------ ------------------------------ ------ ---------------- --------- ------ ------- ------ ----- ------ ------
($Mil) ($) ($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
September 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) ($) ($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
September 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
- ------ ------------------------------ ------ ---------------- --------- ------ ------- ------ ----- ------ ------
($Mil) ($) ($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
September 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) ($) ($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
September 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
- ------ ------------------------------ ------ ---------------- --------- ------ ------- ------ ----- ------ ------
($Mil) ($) ($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
September 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) ($) ($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
September 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
- ------ ------------------------------ ------ ---------------- --------- ------ ------- ------ ----- ------ ------
($Mil) ($) ($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 136 M 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
September 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) ($) ($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
September 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
- ------ ------------------------------ ------ ---------------- --------- ------ ------- ------ ----- ------ ------
($Mil) ($) ($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 <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 >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 <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 >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 <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 >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 <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 >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 <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 >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 $250 Million(120) 16.84 16.76 0.98 6.49 5.48 0.92 5.98 0.57 148.17 0.67
Goodwill Companies(116) 10.58 9.90 0.83 9.24 6.14 0.79 8.57 0.74 126.00 0.89
Non-Goodwill Companies(166) 15.94 15.94 0.96 6.81 5.47 0.91 6.46 0.57 163.29 0.74
Acquirors of FSLIC Cases(8) 9.31 8.85 1.15 13.28 9.84 0.98 11.18 0.77 66.05 0.63
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts (no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(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 <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 >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 <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 >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 $250 Million(14) 13.32 13.20 0.91 8.28 6.35 0.87 7.84 0.55 241.39 0.90
Goodwill Companies(28) 11.13 10.45 1.00 10.88 7.14 0.93 9.74 0.82 142.52 1.24
Non-Goodwill Companies(26) 13.30 13.30 1.13 10.11 6.82 1.15 9.92 0.42 257.02 1.23
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts (no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(55) 14.41 135.94 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 <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 >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 >12%(10) 19.04 19.04 1.01 5.92 3.86 1.00 5.82 0.34 248.47 0.94
Holding Company Structure(4) 13.40 12.97 0.79 6.08 3.89 0.73 5.51 0.61 90.35 0.63
Assets Over $1 Billion(5) 10.26 9.64 0.95 9.80 4.82 0.76 7.62 0.48 121.45 0.98
Assets $500 Million-$1 Billion(3) 33.21 33.21 1.92 8.85 4.32 1.92 8.85 0.60 251.07 2.37
Assets $250-$500 Million(6) 12.42 12.42 0.75 5.97 3.49 0.72 5.65 0.45 177.83 0.57
Assets less than $250 Million(8) 15.34 15.10 0.77 5.50 3.65 0.72 5.04 0.58 154.93 0.85
Goodwill Companies(7) 10.07 9.25 0.87 9.09 4.53 0.69 7.13 0.69 90.23 0.84
Non-Goodwill Companies(15) 15.85 15.85 0.87 5.97 3.67 0.84 5.64 0.46 183.14 0.89
MHC Institutions(22) 14.03 13.77 0.87 6.96 3.94 0.79 6.11 0.52 157.33 0.88
MHC Converted Last 3 Months(2) 14.70 14.70 0.71 4.80 3.69 0.69 4.68 0.35 82.98 0.51
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ------ ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 25.42 163.99 21.25 167.64 25.40 0.26 1.64 28.72
BIF-Insured Thrifts(3) 21.14 156.03 20.37 174.43 26.20 0.35 1.71 30.32
NASDAQ Listed OTC Companies(22) 24.62 162.73 21.11 168.72 25.52 0.27 1.65 29.04
Florida Companies(2) 20.87 180.72 11.12 186.05 26.09 1.00 4.17 0.00
Mid-Atlantic Companies(12) 25.27 164.98 19.93 171.69 25.60 0.17 1.25 22.23
Mid-West Companies(5) 27.55 172.74 23.57 172.74 24.21 0.31 1.63 28.85
New England Companies(2) 18.82 145.03 27.53 158.96 25.54 0.52 2.73 47.53
South-East Companies(1) 0.00 123.09 24.97 123.09 0.00 0.20 1.78 60.61
Thrift Strategy(20) 25.26 156.99 21.44 160.46 25.32 0.24 1.54 26.34
Mortgage Banker Strategy(1) 25.70 249.64 20.27 276.49 0.00 0.22 1.59 40.74
Diversified Strategy(1) 14.49 173.45 16.33 201.30 27.94 0.84 3.62 52.50
Companies Issuing Dividends(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 >12%(10) 24.65 132.18 24.92 132.18 25.31 0.17 1.31 21.09
Holding Company Structure(4) 25.88 156.76 20.17 163.60 25.64 0.21 1.11 12.82
Assets Over $1 Billion(5) 21.63 194.63 18.71 211.90 25.80 0.44 2.17 32.01
Assets $500 Million-$1 Billion(3) 23.15 116.61 38.73 116.61 23.15 0.20 1.84 42.55
Assets $250-$500 Million(6) 26.49 174.45 20.76 174.45 26.17 0.20 1.08 0.00
Assets less than $250 Million(8) 26.02 136.49 20.60 140.40 25.18 0.23 1.74 44.17
Goodwill Companies(7) 23.20 190.08 18.33 209.03 26.94 0.40 2.06 33.30
Non-Goodwill Companies(15) 25.46 150.11 22.39 150.11 24.89 0.21 1.46 26.91
MHC Institutions(22) 24.62 162.73 21.11 168.72 25.52 0.27 1.65 29.04
MHC Converted Last 3 Months(2) 27.24 131.02 19.45 131.02 27.91 0.00 0.00 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized.
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities
or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 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>
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
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA(8) 13.84 180.63 11.05 236.84 13.99 0.88 1.70 23.53
BYS Bay State Bancorp of MA* 18.81 83.47 17.29 83.47 18.81 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 15.79 150.82 10.95 170.18 13.10 0.22 0.95 15.07
DME Dime Bancorp, Inc. of NY* 14.68 194.11 12.35 236.00 23.95 0.20 0.88 12.90
DSL Downey Financial Corp. of CA 11.48 142.74 11.23 144.25 11.10 0.32 1.37 15.76
FED FirstFed Fin. Corp. of CA 10.78 131.33 7.87 132.27 11.36 0.00 0.00 0.00
GSB Golden State Bancorp of CA(8) 10.44 87.70 5.44 104.47 8.70 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 11.02 151.81 11.36 151.81 11.27 0.50 0.65 7.15
GPT GreenPoint Fin. Corp. of NY* 16.54 189.15 18.77 334.57 16.17 0.64 2.21 36.57
JSB JSB Financial, Inc. of NY* 10.07 121.11 29.44 121.11 8.97 1.60 3.42 34.41
OCN Ocwen Financial Corp. of FL NM 205.41 25.03 224.57 NM 0.00 0.00 0.00
SIB Staten Island Bancorp of NY* NM 106.73 25.13 109.51 18.47 0.32 1.90 57.14
WES Westcorp Inc. of Orange CA NM 71.43 6.48 71.60 NM 0.20 2.22 71.43
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 13.14 88.47 13.02 88.47 14.09 0.44 2.84 37.29
ANE Alliance Bncp of New Eng of CT* 11.76 138.48 10.81 141.53 24.31 0.20 1.83 21.51
BKC American Bank of Waterbury CT* 11.37 163.56 14.15 168.62 13.52 0.80 3.87 43.96
BFD BostonFed Bancorp of MA 12.69 109.41 8.54 113.41 15.80 0.40 2.39 30.30
CNY Carver Bancorp, Inc. of NY 21.11 61.85 5.03 64.10 23.75 0.00 0.00 0.00
CBK Citizens First Fin.Corp. of IL 18.44 92.65 12.92 92.65 NM 0.00 0.00 0.00
EFC EFC Bancorp Inc of IL NM 81.61 19.31 81.61 19.34 0.00 0.00 NM
EBI Equality Bancorp, Inc. of MO 23.32 125.58 12.03 125.58 NM 0.24 1.84 42.86
ESX Essex Bancorp of Norfolk VA(8) NM NM 1.08 NM NM 0.00 0.00 NM
FCB Falmouth Bancorp, Inc. of MA* 22.33 103.14 22.05 103.14 29.39 0.24 1.43 32.00
FAB FirstFed America Bancorp of MA 17.24 101.49 9.00 101.49 21.36 0.20 1.40 24.10
GAF GA Financial Corp. of PA 11.84 89.50 11.52 90.34 12.74 0.00 0.00 0.00
HBS Haywood Bancshares, Inc. of NC* 10.80 105.20 15.63 108.63 10.80 0.60 3.16 34.09
KNK Kankakee Bancorp, Inc. of IL 11.72 86.18 8.41 100.86 12.25 0.00 0.00 0.00
KYF Kentucky First Bancorp of KY 18.42 117.40 20.62 117.40 18.67 0.50 3.67 67.57
NBN Northeast Bancorp of ME* 12.36 113.17 7.92 124.58 13.58 0.21 1.91 23.60
NEP Northeast PA Fin. Corp of PA NM 80.41 14.30 80.41 23.62 0.00 0.00 NM
PDB Piedmont Bancorp, Inc. of NC 15.93 121.78 20.15 121.78 16.48 0.48 5.02 NM
SSB Scotland Bancorp, Inc. of NC 25.14 138.94 34.66 138.94 25.14 0.20 1.81 45.45
SZB SouthFirst Bancshares of AL 25.20 99.28 9.87 101.77 28.19 0.60 3.61 NM
SRN Southern Banc Company of AL NM 93.65 16.29 94.34 NM 0.00 0.00 0.00
SSM Stone Street Bancorp of NC 19.21 94.65 25.86 94.65 19.21 0.46 2.92 56.10
TSH Teche Holding Company of LA 12.95 87.35 12.09 87.35 13.18 0.50 3.45 44.64
FTF Texarkana Fst. Fin. Corp of AR 12.64 141.71 21.09 141.71 12.99 0.56 2.43 30.77
THR Three Rivers Fin. Corp. of MI 16.09 101.06 13.67 101.44 17.29 0.44 2.71 43.56
WSB Washington SB, FSB of MD 11.09 93.67 7.89 93.67 16.27 0.10 2.05 22.73
WFI Winton Financial Corp. of OH 14.38 198.28 14.23 202.46 17.42 0.25 2.17 31.25
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN(8) 24.14 193.36 17.73 197.15 NM 0.27 0.64 15.43
FBER 1st Bergen Bancorp of NJ 19.82 120.37 13.97 120.37 19.82 0.28 1.72 34.15
AFED AFSALA Bancorp, Inc. of NY(8) 14.84 88.47 10.73 88.47 14.52 0.28 2.07 30.77
ALBK ALBANK Fin. Corp. of Albany NY(8) 16.46 193.83 17.81 244.85 16.51 0.84 1.51 24.85
AMFC AMB Financial Corp. of IN 15.43 94.09 11.93 94.09 23.77 0.28 1.93 29.79
ASBP ASB Financial Corp. of OH 17.69 131.28 16.35 131.28 17.69 0.40 3.48 61.54
ABBK Abington Bancorp of MA* 11.82 153.60 9.78 168.49 15.60 0.20 1.32 15.63
AABC Access Anytime Bancorp of NM 5.69 91.86 7.29 91.86 6.25 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 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
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
---------------------------------------
AFBC Advance Fin. Bancorp of WV 16.16 99.04 13.96 99.04 17.12 0.32 2.23 35.96
ALBC Albion Banc Corp. of Albion NY 16.92 103.11 8.76 103.11 17.98 0.12 1.39 23.53
ABCL Alliance Bancorp, Inc. of IL 17.08 109.18 9.54 110.08 13.91 0.44 2.55 43.56
ALLB Alliance Bank MHC of PA (19.9) 25.00 168.51 17.99 168.51 25.00 0.00 0.00 0.00
AHCI Ambanc Holding Co., Inc. of NY* 25.49 91.42 9.44 91.42 25.00 0.24 1.85 47.06
ASBI Ameriana Bancorp of IN 15.38 128.30 15.60 130.62 18.37 0.64 3.56 54.70
ABCW Anchor Bancorp Wisconsin of WI 18.04 302.73 19.24 307.34 20.74 0.20 0.90 16.26
ANDB Andover Bancorp, Inc. of MA* 11.32 156.16 12.80 156.16 11.60 0.72 2.62 29.63
ASFC Astoria Financial Corp. of NY 12.67 112.60 8.68 157.18 13.98 0.80 2.11 26.76
AVND Avondale Fin. Corp. of IL NM 81.29 6.18 81.29 NM 0.00 0.00 NM
BCSB BCSB Bankcorp MHC of MD (38.6) 29.00 143.41 23.33 143.41 29.00 0.00 0.00 0.00
BKCT Bancorp Connecticut of CT* 12.80 169.62 16.78 169.62 15.19 0.54 3.32 42.52
BPLS Bank Plus Corp. of CA 18.59 75.92 3.28 82.67 12.29 0.00 0.00 0.00
BNKU Bank United Corp. of TX 10.13 167.25 8.55 184.10 10.80 0.64 1.81 18.29
BWFC Bank West Fin. Corp. of MI 29.29 125.34 16.09 125.34 NM 0.00 0.00 0.00
BANC BankAtlantic Bancorp of FL 12.93 133.76 9.09 173.05 29.09 0.10 1.07 13.89
BKUNA BankUnited Fin. Corp. of FL 26.39 92.32 4.71 110.47 NM 0.00 0.00 0.00
BVCC Bay View Capital Corp. of CA 23.61 87.49 6.03 134.92 13.93 0.40 2.35 55.56
FSNJ Bayonne Banchsares of NJ(8) 25.80 124.74 17.09 124.74 25.80 0.25 1.90 49.02
BFSB Bedford Bancshares, Inc. of VA 14.94 127.49 16.88 127.49 15.13 0.32 2.78 41.56
BFFC Big Foot Fin. Corp. of IL 29.79 92.35 15.95 92.35 NM 0.00 0.00 0.00
BYFC Broadway Fin. Corp. of CA 11.96 59.18 5.99 59.18 18.75 0.19 2.30 27.54
BRKL Brookline Bncp MHC of MA(47.0) 23.15 116.61 38.73 116.61 23.15 0.20 1.84 42.55
CBES CBES Bancorp, Inc. of MO 16.96 105.97 14.44 105.97 23.75 0.48 2.53 42.86
CCFH CCF Holding Company of GA NM 162.92 11.86 162.92 NM 0.64 3.05 NM
CITZ CFS Bancorp, Inc. of IN 25.36 83.92 14.61 83.92 22.83 0.00 0.00 0.00
CFSB CFSB Bancorp of Lansing MI 15.32 269.18 20.95 269.18 17.13 0.52 2.39 36.62
CKFB CKF Bancorp of Danville KY 16.84 102.74 22.16 102.74 16.84 0.54 3.27 55.10
CNSB CNS Bancorp, Inc. of MO 28.55 102.51 25.40 102.51 NM 0.30 1.98 56.60
CSBF CSB Financial Group Inc of IL 24.71 74.93 17.33 79.39 24.12 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 8.72 95.53 16.94 95.53 8.66 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 13.01 150.66 14.91 160.32 17.98 0.39 2.44 31.71
CMRN Cameron Fin. Corp. of MO 15.84 88.79 17.64 88.79 16.16 0.28 1.75 27.72
CFNC Carolina Fincorp of NC* 15.96 110.78 14.96 110.78 14.19 0.24 2.68 42.86
CASB Cascade Financial Corp. of WA 15.36 173.23 12.25 173.23 17.23 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 14.83 83.83 18.48 83.83 15.00 0.37 2.90 43.02
CAVB Cavalry Bancorp of TN 27.76 141.21 41.88 141.21 NM 0.20 1.06 29.41
CNIT Cenit Bancorp of Norfolk VA 13.98 172.00 13.61 185.67 15.17 0.40 2.25 31.50
CEBK Central Co-Op. Bank of MA* 12.58 104.17 10.19 114.71 16.25 0.32 1.64 20.65
CENB Century Bancorp, Inc. of NC(8) 13.68 88.20 17.06 88.20 13.83 0.68 5.23 71.58
COFI Charter One Financial of OH 20.33 229.77 17.16 244.09 15.39 0.56 2.10 42.75
CVAL Chester Valley Bancorp of PA 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
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
DCOM Dime Community Bancorp of NY* 16.67 117.65 13.50 135.03 17.14 0.40 2.22 37.04
ESBF ESB Financial Corp of PA 15.29 131.14 9.44 146.92 15.29 0.36 2.29 34.95
EGLB Eagle BancGroup of IL NM 88.38 10.65 88.38 NM 0.00 0.00 0.00
EBSI Eagle Bancshares of Tucker GA 11.41 127.25 8.81 127.25 11.72 0.64 3.76 42.95
ETFS East Texas Fin. Serv. of TX NM 96.22 16.63 96.22 NM 0.00 0.00 0.00
ESBK Elmira Svgs Bank (The) of NY* 16.22 120.18 7.53 120.18 15.38 0.64 2.67 43.24
EMLD Emerald Financial Corp. of OH 17.91 234.83 19.97 237.62 19.67 0.14 1.17 20.90
EFBC Empire Federal Bancorp of MT 20.20 80.11 29.45 80.11 20.20 0.32 2.44 49.23
EFBI Enterprise Fed. Bancorp of OH 26.58 166.24 16.56 170.49 NM 1.00 3.65 NM
EQSB Equitable FSB of Wheaton MD 12.37 156.78 8.02 156.78 13.07 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 18.05 140.32 20.30 140.32 24.33 0.88 3.23 58.28
FFDF FFD Financial Corp. of OH 15.60 110.17 24.54 110.17 NM 0.30 1.76 27.52
FFLC FFLC Bancorp of Leesburg FL 16.51 124.03 15.88 124.03 17.50 0.36 2.06 33.96
FFWC FFW Corporation of Wabash IN 11.54 114.33 10.76 124.28 13.16 0.42 2.80 32.31
FFYF FFY Financial Corp. of OH 15.28 140.48 18.15 140.48 15.61 0.80 2.71 41.45
FMCO FMS Financial Corp. of NJ 15.41 197.72 12.03 199.47 15.41 0.12 1.07 16.44
FFHH FSF Financial Corp. of MN 13.31 97.62 10.19 97.62 14.10 0.50 3.48 46.30
FOBC Fed One Bancorp of Wheeling WV(8) 29.90 214.46 24.02 222.90 NM 0.62 1.66 49.60
FBCI Fidelity Bancorp of Chicago IL NM 112.57 11.93 112.75 20.32 0.00 0.00 0.00
FSBI Fidelity Bancorp, Inc. of PA 12.76 130.01 9.22 130.01 13.03 0.00 0.00 0.00
FFFL Fidelity Bcsh MHC of FL (47.9) 20.87 180.72 11.12 186.05 26.09 1.00 4.17 NM
FFED Fidelity Fed. Bancorp of IN NM 84.81 5.75 84.81 NM 0.20 5.51 NM
FFOH Fidelity Financial of OH 15.29 110.26 13.68 123.93 15.85 0.32 2.46 37.65
FIBC Financial Bancorp, Inc. of NY(8) 18.34 184.19 15.52 184.96 18.90 0.00 0.00 0.00
FBSI First Bancshares, Inc. of MO 15.36 115.91 16.39 120.85 15.36 0.12 0.94 14.46
FBBC First Bell Bancorp of PA 13.79 135.82 13.80 135.82 13.91 0.40 2.50 34.48
SKBO First Carnegie MHC of PA(45.0) NM 103.48 17.38 103.48 25.58 0.30 2.73 NM
FSTC First Citizens Corp of GA 11.59 200.47 20.23 250.74 12.81 0.32 1.25 14.55
FCME First Coastal Corp. of ME* 13.06 104.07 9.31 104.07 14.51 0.00 0.00 0.00
FDEF First Defiance Fin.Corp. of OH 18.00 93.84 16.65 93.84 18.86 0.36 3.03 54.55
FESX First Essex Bancorp of MA* 11.51 128.93 9.20 177.78 13.45 0.56 3.50 40.29
FFSX First FSB MHC Sxld of IA(46.3)(8) 23.33 189.19 14.42 234.90 23.93 0.00 0.00 0.00
FFES First Fed of E. Hartford CT 11.80 97.67 7.03 97.67 10.93 0.68 2.71 31.92
BDJI First Fed. Bancorp. of MN 18.21 116.05 12.13 116.05 17.99 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 16.67 108.82 16.01 108.82 16.81 0.28 1.47 24.56
FTFC First Fed. Capital Corp. of WI 13.97 221.96 16.65 233.22 20.36 0.28 1.96 27.45
FFKY First Fed. Fin. Corp. of KY 15.44 178.47 23.82 187.99 16.07 0.60 2.54 39.22
FFBZ First Federal Bancorp of OH 18.52 191.20 15.20 191.20 19.61 0.14 1.40 25.93
FFCH First Fin. Holdings Inc. of SC 15.95 207.40 13.46 207.40 16.67 0.42 2.27 36.21
FFHS First Franklin Corp. of OH 13.81 119.24 10.88 119.74 15.93 0.30 2.07 28.57
FGHC First Georgia Hold. Corp of GA 25.00 333.88 27.20 NM 25.00 0.00 0.00 0.00
FFSL First Independence Corp. of KS 13.07 93.12 8.92 93.12 13.07 0.30 2.61 34.09
FISB First Indiana Corp. of IN 13.44 157.50 14.42 159.27 18.99 0.48 2.43 32.65
FKAN First Kansas Financial of KS 16.61 78.22 14.62 78.22 16.61 0.00 0.00 0.00
FKFS First Keystone Fin. Corp of PA 10.53 113.96 7.41 113.96 11.88 0.20 1.67 17.54
FLKY First Lancaster Bncshrs of KY 26.84 91.82 24.46 91.82 26.84 0.60 4.38 NM
FLFC First Liberty Fin. Corp. of GA 27.03 268.46 19.73 293.69 25.97 0.30 1.50 40.54
CASH First Midwest Fin., Inc. of OH 16.63 110.48 11.25 123.75 18.50 0.48 2.65 44.04
FMBD First Mutual Bancorp Inc of IL(8) NM 105.79 15.47 135.98 NM 0.32 1.92 NM
FMSB First Mutual SB of Bellevue WA* 12.38 176.59 11.99 176.59 12.62 0.20 1.57 19.42
FNGB First Northern Cap. Corp of WI 14.53 126.62 13.79 126.62 15.81 0.36 3.35 48.65
FFPB First Palm Beach Bancorp of FL 19.87 131.75 9.03 134.55 NM 0.70 2.26 44.87
FWWB First Savings Bancorp of WA 17.97 156.78 20.41 169.16 19.36 0.36 1.79 32.14
FSFF First SecurityFed Fin of IL 26.63 83.96 24.28 84.19 17.01 0.00 0.00 0.00
FSLA First Source Bancorp of NJ 22.22 97.92 20.80 101.14 22.86 0.18 2.25 50.00
SOPN First Svgs Bancorp of NC 14.96 113.45 25.93 113.45 14.96 1.00 4.71 70.42
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 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)
- ---------------------------------------
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
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FBNW FirstBank Corp of Clarkston WA 15.60 98.76 15.44 98.76 27.51 0.32 2.12 32.99
FFDB FirstFed Bancorp, Inc. of AL 18.38 172.65 16.77 187.41 18.38 0.28 2.24 41.18
FSPT FirstSpartan Fin. Corp. of SC 18.36 109.91 26.71 109.91 18.90 0.60 1.85 33.90
FLAG Flag Financial Corp of GA NM 311.03 27.65 311.03 NM 0.24 1.81 61.54
FLGS Flagstar Bancorp, Inc of MI 9.55 201.15 11.16 206.69 9.55 0.28 1.33 12.73
FFIC Flushing Fin. Corp. of NY* 18.18 122.91 15.74 127.61 18.03 0.36 1.64 29.75
FBHC Fort Bend Holding Corp. of TX(8) 14.59 132.83 9.49 140.46 22.17 0.00 0.00 0.00
FTSB Fort Thomas Fin. Corp. of KY 16.56 119.91 19.27 119.91 16.56 0.25 1.89 31.25
FKKY Frankfort First Bancorp of KY 14.54 101.64 17.15 101.64 14.54 0.80 5.61 NM
FTNB Fulton Bancorp, Inc. of MO 22.51 112.08 26.19 112.08 29.10 0.24 1.42 32.00
GUPB GFSB Bancorp, Inc of Gallup NM 17.72 115.32 14.23 115.32 17.72 0.30 2.14 37.97
GSLA GS Financial Corp. of LA 26.09 74.95 27.01 74.95 30.00 0.28 2.33 60.87
GOSB GSB Financial Corp. of NY* 28.66 82.17 20.46 82.17 NM 0.12 1.02 29.27
GBNK Gaston Fed Bncp MHC of NC(47.0 NM 123.09 24.97 123.09 NM 0.20 1.78 60.61
GFCO Glenway Financial Corp. of OH 17.12 150.79 14.43 152.12 16.96 0.44 2.32 39.64
GTPS Great American Bancorp of IL 26.59 98.13 17.93 98.13 26.59 0.44 2.63 69.84
PEDE Great Pee Dee Bancorp of SC 19.35 84.57 38.16 84.57 19.35 0.36 3.00 58.06
GSFC Green Street Fin. Corp. of NC 18.12 84.40 29.45 84.40 18.12 0.48 3.84 69.57
GFED Guaranty Fed Bancshares of MO 23.33 92.51 25.15 92.51 23.33 0.32 3.05 71.11
HCBB HCB Bancshares of Camden AR NM 76.12 13.13 77.03 NM 0.20 1.82 NM
HEMT HF Bancorp of Hemet CA NM 107.45 8.60 125.60 NM 0.00 0.00 0.00
HFFC HF Financial Corp. of SD 10.54 120.34 11.95 120.34 12.11 0.00 0.00 0.00
HFNC HFNC Financial Corp. of NC(8) 13.46 105.63 17.91 105.63 19.81 0.32 3.05 41.03
HMNF HMN Financial, Inc. of MN 12.97 87.86 10.20 94.50 18.33 0.24 1.75 22.64
HALL Hallmark Capital Corp. of WI 12.37 103.07 7.86 103.07 13.20 0.00 0.00 0.00
HRBF Harbor Federal Bancorp of MD 19.15 112.92 14.23 112.92 19.78 0.47 2.61 50.00
HARB Harbor Florida Bancshrs of FL 19.81 124.85 24.48 126.20 21.00 0.26 2.48 49.06
HFSA Hardin Bancorp of Hardin MO 16.58 101.45 10.25 101.45 19.03 0.56 3.34 55.45
HARL Harleysville SB of PA 14.25 195.71 12.55 195.71 14.25 0.00 0.00 0.00
HFGI Harrington Fin. Group of IN NM 139.16 6.51 139.16 NM 0.12 1.25 NM
HARS Harris Fin. MHC of PA (24.9) 25.70 249.64 20.27 276.49 NM 0.22 1.59 40.74
HFFB Harrodsburg 1st Fin Bcrp of KY 19.81 101.73 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
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
INBI Industrial Bancorp of OH 15.65 137.41 21.94 137.41 15.65 0.60 3.58 56.07
IWBK Interwest Bancorp of WA 19.67 281.37 19.02 285.81 23.28 0.53 2.09 41.09
IPSW Ipswich SB of Ipswich MA* 11.01 219.78 12.27 219.78 13.79 0.16 1.33 14.68
JXVL Jacksonville Bancorp of TX 11.64 104.49 15.10 104.49 11.64 0.50 3.30 38.46
JXSB Jcksnville SB,MHC of IL (45.6) 29.33 162.58 17.14 162.58 NM 0.30 1.97 57.69
JSBA Jefferson Svgs Bancorp of MO 17.35 143.58 13.73 178.95 19.54 0.28 1.65 28.57
KSBK KSB Bancorp of Kingfield ME* 12.97 180.44 14.04 207.58 12.97 0.00 0.00 0.00
KFBI Klamath First Bancorp of OR 15.56 98.45 13.76 107.44 15.73 0.36 2.57 40.00
LSBI LSB Fin. Corp. of Lafayette IN 16.49 158.36 13.31 158.36 19.18 0.40 1.31 21.62
LVSB Lakeview Financial of NJ 12.22 177.54 17.27 260.29 24.43 0.25 1.16 14.20
LARK Landmark Bancshares, Inc of KS 13.92 113.70 14.86 113.70 16.54 0.00 0.00 0.00
LARL Laurel Capital Group of PA 11.87 153.77 16.36 153.77 11.54 0.60 3.64 43.17
LSBX Lawrence Savings Bank of MA* 5.66 124.74 15.06 124.74 5.74 0.00 0.00 0.00
LFED Leeds Fed Bksr MHC of MD (36.3 23.86 165.44 27.30 165.44 23.86 0.56 3.56 NM
LXMO Lexington B&L Fin. Corp. of MO 22.58 92.29 14.82 98.94 22.58 0.30 2.14 48.39
LIBB Liberty Bancorp MHC of NJ (47) 25.48 118.63 15.57 118.63 26.82 0.00 0.00 0.00
LFCO Life Financial Corp of CA(8) 2.37 54.88 6.94 54.88 2.28 0.00 0.00 0.00
LFBI Little Falls Bancorp of NJ 19.25 98.19 10.32 105.86 19.25 0.24 1.64 31.58
LOGN Logansport Fin. Corp. of IN 14.46 109.58 20.62 109.58 14.32 0.44 2.98 43.14
LISB Long Island Bancorp, Inc of NY(8) 18.56 179.56 15.99 181.08 22.81 0.80 1.87 34.63
MAFB MAF Bancorp, Inc. of IL 13.33 178.47 14.00 199.91 13.92 0.28 1.27 16.87
MBLF MBLA Financial Corp. of MO 12.82 88.25 11.91 88.25 12.91 0.60 3.04 38.96
MECH MECH Financial Inc of CT* 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>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- ----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- -------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
OFCP Ottawa Financial Corp. of MI 8.22 6.74 0.89 10.38 5.81 0.79 9.25 0.50 79.48 0.46
PFFB PFF Bancorp of Pomona CA 8.04 7.96 0.60 6.43 7.16 0.56 5.93 1.06 79.87 1.36
PSFI PS Financial of Chicago IL 26.77 26.77 1.00 3.18 3.77 1.73 5.53 0.41 50.85 0.37
PSBI PSB Bancorp Inc. of PA* 19.81 19.81 0.78 3.93 5.19 0.78 3.93 NA NA 0.46
PVFC PVF Capital Corp. of OH 7.20 7.20 1.33 18.67 12.90 1.26 17.66 0.69 95.38 0.74
PBCI Pamrapo Bancorp, Inc. of NJ 12.47 12.41 1.24 9.69 6.84 1.19 9.34 1.66 35.55 1.03
PFED Park Bancorp of Chicago IL 20.33 20.33 0.92 4.28 5.00 0.93 4.34 0.07 390.63 0.67
PVSA Parkvale Financial Corp of PA 7.67 7.64 1.08 13.90 7.17 1.08 13.90 0.43 279.67 1.56
PBHC Pathfinder BC MHC of NY (45.2)* 11.89 10.15 0.75 6.37 3.92 0.62 5.27 1.30 32.06 0.63
PEEK Peekskill Fin. Corp. of NY 21.57 21.57 0.98 4.05 4.34 1.00 4.11 0.79 43.03 1.41
PFSB PennFed Fin. Services of NJ 6.68 5.81 0.78 10.97 9.15 0.76 10.69 0.44 40.82 0.25
PWBK Pennwood Bancorp, Inc. of PA 17.27 17.27 0.59 3.29 3.64 0.65 3.62 1.44 58.95 1.15
PBKB People's Bancshares of MA* 3.78 3.62 0.73 17.51 9.91 0.28 6.65 0.35 149.48 0.88
TSBS Peoples Bancorp Inc of NJ* 39.09 37.92 1.14 5.37 2.77 0.99 4.67 0.68 66.45 0.90
PFDC Peoples Bancorp of Auburn IN 14.97 14.97 1.45 9.60 6.24 1.45 9.60 0.18 172.98 0.36
PBCT Peoples Bank, MHC of CT (41.2)* 9.42 8.11 1.22 13.58 6.90 0.63 7.05 0.70 156.79 1.72
PFFC Peoples Fin. Corp. of OH 17.34 17.34 1.15 6.30 6.68 0.53 2.93 0.15 151.61 0.30
PHBK Peoples Heritage Fin Grp of ME* 7.40 6.15 0.94 12.95 4.54 1.26 17.38 0.79 114.76 1.25
PSFC Peoples Sidney Fin. Corp of OH 18.52 18.52 1.18 4.96 3.73 1.18 4.96 NA NA NA
PERM Permanent Bancorp, Inc. of IN 8.58 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
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
OFCP Ottawa Financial Corp. of MI 17.21 179.52 14.76 218.89 19.31 0.40 1.68 28.99
PFFB PFF Bancorp of Pomona CA 13.96 96.38 7.75 97.36 15.14 0.00 0.00 0.00
PSFI PS Financial of Chicago IL 26.50 98.76 26.44 98.76 15.25 0.48 4.31 NM
PSBI PSB Bancorp Inc. of PA* 19.27 75.77 15.01 75.77 19.27 0.00 0.00 0.00
PVFC PVF Capital Corp. of OH 7.75 132.28 9.52 132.28 8.20 0.00 0.00 0.00
PBCI Pamrapo Bancorp, Inc. of NJ 14.62 139.48 17.40 140.21 15.18 1.12 4.64 67.88
PFED Park Bancorp of Chicago IL 20.00 84.59 17.20 84.59 19.72 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 13.95 184.62 14.17 185.53 13.95 0.60 2.00 27.91
PBHC Pathfinder BC MHC of NY (45.2)* 25.48 159.25 18.94 186.62 NM 0.20 1.51 38.46
PEEK Peekskill Fin. Corp. of NY 23.05 98.86 21.32 98.86 22.69 0.36 2.44 56.25
PFSB PennFed Fin. Services of NJ 10.92 117.65 7.86 135.28 11.21 0.14 1.08 11.76
PWBK Pennwood Bancorp, Inc. of PA 27.50 96.32 16.64 96.32 25.00 0.28 2.55 70.00
PBKB People's Bancshares of MA* 10.09 171.09 6.47 178.57 26.59 0.56 3.34 33.73
TSBS Peoples Bancorp Inc of NJ* NM 88.40 34.55 91.12 NM 0.10 1.20 43.48
PFDC Peoples Bancorp of Auburn IN 16.02 151.07 22.61 151.07 16.02 0.44 2.15 34.38
PBCT Peoples Bank, MHC of CT (41.2)* 14.49 173.45 16.33 201.30 27.94 0.84 3.62 52.50
PFFC Peoples Fin. Corp. of OH 14.97 97.61 16.93 97.61 NM 0.60 5.64 NM
PHBK Peoples Heritage Fin Grp of ME* 22.04 202.78 15.02 244.17 16.42 0.44 2.63 57.89
PSFC Peoples Sidney Fin. Corp of OH 26.81 168.33 31.18 168.33 26.81 0.28 1.51 40.58
PERM Permanent Bancorp, Inc. of IN 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
<PAGE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- ------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ----- ----- --------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SPBC St. Paul Bancorp, Inc. of IL 13.81 155.92 14.96 156.54 14.30 0.60 3.02 41.67
SFFC StateFed Financial Corp. of IA 15.38 97.37 17.44 97.37 15.38 0.20 2.00 30.77
SFIN Statewide Fin. Corp. of NJ 13.84 115.44 11.22 115.60 14.44 0.52 3.10 42.98
STSA Sterling Financial Corp. of WA 17.84 114.24 5.82 290.31 14.84 0.00 0.00 0.00
ROSE T R Financial Corp. of NY* 12.56 191.52 11.93 191.52 14.74 0.80 2.86 35.87
THRD TF Financial Corp. of PA 12.77 109.70 8.22 129.28 15.85 0.48 2.70 34.53
THTL Thistle Group Holdings of PA 16.04 78.78 21.90 78.78 16.04 0.00 0.00 0.00
TSBK Timberland Bancorp of WA 18.48 96.19 31.11 96.19 19.65 0.24 1.94 35.82
TRIC Tri-County Bancorp of WY 15.13 94.26 15.51 94.26 14.74 0.44 3.83 57.89
TWIN Twin City Bancorp, Inc. of TN 14.61 115.15 14.59 115.15 18.06 0.40 3.08 44.94
USAB USABancshares, Inc of PA* NM 129.77 12.63 130.57 26.56 0.00 0.00 0.00
UCBC Union Community Bancorp of IN 23.40 77.36 30.96 77.36 23.40 0.34 3.09 72.34
UCFC United Community Fin. of OH 24.36 113.31 36.62 113.31 24.36 0.00 0.00 0.00
UFRM United FSB of Rocky Mount NC(8) 29.46 231.42 17.94 231.42 NM 0.24 1.45 42.86
UBMT United Fin. Corp. of MT 29.38 131.80 19.43 136.39 29.38 1.00 4.26 NM
UTBI United Tenn. Bancshares of TN 16.46 84.53 22.85 84.53 16.46 0.00 0.00 0.00
WHGB WHG Bancshares of MD 23.91 75.76 11.58 75.76 23.91 0.00 0.00 0.00
WSFS WSFS Financial Corp. of DE* 11.76 209.97 12.92 211.08 12.21 0.12 0.75 8.82
WVFC WVS Financial Corp. of PA 15.78 167.87 18.64 167.87 14.58 0.60 3.92 61.86
WRNB Warren Bancorp of Peabody MA* 12.66 201.79 21.17 201.79 12.66 0.36 3.55 45.00
WSBI Warwick Community Bncrp of NY* NM 89.88 20.72 89.88 29.82 0.16 1.38 NM
WFSL Washington Federal, Inc. of WA 10.50 151.05 20.99 162.65 10.80 0.92 4.13 43.40
WYNE Wayne Bancorp, Inc. of NJ NM 166.00 21.20 166.00 NM 0.20 0.69 21.51
WAYN Wayne Svgs Bks MHC of OH (48.2 29.11 213.78 20.36 213.78 NM 0.62 2.92 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 24.21 141.86 33.20 141.86 24.21 0.00 0.00 0.00
WBST Webster Financial Corp. of CT 17.74 159.89 9.54 188.62 15.78 0.44 1.92 34.11
WEFC Wells Fin. Corp. of Wells MN 13.19 108.55 16.68 108.55 14.19 0.60 3.58 47.24
WCBI WestCo Bancorp, Inc. of IL(8) 15.13 142.47 22.31 142.47 16.15 0.68 2.37 35.79
WSTR WesterFed Fin. Corp. of MT 14.23 94.20 10.11 115.55 14.23 0.00 0.00 0.00
WOFC Western Ohio Fin. Corp. of OH NM 91.94 13.35 98.29 NM 1.00 4.82 NM
WEHO Westwood Hmstd Fin Corp of OH 29.53 104.63 21.53 104.63 18.33 0.40 3.76 NM
FFWD Wood Bancorp of OH 16.85 177.51 24.10 177.51 20.83 0.36 2.40 40.45
YFCB Yonkers Fin. Corp. of NY 14.49 103.96 10.70 103.96 15.98 0.00 0.00 0.00
YFED York Financial Corp. of PA 16.29 149.84 13.31 149.84 20.74 0.52 2.85 46.43
</TABLE>
<PAGE>
EXHIBIT IV-2
Historical Stock Price Indices
<PAGE>
Exhibit IV-2
Historical Stock Price Indices(1)
<TABLE>
<CAPTION>
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
--------------- ---- ------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 445.8 743.5 241.6 143.1
Quarter 2 3625.0 444.3 706.0 269.6 152.6
Quarter 3 3843.2 462.6 764.3 279.7 149.2
Quarter 4 3834.4 459.3 752.0 244.7 137.6
1995: Quarter 1 4157.7 500.7 817.2 278.4 152.1
Quarter 2 4556.1 544.8 933.5 313.5 171.7
Quarter 3 4789.1 584.4 1,043.5 362.3 195.3
Quarter 4 5117.1 615.9 1,052.1 376.5 207.6
1996: Quarter 1 5587.1 645.5 1,101.4 382.1 225.1
Quarter 2 5654.6 670.6 1,185.0 387.2 224.7
Quarter 3 5882.2 687.3 1,226.9 429.3 249.2
Quarter 4 6442.5 737.0 1,280.7 483.6 280.1
1997: Quarter 1 6583.5 757.1 1,221.7 527.7 292.5
Quarter 2 7672.8 885.1 1,442.1 624.5 333.3
Quarter 3 7945.3 947.3 1,685.7 737.5 381.7
Quarter 4 7908.3 970.4 1,570.4 814.1 414.9
1998: Quarter 1 8799.8 1101.8 1,835.7 869.3 456.1
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>
ThirftINVESTOR
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
$250M 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 tor 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, Ml, 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, VT; West: AZ, AK, CA, HI, ID, MT, NV,
OR, WA, WY
<PAGE>
EXHIBIT IV-4
Market Area Acquisition Activity
<PAGE>
Exhibit IV-4
Pennsylvania Thrift Merger and Acquisition Activity
1996 to Present
<TABLE>
<CAPTION>
Seller Financials
------------------------------------------------
Total TgEq/ YTD YTD NPAs/ Rsrvs/
Ann'd Comp Assets Assets ROAA ROAE Assets NPLs
Date Date Buyer ST Seller ST ($000) (%) (%) (%) (%) (%)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/20/98 08/Emclaire Finl Corp PA Peoples Savings Finl PA 44,490 20.84 0.98 4.72 1.75 35.31
02/06/98 06/Signal Corp. OH First Shenango Bncp PA 374,972 12.76 1.15 10.20 1.04 116.66
09/18/97 02/Sovereign Bancorp PA ML Bancorp PA 2,071,285 6.87 0.75 10.64 0.46 193.13
09/16/96 04/PennFirst Bancorp PA Troy Hill Bancorp PA 80,484 22.20 1.34 5.98 0.51 183.03
06/27/96 02/Northwest Bancorp PA Bridgeville SB PA 55,712 28.51 1.21 4.24 0.25 102.86
11/14/95 12/ML/Bancorp PA Suburban Federal SB PA 66,103 5.36 0.22 4.08 7.22 29.81
11/13/95 04/Harris Svngs Bk, MHC PA First Harrisburg PA 313,989 7.69 0.82 9.73 0.64 60.84
09/18/95 03/Northwest Bancorp PA First FSB of Kane PA 48,729 9.36 0.39 4.20 1.08 99.24
Average 381,971 14.20 0.86 6.72 1.62 102.61
Median 73,294 11.06 0.90 5.35 0.84 101.05
</TABLE>
<TABLE>
<CAPTION>
Deal Terms and Pricing as of Announcement Date
---------------------------------------------------------------------
Deal Deal Deal Deal Pr/ Deal Pr/ Deal Pr/ TgBkPrm/
Ann'd Comp Value Pr/Shr Consider Pr/Bk Tg Bk 4QEPS Assets CoreDeps
Date Date Buyer ST Seller ST ($M) ($) Type (%) (%) (x) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/20/98 08/Emclaire Finl Corp PA Peoples Savings Finl PA 12.2 26.00 Mixture 129.48 129.48 29.21 27.42 9.37
02/06/98 06/Signal Corp. OH First Shenango Bncp PA 102.2 47.44 Com Stock 205.08 205.08 21.18 27.26 22.83
09/18/97 02/Sovereign Bancorp PA ML Bancorp PA 400.3 27.35 Mixture 199.90 203.47 21.70 19.33 35.47
09/16/96 04/PennFirst Bancorp PA Troy Hill Bancorp PA 23.3 21.15 Mixture 126.42 126.42 19.77 28.95 10.75
06/27/96 02/Northwest Bancorp PA Bridgeville SB PA 18.3 16.00 Cash 114.45 114.45 26.67 32.85 7.53
11/14/95 12/ML/Bancorp PA Suburban Federal SB PA 5.5 10.25 Cash 155.15 155.15 24.89 8.32 3.62
11/13/95 04/Harris Svngs Bk, MHC PA First Harrisburg PA 39.4 14.77 Cash 156.96 156.96 15.23 12.55 10.29
09/18/95 03/Northwest Bancorp PA First FSB of Kane PA 7.2 32.40 Cash 157.86 157.86 28.57 14.78 7.21
Average 76.05 24.42 155.66 156.11 23.40 21.43 13.38
Median 20.80 23.58 156.06 156.06 23.30 23.30 9.83
</TABLE>
Note: Excludes deals when pricing is unavailable
Source: SNL Securities, LC.
<PAGE>
EXHIBIT IV-5
Directors and Senior Management Summary Resumes
Lewis W. Hull. Mr. Hull is currently Chairman of Hull Corp and Hull
Company, manufacturing companies located in Hatboro, Pennsylvania. He is the
controlling shareholder of Hull Corp.
J. Ellwood Kirk. Mr. Kirk is currently retired. Previously, Mr. Kirk
served as President of the Bank.
Stanley B. Kitzelman. Mr. Kitzelman is currently retired. Previously,
Mr. Kitzelman was an insurance executive.
Charles F. Kremp, 3rd. Mr. Kremp is President and owner of Charles F.
Kremp, 3rd, florist, Willow Grove, Pennsylvania.
William W. Langan. Mr. Langan is the President and owner of Marmetal
Industries, Inc., Horsham, Pennsylvania.
Frederick A. Marcell, Jr. Mr. Marcell has served as President and Chief
Executive Officer of the Bank since April 1992.
A. Brent O'Brien. Mr. O'Brien is President and owner of the insurance
broker firm Bean, Mason & Eyer, Inc., Doylestown, Pennsylvania.
Samuel H. Ramsey, III. Mr. Ramsey is President and owner of Samuel H.
Ramsey III, certified public accountants since 1973.
William B. Weihenmayer. Mr. Weihenmayer is a self-employed real estate
investor, Huntingdon Valley, Pennsylvania.
Executive Officers Who Are Not Directors
Set forth below is information with respect to the principal
occupations during at least the last five years for the three executive officers
of the Bank who do not serve as directors.
Thomas M. Fewer. Age 46 years. Mr. Fewer has served as Senior Vice
President of the Bank since 1997. Mr. Fewer has been employed by the Bank since
1991 and has previously served as Vice President and Senior Lending Officer.
John J. Foff, Jr. Age 47 years. Mr. Foff currently is Senior Vice
President and Chief Financial Officer of the Bank. Mr. Foff joined the Bank in
1986 as Vice President and Treasurer. Mr. Foff has served as a financial manager
in the banking industry since 1976.
John T. Powers. Age 48 years. Mr. Powers currently is Senior Vice
President, Community Banking and Corporate Secretary of the Bank and has served
with the Bank since 1986.
<PAGE>
EXHIBIT IV-6
Pro Forma Analysis Sheet
Fully-Converted Basis
<PAGE>
EXHIBIT IV-6
PRO FORMA ANALYSIS SHEET
Willow Grove Bank
Prices as of September 4, 1998
<TABLE>
<CAPTION>
Peer Group Pensylvania SAIF-Insured
------------------ ---------------- ------------------
Price Multiple Symbol Subject(1) Mean Median Mean Median Mean Mear
- -------------- ------ ---------- ---- ------- ---- ------ ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earning ratio P/E 13.51x 18.71x 17.94x 15.82x 15.29x 17.49x 16.65x
Price-book ratio = P/B 60.13% 87.35% 85.20% 137.59% 129.77% 126.88% 113.70%
Price-assets ratio = P/A 9.78% 18.94% 17.88% 13.13% 12.63% 16.12% 15.21%
</TABLE>
Valuation Parameters
- --------------------
<TABLE>
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $2,445,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $35,944,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conversion Value (B) $33,584,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Asets (A) $405,373,000 RRP Amount (M) 4.00%
Reinvestment Rate(2)R 3.28% RRP Vessting(N) 5.00 years (5)
Est.Conversion Expenses(3)(X) 3.00% Foundation (F) 4.00%
Tax rate (TAX) 39.00% Tax Benefit(Z) 564,400
Tax rate on Foundation Conversion 34.00% Percentage Sold (PCT) 100.000%
</TABLE>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
1. V= P/E * (Y) V= $43,160,001
-----------------------------------------------
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= $43,160,002
-------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $43,160,000
-------------------------
1 - P/A * PCT * (1-X-E-M-F)
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Issued To Total Shares Market Value
Conclusion Public Share Proceeds Fountdation Issued of Stock Issued
- ---------- -------------- --------- -------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Minimum 3,527,500 10.00 $35,275,000 141,100 3,668,600 36,686,000
Midpoint 4,150,000 10.00 41,500,000 166,000 4,316,000 43,160,000
Maximum 4,772,500 10.00 47,725,000 190,900 4,963,400 49,634,000
Supermaximum 5,488,375 10.00 54,883,750 219,535 5,707,910 57,079,100
</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
39.00 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 39.00 percent.
<PAGE>
EXHIBIT IV-7
Pro Forma Effect of Conversion Proceeds
Fully-Converted Basis
<PAGE>
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Minimum
<TABLE>
<S> <C> <C>
1. Offering Proceeds $35,275,000
Less: Estimated Offering Expenses 1,058,250
-----------
Net Conversion Proceeds $34,216,750
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $34,216,750
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 4,233,000
-----------
Net Proceeds Reinvested $29,983,750
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $982,178
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 172,142
Less: Recognition Plan Vesting (4) 172,142
-----------
Net Earnings Increase $637,894
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $2,445,000 $637,894 $3,082,894
12 Months ended June 30, 1998 (core) $2,997,000 $637,894 $3,634,894
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1998 $35,944,000 $29,983,750 $479,740 $66,407,490
June 30, 1998 (Tangible) $33,584,000 $29,983,750 $479,740 $64,047,490
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1998 $405,373,000 $29,983,750 $479,740 $435,836,490
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Midpoint
<TABLE>
<S> <C> <C>
1. Offering Proceeds $41,500,000
Less: Estimated Offering Expenses 1,245,000
-----------
Net Conversion Proceeds $40,255,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $40,255,000
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 4,980,000
-----------
Net Proceeds Reinvested $35,275,000
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $1,155,503
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 202,520
Less: Recognition Plan Vesting (4) 202,520
-----------
Net Earnings Increase $750,463
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $2,445,000 $750,463 $3,195,463
12 Months ended June 30, 1998 (core) $2,997,000 $750,463 $3,747,463
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1998 $35,944,000 $35,275,000 $564,400 $71,783,400
June 30, 1998 (Tangible) $33,584,000 $35,275,000 $564,400 $69,423,400
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1998 $405,373,000 $35,275,000 $564,400 $441,212,400
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Maximum
<TABLE>
<S> <C> <C>
1. Offering Proceeds $47,725,000
Less: Estimated Offering Expenses 1,431,750
-----------
Net Conversion Proceeds $46,293,250
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $46,293,250
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 5,727,000
-----------
Net Proceeds Reinvested $40,566,250
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $1,328,829
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 232,898
Less: Recognition Plan Vesting (4) 232,898
-----------
Net Earnings Increase $863,033
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $2,445,000 $863,033 $3,308,033
12 Months ended June 30, 1998 (core) $2,997,000 $863,033 $3,860,033
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1998 $35,944,000 $40,566,250 $649,060 $77,159,310
June 30, 1998 (Tangible) $33,584,000 $40,566,250 $649,060 $74,799,310
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1998 $405,373,000 $40,566,250 $649,060 $446,588,310
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Supermaximum Value
<TABLE>
<S> <C> <C>
1. Offering Proceeds $54,883,750
Less: Estimated Offering Expenses 1,646,513
-----------
Net Conversion Proceeds $53,237,238
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $53,237,238
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 6,586,050
-----------
Net Proceeds Reinvested $46,651,188
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $1,528,153
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 267,833
Less: Recognition Plan Vesting (4) 267,833
-----------
Net Earnings Increase $992,488
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $2,445,000 $992,488 $3,437,488
12 Months ended June 30, 1998 (core) $2,997,000 $992,488 $3,989,488
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1998 $35,944,000 $46,651,188 $746,419 $83,341,607
June 30, 1998 (Tangible) $33,584,000 $46,651,188 $746,419 $80,981,607
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
June 30, 1998 $405,373,000 $46,651,188 $746,419 $452,770,607
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
EXHIBIT IV-8
Peer Group Core Earnings Analysis
<PAGE>
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended June 30, 1998
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
--------- ----------- --------- --------- ----------- ------ --------
($000) ($000) $(000) ($000) ($000) ($000) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
----------------
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 MA(47.0)(1) 13,726 -78 27 0 13,675 29,095 0.47
FFFL Fidelity Bcsh MHC of FL (47.9) 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 reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources
we believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE>
EXHIBIT IV-9
Pro Forma Regulatory Capital Ratios
<TABLE>
<CAPTION>
Pro Forma at June 30, 1998 Based on
--------------------------------------------------------------
1,564,000 1,840,000
Shares Sold Shares Sold
Historical at at $10.00 at $10.00
June 30, 1998 Per Share Per Share
------------------------- ---------------------------- ----------------------------
Percent of Percent of Percent of
Amount Assets(1) Amount Assets(1) Amount Assets(1)
----------- ------------ ------------ ------------- ------------ -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible capital:
Actual...................... $33,504 8.3% $38,911 9.5% $39,944 9.7%
Requirement................. 6,074 1.5 6,174 1.5 6,193 1.5
------- ---- ------- ---- ------- ----
Excess...................... $27,430 6.8% $32,737 8.0% $33,751 8.2%
======= ==== ======= ==== ======= ====
Core capital(2):
Actual...................... $33,504 8.3% $38,911 9.5% $39,944 9.7%
Requirement................. 6,198 4.0 6,464 4.0 6,514 4.0
------- ----- ------- ---- ------- ----
Excess...................... $17,306 4.3% $22,447 5.5% $ 3,430 5.7%
======= ===== ======= ==== ======= ====
Risk-based capital(2):
Actual...................... $36,169 14.9% $41,576 17.0% $42,609 17.4%
Requirement................. 19,438 8.0 19,544 8.0 19,564 8.0
------- ---- ------- ---- ------- ----
Excess...................... $16,731 6.9% $22,032 9.0% $23,045 9.4%
======= ==== ======= ==== ======= ====
<CAPTION>
Pro Forma at June 30, 1998 Based on
----------------------------------------------------------
2,116,000 2,433,400
Shares Sold Shares Sold
at $10.00 at $10.00
Per Share Per Share
--------------------------- ---------------------------
Percent of Percent of
Amount Assets(1) Amount Assets(1)
----------- ------------ ----------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Tangible capital:
Actual...................... $40,977 9.9% $42,165 10.1
Requirement................. 6,212 1.5 6,233 1.5
------- ---- ------- ----
Excess...................... $34,765 8.4% $35,932 8.6%
======= ==== ======= ====
Core capital(2):
Actual...................... $40,977 9.9% $42,165 10.1%
Requirement................. 6,565 4.0 16,622 4.0
------- ---- ------- ----
Excess...................... $24,412 5.9% $25,543 6.1%
======= ==== ======= ====
Risk-based capital(2):
Actual...................... $43,642 17.8% $44,830 18.3%
Requirement................. 19,584 8.0 19,607 8.0
------- ---- ------- ----
Excess...................... $24,057 9.8% $25,223 10.3%
======= ==== ======= ====
</TABLE>
- ---------------------------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
(2) Does not reflect the interest rate risk component to be added to the
risk-based capital requirements or, see "Regulation - The Bank - Regulatory
Capital Requirements."
<PAGE>
EXHIBIT IV-10
Pro Forma Analysis Sheet
Minority Stock Offering
<PAGE>
EXHIBIT IV-10
PRO FORMA ANALYSIS SHEET
Willow Grove Bank
Prices as of September 4, 1998
<TABLE>
<CAPTION>
Peer Group Pennsylvania SAIF-Insured
------------------ ------------------- ---------------
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Mean
-------------- ------ ----------- ---- ------ ---- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio P/E 15.27x 18.71x 17.94x 15.82x 15.29x 17.49x 16.65x
Price-book ratio = P/B 82.04% 87.35% 85.20% 137.59% 129.77% 126.88% 113.70x
Price-assets ratio = P/A 10.03% 18.94% 17.88% 13.13% 12.63% 16.12% 15.21%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
--------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $2,445,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $35,944,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $33,584,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $405,373,000 RRP Amount (M) 4.00%
Reinvestment Rate (2)(R) 3.28% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 3.00% Foundation (F) 4.00%
Tax rate (TAX) 39.00% Tax Benefit (Z) 97,594
Tax rate on Foundation Contribution 34.00% Percentage Sold (PCT) 44.34%
</TABLE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Value After Conversion
-----------------------------------------------
<S> <C> <C> <C> <C>
1. V= P/E * (Y) V= $42,117,546
-----------------------------------------------------------
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= $41,680,966
---------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $42,186,066
---------------------------
1 - P/A * PCT * (1-X-E-M-F)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Issued Shares Sold to Price Per Gross Offering Issued To Total Shares Market Value
Conclusion To MHC Public Share Proceeds Foundation Issued of Stock Issued
---------- ------------ -------------- --------- -------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 1,963,500 | 1,564,000 10.00 $15,640,000 62,560 1,626,560 16,265,600
Midpoint 2,310,000 | 1,840,000 10.00 18,400,000 73,600 1,913,600 19,136,000
Maximum 2,656,500 | 2,116,000 10.00 21,160,000 84,640 2,200,640 22,006,400
Supermaximum 3,054,975 | 2,433,400 10.00 24,334,000 97,336 2,530,736 25,307,360
</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 39.00 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 39.00 percent.
<PAGE>
EXHIBIT IV-11
Pro Forma Effects
Minority Stock Offering
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $15,640,000
Less: Estimated Offering Expenses 872,360
-----------
Net Conversion Proceeds $14,767,640
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $14,767,640
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 1,876,800
-----------
Net Proceeds Reinvested $12,890,840
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $422,265
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 76,323
Less: Recognition Plan Vesting (4) 76,323
-----------
Net Earnings Increase $269,619
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $2,445,000 $269,619 $2,714,619
12 Months ended June 30, 1998 (core) $2,997,000 $269,619 $3,266,619
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
June 30, 1998 $35,944,000 $12,890,840 $212,704 $49,047,544
June 30, 1998 (Tangible) $33,584,000 $12,890,840 $212,704 $46,687,544
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
June 30, 1998 $405,373,000 $12,890,840 $212,704 $418,476,544
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Midpoint
<TABLE>
<S> <C> <C> <C> <C>
1. Offering Proceeds $18,400,000 0 525 12,191,392
Less: Estimated Offering Expenses 904,100 0 550 12,532,176
-----------
Net Conversion Proceeds $17,495,900 1 575 13,883,522
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds 17,495,900
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 2,208,000
-----------
Net Proceeds Reinvested $15,287,900
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $500,786
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 89,792
Less: Recognition Plan Vesting (4) 89,792
-----------
Net Earnings Increase $321,202
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $2,445,000 $321,202 $2,766,202
12 Months ended June 30, 1998 (core) $2,997,000 $321,202 $3,318,202
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
June 30, 1998 $35,944,000 $15,287,900 $250,240 $51,482,140
June 30, 1998 (Tangible) $33,584,000 $15,287,900 $250,240 $49,122,140
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
June 30, 1998 $405,373,000 $15,287,900 $250,240 $420,911,140
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Maximum
<TABLE>
<S> <C>
1. Offering Proceeds $21,160,000
Less: Estimated Offering Expenses 935,840
-----------
Net Conversion Proceeds $20,224,160
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $20,224,160
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 2,539,200
-----------
Net Proceeds Reinvested $17,684,960
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $579,306
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 103,261
Less: Recognition Plan Vesting (4) 103,261
----------
Net Earnings Increase $372,785
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $2,445,000 $372,785 $2,817,785
12 Months ended June 30, 1998 (core) $2,997,000 $372,785 $3,369,785
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
June 30, 1998 $35,944,000 $17,684,960 $287,776 $53,916,736
June 30, 1998 (Tangible) $33,584,000 $17,684,960 $287,776 $51,556,736
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
June 30, 1998 $405,373,000 $17,684,960 $287,776 $423,345,736
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit IV-11
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Supermaximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $24,334,000
Less: Estimated Offering Expenses 972,341
-----------
Net Conversion Proceeds $23,361,659
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $23,361,659
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 2,920,080
-----------
Net Proceeds Reinvested $20,441,579
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $669,605
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 118,750
Less: Recognition Plan Vesting (4) 118,750
-----------
Net Earnings Increase $432,105
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended June 30, 1998 (reported) $2,445,000 $432,105 $2,877,105
12 Months ended June 30, 1998 (core) $2,997,000 $432,105 $3,429,105
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
June 30, 1998 $35,944,000 $20,441,579 $330,942 $56,716,521
June 30, 1998 (Tangible) $33,584,000 $20,441,579 $330,942 $54,356,521
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
June 30, 1998 $405,373,000 $20,441,579 $330,942 $426,145,521
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
EXHIBIT V-1
RP Financial, LC.
Firm Qualifications Statement
<PAGE>
RP Financial, LC.
- ---------------------------------------
Financial Services Industry Consultants
FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (18)
William E. Pommerening, Managing Director (14)
Gregory E. Dunn, Senior Vice President (16)
James P. Hennessey, Senior Vice President (13)
James J. Oren, Senior Vice President (11)
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
Exhibit 99.2
Proxy Card
Please Detatch, Sign, & Return ALL Proxies in the enclosed white envelope
- --------------------------------------------------------------------------------
Willow Grove Bancorp, Inc.
Stock Sales Center
Welsh and Norristown Roads
Maple Glen, Pennsylvania 19002
(125) XXX - XXXX
Stock Order Form
Deadline: The Subscription Offering ends at 12:00 noon, Eastern Time, on XXXX,
1998. Your original Stock Order Form and Certification Form, properly executed
and with the correct payment, must be received (not postmarked) at the address
on the top of this form, or at any Willow Grove Bank branch office, by the
deadline, or it will be considered void. Faxes or copies of this form will not
be accepted.
(1) Number of Shares Price Per Share (2) Total Amount Due
x $10.00 = $
- -------------------- ---------------------
The minimum number of shares that may be subscribed for is XX. The maximum
individual subscription is XXXX shares. No person, together with associates of
and persons acting in concert with such person may purchase more than XXXX
shares of the Common Stock sold in the Reorganization. There are additional
purchase limitations for associates and groups acting in concert, as defined in
the Prospectus.
Method of Payment
(3) [ ] Enclosed is a check, bank draft or money order payable to XXXX XXXXXXX,
Inc., for $______________.
(4) [ ] I authorize Lincoln Federal Savings Bank to make withdrawals from my
Lincoln Federal Savings Bank certificate or savings account (s) shown
below, and understand that the amounts will not otherwise be available
for withdrawal:
Account Number (s) Amount (s)
- --------------------------------- ---------------------------
- --------------------------------- ---------------------------
- --------------------------------- ---------------------------
- --------------------------------- ---------------------------
Total Withdrawal ---------------------------
There is NO penalty for early withdrawal.
(5) [ ] Check here if you are a director, officer or employee of Willow Grove
Bank or a member of such person's immediate family (same household).
(6) [ ] Associate - Acting in Concert
Check here, and complete the reverse side of this form, if you or any
associates or persons acting in concert with you have submitted other
orders for shares in the Subscription Offering.
(7) Purchaser Information (check one)
a. [ ] Eligible Account Holder - Check here if you were a depositor with $50.00
or more on deposit with Willow Grove Bank as of XXX. Enter information
below for all deposit accounts that you had at Lincoln Federal Savings
Bank on XXXX.
b. [ ] Supplemental Eligible Account Holder - Check here if you were a depositor
with $50.00 or more on deposit with Willow Grove Bank as of XXXXX but are
not an Eligible Account Holder. Enter information below for all deposit
accounts that you had at Willow Grove Bank on XXXXX.
c. [ ] Voting Member - Check here if you were a depositor of Willow Grove Bank
as of XXXX, but are not an Eligible Account Holder or a Supplemental
Eligible Account Holder or were a borrower of Willow Grove Bank as of
XXXX whose loan was in existence on XXXXX, but are not an Eligible
Account Holder or a Supplemental Eligible Account Holder. Enter
information below for all deposit accounts and/or loan accounts that you
had at Willow Grove Bank on XXXX.
<PAGE>
Account Title (Names on Accounts) Account Number
------------------------------------- -------------------------
------------------------------------- -------------------------
------------------------------------- -------------------------
------------------------------------- -------------------------
Please Note: Failure to list all of your accounts may result in
the loss of part or all of your subscription rights. (additional
space on back of form)
(8) Stock Registration - Please Print Legibly and Fill Out Completely
(Note: The Stock Certificate and all correspondence related to
this stock order will be mailed to the address provided below)
[ ] Individual
[ ] Joint Tenants
[ ] Tenants in Common
[ ] Uniform Transfer to Minors
[ ] Uniform Gift to Minors
[ ] Corporation
[ ] Partnership
[ ] Individual Retirement Account
[ ] Fiduciary/Trust (Under Agreement Dated _________________)
Name
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Mailing
Address
- --------------------------------------------------------------------------------
Zip
City State Code County
- --------------------------------------------------------------------------------
Social Security or Tax I.D.
- --------------------------------------------------------------------------------
Social Security or Tax I.D.
- --------------------------------------------------------------------------------
Daytime
Telephone
- --------------------------------------------------------------------------------
Evening
Telephone
- --------------------------------------------------------------------------------
[ ] NASD Affiliation (This section only applies to those individuals who meet
the delineated criteria)
Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of
the immediate family of any such person to whose support such person
contributes, directly or indirectly, or the holder of an account in which an
NASD member or person associated with an NASD member has a beneficial
interest. To comply with conditions under which an exemption from the NASD's
Interpretation With Respect to Free-Riding and Withholding is available, you
agree, if you have checked the NASD affiliation box: (1) not to sell,
transfer or hypothecate the stock for a period of three months following the
issuance and (2) to report this subscription in writing to the applicable
NASD member within one day of the payment therefor.
Acknowledgment By signing below, I acknowledge receipt of the Prospectus dated
XXXX XX, 1998 and understand I may not change or revoke my order once it is
received by XXXXXXXXXXXX, Inc. I also certify that this stock order is for my
account and there is no agreement or understanding regarding any further sale or
transfer of these shares. Applicable regulations prohibit any persons from
transferring, or entering into any agreement directly or indirectly to transfer,
the legal or beneficial ownership of subscription rights or the underlying
securities to the account of another person. XXXXXXXX, Inc. will pursue any and
all legal and equitable remedies in the event it becomes aware of the transfer
of subscription rights and will not honor orders known by it to involve such
transfer. Under penalties of perjury, I further certify that: (1) the social
security number or taxpayer identification number given above is correct; and
(2) I am not subject to backup withholding. You must cross out this item, (2)
above, if you have been notified by the Internal Revenue Service that you are
subject to backup withholding because of under-reporting interest or dividends
on your tax return. By signing below, I also acknowledge that I have not waived
any rights under the Securities Act of 1933 and the Securities Exchange Act of
1934.
THE COMMON SHARES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS ASSOCIATION
INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
Signature THIS FORM MUST BE SIGNED AND DATED TWICE: Here and on the
Certification Form. THIS ORDER IS NOT VALID IF THE STOCK ORDER FORM AND
CERTIFICATION FORM ARE NOT BOTH SIGNED. YOUR ORDER WILL BE FILLED IN ACCORDANCE
WITH THE PROVISIONS OF THE PROSPEWCTUS. An additional signature is required only
if payment is by withdrawal from an account that requires more than one
signature to withdraw funds.
Signature Date
- --------------------------------------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
TURN PAGE OVER
FOR OFFICE
USE
Batch # ______
Date Rec'd _____/____/_____
Amount $ _______________
- ________________Order #
Check # ___________
Category ___________
Deposit $ ___________
<PAGE>
Proxy Card
Please Detatch, Sign, & Return ALL Proxies in the enclosed white envelope
Willow Grove Bancorp, Inc.
Item (6) continued; Associate - Acting in Concert
Associates listed on Number of
other stock orders shares ordered
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
Item (7) continued; Purchaser Information
Account Title (Names on Accounts) Account Number
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
- --------------------------------------- ------------------------------
CERTIFICATION FORM
(This Certification Must Be Signed In Addition to the Stock Order
Form On Reverse Hereof)
I ACKNOWLEDGE THAT THE COMMON SHARES, NO PAR VALUE PER SHARE, OF WILLOW GROVE
BANCORP, INC., ARE NOT A DEPOSIT OR AN ACCOUNT AND ARE NOT FEDERALLY INSURED OR
GUARANTEED BY COLUMBIA FEDERAL SAVINGS BANK OR BY THE FEDERAL GOVERNMENT.
If anyone asserts that the common shares are federally insured or guaranteed, or
are as safe as an insured deposit, I should call the Office of Thrift
Supervision Northeast Regional Director, Robert C. Albanese, at (201) 413-1000.
I further certify that, before purchasing the common shares of Willow Grove
Bancorp, Inc., I received a copy of the Prospectus dated XXXXX xx, 1998, which
discloses the nature of the common shares being offered thereby and describes
the following risks involved in an investment in the common shares under the
heading "Risk Factors" beginning on page X of the Prospectus:
1. Control of the Company by the MHC
2. Waiver of the Dividends by the MHC
3. Potential Low Return on Equity Following the Reorganization;
Uncertainty as to Future Growth Opportunities
4. Potential Increased Compensation Expense After the Reorganization
5. Risks Related to Construction and Land Development Loans, Multi-
Family Residential Real Estate Loans and Commercial Real Estate
Loans
6. Dilutive Effect of Issuance of Additional Shares
7. The Establishment of the Foundation: Dilution of Stockholders'
Interests, Impact on Earnings, Tax Considerations, Comparison on
Valuation and Other Factors Assuming the Foundation is Not
Established as Part of the Reorganization, Potential Challenges
and Approval of Members
8. Potential Effects of Changes in Interest Rates and the Current
Interest Rate Environment
9. Strong Competition Within the Bank's Market Area
10. Geographic Concentration of Loans
11. Regulatory Oversight and Legislation
12. Absence of Market for the Common Stock
13. Possible Increase in Number of Shares of Common Stock Issued in
the Reorganization
14. Possible Adverse Income Tax Consequences of the Distribution of
Subscription Rights
15. Year 2000 Compliance
16. Certain Additional Anti-takeover Considerations
17. Irrevocability of Orders; Potential Delay in Completion of
Offerings
Signature Date Signature Date
- --------------------------------- ------------------------------------
(Note: If shares are to be held jointly, both parties must sign)
<PAGE>
Willow Grove Bancorp, Inc.
Stock Ownership Guide and Stock Order Form Instructions
Stock Order Form Instructions
- --------------------------------------------------------------------------------
Item 1 and 2 - Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares ordered by the subscription price of $10.00 per share. The minimum
purchase is 25 shares. The maximum purchase for any person is 15,000 shares.
There are additional purchase limitations for associates and groups acting in
concert as defined in the Prospectus. Willow Grove Bancorp, Inc. reserves the
right to reject the subscription of any order received in the Direct Community
Offering in whole or in part.
Item 3 - Payment for shares may be made in cash (only if delivered by you in
person), by check, bank draft or money order payable to Willow grove Bancorp,
Inc. DO NOT MAIL CASH. Your funds will earn interest at Willow Grove Bank' ("The
Bank") current passbook rate.
Item 4 - To pay by withdrawal from a savings account or certificate at the Bank,
insert the account number(s) and the amount(s) you wish to withdraw from each
account. If more than one signature is required for a withdrawal, all
signatories must sign in the signature box on the front of this form. To
withdraw from an account with checking privileges, please write a check. The
Bank will waive any applicable penalties for early withdrawal from certificate
accounts. A hold will be placed on the account(s) for the amount(s) you indicate
to be withdrawn. Payments will remain in account(s) until the stock offering
closes. If a partial withdrawal reduces the balance of a certificate account to
less than the applicable minimum, the remaining balance will thereafter earn
interest at the passbook rate.
Item 5 - Please check this box to indicate whether you are a director, officer
or employee of The Bank, or a member of such person's immediate family.
Item 6 - Please check this box if you or any associate (as defined on the
reverse side of the Stock Order Form) or person acting in concert with you has
submitted another order for shares, and complete the reverse side of the Stock
Order Form.
Item 7 - Please check the appropriate box if you were:
a) A depositor with $50.00 or more on deposit at The Bank as of XXXX
xx, 1997. Enter information below for all deposit accounts that
you had at The Bank on XXXX xx.
b) A depositor with $50.00 or more on deposit at The Bank as of
September 30, 1998, but is not an Eligible Account Holder. Enter
Information below for all deposit accounts that you had at the
Bank on September 30, 1998.
c) A depositor or borrower at The Bank as of November xx, 1998, but
are not an Eligible Account Holder or Supplemental Eligible
Account Holder.
Item 8 - The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of Willow Grove
Bancorp, Inc. common stock. Please complete this section as fully and accurately
as possible, and be certain to supply your social security or Tax I.D. number(s)
and your daytime and evening phone numbers. We will need to call you if we can
not execute you order as given. If you have any questions regarding the
registration of your stock, please consult your legal advisor. Subscription
rights are not transferable. If you are a qualified member, to protect your
priority over other purchasers as described in the Prospectus, you must take
ownership in at least one of the account holder's names.
Stock Ownership Guide
- --------------------------------------------------------------------------------
Individual - The Stock is to be registered in an individual's name only. You may
not list beneficiaries for this ownership.
Joint Tenants - Joint tenants with rights of survivorship identifies two or more
owners. When stock is held by joint tenants with rights of survivorship,
ownership automatically passes to the surviving joint tenant(s) upon the death
of any joint tenant. You may not list beneficiaries for this ownership.
Tenants in Common - Tenants in common may also identify two or more owners. When
stock is to be held by tenants 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 by tenants in common. You may not list beneficiaries for this
ownership.
Uniform Gift to Minors - For residents of many states, stock may by held in the
name of a custodian for the benefit of a minor under the Uniform Gift to Minors
Act. For residents in other states, stock may be held in a similar type of
ownership under the Uniform Transfer to Minors Act of the individual state. For
either ownership, the minor is the actual owner of the stock with the adult
custodian being responsible for the investment until the child reaches legal
age. Only one custodian and one minor may be designated.
Instructions: On the first name line, print the first name, middle initial and
last name of the custodian, with the abbreviation "CUST" after the name. Print
the first name, middle initial and last name of the minor on the second name
line. Use the minor's social security number.
Corporation/Partnership - Corporation/Partnerships may purchase stock. Please
provide the Corporation/Partnership's legal name and Tax I.D. To have depositor
rights, the Corporation/Partnership must have an account in the legal name.
Please contact the Stock Information Center to verify depositor rights and
purchase limitations.
Individual Retirement Account - Individual Retirement Account ("IRA") holders
may make stock purchases from their deposits through a prearranged
"trustee-to-trustee" transfer. Stock may only be held in a self-directed IRA.
The Bank does not offer a self-directed IRA. Please contact the Stock
Information Center if you have any questions about your IRA account.
Fiduciary/Trust - Generally, fiduciary relationships (such as Trusts, Estates,
Guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without a legal document establishing a fiduciary
relationship, your stock may not be registered in a fiduciary capacity.
Instructions: On the first name line, print the first name, middle initial and
last name of the fiduciary if the fiduciary is an individual. If the fiduciary
is a corporation, list the corporate title on the first name line. Following the
name, print the fiduciary title such as trustee, executor, personal
representative, etc. On the second name line, print the name of the maker, donor
or testator or the name of the beneficiary. Following the name, indicate the
type of legal document establishing the fiduciary relationship (agreement, court
order, etc.). In the blank after "Under Agreement Dated", fill in the date of
the document governing the relationship. The date of the document need not be
provided for a trust created by a will.
Exhibit 99.3
December XX, 1998
Dear Prospective Investor:
We are pleased to announce that Willow Grove Bank (the "Bank") is
reorganizing from a federally chartered mutual savings bank to the federal
mutual holding company form of ownership (the "Reorganization"). In conjunction
with the Reorganization, Willow Grove Bancorp, Inc., the newly-formed
corporation that will serve as holding company for the Bank, is offering shares
of common stock in a subscription offering and community offering and to our
Employee Stock Ownership Plan pursuant to a Plan of Reorganization. The sale of
stock in connection with the Reorganization will enable the Bank to raise
additional capital to support and enhance its current operations.
We have enclosed the following materials that will help you learn more
about the merits of Willow Grove Bancorp Inc.'s common stock as an investment.
Please read and review the materials carefully.
PROSPECTUS: This document provides detailed information about
operations at the Bank and a complete discussion on the proposed stock
offering.
QUESTIONS AND ANSWERS: Key questions and answers about the stock
offering are found in this pamphlet.
STOCK ORDER FORM & CERTIFICATION FORM: This form is used to purchase
stock by returning it with your payment in the enclosed business reply
envelope. The deadline for ordering stock is 12:00 noon., December xx,
1998.
We invite our loyal customers and local community members to become
charter shareholders of Willow Grove Bancorp, Inc. Through this offering you
have the opportunity to buy stock directly from Willow Grove Bancorp, Inc.
without a commission or a fee. The board of directors and senior management of
the Bank fully support the stock offering.
Should you have additional questions regarding the Reorganization and
stock offering, please call us at (215) xxx-xxxx, Monday through Thursday from
9:00 a.m. to 4:00 p.m., Friday from 9:00 a.m. to 7:00 p.m., or stop by the Stock
Sales Center located at Welsh and Norristown Roads, Maple Glen, Pennsylvania.
Sincerely,
Frederick A. Marcell, Jr.
President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
[Letterhead of Charles Webb & Company]
To Members and Friends of
Willow Grove Bancorp, Inc.
- --------------------------------------------------------------------------------
Charles Webb & Company, a member of the National Association of Securities
Dealers, Inc. ("NASD"), is assisting Willow Grove Bank (the "Bank") in its
reorganization from a federally chartered mutual savings bank into the federal
mutual holding company form of ownership and the concurrent offering of shares
of common stock by Willow Grove Bancorp, Inc. (the "Holding Company"), the newly
formed corporation that will serve as holding company for the Bank following the
conversion.
At the request of the Holding Company, we are enclosing materials explaining
this process and your options, including an opportunity to invest in shares of
the Holding Company's common stock being offered to customers and the community
through December xx, 1998. Please read the enclosed offering materials carefully
including the prospectus for a complete discussion of the offering. The Holding
Company has asked us to forward these documents to you in view of certain
requirements of the securities laws in your state.
Should you have any questions, please visit our Stock Sales Center at Welsh and
Norristown Roads, Maple Glen, Pennsylvania or feel free to call the Stock
Information Center at (215) xxx-xxxx.
Very truly yours,
Charles Webb & Company
<PAGE>
November XX, 1998
Dear Member:
We are pleased to announce that Willow Grove Bank (the "Bank") is
reorganizing from a federally chartered mutual savings bank to the federal
mutual holding company form of ownership (the "Reorganization"). In conjunction
with the Reorganization, Willow Grove Bancorp, Inc., the newly-formed
corporation that will serve as holding company for the Bank, is offering shares
of common stock in a subscription offering and community offering and to our
Employee Stock Ownership Plan pursuant to a Plan of Reorganization.
To accomplish the Reorganization, we need your participation in an
important vote. Enclosed is a proxy statement describing the Plan of
Reorganization and your voting and subscription rights. The Plan of
Reorganization has been approved by the Office of Thrift Supervision and now
must be approved by you. YOUR VOTE IS VERY IMPORTANT.
Enclosed, as part of the proxy material, is your proxy card located
behind the window of your mailing envelope. This proxy should be signed and
returned to us prior to the Special Meeting to be held on December xx, 1998.
Please take a moment to sign the enclosed proxy card and return it to us in the
postage-paid envelope provided. FAILURE TO VOTE HAS THE SAME EFFECT AS VOTING
AGAINST THE CONVERSION.
The Board of Directors of the Bank believes that the Reorganization
will offer a number of advantages, such as an opportunity for depositors and
customers of the Bank to become shareholders. Please remember:
o Your accounts at the Bank will continue to be insured up to the
maximum legal limit by the Federal Deposit Insurance Corporation
("FDIC").
o There will be no change in the balance, interest rate, or maturity of
any deposit accounts because of the Reorganization.
o Members have a right, but no obligation, to buy stock before it is
offered to the public.
o Like all stock, stock issued in this offering will not be insured by
the FDIC.
Enclosed is a prospectus containing a complete discussion of the stock
offering. We urge you to read these materials carefully. If you are interested
in purchasing the common stock of Willow Grove Bancorp, Inc., your Stock Order
Form and Certification Form and payment must be received by the Bank prior to
12:00, noon, Eastern Time, on December xx, 1998.
If you have additional questions regarding the stock offering, please
call us at (215) xxx-xxxx, Monday through Thursday from 9:00 a.m. to 4:00 p.m.,
Friday from 9:00 a.m. to 7:00 p.m., or stop by the Stock Sales Center located at
Welsh and Norristown Roads in Maple Glen, Pennsylvania.
Sincerely,
Frederick A. Marcell, Jr.
President and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED IN THIS OFFERING ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND
OR ANY OTHER GOVERNMENT AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY STOCK. THE OFFER WILL BE MADE ONLY BY THE PROSPECTUS.
<PAGE>
November , 1998
Dear Member:
We are pleased to announce that Willow Grove Bank (the "Bank") is
reorganizing from a federally chartered mutual savings bank to the federal
mutual holding company form of ownership (the "Reorganization"). In conjunction
with the Reorganization, Willow Grove Bancorp, Inc., the newly-formed
corporation that will serve as holding company for the Bank, is offering shares
of common stock in a subscription offering and community offering and to our
Employee Stock Ownership Plan pursuant to a Plan of Reorganization.
Unfortunately, Willow Grove Bancorp, Inc. is unable to either offer or
sell its common stock to you because the small number of eligible subscribers in
your jurisdiction makes registration or qualification of the common stock under
the securities laws of your jurisdiction impractical, for reasons of cost or
otherwise. Accordingly, this letter should not be considered an offer to sell or
a solicitation of an offer to buy the common stock of Willow Grove Bancorp, Inc.
However, as a member of Willow Grove Bank you have the right to vote on
the Plan of Reorganization at the Special Meeting of Members to be held on
December xx, 1998. Therefore, enclosed is a proxy card, a Proxy Statement (which
includes the Notice of the Special Meeting), a Prospectus (which contains
information incorporated into the Proxy Statement) including a complete
discussion of the offering and a return envelope for your proxy card.
I invite you to attend the Special Meeting on December xx, 1998.
However, whether or not you are able to attend, please complete the enclosed
proxy card and return it in the enclosed envelope to ensure your vote is counted
at the Special Meeting.
Sincerely,
Frederick A. Marcell, Jr.
President and Chief Executive Officer
<PAGE>
FACTS ABOUT CONVERSION
The Board of Directors of Willow grove Bank (the "Bank") unanimously adopted a
Plan of Reorganization (the "Reorganization") to reorganizae from a federally
chartered mutual savings bank to a federally chartered stock mutual holding
company.
This brochure answers some of the most frequently asked questions about the
Reorganization and about your opportunity to invest in Willow Grove Bancorp,
Inc. (the "Holding Company"), the newly formed corporation that will serve as
the holding company for the Bank following the Reorganization.
Investment in the stock of Willow Grove Bancorp, Inc. involves certain risks.
For a discussion of these risks and other factors, including a complete
description of the offering, investors are urged to read the accompanying
Prospectus, especially the discussion under the heading "Risk Factors".
WHY IS THE BANK CONVERTING TO STOCK FORM?
- --------------------------------------------------------------------------------
The stock form of ownership is used by most business corporations and an
increasing number of savings institutions. Through the sale of stock, the Bank
will raise additional capital enabling it to:
o support and expand its current financial and other services.
o allow customers and friends to purchase stock and share in the Holding
Company's and the Bank's future.
WILL THE REORGANIZATION AFFECT ANY OF MY DEPOSIT ACCOUNTS OR LOANS?
- --------------------------------------------------------------------------------
No. The Conversion will have no effect on the balance or terms of any savings
account or loan, and your deposits will continue to be federally insured by the
Federal Deposit Insurance Corporation ("FDIC") to the maximum legal limit. Your
savings account is not being converted to stock.
WHO IS ELIGIBLE TO PURCHASE STOCK IN THE SUBSCRIPTION AND COMMUNITY OFFERINGS?
- --------------------------------------------------------------------------------
Certain past and present depositors of the Bank, the Holding Company's Employee
Stock Ownership Plan and members of the general public.
HOW MANY SHARES OF STOCK ARE BEING OFFERED AND AT WHAT PRICE?
- --------------------------------------------------------------------------------
Willow Grove Bancorp, Inc. is offering through the Prospectus up to x,xxx,xxx
shares of common stock, subject to adjustment as described in the Prospectus,
at a price of $10.00 per share.
HOW MUCH STOCK MAY I BUY?
- --------------------------------------------------------------------------------
The minimum order is 25 shares. No person may purchase more than $x,xxx,xxx of
common stock in the subscription offering and no person, together with
associates of and persons acting in concert with such person, may purchase more
than $xxx,xxx of common stock.
DO MEMBERS HAVE TO BUY STOCK?
- --------------------------------------------------------------------------------
No. However, the Reorganization will allow the Bank's depositors an opportunity
to buy stock and become charter shareholders of the Holding Company for the
local financial institution with which they do business.
HOW DO I ORDER STOCK?
- --------------------------------------------------------------------------------
You must complete the enclosed Stock Order Form and Certification Form.
Instructions for completing your Stock Order Form and Certification Form are
contained in this packet. Your order must be received by the Bank prior to 12:00
noon on December xx, 1998.
HOW MAY I PAY FOR MY SHARES OF STOCK?
- --------------------------------------------------------------------------------
First, you may pay for stock by check, cash or money order. Interest will be
paid by The Bank on these funds at the passbook rate, which is currently x.xx%
per annum, from the day the funds are received until the completion or
termination of the Reorganization. Second, you may authorize us to withdraw
funds from your Willow Grove savings account or certificate of deposit for the
amount of funds you specify for payment. You will not have access to these funds
from the day we receive your order until completion or termination of the
Reorganization.
CAN I PURCHASE SHARES USING FUNDS IN MY WILLOW GROVE IRA ACCOUNT?
- --------------------------------------------------------------------------------
Federal regulations do not permit the purchase of conversion stock from your
existing Willow Grove IRA account. To accommodate our depositors, we have made
<PAGE>
arrangements with an outside trustee to allow such purchases. Please call our
Stock Sales Center for additional information.
WILL THE STOCK BE INSURED?
- --------------------------------------------------------------------------------
No. Like any other common stock, the Holding Company's stock will not be
insured.
WILL DIVIDENDS BE PAID ON THE STOCK?
- --------------------------------------------------------------------------------
The Board of Directors of the Holding Company will consider whether to pay a
cash dividend in the future, subject to regulatory limits and requirements. No
decision has been made as to the amount or timing of such dividends, if any.
HOW WILL THE STOCK BE TRADED?
- --------------------------------------------------------------------------------
The Holding Company's stock is expected to trade on The Nasdaq National Market
under the symbol "WGBC". However, no assurance can be given that an active and
liquid market will develop.
ARE OFFICERS AND DIRECTORS OF THE BANK PLANNING TO PURCHASE STOCK?
- --------------------------------------------------------------------------------
Yes! The Bank's officers and directors plan to purchase, in the aggregate,
$xxx,xxx worth of stock or approximately x.x% of the stock offered at the
midpoint of the offering range.
MUST I PAY A COMMISSION?
- --------------------------------------------------------------------------------
No. You will not be charged a commission or fee on the purchase of shares in
the Reorganization.
SHOULD I VOTE?
- --------------------------------------------------------------------------------
Yes. Your "YES" vote is very important!
PLEASE VOTE, SIGN AND RETURN ALL PROXY CARDS!
WHY DID I GET SEVERAL PROXY CARDS?
- --------------------------------------------------------------------------------
If you have more than one account, you could receive more than one proxy card,
depending on the ownership structure of your accounts.
HOW MANY VOTES DO I HAVE?
- --------------------------------------------------------------------------------
Your proxy card(s) show(s) the number of votes you have. Every depositor
entitled to vote may cast one vote for each $100, or fraction thereof, on
deposit as of the voting record date up to xxxx votes.
Borrowers of the Bank entitled to vote may cast one vote in addition to any
votes they may have as depositors.
MAY I VOTE IN PERSON AT THE SPECIAL MEETING?
- --------------------------------------------------------------------------------
Yes, but we would still like you to sign and mail your proxy today. If you
decide to revoke your proxy you may do so by giving notice at the special
meeting.
FOR ADDITIONAL INFORMATION YOU MAY CALL OUR STOCK SALES CENTER BETWEEN 9:00 A.M.
AND 4:00 P.M. MONDAY THROUGH THURSDAY OR 9:00 A.M. TO 7:00 P.M. FRIDAY.
- --------------------------------------------------------------------------------
STOCK SALES CENTER
(215) xxx-xxxx
- --------------------------------------------------------------------------------
Willow Grove Bancorp, Inc.
Welsh and Norristown Roads
Maple Glen, Pennsylvania 19002
- --------------------------------------------------------------------------------
STOCK OFFERING QUESTIONS
AND ANSWERS
- --------------------------------------------------------------------------------
Willow Grove
Bancorp, Inc.
(the proposed holding company for Willow Grove
Bank)
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND, OR ANY OTHER
GOVERNMENTAL AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE>
PROXY GRAM
We recently forwarded to you a proxy statement and related materials regarding a
proposal to reorganize Willow Grove Bank from a federally chartered mutual
savings bank to a federally chartered mutual holding company.
Your vote on our Plan of Reorganization has not yet been received. Failure to
Vote has the Same Effect as Voting Against the Conversion.
Your vote is important to us. Therefore, we are requesting that you sign the
enclosed proxy card and return it promptly in the enclosed postage-paid
envelope.
Voting for the Reorganization does not obligate you to purchase stock or affect
the terms or insurance on your accounts.
The Board of Directors unanimously recommend you vote "FOR" the Conversion.
Willow grove Bank
Maple Glen, Pennsylvania
Frederick A. Marcell, Jr.
President and Chief Executive Officer
- ------------------------------------------------------------------------------
If you mailed the proxy, please accept our thanks and disregard this request.
For further information call (215) xxx-xxxx.
<PAGE>
STOCK GRAM
We are pleased to announce that Willow Grove Bancorp, Inc., the proposed holding
company for Willow Grove Bank, is offering shares of common stock in a
subscription and community offering. The sale of stock in connection with the
offering will enable Willow Grove to raise additional capital to support and
enhance its current franchise.
We previously mailed to you a Prospectus providing detailed information about
Willow Grove's operations and the proposed stock offering. We urge you to read
the Prospectus carefully.
We invite our loyal customers and community members to become shareholders of
Willow Grove Bancorp, Inc. If you are interested in purchasing the common stock
of Willow Grove Bancorp, Inc., your Stock Order Form, Certification Form and
payment must be received by the Bank prior to 12:00 noon, Eastern Time, on
December xx, 1998.
Should you have additional questions regarding the stock offering or need
additional materials, please call the Stock Sales Center at (215) xxx-xxxx or
stop by the Stock Sales Center at Welsh and Norristown Roads in Maple Glen,
Pennsylvania.
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is not an offer to sell or a solicitation of an offer to buy stock.
The offer is made only by the Prospectus.
Exhibit 99.4
WILLOW GROVE BANK
WELSH AND NORRISTOWN ROADS
MAPLE GLEN, PENNSYLVANIA 19002
(215) 646-5405
NOTICE OF SPECIAL MEETING OF MEMBERS
To be held on _____ __, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Members ("Special
Meeting") of Willow Grove Bank (the "Bank") will be held at the
_____________________________________, _______________, Maple Glen,
Pennsylvania, at ___ a.m., Eastern Time, on ____ __, 1998, to consider and vote
upon:
(1) The Plan of Reorganization, as amended ("Plan of
Reorganization" or "Plan"), pursuant to which the Bank
will reorganize into the mutual holding company form of
organization as a wholly owned subsidiary of a subsidiary
holding company (the "Company"), and the Company will
become a majority-owned subsidiary of a mutual holding
company (the "MHC"); and other transactions provided for
in the Plan, including the adoption of new Federal Stock
Charter and Bylaws for the Bank;
(2) The approval of the establishment of The Willow Grove
Foundation (the "Foundation"), a Delaware non-stock
corporation dedicated to the promotion of charitable
purposes within the communities that the Bank serves, and
the contribution to the Foundation concurrently with the
completion of the reorganization of the Bank; and
(3) Such other business as may properly come before the
Special Meeting or any adjournment hereof. Except with
respect to procedural matters incident to the conduct of
the meeting, management is not aware of any other such
business.
The Board of Directors has fixed ___ _, 1998 as the record date ("Voting
Record Date") for the determination of members of the Bank entitled to notice of
and to vote at the Special Meeting and at any adjournment thereof. Only those
members of the Bank of record as of the close of business on the Voting Record
Date will be entitled to vote at the Special Meeting or any postponement or
adjournment thereof. The Plan of Reorganization must be approved by the
affirmative vote of at least a majority of the amount of votes entitled to be
cast at such Special Meeting. If there are not sufficient votes for approval of
the Plan at the time of the Special Meeting, the Special Meeting may be
postponed or adjourned to permit further solicitation of the proxies. The
following Proxy Statement and the Prospectus attached hereto contain a more
detailed description of the Bank, the Company, the proposed reorganization and
the proposed charitable foundation.
Whether or not you plan to attend the Special Meeting, you are requested
to sign, date and return the enclosed proxy card(s) without delay in the
enclosed postage-paid envelope to assure that your vote will be counted even if
you are unable to attend. For a discussion of how to revoke a previously granted
proxy, see "Revocability of Proxies" in the attached Proxy Statement.
By Order of the Board of Directors
John T. Powers
Secretary
Maple Glen, Pennsylvania
___ __, 1998
<PAGE>
WILLOW GROVE BANK
WELSH AND NORRISTOWN ROADS
MAPLE GLEN, PENNSYLVANIA 19002
PROXY STATEMENT
FOR THE
SPECIAL MEETING OF MEMBERS OF THE BANK
TO BE HELD ON ____ __, 1998
THE BOARD OF DIRECTORS OF THE BANK AND THE OTS HAVE APPROVED THE PLAN OF
REORGANIZATION, AS AMENDED, SUBJECT TO ITS APPROVAL BY THE MEMBERS AND THE
SATISFACTION OF CERTAIN OTHER CONDITIONS. HOWEVER, SUCH APPROVAL BY THE OTS DOES
NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN OF REORGANIZATION, AS
AMENDED, BY THE OTS.
Purpose of the Special Meeting and Summary of Transaction
This Proxy Statement, together with the Prospectus of Willow Grove
Bancorp, Inc. (the "Company") attached hereto, constitutes the Proxy Statement
for, and is being furnished to eligible members ("Members") of, Willow Grove
Bank (the "Bank") in connection with the solicitation by the Board of Directors
of proxies to be voted at the Special Meeting of Members of the Bank (the
"Special Meeting") to be held on ____ __, 1998, at the
________________________________________________, Maple Glen, Pennsylvania, at
_____ a.m., Eastern Time, and at any postponement or adjournment thereof. The
Special Meeting is being held for the purpose of considering and voting upon the
Plan of Reorganization, as amended ("Plan of Reorganization" or "Plan"), and the
transactions contemplated by and provided for in the Plan of Reorganization,
including the establishment of The Willow Grove Foundation (the "Foundation"), a
charitable foundation which will be funded with _______ shares of common stock,
$0.01 par value per share (the "Common Stock"), of the Company.
The Bank's Board of Directors unanimously adopted the Plan of
Reorganization, pursuant to which the Bank will be converted from a federally
chartered mutual savings bank to a federally chartered stock savings bank, and
will become a subsidiary of the Company, a federally chartered corporation. The
Company will be a subsidiary of Willow Grove Mutual Holding Company, a federally
chartered mutual holding company (the "MHC"). It is currently intended that all
of the capital stock of the Bank will be held by the Company. The Plan has been
approved by the Office of Thrift Supervision (the "OTS"), subject to, among
other things, approval of the Plan by the Bank's Members at the Special Meeting.
Following receipt of all required regulatory approvals, the approval of
the members of the Bank entitled to vote on the Plan of Reorganization, and the
satisfaction of all other conditions precedent to the Reorganization, the Bank
will consummate the Reorganization. Following completion of the Reorganization,
the Bank in its stock form will continue to conduct its business and operations
from the same offices with the same personnel as the Bank conducted prior to the
Reorganization. The Reorganization will not affect the balances, interest rates
or other terms of the Bank's loans or deposit accounts, and the deposit accounts
will continue to be issued by the Federal Deposit Insurance Corporation ("FDIC")
to the same extent as they were prior to the Reorganization.
Pursuant to the Plan of Reorganization, 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 of 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 Company as a wholly owned
subsidiary;
<PAGE>
(iv) the Bank will convert its charter to a federal stock savings bank
charter and Interim One will convert its charter to a federal
mutual holding company charter to become the MHC;
(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 MHC in exchange for membership interests in the MHC;
(vii) the MHC will contribute the capital stock of the Bank to the
Company, and the Bank will become a wholly owned subsidiary of
the Company; and
(viii) contemporaneously with the Reorganization, the Company will sell
a minority interest ("Minority Interest") in shares of its Common
Stock to certain depositors and others pursuant to a Plan of
Stock Issuance ("Plan of Stock Issuance"), which was approved by
the Bank's Board of Directors contemporaneously with its adoption
of the Plan of Reorganization.
The Company expects to receive the approval of the OTS to become a
savings and loan holding company and to own all of the common stock of the Bank.
The Company intends to contribute at least 50% of the net proceeds of the
Offerings to the Bank. The Reorganization will be effected only upon completion
of the sale of all of the shares of Common Stock to be issued pursuant to the
Plan of Stock Issuance.
Pursuant to the Plan of Stock Issuance, nontransferable rights to
subscribe for the shares of Common Stock have been granted, in order of
priority, to (i) depositors of the Bank with account balances of $50.00 or more
as of the close of business on June 30, 1997 ("Eligible Account Holders"), (ii)
Company's employee stock ownership plan ("ESOP"), (iii) depositors of the Bank
with account balances of $50.00 or more as of the close of business on
__________, 1998 ("Supplemental Eligible Account Holders"), (iv) depositors and
certain borrowers of the Bank as of the close of business on ___________, 1998
("Other Members") and (v) officers, directors and employees of the Bank, subject
to the limitations described herein (the "Subscription Offering"). In the event
that there are any shares of Common Stock which are not sold in the Subscription
Offering, the Company anticipates that it will offer any such shares of Common
Stock in a community offering (the "Community Offering"). If necessary, any
shares of Common Stock not subscribed for in the Subscription Offering or
purchased in the Community Offering will be offered to members of the general
public in a syndicated community offering (the "Syndicated Community Offering").
(The Subscription Offering, Community Offering and Syndicated Community Offering
are referred to collectively as the "Offerings").
The Bank's Plan of Reorganization also provides for the establishment of
the Foundation in connection with the Reorganization. The Foundation, which will
be incorporated under Delaware law as a non-stock corporation, will be funded
with a contribution by the Company of _______ shares of Common Stock equal to
4.0% of the shares. The authority for the affairs of the Foundation will be
vested in the Board of Directors of the Foundation, which will initially consist
of six persons, two of whom are existing directors of the Bank. The contribution
of Common Stock to the Foundation will be dilutive to the interests of
stockholders of the Company and will have an adverse impact on the Company's
earnings in the year of the contribution. See "Risk Factors - Establishment of
the Foundation" and "The Reorganization and Stock Issuance - Establishment of
the Foundation" in the Prospectus.
Voting in favor of or against the Plan of Reorganization includes a vote
for or against the adoption of the new Federal Stock Charter and Bylaws of the
Bank.
Voting in favor of the establishment of the Foundation will not in any
way affect the votes in favor of or against the Plan of Reorganization. If
members vote for the adoption of the Plan of Reorganization but against the
establishment of the Foundation, the Bank intends to consummate the
Reorganization without establishing the Foundation.
2
<PAGE>
Voting in favor of the Plan of Reorganization will not obligate any
person to purchase any Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
PLAN OF REORGANIZATION AND ESTABLISHMENT OF THE FOUNDATION.
Voting Rights and Votes Required for Approval
The Board of Directors has fixed ______, 1998 as the record date
("Voting Record Date") for the determination of Members entitled to notice of
and to vote at the Special Meeting and at any postponement or adjournment
thereof. All of the Bank's depositors and its borrowers as of ______________
whose loans continue to be outstanding are members of the Bank ("Members"). The
Plan of Reorganization must be approved by the affirmative vote of at least a
majority of the amount of votes entitled to be cast at such Special Meeting. If
there are not sufficient votes for approval of the Plan at the time of the
Special Meeting, the Special Meeting may be adjourned to permit further
solicitation of proxies.
Each depositor member of the Voting Record Date will be entitled at the
Special Meeting to cast one vote per $100, or fraction thereof, of the aggregate
withdrawal value of all of such Member's deposit accounts in the Bank as of the
Voting Record Date. Also, each borrower member whose loan was outstanding as of
May 15, 1995, which loan continues to be outstanding as of the Voting Record
Date, will be entitled to one vote in addition to any other vote the borrower
may otherwise have. No Member may cast more than 1,000 votes at such Special
Meeting. In general, accounts held in different ownership capacities will be
treated as separate accounts for purposes of applying the 1,000 vote limitation.
For example, if two persons hold a $100,000 account in their joint names and
each of the persons also holds a separate account for $100,000 in their own
name, each person would be entitled to 1,000 votes for the separate account and
they would together be entitled to cast 1,000 votes on the basis of the joint
account. The Bank's records indicate that as of the Voting Record Date, there
were approximately _____ Members entitled to cast a total of _________ votes at
the Special Meeting.
Deposits held in trust or other fiduciary capacity may be voted by the
trustee or other fiduciary to whom voting rights are delegated under the trust
instrument or other governing document or applicable law. In the case of IRA and
Qualified Plan accounts established at the Bank, the beneficiary may direct the
trustee's vote on the Plan of Reorganization by returning a completed proxy card
to the Bank. If no proxy card is returned, the Bank, as trustee, will not vote
on the adoption of the Plan of Reorganization and establishment of the
Foundation on behalf of such beneficiary.
Proxies
The Bank's Members as of the Voting Record Date may vote at the Special
Meeting or at any postponement or adjournment thereof in person or by proxy.
Enclosed is a proxy card which may be used by any Member to vote on the Plan of
Reorganization and establishment of the Foundation. All properly executed
proxies received by the Bank will be voted in accordance with the instructions
indicated thereon by the Member giving such proxies. If no instructions are
given, executed proxies will be voted FOR adoption of the Plan of Reorganization
and the establishment of the Foundation.
Revocability of Proxies
A proxy may be revoked at any time before it is voted by filing written
revocation of the proxy with the Secretary of the Bank, by submitting a duly
executed proxy bearing a later date or by attending and voting in person at the
Special Meeting or any postponement or adjournment thereof. The presence of a
Member at the Special Meeting shall not revoke a proxy unless a written
revocation is filed with the Secretary of the Bank prior to the voting of such
Proxy. The proxies being solicited by the Board of Directors of the Bank are
only for use at the Special Meeting and at any adjournment thereof and will not
be used for any other meeting.
3
<PAGE>
Solicitation of Proxies and Tabulation of the Vote
To the extent necessary to permit approval of the Plan of
Reorganization, proxies may be solicited by officers, directors or employees of
the Bank, by telephone or through other forms of communication and, if
necessary, the Special Meeting may be adjourned to a later date. Such persons
will be reimbursed by the Bank for their reasonable out-of-pocket expenses
incurred in connection with such solicitation. The Company has retained Charles
Webb & Company, a division of Keefe, Bruyette & Woods, Inc., to provide proxy
solicitation and vote tabulation services, to act as inspector of election and
to provide financial and marketing advisory services for the Offerings, for an
aggregate fee equal to 1.25% of the dollar value of all Common Stock sold in the
Offerings (as such terms are defined in the Plan of Stock Issuance), subject to
certain limitations. See "The Offerings - Marketing Arrangements" in the
Prospectus. The Bank will bear all costs associated with proxy solicitation and
vote tabulation.
Reasons for Reorganization
See "The Reorganization and Stock Issuance - Purposes of the
Reorganization" and "-Effects of the Reorganization" in the Prospectus for a
discussion of the basis upon which the Board of Directors determined to
undertake the proposed Reorganization. As more fully discussed in those sections
and in other sections of the Prospectus, the Board of Directors believes that
the Plan of Reorganization is in the best interest of the Bank, its members and
the communities it serves.
Stock-Based Benefits to Management
See "Summary - Benefits of Reorganization to Officers and Directors,"
and "Management - Employment Agreements" and "-Benefits" in the Prospectus for a
discussion of the interests of management in the Reorganization and Stock
Issuance.
Review of OTS Action
Any person aggrieved by a final action of the OTS which approves, with
or without conditions, or disapproves a plan of reorganization may obtain review
of such action by filing in the court of appeals of the United States for the
circuit in which the principal office or residence of such person is located, or
in the United States Court of Appeals for the District of Columbia, a written
petition praying that the final action of the OTS be modified, terminated or set
aside. Such petition must be filed within 30 days after the publication of
notice of such final action in the Federal Register, or 30 days after the
mailing by the applicant of the notice to members as provided for in 12 C.F.R.
ss.563b.6(c), whichever is later. The further procedure for review is as
follows: A copy of the petition is forthwith transmitted to the OTS by the clerk
of the court and thereupon the OTS files in the court the record in proceeding,
as provided in Section 2112 of Title 28 of the United States Code. Upon the
filing of the petition, the court has jurisdiction, which upon the filing of the
record is exclusive, to affirm, modify, terminate, or set aside in whole or in
part, the final action of the OTS. Review of such proceedings is as provided in
Chapter 7 of Title 5 of the United States Code. The judgment and decree of the
court is final, except that they are subject to review by the Supreme Court upon
certiorari as provided in Section 1254 of Title 28 of the United States Code.
Risk Factors
See "Risk Factors" in the Prospectus for a discussion of certain factors
that should be considered by prospective investors, including, among other
factors, control of the Company by the MHC, waiver of dividends by the MHC, the
potential for a low return on equity following the Reorganization and the
uncertainty as to future growth opportunities, the dilutive effect of the
issuance of additional shares of Common Stock, the charitable foundation to be
established in connection with the Reorganization, the potential effects of
changes in interest rates and the current interest rate environment, risks
related to construction and land development loans, multi-family residential
real estate loans, commercial real estate loans and commercial business loans,
competition, the Bank's geographic concentration of loans, certain anti-takeover
provisions, regulatory oversight, the absence of a market for the Common Stock,
a possible
4
<PAGE>
increase in the number of shares issued in the Reorganization, potential
increased compensation expenses after the Reorganization, possible adverse tax
consequences of the distribution of subscription rights to purchase the Common
Stock, compliance with the Year 2000 issues, certain additional anti-takeover
considerations and the potential delay in consummation of the Reorganization and
the irrevocability of orders.
Certain Additional Anti-Takeover Considerations. The MHC will own more
than a majority of the issued and outstanding shares of Common Stock and,
accordingly, will be able to elect all of the members of the Board of Directors
of the Company and will be able to control the outcome of most matters presented
to stockholders for their approval. See " - Control of the Company by the MHC"
in the Prospectus. In addition, certain provisions in the Company's Charter and
Bylaws and Federal law and regulations as well as the anticipated stock
ownership levels of the Bank's management will provide certain additional
anti-takeover provisions.
The Company's Charter and Bylaws contain certain provisions that could
discourage non-negotiated takeover attempts that certain stockholders might deem
to be in their interests or as a result of which stockholders might otherwise
receive a premium for their shares over the then current market price and that
may tend to perpetuate existing management. These provisions include the
classification of the terms of the members of the Board of Directors, the
elimination of cumulative voting by stockholders in the election of directors,
certain provisions relating to meetings of stockholders, and restrictions on the
acquisition of the Company's equity securities. The Charter also authorizes the
issuance of up to 10,000,000 shares of Preferred Stock as well as additional
shares of Common Stock. Such shares could be issued without stockholder approval
on terms or in circumstances that could deter a future takeover attempt. In
addition, Federal law provides for certain restrictions on acquisition of the
Company and Bank. See "Certain Restrictions on Acquisition of the Company and
the Bank"in the Prospectus.
Directors and executive officers of the Bank expect to purchase
approximately 200,000 shares of Common Stock, which would equal 4.74% of the
total issued and outstanding shares assuming the sale of 1,840,000 shares at the
mid-point of the Estimated Offering Range. See "Proposed Management Purchases"
in the Prospectus. The directors who act as trustees of the ESOP are also
expected to immediately control the voting of 8% of the shares of Common Stock
sold in the Offerings through the ESOP, at least until an allocation has been
made under the ESOP. Under the terms of the ESOP, after an allocation has been
made, the unallocated shares will be voted by the trustees in the same
proportion as the allocated shares are voted by the ESOP participants.
The Company intends to seek stockholder approval of the Company's
proposed Recognition Plan, which is a non-tax qualified restricted stock plan
for the benefit of directors, officers, and employees of the Company and the
Bank. Assuming the receipt of stockholder approval, which stockholder approval
cannot be obtained earlier than six months following the Reorganization pursuant
to regulations of the OTS, the Company expects to acquire Common Stock on behalf
of the Recognition Plan, in an amount equal to 4% of the Common Stock sold in
the Offerings, or 62,560 shares and 84,640 shares at the minimum and maximum of
the Estimated Offering Range, respectively. These shares will be acquired either
through open market purchases, if permissible, or from authorized but unissued
Common Stock. Under the terms of the Recognition Plan, recipients of awards will
be entitled to instruct the trustee of the Recognition Plan as to how the
underlying shares should be voted, and the trustee will be entitled to vote all
unallocated shares in its discretion. If the shares are purchased in the open
market, directors and executive officers would have effective control over 7.31%
or 5.86% of the Common Stock outstanding at such time based upon the minimum and
the maximum of the Estimated Offering Range, respectively, before giving effect
to the potential exercise of any stock options by directors and officers of the
Company and the Bank, and shares held by the ESOP. If approved by stockholders
at a meeting held no earlier than six months following the Reorganization, the
Company intends to reserve for future issuance pursuant to the Stock Option Plan
a number of authorized shares of Common Stock equal to an aggregate of 10% of
the Common Stock sold in the Offerings (184,000 shares, based on the issuance of
1,840,000 shares at the mid-point of the Estimated Offering Range). See
"Management - Benefits - Stock Option Plan" in the Prospectus. Management's
potential stock ownership interest could, together with additional stockholder
support, make more difficult takeover attempts that certain stockholders deem to
be in their best interest and may tend to perpetuate existing management.
5
<PAGE>
Upon completion of the Reorganization, the Foundation will own 1.7% of
the total shares of the Common Stock outstanding. Such shares will be owned
solely by the Foundation; however, pursuant to a condition expected to be
required by regulatory authorities, it is anticipated that the shares of Common
Stock held by the Foundation will be voted in the same ratio as all other shares
of the Common Stock voted on all proposals considered by the stockholders of the
Company. As such, the Company does not believe the Foundation will have an
anti-takeover effect on the Company. However, in the event that the OTS were to
waive this voting restriction for the reasons described herein as provided in
the condition, the Foundation's Board of Directors would exercise sole voting
power over such shares and would no longer be subject to the restriction. See
"The Reorganization and Stock Issuance - Establishment of the Foundation
Regulatory Conditions Imposed on the Foundation" in the Prospectus. In the event
the OTS waived the voting restriction (although it is not currently anticipated
that the Company and the Foundation will seek such a waiver), management of the
Company and the Bank may benefit to the extent that the Board of Directors of
the Foundation determines to vote the shares of Common Stock held by the
Foundation in favor of proposals supported by the Company and the Bank.
Upon consummation of the Reorganization, the Bank intends to enter into
a two-year employment agreement with the Bank's President and one-year
employment agreements with the Bank's three other executive officers. Such
agreements provide for severance payments under certain conditions after a
change-in-control of the Bank. Such severance provisions may have the effect of
increasing the cost of an acquisition of the Bank and, thereby, may discourage
future attempts to acquire the Company or the Bank. See "Management - Management
of the Bank Employment Agreements" in the Prospectus.
Procedures for Stockholder Nominations
The Company's Bylaws provide that any stockholder desiring to make a
nomination for the election of directors or a proposal for new business at a
meeting of stockholders must submit written notice to the Secretary of the
Company not less than 30 or more than 60 days in advance of the meeting. The
Bylaws further provide that if a stockholder seeking to make a nomination or a
proposal for new business fails to follow the prescribed procedures, the
chairman of the meeting may disregard the defective nomination or proposal.
Management believes that it is in the best interests of the Company and its
stockholders to provide sufficient time to enable management to disclose to
stockholders information about a dissident slate of nominations for directors.
This advance notice requirement may also give management time to solicit its own
proxies in an attempt to defeat any dissident slate of nominations should
management determine that doing so is in the best interest of stockholders
generally. Similarly, adequate advance notice of stockholder proposals will give
management time to study such proposals and to determine whether to recommend to
the stockholders that such proposals be adopted.
6
<PAGE>
Additional Information
A copy of the Plan of Reorganization, Plan of Stock Issuance, the
proposed Federal Stock Charter and Bylaws of the Company, the proposed Federal
Stock Charter and Bylaws of the Bank and the proposed Charter and Bylaws of the
MHC are available without charge from the Bank. Also, a copy of the Certificate
of Incorporation and Bylaws of the Foundation are available without charge from
the Bank. Requests for copies of any such documents should be directed to: John
T. Powers, Corporate Secretary, Willow Grove Bank, Welsh and Norristown Roads,
Maple Glen, Pennsylvania 19002.
THE ATTACHED PROSPECTUS IS AN INTEGRAL PART OF THIS PROXY STATEMENT AND
CONTAINS DETAILED INFORMATION ABOUT THE BANK, THE COMPANY, THE MHC, THE
FOUNDATION, THE REORGANIZATION AND STOCK ISSUANCE, INCLUDING, THE RIGHTS OF
ELIGIBLE ACCOUNT HOLDERS, SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS AND OTHER
MEMBERS TO SUBSCRIBE FOR SHARES OF THE COMPANY'S COMMON STOCK. MEMBERS AS OF THE
VOTING RECORD DATE ARE URGED TO CONSIDER SUCH INFORMATION CAREFULLY PRIOR TO
SUBMITTING THEIR PROXIES.
7
<PAGE>
WILLOW GROVE BANK REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WILLOW
GROVE BANK ("WILLOW GROVE" OR THE "BANK") FOR USE ONLY AT A SPECIAL MEETING OF
MEMBERS TO BE HELD ON ___________, 1998 AND ANY ADJOURNMENT THEREOF.
The undersigned being a member of Willow Grove, hereby authorizes the
Board of Directors of Willow Grove or any successors in their respective
positions, as proxy, with full powers of substitution, to represent the
undersigned at the Special Meeting of Members of the Willow Grove to be held at
______________________________________________________, _____________, ________
_____ on ______________, 1998, at ___:00 p.m., Eastern Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes that
the undersigned would be entitled to cast, if then personally present, as set
forth below:
(1) To vote FOR or AGAINST a Plan of Reorganization ("Plan of
Reorganization") pursuant to which Willow Grove would be converted from
a federally chartered mutual savings bank to a federally chartered stock
savings bank as a wholly owned subsidiary of Willow Grove Bancorp, Inc.
(the "Company"), and the Company will become a majority-owned subsidiary
of Willow Grove Mutual Holding Company (the "MHC"), a federally
chartered mutual holding company, and the transactions provided for in
such Plan of Reorganization.
FOR [ ] AGAINST [ ]
(2) To approve the creation of The Willow Grove Foundation and
the Company's contribution to the Foundation of shares of Company
Common Stock pursuant to the Plan of Reorganization.
FOR [ ] AGAINST [ ]
(3) To vote, in its discretion, upon such other business as
may properly come before the Special Meeting or any adjournment
thereof. Except with respect to procedural matters incident to the
conduct of the meeting, management is not aware of any other such
business.
This proxy, if executed, will be voted FOR adoption of the Plan of
Reorganization and FOR the creation of the Foundation if no choice is made
herein. Please date and sign this proxy on the reverse side and return it in the
enclosed envelope.
(Continued and to be signed on other side)
<PAGE>
(Continued from other side)
Any Member giving a proxy may revoke it at any time before it is voted
by delivering to the Secretary of Willow Grove either a written revocation of
the proxy, or a duly executed proxy bearing a later date, or by voting in person
at the Special Meeting.
The undersigned hereby acknowledges receipt of a Notice of Special
Meeting of the Members of Willow Grove called for the __th day of ___________,
1998 and a Proxy Statement for the Special Meeting prior to the signing of this
Proxy.
Date:
------------------------------------------
-------------------------------------------
Signature
------------------------------------------
Signature
Note: Please sign exactly as your name
appears on this Proxy. Only one signature is
required in the case of a joint account.
When signing in a representative capacity,
please give title.
Exhibit 99.5
|-------------------------------------------|
| |
| PRO FORMA VALUATION UPDATE REPORT |
| MUTUAL HOLDING COMPANY STOCK OFFERING |
| |
| |
| |
| |
| WILLOW GROVE BANK |
| Maple Glen, Pennsylvania |
| |
| |
| |
| 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
Willow Grove Bank
Welsh and Norristown Roads
Maple Glen, Pennsylvania 19002-8030
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 Willow Grove Bank, Maple
Glen, Pennsylvania ("Willow Grove" 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, Willow Grove will become a wholly-owned
subsidiary of Willow Grove Bancorp, Inc. (the "Holding Company"), a Delaware
Corporation, and Willow Grove Bancorp, Inc. will issue a majority of its common
stock to Willow Grove, MHC (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 56 percent of the shares issued in the offering, and the number
of shares issued to the MHC will approximate 44 percent of the shares issued in
the offering. In addition, the Holding Company intends to donate to a charitable
foundation, immediately following the Conversion, authorized but unissued shares
of the Holding Company stock equal to 4 percent of the number of shares sold in
the offering.
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suie 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
Board of Directors
Willow Grove Bank
October 30, 1998
Page 2
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.
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 Willow
Grove'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 also increased
modestly on both a reported and core earnings basis.
Growth Trends
Willow Grove's total assets decreased by $6.7 million over the three
months ended September 30, 1998, to equal $398.7 million. The recent shrinkage
contrasts with long-term growth trends and is primarily the result the sale of
loans classified as AFS; the proceeds from
<PAGE>
Board of Directors
Willow Grove Bank
October 30, 1998
Page 3
Table 1
Willow Grove Bank
Recent Financial Data
<TABLE>
<CAPTION>
June 30, 1998 At September 30, 1998
----------------------- -----------------------
(% of (% of
Amount Assets) Amount Assets)
------ ------- ------ -------
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Balance Sheet Data
Total Assets $405,373 100.00% $398,723 100.00%
Cash & Cash Equivalents 18,291 4.51% 25,854 6.48%
Investment Securities - HTM 0 0.00% 0 0.00%
Investment Securities - AFS 48,111 11.87% 36,338 9.11%
Loans Available for Sale 12,152 3.00% 5,661 1.42%
Loans Receivable (net) 315,705 77.88% 320,529 80.39%
Goodwill 2,360 0.58% 2,258 0.57%
Real Estate Held for Investment 0 0.00% 0 0.00%
Deposits 340,793 84.07% 342,955 86.01%
Borrowed Funds 21,000 5.18% 14,000 3.51%
Total Equity 35,945 8.87% 37,125 9.31%
Total Tangible Equity 33,584 8.28% 34,868 8.74%
</TABLE>
<TABLE>
<CAPTION>
12 Months Ended 12 Months Ended
June 30, 1998 September 30, 1998
----------------------------- -------------------------
(% of Avg. (% of Avg.
Amount Assets) Amount Assets)
------ ------- ------ -------
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Summary Income Statement
Interest Income $28,604 7.60% $29,366 7.71%
Interest Expense (15,097) -4.01% (15,385) -4.04%
------- ----- ------- -----
Net Interest Income $13,507 3.59% $13,981 3.67%
Provision for Loan Losses (993) -0.26% (993) -0.26%
------- ----- ------- -----
Net Interest Income After Provisions $12,514 3.33% $12,988 3.41%
Other Operating Income 820 0.22% 893 0.23%
Community Enrichment Program Expense (373) -0.10% (381) -0.10%
Operating Expense (8,289) -2.20% (8,578) -2.25%
------- ----- ------- -----
Net Operating Income $ 4,672 1.24% $ 4,922 1.29%
Net Gain (Loss) on Sale of Land (24) -0.01% (24) -0.01%
Net Gain (Loss) on Sale of AFS Securities (105) -0.03% (50) -0.01%
Net Gain (Loss) on Sale of AFS Loans 69 0.02% 86 0.02%
Directors Retirement Program Expense (800) -0.21% (827) -0.22%
------- ----- ------- -----
Total Non-Operating Income/(Expense) (860) -0.23% (815) -0.21%
Net Income Before Tax 3,812 1.01% 4,108 1.08%
Income Taxes (1,367) -0.36% (1,492) -0.39%
------- ----- ------- -----
Net Income/(Loss) $ 2,445 0.65% $ 2,616 0.69%
Estimated Core Earnings
Net Income $ 2,445 0.65% $ 2,616 0.69%
Addback (Deduct): Non-Recurring (Inc)/Exp 860 0.23% 815 0.21%
Tax Effect (1) (308) -0.08% (296) -0.08%
------- ----- ------- ----
Estimated Core Net Income $ 2,997 0.80% $ 3,135 0.82%
Memo:
Expense Coverage Ratio (2) 155.93% 156.06%
Efficiency Ratio (3) 60.46% 60.23%
Effective Tax Rate 35.86% 36.32%
</TABLE>
(1) Reflects effective tax rate for each period.
(2) Net interest income divided by operating expenses plus community enrichment
program expense.
(3) Operating expenses plus community enrichment program expense as a percent
of the sum of net interest income and other operating income (excluding
gains on sale).
Source: Willow Grove's audited and unaudited financial statements.
<PAGE>
Board of Directors
Willow Grove Bank
October 30, 1998
Page 4
the sale of loans were utilized to repay borrowed funds which declined by $7.0
million. Capital increased as a result of interim earnings while the capital
ratio increased both as a result of retained earnings and due to the modest
reduction of total assets.
Loan Receivable
The balance of loans receivable increased from $315.7 million as of
June 30, 1998, to $320.5 million as of September 30, 1998. Growth is primarily
the result of an increase in residential mortgage loans although the Bank will
be seeking to emphasize commercial lending more heavily in the future. As
discussed previously, the balance of residential mortgage loans classified as
available for sale decreased by approximately $6.5 million due to sales.
Investments and Mortgage-Backed Securities
It is management's preference to deploy the majority of the Bank's
assets into loans while maintaining cash and investments at moderate levels,
primarily for liquidity purposes. Over the three months ended September 30,
1998, Willow Grove's cash balances increased to $25.9 million, equal to 6.48
percent of assets, while the balance of investment securities decreased modestly
to equal $36.3 million, or 9.11 percent of assets. The composition of the
investment portfolio remains substantially unchanged comprised of U.S. Agency
securities (primarily callable securities), mortgage-backed securities including
CMOs and equity securities (including a mutual fund investing in ARM mortgage
loans).
Funding Structure
Retail deposits continue to meet the substantial portion of Willow
Grove's funding needs, and the deposit balance increased by $2.2 million to
equal $343.0 million, or 86.01 percent of total assets. As discussed in the
Original Appraisal, Willow Grove's deposits have been increasing as the Bank has
been seeking to fund loan growth. Deposit growth has been facilitated by
favorable local economic conditions and Willow Grove's position as a
locally-headquartered institution. The level of borrowed funds decreased as
excess liquidity was applied to repay outstanding borrowings.
Equity
After-tax earnings of $1.0 million during the three months ended
September 30, 1998, coupled with the impact of a small upward equity adjustment
on the available for sale portfolio resulted in equity growth to $37.1 million.
Tangible capital equaled $34.9 million, or 8.74 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. Willow Grove's earnings increased modestly based on updated financial
data, with earnings growth principally attributable to expansion of the net
interest margin, and growth in the level of other non-interest operating income.
Overall, net income increased from $2.4 million for the twelve months ended June
30,
<PAGE>
Board of Directors
Willow Grove Bank
October 30, 1998
Page 5
1998 to $2.6 million for the twelve months ended September 30, 1998. The
Bank's return on average assets ("ROA") increased slightly to 0.69 percent.
Willow Grove's net interest income increased modestly for the most
recent trailing 12 month period both in dollar terms and as a percent of average
assets. Specifically, net interest income increased to $14.0 million while the
net interest margin as a percent of assets increased from 359 basis points for
the twelve months ended June 30, 1998, to 367 basis points for the twelve months
ended September 30, 1998.
Non-interest income increased modestly based on updated financial
data through September 30, 1998. Specifically, non-interest income increased by
approximately $73,000 to equal $893,000, primarily as a result of increased
business volumes including loan originations.
Willow Grove's operating expenses increased to $8.6 million, equal
to 2.25 percent of average assets, versus $2.20 million for the twelve months
ended June 30, 1998. The increase reflects in part, increased business volumes
and the larger average size of the balance sheet for the twelve months ended
September 30, 1998.
Willow Grove continues to accrue for discretionary contributions to
the Community Enrichment Program which equaled $381,000, or 0.10 percent of
assets. In conjunction with the mutual holding company reorganization and
minority stock offering, the Bank will be establishing the Willow Grove
Foundation with Holding Company stock equal to 4 percent of the shares offered.
While the Willow Grove Foundation will be committed to the same types of
community projects and charities as the Community Enrichment Program, the Board
believes it may likely to continue to fund the Community Enrichment Program,
albeit at lower levels, in order to supplement the giving by the Foundation.
Willow Grove's efficiency ratio (operating expenses as a percent of
the sum of net interest income and other operating income) of approximately 60.2
percent for the most recent 12 months reflected a decrease from the 60.5 percent
ratio reported for the twelve months ended June 30, 1998, with the increase
largely reflecting growth in the net interest margin.
Provisions for loan losses remained unchanged incorporating updated
financial information and totaled $993,000, equal to 0.26 percent of average
assets.
Net non-operating expenses increased to equal $815,000 for the
twelve months ended September 30, 1998, equal to 0.21 percent of assets, and
primarily consisted of costs related to the establishment of the directors
retirement program.
2. Peer Group Financial Comparisons
Tables 2 and 3 present updated financial characteristics and operating
results for Willow Grove, the Peer Group and all publicly-traded savings
institutions. Willow Grove'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>
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
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
- -----------------
September 30, 1998 11.1 81.8 4.5 86.0 3.5 0.0 9.3 0.6 8.7 0.0
SAIF-Insured Thrifts 18.9 67.3 10.4 68.7 15.9 0.1 13.4 0.3 13.2 0.0
All Public Companies 19.4 66.7 10.5 69.2 15.7 0.1 13.2 0.3 12.9 0.0
State of PA 26.1 57.6 13.3 66.3 21.1 0.0 9.8 0.3 9.5 0.0
Comparable Group Average 24.1 59.4 13.1 74.5 9.2 0.1 13.6 0.3 13.3 0.0
Mid-Atlantic Companies 25.6 55.1 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
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 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
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------ -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
- -----------------
September 30, 1998 9.74 69.83 5.31 8.44 79.63 9.49 11.64 0.00 0.00 0.00
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 PA 20.17 26.82 15.31 9.54 27.80 5.65 5.40 8.94 9.30 20.54
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
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 -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>
Willow Grove Bank
- -----------------
September 30, 1998 0.69 7.71 4.04 3.67 0.26 3.41 0.00 0.00 0.23 0.23
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 PA 0.85 7.30 4.15 3.15 0.15 3.00 0.06 0.00 0.36 0.42
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
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
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>
Willow Grove Bank
- -----------------
September 30, 1998 2.25 0.11 -0.21 0.00 7.96 4.52 3.44 3,658 36.32
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 PA 2.16 0.03 0.05 0.00 7.34 4.60 2.74 4,746 35.86
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
SKBO First Carnegie MHC of PA (45.0) 1.88 0.00 -0.18 0.00 7.07 5.14 1.93 7,663 65.46
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
Willow Grove Bank
October 30, 1998
Page 8
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 Willow Grove on a pre-conversion basis. Willow Grove's net worth
base of 9.3 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").
Willow Grove's funding liabilities continue to reflect a strategy
which is more dependent upon retail deposits as deposits equaled 86.0 percent
versus 73.3 percent for the Peer Group on average while the Peer Group relied on
a comparatively higher level of borrowed funds (3.5 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 increased slightly to 97.4 percent, which continues to
exceed the Peer Group average of 96.6 percent. The Bank also continues to
maintain a higher ratio of interest-bearing liabilities ("IBL"), equal to 89.5
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 Willow
Grove'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 annualized rates for the fifteen 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 fell short of the Peer Group average, partially
due to recent loan sales by Willow Grove. The Bank's asset growth was funded
primarily with deposits as the high rate of borrowings growth has been realized
from a modest beginning level.
Capital growth rates posted by the Bank and the Peer Group equaled
positive 9.94 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,
Willow Grove'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
Willow Grove's profitability remained below the Peer Group average,
equal to 0.69 percent of average assets for the twelve months ended September
30, 1998, while the Peer
<PAGE>
Board of Directors
Willow Grove Bank
October 30, 1998
Page 9
Group's earnings equaled 0.85 percent of average assets. The relatively higher
returns posted by the Peer Group continue to be primarily attributable to the
Bank's lower level of non-interest income and higher loan loss provisions.
Additionally, Willow Grove has incurred a higher level of non-operating expenses
which also suppressed the Bank's earnings levels in comparison to the Peer
Group.
Neither Willow Grove nor the Peer Group's net interest margin
changed significantly incorporating updated financial data (the net interest
margin equaled 3.67 percent and 3.16 percent of assets for the Bank and Peer
Group, respectively). Willow Grove's advantage is the result of higher asset
yields as interest costs as a percent of average assets exceeded the Peer Group
average.
Loan loss provisions for Willow Grove remain in excess of the Peer
Group average (0.26 percent for Willow Grove 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.
Willow Grove continues to generate modestly lower levels of
non-interest income relative to the Peer Group, equal to 0.23 percent and 0.40
percent of average assets, respectively. Willow Grove continued to maintain a
comparable level of operating expenses (2.25 percent of assets for Willow Grove
versus an average of 2.23 percent for the Peer Group). In the future, Willow
Grove expects that operating costs may diminish as there were several unusual
expenditures in trailing twelve month earnings which may not recur to the same
extent in the future.
Non-operating expenses for the Bank continue to well exceed the
Peer Group average, totaling 0.21 percent, while the Peer Group reported
non-operating income equal to 0.09 percent of average assets. Non-operating
expenses for Willow Grove continued to primarily consist of the $827,000 expense
related to the funding of the Directors Retirement Program.
Willow Grove's effective tax rate of 36.32 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 discount rate and targeted federal funds rate by an additional 25
basis points. On October 30,
<PAGE>
Board of Directors
Willow Grove Bank
October 30, 1998
Page 10
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
Willow Grove Bank
October 30, 1998
Page 11
Average Pricing Characteristics
<TABLE>
<CAPTION>
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 4
Market Pricing Comparatives
Prices As of October 30, 1998
<TABLE>
<CAPTION>
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
------- ----- ------- ------- ------- ------- ------- ------- --------
Financial Institution ($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 15.93 145.23 0.91 13.27 17.45 126.24 16.02 131.58 17.93
All Public Companies 16.18 165.64 0.95 13.19 17.02 128.28 15.99 133.37 17.68
Special Selection Grouping(8) 10.00 53.57 0.56 14.34 0.00 69.74 18.99 69.74 17.86
State of PA 15.03 142.90 0.87 11.01 17.94 144.91 14.40 151.59 18.64
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CNYF CNY Financial Corp of NY 10.00 53.57 0.56 14.34 NM 69.74 18.99 69.74 17.86
</TABLE>
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ---------------- ---------------
Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
------- ------ ------- ------ ------- ------- ------- ------- ------- -------
Financial Institution ($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.33 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) 0.00 0.00 0.00 282 27.23 1.28 0.47 1.74 1.06 3.91
State of PA 0.30 1.87 27.96 1,317 10.81 0.70 0.85 9.31 0.86 9.15
Comparable Group
- ----------------
Special Comparative Group(8)
- ----------------------------
CNYF CNY Financial Corp of NY 0.00 0.00 0.00 282 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
Willow Grove 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, Willow Grove'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
- ---------------------- ----- --- --- ----- ---------
($) (%) (x)
<S> <C> <C> <C> <C> <C>
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 or
earnings 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. Thus, 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, 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.
<PAGE>
Board of Directors
Willow Grove Bank
October 30, 1998
Page 14
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 Willow Grove 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, stock benefit plans and the amount of stock
contributed to the Foundation 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 and First Update, this updated
appraisal continues to be based primarily on fundamental analysis techniques
applied to the Peer Group, including the P/E approach, the P/B approach and the
P/A approach. The updated appraisal also incorporates a technical analysis of
recently completed stock conversions, including principally the P/B approach
which (as discussed in the Original Appraisal) is the most meaningful pricing
ratio as the pro forma P/E ratios reflect an assumed reinvestment rate and do
not yet reflect the actual use of proceeds.
Based on the foregoing, we have concluded that the pro forma market
value range of Willow Grove's stock is subject to a decrease. Therefore, as of
October 30, 1998, RP Financial concluded that the pro forma market value of
Willow Grove's stock as a mutual holding company on a fully-converted basis,
taking into account the dilutive impact of the 4 percent contribution to a
charitable foundation subsequent to the completion of the offering, is equal to
$41,080,000, which represents a 4.8 percent decrease from the midpoint valuation
of $43,160,000 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, Willow Grove's pro forma full
conversion P/TB ratio was 59.55 percent (versus the 62.17 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), Willow
Grove's updated valuation reflected a 26.7 percent discount relative to the Peer
Group (versus
<PAGE>
Board of Directors
Willow Grove Bank
October 30, 1998
Page 15
the 29.9 percent discount applied in the Original Appraisal). The lower discount
is warranted by 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 59.55 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. Willow Grove's core earnings for
the twelve months ended September 30, 1998 equaled $3.135 million (see Table 1).
Based on Willow Grove's core earnings, and incorporating the impact of the pro
forma assumptions discussed previously, the Bank's core P/E multiple at the
$39.5 million midpoint value (full conversion) equaled 11.07 times (versus the
11.52 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 42.3 percent in the Bank's core P/E
multiple (versus a discount of 41.4 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 $39.5 million midpoint of the valuation range,
Willow Grove exhibited a pro forma P/A ratio of 9.49 percent. In comparison to
the Peer Group's average P/A ratio of 18.75 percent (fully converted basis),
Willow Grove's P/A ratio indicated a discount of 49.4 percent (versus a discount
of 48.4 percent at the fully-converted midpoint valuation in the Original
Appraisal).
Summary
Based on the foregoing, we have concluded that Willow Grove'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, taking into account the dilutive impact of the 4 percent
contribution to a charitable foundation subsequent to the completion of the
offering, was $39,500,000 at the midpoint, equal to 3,950,000 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 $33,575,000, and a maximum
offering value of $45,425,000. Based on the $10.00 per share offering price
determined by the Board, this valuation range equates to an offering of
3,357,500 shares at the minimum to 4,542,500 shares at the maximum. In the event
that the appraised value is subject to an increase, up to 5,223,875 shares may
be sold in the offering at an issue price of $10.00 per share, for an aggregate
market value of $52,238,750, without a
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Public Market Pricing
Willow Grove Bank and the Comparables
As of October 30, 1998
Market
Capitalization Per Share Data
---------------- --------------
Core Book Pricing Ratios(3)
Price/ Market 12-Mth Value/ --------------------------------------
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------- ------ ------ ----- ------ ----- ------ ------
($) ($Mil) ($) ($) (X) (%) (%) ($) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
- -----------------
Superrange 10.00 54.33 0.66 15.14 15.26 66.06 12.24 67.93 13.78
Range Maximum 10.00 47.24 0.73 16.16 13.74 61.87 10.79 63.76 12.37
Range Midpoint 10.00 41.08 0.81 17.34 12.34 57.67 9.49 59.55 11.07
Range Minimum 10.00 34.92 0.92 18.94 10.83 52.81 8.16 54.68 9.69
SAIF-Insured Thrifts(7)
- -----------------------
Average 15.93 145.23 0.91 13.27 17.45 126.24 16.02 131.58 17.16
Medians --- --- --- --- 16.67 114.33 14.91 115.21 17.62
All Non-MHC State of PA(7)
- --------------------------
Average 16.19 172.49 1.01 12.01 16.00 140.21 13.38 146.29 17.16
Medians --- --- --- --- 15.68 119.47 12.23 134.74 16.52
Publicly-Traded MHC Institutions,
Full Coversion Basis
- ---------------------------------
Average 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 Coversion 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 1940.21 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 15.16 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>
Willow Grove Bank
- -----------------
Superrange 0.00 0.00 0.00 444 18.53 0.39 0.80 4.33 0.89 4.79
Range Maximum 0.00 0.00 0.00 438 17.43 0.39 0.78 4.50 0.87 5.00
Range Midpoint 0.00 0.00 0.00 433 16.46 0.40 0.77 4.67 0.86 5.21
Range Minimum 0.00 0.00 0.00 428 15.46 0.40 0.75 4.87 0.84 5.45
SAIF-Insured Thrifts(7)
- -----------------------
Average 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 PA(7)
- --------------------------
Average 0.33 2.02 33.06 1,479 10.30 0.65 0.88 10.15 0.89 9.97
Medians --- --- --- --- --- --- --- --- --- ---
Publicly-Traded MHC Institutions,
Full Coversion Basis
- ---------------------------------
Average 0.32 2.07 34.44 1,128 22.50 0.57 1.05 4.76 1.01 4.50
Medians --- --- --- --- --- --- --- --- --- ---
Publicly-Traded MHC Institutions,
Full Coversion 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
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
Willow Grove Bank
October 30, 1998
Page 17
resolicitation. The total shares issued and aggregate market value of
the shares increases following the contribution of 4 percent of the shares to a
charitable foundation, as follows:
Total Aggregate
Shares Issued(1) Market Value(1)(2)
---------------- ------------------
Minimum 3,491,800 $34,918,000
Midpoint 4,108,000 41,080,000
Maximum 4,724,200 47,242,000
Supermaximum 5,432,830 54,328,000
(3) Includes offering shares plus 4 percent shares contributed to a charitable
foundation.
(4) Based on a $10.00 per share price.
The Board of Directors has established a public offering range such
that the public ownership of the Holding Company will constitute a 44 percent
ownership interest prior to the issuance of shares to the Foundation.
Accordingly, the offering range to the public of the minority stock will range
from $14,875,000 at the minimum, to $17,500,000 at the midpoint, $20,125,000 at
the maximum and $23,143,750 at the supermaximum of the valuation range, all
based on a $10.00 per share offering price. Based on the public offering range,
and inclusive of the shares issued to the Foundation, the public ownership of
the shares will represent 45.31 percent of the shares issued in the
reorganization, with the MHC owning the majority of the shares. The pro forma
valuation calculations relative to the Peer Group (fully converted basis) are
shown in Table 5 and are detailed in Exhibit 2 and Exhibit 3; the pro forma
valuation calculations relative to the Peer Group based on reported financials
are shown in Table 6 and are detailed in Exhibits 4 and 5.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ Ronald S. Riggins
----------------------------
Ronald S. Riggins
President
/s/ James P. Hennessey
----------------------------
James P. Hennessey
Senior Vice President
<PAGE>
RP FINANCIAL, LC.
- ----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 6
Public Market Pricing
Willow Grove Bank and the Comparables
As of October 30, 1998
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization ---------------- Pricing Ratios(3)
-------------- Core Book -----------------------------------
Price/ Market 12-Mth Value/
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------ ------ ------ --- --- --- ---- ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Willow Grove Bank
-----------------
Superrange 10.00 24.07 0.57 10.69 17.57 93.52 12.71 97.39 15.61
Range Maximum 10.00 20.93 0.64 11.72 15.57 85.32 11.12 89.03 13.80
Range Midpoint 10.00 18.20 0.73 12.90 13.77 77.50 9.72 81.03 12.18
Range Minimum 10.00 15.47 0.84 14.50 11.90 68.96 8.31 72.25 10.51
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 PA 15.03 142.90 0.87 11.01 17.94 144.91 14.40 151.59 18.64
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
</TABLE>
<TABLE>
<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>
Financial Institution
- ----------------
Willow Grove Bank
Superrange 0.00 0.00 0.00 418 13.59 0.41 0.72 5.32 0.81 5.99
Range Maximum 0.00 0.00 0.00 416 13.03 0.41 0.71 5.48 0.81 6.18
Range Midpoint 0.00 0.00 0.00 413 12.54 0.41 0.71 5.63 0.80 6.36
Range Minimum 0.00 0.00 0.00 411 12.05 0.42 0.71 5.79 0.79 6.56
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 PA 0.30 1.87 27.96 1,317 10.81 0.70 0.85 9.31 0.86 9.15
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
Exhibit
Number Description
- ------ -----------
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
<PAGE>
EXHIBIT 1
Stock Prices
As of October 30, 1998
<PAGE>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 <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 >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 $250 Million(119) 13.79 1,696 23.0 19.64 12.37 13.53 2.30 -9.18 -17.54
Goodwill Companies(111) 16.70 14,083 255.6 24.46 13.87 16.40 1.74 -9.09 -18.60
Non-Goodwill Companies(161) 15.67 3,460 82.0 21.90 13.67 15.32 2.54 -7.16 -15.36
Acquirors of FSLIC Cases(7) 32.34 33,613 1,443.7 43.53 26.88 32.44 -1.26 -8.02 -16.58
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(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 <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 >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>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 <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 >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 $250 Million(14) 13.23 1,981 23.4 20.81 11.13 13.14 1.07 -14.31 -24.94
Goodwill Companies(28) 17.81 19,691 437.4 26.17 14.21 17.81 -0.28 -6.64 -20.71
Non-Goodwill Companies(28) 17.32 5,624 117.0 24.02 14.29 17.11 1.47 -7.76 -16.43
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(56) 1.23 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 <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 >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>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 >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 $250 Million(8) 13.07 2,632 15.8 22.22 11.09 12.50 4.75 -20.82 -23.80
Goodwill Companies(8) 15.43 23,551 163.1 24.46 12.21 14.76 4.41 -15.14 -20.24
Non-Goodwill Companies(15) 12.98 7,151 39.1 22.57 11.07 12.58 3.55 -17.22 -19.24
MHC Institutions(24) 13.66 12,525 79.7 22.60 11.33 13.17 3.79 -15.71 -18.65
MHC Converted Last 3 Months(2) 9.88 4,705 20.1 10.03 8.46 9.91 -0.26 -1.25 -1.25
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(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>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C>
BYS Bay State Bancorp of MA* 1.05 1.05 23.66 23.66 114.26
CFB Commercial Federal Corp. of NE 1.01 1.23 10.65 9.44 146.59
DME Dime Bancorp, Inc. of NY* 1.58 0.96 11.88 9.77 186.69
DSL Downey Financial Corp. of CA 2.03 2.10 16.31 16.14 207.31
FED FirstFed Fin. Corp. of CA 1.39 1.31 11.34 11.27 189.28
GSB Golden State Bancorp of CA(8) 1.14 1.20 8.74 7.33 140.93
GDW Golden West Fin. Corp. of CA 7.05 6.89 51.14 51.14 683.33
GPT GreenPoint Fin. Corp. of NY* 1.53 1.57 13.41 7.59 135.13
JSB JSB Financial, Inc. of NY* 4.65 5.22 38.65 38.65 159.00
OCN Ocwen Financial Corp. of FL 0.45 0.04 7.03 6.43 57.66
SIB Staten Island Bancorp of NY* 0.56 0.91 15.75 15.35 66.89
WES Westcorp Inc. of Orange CA 0.28 1.26 12.59 12.56 138.79
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------------- ------------------------------------------------
52 Week (1) % Change From
Shares Market ------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ---- --- ---- ---- ------ -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
AMEX Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
AMEX Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies
- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
FBCV 1st Bancorp of Vincennes IN(8) 1.74 1.22 21.77 21.35 237.36
FBER 1st Bergen Bancorp of NJ(8) 0.82 0.82 13.50 13.50 116.35
AFED AFSALA Bancorp, Inc. of NY(8) 0.77 0.84 14.46 14.46 126.84
ALBK ALBANK Fin. Corp. of Albany NY(8) 3.34 3.32 28.35 22.45 308.64
AMFC AMB Financial Corp. of IN 0.94 0.61 15.41 15.41 121.55
ASBP ASB Financial Corp. of OH 0.65 0.64 8.76 8.76 70.35
ABBK Abington Bancorp of MA* 1.28 0.97 9.85 8.98 154.65
AABC Access Anytime Bancorp of NM 1.22 1.11 7.55 7.55 95.21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of October 30, 1998
Market Capitalization Price Change Data
----------------------------- ------------------------------------------------
52 Week (1) % Change From
Shares Market ------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1997(2)
- --------------------- -------- ------ ---------- ---- --- ---- ---- ------ -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700 Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of 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) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ----- ------- -----
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 <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 >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 $250 Million(119) 16.78 16.69 0.97 6.50 5.65 0.93 6.06 0.59 141.67 0.68
Goodwill Companies(111) 10.70 10.01 0.85 9.35 6.36 0.80 8.74 0.76 129.34 0.90
Non-Goodwill Companies(161) 15.93 15.93 0.96 6.90 5.64 0.92 6.61 0.58 147.73 0.69
Acquirors of FSLIC Cases(7) 9.44 8.97 1.28 14.97 11.49 1.21 14.23 0.79 62.47 0.62
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ------ ------ --------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
222 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 <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 >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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 <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 $250 Million(14) 13.30 13.18 0.87 8.02 6.33 0.87 7.84 0.52 235.72 0.90
Goodwill Companies(28) 10.13 9.45 0.97 10.92 7.23 0.94 9.89 0.75 166.51 1.26
Non-Goodwill Companies(28) 13.52 13.52 1.14 10.14 6.73 1.15 9.88 0.39 245.08 1.21
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ------ ------ --------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 <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 >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 $250 Million(8) 15.34 15.10 0.77 5.48 3.80 0.72 5.05 0.57 166.19 0.85
Goodwill Companies(8) 10.54 9.85 0.79 8.11 4.19 0.64 6.48 0.68 87.93 0.94
Non-Goodwill Companies(15) 15.82 15.82 0.83 5.78 3.68 0.83 5.67 0.51 148.27 0.90
MHC Institutions(24) 14.21 13.98 0.84 6.58 3.98 0.78 5.97 0.57 124.54 0.91
MHC Converted Last 3 Months(2) 16.24 16.24 0.77 4.40 4.53 0.77 4.40 0.81 63.36 1.19
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ------ ------ --------
(X) (%) (%) (%) (x) ($) (%) (%)
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 >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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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) ($) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ------ ------ --------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ------ ------ --------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------ ------ ------ -------- ------ ------ --------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
- --------------------- ------- ------- ------ ------ ------ ------ ------- ------ ------ ------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
Willow Grove Bank
Prices as of October 30, 1998
<TABLE>
<CAPTION>
Peer Group Pennsylvania SAIF-Insured
----------------- ------------------ -----------------
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 12.34x 19.02x 18.81x 16.00x 15.68x 17.45x 16.67x
Price-book ratio = P/B 57.67% 83.66% 84.31% 140.21% 119.47% 126.24% 114.33%
Price-assets ratio = P/A 9.49% 18.75% 17.42% 13.38% 12.23% 16.02% 14.91%
Valuation Parameters
- --------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $2,616,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $37,125,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $34,868,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $398,723,000 RRP Amount (M) 4.00%
Reinvestment Rate (2)(R) 3.28% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 3.00% Foundation (F) 4.00%
Tax rate (TAX) 39.00% Tax Benefit (Z) 537,200
Tax rate on Foundation Contribution 34.00% Percentage Sold (PCT) 100.00%
</TABLE>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
1. V= P/E * (Y) V= $41,080,001
-----------------------------------------------------------
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= $41,080,002
---------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $41,080,000
---------------------------
1 - P/A * PCT * (1-X-E-M-F)
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Issued To Total Shares Market Value
Conclusion Public Share Proceeds Foundation Issued of Stock Issued
- ----------- -------------- --------- -------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Minimum 3,357,500 10.00 $33,575,000 134,300 3,491,800 34,918,000
Midpoint 3,950,000 10.00 39,500,000 158,000 4,108,000 41,080,000
Maximum 4,542,500 10.00 45,425,000 181,700 4,724,200 47,242,000
Supermaximum 5,223,875 10.00 52,238,750 208,955 5,432,830 54,328,300
</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
39.00 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 39.00 percent.
<PAGE>
EXHIBIT 3
Pro Forma Effect of Conversion Proceeds
Fully Converted Basis
<PAGE>
Exhibit 3
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $33,575,000
Less: Estimated Offering Expenses 1,007,250
-----------
Net Conversion Proceeds $32,567,750
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $32,567,750
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 4,029,000
-----------
Net Proceeds Reinvested $28,538,750
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $ 934,844
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 163,846
Less: Recognition Plan Vesting (4) 163,846
-----------
Net Earnings Increase $ 607,152
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $2,616,000 $607,152 $3,223,152
12 Months ended September 30, 1998 (core) $2,997,000 $607,152 $3,604,152
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $37,125,000 $28,538,750 $456,620 $66,120,370
September 30, 1998 (Tangible) $34,868,000 $28,538,750 $456,620 $63,863,370
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $398,723,000 $28,538,750 $456,620 $427,718,370
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit 3
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Midpoint
<TABLE>
<S> <C>
1. Offering Proceeds $39,500,000
Less: Estimated Offering Expenses 1,185,000
-----------
Net Conversion Proceeds $38,315,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $38,315,000
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 4,740,000
-----------
Net Proceeds Reinvested $33,575,000
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $ 1,099,816
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 192,760
Less: Recognition Plan Vesting (4) 192,760
-----------
Net Earnings Increase $ 714,296
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $2,616,000 $714,296 $3,330,296
12 Months ended September 30, 1998 (core) $2,997,000 $714,296 $3,711,296
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $37,125,000 $33,575,000 $537,200 $71,237,200
September 30, 1998 (Tangible) $34,868,000 $33,575,000 $537,200 $68,980,200
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $398,723,000 $33,575,000 $537,200 $432,835,200
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit 3
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Maximum
<TABLE>
<S> <C>
1. Offering Proceeds $45,425,000
Less: Estimated Offering Expenses 1,362,750
-----------
Net Conversion Proceeds $44,062,250
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $44,062,250
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 5,451,000
-----------
Net Proceeds Reinvested $38,611,250
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $ 1,264,789
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 221,674
Less: Recognition Plan Vesting (4) 221,674
-----------
Net Earnings Increase $ 821,441
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $2,616,000 $821,441 $3,437,441
12 Months ended September 30, 1998 (core) $2,997,000 $821,441 $3,818,441
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $37,125,000 $38,611,250 $617,780 $76,354,030
September 30, 1998 (Tangible) $34,868,000 $38,611,250 $617,780 $74,097,030
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $398,723,000 $38,611,250 $617,780 $437,952,030
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit 3
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Supermaximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $52,238,750
Less: Estimated Offering Expenses 1,567,163
-----------
Net Conversion Proceeds $50,671,588
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $50,671,588
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 6,268,650
-----------
Net Proceeds Reinvested $44,402,938
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $ 1,454,507
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 254,925
Less: Recognition Plan Vesting (4) 254,925
-----------
Net Earnings Increase $ 944,657
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $2,616,000 $944,657 $3,560,657
12 Months ended September 30, 1998 (core) $2,997,000 $944,657 $3,941,657
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $37,125,000 $44,402,938 $710,447 $82,238,385
September 30, 1998 (Tangible) $34,868,000 $44,402,938 $710,447 $79,981,385
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $398,723,000 $44,402,938 $710,447 $443,836,385
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
EXHIBIT 4
Pro Forma Analysis Sheet
Minority Stock Offering
<PAGE>
EXHIBIT 4
PRO FORMA ANALYSIS SHEET
Willow Grove Bank
Prices as of October 30, 1998
<TABLE>
<CAPTION>
Peer Group Pennsylvania SAIF-Insured
------------------- ----------------- -------------------
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Mean
- -------------- ------ ----------- ---- ------ ---- ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio P/E 13.77x 23.18x 22.87x 16.00x 15.68x 17.45x 16.67x
Price-book ratio = P/B 77.50% 151.16% 144.86% 140.21% 119.47% 126.24% 114.33%
Price-assets ratio = P/A 9.72% 20.29% 17.75% 13.38% 12.23% 16.02% 14.91%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $2,616,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $37,125,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $34,868,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $398,723,000 RRP Amount (M) 4.00%
Reinvestment Rate (2)(R) 3.28% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 5.11% Foundation (F) 4.00%
Tax rate (TAX) 39.00% Tax Benefit (Z) 92,820
Tax rate on Foundation Contribution 34.00% Percentage Sold (PCT) 44.30%
</TABLE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
<S> <C> <C> <C>
1. V= P/E * (Y) V= $40,100,052
---------------------------------------
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= $39,713,502
--------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $40,154,096
--------------------------
1 - P/A * PCT * (1-X-E-M-F)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Issued Shares Sold to Price Per Gross Offering Issued To Total Shares Market Value
Conclusion To MHC Public Share Proceeds Foundation Issued of Stock Issued
- ----------- ------ ------ ----- -------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 1,870,000| 1,487,500 10.00 $14,875,000 59,500 1,547,000 15,470,000
Midpoint 2,200,000| 1,750,000 10.00 17,500,000 70,000 1,820,000 18,200,000
Maximum 2,530,000| 2,012,500 10.00 20,125,000 80,500 2,093,000 20,930,000
Supermaximum 2,909,500| 2,314,375 10.00 23,143,750 92,575 2,406,950 24,069,500
</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
39.00 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 39.00 percent.
<PAGE>
EXHIBIT 5
Pro Forma Effects
Minority Stock Offering
<PAGE>
Exhibit 5
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $14,875,000
Less: Estimated Offering Expenses 863,563
-----------
Net Conversion Proceeds $14,011,437
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $14,011,437
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 1,785,000
-----------
Net Proceeds Reinvested $12,226,437
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $ 400,501
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 72,590
Less: Recognition Plan Vesting (4) 72,590
-----------
Net Earnings Increase $ 255,321
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $2,616,000 $255,321 $2,871,321
12 Months ended September 30, 1998 (core) $2,997,000 $255,321 $3,252,321
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $37,125,000 $12,226,437 $202,300 $49,553,737
September 30, 1998 (Tangible) $34,868,000 $12,226,437 $202,300 $47,296,737
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $398,723,000 $12,226,437 $202,300 $411,151,737
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit 5
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Midpoint
<TABLE>
<S> <C>
1. Offering Proceeds $17,500,000
Less: Estimated Offering Expenses 893,750
-----------
Net Conversion Proceeds $16,606,250
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $16,606,250
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 2,100,000
-----------
Net Proceeds Reinvested $14,506,250
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $ 475,181
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 85,400
Less: Recognition Plan Vesting (4) 85,400
-----------
Net Earnings Increase $ 304,381
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $2,616,000 $304,381 $2,920,381
12 Months ended September 30, 1998 (core) $2,997,000 $304,381 $3,301,381
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $37,125,000 $14,506,250 $238,000 $51,869,250
September 30, 1998 (Tangible) $34,868,000 $14,506,250 $238,000 $49,612,250
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $398,723,000 $14,506,250 $238,000 $413,467,250
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit 5
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Maximum
<TABLE>
<S> <C>
1. Offering Proceeds $20,125,000
Less: Estimated Offering Expenses 923,938
-----------
Net Conversion Proceeds $19,201,062
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $19,201,062
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 2,415,000
-----------
Net Proceeds Reinvested $16,786,062
Estimated net incremental rate of return 3.28%
-----------
Earnings Increase $ 549,861
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 98,210
Less: Recognition Plan Vesting (4) 98,210
-----------
Net Earnings Increase $ 353,441
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended September 30, 1998 (reported) $2,616,000 $353,441 $2,969,441
12 Months ended September 30, 1998 (core) $2,997,000 $353,441 $3,350,441
<CAPTION>
Before Net Cash Tax Benefit(5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $37,125,000 $16,786,062 $273,700 $54,184,762
September 30, 1998 (Tangible) $34,868,000 $16,786,062 $273,700 $51,927,762
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $398,723,000 $16,786,062 $273,700 $415,782,762
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
Exhibit 5
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Willow Grove Bank
At the Supermaximum Value
<TABLE>
<S> <C> <C>
1. Offering Proceeds $23,143,750
Less: Estimated Offering Expenses 958,653
-----------
Net Conversion Proceeds $22,185,097
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $22,185,097
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 2,777,250
-----------
Net Proceeds Reinvested $19,407,847
Estimated net incremental rate of return 3.28%
------------
Earnings Increase $ 635,743
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 112,942
Less: Recognition Plan Vesting (4) 112,942
-----------
Net Earnings Increase $ 409,860
</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) $2,616,000 $409,860 $3,025,860
12 Months ended September 30, 1998 (core) $2,997,000 $409,860 $3,406,860
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- ---------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $37,125,000 $19,407,847 $314,755 $56,847,602
September 30, 1998 (Tangible) $34,868,000 $19,407,847 $314,755 $54,590,602
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- ---------------- ----------
<S> <C> <C> <C> <C>
September 30, 1998 $398,723,000 $19,407,847 $314,755 $418,445,602
</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 39.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
39.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE>
EXHIBIT 6
Firm Qualifications Statement
<PAGE>
RP FINANCIAL, LC.
- ----------------
Financial Services Industry Consultants FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (18)
William E. Pommerening, Managing Director (14)
Gregory E. Dunn, Senior Vice President (16)
James P. Hennessey, Senior Vice President (13)
James J. Oren, Senior Vice President (11)
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
