<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission File Number 1-14671
WORONOCO BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3444269
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification
No.)
31 Court Street, Westfield, Massachusetts 01085
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(413) 568-9141
- --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changes since
last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: the Issuer had 5,071,968
shares of common stock, par value $0.01 per share, outstanding as of May 4,
2000.
<PAGE>
WORONOCO BANCORP, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets at
March 31, 2000 and December 31, 1999........................................................... 1
Consolidated Statements of Operations for the Three
Months Ended March 31, 2000 and 1999......................................................... 2
Consolidated Statements of Changes in Stockholders' Equity
for the Three Months Ended March 31, 2000 and 1999............................................ 3
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999................................................... 4
Notes to Unaudited Consolidated Financial Statements......................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................................ 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk................................... 20
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.............................................................................. 21
Item 2. Changes in Securities and Use of Proceeds..................................................... 21
Item 3. Defaults Upon Senior Securities................................................................ 21
Item 4. Submission of Matters to a Vote of Security Holders............................................ 21
Item 5. Other Information ............................................................................. 21
Item 6. Exhibits and Reports on Form 8-K.............................................................. 21
SIGNATURES................................................................................................ 22
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
WORONOCO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<TABLE>
<CAPTION>
Unaudited
March 31, December 31,
Assets 2000 1999
---------- ------------
<S> <C> <C>
Cash and due from banks $12,739 $ 13,569
Interest-bearing balances 7,046 2,616
---------- ----------
Total cash and cash equivalents 19,785 16,185
Securities available for sale, at fair value 170,876 149,957
Federal Home Loan Bank stock, at cost 9,450 7,542
Loans, net of allowance for loan losses ($2,310 at
March 31, 2000 and $2,309 at December 31, 1999) 332,277 307,407
Other real estate owned, net 141 883
Banking premises and equipment, net 8,726 8,859
Accrued interest receivable 2,792 2,263
Net deferred tax asset 4,845 4,922
Cash surrender value of life insurance 2,116 2,075
Other assets 1,227 855
---------- ----------
Total assets $552,235 $500,948
========== ==========
Liabilities and Stockholders' Equity
Deposits $279,909 $263,196
Federal Home Loan Bank advances 187,484 152,147
Repurchase agreements 40 170
Mortgagors' escrow accounts 1,488 883
Accrued expenses and other liabilities 8,318 3,657
---------- ----------
Total liabilities 477,239 420,053
---------- ----------
Commitments and contingencies
Stockholders' Equity:
Preferred stock ($.01 par value; 2,000,000 shares
authorized; no shares issued and outstanding) - -
Common stock ($.01 par value; 16,000,000 shares authorized;
shares issued: 5,998,860 at March 31, 2000 and December 31,
1999; shares outstanding: 5,129,968 at March 31, 2000 and
5,822,360 at December 31, 1999 60 60
Additional paid-in capital 57,874 57,874
Unearned compensation (6,384) (6,604)
Retained earnings 36,010 35,230
Accumulated other comprehensive loss - net unrealized
loss on securities available-for-sale, net of tax effects (3,731) (3,875)
Treasury stock, at cost (868,892 shares at March 31, 2000
and 176,500 shares at December 31, 1999) (8,833) (1,790)
---------- ----------
Total stockholders' equity 74,996 80,895
---------- ----------
Total liabilities and stockholders' equity $552,235 $500,948
========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
1
<PAGE>
WORONOCO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Unaudited
Three Months Ended
March 31,
--------------------------
2000 1999
-------- ---------
<S> <C> <C>
Interest and dividend income:
Interest and fees on loans $5,961 $5,382
Interest and dividends on investment securities:
Interest 2,178 1,488
Dividends 730 284
Interest on federal funds sold - 306
Other interest income 37 14
-------- ---------
Total interest and dividend income 8,906 7,474
-------- ---------
Interest expense:
Interest on deposits 2,071 2,386
Interest on borrowings 2,520 1,347
-------- ---------
Total interest expense 4,591 3,733
-------- ---------
Net interest income 4,315 3,741
Provision for loan losses 20 60
-------- ---------
Net interest income, after provision for loan losses 4,295 3,681
-------- ---------
Other income:
Fee income 484 442
Insurance commissions 117 -
Gain on sales and disposition of securities, net 318 448
Other income 37 29
-------- ---------
Total other income 956 919
-------- ---------
Other expenses:
Salaries and employee benefits 1,956 1,399
Occupancy and equipment 487 450
Marketing 146 203
Professional services 192 145
Data processing 203 176
Deposit insurance 30 16
Contributions 4 4,445
Other general and administrative 623 450
-------- ---------
Total other expenses 3,641 7,284
-------- ---------
Income (loss) before income tax expense (benefit) 1,610 (2,684)
Income tax expense (benefit) 565 (1,036)
-------- ---------
Net income (loss) $1,045 ($1,648)
======== =========
Earnings per share:
Basic $0.20 NA
Diluted $0.20 NA
Weighted average shares outstanding:
Basic 5,279,203 NA
Diluted 5,279,203 NA
</TABLE>
See accompanying notes to unaudited consolidated financial statements
2
<PAGE>
WORONOCO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Three Months Ended March 31, 2000 and 1999
(In Thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-in Unearned Retained Comprehensive Treasury
Stock Capital Compensation Earnings (Loss) Income Stock Total
-------- -------- ------------- -------- ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 $ 60 $57,874 $ (6,604) $35,230 $ (3,875) $ (1,790) $ 80,895
--------
Comprehensive income:
Net income - - - 1,045 - - 1,045
Change in net unrealized loss on securities
available for sale, net of reclassification
adjustment and tax effects - - - - 144 - 144
--------
Total comprehensive income 1,189
Decrease in unearned compensation - - 220 - - - 220
Cash dividends declared - - - (265) - - (265)
Treasury stock purchased - - - - - (7,043) (7,043)
----- ------- --------- -------- -------- --------- --------
Balance at March 31, 2000 $ 60 $57,874 $ (6,384) $36,010 $ (3,731) $ (8,833) $74,996
===== ======= ========= ======== ======== ========= ========
Balance at December 31, 1998 $ - $ - $ - $34,060 $ 1,713 $ - $35,773
--------
Comprehensive income (loss):
Net loss - - - (1,648) - - (1,648)
Change in net unrealized gain on securities
available for sale, net of reclassification
adjustment and tax effects - - - - (1,309) - (1,309)
--------
Total comprehensive loss (2,957)
--------
Issuance of common stock in connection with
Bank's conversion from mutual to stock-
owned savings bank 60 57,891 (4,609) - - - 53,342
Decrease in unearned compensation - - 13 - - - 13
----- ------- --------- ------- ------- --------- --------
Balance at March 31, 1999 $ 60 $57,891 $ (4,596) $32,412 $ 404 $ - $86,171
===== ======= ========= ======= ======= ========= ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
3
<PAGE>
WORONOCO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Unaudited
Three Months Ended March 31,
2000 1999
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,045 ($1,648)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for loan losses 20 60
Charitable contribution in the form of equity securities - 4,444
Net (accretion) amortization of investments (19) 3
Depreciation and amortization 226 169
Employee stock ownership plan expense 96 13
Stock-based incentive plan expense 124 -
Deferred tax benefit - (1,511)
Gain on sales and disposition of securities, net (318) (448)
Loss on sale of other real estate owned 1 -
Amortization of goodwill 19 -
Changes in operating assets and liabilities:
Accrued interest receivable (529) (93)
Accrued expenses and other liabilities 807 190
Other, net 361 335
---------- ----------
Net cash provided by operating activities 1,833 1,514
---------- ----------
Cash flows from investing activities:
Proceeds from sales of securities available for sale 1,500 3,474
Purchases of securities available for sale (24,426) (3,673)
Proceeds from maturities of securities available for sale - 172
Principal payments on mortgage-backed investments 2,572 3,705
Purchases of Federal Home Loan Bank stock (1,908) (85)
Loans originated/purchased, net of loan payments received (24,890) (6,750)
Purchases of banking premises and equipment (93) (686)
Proceeds from sales of foreclosed real estate 741 73
Payment to purchase A.J. Agan Insurance Agency, Inc. (800) -
Loan to fund employee stock ownership plan - (4,609)
---------- ----------
Net cash used in investing activities (47,304) (8,379)
---------- ----------
Cash flows from financing activities:
Net increase (decrease) in deposits 16,713 (1,855)
Net increase (decrease) in Federal Home Loan Bank Advances 35,337 (42,805)
Net (decrease) increase in repurchase agreements (130) 16
Net increase in mortgagors' escrow accounts 605 520
Net proceeds from initial public offering - 53,507
Cash dividends paid (265) -
Treasury stock purchased (3,189) -
---------- ----------
Net cash provided by financing activities 49,071 9,383
---------- ----------
Net increase in cash and cash equivalents 3,600 2,518
Cash and cash equivalents at beginning of period 16,185 11,978
---------- ----------
Cash and cash equivalents at end of period $ 19,785 $14,496
========== ==========
Supplemental cash flow information:
Interest paid on deposits $2,073 $ 2,383
Interest paid on borrowings 2,619 1,431
Income taxes paid 30 107
Purchase of treasury stock - trade date accounting 3,854 -
</TABLE>
See accompanying notes to unaudited consolidated financial statements
4
<PAGE>
WORONOCO BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
March 31, 2000
(Dollars in thousands except per share amounts)
1. Consolidated Financial Statements
The Consolidated Financial Statements of Woronoco Bancorp, Inc. and its
subsidiaries (the "Company") included herein are unaudited, and in the opinion
of management all adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation of the financial condition, results of
operations and cash flows, as of and for the periods covered herein, have been
made. Certain information and note disclosures normally included in the
Consolidated Financial Statements have been omitted as they are included in the
most recent Securities and Exchange Commission ("SEC") Form 10-K and
accompanying Notes to the Financial Statements (the "Form 10-K") filed by the
Company for the year ended December 31, 1999. Management believes that the
disclosures contained herein are adequate to make a fair presentation.
These unaudited consolidated financial statements should be read in conjunction
with the Form 10-K.
The results for the three month interim period covered hereby are not
necessarily indicative of the operating results for a full year.
2. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which as amended by SFAS 137, is effective
for all fiscal years beginning after June 15, 2000. This Statement establishes
accounting and reporting standards for derivative instruments and hedging
activities, including certain derivative instruments embedded in other
contracts, and requires that an entity recognize those items as assets or
liabilities in the balance sheet and measure them at fair value. If certain
conditions are met, an entity may elect to designate a derivative as follows:
(a) a hedge of the exposure to changes in the fair market value of a recognized
asset or liability, or of an unrecognized firm commitment that is attributable
to a particular risk, (b) a hedge of the exposure to variable cash flows of a
forecasted transaction, or (c) a hedge of the foreign currency exposure of an
unrecognized firm commitment, an available-for-sale security, a foreign currency
denominated forecasted transaction, or a net investment in a foreign operation.
The Statement generally provides for matching the timing of the recognition of
the gain or loss on derivatives designated as hedging instruments with the
recognition of the changes in the fair value of the item being hedged. Depending
on the type of hedge, such recognition will be in either net income or other
comprehensive income. For a derivative not designated as a hedging instrument,
changes in fair value will be recognized in net income in the period of change.
Management is currently evaluating the impact of adopting this Statement on the
consolidated financial statements, but does not anticipate that it will have a
material impact.
3. Earnings Per Share
Basic earnings per share represents net income divided by the weighted-average
number of common shares outstanding during the period. Diluted earnings per
share reflects additional common shares that would have been outstanding if
potential dilutive shares, such as stock options or restricted stock, had been
issued. However, options will have a dilutive effect only when the average
market price of the common stock exceeds the exercise price of the options.
Earnings per share data is not presented in these financial statements for the
three months ended March 31, 1999 since shares of common stock were not issued
until March 19, 1999.
5
<PAGE>
The following table sets forth the calculation of basic and diluted earnings per
share for the periods indicated (dollars in thousands except per share amounts).
<TABLE>
<CAPTION>
Unaudited
Three Months Ended March 31,
2000 1999
-------------------- --------------------
<S> <C> <C>
Net income $1,045 NA
Weighted average shares outstanding:
Weighted average shares outstanding 5,998,860 NA
Less: unearned ESOP shares (439,806) NA
Less: treasury shares (279,851) NA
--------------------
Basic 5,279,203 NA
Effect of dilutive stock options - NA
--------------------
Diluted 5,279,203 NA
====================
Net income per share:
Basic $0.20 NA
Diluted $0.20 NA
</TABLE>
4. Dividends
On April 19, 2000, the Company declared a cash dividend of $0.0525 per share
payable on May 24, 2000 to shareholders of record as of the close of business on
May 4, 2000.
5. Loan commitments
Outstanding commitments for all loans totaled $12.8 million at March 31, 2000
compared to $7.7 million at December 31, 1999.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations.
--------------
The following analysis discusses changes in the financial condition and results
of operations at and for the three months ended March 31, 2000 and 1999, and
should be read in conjunction with the Company's Unaudited Consolidated
Financial Statements and the notes thereto, appearing in Part I, Item 1 of this
document.
Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the
operations of the Company include, but are not limited to: changes in interest
rates, general economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the U.S. Treasury
and the Federal Reserve Board, the quality or composition of the loan or
investment portfolios, demand for loan products, deposit flows, competition,
demand for financial services in the Company's market area and accounting
principles and guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. Examples of these assumptions may be found in the discussion of
Allowance for Loan Losses, Provision for Loan Losses, Liquidity and Regulatory
Capital.
The Company does not undertake - and specifically disclaims any obligation - to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
7
<PAGE>
Comparison of Financial Condition at March 31, 2000 and December 31, 1999
Total assets increased $51.3 million, or 10.2%, to $552.2 million at March 31,
2000, from $500.9 million at December 31, 1999 primarily reflecting increases in
securities available for sale and loans. Asset growth was funded primarily by
increases in deposits and Federal Home Loan Bank advances. Stock repurchases
totaling $7.0 million, offset by net income of $1.0 million, contributed to a
net decrease in stockholders' equity of $5.9 million to $75.0 million at March
31, 2000 from $80.9 million at December 31, 1999.
Investments
At March 31, 2000, the Company's securities portfolio totaled $170.9 million, or
30.9% of assets, all of which was categorized as available-for-sale. The
following table sets forth at the dates indicated information regarding the
amortized cost and market values of the Company's investment securities.
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
------------------------------------- -------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------------- ----------------- ----------------- ------------------
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Equity securities:
Preferred stock $ 4,428 $ 3,939 $ 4,358 $ 3,924
Common stock 15,518 14,551 14,270 13,683
Trust preferred 19,439 18,831 13,353 12,345
----------------- ----------------- ----------------- ------------------
Total equity securities 39,385 37,321 31,981 29,952
----------------- ----------------- ----------------- ------------------
Mortgage-backed and mortgage-related securities:
Freddie Mac 23,081 22,634 23,502 23,081
Fannie Mae 68,558 67,515 54,001 52,916
Ginnie Mae 39,171 36,592 39,912 37,049
REMICS 6,604 6,814 6,712 6,959
----------------- ----------------- ----------------- ------------------
Total mortgage-backed securities 137,414 133,555 124,127 120,005
----------------- ----------------- ----------------- ------------------
Total securities (1) $ 176,799 $ 170,876 $ 156,108 $ 149,957
================= ================= ================= ==================
</TABLE>
(1) Does not include $9.5 million and $7.5 million of FHLB-Boston stock held at
March 31, 2000 and December 31, 1999, respectively.
Securities available for sale increased $20.9 million, or 13.9%, due to
purchases of $15.8 million of mortgage-backed securities and $6.1 million of
trust preferred securities.
8
<PAGE>
Lending Activities
At March 31, 2000, the Company's gross loan portfolio was $336.2 million, or
60.9%, of total assets. The following table sets forth the composition of the
Company's loan portfolio in dollar amounts and as a percentage of the respective
portfolio at the dates indicated.
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
------------------------------- --------------------------------
Percent Percent
Amount of Total Amount of Total
-------------- -------------- --------------- ---------------
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Real estate loans
One- to four-family $183,488 54.57% $170,808 54.83%
Multi-family 28,426 8.45% 26,104 8.38%
Commercial 27,614 8.21% 23,796 7.64%
Construction and development 4,086 1.22% 2,873 0.92%
-------------- -------------- --------------- ---------------
Total real estate loans 243,614 72.45% 223,581 71.77%
-------------- -------------- --------------- ---------------
Consumer loans
Home equity loans 73,957 22.00% 69,821 22.41%
Automobile 9,818 2.92% 9,653 3.10%
Other 3,418 1.02% 3,551 1.14%
-------------- -------------- --------------- ---------------
Total consumer loans 87,193 25.94% 83,025 26.65%
-------------- -------------- --------------- ---------------
Commercial loans 5,423 1.61% 4,907 1.58%
-------------- --------------- ---------------
Total loans 336,230 100.00% 311,513 100.00%
============== ===============
Less:
Unadvanced loan funds (1) (2,273) (2,350)
Deferred loan origination costs 630 553
Allowance for loan losses (2,310) (2,309)
-------------- ---------------
Net loans $ 332,277 $ 307,407
============== ===============
</TABLE>
(1) Includes committed but unadvanced loan amounts.
Total gross loans rose $24.7 million, or 7.9%, during the first quarter of 2000.
Loan growth was strong across several categories, with increases of 7.4% in one-
to four-family residential real estate loans, 8.9% in multi-family real estate
loans, 16.0% in commercial real estate loans and 5.9% in home equity loans. The
increase in one- to four-family residential real estate loans reflects purchases
and originations, partially offset by prepayments and amortization of the
existing portfolio. Solid origination volume, partially offset by prepayments
and amortization of the existing portfolio, was mainly responsible for the
increases in multi-family real estate, commercial real estate and home equity
loans.
9
<PAGE>
Non-performing Assets and Impaired Loans
The following table sets forth information regarding nonaccrual loans, real
estate owned and restructured loans.
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------------- ---------------
(Dollars in Thousands)
<S> <C> <C>
Nonaccruing loans:
Real estate:
One- to four- family $ - $ 49
Commercial 12 12
Home equity loans and lines of credit 114 114
-------------- ---------------
Total 126 175
Other real estate owned, net (1) 141 879
Other repossessed assets - 4
-------------- ---------------
Total non-performing assets 267 1,058
Troubled debt restructurings - -
Troubled debt restructurings and
-------------- ---------------
total non-performing assets $ 267 $ 1,058
============== ===============
Total non-performing loans and
troubled debt restructurings as a
percentage of total loans (2) (3) 0.04% 0.06%
Total non-performing assets and
troubled debt restructurings as a
percentage of total assets (3) 0.05% 0.21%
</TABLE>
(1) Other real estate owned balances are shown net of related allowances.
(2) Total loans includes loans, less unadvanced loan funds, plus net deferred
loan costs.
(3) Non-performing assets consist of nonperforming loans and other real estate
owned, net.
Nonperforming loans consist of nonaccruing loans and all loans 90 days or
more past due and other loans which have been identified by the Company as
presenting uncertainty with respect to the collectibility of interest or
principal.
The reduction in other real estate owned from December 31, 1999 primarily
reflects the sale of an office/retail building with a book value of $738,000 for
$737,000 in the first quarter of 2000.
10
<PAGE>
Allowance for Loan Losses
The following table sets forth activity in the allowance for loan losses for the
periods set forth in the table.
<TABLE>
<CAPTION>
At or for the Three Months
Ended March 31,
------------------------------------
2000 1999
-------------- --------------
(Dollars in Thousands)
<S> <C> <C>
Allowance for loan losses, beginning of period $2,309 $2,166
Charged-off loans:
Real estate - 7
Consumer 30 18
-------------- --------------
Total charged-off loans 30 25
Recoveries on loans previously charged-off:
Real estate 2 -
Consumer 9 7
-------------- --------------
Total recoveries 11 7
-------------- --------------
Net loans charged off 19 18
Provision for loan losses 20 60
-------------- --------------
Allowance for loan losses, end of period $2,310 $2,208
============== ==============
Net loans charged-off to average
interest-earning loans 0.02% 0.03%
Allowance for loan losses to total loans (1) 0.69% 0.75%
Allowance for loan losses to non-performing
loans and troubled debt restructurings (2) 1833.33% 226.46%
Net loans charged-off to allowance for loan losses 3.29% 3.26%
Recoveries to charge-offs 36.67% 28.00%
</TABLE>
(1) Total loans includes loans, less unadvanced loan funds, plus deferred loan
costs (fees), net.
(2) Nonperforming loans consist of nonaccruing loans and all loans 90 days or
more past due and other loans which have been identified by the Company as
presenting uncertainty with respect to the collectibility of interest or
principal.
11
<PAGE>
Deposits
The following table sets forth the distribution of deposit accounts for the
periods indicated.
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
----------------------------- -----------------------------
Percent Percent
of Total of Total
Balance Deposits Balance Deposits
-------------- ------------- -------------- -------------
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Demand deposits $12,876 4.60% $11,975 4.55%
Savings 68,133 24.34% 67,169 25.52%
Money market 29,007 10.36% 30,321 11.52%
NOW 39,966 14.28% 35,076 13.33%
Brokered deposits 10,000 3.57% - -
Certificates of deposit 119,927 42.85% 118,655 45.08%
------------- ----------- ------------- -----------
Total deposits $ 279,909 100.00% $ 263,196 100.00%
============= =========== ============= ===========
</TABLE>
Core deposits, excluding brokered deposits and certificates of deposit,
increased $5.5 million, or 3.8%, to $150.0 million at March 31, 2000 from $144.5
million at December 31, 1999 primarily due to growth in total number of deposit
accounts, and to a lesser extent, the introduction of a new interest checking
product, the Premium Investment Account. The growth in number of accounts is
mainly due to the active promotion of checking and savings products as well as
new customers gained as a result of ongoing consolidation in the banking
industry. During the first quarter of 2000, the introduction of the Premium
Investment Account resulted in approximately $1.0 million in new deposits.
The Company acquired $10.0 million of brokered certificates of deposit during
the first quarter of 2000. The Company from time to time utilizes brokered
deposits as an alternative source of funding and to reduce dependence on FHLB
Advances when such funds have a competitive interest rate. These brokered
deposits mature in five years and are callable, at the option of the broker,
beginning after one year.
12
<PAGE>
Comparison of Operating Results for the Three Months Ended March 31, 2000 and
1999
General
The Company reported net income of $1.0 million, or $0.20 per share, for the
quarter ended March 31, 2000 compared to a net loss of $1.6 million for the same
period last year. Excluding the $4.4 million contribution to establish the
Woronoco Savings Charitable Foundation and the related tax benefit of $1.5
million, the Company earned $1.3 million for the three months ended March 31,
1999.
Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
on the relative amounts of interest-earning assets and interest-bearing
liabilities and the interest rate earned or paid on them.
The following table sets forth, for the periods indicated, average balances,
interest income and expense, and yields earned or rates paid on the major
categories of assets and liabilities. The average yields and costs are derived
by dividing income or expense by the average balance of interest-earning assets
or interest-bearing liabilities, respectively, for the periods shown. The yields
and costs are annualized. Average balances are derived from average daily
balances. The yields and costs include fees which are considered adjustments to
yields. Loan interest and yield data does not include any accrued interest from
nonaccruing loans.
13
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------------------------------------------------
2000 1999
--------------------------------------- ----------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
----------- -------- ----------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets: (1)
Investments:
Mortgage-backed securities $ 124,258 $ 2,178 7.01% $ 86,781 $ 1,488 6.86%
Equity securities 35,352 611 6.91% 22,016 229 4.16%
FHLB stock 8,633 119 5.51% 5,706 55 3.86%
Loans: (2)
Residential real estate loans 198,141 3,628 7.32% 181,839 3,362 7.40%
Commercial real estate loans 26,885 573 8.53% 22,803 515 9.03%
Consumer loans 84,899 1,655 7.84% 77,037 1,412 7.43%
Commercial loans 5,076 105 8.18% 5,459 93 6.81%
--------- ------ -------- -------
Loans, net 315,001 5,961 7.58% 287,138 5,382 7.52%
Other 4,444 37 3.29% 41,131 320 3.11%
--------- ------ -------- -------
Total interest-earning assets 487,688 8,906 7.31% 442,772 7,474 6.77%
------ -------
Noninterest-earning assets 31,357 21,159
--------- --------
Total assets $ 519,045 $ 463,931
========= ========
Interest-bearing liabilities:
Deposits:
Money market accounts $ 30,163 $ 232 3.09% $ 27,624 $ 208 3.05%
Savings accounts (3) 67,458 316 1.88% 100,748 330 1.33%
NOW accounts 35,138 53 0.61% 31,098 77 1.00%
Certificates of deposit 119,757 1,470 4.94% 138,028 1,771 5.20%
--------- ------- --------- -------
Total interest-bearing deposits 252,516 2,071 3.30% 297,498 2,386 3.25%
Borrowings 171,938 2,520 5.80% 105,282 1,347 5.12%
--------- ------- --------- -------
Total interest-bearing liabilities 424,454 4,591 4.31% 402,780 3,733 3.74%
------- ------ ------- -----
Demand deposits 12,049 10,835
Other noninterest-bearing liabilities 3,591 3,046
--------- --------
Total liabilities 440,094 416,661
Total stockholders' equity 78,951 47,270
--------- --------
Total liabilities and stockholders' equity $ 519,045 $ 463,931
========= =========
Net interest-earning assets $ 63,234 $ 39,992
========= =========
Net interest income/interest
rate spread (4) $ 4,315 3.00% $ 3,741 3.03%
======= ====== ======= ======
Net interest margin as a percentage
of interest-earning assets (5) 3.54% 3.38%
====== ======
Ratio of interest earning assets
to interest-bearing liabilities 114.90% 109.93%
====== ======
</TABLE>
(1) Includes related assets available-for-sale and unamortized discounts and
premiums.
(2) Amount is net of deferred loan origination fees, unadvanced loan funds,
allowance for loan losses and includes nonaccrual loans. The Company
records interest income on nonaccruing loans on a cash basis.
(3) Savings accounts include mortgagors' escrow deposits.
(4) Net interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost
of interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average
interest-earning assets.
14
<PAGE>
The following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to: (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate); (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume); and (iii) the net change. The changes
attributable to the combined impact of volume and rate have been allocated
proportionately to the changes due to volume and the changes due to rate.
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 compared to 1999
-----------------------------------------------------
Increase (Decrease) Due to
-----------------------------------------------------
Volume Rate Net
--------------- --------------- --------------
(Dollars in Thousands)
<S> <C> <C> <C>
Interest-earning assets:
Mortgage-backed securities $ 656 $ 34 $ 690
Equity securities 182 200 382
FHLB stock 34 30 64
Loans:
Residential real estate loans 298 (32) 266
Commercial real estate loans 85 (27) 58
Consumer loans 158 85 243
Commercial loans (7) 19 12
--------------- --------------- --------------
Total loans 534 45 579
Other (303) 20 (283)
--------------- --------------- --------------
Total interest-earning assets $ 1,103 $ 329 $ 1,432
--------------- --------------- --------------
Interest-bearing liabilities:
Deposits:
Money market accounts $ 21 $ 3 $ 24
Savings accounts (1) (132) 118 (14)
NOW accounts 11 (35) (24)
Certificates of deposit (217) (84) (301)
--------------- --------------- --------------
Total deposits (317) 2 (315)
Borrowings 969 204 1,173
--------------- --------------- --------------
Total interest-bearing liabilities 652 206 858
--------------- --------------- --------------
Increase in net interest income $ 451 $ 123 $ 574
=============== =============== ==============
</TABLE>
(1) Includes interest on mortgagors' escrow deposits.
15
<PAGE>
Net interest income totaled $4.3 million for the three months ended March 31,
2000 compared to $3.7 million for the same period in 1999, representing an
increase of $574,000, or 15.3% due to increases in average interest-earning
assets and net interest margin. The improvement of 16 basis points in net
interest margin primarily reflects the reinvestment of proceeds from the
Company's 1999 stock offering to fund a portion of the Company's asset growth.
Interest and dividend income increased $1.4 million, or 19.2%, to $8.9 million
for the three months ended March 31, 2000 reflecting higher interest-earning
assets balances and yields. Interest-earning assets totaled $487.7 million for
the first quarter of 2000 compared to $442.8 million for the same period last
year, an increase of $44.9 million, or 10.1%. Average investments increased
$50.8 million, or 46.7%, resulting from the use of Conversion proceeds and
additional borrowings to fund the purchases of mortgage-backed and trust
preferred equity securities. Average loans increased $27.9 million, or 9.7%,
primarily due to originations of residential real estate, commercial real estate
and home equity loans, offset by amortization and prepayments of the existing
loan portfolio. Growth in average investments and loans was offset to some
extent by a decrease in other interest-earning assets attributable to the
temporary savings deposits associated with the stock offering. The yield on
interest-earning assets rose 54 basis points mainly due to the purchase of
higher-yielding trust preferred securities, and to a lesser extent, the higher
interest rate environment which led to improved yields on new assets as well as
the repricing of existing consumer and commercial loans.
Total interest expense increased $858,000, or 23.0%, to $4.6 million for the
three months ended March 31, 2000 resulting primarily from an increase in
average borrowings and higher rates paid on borrowings as a result of the higher
interest rate environment, offset by decreased average interest-bearing
deposits. Average borrowings grew $66.7 million, or 63.3%, resulting from
management's decision to increase its utilization of borrowings to fund asset
growth. The reduction in average interest-bearing deposit balances primarily
reflects approximately $35 million of temporary savings deposits associated with
the stock offering and lower certificates of deposit balances. The maturing of
previously-offered premium-rate "specials", as well as the inability to retain
other certificates of deposit due to competitive pricing pressures, contributed
to the reduction in average certificates of deposits.
Provision for Loan Losses
The Company's provision for loan losses decreased by $40,000, or 66.7%, to
$20,000 for the first quarter of 2000 from $60,000 for the same period in 1999.
Management determined that a decrease in the provision was warranted based upon
the reserve coverage ratios, a decrease in total nonperforming loans and
troubled debt restructurings and an analysis of the adequacy of the balance in
the allowance for loan losses. At March 31, 2000, the Company's allowance for
loan losses was $2.2 million, or 0.75% of total loans, and 226.46% of
nonperforming loans and troubled debt restructurings as compared to $2.3
million, or 0.69% of total loans, and 1,833.33% of nonperforming loans and
troubled debt restructurings as of March 31, 2000. Total nonperforming loans and
troubled debt restructurings decreased $876,000, or 77%, from $1.1 million at
March 31, 1999 compared to $267,000 at March 31, 2000. Management of the Company
assesses the adequacy of the allowance for loan losses based on known and
inherent risks in the loan portfolio and upon management's continuing analysis
of the factors underlying the quality of the loan portfolio. While management
believes that, based on information currently available, the Company's allowance
for loan losses is sufficient to cover losses inherent in its loan portfolio at
this time, no assurances can be given that the Company's level of allowance for
loan losses will be sufficient to cover loan losses inherent in the portfolio 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. Management may in the future increase its level of
allowance for loan losses as a percentage of total loans and non-performing
loans in the event it increases
16
<PAGE>
the level of commercial real estate, multi-family, commercial, construction and
development or consumer lending as a percentage of its total loan portfolio. In
addition, various regulatory agencies, as an integral part of their examination
process, periodically review the Company's allowance for loan losses. Such
agencies may require the Company to provide additions to the allowance based
upon judgments different from management.
Other Income
Total other income increased $37,000, or 4.0%, to $956,000 for the quarter ended
March 31, 2000 from $919,000 in the 1999 period as a result of growth in fee
income and insurance commissions, partially offset by lower gain on sales of
securities. Fee income increased $42,000, or 9.5%, for the three months ended
March 31, 2000 reflecting solid growth in core deposits. During the period from
March 31, 1999 through March 31, 2000, the Company experienced a 16% increase in
net new transaction accounts. The increase in insurance commissions was due to
the purchase of Agan Insurance Agency in January 2000.
Other Expenses
Other expenses totaled $3.6 million for the first quarter of 2000 compared to
$7.3 million for the 1999 period. Excluding the $4.4 million contribution in
1999 to establish the Woronoco Savings Charitable Foundation, other expenses for
the three months ended March 31, 2000 increased $802,000, or 28.2%. Salaries and
benefits increased $557,000, or 39.8%, primarily due to expenses associated with
the Company's employee stock ownership and stock-based incentive plans,
additional staff required to support the growth of the Company and an increase
in other benefit costs. Marketing expenses decreased $57,000, or 28.1%, as a
result of advertising and promotional activities related to the opening of the
Amherst, Massachusetts full service supermarket branch in 1999. Professional
expenses rose $47,000, or 32.4%, as a result of increased legal expenses related
to the additional requirements of being a public company. Data processing
expenses increased $27,000, or 15.3%, due to costs associated with growth in
deposit accounts. Contributions declined $4.4 million as a result of the
Company's 1999 contribution to establish the Woronoco Saving Charitable
Foundation. Other general and administrative expenses grew $173,000, or 38.4%,
principally due to increased investor-related expenses, telemarketing costs
related to home equity loan products, increased expenditures attributable to
significant growth in customers using Woronoco Online Link, our online banking
product, Delaware franchise taxes, and expenses associated with the Company's
larger deposit base.
Income Taxes
Total income tax expense was $565,000 for the three months ended March 31, 2000,
compared to income tax benefit of $1.0 million in 1999. Excluding the $1.5
million tax effect related to the 1999 contribution to establish Woronoco
Savings Charitable Foundation, income tax expense would have totaled $475,000,
representing an increase of $90,000, or 19.0%, primarily due to growth in
operating income before taxes.
Liquidity
Liquidity and funding strategies are the responsibility of the Asset/Liability
Management Committee (the "ALCO"). The ALCO is responsible for establishing
liquidity targets and implementing strategies to meet desired goals. Liquidity
is measured by the Company's ability to raise cash within 30 days at a
reasonable cost and with a minimum of loss. The Company's primary sources of
funds are deposits, principal and interest payments on loans and investment
securities and borrowings from the FHLB-Boston. While maturities and scheduled
amortization of loans and securities are predictable sources of funds, deposit
outflows and mortgage prepayments are greatly influenced by general interest
rates, economic conditions and competition.
17
<PAGE>
The primary investing activities of the Company are the origination of
residential one-to four-family mortgage loans and consumer loans, primarily home
equity loans and lines of credit, and, to a lesser extent, multi-family and
commercial real estate loans, construction and development loans, commercial
business loans and other types of consumer loans, as well as the purchase of
adjustable rate one-to four-family residential mortgage loans and the investment
in mortgage-backed and equity securities. These activities are funded primarily
by principal and interest payments on loans and investment securities, deposit
growth and the utilization of FHLB advances. During the three months ended March
31, 2000, the Company's loan originations and purchases totaled $23.2 million
and $13.8 million, respectively. At March 31, 2000, the Company's investments in
mortgage-backed and equity securities totaled $170.9 million. During the three
months ended March 31, 2000, total deposits increased $16.7 million. The Company
issued $10.0 million of brokered certificates of deposit in the first quarter of
2000, which contributed to growth in deposits. Deposit flows are affected by the
overall level of interest rates, the interest rates and products offered by the
Company and its local competitors and other factors. The Company closely
monitors its liquidity position on a daily basis. If the Company requires funds
beyond its ability to generate them internally, additional sources of funds are
available through FHLB advances. At March 31, 2000, the Company had $187.5
million of FHLB borrowings.
Outstanding commitments for all loans totaled $12.8 million at March 31, 2000.
Management of the Company anticipates that it will have sufficient funds
available to meet its current loan commitments. Certificates of deposit, which
are scheduled to mature in one year or less from March 31, 2000, totaled $116.3
million. The Company relies primarily on competitive rates, customer service,
and long-standing relationships with customers to retain deposits. From time to
time, the Company will also offer competitive special products to its customers
to increase retention and to attract new deposits. Based upon the Company's
experience with deposit retention and current retention strategies, management
believes that, although it is not possible to predict future terms and
conditions upon renewal, a significant portion of such deposits will remain with
the Company.
Regulatory Capital
The Company and the Bank are 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 Company's consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company and the Bank must meet specific capital guidelines that
involve quantitative measures of the Company's and the Bank's assets,
liabilities and certain off-balance-sheet items as calculated under regulatory
accounting practices. The capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and
other factors. Prompt corrective action provisions are not applicable to savings
and loan holding companies.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital (as defined) to risk
weighted assets (as defined) and to average assets (as defined). Management
believes, as of March 31, 2000 and December 31, 1999, that the Company and the
Bank met all capital adequacy requirements to which they are subject.
As of March 31, 2000 and December 31, 1999, the most recent notification from
the Federal Deposit Insurance Corporation 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 total risk-
based, Tier 1 risk-based
18
<PAGE>
risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the
following table. There are no conditions or events since that notification that
management believes have changed the Bank's category.
The Company's and Bank's actual capital amounts and ratios as of March 31, 2000
and December 31, 1999 are also presented in the table.
<TABLE>
<CAPTION>
Minimum
to be well
Capitalized Under
Minimum for Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
-------------------------- -------------------------- --------------------------
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 2000:
- --------------------
Total Capital to Risk Weighted Assets
Company $78,812 22.6% $27,854 8.0% N/A N/A
Bank $58,016 16.7% $27,729 8.0% $34,661 10.0%
Tier 1 Capital to Risk Weighted Assets
Company $76,502 22.0% $13,927 4.0% $20,890 6.0%
Bank $55,706 16.1% $13,864 4.0% $20,797 6.0%
Tier 1 Capital to Average Assets
Company $76,502 14.6% $20,948 4.0% $26,186 5.0%
Bank $55,706 10.7% $15,625 3.0% - $26,042 5.0%
$26,042 5.0%
As of December 31, 1999:
- -----------------------
Total Capital to Risk Weighted Assets
Company $86,046 27.0% $25,520 8.0% N/A N/A
Bank $58,976 18.6% $25,399 8.0% $31,749 10.0%
Tier 1 Capital to Risk Weighted Assets
Company $83,737 26.2% $12,760 4.0% $19,140 6.0%
Bank $56,667 17.8% $12,700 4.0% $19,049 6.0%
Tier 1 Capital to Average Assets
Company $83,737 17.9% $18,728 4.0% $23,410 5.0%
Bank $56,667 12.1% $14,003 3.0% - $23,338 5.0%
$23,338 5.0%
</TABLE>
The reduction in the Company's capital amounts and ratios from December 31, 1999
primarily reflects the stock repurchases and growth in assets during the first
quarter of 2000.
19
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Information regarding quantitative and qualitative disclosure about market risk
is presented in the Securities and Exchange Commission Form 10-K filed by the
Company for the year ended December 31, 1999. In addition, during the first
quarter of 2000, the Company entered into two interest rate swap agreements,
each with a notional amount of $10 million. Under the terms of the first swap
agreement, which is for a period of 13 months, the Company exchanges a monthly
payment based on the 30 day LIBOR rate for a semi-annual payment based on a
fixed rate of 6.77%. Under the terms of the second swap agreement, the Company
exchanges a monthly payment based on the 30 day LIBOR rate plus five basis
points for a monthly payment based on a fixed rate of 7.25%. The second swap
agreement is for a period of five years and is callable, at the option of the
Company, in March 2001 and monthly, thereafter.
20
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
The Company is not involved in any pending legal proceedings other than routine
legal proceedings occurring in the ordinary course of business. Such routine
legal proceedings, in the aggregate, are believed by management to be immaterial
to the financial condition and results of operations of the Company.
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
None.
Item 3. Defaults Upon Senior Securities.
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None.
Item 5. Other Information.
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K ((S).249.308 of this Chapter).
-------------------------------------------------------------
(a) Exhibits
3.1 Certificate of Incorporation of Woronoco Bancorp,
Inc. (1)
3.2 Amended Bylaws of Woronoco Bancorp, Inc.
4.0 Stock Certificate of Woronoco Bancorp, Inc. (1)
11.0 Statement Re: Computation of Per Share Earnings
Incorporated Herein By Reference to Part 1 -
Earnings Per Share
27.0 Financial Data Schedule
-----------------------------
(1) Incorporated by reference into this document from the
Exhibits filed with the Registration Statement on
Form S-1, and any amendments thereto, Registration
No. 333-67255.
(b) Reports on Form 8-K
On February 28, 2000 the Company filed an 8-K relating to the
press release issued on February 25, 2000 which announced that
the Company had completed its plan to repurchase 5% of its
outstanding shares. The Company also announced that it was
authorized by its Board of Directors to repurchase up to an
additional 10% of its 5,698,917 outstanding shares of common
stock commencing March 20, 2000. The press release making the
announcement was filed by exhibit.
21
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities and Exchange
Act, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
WORONOCO BANCORP, INC.
Dated: May 10, 2000 By: /s/ Cornelius D. Mahoney
------------------------
Cornelius D. Mahoney
Chairman of the Board, President
and Chief Executive Officer
(principal executive officer)
Dated: May 10, 2000 By: /s/ Debra L. Murphy
--------------------------
Debra L. Murphy
Senior Vice President and
Chief Financial Officer
(principal financial and
accounting officer)
22
<PAGE>
Exhibit 3.2
Amended Bylaws of Woronoco Bancorp, Inc.
WORONOCO BANCORP, INC.
AMENDED AND RESTATED
BYLAWS
AS OF FEBRUARY 16, 2000
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
--------- --------------
An annual meeting of the stockholders, for the election of Directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall each year fix, which date
shall be within thirteen (13) months subsequent to the later of the date of
incorporation or the last annual meeting of stockholders.
Section 2. Special Meetings.
--------- ----------------
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation, special meetings of stockholders of the Corporation
may be called only by the Board of Directors pursuant to a resolution adopted by
a majority of the total number of Directors which the Corporation would have if
there were no vacancies on the Board of Directors (hereinafter the "Whole
Board").
Section 3. Notice of Meetings.
--------- ------------------
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 4. Quorum.
--------- ------
<PAGE>
At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy (after giving effect to the provisions of Article FOURTH of the
Corporation's Certificate of Incorporation), shall constitute
<PAGE>
a quorum for all purposes, unless or except to the extent that the presence of a
larger number may be required by law. Where a separate vote by a class or
classes is required, a majority of the shares of such class or classes present
in person or represented by proxy (after giving effect to the provisions of
Article FOURTH of the Corporation's Certificate of Incorporation) shall
constitute a quorum entitled to take action with respect to that vote on that
matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present in person or by proxy constituting a quorum, then except as otherwise
required by law, those present in person or by proxy at such adjourned meeting
shall constitute a quorum, and all matters shall be determined by a majority of
the votes cast at such meeting.
Section 5. Organization.
--------- ------------
Such person as the Board of Directors may have designated or, in the
absence of such a person, the Chairman of the Board of the Corporation or, in
his or her absence, such person as may be chosen by the holders of a majority of
the shares entitled to vote who are present, in person or by proxy, shall call
to order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the Secretary of the Corporation, the secretary of the meeting
shall be such person as the chairman appoints.
Section 6. Conduct of Business.
--------- -------------------
(a) The chairman of any meeting of stockholders shall determine the
order of business and the procedures at the meeting, including such regulation
of the manner of voting and the conduct of discussion as seem to him or her in
order. The date and time of the opening and closing of the polls for each
matter upon which the stockholders will vote at the meeting shall be announced
at the meeting.
(b) At any annual meeting of the stockholders, only such business
shall be conducted as shall have been brought before the meeting: (i) by or at
the direction of the Board of Directors or (ii) by any stockholder of the
Corporation who is entitled to vote with respect thereto and who complies with
the notice procedures set forth in this Section 6(b). For business to be
properly brought before an annual meeting by a stockholder, the business must
relate to a proper subject matter for stockholder action and the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered or mailed
to and received at the principal executive offices of the Corporation not less
than ninety (90) days prior to the date of the annual meeting; provided,
however, that in the event that less than one hundred (100) days' notice or
prior public disclosure of the date of the meeting
3
<PAGE>
is given or made to stockholders, notice by the stockholder to be timely must be
received not later than the close of business on the 10th day following the day
on which such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set forth as
to each matter such stockholder proposes to bring before the annual meeting: (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting; (ii)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business; (iii) the class and number of shares of the
Corporation's capital stock that are beneficially owned by such stockholder; and
(iv) any material interest of such stockholder in such business. Notwithstanding
anything in these Bylaws to the contrary, no business shall be brought before or
conducted at an annual meeting except in accordance with the provisions of this
Section 6(b). The Officer of the Corporation or other person presiding over the
annual meeting shall, if the facts so warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this Section 6(b) and, if he should so determine, he
shall so declare to the meeting and any such business so determined to be not
properly brought before the meeting shall not be transacted.
At any special meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the Board of Directors.
(c) Only persons who are qualified under Article II, Section 1 of
these Bylaws and nominated in accordance with the procedures set forth in these
Bylaws shall be eligible for election as Directors. Nominations of persons for
election to the Board of Directors of the Corporation may be made at a meeting
of stockholders at which directors are to be elected only: (i) by or at the
direction of the Board of Directors; or (ii) by any stockholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 6(c). Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made by timely notice in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered or mailed
to and received at the principal executive offices of the Corporation not less
than ninety (90) days prior to the date of the meeting; provided, however, that
in the event that less than one hundred (100) days' notice or prior disclosure
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth: (i) as to each person whom such stockholder proposes to
nominate for election or re-election as a Director, all information relating to
such person that would indicate such person's qualification under Article II,
Section 1, including an affidavit that such person would not be disqualified
under the provisions of section 1(d), and such information that is required to
be disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected); and (ii) as to the stockholder giving the notice (x) the name and
address, as they appear on the Corporation's books, of such
4
<PAGE>
stockholder and (y) the class and number of shares of the Corporation's capital
stock that are beneficially owned by such stockholder. At the request of the
Board of Directors, any person nominated by the Board of Directors for election
as a Director shall furnish to the Secretary of the Corporation that information
required to establish his or her qualifications and to be set forth in a
stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a Director of the Corporation unless nominated
in accordance with the provisions of this Section 6(c) and Section 1 of Article
II. The Officer of the Corporation or other person presiding at the meeting
shall, if the facts so warrant, determine that a nomination was not made in
accordance with such provisions and, if he or she shall so determine, he or she
shall so declare to the meeting and the defective nomination shall be
disregarded.
Section 7. Proxies and Voting.
--------- ------------------
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting. Any facsimile
telecommunication or other reliable reproduction of the writing or transmission
created pursuant to this paragraph may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.
All voting, including on the election of Directors but excepting where
otherwise required by law or by the governing documents of the Corporation, may
be made by a voice vote; provided, however, that upon demand therefor by a
stockholder entitled to vote or his or her proxy, a stock vote shall be taken.
Every stock vote shall be taken by ballot, each of which shall state the name of
the stockholder or proxy voting and such other information as may be required
under the procedures established for the meeting. The Corporation shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act at
the meeting and make a written report thereof. The Corporation may designate
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law or the Certificate of Incorporation, all
other matters shall be determined by a majority of the votes cast.
Section 8. Stock List.
--------- ----------
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and
5
<PAGE>
the number of shares registered in his or her name, shall be open to the
examination of any such stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
Section 9. Consent of Stockholders in Lieu of Meeting.
--------- ------------------------------------------
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
ARTICLE II - BOARD OF DIRECTORS
Section 1. General Powers, Number, Term of Office and Qualifications
--------- ---------------------------------------------------------
(a) General Powers. The business and affairs of the Corporation shall be
under the direction of its Board of Directors. The Board of Directors
shall annually elect a Chairman of the Board from among its members
who shall, when present, preside at its meetings.
(b) Number. The number of Directors who shall constitute the Whole Board
shall be such number as the Board of Directors shall from time to time
have designated, except that in the absence of such designation shall
be twelve (12).
(c) Term of Office. The Directors, other than those who may be elected by
the holders of any class or series of Preferred Stock, shall be
divided, with respect to the time for which they severally hold
office, into three classes, with the term of office of the first class
to expire at the first annual meeting of stockholders, the term of
office of the second class to expire at the annual meeting of
stockholders one year thereafter and the term of office of the third
class to expire at the annual meeting of stockholders two years
thereafter, with each Director to hold office until his or her
successor shall have been duly elected and qualified. At each annual
meeting of stockholders, Directors elected to succeed those Directors
whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after
their election, with each Director to hold office until his or her
successor shall have been duly elected and qualified.
6
<PAGE>
(d) Qualifications. No person shall be eligible for election or
appointment to the Board of Directors: (i) if such person has, within
the previous 10 years, been the subject of supervisory action by a
financial regulatory agency that resulted in a cease and desist order
or an agreement or other written statement subject to public
disclosure under 12 U.S.C. 1818(u), or any successor provision; (ii)
if such person has been convicted of a crime involving dishonesty or
breach of trust which is punishable by imprisonment for a term
exceeding one year under state or federal law; (iii) if such person is
currently charged in any information, indictment, or other complaint
with the commission of or participation in such a crime; and (iv)
unless such person has been, for a period of at least one year prior
to his or her election, nomination or appointment, a resident of a
county in which the Corporation or its subsidiaries maintains a
banking office or of a county contiguous to any such county or had
significant business ties to such counties. No person may serve on the
Board of Directors and at the same time be a director or officer of
another co-operative bank, credit union, savings bank, savings and
loan association, trust company, bank holding company or banking
association (in each case whether chartered by a state, the federal
government or any other jurisdiction) that engages in business
activities in the same market area as the Corporation or any of its
subsidiaries. No person shall be eligible for election to the Board of
Directors if such person is the representative or agent of a person or
acting in concert (as that term is used to describe relationships
involved in either presumptive or actual concerted action under 12
C.F.R. Section 574.4(d)) with respect to the Corporation or its
subsidiaries, with a person who is ineligible for election to the
Board of Directors under this Subsection 1(d). No nomination of any
individual who would not be qualified to be elected or appointed to or
serve as a member of the Board of Directors under this Article II,
Section 1(d) shall be valid, accepted or voted upon. The Board of
Directors shall have the power to construe and apply the provisions of
this Section 1(d) and to make all determinations necessary to
implement such provisions, including but not limited to determinations
as to whether any persons are a group acting in concert, as defined by
this Section 1(d). The Board may request from a nominee information it
deems relevant to assessing a nominee's satisfaction of the
requirements of this Section 1(d).
7
<PAGE>
Section 2. Vacancies and Newly Created Directorships.
--------- -----------------------------------------
Subject to the rights of the holders of any class or series of Preferred
Stock, and unless the Board of Directors otherwise determines, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the Directors then in office, though less than a
quorum, and Directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such Director's successor shall have
been duly elected and qualified. No decrease in the number of authorized
directors constituting the Board shall shorten the term of any incumbent
Director.
Section 3. Regular Meetings.
--------- ----------------
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all Directors. A
notice of each regular meeting shall not be required.
Section 4. Special Meetings.
--------- ----------------
Special meetings of the Board of Directors may be called by one-third (1/3)
of the Directors then in office (rounded up to the nearest whole number), by the
Chairman of the Board or the President or, in the event that the Chairman of the
Board or President are incapacitated or otherwise unable to call such meeting,
by the Secretary, and shall be held at such place, on such date, and at such
time as they, or he or she, shall fix. Notice of the place, date, and time of
each such special meeting shall be given each Director by whom it is not waived
by mailing written notice not less than five (5) days before the meeting or by
telegraphing or telexing or by facsimile transmission of the same not less than
twenty-four (24) hours before the meeting. Unless otherwise indicated in the
notice thereof, any and all business may be transacted at a special meeting.
Section 5. Quorum.
--------- ------
At any meeting of the Board of Directors, a majority of the Whole Board
shall constitute a quorum for all purposes. If a quorum shall fail to attend
any meeting, a majority of those present may adjourn the meeting to another
place, date, or time, without further notice or waiver thereof.
Section 6. Participation in Meetings By Conference Telephone.
--------- -------------------------------------------------
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
8
<PAGE>
Section 7. Conduct of Business.
-------------------
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the Directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 8. Powers.
--------- ------
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as it
may determine, of written obligations of every kind, negotiable or non-
negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
(4) To remove any Officer of the Corporation with or without cause,
and from time to time to devolve the powers and duties of any Officer upon
any other person for the time being;
(5) To confer upon any Officer of the Corporation the power to
appoint, remove and suspend subordinate Officers, employees and agents;
(6) To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for Directors, Officers, employees and
agents of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and other
benefit plans for Directors, Officers, employees and agents of the
Corporation and its subsidiaries as it may determine;
(8) To adopt from time to time regulations, not inconsistent with
these Bylaws, for the management of the Corporation's business and affairs;
and
9
<PAGE>
(9) To fix the Compensation of officers and employees of the
Corporation and its subsidiaries as it may determine.
Section 9. Compensation of Directors.
--------- -------------------------
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as Directors,
including, without limitation, their services as members of committees of the
Board of Directors.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors.
--------- ------------------------------------
The Board of Directors, by a vote of a majority of the Board of Directors,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for these committees and any others provided for herein,
elect a Director or Directors to serve as the member or members, designating, if
it desires, other Directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so
designated may exercise the power and authority of the Board of Directors to
declare a dividend, to authorize the issuance of stock or to adopt a certificate
of ownership and merger pursuant to Section 253 of the Delaware General
Corporation Law if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his or her place, the member or members of the committee present at
the meeting and not disqualified from voting, whether or not he or she or they
constitute a quorum, may by unanimous vote appoint another member of the Board
of Directors to act at the meeting in the place of the absent or disqualified
member.
Section 2. Conduct of Business.
--------- -------------------
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings. The quorum requirements for each such
committee shall be a majority of the members of such committee unless otherwise
determined by the Board of Directors by a majority vote of the Board of
Directors which such quorum determined by a majority of the Board may be one-
third of such members and all matters considered by such committees shall be
determined by a majority vote of the members present. Action may be taken by
any committee without a meeting if all members thereof consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of such committee.
10
<PAGE>
Section 3. Nominating Committee.
---------- --------------------
The Board of Directors shall appoint a Nominating Committee of the Board,
consisting of not less than three (3) members. The Nominating Committee shall
have authority: (a) to review any nominations for election to the Board of
Directors made by a stockholder of the Corporation pursuant to Section 6(c)(ii)
of Article I of these Bylaws in order to determine compliance with such Bylaw;
and (b) to recommend to the Whole Board nominees for election to the Board of
Directors to replace those Directors whose terms expire at the annual meeting of
stockholders next ensuing.
ARTICLE IV - OFFICERS
Section 1. Generally.
--------- ---------
(a) The Board of Directors as soon as may be practicable after the
annual meeting of stockholders shall choose a Chairman of the Board, Chief
Executive Officer, a President, one or more Vice Presidents, a Secretary and a
Treasurer and from time to time may choose such other officers as it may deem
proper. The Chairman of the Board shall be chosen from among the Directors.
Any number of offices may be held by the same person.
(b) The term of office of all Officers shall be until the next annual
election of Officers and until their respective successors are chosen but any
Officer may be removed from office at any time by the affirmative vote of a
majority of the authorized number of Directors then constituting the Board of
Directors.
(c) All Officers chosen by the Board of Directors shall have such
powers and duties as generally pertain to their respective Offices, subject to
the specific provisions of this ARTICLE IV. Such officers shall also have such
powers and duties as from time to time may be conferred by the Board of
Directors or by any committee thereof.
Section 2. Chairman of the Board of Directors.
--------- ----------------------------------
The Chairman of the Board, subject to the provisions of these Bylaws and to
the direction of the Board of Directors, when present shall preside at all
meetings of the stockholders of the Corporation. The Chairman of the Board
shall perform such duties designated to him by the Board of Directors and which
are delegated to him or her by the Board of Directors by resolution of the Board
of Directors.
Section 3. President and Chief Executive Officer.
--------- -------------------------------------
11
<PAGE>
The President and Chief Executive Officer shall have general responsibility
for the management and control of the business and affairs of the Corporation
and shall perform all duties and have all powers which are commonly incident to
the office of President and Chief Executive Officer or which are delegated to
him or her by the Board of Directors. Subject to the direction of the Board of
Directors, the President and Chief Executive Officer shall have power to sign
all stock certificates, contracts and other instruments of the Corporation which
are authorized and shall have general supervision of all of the other Officers
(other than the Chairman of the Board), employees and agents of the Corporation.
Section 4. Vice President.
---------- --------------
The Vice President or Vice Presidents shall perform the duties of the
President in his absence or during his inability to act. In addition, the Vice
Presidents shall perform the duties and exercise the powers usually incident to
their respective offices and/or such other duties and powers as may be properly
assigned to them by the Board of Directors, the Chairman of the Board or the
President. A Vice President or Vice Presidents may be designated as Executive
Vice President or Senior Vice President.
Section 5. Secretary.
--------- ---------
The Secretary or Assistant Secretary shall issue notices of meetings, shall
keep their minutes, shall have charge of the seal and the corporate books, shall
perform such other duties and exercise such other powers as are usually incident
to such office and/or such other duties and powers as are properly assigned
thereto by the Board of Directors, the Chairman of the Board or the President.
Subject to the direction of the Board of Directors, the Secretary shall have the
power to sign all stock certificates.
Section 6. Treasurer.
---------- ----------
The Treasurer shall be the Comptroller of the Corporation and shall have
the responsibility for maintaining the financial records of the Corporation. He
or she shall make such disbursements of the funds of the Corporation as are
authorized and shall render from time to time an account of all such
transactions and of the financial condition of the Corporation. The Treasurer
shall also perform such other duties as the Board of Directors may from time to
time prescribe. Subject to the direction of the Board of Directors, the
Treasurer shall have the power to sign all stock certificates.
Section 7. Assistant Secretaries and Other Officers.
--------- -----------------------------------------
The Board of Directors may appoint one or more Assistant Secretaries and
such other Officers who shall have such powers and shall perform such duties as
are provided in these Bylaws or as may be assigned to them by the Board of
Directors, the Chairman of the Board or the President.
12
<PAGE>
Section 8. Action with Respect to Securities of Other Corporations.
---------- --------------------------------------------------------
Unless otherwise directed by the Board of Directors, the President or any
Officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other corporation.
13
<PAGE>
ARTICLE V - STOCK
Section 1. Certificates of Stock.
--------- ---------------------
Each stockholder shall be entitled to a certificate signed by, or in the
name of the Corporation by, the Chairman of the Board or the President, and by
the Secretary or an Assistant Secretary, or any Treasurer or Assistant
Treasurer, certifying the number of shares owned by him or her. Any or all of
the signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock.
--------- ------------------
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of Article V of these Bylaws,
an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 3. Record Date.
--------- -----------
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the next day preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment or rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
14
<PAGE>
Section 4. Lost, Stolen or Destroyed Certificates.
--------- --------------------------------------
In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
Section 5. Regulations.
--------- -----------
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
ARTICLE VI - NOTICES
Section 1. Notices.
--------- -------
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, Director, Officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mails,
postage paid, or by sending such notice by prepaid telegram or mailgram or other
courier. Any such notice shall be addressed to such stockholder, Director,
Officer, employee or agent at his or her last known address as the same appears
on the books of the Corporation. The time when such notice is received, if hand
delivered, or dispatched, if delivered through the mails or by telegram or
mailgram or other courier, shall be the time of the giving of the notice.
Section 2. Waivers.
--------- -------
A written waiver of any notice, signed by a stockholder, Director, Officer,
employee or agent, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to the notice required to be
given to such stockholder, Director, Officer, employee or agent. Neither the
business nor the purpose of any meeting need be specified in such a waiver.
15
<PAGE>
ARTICLE VII - MISCELLANEOUS
Section 1. Facsimile Signatures.
--------- --------------------
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
Section 2. Corporate Seal.
--------- --------------
The Board of Directors may provide a suitable seal, containing the name of
the Corporation, which seal shall be in the charge of the Secretary. If and
when so directed by the Board of Directors or a committee thereof, duplicates of
the seal may be kept and used by the Treasurer or by an Assistant Secretary or
an assistant to the Treasurer.
Section 3. Reliance Upon Books, Reports and Records.
--------- ----------------------------------------
Each Director, each member of any committee designated by the Board of
Directors, and each Officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its Officers or
employees, or committees of the Board of Directors so designated, or by any
other person as to matters which such Director or committee member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.
Section 4. Fiscal Year.
--------- -----------
The fiscal year of the Corporation shall be as fixed by the Board of
Directors.
Section 5. Time Periods.
--------- ------------
In applying any provision of these Bylaws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
16
<PAGE>
ARTICLE VIII - AMENDMENTS
The Board of Directors may amend, alter or repeal these Bylaws at any
meeting of the Board, provided notice of the proposed change was given not less
than two (2) days prior to the meeting. The stockholders shall also have power
to amend, alter or repeal these Bylaws at any meeting of stockholders provided
notice of the proposed change was given in the notice of the meeting; provided,
however, that, notwithstanding any other provisions of the Bylaws or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of the voting stock required by law, the Certificate of Incorporation,
any Preferred Stock Designation or these Bylaws, the affirmative votes of the
holders of at least 80% of the voting power of all the then-outstanding shares
of the Voting Stock, voting together as a single class, shall be required to
alter, amend or repeal any provisions of these Bylaws.
The above Amended and Restated Bylaws are effective as of February 16, 2000
17
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