As filed with the Securities and Exchange Commission on May 4, 1999
Registration No. 333-69959
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 2
TO THE FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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OSWEGO COUNTY BANCORP, INC.
(in organization)
(Name of Small Business Issuer in its to be filed Articles of Incorporation)
----------
<TABLE>
<S> <C> <C>
Delaware 6711 To be Requested
------------------------------ -------------------------------------- -------------------
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Gregory J. Kreis
President and Chief Executive Officer
44 East Bridge Street
Oswego, New York 13126
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
John P. Soukenik, Esq.
Hugh T. Wilkinson, Esq.
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
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Approximate date of commencement of proposed sale to public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================================
Amount Proposed Maximum Amount of
Title of each Class of to be Offering Price Aggregate Registration
Securities to be Registered Registered Per Share Offering Price Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share(1)......... 759,220 shares $10.00 $7,592,200(2) $2,111(3)
Participation Interests.... 95,000 shares $10.00 $950,000 --(3)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes shares of Common Stock to be issued to the Oswego County
Charitable Foundation, a private foundation.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The shares of Oswego County Bancorp, Inc. which may be purchased by
participants in The Oswego County Savings Bank 401(k) plan are included
in the amount shown for common stock. Accordingly, no separate fee is
required for the participation interests. In accordance with Rule 457(h)
of the Securities Act, as amended, the registration fee has been calculated
basis of the maximum number of shares of common stock which could be
on the purchased through utilization of the assets of such plan.
The Registrant hereby amends this Registration Statement on such date
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.
Disclosure alternative used (check one): Alternative 1 Alternative 2 x
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<PAGE>
PROSPECTUS SUPPLEMENT
OSWEGO COUNTY BANCORP, INC.
The Oswego County Savings Bank 401(k) Plan
(Participation Interest in up to _______ shares of Oswego County Bancorp, Inc.)
Oswego County Bancorp, Inc. is providing this prospectus supplement to
the participants in The Oswego County Savings Bank 401(k) Plan (the "401(k)
plan" or the "plan"). As a participant in the 401(k) plan, you may direct the
trustee of the plan to purchase common stock of Oswego County Bancorp, Inc. in
its offering with amounts allocated to your account under the plan. Amounts not
invested in Oswego County Bancorp, Inc. common stock will remain invested in and
among your previously selected investment funds. If you decide not to allocate
your funds available under your 401(k) account into Oswego County Bancorp, Inc.
common stock or you cannot acquire all of the common stock you want in the
offering you may direct the investment of your 401(k) account into the Oswego
County Bancorp, Inc. common stock investment fund at any time after the offering
is completed.
The prospectus of Oswego County Bancorp, Inc. dated ____________ ____,
1999 attached to this prospectus supplement includes detailed information with
respect to the offering of Oswego County Bancorp, Inc. common stock, and the
financial condition, results of operations and description of the business of
Oswego County Bancorp, Inc. and Oswego County Savings Bank. You should read this
prospectus supplement only in conjunction with the attached prospectus.
-------------------------------
This Investment Involves a High Degree of Risk. You Should Purchase Shares Only
if You Can Afford a Complete Loss. See "Restrictions on Resale" at Page S-____
in this Prospectus Supplement and "Risk Factors" at Page ____
in the Attached Prospectus.
Neither the Securities and Exchange Commission nor any state or federal
agency has approved or disapproved these securities or determined that this
prospectus supplement is accurate or complete. Any representation to the
contrary is a criminal offense.
The participation interests offered by The Oswego County Savings Bank
401(k) Plan are not savings accounts or deposits and are not insured or
guaranteed by any government insurance fund, Oswego County Savings Bank or
Oswego County Bancorp, Inc.
-------------------------------
____________ ____, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE OFFERING...........................................................................................S-1
Summary of the Reorganization.................................................................S-1
Securities Offered............................................................................S-1
Election to Purchase Common Stock in the Offering; Priorities.................................S-1
Value of 401(k) Plan Account Balances.........................................................S-2
How to Use Plan Funds to Invest in the Offering...............................................S-2
Deadline for Participating in the Offering....................................................S-2
Irrevocability of Election to Participate in the Offering.....................................S-3
Direction to Purchase Common Stock After the Offering.........................................S-3
Purchase Price of Common Stock................................................................S-3
Nature of a Participant's Interest in the Common Stock........................................S-3
Voting Rights of Common Stock.................................................................S-4
DESCRIPTION OF THE 401(k) PLAN.........................................................................S-4
Introduction..................................................................................S-4
Employee Retirement Income Security Act.......................................................S-4
Reference to Full Text of Plan................................................................S-5
Eligibility and Participation.................................................................S-5
Contributions Under the Plan..................................................................S-5
Limitations on Contributions..................................................................S-6
Limitation on 401(k) Plan Contributions..............................................S-6
Limitation on Annual Additions and Benefits..........................................S-6
Limitation on Plan Contributions for Highly Compensated Employees....................S-6
Top-Heavy Plan Requirements..........................................................S-8
Investment of Contributions.......................................................S-8
General........................................................................S-8
Previous Funds.......................................................................S-8
Oswego County Bancorp Stock Investment Fund..................................................S-11
Vesting......................................................................................S-12
Withdrawals and Distributions From the 401(k) Plan...........................................S-12
Withdrawals Prior to Termination of Employment or Age 59 1/2.................................S-12
Distribution Upon Death, Retirement, Disability or Termination of
Employment....................................................................S-13
Non-alienation of Benefits................................................................S-13
Trustee......................................................................................S-13
Plan Administrator...........................................................................S-13
Reports to 401(k) Plan Participants..........................................................S-14
Amendment and Termination....................................................................S-14
Merger, Consolidation or Transfer.........................................................S-14
Federal Income Tax Consequences..............................................................S-15
Lump Sum Distribution...............................................................S-15
Averaging Rules.....................................................................S-16
Common Stock Included in Lump Sum Distribution......................................S-16
Continuation or Rollovers to Another Qualified Plan or to an IRA...................S-17
Additional Tax on Early Distributions...............................................S-19
Additional Employee Retirement Income Security Act Considerations...................S-19
SEC Reporting and Short-Swing Profit Liability......................................S-19
LEGAL OPINION.........................................................................................S-19
</TABLE>
<PAGE>
THE OFFERING
Summary of the Reorganization
Oswego County Savings Bank is reorganizing into a New York-chartered
mutual holding company form, whereby the mutual savings bank will convert to a
New York-chartered stock savings bank as a wholly owned subsidiary of Oswego
County Bancorp, Inc. Oswego County Bancorp will become a majority-owned
subsidiary of Oswego County MHC, a New York- chartered mutual holding company.
Securities Offered
Oswego County Bancorp is offering participation interests to the
participant's in the 401(k) plan. These participation interests represent
indirect ownership of Oswego County Bancorp's common stock through the 401(k)
plan. The 401(k) plan may acquire up to ___________ shares (at a purchase price
of $ ________ per share) of common stock to be held by the 401(k) plan's trustee
in an investment fund established to primarily investment in the common stock of
Oswego County Bancorp. Oswego County Bancorp is the issuer of the common stock.
Only employees of Oswego County Savings Bank may become participants in the
401(k) plan. Oswego County Savings Bank will not offer these interests unless
Oswego County Savings Bank completes the reorganization into stock form. Your
ability to invest in the Oswego County Bancorp stock investment fund is subject
to the priority purchase rights described below. Information with regard to the
401(k) plan is contained in this prospectus supplement and information with
regard to the reorganization and the financial condition, results of operation
and business of Oswego County Savings Bank is contained in the attached
prospectus. This prospectus supplement should be read with the attached
prospectus. The address of the principal executive office of Oswego County
Savings Bank is 44 East Bridge Street, Oswego, New York 13126. Oswego County
Savings Bank's telephone number is (315) 343-4100.
Election to Purchase Common Stock in the Offering; Priorities
In connection with the reorganization, Oswego County Savings Bank has
amended its 401(k) plan to permit you to direct all or part of your 401(k)
account balance into the Oswego County Bancorp Stock Investment Fund to be used
to purchase the common stock issued in connection with the offering. The trustee
of the 401(k) plan will purchase common stock offered for sale in connection
with the offering in accordance with your directions.
In the event the offering is oversubscribed and the trustee is unable
to use the full amount allocated by you to purchase common stock in the
offering, the amount that cannot be invested in the Oswego County Bancorp Stock
Investment Fund will be reallocated on a pro rata basis to the other investment
options that you have previously selected. If you choose not to direct the
investment of your 401(k) account balance, your account balance will remain
allocated in and among the other investment options of the 401(k) plan as you
previously directed. If you have
S-1
<PAGE>
never made an investment election, your account balance will be invested in the
RSGroup Trust Company Stable Value Fund.
The shares of common stock to be sold in the offering are being offered
in the following order of priority:
(1) Depositors who held at least $100 with us on September 30, 1997.
(2) The Oswego County Bancorp, Inc. Employee Stock Ownership Plan.
(3) Depositors who held at least $100 with us on March 31, 1999.
(4) Oswego County Savings Bank's trustees, officers and employees.
To the extent you fall into one of these categories, you may use funds
in your 401(k) account to subscribe or pay for the common stock being offered.
Common stock so purchased will be placed in the Oswego County Bancorp Stock
Investment Fund and allocated to your 401(k) account. Limitations on the amount
of common stock that you may purchase in the offering will be calculated based
on the aggregate amount directly purchased by you in the offering together with
the amount purchased with funds allocated to your 401(k) account. See
"Limitations on Stock Purchases" at page ____ in the attached prospectus.
Value of 401(k) Plan Account Balances.
As of ____________ ____, 1999, the market value of the assets of the
401(k) plan equaled approximately $________________, representing the aggregate
market value of all the plan participants' accounts and earnings, less previous
withdrawals.
How to Use Plan Funds to Invest in the Offering
Accompanying this prospectus supplement is an Investment Election Form,
attached as Annex A, which will enable you to direct that all or a portion of
your 401(k) account balance, representing contributions through ____________
____, 1999, be transferred into the Oswego County Bancorp Stock Investment Fund.
If you wish to use all or any part of your 401(k) account balance to purchase
common stock issued in the offering, you must complete the attached Investment
Election Form.
Deadline for Participating in the Offering
If you wish to purchase common stock with your 401(k) account balance,
you must return your Investment Election Form to ____________,___________,
Oswego County Savings Bank, 44 East Bridge Street, Oswego, New York 13126, no
later than 12:00 noon on ____________ ____, 1999.
S-2
<PAGE>
Irrevocability of Election to Participate in the Offering
You may not revoke your election to transfer amounts credited to your
401(k) account into the Oswego County Bancorp Stock Investment Fund. At any time
after the offering and pursuant to the terms of the plan, you may change the
investment allocations of your 401(k) account balance as explained below.
Direction to Purchase Common Stock After the Offering
Whether or not you choose to purchase stock in the offering, you will
be able to purchase stock after the offering. You may direct a percentage of
your 401(k) account balance to be allocated and invested in the Oswego County
Bancorp Stock Investment Fund and/or in and among the other investment funds
available under the plan. You may change your investment allocation on an
unlimited basis. Special restrictions may apply to allocations directed to or
from the Oswego County Bancorp Stock Investment Fund by those participants who
are subject to the provisions of Section 16(b) of the Securities Exchange Act of
1934, as amended, relating to the purchase and sale of securities by executive
officers, directors and principal shareholders of Oswego County Bancorp and
Oswego County Savings Bank.
If you are an officer or director of Oswego County Bancorp or Oswego
County Savings Bank, then you will not be able to transfer your initial
investment out of the Oswego County Bancorp Stock Investment Fund for a period
of one year following the consummation of the conversion.
Purchase Price of Common Stock
The trustee will use the funds transferred to the Oswego County Bancorp
Stock Investment Fund for the purchase of common stock in the offering, except
in the event of an oversubscription, as discussed above. The trustee will pay
$_______ per share, the same price as paid by all other persons who purchase
shares of common stock in the offering.
After the offering, the trustee will acquire common stock in open
market transactions at the prevailing market price. The trustee will pay
transaction fees associated with the purchase, sale or transfer of the common
stock from the assets of the investment fund.
Nature of a Participant's Interest in the Common Stock
The trustee holds the common stock, in trust, for the participants in
the 401(k) plan. Shares of common stock acquired by the trustee at your
discretion will be held in an investment fund with participation interests of
such fund allocated to your 401(k) account. Therefore, investment decisions of
other plan participants should not affect the earnings allocated to your
individual account.
S-3
<PAGE>
Voting Rights of Common Stock
Each participant who is allocated interests in the Oswego County
Bancorp Stock Investment Fund shall be entitled to direct the plan's trustee
with respect to the voting and tendering of their proportionate interest in the
fund. Each such participant will be allocated instruction rights reflecting
their proportionate interest in the Oswego County Bancorp Stock Investment Fund
and the trustee will vote and/or tender the common stock, as the case may be,
held in the Oswego County Bancorp Stock Investment Fund affirmatively and
negatively on each matter in proportion to the instructions received by the
trustee in a timely manner.
DESCRIPTION OF THE 401(K) PLAN
Introduction
Oswego County Savings Bank adopted the 401(k) plan effective January 1,
1992 and restated on June 1, 1999. As part of the reorganization and conversion
into a mutual holding company structure Oswego County Savings Bank amended the
401(k) plan to permit investments in a fund established to invest primarily in
the common stock of Oswego County Bancorp. The 401(k) plan is a tax-qualified
plan that permits participants to defer current compensation to their 401(k)
accounts.
Employee Retirement Income Security Act.
Oswego County Savings Bank intends that the 401(k) plan, in operation,
will comply with the requirements of the Internal Revenue Code and the Employee
Retirement Income Security Act. Oswego County Savings Bank may amend the 401(k)
plan from time to time in the future, as it sees fit or to maintain compliance
with federal law. Since the 401(k) plan is governed by the Employee Retirement
Income Securities Act, you are provided with various rights and protections as a
participant of a the plan. Although the 401(k) plan is subject to many of the
provisions of the Employee Retirement Security Act, your benefits under the
401(k) plan are not governed or insured by the Pension Benefit Guaranty
Corporation.
Generally, applicable federal law requires the 401(k) plan to impose
substantial restrictions on your right to withdraw amounts held for your benefit
under the plan prior to your retirement. Additionally, a substantial federal tax
penalty may be imposed on withdrawals made prior to your attainment of age 59
1/2 , regardless of whether such a withdrawal occurs during or after your term
of employment.
S-4
<PAGE>
Reference to Full Text of Plan
The following statements are summaries of certain provisions of the
401(k) plan. They are not complete and are qualified in their entirety by the
full text of the 401(k) plan. You may obtain a copy of the 401(k) plan by filing
a request with Oswego County Savings Bank, 44 East Bridge Street, Oswego, New
York 13126, Attention: ________________. We urge each employee to read carefully
the full text of the 401(k) plan.
Eligibility and Participation
Any employee of Oswego County Savings Bank who has reached age 21 is
eligible to become a participant in the 401(k) plan on the first January 1st or
July 1st following the completion of one "year of service," a twelve consecutive
month period during which an employee completes at least 1,000 hours of service
with Oswego County Savings Bank. The plan year is January 1 to December 31.
As of ____________ ____ 1999, there were approximately ____ employees
eligible to participate in the 401(k) plan, and ____ employees participating by
making elective deferral contributions.
Contributions Under the Plan
401(k) Contributions. As a member of the 401(k) plan, you are permitted
to defer on a pre-tax basis from 1% to 12% of your compensation up to $10,000,
and to have that amount contributed to the 401(k) plan on your behalf. For
purposes of the 401(k) plan, "compensation" means your base pay plus
commissions, exclusive of any compensation deferred from a previous year, plus
pre-tax contributions made to this 401(k) plan or a section 125 cafeteria plan.
In 1999, the maximum amount of your annual salary that could be taken
into account under the 401(k) plan is limited to $160,000. Limits established by
the Internal Revenue Service are subject to increase pursuant to an annual cost
of living adjustment.
You may elect to modify the amount contributed to the 401(k) plan by
filing a new salary reduction agreement with the 401(k) plan administrator which
will be effective the first day of the next contribution reporting period.
However, Section 16 of the Securities Exchange Act of 1934 applies special
restrictions to those participants who are officers, directors and persons
beneficially owning more than 10% of Oswego County Bancorp.
After-Tax Contributions. Employee after-tax contributions are not
allowed under the plan.
Employer Contributions. If you make a deferral contribution, Oswego
County Savings Bank will make a matching contribution to your 401(k) account
equal to 50% of your deferral up to the first 6% of your compensation (a maximum
matching contribution of 3% of your
S-5
<PAGE>
compensation). Matching contributions are subject to revision by Oswego County
Savings Bank at any time. Matching contributions vest according to the vesting
schedule as set forth on Page S-____.
Limitations on Contributions
Limitation on 401(k) Plan Contributions. In 1999, the aggregate amount
of your elective deferral contributions may not exceed $10,000 for the calendar
year. The Internal Revenue Service will periodically increase this annual
limitation. If you defer salary in excess of this limitation, your gross income
for federal income tax purposes will include the excess in the year of the
deferral. In addition, unless the excess deferral is distributed before April 15
of the following year it will be taxed again in the year distributed. Income on
the excess deferral distribution by April 15 of the immediately succeeding year
will be treated, for federal income tax purposes, as earned and received by the
participant in the tax year in which the distribution is made.
Limitation on Annual Additions and Benefits. The contributions and
forfeitures you receive under the 401(k) plan and other defined contribution
plans qualified under Section 401 of the Internal Revenue Code (including the
newly adopted employee stock ownership plan), in the aggregate, cannot exceed
the lesser of $30,000 or 25% of you compensation. To the extent contributions
and forfeitures exceed these limitations, the amounts that would have been
credited to your account shall be administered as follows:
(1) any excess amount of employer contribution shall be deemed
forfeited as of the end of the plan year and reallocated among the accounts of
the other participants; and
(2) remaining excess amounts shall be held in an unallocated suspense
account to be used as contributions for the next plan year.
If you are also covered under Oswego County Bancorp's employee stock
ownership plan and your annual additions exceed the maximum permissible amount
after the above reductions are taken, the plan administrator may reduce your
employee stock ownership plan contributions so the total annual additions do not
exceed the limitation.
Limitation on Plan Contributions for Highly Compensated Employees. The
Internal Revenue Code limits the amount of elective deferral contributions and
matching contributions that may be made to the 401(k) plan in any plan year on
behalf of highly compensated employees. The limitation is based upon the
relationship between the deferrals of the highly compensated employees verse the
contributions made by or on behalf of all other employees eligible to
participate in the 401(k) plan. Specifically, the actual deferral percentage,
i.e., the average of the actual deferral ratios, expressed as a percentage, of
each eligible employee's elective deferral contribution, if any, for the plan
year over the employee's salary, must meet either of the following tests:
S-6
<PAGE>
(1) the average deferral percentage of the eligible highly compensated
employees is not more than 125% of the average deferral percentage of all other
eligible employees; or
(2) the average deferral percentage of the eligible highly compensated
employees is not more than 200% of the average deferral percentage of all other
eligible employees, and the excess of the average deferral percentage for the
eligible highly compensated employees over the average deferral percentage of
all other eligible employees is not more than two percentage points.
Similarly, the actual contribution percentage, i.e., the average of the
actual contribution ratios, expressed as a percentage, of each eligible
employee's matching contributions, if any, for the plan year over the employee's
salary, must meet either of the following test:
(1) the actual contribution percentage of the eligible highly
compensated employees is not more than 125% of the actual contribution
percentage of all other eligible employees; or
(2) the actual contribution percentage of the eligible highly
compensated employees is not more than 200% of the actual contribution
percentage of all other eligible employees, and the excess of the actual
contribution percentage for the eligible highly compensated employees over the
actual contribution percentage of all other employees is not more than two
percentage points.
Example: If the average deferral percentage of non-highly
compensated employees is 4%, the average deferral
percentage of highly compensated employees cannot
exceed 6%. Alternatively, if the average deferral
percentage of non-highly compensated employees is
10%, the maximum deferral percentage of highly
compensated employees cannot exceed 12.5%.
In general, for plan years beginning in 1999, a highly compensated
employee includes:
(1) an employee who, during the plan year or the preceding plan year,
was at any time a 5% owner of the stock of the employer; or stock processing
more than 5% of the total combined voting power of all stock of the employer.
(2) an employee who, for the preceding plan year, received salary from
the employer in excess of $80,000 and if Oswego County Savings Bank elects, was
in the group consisting of the top 20% of employees when ranked on the basis of
salary paid during the plan year. The dollar amounts set forth above are
adjusted annually to reflect increases in the cost of living.
The trustee will distribute amounts contributed by highly compensated
employees that exceed the average deferral percentage limitation in any plan
year, together with any income allocable. These contributions must be
distributed before the close of the following plan year, first to highly
compensated employees with the greatest dollar amount of deferrals, until the
plan satisfies the average deferral percentage test. Moreover, Oswego County
Savings Bank will be subject to a 10% excise tax on these contributions unless,
together with any income allocable
S-7
<PAGE>
thereto, they either are re-characterized or are distributed before the close of
the first 2 1/2 months following the plan year to which the contributions
relate.
In addition, the trustee will distribute, any contributions by highly
compensated employees that exceed the average contribution percentage limitation
on any plan year, together with any income allocable thereto, before the close
of the following plan year. A 10% excise tax will also be imposed on Oswego
County Savings Bank with respect to these contributions, unless such
contributions, plus any income allocable thereto, are distributed within 2 1/2
months following the close of the plan year in which they arose.
Top-Heavy Plan Requirements. If for any plan year that the plan is a
top-heavy plan (as defined below), then (i) Oswego County Savings Bank may be
required to make certain minimum contributions to the plan on behalf of non-key
employees (as defined below), and (ii) certain additional restrictions would
apply with respect to the combination of annual additions to the plan and
projected annual benefits under any defined benefit plan maintained by Oswego
County Savings Bank.
In general, the Plan will be regarded as a "top-heavy plan" for any
plan year if, as of the last day of the preceding plan year, the aggregate
balance of the accounts of participants who are key employees exceeds 60% of the
aggregate balance of the accounts of all participants. Key employees generally
include any employee who, at any time during the plan year or any of the four
preceding plan years, is (1) an officer of the employer having annual
compensation in excess of 50% of the amount under Section 415(b)(1)(A) of the
Internal Revenue Code ($130,000 for 1999), (2) one of the ten employees having
annual compensation greater than the Section 415(c)(1)(A) amount ($30,000 for
1999) and owning, directly or indirectly, the largest interests in the employer,
(3) a 5% owner of the employer, (i.e., owns directly or indirectly more than 5%
of the stock of the employer, or stock processing more than 5% of the total
combined voting power of all stock of the employer) or (4) a 1% owner of the
employer having annual compensation in excess of $150,000.
Investment of Contributions
General. All amounts credited to your accounts under the 401(k) plan
are held in the plan trust which is administered by the trustee appointed by
Oswego County Savings Bank's board of directors.
S-8
<PAGE>
Previous Funds. The annual percentage return on these funds for the
prior three years was:
<TABLE>
<CAPTION>
=================================================================================================================
Fund 1998 1997 1996
- ----------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Alliance Premier Growth A Equity Fund % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
MFS Massachusetts Inv Growth A Equity Fund % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
MFS Capital Opportunities A Equity Fund % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
Baron Asset Fund % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
Scudder International Equity Fund % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
RSI Retirement Trust Actively Managed Bond Fund % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
RSGroup Trust Company Stable Value Fund % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
RSGroup Trust Company Aggressive Asset Allocation % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
RSGroup Trust Company Moderate Asset Allocation % % %
- ----------------------------------------------------------------------------- ----------- ----------- -----------
RSGroup Trust Company Conservative Asset Allocation % % %
=================================================================================================================
</TABLE>
A brief summary of such funds is as follows:
Alliance Premier Growth A Equity Fund - The Alliance Premier Growth
Fund seeks long-term growth of capital by investing primarily in the equity
securities of a limited number of large, high-quality U.S. companies that are
judged likely to achieve superior earning growth. The fund is appropriate for
investors with a long-term investment horizon.
MFS Massachusetts Inv Growth A Equity Fund - The MFS Massachusetts
Investors Growth Stock Fund seeks long-term growth of capital and future income
by investing in common stocks of companies with better-than-average prospects
for long-term growth. The fund is appropriate for investors with a long-term
investment horizon.
MFS Capital Opportunities A Equity Fund - The MFS Capital Opportunities
Fund seeks capital appreciation by investing primarily in common stocks selling
at a discount to projected earnings growth. Income is a secondary consideration.
The fund is appropriate for investors with a long-term investment horizon.
Baron Asset Fund - The Baron Asset Fund seeks capital appreciation by
investing in securities of smaller companies which management believes are
undervalued or have superior growth potential. The fund is appropriate for
investors with a long-term investment horizon who are willing to accept greater
short-term changes in value for the potential of a higher long-term return.
S-9
<PAGE>
Scudder International Equity Fund - The Scudder International Fund
seeks long-term growth of capital by investing in foreign equities. The fund is
appropriate for investors with a long-term investment horizon. There are special
risks associated with an investment in this fund, including fluctuations in
exchange rates and political uncertainty.
RSI Retirement Trust Actively Managed Bond Fund -
RSGroup Trust Company Stable Value Fund - The Stable Value Fund is a
bank collective trust that seeks to protect principal from market volatility and
achieve returns comparable to short-term bond funds by investing in high
quality, interest stable instruments that are inherent in instruments in GICs,
BICs and synthetic stable value products with a relatively predictable annual
return.
RSGroup Trust Company Aggressive Asset Allocation - This diversified
investment fund is a bank collective trust that is ready-made asset allocated
portfolio for the investor with an "aggressive" risk profile who is stable to
leave their money invested through market cycles and are comfortable riding out
market declines when they occur. The fund has target exposure of 75% stocks and
25% bonds.
RSGroup Trust Company Moderate Asset Allocation - This diversified
investment fund is a bank collective trust that is a ready-made asset allocated
portfolio for the investor with a "moderate" risk profile who is stable to leave
their money invested through market cycles and are comfortable riding out market
declines when they occur. The fund has target exposure of 60% stocks and 40%
bonds.
RSGroup Trust Company Conservative Asset Allocation - This diversified
investment fund is a bank collective trust that is ready-made asset allocated
portfolio for the investor with a "conservative" risk profile who is stable to
leave their money invested through market cycles and are comfortable riding out
market declines when they occur. The fund has a target exposure of 40% stocks
and 60% bonds.
Prior to the effective date of the offering and as part of the normal
operation of the plan, you and the other participants were provided the
opportunity to direct the investment of your 401(k) accounts into and among the
following funds:
A. Alliance Premier Growth A Equity Fund
B. MFS Massachusetts Inv Growth A Equity Fund
C. MFS Capital Opportunities A Equity Fund
D. Baron Asset Fund
E. Scudder International Equity Fund
F. RSI Retirement Trust Actively Managed Bond Fund
G. RSGroup Trust Company Stable Value Fund
H. RSGroup Trust Company Aggressive Asset Allocation
I. RSGroup Trust Company Moderate Asset Allocation
J. RSGroup Trust Company Conservative Asset Allocation
S-10
<PAGE>
The 401(k) plan now provides that in addition to the funds specified
above, you may direct the trustee to invest all or a portion of your 401(k)
account in the Oswego County Bancorp Stock Investment Fund.
You may elect to have past contributions (including earnings thereon)
as well as future contributions to your 401(k) account invested either in the
Oswego County Bancorp Stock Investment Fund and/or in and among the other funds
listed above. Transfers of past contributions (and the earnings thereon) do not
affect the investment mix of future contributions.
If you make an election to direct any part of your 401(k) account into
the Oswego County Bancorp Stock Investment Fund, you may change your investment
decision at a future date. This may be done by filing a Change of Investment
Allocation Form with the 401(k) plan's administrator. The proceeds of the sale,
net of expenses, will be allocated to your 401(k) account and reallocated in
accordance with your alternative investment directions. Until an initial
effective direction is made by a participant, the participant's 401(k) account
will be invested in the RSGroup Trust Company Stable Value Fund.
Oswego County Bancorp Stock Investment Fund
The Oswego County Bancorp Stock Investment Fund will consist of
investments in common stock made on and after the effective date of the
offering. After the offering, the trustee will, to the extent practicable, use
all amounts held by it in the stock investment fund, (including cash dividends
paid on the common stock held) to purchase shares of common stock of Oswego
County Bancorp. It is expected that all purchases will be made at the then
prevailing market price. Under certain circumstances, the trustee may be
required to limit the daily volume of shares purchased. Pending investment in
common stock, assets held in the stock investment fund will be placed in the
RSGroup Trust Company Stable Value Fund an equivalent investment vehicle. Any
earnings that result therefrom will remain in and be utilized by the stock
investment fund.
Any brokerage commissions, transfer fees and other expenses incurred in
the sale and purchase of common stock for the stock investment fund will be paid
out of a cash account managed by the trustee. Therefore, although the
participants' 401(k) accounts will not be directly adjusted for such fees, the
market value of the fund its self and the units allocated to the participant's
accounts will be reduced.
As of the date of this prospectus supplement, none of the shares of
common stock have been issued or are outstanding and there is no established
market for the common stock. Accordingly, there is no record of the historical
performance of the Oswego County Bancorp Stock Investment Fund. Performance will
depend upon a number of factors, including the financial condition and
profitability of Oswego County Bancorp and Oswego County Savings Bank and market
conditions for the common stock generally.
Investments in the Oswego County Bancorp Stock Investment Fund involve
certain special risks as they are an indirect investment in the common stock of
the Oswego County Bancorp. For a discussion of these risk factors, see "Risk
Factors" on page ____ in the prospectus.
S-11
<PAGE>
Vesting
You are always 100% vested in your deferral contributions to the 401(k)
plan. You shall become vested in any employer matching contributions in
accordance with the following schedule:
----------------------------------- -------------------------
Years of Service Vested Percentage
----------------------------------- -------------------------
Less than 2 0%
----------------------------------- -------------------------
2 20%
----------------------------------- -------------------------
3 40%
----------------------------------- -------------------------
4 60%
----------------------------------- -------------------------
5 80%
----------------------------------- -------------------------
6 100%
----------------------------------- -------------------------
A year of service is granted provided the participant works at least
1,000 hours in the plan year.
You are also 100% vested in employer matching contributions made to
your 401(k) account, regardless of your years of service, upon attainment of
normal retirement age under the 401(k) plan, defined as age 65, death,
disability or upon the complete termination of the plan. Any non-vested employer
contributions which are forfeited will be reallocated to all eligible
participants at the end of the plan year in the same ratio as each participant's
salary bears to the total of the salary of all participants.
Withdrawals and Distributions From the 401(k) Plan
Federal law requires the 401(k) plan to impose substantial restrictions
on your right to withdraw amounts held for your benefit under the 401(k) plan
prior to termination of employment with Oswego County Savings Bank. A federal
tax penalty equal to 10% of the withdrawal, over and above the normal federal
and state income tax, may also be imposed on withdrawals made prior to your
attainment of age 59 1/2, regardless of whether the withdrawals occur during
your employment with Oswego County Savings Bank or after termination of such
employment.
Withdrawals Prior to Termination of Employment or Age 59 1/2
You may withdraw your deferral or employer matching contributions in
your 401(k) account prior to termination of employment or attaining age 59 1/2
only in the event of unforseen financial hardship, subject to the hardship
distribution rules under the plan. These requirements insure that you have a
true financial need before you make such a withdrawal.
S-12
<PAGE>
Distribution Upon Death, Retirement, Disability or Termination of Employment
Payment of your benefits upon your death, retirement, disability or
other termination of employment shall be made to you (or your beneficiary, as
the case may be) in a lump sum if your 401(k) account is no more that $5,000.
For distributions for other then death, if the value of your 401(k) account is
greater than $5,000, payout(s) of your benefits will be deferred until age 65
unless you select one of the following options.
o You may select a lump sum payment as of the plan's
valuation date following you date of termination.
Such lump sum may be subject to mandatory withholding
and/or the 10% federal excise tax for early
distributions.
o You may "rollover" your 401(k) account balance into
another qualified retirement plan or to an Individual
Retirement Account, as discussed below.
o You may have your account balance paid out as
monthly, quarterly, semi-annual or annual
installments commencing on a date of your choosing
over a period not to exceed 20 years. Depending upon
your particular circumstances, these installment
payments may be subjected to the 10% excise tax for
early distributions.
Benefit payments may be deferred until April 1 following the calendar
year in which you attain age 70 1/2. Minimum distributions must commence and
continue every year thereafter.
Non-alienation of Benefits
Except for federal income tax withholding and qualified domestic
relations order, your benefits payable under the 401(k) plan cannot be
alienated. Examples of alienation include transferring your benefits voluntarily
and having a creditor place a lien on your benefits. Any attempt to alienate
your benefits, whether voluntary or involuntary shall be void.
Trustee
The trustee with respect to the 401(k) plan is the named fiduciary of
the 401(k) plan. The board of trustees of Oswego County Savings Bank has
appointed RSGroup Trust Company as trustee of the 401(k) plan. The trustee
receives, holds and invests the contributions to the 401(k) plan in trust and
distributes them to you and your beneficiaries in accordance with the terms of
the 401(k) plan and the directions of the plan administrator. The trustee is
responsible for investment of the assets of the trust.
Plan Administrator
Currently, the 401(k) plan administrator is a committee appointed by
Oswego County Savings Bank. The address and telephone number of the plan
administrator is 44 East Bridge Street, Oswego, New York 13126, telephone number
(315) 343-4100. The 401(k) plan administrator is responsible for the
administration of the 401(k) plan, interpretation of the
S-13
<PAGE>
provisions of the 401(k) plan, prescribing procedures for filing applications
for benefits, preparation and distribution of information explaining the 401(k)
plan, maintenance of 401(k) plan records, books of account and all other data
necessary for the proper administration of the 401(k) plan, and preparation and
filing of all returns and reports relating to the 401(k) plan which are required
to be filed, and for all disclosures required to be made to participants,
beneficiaries and others.
Reports to 401(k) Plan Participants
The 401(k) plan administrator will furnish you with a statement at
least quarterly showing:
(1) the balance in your 401(k) plan account as of the end of that
period;
(2) the amount of contributions allocated to your 401(k) plan account
for that period; and
(3) the adjustments to your 401(k) plan account to reflect earnings or
losses, distributions, loans disbursed, loan repayments and/or
transfers between investment funds.
Amendment and Termination
It is the intention of Oswego County Savings Bank to continue the
401(k) plan indefinitely. Nevertheless, Oswego County Savings Bank may terminate
the 401(k) plan at any time. If the 401(k) plan is terminated in whole or in
part, then regardless of other provisions in the 401(k) plan, you will have a
fully vested interest in your 401(k) account. Oswego County Savings Bank
reserves the right to make, from time to time, any amendment or amendments to
the 401(k) plan which do not cause any part of the trust to be used for, or
diverted to, any purpose other than the exclusive benefit of participants or
their beneficiaries; provided, however, that Oswego County Savings Bank may make
any amendment it determines necessary or desirable, with or without retroactive
effect, to comply with the Employee Retirement Income Security Act and/or the
Internal Revenue Code.
Merger, Consolidation or Transfer
In the event of the merger or consolidation of the 401(k) plan with
another plan, or the transfer of the trust assets to another plan, the 401(k)
plan requires that you will be entitled to a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the benefit
you would have been entitled to receive immediately before such merger,
consolidation or transfer.
S-14
<PAGE>
Federal Income Tax Consequences
General. The following is a summary of the material federal income tax
aspects of the 401(k) plan. However, statutory provisions are subject to change,
as are their interpretations, and their application may vary in individual
circumstances. The consequences under state and local income tax laws may not be
the same as under the federal income tax laws.
You Are Urged to Consult Your Tax Advisor With Respect To
Any Distribution From The 401(k) Plan And Transactions
Involving The 401(k) Plan.
The 401(k) plan is tax-qualified and the related trust is exempt from
taxation under the Internal Revenue Code. As a result, the 401(k) plan is
afforded special tax treatment which include the following:
(1) Oswego County Savings Bank is allowed an immediate tax deduction
for the amount contributed to the 401(k) plan each year;
(2) participants pay no current income tax on amounts contributed by
Oswego County Savings Bank on their behalf; and
(3) earnings of the 401(k) plan are tax-exempt thereby permitting the
tax-free accumulation of income and gains on investments.
The 401(k) plan will be administered to comply in operation with the
requirements of the Internal Revenue Code as of the effective date of any change
in the law. Oswego County Savings Bank expects to timely adopt any amendments to
the 401(k) plan that may be necessary to maintain the qualified status of the
401(k) plan under the Internal Revenue Code.
Assuming that the 401(k) plan is administered in accordance with the
requirements of the Internal Revenue Code, participation in the 401(k) plan
under existing federal income tax laws will have the following effects:
(1) The contributions to your 401(k) account and the investment
earnings on the account are not includable in your federal taxable income until
the contributions or earnings are actually distributed or withdrawn from the
401(k) plan. Special tax treatment may apply to the taxable portion of any
distribution that includes common stock or qualifies as a lump sum distribution,
as described below; and
(2) Income earned on assets held by the trust will not be taxable to
the trust.
Lump Sum Distribution. A distribution from the 401(k) plan to you or
your beneficiary will qualify as a lump sum distribution if it is made:
(1) within one calendar year;
S-15
<PAGE>
(2) on account of your death, disability or separation from service, or
after you attain age 59 1/2; and
(3) consists of your balance under this 401(k) plan and all other
profit sharing plans, if any, maintained by Oswego County Savings Bank. The
portion of any lump sum distribution that is required to be included in your
taxable income for federal income tax purposes, consists of the entire amount of
the lump sum distribution less the amount of after-tax contributions, if any,
made by you to this or any other profit sharing plan maintained by Oswego County
Savings Bank which is included as part of the lump sum distribution.
Averaging Rules. The portion of the total taxable amount of a lump sum
distribution that is attributable to participation after 1973 in the 401(k) plan
or in any other profit-sharing plan maintained by Oswego County Savings Bank,
referred to as the ordinary income portion, will be taxable generally as
ordinary income for federal income tax purposes. However, if you have completed
at least five years of participation in the 401(k) plan before the year in which
the distribution is made, you may elect to have the ordinary income portion of
the lump sum distribution taxed according to a special five-year averaging rule.
In general, five-year income averaging allows you to pay a separate tax
on the lump-sum distribution that approximates the tax that would have been due
if the distribution had been received in five equal annual installments. The
election of the special averaging rules apply only to one lump sum distribution
received by you provided such amount is received on or after you turn age 59 1/2
and you elect to have any other lump sum distribution from a qualified plan
received in the same year taxed under the special averaging rule. If your
beneficiary receives a lump sum distribution as the result of your death, your
beneficiary may elect five-year averaging without regard to whether you were a
participant in the plan for five years prior to your death.
Example: Smith, age 65 and married filing a joint federal tax return,
receives a lump-sum distribution of $150,000 from his corporation's
qualified plan and elects 5-year averaging. The tax is computed as
follows:
Amount of total distribution subject to tax $150,000.00
Tax at single rates on $30,000 (1/5 of $150,000) 5,988.50
Multiplied by 5 $ 29,942.50
Under a special grandfather rule, if you turned age 50 by 1985, you may
elect to have your lump sum distribution taxed under either the five-year
averaging rule or under the prior law's ten-year averaging rule; you also may
elect to have that portion of the lump sum distribution attributable to your
pre-1974 participation in the 401(k) plan taxed at a flat 20% rate as gain from
the sale of a capital asset.
For years beginning after December 31, 1999, five year income averaging
is repealed. The special grandfather rule is modified so that, if you qualify,
you can elect 10-year but not five year averaging.
S-16
<PAGE>
Common Stock Included in Lump Sum Distribution. If a lump sum
distribution includes common stock, the distribution generally will be taxed in
the manner described above under lump sum distributions rules, except that the
total taxable amount will be reduced by the amount of any net unrealized
appreciation with respect to such common stock, i.e., the net unrealized
appreciation is the excess of the value of such common stock at the time of the
distribution over the cost or other basis to the trust.
Example: Assume the 401(k) plan purchases 100 shares of common stock in
the offering at $10 per share. Ten dollars would be the cost basis of
the stock to the 401(k) plan. If the 401(k) plan distributes the common
stock to you in a lump sum distribution when the stock is trading at
$18 per share, you will be taxed in the year of distribution on the $10
cost basis of the stock to the 401(k) plan. The additional $8 per
share, or the net unrealized appreciation, will not be taxed until you
ultimately sell the stock.
The tax basis of such common stock for purposes of computing gain or
loss on its subsequent sale will be the value of the common stock at the time of
distribution less the amount of net unrealized appreciation.
Example: Assuming the same facts as above, your cost basis in the stock
is $10, which is the $18 value of the stock at the time of distribution
MINUS the $8 of net unrealized appreciation.
Any gain on a sale or other taxable disposition of such common stock,
to the extent of the amount of net unrealized appreciation at the time of
distribution, will be considered long-term capital gain regardless of the
holding period of such common stock. Any gain on a sale (or other taxable
disposition) of the common stock in excess of the amount of net unrealized
appreciation at the time of distribution will be considered short-term, mid-term
or long-term capital gain depending upon the length of the holding period of the
common stock.
Example: Assume you sell 50 shares of the stock in January, seven
months after you receive the distribution for $20 per share. You will
be taxed as follows: You will not be taxed again on the $10 cost basis
you recognized as income at the time of distribution. The $8 in net
unrealized appreciation will be taxed at long term capital gains rates.
However, the $2 appreciation in the value of the stock that occurred
since the distribution will be taxed at short term capital gains rates
since you have only held the stock for seven months following its
distribution to you.
As a recipient of a distribution you may elect to include the amount of
any net unrealized appreciation in the total taxable amount of such distribution
to the extent allowed by the regulations to be issued by the Internal Revenue
Service.
Contribution or Rollover to Another Qualified Plan or to an Individual
Retirement Account. You may defer federal income taxation of all or any portion
of the total taxable amount of a lump sum distribution, including the proceeds
from the sale of any common stock included in the lump sum distribution, to the
extent that such amount, or a portion thereof, is contributed
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("rolled over") within 60 days after the date of its receipt by you, to another
qualified plan or to an individual retirement account. If less than the total
taxable amount of a lump sum distribution is contributed to another qualified
plan or to an individual retirement account within the applicable 60-day period,
the amount not so contributed must be included in your income for federal income
tax purposes and will not be eligible for the special averaging rules or for
capital gains treatment.
Example: You receive a distribution of 500 shares of stock and $3,000
cash from the 401(k) plan on June 30. If you intend to roll your
distribution over to another tax qualified plan or individual
retirement account, you must do so no later than August 29, which is 60
days after you received the distribution. If you roll over all the
stock but none of the cash, you must include the $3,000 cash in your
income for the calendar year in which the distribution is made to you.
You generally may defer the federal income taxation of any portion of
any other distribution made on account of your disability or separation from
service, if the amount is distributed within one taxable year, and is
contributed, within 60 days after the date of its receipt by you, to an
individual retirement account.
Effective January 1, 1993, you have the right to elect to have the
trustee transfer all or any portion of an "eligible rollover distribution"
directly to another qualified plan or to an individual retirement account. If
you do not elect to have an eligible rollover distribution transferred directly
to another qualified plan or to an individual retirement account, the
distribution will be subject to a mandatory federal withholding tax equal to 20%
of the taxable distribution. An eligible rollover distribution means any amount
distributed from the 401(k) plan except:
(1) a distribution that is (a) one of a series of substantially equal
periodic payments made, not less frequently than annually, over your
life or the joint lives of you and your designated beneficiary, or (b)
for a specified period of ten years or more;
(2) any amount that is required to be distributed under the minimum
distribution rules; and
(3) any other distributions excepted under applicable federal law.
If your beneficiary is your surviving spouse, he or she also may defer
federal income taxation of all or any portion of a distribution from the 401(k)
plan to the extent that such amount, or a portion thereof, is contributed within
60 days after the date of its receipt by your surviving spouse, to an individual
retirement account. If all or any portion of the total taxable amount of a lump
sum distribution is contributed by your surviving spouse to an individual
retirement account within the applicable 60-day period, any subsequent
distribution from the individual retirement account will not be eligible for the
special averaging rules or for capital gains treatment. Any amount received by
your surviving spouse that is not contributed to another qualified plan or to an
individual retirement account within the applicable 60-day period, and any
amount received by a nonspouse beneficiary will be included in such
beneficiary's income for federal tax purposes in the year in which it is
received.
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Additional Tax on Early Distributions. If you receive a distribution
from the 401(k) plan prior to attaining age 59 1/2 it will be subject to an
additional income tax equal to 10% of the taxable amount of the distribution.
The 10% additional income tax will not apply, however, to the extent the
distribution is rolled over into an individual retirement account or another
qualified plan or the distribution is:
(1) made to a beneficiary, or to your estate, on or after your death;
(2) attributable to your disability;
(3) part of a series of substantially equal periodic payments not less
frequently than annually made for your life or life expectancy or the
joint lives or joint life expectancies of you and your beneficiary;
(4) made to you after separation from service on account of early
retirement under the 401(k) plan after attainment of age 55;
(5) made to pay medical expenses to the extent deductible for federal
income tax purposes;
(6) made to an alternate payee pursuant to a qualified domestic
relations order; or
(7) made to effect the distribution of excess contributions or excess
deferrals.
Additional Employee Retirement Income Security Act Considerations
As noted above, the plan is subject to certain provisions of the
Employee Retirement Income Security Act, including special provisions relating
to control over the plan's assets by participants and beneficiaries. The 401(k)
plan's feature that allows you to direct the investment of your account balances
is intended to satisfy the requirements of section 404(c) of the Employee
Retirement Income Security Act of 1974 relating to control over plan assets by a
participant or beneficiary. The effect of this is two-fold. First, you will not
be deemed a 'fiduciary' because of your exercise of investment discretion.
Second, no person who otherwise is a fiduciary, such as your employer, the plan
administrator, or the plan's trustee is liable under the fiduciary
responsibility provision of the Employee Retirement Income Security Act for any
loss which results from your exercise of control over the assets in your plan
account.
Securities and Exchange Commission Reporting and Short-Swing Profit Liability
Section 16 of the Securities Exchange Act of 1934 imposes reporting and
liability requirements on officers, directors, and persons beneficially owning
more than 10% of public companies such as Oswego County Bancorp. Section 16(a)
of the Securities Exchange Act of 1934 requires the filing of reports of
beneficial ownership. Within 10 days of becoming an officer, director or person
beneficially owning more than 10% of the shares of Oswego County Bancorp, a Form
3 reporting initial beneficial ownership must be filed with the Securities and
Exchange Commission. Changes in beneficial ownership, such as purchases, sales
and gifts
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generally must be reported periodically, either on a Form 4 within 10 days after
the end of the month in which a change occurs, or annually on a Form 5 within 45
days after the close of Oswego County Bancorp's fiscal year. Discretionary
transactions in and beneficial ownership of the common stock through the Oswego
County Bancorp Stock Investment Fund of the 401(k) plan by officers, directors
and persons beneficially owning more than 10% of the common stock of Oswego
County Bancorp generally must be reported to the Securities and Exchange
Commission by such individuals.
In addition to the reporting requirements described above, section
16(b) of the Securities Exchange Act of 1934 provides for the recovery by Oswego
County Bancorp of profits realized by an officer, director or any person
beneficially owning more than 10% of Oswego County Bancorp's common stock
resulting from non-exempt purchases and sales of Oswego County Bancorp's common
stock within any six-month period.
The Securities and Exchange Commission has adopted rules that provide
exemptions from the profit recovery provisions of section 16(b) for all
transactions in employer securities within an employee benefit plan, provided
certain requirements are met. These requirements generally involve restrictions
upon the timing of elections to acquire or dispose of employer securities for
the accounts of section 16(b) persons.
Except for distributions of common stock due to death, disability,
retirement, termination of employment or under a qualified domestic relations
order, persons affected by section 16(b) are required to hold shares of common
stock distributed from the 401(k) plan for six months following such
distribution and are prohibited from directing additional purchases of units
within the Oswego County Bancorp Stock Investment Fund for six months after
receiving such a distribution.
LEGAL OPINION
The validity of the issuance of the common stock will be passed upon by
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D. C., which firm acted as
special counsel to Oswego County Bancorp, Inc. in connection with Oswego County
Savings Bank's reorganization from a mutual form to a stock form bank.
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ANNEX A
THE OSWEGO COUNTY SAVINGS BANK 401(k) PLAN
Investment Election Form
Name of 401(k) Plan Participant: ___________________________
Social Security Number: ___________________________
1. INSTRUCTIONS. The Oswego County Savings Bank 401(k) Plan now permits
participants to direct their 401(k) account balances into a new investment fund:
the Oswego County Bancorp Stock Investment Fund. The percentage of a
participant's 401(k) account transferred at the direction of the participant
into the Oswego County Bancorp Stock Investment Fund will be used to purchase
shares of common stock of Oswego County Bancorp, Inc.
To direct a transfer of all or a portion of the funds credited to your
401(k) account to the Oswego County Bancorp Stock Investment Fund, you should
complete and file this form with the Human Resources Department, no later noon
on ________ __, 1999. A representative for Oswego County Savings Bank will
retain a copy of this form and return a copy to you. If you need any assistance
in completing this form, please contact _______________. If you do not complete
and return this form to the Oswego County Savings Bank by noon on ________ __,
1999, the funds credited to your 401(k) account will continue to be invested in
accordance with your prior investment direction or in accordance with the terms
of the 401(k) plan if no investment direction has been provided.
2. INVESTMENT DIRECTIONS. I hereby authorize the 401(k) plan
administrator to direct the Oswego County Savings Bank to sell the units
currently credited to my 401(k) account and to purchase units in the Oswego
County Bancorp Stock Investment Fund. Transfers of units from existing
investment funds must be in multiples of 1% or whole percentages:
<TABLE>
<CAPTION>
========================================== ====================================================
SELL UNITS FROM 401(k) plan Investment Funds
- ------------------------------------------ ----------------------------------------------------
<S> <C>
Sell _____% of A Alliance Premier Growth A Equity Fund
- ------------------------------------------ ----------------------------------------------------
Sell _____% of B MFS Massachusetts Inv Growth A Equity Fund
- ------------------------------------------ ----------------------------------------------------
Sell _____% of C MFS Capital Opportunities A Equity Fund
- ------------------------------------------ ----------------------------------------------------
Sell _____% of D Baron Asset Fund
- ------------------------------------------ ----------------------------------------------------
Sell _____% of E Scudder International Equity Fund
- ------------------------------------------ ----------------------------------------------------
Sell _____% of F RSI Retirement Trust Actively Managed Bond Fund
- ------------------------------------------ ----------------------------------------------------
Sell _____% of G RSGroup Trust Company Stable Value Fund
- ------------------------------------------ ----------------------------------------------------
Sell _____% of H RSGroup Trust Company Aggressive Asset Allocation
- ------------------------------------------ ----------------------------------------------------
Sell _____% of I RSGroup Trust Company Moderate Asset Allocation
- ------------------------------------------ ----------------------------------------------------
Sell _____% of J RSGroup Trust Company Conservative Asset Allocation
========================================== ====================================================
</TABLE>
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<PAGE>
3. PURCHASER INFORMATION. The ability of a participant in the 401(k)
plan to purchase common stock in the reorganization of Oswego County Savings
Bank and the related stock issuance and to direct his or her current balances
into the Oswego County Bancorp Stock Investment Fund is based upon the
participant's status as an eligible account holder, supplemental eligible
account holder, or trustee, officer or employee of Oswego County Savings Bank,
as defined in the Oswego County Bancorp, Inc. prospectus. To the extent your
order cannot be filled with common stock purchased in the reorganization of
Oswego County Savings Bank and the related stock issuance, the amount not used
to purchase common stock will be returned to the other investment funds of the
401(k) plan pursuant to your existing investment directions. Please indicate
your status.
a. |_| Eligible Account Holder - Check here if you were a
depositor with $100.00 or more on deposit with Oswego
County Savings Bank as of September 30, 1997.
b. |_| Supplemental Eligible Account Holder - Check here
if you were a depositor with $100.00 or more on
deposit with Oswego County Savings Bank as of March
31, 1999, but are not an Eligible Account Holder.
c. |_| Trustees, Officers and Employees - Check here if
you are a Trustee, Officer or Employee of Oswego
County Savings Bank.
4. ACKNOWLEDGMENT OF PARTICIPANT. I understand that this Investment
Election Form shall be subject to all of the terms and conditions of the 401(k)
plan. I acknowledge that I have received a copy of the prospectus and the
prospectus supplement.
_____________________________
Signature of Participant
Date:________________________
ACKNOWLEDGMENT OF RECEIPT BY PLAN ADMINISTRATOR. This Investment Election Form
was received by the 401(k) plan administrator and will become effective on the
date noted below.
By:__________________________
Date:________________________
A-2
<PAGE>
PROSPECTUS
Up to 700,925 Shares of Common Stock
OSWEGO COUNTY BANCORP, INC.
(in organization)
(Proposed Holding Company for
Oswego County Savings Bank)
- --------------------------------------------------------------------------------
Oswego County Savings Bank formed a new corporation called Oswego
County Bancorp, Inc. to own all of the common stock of Oswego County Savings
Bank. Oswego County Bancorp, Inc. is offering to the public shares of its common
stock representing an ownership interest of up to 49%. Oswego County Bancorp,
Inc. will issue the remaining shares of its outstanding common stock to Oswego
County MHC, a mutual holding company.
- --------------------------------------------------------------------------------
TERMS OF THE OFFERING
<TABLE>
<CAPTION>
Maximum,
Minimum Midpoint Maximum as Adjusted
------- -------- ------- -----------
<S> <C> <C> <C> <C>
Per Share Price.................................... $ 10.00 $ 10.00 $ 10.00 $ 10.00
Number of Shares................................... 399,500 470,000 540,500 621,575
Underwriting Commission and Other Expenses......... $592,200 $592,200 $592,200 $592,200
Net Proceeds to Oswego County Bancorp, Inc. ....... $3,402,800 $4,107,800 $4,812,800 $5,623,550
Net Proceeds Per Share............................. $8.52 $8.74 $8.90 $9.05
</TABLE>
Please refer to "Risk Factors" beginning on page ____ of this document.
These securities are not deposits or accounts and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
Neither the Securities and Exchange Commission, the Federal Deposit
Insurance Corporation, the New York State Banking Department, nor any other
federal agency or state securities regulator has approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
We have received conditional approval to list the common stock on the
Over-the-Counter Electronic Bulletin Board under the symbol "__________". The
underwriter, Friedman, Billings, Ramsey & Co., Inc., must sell the minimum
amount of securities ($3,995,000 of common stock) if any are sold. The
underwriter is required to use only its best efforts to sell the maximum amount
of securities offered ($5,405,000 of common stock).
Friedman, Billings, Ramsey & Co., Inc.
________________ ____, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Questions and Answers.............................................................................................5
Summary...........................................................................................................7
Contribution of Oswego County Bancorp, Inc. Stock to a Charitable Foundation.................................7
The Stock Offering...........................................................................................8
How We Determined the Offering Range and the $10.00 Price Per Share..........................................8
Persons Who Can Order Stock..................................................................................9
Termination of the Offering..................................................................................9
How We Will Use the Proceeds Raised From the Sale of Common Stock............................................9
We Plan to Establish a Dividend Policy......................................................................10
The Common Stock Will be Traded on the Over-the-Counter Market..............................................10
Our Board and Management Will Receive Benefits Following the Offering.......................................10
We Intend to Contribute Stock to a New Charitable Foundation................................................11
Background of Our Corporate Change..........................................................................11
Stock Center................................................................................................11
You May Not Sell or Give Away Your Subscription Rights......................................................11
Important Risks in Owning Oswego County Bancorp, Inc.'s Common Stock........................................11
Selected Financial and Other Data................................................................................12
Risk Factors.....................................................................................................14
Oswego County Bancorp, Inc.......................................................................................17
Oswego County Savings Bank.......................................................................................18
Oswego County MHC................................................................................................18
How We Intend To Use The Proceeds................................................................................18
Market For The Common Stock......................................................................................20
Our Policy Regarding Dividends...................................................................................21
Oswego County Savings Bank Exceeds All Regulatory Capital Requirements...........................................21
Capitalization...................................................................................................23
Pro Forma Data...................................................................................................25
Comparison Of Valuation And Pro Forma Information With No Foundation.............................................29
Oswego County Savings Bank.......................................................................................31
Management's Discussion and Analysis Of Financial Condition And Results Of Operation.............................32
General.....................................................................................................32
Forward-Looking Statements..................................................................................32
Management Strategy.........................................................................................32
Market Risk Analysis........................................................................................34
Financial Condition.........................................................................................36
Results of Operations.......................................................................................39
Liquidity and Capital Resources.............................................................................42
Impact of Inflation and Changing Prices.....................................................................42
Year 2000 Compliance........................................................................................43
Impact of New Accounting Standards..........................................................................44
Business.........................................................................................................46
Lending Activities..........................................................................................46
Asset Quality...............................................................................................51
Securities..................................................................................................55
</TABLE>
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Sources of Funds............................................................................................58
Subsidiaries................................................................................................60
Legal Proceedings...........................................................................................61
Employees...................................................................................................61
Properties..................................................................................................61
How We Are Regulated.............................................................................................62
General.....................................................................................................62
New York Regulation of Oswego County Savings................................................................62
Federal Regulation of Oswego County Savings.................................................................63
Holding Company Regulation..................................................................................67
Taxation.........................................................................................................71
Federal Taxation............................................................................................71
New York State Taxation.....................................................................................73
Management.......................................................................................................73
Management of Oswego County Bancorp.........................................................................73
Management of Oswego County Savings.........................................................................74
Biographical Information....................................................................................75
Executive Officers Who Are Not Trustees.....................................................................76
Meetings and Committees of Oswego County Savings............................................................76
Compensation of Trustees....................................................................................76
Deferred Compensation Plan for Trustees.....................................................................77
Executive Compensation......................................................................................77
Report of Independent Compensation Consultant...............................................................77
Benefits....................................................................................................78
Loans and Other Transactions with Officers and Trustees.....................................................80
Proposed Management Purchases....................................................................................82
Our Corporate Change and Stock Offering..........................................................................82
General.....................................................................................................82
Our Reasons For the Corporate Change........................................................................84
Effects of the Corporate Change.............................................................................85
Oswego County Charitable Foundation.........................................................................88
How We Determined Our Price and Number of Shares to be Issued in the Stock Offering.........................94
Subscription Offering and Subscription Rights...............................................................97
Community Offering.........................................................................................100
Syndicated Community Offering..............................................................................100
Persons in Nonqualified States or Foreign Countries........................................................102
Limitations on Stock Purchases.............................................................................102
Marketing Arrangements.....................................................................................104
Procedure for Purchasing Shares in the Subscription Offering...............................................105
Restrictions on Transfer of Subscription Rights and Shares.................................................107
Delivery of Certificates...................................................................................107
Required Approvals and Nonobjections.......................................................................107
Restrictions on Purchase or Transfer of Shares After the Corporate Change..................................108
Certain Restrictions On Acquisition Of Oswego County Bancorp and Oswego County
Savings...............................................................................................109
</TABLE>
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Provisions of Oswego County Bancorp's Certificate of Incorporation and Bylaws..............................109
Federal Reserve Board Regulations..........................................................................110
New York Banking Law.......................................................................................111
Benefit Plans..............................................................................................111
Description Of Capital Stock Of Oswego County Bancorp...........................................................111
General....................................................................................................111
Common Stock...............................................................................................111
Preferred Stock............................................................................................112
Transfer Agent and Registrar...............................................................................112
Experts.........................................................................................................112
Legal and Tax Opinions..........................................................................................113
Additional Information..........................................................................................113
Index to Financial Statements...................................................................................115
</TABLE>
4
<PAGE>
QUESTIONS AND ANSWERS
The following are frequently asked questions. References in this
document to "we," "us," "our," and "Oswego County Bancorp" refer to Oswego
County Bancorp, Inc. and, in some cases, to both Oswego County Bancorp, Inc. and
Oswego County Savings Bank. References to "Oswego County Savings" refer to
Oswego County Savings Bank.
Q: HOW MANY SHARES OF STOCK ARE BEING OFFERED, AND AT WHAT
PRICE?
We anticipate offering up to a maximum of 540,500 shares of common
stock at $10.00 per share. We must sell at least 399,500 shares.
However, without notice to you, we may increase the number of shares
we offer to up to 621,575 shares.
Q: WILL I BE ABLE TO SELL MY STOCK AFTER I PURCHASE IT?
A: Yes, you can immediately sell your stock unless you are one of our
officers, directors or trustees. However, you cannot be sure that
someone will want to buy your stock.
Q: WILL MY STOCK BE COVERED BY DEPOSIT INSURANCE OR
GUARANTEED BY ANY GOVERNMENT AGENCY?
A: No. Unlike insured deposit accounts at Oswego County Savings your
stock will not be insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Q: HOW MUCH STOCK MAY I ORDER?
A: There are limits on how much stock you can order. These limits are
discussed in this prospectus and on the stock order form.
Q: WHEN IS THE DEADLINE TO ORDER STOCK?
A: We must receive your signed order form with payment no later than
_____________ 12:00 noon, New York time, on __________________, 1999.
Q: HOW DO I PURCHASE THE STOCK?
A: First, you should read this prospectus. Then, complete and return the
enclosed stock order and certification form, together with your
payment.
Q: CAN I CHANGE MY MIND AFTER I ORDER STOCK?
A: No. After we receive your order form and payment, you may not cancel
or modify your order.
Q: HOW CAN I PAY FOR THE STOCK?
A: You have three options: (1) pay cash if it is delivered to us in
person; (2) send us a check or money order; or (3) authorize a
withdrawal from your deposit account at Oswego County Savings,
without any penalty for early withdrawal. Please do not send cash in
the mail.
Q: WILL I RECEIVE INTEREST ON MY PAYMENT?
A: Yes. Payments will be placed in an interest bearing account at Oswego
County Savings, and will earn interest at our passbook rate.
Depositors who authorize a withdrawal from their accounts at Oswego
County Savings will continue to receive interest on their accounts
until the funds are withdrawn.
5
<PAGE>
Q: CAN I PAY FOR STOCK USING FUNDS IN MY INDIVIDUAL RETIREMENT
ACCOUNT OR IRA AT OSWEGO COUNTY SAVINGS?
A: No. You cannot pay for stock with your individual retirement account
at Oswego County Savings. You may, however, establish a self-directed
individual retirement account with an outside trustee to pay for
stock using your IRA funds. Please call our Stock Center at
(315)___-____ to get more information. Please understand that this
process takes time, so please make arrangements as soon as possible.
Q: WHAT HAPPENS IF THERE IS NOT ENOUGH STOCK TO FILL ALL
ORDERS?
A: You may not receive any or all of the stock that you ordered.
If you hold a priority subscription right, you will receive at least
100 shares or your order for fewer shares before Oswego County
Bancorp fills orders for larger orders in your subscription priority
category.
Q: WHO CAN HELP ANSWER ANY OTHER QUESTIONS?
A: For answers to your other questions please read this prospectus. You
can also call the Stock Center at (315)343-3181, [_________ through
_______], between the hours of ____ a.m. and ____ p.m. You may also
write to:
Stock Center
Oswego, New York
Please note that the Stock Center will be closed for bank holidays. TO ENSURE
THAT EACH PERSON RECEIVES A PROSPECTUS AT LEAST 48 HOURS PRIOR TO ___________,
1999, NO PROSPECTUS WILL BE MAILED ANY LATER THAN FIVE DAYS PRIOR TO _________,
1999 OR HAND DELIVERED ANY LATER THAN TWO DAYS PRIOR TO ___________, 1999.
6
<PAGE>
SUMMARY
The summary highlights selected information from this document and
may not contain all the information that is important to you. To understand the
stock offering fully, you should read this entire document carefully, including
the financial statements and the notes to the financial statements.
The Companies:
Oswego County Bancorp, Inc.
44 East Bridge Street
Oswego, New York 13126
Oswego County Bancorp will be the holding company for Oswego County
Savings when our change in structure is complete. It is not currently an
operating company and has not engaged in any business to date.
Oswego County Savings Bank
44 East Bridge Street
Oswego, New York 13126
Oswego County Savings is a New York-chartered mutual savings bank. At
December 31, 1998, we had total assets of $110.9 million, deposits of $96.6
million, and net worth of $11.7 million. We are changing our structure by
becoming a stock savings bank.
We are a community-oriented savings bank serving primarily Oswego
County, New York and the surrounding counties through four full-service banking
offices located in Oswego, Fulton and Pulaski, New York. We emphasize single
family (one-to four-units) residential lending.
Oswego County MHC
44 East Bridge Street
Oswego, New York 13126
Upon completion of our change in structure and the stock offering,
Oswego County MHC will own 51% or more of the outstanding shares of Oswego
County Bancorp. Persons who as depositors of Oswego County Savings have
liquidation and voting rights as of the date of the change in structure will
have those rights automatically exchanged for identical rights in Oswego County
MHC after the change in structure.
Oswego County MHC is not expected to engage in any business activity
other than holding 51% or more of the shares of Oswego County Bancorp and
investing any funds retained by it.
Contribution of Oswego County Bancorp, Inc. Stock to a Charitable Foundation
To further Oswego County Savings' commitment to its community, Oswego
County Savings has established the Oswego County Charitable Foundation. Oswego
County Bancorp will contribute up to 21,620 shares of Oswego County Bancorp
common stock to the foundation. At the $10.00 per share price offered to members
of the public, the contributed shares have a value of $216,200. Charitable
contributions by Oswego County Savings totaled $40,000 in 1998, $32,000 in
1997 and $11,000 in 1996.
7
<PAGE>
The Stock Offering
We are offering between 399,500 and 540,500 shares of Oswego County
Bancorp common stock at $10.00 per share. If there are changes in financial
market conditions before we complete the stock offering, the offering may
increase to 621,575 shares with the approval of the New York State Banking
Department and the Federal Deposit Insurance Corporation without any notice to
you. If so, you will not have the chance to change or cancel your stock order.
Friedman, Billings, Ramsey & Co., Inc. will assist us in selling the
stock. For further information about Friedman, Billings, Ramsey & Co., Inc.'s
role in the stock offering, see "Our Corporate Change and Stock Offering -
Marketing Arrangements."
Oswego County Bancorp, Inc. Shares to be Issued
Maximum
Shareholders Minimum Midpoint Miximum As Adjusted
------------ ------- -------- ------- -----------
Oswego County MHC 471,750 555,000 638,250 733,988
Oswego County Charitable Foundation 15,980 18,800 21,620 24,863
Public Shareholders 399,500 470,000 540,500 621,575
------- ------- ------- -------
Total 887,230 1,043,800 1,200,370 1,380,426
======= ========= ========= =========
How We Determined the Offering Range and the $10.00 Price Per Share
The independent appraisal by RP Financial, L.C., dated as of April
16, 1999, established the offering range. This appraisal was based on our
financial condition and operations and the effect of the additional capital
raised in this offering. The $10.00 price per share was determined by our board
of trustees and is the price most commonly used in stock offerings involving
conversions of mutual savings institutions. RP Financial will update the
appraisal before the completion of the stock offering.
After completion of the change in structure and the stock offering,
each share of Oswego County Bancorp common stock, including the shares
contributed to Oswego County MHC and the Oswego County Charitable Foundation,
will have a book value of $13.24, at the maximum of the offering range. This
means the price paid for each share sold in this offering will be 75.73% of the
book value. The following table presents a summary of selected pricing ratios
for comparable public thrift institutions used by RP Financial to help
establish the market value of Oswego County Bancorp, Inc. pursuant to the
valuation methodology described in RP Financial's appraisal analyses.
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Price to Pro Forma Price Pro Forma Price to Price to
Earnings to Book Tangible Book Assets
Multiple Value Ratio Value Ratio
--------- --------------- ------------------ ---------
<S> <C> <C> <C> <C>
Oswego County Bancorp, Inc. (Fully Converted Basis)
15% above maximum 25.4x 60.9% 60.9% 11.5%
Maximum 23.2x 56.6% 56.6% 10.2%
Midpoint 21.1x 52.4% 52.4% 8.9%
Minimum 18.7x 47.6% 47.6% 7.7%
All Publicly-Traded Savings Institutions (Reported Basis)
As of April 16, 1999
Averages 15.8x 116.0% 120.6% 14.2%
Medians 14.5x 104.4% 107.1% 13.1%
Valuation Peer Group Institutions (Fully Converted Basis)
As of April 16, 1999
Averages 17.2x 79.4% 80.8% 16.7%
Medians 16.5x 78.5% 81.0% 14.9%
</TABLE>
8
<PAGE>
Persons Who Can Order Stock
We are offering the shares of common stock in a subscription offering
in the following order of priority:
(1) Depositors who held at least $100 with us on September 30, 1997;
(2) The Oswego County Bancorp employee stock ownership plan;
(3) Depositors who held at least $100 with us on March 31, 1999; and
(4) Oswego County Savings' trustees, officers and employees.
Shares of common stock not subscribed for in the subscription
offering will be offered to the general public in a direct community offering
and, if necessary, a syndicated public offering.
See pages __ to __.
Termination of the Offering
The subscription offering will end on [June __], 1999. If all of the
shares are not subscribed for and we do not get orders for the remaining shares
by [August __], 1999, we will either:
(1) promptly return any payment you made to us, with interest, or
cancel any withdrawal authorization you gave us; or
(2) extend the offering, if allowed, and give you notice of the
extension and of your rights to cancel or change your order. If
we extend the offering and you do not respond to the notice,
then we will cancel your order and return your payment, with
interest, or cancel your withdrawal authorization.
The latest possible extension date for the offering is
_____________________.
How We Will Use the Proceeds Raised From the Sale of Common Stock
We plan to use the net proceeds received at the minimum, midpoint,
maximum and maximum, as adjusted, of the estimated valuation range as follows:
<TABLE>
<CAPTION>
Maximum,
Minimum Midpoint Maximum As Adjusted
------- -------- ------- -----------
<S> <C> <C> <C> <C>
Retained by Oswego County Bancorp $1,701,400 $2,053,900 $2,406,400 $2,811,775
Contributed to Oswego County MHC $ 319,600 $ 376,000 $ 432,400 $ 497,260
Used to buy the Stock of Oswego County Savings $1,381,800 $1,677,900 $1,974,000 $2,314,515
</TABLE>
9
<PAGE>
We Plan to Establish a Dividend Policy
We plan to establish a policy to pay dividends on the common stock.
The board of directors has not yet determined the initial annual amount of the
dividends. Dividends are not guaranteed and will depend on our ability to pay
them. We will not pay or take any steps to pay a tax-free dividend which
qualifies as a return of capital for one year following the stock offering. See
page __.
The Common Stock Will be Traded on the Over-the-Counter Market
We expect our common stock to be traded on the over-the-counter
market through the OTC "Electronic Bulletin Board" under the symbol "____." [Our
application to list our stock on the over-the-counter market through the OTC
Bulletin Board is currently pending.] Persons purchasing shares may not be able
to sell their shares at a price equal to or above $10.00.
Our Board and Management Will Receive Benefits Following the Offering
Employee Stock Ownership Plan. This plan intends to purchase up to 8%
of the shares sold in this offering. The plan will use a loan from Oswego County
Bancorp, funded by a portion of the proceeds from this offering, to purchase
these shares. If shares are not available for purchase by the employee stock
ownership plan in the subscription offering, then the plan intends to purchase
the shares in the open market. The employee stock ownership plan will provide a
retirement benefit to all eligible employees.
Long-Term Equity Compensation Plans. We also intend to adopt a stock
option plan and a restricted stock plan for the benefit of directors, officers
and employees, subject to shareholder approval. If we adopt the restricted stock
plan, some of these individuals will receive stock at no cost to them. As a
result, both the employee stock ownership plan and the restricted stock plan
will increase the voting control of management without a cash outlay.
The following table presents the total value of the shares of common
stock, at the maximum of the offering range, which the employee stock ownership
plan would acquire and the total value of all shares to be available for award
and issuance under the restricted stock plan. The table assumes that the value
of the shares is the same as the purchase price in the offering. The table does
not include a value for the options because the price for the option shares will
be equal to the fair market value of the common stock on the day that the
options are granted. As a result, an optionholder can realize financial gains
under an option only if the market price of the common stock increases.
Percentage of
Estimated Shares Sold
Value of Shares in the Offering
--------------- ---------------
Employee Stock Ownership Plan.......... $432,400 8.0%
Restricted Stock Awards................ 216,200 3.0
Stock Options.......................... -- 10.0
-------- ----
Total....................... $648,600 22.0%
======== ====
10
<PAGE>
For further discussion of benefits to management, see "Management."
We Intend to Contribute Stock to a New Charitable Foundation
To continue our long-standing commitment to our local community, we
established a charitable foundation, the Oswego County Charitable Foundation. We
intend to contribute shares of our common stock to the foundation with a total
value equal to 4% of the shares sold in this offering. Based on the maximum
amount of shares offered, we will issue 21,620 shares to the foundation, worth
$216,200. We plan for the foundation to support charitable causes in Oswego
County Savings' primary market area. Charitable contributions by Oswego County
Savings totaled $32,000 in 1997 and $40,000 in 1998. If we contribute shares to
the foundation, then the value of the common stock will be lower than if the
stock offering were completed without the contribution. For a further discussion
of the financial impact of the foundation, see "Risk Factors - The establishment
of Oswego County Charitable Foundation will reduce our earnings," "Pro Forma
Data" and "Comparison of Valuation and Pro Forma Information With No
Foundation."
Background of Our Corporate Change
Originally, we planned to change our structure to a mutual holding
company as part of our proposed plan to merge with Pathfinder Bancorp, Inc. and
its local savings bank subsidiary, Oswego City Savings Bank. In January 1999,
Pathfinder and we jointly decided to terminate our merger plans because of the
difficulty in obtaining approvals from bank regulators. Even though we are not
now planning to merge with Oswego City Savings, we continue to think that we
should change our corporate structure. Forming a mutual holding company and
selling stock may help us in the future if we want to enter into other
acquisition transactions. We do expect to explore all of our options to improve
our bank including acquisitions of other companies that we think could help us.
We may look at areas outside of traditional banking services. We may also
consider trying to form another deal with Pathfinder and Oswego City Savings.
But, for now, we have no plans to enter into another deal with anyone and we are
not discussing any transaction with anyone else. We may or may not enter into a
combination in the future. However, the mutual holding company structure permits
us to consider more options in the future.
Stock Center
If you have any questions regarding the offering or our change in
structure, please call the Stock Center at (315) 343-3181.
You May Not Sell or Give Away Your Subscription Rights
Subscription rights may not be transferred and we will act to ensure
that you do not transfer your subscription rights. We will reject any stock
orders that we believe involve the transfer of subscription rights. Violations
may lead to actions by the Securities and Exchange Commission, the New York
Banking Department, the Federal Deposit Insurance Corporation or other
governmental agencies.
Important Risks in Owning Oswego County Bancorp, Inc.'s Common Stock
Before you decide to purchase stock, you should read the "Risk
Factors" section on pages __ to __ of this document.
11
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
The summary information presented below under "Selected Financial
Condition Data" and "Selected Operations Data" for, and as of the end of, each
of the years in the three-year period ended December 31, 1998 is derived from
our audited financial statements. The following information is only a summary
and you should read it in conjunction with our 1998 and 1997 financial
statements and notes beginning on page F-2.
At December 31,
----------------------------------
1998 1997 1996
-------- -------- --------
(Dollars In Thousands)
Selected Financial Condition Data:
Total assets $110,866 $111,993 $115,650
Cash and due from banks 4,007 4,083 4,723
Federal funds sold and other short-term
investments 2,600 2,681 12,819
Securities held to maturity 13,730 10,441 10,106
Securities available for sale 14,784 10,921 5
Loans, net 66,727 79,052 83,504
Loans held for sale 7,826 -- --
Deposits 96,564 97,899 102,015
Net worth 11,694 11,392 11,197
Year Ended December 31,
----------------------------------
1998 1997 1996
-------- -------- --------
(Dollars In Thousands)
Selected Operations Data:
Total interest income $7,915 $8,252 $8,169
Total interest expense 3,388 3,738 3,973
------ ------ ------
Net interest income 4,527 4,514 4,196
Provision for loan losses 120 525 1,141
Noninterest income 469 516 502
Noninterest expense 4,405 4,115 3,737
------ ------ ------
Income (loss) before income tax expense 471 390 (180)
(benefit)
Income tax expense (benefit) 162 201 (119)
------ ------ ------
Net income (loss) $ 309 $ 189 $ (61)
====== ====== ======
12
<PAGE>
At or For the Year Ended
December 31,
-----------------------------------
1998 1997 1996
-------- ------- --------
Selected Ratios:(1)
Return (loss) on average assets 0.28% 0.17% (0.05)%
Return (loss) on average equity 2.71 1.60 (0.52)
Average equity to average assets 10.38 10.41 10.04
Equity to assets at year end 10.55 10.17 9.68
Interest rate spread(3) 3.73 3.68 3.28
Net interest margin(3) 4.37 4.25 3.83
Non-performing loans to total loans
at year end(3) 2.49 2.20 2.56
Non-performing assets to total assets
at year end(3) 1.70 2.12 2.31
Allowance for loan losses to total
non-performing loans 63.23 79.43 72.61
Average interest-earning assets to
average interest-bearing liabilities 119.48 116.19 114.99
Net interest income after provision
for loan losses to total noninterest
expenses 100.05 96.48 81.78
Noninterest expenses to average
total assets 4.02 3.62 3.19
- ------------------------------
(1) With the exception of end of year ratios, all ratios are based on average
monthly balances.
(2) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average rate on interest-bearing
liabilities. Net interest margin represents net interest income as a
percentage of average interest-earning assets.
(3) Non-performing loans consist of non-accrual loans, and non-performing
assets consist of non-performing loans and real estate acquired by
foreclosure.
13
<PAGE>
SUMMARY OF RECENT DEVELOPMENTS
The following tables summarize certain financial and operational
information and other data for Oswego County Savings at or for the periods ended
March 31, 1999 and 1998 (unaudited) and December 31, 1998. Information at March
31, 1999 and for the three months ended March 31, 1999 and 1998 is unaudited,
but in the opinion of management, all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the results for such
unaudited periods have been made. Information at and for the year ended December
31, 1998 is derived from the audited financial statements and should be read in
conjunction with the financial statements included elsewhere in this prospectus.
The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the entire year
or any other period.
Selected Financial Condition Data:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
(In thousands)
<S> <C> <C>
Total assets ........................................... $110,748 $110,866
Cash and due from banks ................................ 4,060 4,007
Federal funds sold and other short term investments .... 2,400 2,600
Securities held to maturity ............................ 13,647 13,730
Securities available for sale .......................... 14,925 14,784
Loans, net ............................................. 65,249 66,727
Loans held for sale..................................... 5,712 4,286
Deposits ............................................... 97,021 96,564
Net worth .............................................. $ 11,780 $ 11,694
Selected Operations Data:
Three Months
Ended March 31,
---------------------
1999 1998
------ ------
(In thousands)
Total interest income ........................... $1,872 $2,014
Total interest expense .......................... 771 894
------ ------
Net interest income .......................... 1,101 1,120
Provision for loan losses ...................... 30 30
------ ------
Non-interest income ............................ 116 101
Non-interest expenses .......................... 962 1,028
------ ------
Income before income tax expense ............... 225 163
Income tax expense ............................. 83 69
------ ------
Net income ..................................... $ 142 $ 94
====== ======
</TABLE>
14
<PAGE>
Selected Ratios (1):
<TABLE>
<CAPTION>
At or for the
Three Months
Ended March 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Return on average assets .................................. 0.52% 0.34%
Return on average equity .................................. 4.90 3.36
Average equity to average assets .......................... 10.69 10.25
Equity to assets at end of period ......................... 10.64 10.25
Interest rate spread (2) .................................. 3.77 3.72
Net interest margin (2) ................................... 4.36 4.35
Non-performing loans to total loans at end of period (3)... 2.03 2.58
Non-performing assets to total assets at end of
period (3)............................................ 1.38 2.35
Allowance for loan losses to total non-performing loans ... 79.84 64.07
Average interest-earning assets to average
interest-bearing liabilities.......................... 119.54 118.40
Net interest income after provision for loan losses to
total non-interest expenses .......................... 111.33 106.03
Non-interest expenses to average total assets.............. 0.87 0.92
</TABLE>
- ----------------
(1) With the exception of end of period ratios all other ratios are based
on monthly average balances. Ratios have been annualized where
appropriate.
(2) The interest rate spread represents the difference between the average
yield on interest earning assets and the average rate of
interest-bearing liabilities. The net interest margin represents net
interest income as a percentage of average interest-earning assets.
(3) Non-performing loans consist of non-accrual loans, and non-performing
assets consist of non-performing loans and real estate acquired by
foreclosure.
Comparison of Financial Condition at March 31, 1999 and December 31, 1998
Total assets decreased by $118,000 or 0.1% from $110.9 million at
December 31, 1998 to $110.7 million at March 31, 1999. Net loans decreased by
$1.5 million during the three month period, from $66.7 million at December 31,
1998 to $65.2 million at March 31, 1999. The decrease in loans was caused by a
$2.4 million decline in residential mortgages and home equity loans as principal
paydowns exceeded originations. Commercial mortgages increased by $226 thousand
and consumer loans increased by $710,000 partially offsetting the decline in
residential mortgages and home equity loans. This shift in the mix of the loan
portfolio reflects the Bank's efforts to increase the yield on its loans and
improve its interest rate sensitivity with shorter term loans.
Loans held for sale which consist of fixed-rate residential mortgage
loans, increased by $1.4 million from $4.3 million at December 31, 1998 to $5.7
million at March 31, 1999. This increase was funded primarily by the net
principal paydowns of loans.
Securities held to maturity declined slightly from $13.7 million at
December 31, 1998 to $13.6 million at March 31, 1999, while securities available
for sale increased from $14.8 million at December 31, 1998 to $14.9 million at
March 31, 1999.
Deposits increased by $457,000 during the first quarter of 1999 to
$97.0 million due primarily to increased commercial type deposits.
15
<PAGE>
Our net worth increased by $86,000 during the three month period ended
March 31, 1999 from $11.7 million to $11.8 million. The increase resulted from
net income of $142,000, which was partially offset by a $56,000 increase in the
unrealized loss in securities available for sale.
Comparison of Operating Results for the Three Months ended March 31, 1999 and
March 31, 1998
Oswego County Savings' net income was $142,000 for the three months
ended March 31, 1999, an increase of $48,000 or 51.1% as compared to net income
of $94,000 for the three months ended March 31, 1998.
Our net interest income remained relatively stable at $1.1 million for
both the three months ended March 31, 1999 and 1998. Total interest income
decreased by $142,000, or 7.1%, to $1.9 million for the three months ended March
31, 1999 compared to $2.0 million for the comparable period in 1998. The primary
reason for the decrease in interest income was a decrease in the average loan
balance by $6.8 million as well as a decline in the average yield on loans by 31
basis points. Income from Oswego County Savings' securities portfolio increased
by $76,000 during the three months ended March 31, 1999 to $400,000 compared to
$324,000 in 1998. This 23.5% increase in interest income from securities during
the three months ended March 31, 1999 was due primarily to a $6.5 million
increase in our average balance of securities to $27.6 million during the three
months ended March 31,1999 compared to $21.1 million in the first quarter of
1998. The average yield on the securities portfolio decreased to 5.89% for the
three month period in 1999 compared to 6.24% for the same period in 1998.
Interest expense, which consisted solely of interest paid on deposits in both
three month periods ended March 31, 1999 and 1998, was $771,000 in 1999 compared
to $894,000 in 1998. The primary reason for the $123,000, or 13.8%, decrease in
interest expense in the 1999 period was a $2.5 million, or 2.8%, decrease in the
average balance of interest-bearing deposits together with a 47 basis point
reduction in the average rate paid on these deposits in first quarter of 1999
compared to the same period in 1998.
The provisions for loan losses were $30,000 for both three month
periods ended March 31, 1999 and 1998. Actual loan charge-offs, net of
recoveries, were $21,000 for the three months ended March 31, 1999 and $156,000
in the first quarter of 1998. Nonperforming loans were $1.0 million at March 31,
1999 as compared to $1.8 million at December 31, 1998. Delinquent loans
decreased to $2.7 million at March 31, 1999 as compared to $3.2 million at
December 31, 1998.
Although we believe that our allowance for loan losses was adequate at
March 31, 1999, there can be no assurances that additions to such allowance will
not be necessary in future periods, which would adversely affect our results of
operations. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review our allowance for loan losses and
the carrying value of our other nonperforming assets based on their judgements
about information available to them at the time of their examination. No
assurance can be given whether any of such agencies might require us to make
additional provisions for loan losses in the future. However, as we continue to
increase the amount of our loan originations and diversify the types of loans we
offer, we may need to increase the amount of future provisions for loan losses.
Non-interest income increased by $15,000 during the three months ended
March 31, 1999 as compared to the same period in 1998. Non-interest expenses
decreased for the three months ended March 31, 1999 by $66,000, or 6.4%, to
$962,000 compared to $1.0 million in the same period in 1998. The primary
reasons for the decrease in noninterest expense were a $41,000 decrease in real
estate owned expenses, a $20,000 decrease in office supplies, printing and
postage and a $17,000 decrease in merger expenses. These decreases were
partially offset by a $19,000 increase in data processing costs during the three
months ended March 31, 1999 as compared to the same period in 1998. The decrease
in real estate owned expense is a result of the average real estate owned
balance decreasing to $185,000 in the quarter ended March 31, 1999 compared to
$550,000 in the comparable quarter of 1998. There were no merger expenses
incurred in 1999 as a result of the planned merger with Pathfinder Bancorp being
terminated. The increase in data processing cost in the first quarter of 1999
reflects our efforts to continue to improve our data processing capabilities as
well as efforts to prepare for the year 2000.
16
<PAGE>
Income tax expense increased by $14,000 for the three months ended
March 31, 1999 to $83,000 as compared to $69,000 in 1998. The income tax rate
declined to 36.7% in 1999 from 42.3% in 1998. The income tax rate decrease was
due to first quarter 1998 non-deductible merger-related expenses.
17
<PAGE>
RISK FACTORS
You should consider these risk factors, in addition to the other
information in this prospectus, before deciding whether to make an investment in
this stock.
Rising interest rates may hurt our profits.
To be profitable, we have to earn more money from the interest we
receive on loans and investments we make than we pay to our depositors in
interest. If interest rates rise, our net interest income could be negatively
affected if interest paid on interest-bearing liabilities, such as deposits,
increases more quickly than interest received on interest-earning assets, such
as loans, mortgage-related and investment securities. This would cause income to
go down. In addition, rising interest rates may hurt our income because they may
reduce the demand for loans and the market value of our mortgage-backed and
investment securities. For a further discussion of how changes in interest rates
could affect us, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Assets and Liability Management and Market
Risk Analysis."
Oswego County MHC will own 51% or more of the stock of Oswego County Bancorp.
This means that Oswego County MHC will have enough votes to control what happens
on most matters put to a vote of stockholders.
Oswego County MHC will own 51% or more of the common stock of Oswego
County Bancorp. The board of trustees of Oswego County MHC will have the power
to vote the common stock of Oswego County Bancorp held by Oswego County MHC.
Therefore, the board of Oswego County MHC will control the results of most
matters put to a vote of stockholders of Oswego County Bancorp. In some cases,
Oswego County MHC may use its voting interest to prevent transactions favored by
investors. In addition, officers and directors of Oswego County Bancorp also
will likely vote their shares in favor of the positions taken by Oswego County
MHC. For more information regarding your lack of voting control over Oswego
County Bancorp, see "Oswego County MHC" and "Restrictions on Acquisition of
Oswego County Bancorp and Oswego County Savings."
After the change in structure and stock offering, our net income-to-equity ratio
will be low compared to other companies and our compensation expenses will
increase. This could negatively impact the price of our stock.
The proceeds we will receive from the sale of our common stock will
significantly increase our capital and it will take us time to profitably use
all of it in our business operations. Our compensation expenses will also
increase because of the costs associated with the employee stock ownership and
stock-based incentive plans. Therefore, we expect our return on equity to be
[below] our historical level and less than our regional and national peers. This
low return on equity could hurt our stock price. We cannot guarantee when or if
we will achieve returns on equity that are comparable to industry peers. For
further information regarding pro forma income and expenses, see "Pro Forma
Data."
You could have difficulty selling your stock if an active trading market does
not develop.
Because we are a new company, there is no market for our stock. We
anticipate our stock will trade on the over-the-counter market through the OTC
"Electronic Bulletin Board" under the
18
<PAGE>
symbol "_____." However, it is unlikely that an active and liquid trading market
for our stock will develop or be maintained due to the relatively small size of
the offering. Friedman, Billings, Ramsey & Co. has informed us that it will
attempt to make a market in our stock.
The slow recovery of the local economy may hurt our profits.
If Oswego County Savings continues to rely almost exclusively on the
Oswego County market area as its source of loans and deposits, the market's
economic growth and stability will have a direct impact on Oswego County
Savings' profitability. Substantially all of Oswego County Savings' loans and
deposits are generated within Oswego County, New York, which is located
approximately 15 miles northwest of Syracuse, New York. The recession of the
early 1990s adversely affected this market area, increasing unemployment and
restricting economic growth. Two large area employers closed their operations in
the mid 1990s resulting in the loss of approximately 850 jobs. The area's
recovery has been slower than many other parts of the United States, especially
the real estate market. Management estimates that residential real estate prices
have fallen by approximately 20 to 30% over the last decade. Despite the slow
economic recovery and the large layoffs, the market area's largest employers,
including Niagara Mohawk Power, Alcan Aluminum and Nestle, and the presence of
the State University of New York, College at Oswego provide a stable source of
employment to the area. In addition, the market area continues to experience
limited population and economic growth and the unemployment rate, while lower in
recent periods, is still higher than the United States and New York averages.
The establishment of the Oswego County Charitable Foundation will reduce our
earnings.
Oswego County Bancorp intends to contribute to the Oswego County
Charitable Foundation shares of its common stock equal to 4% of the shares sold
in the stock offering, worth up to $216,200, at the time of contribution. This
contribution will be a significant expense to Oswego County Bancorp and will
decrease our operating results for the year ending December 31, 1999. For a
further discussion regarding the effect of the contribution to the foundation,
see "Pro Forma Data."
The contribution to the Oswego County Charitable Foundation means that your
total ownership will be 0.9% less after we make the contribution.
If you purchase shares, then your voting interests in Oswego County
Bancorp will be reduced by 0.9% when we contribute our shares to the foundation.
For a further discussion regarding the effect of the contribution to the
foundation, see "Pro Forma Data," "Comparison of Valuation and Pro Form
Information With No Foundation" and "Our Corporate Change and Stock Offering -
Oswego County Charitable Foundation."
The granting of stock options and restricted stock to the board and management
will further reduce your voting interest.
We intend to establish a stock option plan and restricted stock plan.
If we sell 540,500 shares of common stock in the offering, we plan to propose an
option plan with 54,050 additional shares. An optionholder can exercise a stock
option by paying an amount equal to the fair market value of the stock on the
date of the grant. This payment is not made until the option is actually
exercised by the recipient. If we sell 540,500 shares of common stock in the
offering, we plan to propose a restricted stock plan with 16,215 shares. We may
purchase these shares from our existing public shareholders or we may issue new
shares to the restricted stock plan. Restricted stock is a bonus in the form of
stock rather than cash, and is not paid for by the recipient. Awards under the
option plan will reduce the voting interests of all stockholders. An award under
the restricted stock plan will have the same effect if the shares are new
shares
19
<PAGE>
instead of shares purchased from existing shareholders. For further discussion
regarding these plans, see "Pro Forma Data" and "Management - Benefits - Other
Stock Benefit Plans."
If computer systems do not properly work on January 1, 2000, it will
disrupt our business operations and could result in lower profits and stock
value.
If our computer systems and the computer systems operated by our
third party vendors do not properly work on January 1, 2000, then we could
experience a disruption in our business operations. As a result, we could
experience lower profits or losses and a lower stock value. In addition, if we
do not do a good job preparing for the January 1, 2000 date change, then
regulators may take action against us. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Year 2000 Issues."
Oswego County Savings and Oswego County Bancorp, Inc. have engaged
Friedman, Billings, Ramsey & Co., Inc. as their financial and marketing
advisor, and this firm has agreed to use its best efforts to solicit
subscriptions and purchase orders for common stock in the offering. The
financial advisor has not prepared any report or opinion constituting a
recommendation or advice to Oswego County Savings Bank or Oswego County Bancorp,
Inc., nor has it prepared an opinion as to the fairness of the purchase price or
the price at which the stock will trade following the offering. Friedman,
Billings, Ramsey & Co., Inc. has not verified the accuracy or completness of the
information contained in this prospectus. See "Our Corporate Change and Stock
Offering--Marketing Arrangements."
20
<PAGE>
OSWEGO COUNTY BANCORP, INC.
After completing our change in structure, the stock offering and a
planned contribution of shares to the Oswego County Charitable Foundation, we
will appear as shown below:
Total Public Shares
- - - - - - - - - - - - - - - - - - - - - - - - - -
| |
---------------------- | ----------------------- --------------- |
| | | | | | OSWEGO COUNTY | |
| OSWEGO COUNTY MHC | | | MINORITY STOCKHOLDERS | | CHARITABLE | |
| | | | | FOUNDATION | |
---------------------- | ----------------------- --------------- |
| | | | |
| | | | |
| | | | |
| 53.2% of the | | 45.0% of the | 1.8% of the |
| common stock | | common stock | common stock|
| - - - - - - - |- - - - - - - - - - - -|- - - - - - -
| | |
| | |
| | |
------------------------------------------------------------------------------
| OSWEGO COUNTY BANCORP, INC. |
------------------------------------------------------------------------------
|
| 100% of the common stock
|
|
|
------------------------------------------------------------------------------
| OSWEGO COUNTY SAVINGS BANK |
------------------------------------------------------------------------------
Oswego County Bancorp was incorporated under Delaware law to hold all
of the stock of Oswego County Savings. Oswego County Bancorp has applied for the
approval of the Board of Governors of the Federal Reserve System to become a
bank holding company and will be subject to regulation by that agency. See "How
We are Regulated - Oswego County Bancorp, Inc." Oswego County Bancorp will have
no significant assets other than all of the outstanding shares of common stock
of Oswego County Savings, the net proceeds it keeps and its loan to the Oswego
County Bancorp employee stock ownership plan ("ESOP"). Oswego County Bancorp
will have no significant liabilities. See "How We Intend to Use the Proceeds."
Initially, the management of Oswego County Bancorp and Oswego County Savings
will be substantially the same and Oswego County Bancorp will use the offices of
Oswego County Savings. Oswego County Bancorp intends to utilize the support
staff of Oswego County Savings from time to time and will pay Oswego County
Savings for this expense. If Oswego County Bancorp expands or changes its
business in the future, we may hire our own employees.
We believe the proposed mutual holding company structure will give us
more flexibility to change our business activities by forming new companies
which we would own, or by buying other companies, including other financial
institutions and financial services companies. We do not have any current plans
to do these things. Oswego County Bancorp intends to pay for its business
activities with the proceeds it keeps from the stock sale and the money we earn
from investing the proceeds, as well as from dividends from Oswego County
Savings. See "Our Policy Regarding Dividends."
21
<PAGE>
The principal executive offices of Oswego County Bancorp will be
located at 44 East Bridge Street, Oswego, New York 13126, and its telephone
number will be (315)343-4100.
OSWEGO COUNTY SAVINGS BANK
Oswego County Savings is a New York-chartered and Federal Deposit
Insurance Corporation-insured mutual savings bank with four full-service
offices. At December 31, 1998, Oswego County Savings had total assets of $110.9
million, total deposits of $96.6 million and net worth of $11.7 million. For
more information regarding the business and operations of Oswego County Savings
see "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business of Oswego County Savings Bank."
Oswego County Savings is examined and regulated by the New York State
Banking Department and by the Federal Deposit Insurance Corporation, its primary
federal regulator.
The executive offices of Oswego County Savings are located at 44 East
Bridge Street, Oswego, New York 13126, and its telephone number is
(315)343-4100.
OSWEGO COUNTY MHC
Oswego County MHC, a New York mutual holding company, will be formed
as part of the restructuring of Oswego County Savings under the Amended and
Restated Plan of Reorganization and Plan of Stock Issuance. Persons who as
depositors of Oswego County Savings have liquidation and voting rights in Oswego
County Savings as of the date of the reorganization will have those rights
automatically exchanged for identical rights in Oswego County MHC after the
reorganization as long as they remain depositors of Oswego County Savings.
Trustees of Oswego County MHC will have the authority to elect any new or
replacement trustees.
Oswego County MHC's principal assets will be the shares of common
stock, par value $.01 per share, of Oswego County Bancorp received in the
reorganization and $100,000 contributed by Oswego County Savings as its initial
capitalization. Initially, Oswego County MHC does not intend to conduct any
business except to own at least 51% of the common stock of Oswego County Bancorp
and invest the funds received from Oswego County Savings. Oswego County MHC will
be formed as a New York mutual savings bank with no authority to accept
deposits. It will be regulated by the New York State Banking Department and will
be subject to the limitations and restrictions imposed on bank holding companies
by the Bank Holding Company Act. See "How We are Regulated - Oswego County MHC."
The executive offices of Oswego County MHC will be located at 44 East
Bridge Street, Oswego, New York 13126, and its telephone number will be
(315)343-4100
HOW WE INTEND TO USE THE PROCEEDS
Although the actual amount of net proceeds we receive from the sale
of the shares of common stock cannot be determined until the reorganization and
stock offering is completed, we anticipate that the net proceeds from the sale
of the shares of common stock will be between $3.4 million and $4.8 million, and
up to $5.6 million assuming a 15% increase in the estimated value of the common
stock sold in this offering. See "Pro Forma Data" and "Our Corporate Change and
Stock Offering - How We Determined Our Price and the Number of Shares to be
Issued in the Stock Offering" for the assumptions we used to arrive at these
amounts.
22
<PAGE>
We plan to use the net proceeds received at the minimum, midpoint,
maximum and maximum, as adjusted, at the estimated valuation range as follows:
<TABLE>
<CAPTION>
Maximum,
As
Minimum Midpoint Maximum Adjusted
------- -------- ------- --------
<S> <C> <C> <C> <C>
Retained by Oswego County Bancorp $1,701,400 $2,053,900 $2,406,000 $2,811,775
Contributed to Oswego County MHC $ 319,600 376,000 $ 432,400 $ 497,260
Used to buy the stock of Oswego
County Savings $1,381,800 $1,677,900 $1,974,000 $2,314,515
</TABLE>
Oswego County Bancorp plans to use the net proceeds it retains to:
o make a loan to the employee stock ownership plan so that it can
purchase up to 8% of the shares of common stock sold in the
stock offering. The loan will range between $319,600 to
$432,400, depending on how many shares of common stock are sold
in the stock offering;
o contribute shares to the Oswego County Charitable Foundation.
The number of shares contributed to the foundation will have a
value ranging between $159,800 and $216,200, depending on how
many shares of common stock are sold in the stock offering; and
o invest in U.S. Government and federal agency securities of
various maturities, mortgage-backed or other securities,
deposits in either Oswego County Savings or other financial
institutions, or a combination thereof.
Oswego County Bancorp may ultimately use the net proceeds retained by
it to:
o support Oswego County Savings' lending activities;
o support the future expansion of operations through the
establishment of additional banking offices or other customer
facilities or through acquisitions of other financial
institutions or branch offices, although no acquisition
transactions are specifically being considered at this time;
o pay regular or special cash dividends, possible repurchases of
the common stock or returns of capital. Oswego County Bancorp
and Oswego County Savings have committed, however, not to take
any action to further the payment of any return of capital on
the common stock during the one-year period subsequent to
completion of the reorganization; and
o expand or diversify our activities, as opportunities become
available.
Except with the prior approval of the Superintendent, neither Oswego
County Bancorp nor Oswego County Savings may repurchase any of its outstanding
common stock prior to the first anniversary of the completion of the offering.
During the second and third years following offering, neither company may
repurchase in excess of five percent of its outstanding common stock in any
12-month period without the prior approval of the
23
<PAGE>
Superintendent. In determining whether to grant such approval, the
Supertintendent considers:
o financial condition and history of Oswego County Bancorp or
Oswego County Savings, as the case may be;
o the adequacy of its capital structure;
o its future earnings prospects;
o the quality of its management;
o whether the repurchase will result in fair treatment to the
shareholders of Oswego County Bancorp or Oswego County Savings,
as the case may be; and
o the public interest generally.
Prior to authorizing a stock repurchase, Oswego County Bancorp's board of
directors must determine that Oswego County Savings will have capital in excess
of all applicable regulatory requirements upon completion of the repurchases.
Oswego County Savings will use the portion of the net proceeds received
by it in exchange for its capital stock to:
o increase its funds used for general corporate purposes, and to
continue to diversify its banking products, especially
commercial business loans; and
o further strengthen Oswego County Savings' capital position,
which already exceeds all regulatory requirements. After the
reorganization and stock offering, based upon the maximum of the
estimated offering range, Oswego County Savings' core capital
ratio will be approximately 12.4%. As a result, Oswego County
Savings will continue to be a well-capitalized institution.
The net proceeds will vary if total expenses of the reorganization and
stock offering are more or less than those estimated. The net proceeds will also
vary if the number of shares issued in the reorganization and stock offering is
adjusted to reflect a change in the estimated pro forma market value of Oswego
County Savings. Payments for shares made through the withdrawals from existing
deposit accounts at Oswego County Savings will not result in the receipt of new
funds for investment by Oswego County Savings but will result in a reduction of
Oswego County Savings' interest expense and liabilities as funds are transferred
from interest-bearing certificates or other deposit accounts.
MARKET FOR THE COMMON STOCK
Oswego County Bancorp and Oswego County Savings have never issued
capital stock, so there is no established market for the common stock at this
time. Oswego County Bancorp has applied to have its common stock traded on the
over-the-counter market through the OTC "Electronic Bulletin Board" under the
symbol "_________." Making a market involves maintaining bid and ask quotations
and being able, as principal, to effect transactions in reasonable quantities at
these quoted prices, subject to various securities laws and other regulatory
requirements. Additionally, the development of a liquid public market depends on
the existence of willing buyers and sellers, a factor which is not in our
control. Due to the relatively small size of the stock offering, it is unlikely
that an active and liquid market will develop or be maintained. Purchasers of
common stock should have a long-term investment intent and should recognize that
the absence of an active trading market may make it difficult to sell their
shares at or above the purchase price.
OUR POLICY REGARDING DIVIDENDS
Following completion of the reorganization, the board of directors of
Oswego County Bancorp intends to establish a policy to pay dividends on our
common stock. Whether we pay dividends will depend upon a number of factors,
including capital requirements, the financial condition of Oswego County Bancorp
and Oswego County Savings and results of operations, tax considerations,
statutory and regulatory limitations, and general economic conditions. We cannot
give you assurances that we will pay any dividends or that, if paid, we will not
reduce or
24
<PAGE>
eliminate dividends in future periods. We may pay special cash dividends or
stock dividends in addition to, or in lieu of, regular cash dividends. It is
anticipated that we would treat any cash distributions made by Oswego County
Bancorp to its stockholders as cash dividends. We do not expect to make any
distributions which we would treat as a non-taxable return of capital for
federal and state tax purposes. Oswego County Bancorp anticipates that it will
pay any dividends it declares to all of its shareholders, including Oswego
County MHC. Under current regulatory policies applicable to bank holding
companies, Oswego County MHC does not believe that it would receive Federal
Reserve Board approval to waive dividends which it would otherwise receive as a
shareholder of Oswego County Bancorp.
Dividends from Oswego County Bancorp will depend upon:
1. receipt of dividends from Oswego County Savings;
2. earnings from the investment of proceeds from the sale of shares of
common stock retained by Oswego County Bancorp; and
3. interest payments received by Oswego County Bancorp on the loan to the
employee stock ownership plan.
See "How We Are Regulated - Limitations on Dividends."
Any payment of dividends by Oswego County Savings to Oswego County
Bancorp which was deemed to be drawn out of Oswego County Savings' bad debt
reserves would require a payment of taxes at the then-current tax rate by Oswego
County Savings on the amount of earnings deemed removed from the reserves for
such distribution. Oswego County Savings does not intend to make any
distribution to Oswego County Bancorp that would create such a federal tax
liability. See "Taxation."
OSWEGO COUNTY SAVINGS BANK
EXCEEDS ALL REGULATORY CAPITAL REQUIREMENTS
At December 31, 1998, Oswego County Savings exceeded all of the
regulatory capital requirements applicable to it. The table on the following
page shows the historical regulatory capital of Oswego County Savings at
December 31, 1998 and the pro forma regulatory capital of Oswego County Savings
after giving effect to the reorganization and stock offering, based upon the
sale of the number of shares shown in the table. The Federal Reserve Board has
adopted capital adequacy guidelines for bank holding companies, on a
consolidated basis, substantially similar to the FDIC requirements for Oswego
County Savings. The pro forma regulatory capital amounts do not include the
amounts to be loaned to the employee stock ownership plan and contributed to the
restricted stock plan.
25
<PAGE>
<TABLE>
<CAPTION>
Pro Forma at December 31, 1998
--------------------------------------------------------------------------------------
621,575 Shares
Actual, as of 399,500 Shares 470,000 Shares 540,500 Shares Maximum As
December 31, 1998 Minimum Midpoint Maximum Adjusted(1)
-------------------- -------------------- -------------------- ------------------- -------------------
Percent of Percent of Percent of Percent of Percent of
Amount Assets(2) Amount Assets(2) Amount Assets(2) Amount Assets(2) Amount Assets(2)
------- ----------- -------- ----------- -------- ----------- -------- ----------- -------- ----------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Worth Under
Generally
Accepted
Accounting
Principles...... $11,694 10.5% $12,586 11.4% $13,131 11.6% $13,406 11.8% $13,722 12.1%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Leverage capital:
Capital level(3).. $11,694 10.7% $12,586 11.5% $13,131 11.7% $13,406 11.9% $13,722 12.2%
Requirement(4).... 4,387 4.0 4,446 4.0 4,460 4.0 4,473 4.0 4,488 4.0
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess....... $ 7,307 6.7% $ 8,410 7.5% $ 8,671 7.7% $ 8,933 7.9% $ 9,234 8.2%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Risk-based capital:
Tier 1 capital
level(3)(5)....... $11,694 15.5% $12,856 16.7% $13,131 17.0% $13,406 17.3% $13,722 17.7%
Requirement....... 3,023 4.0 3,064 4.0 3,073 4.0 3,082 4.0 3,092 4.0
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess........ $ 8,671 11.5% $ 9,792 12.7% $10,058 13.0% $10,324 13.3% $10,630 13.7%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Total capital
level(3)(5)....... $12,639 16.7% $13,801 18.0% $14,076 18.3% $14,351 18.6% $14,667 18.9%
Requirement....... 6,047 8.0 6,128 8.0 6,146 8.0 6,164 8.0 6,184 8.0
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess........ $ 6,592 8.7% $ 7,674 10.0% $ 7,930 10.3% $ 8,187 10.6% $ 8,483 10.9%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
</TABLE>
- --------------------------
(1) As adjusted to give effect to an increase in the number of shares that
could occur due to an increase in the estimated valuation range of up to
15% as a result of regulatory considerations, demand for the shares, or
changes in market conditions or general financial and economic conditions
following the beginning of the stock offering.
(2) Leverage capital levels are shown as a percentage of average assets.
Risk-based capital levels are calculated on the basis of a percentage of
risk-weighted assets.
(3) Pro forma capital levels assume: funding by Oswego County Savings of the
Recognition Plan to enable the plan to acquire in the open market a number
of shares equal to 4% of the minority ownership interest; the purchase by
the ESOP of 8% of the minority ownership interest; and the capitalization
of the Oswego County MHC by Oswego County Savings with $100,000. See
"Management of Oswego County Savings Bank--Executive Compensation" for a
discussion of the restricted stock plan and ESOP.
(4) The current leverage capital requirement is 3% of total adjusted assets for
banks that receive the highest supervisory rating for safety and soundness
and that are not experiencing or anticipating significant growth. The
current leverage capital ratio applicable to all other banks is 4% to 5%.
See "How We Are Regulated - Federal Regulation of Oswego County Savings --
Capital Requirements.
(5) Assumes net proceeds are invested in assets that carry a risk-weighting
equal to the average risk-weighting of Oswego County Savings' risk-weighted
assets as of December 31, 1998.
26
<PAGE>
CAPITALIZATION
The following table presents the historical capitalization of Oswego
County Savings at December 31, 1998 and the pro forma consolidated
capitalization of Oswego County Bancorp after giving effect to the Offerings,
based upon the sale of the number of shares shown below and the other
assumptions set forth under "Pro Forma Data."
<TABLE>
<CAPTION>
Oswego County Bancorp Pro Forma Based upon the
Sale at $10.00 Per Share of
---------------------------------------------------------------------
Oswego
County 399,500 470,000 540,500 621,575
Savings Shares Shares Shares Shares (adjusted
Historical (Minimum) (Midpoint) (Maximum) Maximum)(1)
------------------------------------------------------------------------------------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Deposits(2)................................. $96,564 $96,564 $96,564 $96,564 $96,564
Total deposits and other borrowings ......... $96,564 $96,564 $96,564 $96,564 $96,564
======= ======= ======= ======= =======
Stockholders' equity:
Common Stock, $.01 par value, 7,500,000
shares authorized; shares to be issued
as reflected(3).......................... - 9 10 12 14
Preferred Stock, $0.01 par value, 1,000,000
shares authorized; none to be issued
Additional paid-in capital .................. -- 3,554 4,286 5,017 5,859
Retained earnings(4)......................... 11,695 11,595 11,595 11,595 11,595
Tax benefit of contribution to
Foundation(5)........................ - 61 71 82 94
Accumulated other comprehensive
income ............................. (1) (1) (1) (1) (1)
Less:
Expense of contribution to Foundation..... -- (160) (188) (216) (249)
Common stock acquired by ESOP(6).......... -- (320) (376) (432) (497)
Common stock acquired by Recognition
Plan(7)................................. - (120) (141) (162) (186)
------- ------- ------- ------- -------
Total stockholders' equity................... $11,694 $14,618 $15,256 $15,895 $16,628
======= ======= ======= ======= =======
</TABLE>
- ----------------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the estimated valuation range of up to
15% as a result of regulatory considerations, demand for the shares, or
changes in market or general financial and economic conditions following
the commencement of the stock offering.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
common stock, which would reduce pro forma deposits by the amount of such
withdrawals.
(3) Reflects the issuance of 887,230, 1,043,800, 1,200,370 and 1,380,426 shares
of common stock in the reorganization and stock offering at the minimum,
midpoint, maximum and adjusted maximum of the estimated valuation range,
respectively, including the issuance of 471,750,550,000, 638,250 and
733,988 shares of common stock to Oswego County MHC at the minimum,
midpoint, maximum and adjusted maximum of the estimated valuation range,
respectively, and the issuance of 15,980, 18,800, 21,620 and 24,863 shares
of common stock to the Oswego County Charitable Foundation at the minimum,
midpoint, maximum and adjusted maximum of the estimated valuation range,
respectively. No effect has been given to the issuance of additional shares
of common stock under the stock option plan to be adopted by Oswego County
Bancorp and presented for approval of stockholders following the stock
offering. The stock option plan would provide for the grant of stock
options to purchase a number of shares of common stock equal to 10% of the
minority ownership interest. See "Management -- Benefits -- Other Stock
Benefit Plans."
(4) The retained earnings of Oswego County Savings will continue to be
substantially restricted after the stock offering. See "Dividend Policy"
and "How We Are Regulated - New York Regulation of Oswego County Savings."
Assumes that Oswego County MHC will be capitalized by Oswego County Savings
with $100,000.
(5) Represents the tax effect of the contribution to the Oswego County
Charitable Foundation based on a 38% tax rate. The tax deduction for
charitable contributions is limited annually to 10% of Oswego County
Bancorp's consolidated annual taxable income, subject to the ability of
Oswego County Bancorp to carry forward and utilize any unused
27
<PAGE>
portion of the deduction for five years following the year in which the
contribution is made. The realization of the deferred tax benefit
attributable to such carryforward will depend on Oswego County Bancorp's
ability to generate sufficient consolidated taxable income during the
five-year carryforward period.
(6) Assumes that 8% of the minority ownership interest will be purchased by the
ESOP and that the funds used to acquire the ESOP shares will be borrowed
from Oswego County Bancorp. The common stock acquired by the ESOP is
reflected as a reduction of stockholders' equity. See "Management Benefits
-- Employee Stock Ownership Plan."
(7) Assumes that, subsequent to the stock offering, an amount equal to 4% of
the minority ownership interest is purchased by the restricted stock plan
through open market purchases. The actual purchase price per share may be
more or less than $10.00. The common stock to be purchased by the
restricted stock plan is reflected as a reduction to stockholders' equity.
See "Risk Factors -- We intend to grant stock options and restricted stock
to the board and management following the change in structure and stock
offering which could further reduce your voting control," footnote 3 to the
table under "Pro Forma Data," and "Management -- Benefits -- Other Stock
Benefit Plans."
28
<PAGE>
PRO FORMA DATA
The actual net proceeds from the sale of the common stock cannot be
determined until the reorganization is completed. However, net proceeds are
currently estimated to be between $3.9 million and $5.5 million, or $6.4 million
in the event the estimated offering range is increased by 15%, based upon the
following assumptions:
o all shares of common stock will be sold in the offering of
non-transferable rights to subscribe for the common stock,
in order of priority, to Eligible Account Holders, the
employee stock ownership plan, Supplemental Eligible
Account Holders and Trustees, Officers and Employees
("Subscription Offering");
o Friedman, Billings, Ramsey & Co., Inc. will receive a fixed
fee of $100,000;
o Oswego County Bancorp will contribute to the foundation an
amount of common stock equal to 4.0% of the common stock
sold in the Offerings from authorized but unissued shares;
and
o total expenses, including the fee paid to Friedman,
Billings, Ramsey & Co., Inc., will be $592,200. Actual
expenses may vary from those estimated.
Pro forma consolidated net income and stockholders' equity of Oswego
County Bancorp have been calculated for the fiscal year ended December 31, 1998,
as if the common stock to be issued in the stock offering had been sold at the
beginning of the period and the net proceeds had been invested at 4.52%, which
represents the yield on one-year U.S. Government securities at December 31,
1998. In light of changes in interest rates in recent periods, this yield is
deemed by Oswego County Bancorp and Oswego County Savings to more accurately
reflect pro forma reinvestment rates than the arithmetic average method. The
effect of withdrawals from deposit accounts for the purchase of common stock has
not been reflected. A tax rate of 38.0% has been assumed for the period,
resulting in an after-tax yield of 2.80% for the year ended December 31, 1998.
Historical and pro forma per share amounts have been calculated by dividing
historical and pro forma amounts by the indicated number of shares of common
stock, as adjusted to give effect to the shares purchased by the employee stock
ownership plan and the effect of the issuance of shares to the foundation. See
Note 3 to the tables below. No effect has been given in the pro forma
stockholders' equity calculations for the assumed earnings on the net proceeds.
As discussed under "How We Intend to Use the Proceeds," Oswego County Bancorp
intends to retain 50% of the net proceeds from the offering and to make a loan
to fund the purchase of 8.0% of the common stock by the employee stock ownership
plan.
No effect has been given in the tables to the issuance of additional
shares of common stock pursuant to the proposed stock option plan. See
"Management - Benefits - Other Stock Benefit Plans." The table below gives
effect to the restricted stock plan, which is expected to be adopted by Oswego
County Bancorp following the reorganization and presented along with the stock
option plan to stockholders for approval at an annual or special meeting of
stockholders to be held at least six months following the completion of the
reorganization. If approved by stockholders, the restricted stock plan will
acquire an amount of common stock equal to 3.0% of the shares of common stock
sold in the stock offering, either through open market purchases or from
authorized but unissued shares of common stock, if permissible. The table below
assumes that stockholder approval has been obtained, as to which
29
<PAGE>
there can be no assurance, and that the shares acquired by the restricted stock
plan are purchased in the open market $10.00 per share. The pro forma expenses
relating to the restricted stock plan and the ESOP are presented after taxes
using a 38% tax rate. No effect has been given to Oswego County Bancorp's
results of operations after the reorganization, the market price of the common
stock after the reorganization or a less than 3.0% purchase by the restricted
stock plan.
The following pro forma information may not be representative of the
actual financial effects of the foregoing transactions and may not be indicative
of future results of operations. Pro forma stockholders' equity represents the
difference between the stated amount of assets and liabilities of Oswego County
Bancorp computed in accordance with generally accepted accounting principles
("GAAP").
The following table gives effect to the issuance of authorized but
unissued shares of the common stock to the foundation concurrently with the
completion of the reorganization. The pro forma stockholders' equity is not
intended to represent the fair market value of the common stock and may be
different than amounts that would be available for distribution to stockholders
in the event of liquidation.
<TABLE>
<CAPTION>
Maximum,
Minimum Midpoint Maximum as Adjusted
399,500 470,000 540,500 621,575
$10.00 $10.00 $10.00 $10.00
per Share per Share per Share per Share(7)
--------- --------- --------- ------------
(Dollars In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross proceeds....................................................... $3,995 $4,700 $5,405 $6,216
Plus: shares issued to the foundation................................ 160 188 216 249
------- ------- ------- -------
Pro forma market capitalization...................................... $4,155 $4,888 $5,621 $6,464
Gross proceeds....................................................... 3,995 4,700 5,405 6,216
Less offering expenses............................................... (592) (592) (592) (592)
------- ------- ------- -------
Estimated net proceeds............................................ $3,403 $4,108 $4,813 $5,624
Less: common stock purchased by ESOP................................. (320) (376) (432) (497)
Less: common stock purchased by restricted stock plan................ (120) (141) (162) (186)
------- ------- ------- -------
Estimated net proceeds, as adjusted............................... 2,964 3,591 4,218 4,940
For the Year Ended December 31, 1998
Net income:
Historical........................................................ $ 309 $ 309 $ 309 $ 309
Pro forma income on net proceeds.................................. 83 101 118 138
Pro forma ESOP adjustment(2)...................................... (20) (23) (27) (31)
Pro forma restricted stock plan adjustment(3)..................... (15) (17) (20) (23)
------- ------- ------- -------
Pro forma net income(1)......................................... $ 357 $ 370 $ 380 $ 393
======= ======= ======= =======
Per share net income (reflects SOP 93-6)(1)
Historical........................................................ $0.36 $0.31 $0.27 $0.23
Pro forma income on net proceeds.................................. 0.10 0.10 0.10 0.10
Pro forma ESOP adjustment(2)...................................... (0.02) (0.02) (0.02) (0.02)
Pro forma restricted stock plan adjustment(3)..................... (0.02) (0.02) (0.02) (0.02)
------- ------- ------- -------
Pro forma net income per share.................................. $0.42 $0.37 $0.33 $0.29
At December 31, 1998
Stockholders' equity:
Historical........................................................ $11,694 $11,694 $11,694 $11,694
Estimated net proceeds............................................ 3,403 4,108 4,813 5,624
Less: capitalization of the Oswego County MHC..................... (100) (100) (100) (100)
Plus: shares issued to foundation................................. 160 188 216 249
Less: contribution to foundation.................................. (160) (188) (216) (249)
Plus: tax benefit of the contribution to the foundation........... 61 71 82 94
30
<PAGE>
Less: common stock acquired by ESOP............................... (320) (376) (432) (497)
Less: common stock acquired by restricted stock plan.............. (120) (141) (162) (186)
------- ------- ------- -------
Pro forma stockholders' equity(3)(4)(5)......................... $14,618 $15,256 $15,895 $16,628
======= ======= ======= =======
Stockholders' equity per share(6)
Historical........................................................ $13.18 $11.20 $9.74 $8.47
Estimated net proceeds............................................ 3.84 3.94 4.01 4.07
Less: capitalization of the Oswego County MHC..................... (0.11) (0.10) (0.08) (0.07)
Plus: shares issued to foundation................................. 0.18 0.18 0.18 0.18
Less: contribution to foundation.................................. (0.18) (0.18) (0.18) (0.18)
Plus: tax benefit of the contribution to the foundation........... 0.07 0.07 0.07 0.07
Less: common stock acquired by ESOP(2)............................ (0.36) (0.36) (0.36) (0.36)
Less: common stock acquired by restricted stock plan(3)........... (0.14) (0.14) (0.14) (0.14)
------- ------- ------- -------
Pro forma stockholders' equity per share(3)(4)(5)............... $16.48 $14.61 $13.24 $12.04
======= ======= ======= =======
Offering price as a percentage of pro forma net earnings per share... 23.81 27.03 30.30 34.48
======= ======= ======= =======
Offering price as a percentage of pro forma stockholders' equity per
share(6).......................................................... 60.68% 68.45% 75.53% 83.06%
</TABLE>
- ----------------------
(1) Does not give effect to the non-recurring expense that will be recognized
in 1999 as a result of the establishment of the Oswego County Charitable
Foundation. Oswego County Bancorp will recognize an after-tax expense for
the amount of the contribution to the foundation which is expected to be
$99,000, $117,000 $134,000 and $154,000 at the minimum, midpoint, maximum
and adjusted maximum of the estimated valuation range, respectively.
Assuming the contribution to the foundation was incurred during the year
ended December 31, 1998, pro forma net income per share would be $0.30,
0.29, 0.21 and 0.18 at the minimum, midpoint, maximum and adjusted maximum,
respectively. Per share net income data is based on 858,466, 1,009,460,
1,161,454, and 1,335,672 shares outstanding, which represents shares issued
in the stock offering, shares contributed to the foundation and shares to
be allocated or distributed under the ESOP and restricted stock plan for
the period presented.
(2) It is assumed that 8% of the minority ownership interest will be purchased
by the ESOP. The funds used to acquire such shares are assumed to have been
borrowed by the ESOP from Oswego County Bancorp. The amount to be borrowed
reflected as a reduction of stockholders' equity. Oswego County Bancorp
intends to make annual contributions to the ESOP in an amount at least
equal to the principal and interest requirement of the debt. Oswego County
Bancorp's total annual payment of the ESOP debt is based upon ten equal
annual installments of principal, with an assumed interest rate at __%. The
pro forma net income assumes: (i) that Oswego County Bancorp's contribution
to the ESOP is equivalent to the debt service requirement for the year
ended December 31, 1998, and was made at the end of the period; (ii) that
3,196, 3,760, 4,324, and 4,973 shares at the minimum, midpoint, maximum and
adjusted maximum of the estimated valuation range, respectively, were
committed to be released during the year ended December 31, 1998, at an
average fair value of $10.00 per share in accordance with Statement of
Position ("SOP") 93-6; and (iii) only the ESOP shares committed to be
released were considered outstanding for purposes of the net income per
share calculations. See "Management--Benefits--Employee Stock Ownership
Plan."
(3) Gives effect to the restricted stock plan expected to be adopted by Oswego
County Bancorp following the stock offering. This plan intends to acquire a
number of shares of common stock equal to 3% of the minority ownership
interest, or 11,985, 14,800, 16,125 and 18,647 shares of common stock at
the minimum, midpoint, maximum and adjusted maximum of the estimated
valuation range, respectively, either through open market purchases, if
permissible, or from authorized-but-unissued shares of common stock or
treasury stock of Oswego County Bancorp, if any. Funds used by the
restricted stock plan to purchase the shares will be contributed to the
plan by Oswego County Bancorp. In calculating the pro forma effect of the
restricted stock plan, it is assumed that the shares were acquired by the
restricted stock plan at the beginning of the period presented in open
market purchases at the purchase price and that 20% of the amount
contributed was an amortized expense during such period. The issuance of
authorized-but-unissued shares of common stock to the restricted stock plan
instead of open market purchases would dilute the voting interests of
existing stockholders by approximately 3.8% and pro forma net income per
share would be $0.41, $0.36, $0.32 and $0.30 at the minimum, midpoint,
maximum and adjusted maximum of the estimated valuation range,
respectively, and pro forma stockholders' equity per share would be $16.39,
$14.56, $13.20, and $12.02 at the minimum, midpoint, maximum and adjusted
maximum of the estimated valuation range, respectively. There can be no
assurance that the actual purchase price of the shares granted under the
restricted stock plan will be equal to the subscription price. See
"Management--Benefits."
31
<PAGE>
(4) No effect has been given to the issuance of additional shares of common
stock pursuant to the stock option plan expected to be adopted by Oswego
County Bancorp following the stock offering. Under the stock option plan,
an amount equal to 10% of the minority ownership interest, or 39,950,
47,000, 54,050 and 62,158 shares at the minimum, midpoint, maximum and
adjusted maximum of the estimated valuation range, respectively, will be
reserved for future issuance upon the exercise of options to be granted
under the stock option plan. The issuance of common stock pursuant to the
exercise of options under the stock option plan will result in the dilution
of existing stockholders' interests. Assuming all options were exercised at
the end of the period at an exercise price of $10.00 per share, the pro
forma net income per share would be $0.40, $0.36, $0.32 and $0.29,
respectively, and the pro forma stockholders' equity per share would be
$16.20, $14.43, $13.11 and $11.97, respectively. See "Management--Benefits-
Other Stock Benefit Plans."
(5) The retained earnings of Oswego County Savings will continue to be
substantially restricted after the stock offering. See "Dividend Policy"
and "Regulation--New York Bank Regulation."
(6) Stockholders' equity per share data is based upon 887,230, 1,043,800,
1,200,370 and 1,380,426 shares outstanding representing shares issued in
the stock offering to Oswego County MHC and the public shares purchased by
the ESOP and the restricted stock plan, and shares contributed to the
foundation.
(7) As adjusted to give effect to an increase in the number of shares that
could occur due to an increase in the estimated valuation range of up to
15% as a result of regulatory considerations, demand for the shares, or
changes in market or general financial and economic conditions following
the commencement of the stock offering.
32
<PAGE>
COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH NO FOUNDATION
In the event that the Oswego County Charitable Foundation was not
being established as part of the reorganization, RP Financial has estimated that
the pro forma aggregate market capitalization of Oswego County Bancorp would be
approximately $5.0 million at the midpoint, which is approximately $64,000
greater than the pro forma aggregate market capitalization of Oswego County
Bancorp if the foundation is included, and would result in an approximately
$252,000 increase in the amount of common stock offered for sale in the stock
offering. At the mid-point, the pro forma price to book ratio without the
foundation would be 70.08%, compared to 68.45% with the foundation. The pro
forma price to earnings ratio would be the same with or without the foundation.
Further, assuming the midpoint of the estimated offering range, pro forma
stockholders' equity per share and pro forma earnings per share without the
foundation would be $14.27 and $0.36, respectively, and $14.61 and $0.37,
respectively, with the foundation. There is no assurance that in the event the
foundation was not formed that the appraisal prepared at the time would have
concluded that the pro forma market value of Oswego County Bancorp would be the
same as that estimated on the following table. Any appraisals prepared at that
time would be based on the facts and circumstances existing at that time,
including, among other things, market and economic conditions.
For comparative purposes only, set forth below are certain pricing
ratios and financial data and ratios, at the minimum, midpoint, maximum and
maximum, as adjusted, of the estimated offering range, assuming the
reorganization and stock offering was completed at December 31, 1998 without the
establishment of the foundation.
<TABLE>
<CAPTION>
At the Minimum At the Midpoint
-------------------------------- -------------------------------
With With
Foundation No Foundation Foundation No Foundation
---------- ------------- ---------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Estimated offering amount.................... $ 3,995 $ 4,209 $ 4,700 $ 4,952
Pro forma market capitalization.............. 4,155 4,209 4,888 4,952
Total assets................................. 113,790 113,920 114,428 114,581
Total liabilities............................ 98,338 98,338 98,338 98,338
Pro forma stockholders' equity............... 14,618 14,748 15,256 15,409
Pro forma consolidated net earnings.......... 357 360 370 373
Pro forma stockholders' equity per share..... 16.48 16.06 14.61 14.27
Pro forma consolidated net earnings per
share..................................... 0.42 0.41 0.37 0.36
Pro Forma Pricing Ratios:
Price/Stockholders' Equity................ 60.68% 62.27% 68.45% 70.08%
Price/Earnings............................ 23.81 24.39 27.03 27.78
Price/Assets.............................. 7.80% 8.06% 9.12% 9.43%
Pro Forma Financial Ratios:
Return on Assets ......................... 0.42% 0.42% 0.43% 0.43%
Return on Stockholders' Equity ........... 3.26% 3.25% 3.23% 3.23%
Stockholders' Equity /Assets.............. 12.85% 12.95% 13.33% 13.45%
<CAPTION>
At the Maximum,
At the Maximum As Adjusted
-------------------------------- -------------------------------
With With
Foundation No Foundation Foundation No Foundation
---------- ------------- ---------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Estimated offering amount.................... $ 5,405 $ 5,695 $ 6,216 $ 6,549
Pro forma market capitalization.............. 5,621 5,695 6,464 6,549
Total assets................................. 115,067 115,243 115,800 116,003
Total liabilities............................ 98,338 98,338 98,338 98,338
Pro forma stockholders' equity............... 15,895 16,071 16,628 16,831
Pro forma consolidated net earnings.......... 380 385 393 400
Pro forma stockholders' equity per share..... 13.24 12.94 12.04 11.78
Pro forma consolidated net earnings per
share..................................... 0.33 0.32 0.29 0.29
Pro Forma Pricing Ratios:
Price/Stockholders' Equity................ 75.53% 77.28% 83.06% 84.89%
Price/Earnings............................ 30.30 31.25 34.48 34.48
Price/Assets.............................. 10.43% 10.78% 11.92% 12.31%
Pro Forma Financial Ratios:
Return on Assets ......................... 0.44% 0.45% 0.45% 0.46%
Return on Stockholders' Equity ........... 3.19% 3.19% 3.15% 3.17%
Stockholders' Equity /Assets.............. 13.81% 13.94% 14.36% 14.51%
</TABLE>
33
<PAGE>
OSWEGO COUNTY SAVINGS BANK
The following Statements of Income of Oswego County Savings for the
years ended December 31, 1998 and 1997 are a part of the audited financial
statements which appear beginning on page F-1 of this Prospectus. These
Statements of Income should be read with the Financial Statements and Notes and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in this Prospectus.
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Interest income:
Loans $6,252,969 $6,860,107
Securities 1,480,880 1,151,073
Federal funds sold and other short-term investments 180,949 240,519
---------- ---------
Total interest income 7,914,798 8,251,699
Interest expense on deposits 3,388,168 3,737,612
---------- ---------
Net interest income 4,526,630 4,514,087
Provision for loan losses 120,000 524,816
---------- ---------
Net interest income after provision for loan losses 4,406,630 3,989,271
---------- ---------
Noninterest income:
Service charges 387,125 415,445
Recovery for Nationar 22,192 54,400
Other 59,526 46,417
---------- ---------
Total noninterest income 468,843 516,262
---------- ---------
Noninterest expenses:
Salaries and employee benefits 1,923,984 1,923,888
Occupancy and equipment 670,735 600,078
Data processing 267,782 221,695
Office supplies, printing and postage 186,750 240,691
Professional fees 251,231 237,923
Merger expenses 171,213 145,278
Real estate owned, net 302,213 198,545
Trustee fees 151,918 172,175
Marketing and advertising 120,616 93,375
Deposit insurance premiums 11,738 12,342
Other 346,585 269,302
---------- ---------
Total noninterest expenses 4,404,765 4,115,292
---------- ---------
Income before income tax expense 470,708 390,241
Income tax expense 162,000 201,350
---------- ---------
Net income $ 308,708 $ 188,891
========== =========
</TABLE>
See accompanying notes to the financial statements.
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Oswego County Savings' results of operations depend primarily on our
net interest income, which is the difference between interest and dividend
income on interest-earning assets and interest expense on interest-bearing
deposits. Interest-earning assets principally consist of loans and securities.
Oswego County Savings' results of operations also are affected by the provision
for losses on loans; the level of its noninterest income; its general,
administrative and other expenses, including compensation and benefits,
occupancy and equipment expense, real estate owned expense and other expenses;
and its income tax expense. Results of operations are also significantly
affected by general economic and competitive conditions, particularly changes in
market interest rates, government policies and actions of regulatory
authorities.
Forward-Looking Statements
This prospectus contains forward-looking statements which are based
on assumptions and describe future plans, strategies and expectations of Oswego
County Savings. These forward-looking statements are generally identified by use
of the words "believe," "expect," "intend," "anticipate," "estimate," "project,"
or similar words. Our ability to predict results or the actual effect of future
plans or strategies is uncertain. Factors which could have a material adverse
effect on our operations 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 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 our market areas and accounting principles and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and you should not rely too much on these statements.
Our Management Strategy
When Oswego County Savings' chairman, president and chief executive
officer retired in June 1996, our Board of Trustees formed a committee to search
for his replacement. The search process culminated with the hiring of Gregory
Kreis as president and chief executive officer in January 1997. Mr. Kreis had 29
years of banking experience in three commercial banks in Vermont, most recently
as president and chief executive officer of a $145 million community bank in
southern Vermont. Since joining Oswego County Savings, Mr. Kreis has retained
the services of several experienced officers, including a new senior consumer
and mortgage lending officer, a new commercial lending officer and a new human
resources and training officer. In addition, we created the new positions of
operations officer and compliance/security officer and promoted then-current
officers to fill those positions. The internal auditor was transferred to the
position of treasurer and chief financial officer and we retained an independent
outside firm to conduct our internal audit procedures.
The new management team reviewed and revised our policies and
procedures in all major areas. Under the direction of new management, we also
undertook a comprehensive review of all non-performing assets, our major loans
and all of our commercial mortgage loans. As a result of
35
<PAGE>
this review, we increased our provisions for loan losses to $1.1 million in 1996
and $525,000 in 1997.
During the past two years we also have implemented new and more
stringent loan underwriting policies and procedures in an effort to diversify
our operations while, at the same time, improving our asset quality. We believe
that we now have the management team and the policies and procedures in place
which will permit us to proceed with our operating strategy.
Certain highlights of Oswego County Savings' operating strategy
include the following:
o Community Banking. We are committed to meeting the
financial needs of our customers in Oswego County, New York
and surrounding counties. We believe that our size and
local base permit us to be more effective in servicing our
customers than non-local competitors because of our ability
to quickly and effectively provide senior management
responses to customer needs and inquiries.
o Emphasis on Retail Deposits. Our liability strategy
emphasizes retail deposits drawn from the four full-service
offices in our market area rather than institutional or
wholesale deposits. At December 31, 1998, we consider our
demand, savings and money market accounts of $58.3 million,
or 60.4% of our total deposit base of $96.6 million, to be
core deposits.
o Single-Family Residential Lending. A cornerstone of our
lending program has long been single-family (one-to
four-units) residential lending. At December 31, 1998, we
had $56.5 million (or 83.4% of total loans) of
single-family residential mortgage loans and home equity
loans. We will continue to be an active originator of
single-family residential mortgage loans because we believe
that they provide acceptable yields and credit risk.
o Asset Quality. Our new management team has significantly
improved our asset quality. The ratio of non-performing
assets to total assets was 1.70% at December 31, 1998
compared to 2.31% at December 31, 1996.
o Net Interest Margin. We manage our interest-rate risk
exposure by monitoring the levels of interest-rate
sensitive assets and liabilities. We have maintained a
relatively strong net interest margin due primarily to our
high level of adjustable-rate mortgage loans and core
deposits. For the year ended December 31, 1998, our net
interest margin was 4.37%. In recent years, our real estate
mortgage loans have consisted almost entirely of
adjustable-rate loans. In early 1998, we began offering
fixed-rate, single-family residential mortgage loans, but
only under terms and conditions which will permit their
resale into the secondary market. We expect to begin
selling our fixed-rate mortgage loans during 1999 and $4.3
million of our loans were classified held for sale at
December 31, 1998. Sales of fixed-rate mortgage loans
should help us to protect ourselves against interest rate
risk. Since we plan to continue servicing any loans we
sell, sales of fixed-rate loans will improve our income
from servicing fees.
36
<PAGE>
o Diversification Efforts. We are diversifying our banking
products, and we are increasing our efforts in making
commercial business loans and consumer loans, particularly
home equity lines of credit. Commercial business loans and
consumer loans generally have higher yields than
residential mortgage loans and generally should improve our
interest-rate risk profile because they have relatively
short terms and interest rates which are adjustable or
variable. We also are expanding our market area into
Onondaga County, which abuts the southern border of Oswego
County. We expect to open our first branch office in North
Syracuse in the summer of 1999.
Market Risk Analysis
Our Efforts to Address Interest Rate Risk. To minimize the potential
for adverse effects of material changes in interest rates on our results of
operations, Oswego County Savings has implemented asset and liability management
policies designed to better match the maturities and repricing terms of our
interest-earning assets and interest-bearing liabilities. Our policies have
consisted primarily of the following:
o originating adjustable or variable rate long-term loans for
portfolio,
o purchasing adjustable-rate mortgage-backed securities and short-term
investment securities,
o since February 1998, originating fixed-rate one-to four-family
residential loans with terms of 15 to 30 years under terms and
conditions which will permit their sale in the secondary market, and
o managing interest expense, by maintaining a strong retail deposit
base and emphasizing core deposits.
From the early 1980s until early 1998, Oswego County Savings
originated primarily adjustable-rate mortgage loans and did not originate
fixed-rate residential mortgage loans with terms of over 15 years. Most of our
single-family residential mortgage loans have interest rates which adjust every
one or three years. Oswego County Savings' portfolio of adjustable-rate one-to
four-family residential mortgage loans amounted to $49.2 million or 87.0% of all
residential mortgage loans at December 31, 1998. As long term interest rates
decreased during the 1990s, most of our customers have indicated a preference
for fixed-rate residential mortgage loans. In February 1998, we began the
origination of long-term, fixed-rate one-to-four family residential mortgage
loans in order to provide a full range of products to customers, but only under
terms, conditions and documentation which allow their sale in the secondary
market.
In order to better match the maturity or repricing of
interest-bearing liabilities with the maturity of our interest-earning assets,
Oswego County Savings offers certificates of deposit with terms in excess of one
year. At December 31, 1998, $9.9 million or 26.0% of our certificates of deposit
mature in more than one year. In our efforts to address interest-rate risk, we
pay higher rates on longer term and higher balance certificates of deposit.
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<PAGE>
Oswego County Savings considers its savings deposit and money market
accounts to be core deposits that are less likely to be withdrawn if interest
rates rise. Our savings and money market accounts have variable interest rates,
and we believe that we can adjust the interest rate on the accounts to retain a
substantial portion of these deposits. While the amount of savings and money
market accounts has declined in recent years, savings and money market accounts
amounted to $46.7 million or 48.3% of total deposits at December 31, 1998.
How We Measure Interest Rate Risk. Prolonged increases in market
rates of interest could adversely affect our interest rate spread and net
interest margin. Moreover, prolonged increases in interest rates could adversely
affect the demand for residential mortgage loans within our primary market area.
Our asset and liability management committee regularly reviews interest rate
risk. We forecast the impact of alternative interest rate environments on net
interest income and market value of portfolio equity, which is defined as the
net present value of our existing assets, liabilities and off-balance sheet
instruments. We also evaluate such impacts against the maximum potential changes
in net interest income and market value of portfolio equity that are authorized
by the board of trustees of Oswego County Savings.
The following table sets forth at December 31, 1998 the estimated
percentage and dollar change in Oswego County Savings' net interest income over
a four-quarter period and market value of portfolio equity based on the
indicated changes in interest rates. We have made certain assumptions in
preparing the table below. Although we believe these assumptions to be
reasonable, the interest rate sensitivity of the assets and liabilities and the
estimated effects of changes in interest rates on net interest income and the
market value of portfolio equity indicated in the following table could vary
substantially if different assumptions were used or actual experience differs
from such assumptions.
The following table presents our internal calculations of net
interest income and net portfolio value at December 31, 1998.
<TABLE>
<CAPTION>
Change in Interest
Rates in Basis Points Net Interest Income Net Portfolio Value
- ---------------------- ------------------------------------------------ ----------------------------------------------
Dollar Percentage Dollar Percentage
Estimated Change from Change Estimated Change Change from
Amount Base from Base Amount from Base Base
--------- ----------- ---------- --------- --------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
+400 $3,755 $(534) (12.44)% $10,670 $(3,905) (26.79)%
+200 4,160 (129) (3.00) 12,543 (2,032) (13.94)
Base 4,289 -- -- 14,575 -- --
-200 4,442 153 3.58 15,044 469 3.22
-400 4,892 603 14.07 15,488 913 6.26
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(1) Assumes an instantaneous uniform change in interest rates.
Certain shortcomings are inherent in the methodology used in the
above interest rate risk measurement. Modeling changes in net portfolio value
requires the making of assumptions which may or may not reflect the manner in
which actual yields and costs respond to changes in market interest rates. In
this regard, the above table's presentation assumes that the composition of our
interest sensitive assets and liabilities existing at the beginning of a period
remains
38
<PAGE>
constant over the period being measured and also assumes that a particular
change in interest rates is reflected uniformly across the yield curve
regardless of the duration to maturity or repricing of specific assets and
liabilities. Accordingly, although the above table provides an indication of our
interest-rate risk exposure at a particular point in time, these measurements
are not intended to and do not provide a precise forecast of the effect of
changes in market interest rates on our net interest income and will differ from
actual results.
Financial Condition
Our total assets decreased by $1.1 million or 1.0% to $110.9 million
at December 31, 1998 from $112.0 million at December 31, 1997. The decrease was
primarily due to a $12.7 million or 15.7% decline in the loan portfolio, which
was partially offset by an increase of $7.2 million in our securities and the
origination for sale of $4.3 million of loans.
We believe that the decrease in total loans reflects the recent
consumer preference for fixed-rate residential mortgage loans and the continued
high levels of mortgage loan refinancings. Because we did not resume offering
fixed-rate residential mortgage loans until February 1998, we believe we were at
a competitive disadvantage compared to those lenders who have marketed
fixed-rate mortgage loans for a longer period of time. While our level of total
loan originations increased by 13.6% in 1998 compared to 1997, loan principal
reductions were substantially greater in 1998. In addition, at December 31,
1998, we held $4.3 million in loans which we intend to sell in the secondary
market. At December 31, 1998, Oswego County Savings net loans amounted to $66.7
million or 60.2% of total assets compared to $79.1 million or 70.6% of total
assets at December 31, 1997.
Our total securities increased by $7.2 million to $28.5 million at
December 31, 1998 compared to $21.4 million at December 31, 1997. The primary
reason for the increase in securities was our reinvestment of available funds
from loan repayments. Securities represented 25.7% of total assets at December
31, 1998 and 19.1% of total assets at December 31, 1998 and December 31, 1997,
respectively.
We held $195,000 of real estate owned at December 31, 1998 compared
to $599,000 at December 31, 1997. Such decline reflects, in part, our efforts to
reduce our level of non-performing assets. In recent years we have reduced the
level of our total non-performing assets and non-performing loans. We also
charged-off $526,000 in loans in 1998. At December 31, 1998, our allowance for
loan losses equaled $1.1 million representing 1.58% of total loans outstanding
and 63.3% of total non-accruing loans.
Our total deposits decreased during 1998 by $1.3 million to $96.6
million at December 31, 1998 from $97.9 million at December 31, 1997. Time
deposits decreased by $1.5 million and savings and money market accounts
decreased by $1.8 million, while demand deposits increased by $2.0 million
during the year. The decrease in total deposits is partly attributable to our
decision not to renew jumbo time deposits at the current market rates. Jumbo
deposits are accounts with a balance of more than $100,000. The decrease in
deposits at Oswego County Savings, as in banks throughout the country, also
reflects the flow of funds into alternative investments such as mutual
funds.
Our total net worth was $11.7 million at December 31, 1998, an
increase of $303,000 from December 31, 1997. The increase was due to net income
of $309,000 during the year ended December 31, 1998 less a $6,000 decrease in
the net unrealized gain on securities available for sale.
39
<PAGE>
Average Balances, Net Interest Income and Yields Earned and Rates
Paid. The following table presents for the periods indicated the total dollar
amount of interest income from Oswego County Savings' average interest-earning
assets and the resultant yields, as well as the interest expense on average
interest-bearing liabilities, expressed both in dollars and rates, and the net
interest margin. All average balances are based on monthly balances. We do not
believe that the monthly averages differ significantly from what the daily
averages would have been during these periods.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------------
1998 1997
--------------------------------------- -----------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
--------- ---------- -------- --------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans gross(1) $ 75,648 $ 6,253 8.27% $ 83,388 $ 6,860 8.23%
Securities(2) 24,706 1,481 5.99 19,062 1,151 6.04
Federal funds sold and other
short term investments 3,232 181 5.60 3,733 241 6.46
-------- ------- -------- -------
Total interest-earning assets 103,586 7,915 7.64 106,183 8,252 7.77
Noninterest-earning assets 6,094 7,405
-------- --------
Total assets $109,680 $113,588
======== ========
Interest-bearing liabilities:
Deposits(3) $ 86,698 3,388 3.91 91,384 3,738 4.09
-------- ------- -------- -------
Noninterest-bearing deposits 10,474 9,217
Other noninterest-bearing liabilities 1,125 1,162
-------- --------
Total liabilities 98,297 101,763
Net worth 11,383 11,825
-------- --------
Total liabilities and net worth $109,680 $113,588
======== ========
Net interest income; average
interest rate spread $ 4,527 3.73% $ 4,514 3.68%
======= =======
Net interest margin(4) 4.37% 4.25%
Average interest-earning assets to
average interest-bearing liabilities 119.48% 116.19%
</TABLE>
- ----------------------
(1) Includes loans held for sale. Excludes non-accruing loans.
(2) Average balance represents the carrying amount of securities available for
sale and securities held to maturity.
(3) Excludes noninterest-bearing checking accounts.
(4) Equals net interest income divided by average interest-earning assets.
40
<PAGE>
Rate/Volume Analysis. The following table describes the extent to
which changes in interest rates and changes in volume of interest-related assets
and liabilities have affected Oswego County Savings' interest income and expense
during the periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (change in volume multiplied by prior year rate), and (ii)
changes in rate (change in rate multiplied by prior year volume). The combined
effect of changes in both rate and volume has been allocated proportionately to
the change due to rate and the change due to volume.
Year Ended December 31,
1998 vs. 1997
--------------------------------------
Increase(Decrease)
Due to Total
------------------------- Increase
Volume Rate Decrease)
----------- ---------- ----------
(In Thousands)
Interest-earning assets:
Loans(1) $(640) $ 33 $(607)
Securities 339 (9) 330
Short-term investments (30) (30) (60)
----- ---- -----
Total interest-earning assets (331) (6) (337)
----- ---- -----
Interest-bearing liabilities:
Deposits (187) (163) (350)
----- ---- -----
Increase (decrease) in net interest
income $(144) $157 $ 13
===== ==== =====
- ----------------------
(1) Includes loans held for sale.
Results of Operations
Oswego County Savings' net income was $309,000 for the year ended
December 31, 1998, an increase of $120,000 as compared to net income of $189,000
in 1997.
Net Interest Income. Net interest income is determined by the average
interest rate spread (i.e., the difference between the average yields earned on
interest-earning assets and the average rates paid on interest-bearing
liabilities) and the relative amounts of interest-earning assets and
interest-bearing liabilities. Our net interest income remained relatively stable
at $4.5 million for both 1998 and 1997. For the year ended December 31, 1998,
net interest income decreased by $144,000 due to volume but was offset by
$157,000 because of interest rate increases.
Interest Income. Total interest income decreased by $337,000, or
4.1%, to $7.9 million for 1998 compared to $8.3 million for 1997. The primary
reason for the decrease in interest income was a decrease in interest earned on
our outstanding loans. Interest income on loans decreased by $607,000 or 8.9%
during 1998 compared to 1997. The average balance of Oswego County Savings' loan
portfolio, which includes loans held for sale, has decreased from $83.4 million
in 1997 to $75.6 million in 1998, while the average yield on our loan portfolio
increased slightly from 8.23% in 1997 to 8.27% in 1998.
41
<PAGE>
Income from Oswego County Savings' securities portfolio increased by
$330,000 during 1998 to $1.5 million compared to $1.2 million in 1997. The 28.7%
increase in interest income from securities during 1998 was due primarily to a
29.6% increase in our average balance of securities to $24.7 million for 1998
compared to $19.1 million in 1997. The average yield on the securities portfolio
decreased to 5.99% in 1998 compared to 6.04% in 1997.
Other interest income, which consists of interest on federal funds
sold and other short-term investments, was $181,000 in 1998 as compared to
$241,000 in 1997. The average amount of federal funds and short-term investments
decreased from $3.7 million in 1997 to $3.2 million in 1998. The average yields
on these investments, which are generally more market sensitive, fluctuated from
6.46% in 1997 to 5.60% in 1998.
Interest Expense. Interest expense, which consisted solely of
interest paid on deposits in both 1998 and 1997, was $3.4 million in 1998
compared to $3.7 million in 1997. The primary reason for the $349,000, or 9.3%,
decrease in interest expense in 1998 was a $4.7 million, or 5.1%, decrease in
the average balance of interest-bearing deposits in 1998 together with an 18
basis point reduction in the average rate paid on these deposits in 1998
compared to 1997.
Provision for Loan Losses. The provisions for loan losses were
$120,000 in 1998 and $525,000 for 1997. Provisions for loan losses are recorded
to maintain the allowance for loan losses at an amount management considers
adequate to cover loan losses which are deemed probable and can be estimated.
These provisions were based upon, a number of factors, including asset
classifications, management's assessment of the credit risk inherent in the
portfolio, historical loan loss experience, economic trends, industry experience
and trends, estimated collateral values and our underwriting policies. The
provision for loan losses of $120,000 in 1998 reflects a more normalized amount
while the provision of loan losses of $525,000 in 1997 reflects our extensive
review, which began in early 1997, of our loan portfolio. The review resulted in
$1.8 million of classified nonperforming loans at December 31, 1998. At December
31, 1998, $1.1 million of the total $1.7 million of nonperforming loans at that
date were also nonperforming loans at December 31, 1997 and had been properly
addressed and reserved for in 1997. Such loans have either been in a workout
process or in foreclosure proceedings. Also, contributing to the reduced 1998
provision for loan losses is the decline in delinquent loans. Delinquent loans
decreased by $1.7 million or 34.6% to $3.2 million at December 31, 1998 from
$4.8 million at December 31, 1997. We have aggressively acted to improve our
credit quality through stronger credit standards and closely monitoring problem
loans. Actual loan charge-offs, net of recoveries, were $460,000 in 1998 and
$699,000 in 1997 which was a result of our effort during the past two years to
perform remedial action on past historical nonperforming loan relationships and
reduce the extent of poor credit quality loans. As a result of the overall
improvement of the loan portfolio quality, the allowance for loan losses has
declined to $1.1 million or 1.58% of the total loans at December 31, 1998 from
$1.4 million or 1.75% of total loans at December 31, 1997
Although we believe that our allowance for loan losses was adequate
at December 31, 1998, there can be no assurances that additions to such
allowance will not be necessary in future periods, which would adversely affect
our results of operations. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review our allowance
for loan losses and the carrying value of our other nonperforming assets based
on their judgements about information available to them at the time of their
examination. No assurance can be given whether any of such agencies might
require us to make additional provisions for loan losses in the future. However,
as we continue to increase the amount of our loan originations and diversify the
types of loans we offer, we may need to increase the amount of future provisions
for loan losses.
Noninterest Income. Non-interest income decreased by $47,000 or 9.1%
during 1998 as compared to 1997. The decrease in 1998 was partially the result
of a decrease of $28,000 or 6.8% in income from service charges and recoveries
from Nationar of $54,000 in 1997 as compared to $22,000 in 1998. The
Superintendent of Banks for the State of New York seized Nationar, a
correspondent bank and trust company, in February 1995. On that date, Oswego
County Savings had demand accounts with Nationar of approximately $63,000,
Nationar capital stock with a carrying value of $5,000, Nationar preferred stock
with a carrying value of $19,000, a pledged security of $80,000 held by Nationar
and Nationar capital debentures of $120,000. Due to the uncertainty of the
collectibility of these amounts owed, we charged off the capital and preferred
stock investments in 1995 and established loss provisions of $120,000 in 1995
and $14,000 in 1996. Our Bank, through distributions, has recovered amounts
totaling $22,000, $54,000 and $154,000 in 1998, 1997 and 1996, respectively. As
of December 31, 1998, the total Nationar losses, net of recoveries, were
$57,000.
Noninterest Expenses. Non-interest expenses increased during 1998 by
$290,000, or 7.0%, to $4.4 million compared to $4.1 million in 1997. The primary
reasons for the increase in
42
<PAGE>
noninterest expense in 1998 compared to 1997 were a $71,000 increase in
occupancy and equipment expenses, a $46,000 increase in data processing costs
and a $104,000 increase in net real estate owned expense. The increase in
occupancy and equipment expense was caused by increased depreciation expense as
we had capital expenditures, primarily for computer equipment, of $177,000 in
1998 and $397,000 in 1997. The increase in data processing cost in 1998 reflects
our efforts to continue to improve our data processing capabilities as well as
efforts to prepare for the year 2000. Real estate owned expenses increased in
1998 partly as a result of our efforts to act more aggressively with respect to
non-performing assets and to acquire and dispose of such assets in a more
expeditious manner. Professional fees also contributed to the increase in
noninterest expense increasing by $13,000 to $251,000 in 1998 from $238,000 in
1997. The primary reason for the increase in professional fees was a result of
increased utilization of computer consulting services in conjunction with year
2000 compliance and other consulting services. Merger expense of $171,000 in
1998 and $145,000 in 1997 reflect costs incurred with the planned merger of
Oswego County Savings with Pathfinder Bancorp, ("Pathfinder") a publicly traded
stock holding company and whose wholly owned subsidiary is Oswego City Savings
Bank. On January 18, 1999, we terminated the proposed merger with Pathfinder as
a result of certain regulatory matters. Trustee fees represent compensation of
the board of trustees for services provided in attendance at board and committee
meetings. Trustee fees decreased to $152,000 in 1998 from $172,000 in 1997,
primarily due to greater attendance by trustees in 1997 as well as additional
special board meetings in 1997. The fees paid for attendance at special meetings
amounted to $31,000 in 1997 compared to $23,000 in 1998. The additional special
board meetings were a result of the proposed merger with Oswego City Savings
Bank. Marketing and advertising expense increased to $121,000 in 1998 from
$93,000 in 1997. The increase was primarily the result of increased advertising
of loan products, especially advertising associated with the introduction of
long-term, fixed-rate residential mortgage loans in 1998 by our Bank.
Income Taxes. Income tax expense decreased by $39,000 in 1998 to
$162,0000 as compared to $201,000 in 1997. The income tax rate declined to 34.4%
in 1998 from 51.6% in 1997. The income tax rate decrease was primarily due to
1997 non-deductible merger-related expenses becoming deductible in 1998.
Liquidity and Capital Resources
Oswego County Savings' liquidity, represented by cash and cash
equivalents and securities available for sale, is a product of its operating,
investing and financing activities. Our primary sources of funds are deposits;
the amortization, prepayment and maturity of outstanding loans, securities and
other short-term investments; and funds provided from operations. While
scheduled payments from the amortization of loans, maturing securities and
short-term investments are relatively predictable sources of funds, deposit
flows and loan prepayments are greatly influenced by general interest rates,
economic conditions and competition. In addition, Oswego County Savings invests
excess funds in federal funds sold and other short-term interest- earning assets
which provide liquidity to meet lending requirements. We have been able to
generate sufficient cash through our deposits and have not utilized borrowings
as a source of funds during the past five years.
Liquidity management is both a daily and long-term function of
business management. Excess liquidity is generally invested in short-term
investments such as federal funds sold or U.S. Treasury securities. On a longer
term basis, we maintain a strategy of investing in various lending products.
Most of such products have either short-terms (five years or less)or interest
rates that adjust at least every three years. We use our sources of funds
primarily to meet our ongoing commitments, to pay maturing certificates of
deposit and savings withdrawals, fund loan commitments and maintain a portfolio
of investment securities. At December 31, 1998, we had outstanding commitments
to originate loans of $2.4 million and unused letters of credit of $20,000. At
December 31, 1998, we also had certificates of deposit scheduled to mature in
one year or less totaling $28.3 million. Based on historical experience, we
believe that a significant portion of maturing deposits will remain with Oswego
County Savings. We anticipate that we will continue to have sufficient deposit
funds, together with borrowings, as needed, to meet our current commitments.
43
<PAGE>
Impact of Inflation and Changing Prices
The financial statements and related financial data presented herein
have been prepared in conformity with generally accepted accounting principles,
which generally require the measurement of financial position and operating
results in terms of historical dollars, without considering changes in relative
purchasing power over time due to inflation. Unlike most industrial companies,
virtually all of Oswego County Savings' assets and liabilities are monetary in
nature. As a result, interest rates generally have a more significant impact on
Oswego County Savings' performance than does the effect of inflation.
Year 2000 Compliance
Many existing computer programs use only two digits to identify a
year in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
Year 2000. The Year 2000 issue affects virtually all companies and
organizations. We have conducted a thorough assessment of our internal systems
as well as the efforts of our outside data processing service providers. During
this assessment phase, we identified all in-house systems and third party
relationships, and assessed whether they were "mission-critical."
Mission-critical is defined as a system that is vital to the successful
continuance of a core business activity. Our data processing system, operations
and teller software and platforms, automated teller machines and personal
computer network have been identified as "mission-critical." We have assessed
both information technology systems and non-information technology systems.
Examples of non-information technology systems include utility and telephone
companies, security systems, and correspondent financial organizations. Also
included in our assessment was the identification of those systems and vendors
whom we have control over and those that we do not control. Examples of those
vendors whom Oswego County Savings has control over include organizations which
Oswego County Savings has a material relationship with. Vendors whom Oswego
County Savings has no control over include utility companies.
The most important mission-critical area concerns the primary data
processing services and software provided to us by a third party vendor. The
vendor has rewritten certain portions of the software, tested the system and
advised us that it is Year 2000 compliant. We also have tested the system and
believe it is Year 2000 compliant. The third party vendors which provide our
automated teller machines and the related software and network switches have
tested those machines and the system and advised us that they also are Year 2000
compliant. Our bank teller and platform software have been tested by the vendor
and us and found to be Year 2000 compliant. We believe that we would use manual
systems as a contingency plan if power or communication capabilities were not
available. There can be no assurance in this regard, however, and it is possible
that as a result we could experience data processing delays, errors or failures,
all of which could have a material adverse impact on our financial condition and
results of operations. We estimate that our expenses related to year 2000
compliance will be approximately $350,000, including over $250,000 incurred
through December 31, 1998 in compliance related costs for upgrading our computer
network and telephone system.
We have also evaluated our non-information technology systems to
determine if such systems may have embedded technology that could also be
affected by the year 2000 problem. We have determined that there are only a few
systems of this type that could be affected. We have been informed by the
vendors that the systems are or will be year 2000 compliant by year 2000.
We have developed contingency plans for all mission-critical areas of
the Bank. Those contingency plans are being drafted into one unified document
which is being reviewed and rewritten by a third-party consultant hired by us.
The contingency plans are based on operating in the event of no electrical power
and/or no communications, as well as failure of a mission-critical area for
whatever reason. Testing of the contingency plans will be accomplished on an
ongoing basis throughout the balance of 1999. Contingency plans necessarily call
for many tasks being done on a manual basis in the event of no power or no
communications. There can be no assurance in this regard, however, and it is
possible that as a result we could experience data processing delays, errors or
failures, all of which could have a material adverse impact on our financial
condition and results of operations.
44
<PAGE>
Computer problems experienced by our commercial borrowers could have
an adverse effect on their business operations and their ability to repay their
loans when due. Oswego County has begun evaluating Year 2000 readiness of its
commercial loan applicants as part of the loan underwriting process and is
calling upon major existing borrowers to assess their readiness and identify
potential problems. There are currently no significant concerns due to the
limited amount of commercial loans made by the Bank.
Impact of New Accounting Standards
On January 1, 1998, we adopted the provisions of SFAS No. 130,
Reporting Comprehensive Income. This statement establishes standards for
reporting and display of comprehensive income and its components. Comprehensive
income includes the reported net income of a company adjusted for items that are
currently accounted for as direct entries to net worth, such as the mark to
market adjustment on securities available for sale. For us, comprehensive income
represents net income plus other comprehensive income, which consists of the net
change in after-tax unrealized gains or losses on securities available for sale
for the period. Accumulated other comprehensive income in the accompanying
statements of financial condition represents the net unrealized gains or losses
on securities available for sale as of the reporting dates. Comprehensive income
for 1998 and 1997 was $303,000 and $194,000, respectively.
In June 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 131 requires public companies to report financial and
other information about key revenue producing segments of the entity for which
such information is available and is utilized by the chief operating decision
maker. Specific information to be reported for individual segments includes
profit or loss, certain specific revenue and expense items, and total assets. A
reconciliation of segment financial information to amounts reported in the
financial statements is also provided. As a community-oriented financial
institution, substantially all of our operations involve the delivery of loan
and deposit products to customers. Management makes operating decisions and
assesses performance based on an ongoing review of these community banking
operations, which constitute Oswego County Savings' only operating segment for
financial reporting purposes. Therefore, the adoption of SFAS No. 131 did not
result in any change in Oswego County Savings reporting.
The FASB issued SFAS No. 132, Employers' Disclosures about Pensions
and Other Post-retirement Benefits, in February 1998. This statement revises
employers' disclosures about pension and other post retirement benefit plans. It
does not change the measurement or the recognition of these benefit costs for
plans. The statement was effective for our year-end 1998 reporting and did not
impact our financial position or results of operations.
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued in June 1998. This statement requires that all
derivatives be recognized as either assets or liabilities in the statement of
financial condition and that those instruments be measured at fair value. The
accounting for changes in the fair value of a derivative (that is, gains and
losses) depends on the intended use of the derivative and the resulting
designation. This statement is effective for fiscal years after June 15, 1999,
although earlier adoption is permitted. We anticipate, based on current
activities, that the adoption of SFAS No. 133 will not have an effect
45
<PAGE>
on our financial position or results of operations.
In October 1998, the FASB issued SFAS No. 134, Accounting for
Mortgage-Backed Securities Retained After the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise, which amends SFAS No 65,
Accounting for Certain Mortgage Banking Activities. This statement conforms the
subsequent accounting for securities retained after the securitization of
mortgage loans by a mortgage banking enterprise with the accounting for such
securities by a non-mortgage banking enterprise. This statement is effective for
the first quarter beginning after December 15, 1998, and will not have any
impact on our financial position or results of operations as we do not currently
securitize mortgage loans.
46
<PAGE>
BUSINESS
Lending Activities
Market Area. Oswego County Savings conducts operations out of its headquarters
office in Oswego, New York and three additional branch offices. We anticipate
opening a fourth branch office in North Syracuse, New York in the summer of
1999. The bulk of our loans and deposits are generated within Oswego County,
which is located on Lake Ontario approximately 30 miles northwest of Syracuse.
The markets served by Oswego County Savings are a combination of suburban and
rural areas.
Since 1990, Oswego County has experienced household and population
growth rates slightly above the average for the State of New York but well below
the national average. The 1997 population estimate of Oswego County was 126,000.
Forecasts of growth in the market area through 2003 indicate that population
growth will continue at a pace approximating recent historic levels or 0.3%.
Some significant job losses in the early 1990s contributed to a declining real
estate market and a relatively high unemployment rate. While the local economy
has been stable in recent years, it has not enjoyed the robust economy
experienced throughout most of the nation.
Local banking competition is substantial with two other savings banks
headquartered in the county. Additionally the county has branches of some of the
money center banks, large regional banks, statewide banks, and community banks
from other areas of New York State. There are a total of 32 banking offices in
Oswego County.
General. At December 31, 1998, Oswego County Savings' total loans
amounted to $67.8 million. Net of the $1.1 million allowance for loan losses,
our loans were $66.7 million at December 31, 1998 representing 60.3% of our
total assets at that date. The principal lending activity of Oswego County
Savings is the origination of single-family (one-to four-units) residential real
estate loans, home equity loans, and commercial real estate loans. To a lesser
extent, Oswego County Savings also makes commercial loans and consumer loans. At
December 31, 1998, $56.5 million or 83.4% of our total loans consisted of
residential mortgage and home equity loans. Commercial mortgage loans totaled
$9.0 million on that date, representing 13.2% of total loans. Commercial loans
totaled $265,000 and consumer loans totaled $2.0 million at December 31, 1998.
The types of loans that Oswego County Savings may originate are
subject to federal and state laws and regulations. Interest rates charged by us
on loans are affected principally by loan demand and the supply of money
available for lending purposes and the rates offered by its competitors. These
factors are, in turn, affected by general economic conditions, the monetary
policy of the federal government, including the Federal Reserve Board,
legislative and tax policies, and governmental budgetary matters.
A New York-chartered savings bank generally may not make loans to one
borrower and related entities in an amount which exceeds 15% of its unimpaired
capital and surplus, although loans in an amount equal to an additional 10% of
unimpaired capital and surplus may be made to a borrower if the loans are fully
secured by readily marketable securities. At December 31, 1998, Oswego County
Savings' limit on loans-to-one borrower was $1.8 million and its five largest
loans or groups of loans-to-one borrower, including related entities, aggregated
$799,000, $730,000, $710,000, $667,000 and $633,000. Four of Oswego County
Savings' five largest loans or groups of loans were performing in accordance
with their terms at December 31, 1998. The $710,000 group of loans consists of
two loans. Both loans were current at December 31, 1998, but have occasionally
been delinquent in the past. The $667,000 group of loans consists of seven loans
secured by various residential, commercial and other properties in Oswego County
Savings' market area. The borrower filed bankruptcy in early 1996, all of the
loans are in default and Oswego County Savings is attempting to foreclose on the
collateral.
Our Loan Portfolio. The following table sets forth the composition of
our loan portfolio by type of loan at the dates indicated. Residential mortgages
at December 31, 1998 include loans held for sale of $4.3 million.
47
<PAGE>
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------------------------------------------------
1998 1997 1996
------------------------- ------------------------ ------------------------
Amount % Amount % Amount %
-------- ------- -------- ------- -------- -------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Residential mortgages and
home equity loans(1) $56,543 83.40% $67,405 83.78% $70,687 83.08%
Commercial mortgages 8,950 13.20 11,145 13.85 11,490 13.50
Commercial loans 265 0.39 276 0.34 589 0.69
Consumer loans 2,037 3.01 1,634 2.03 2,321 2.73
------- ------ ------- ------ ------- ------
Total loans 67,795 100.00% 80,460 100.00% 85,087 100.00%
====== ====== ======
Allowance for loan losses (1,068) (1,408) (1,583)
------- ------- -------
Net loans(1) $66,727 $79,052 $83,504
======= ======= =======
</TABLE>
- --------------
(1) In addition, the Bank had $4.3 million of residential mortgage loans
classified as held for sale at Dececember 31, 1998.
Loans Due or Adjusting After One Year. The following table sets forth
the dollar amount of all loans, before net items, due or adjusting after one
year from December 31, 1998 as shown in the preceding table. The table lists the
total loans in each category as well as those with fixed interest rates and
those with floating or adjustable interest rates.
Floating or
Fixed-Rate Adjustable-Rate Total
---------- --------------- -----
(In Thousands)
Residential mortgages and
home equity loans $ 9,882 $11,880 $21,762
Commercial mortgages 1,408 1,503 2,911
Commercial loans 265 -- 265
Consumer loans 1,496 426 1,922
------- ------- -------
Total $13,051 $13,809 $26,860
======= ======= =======
(1) Includes loans held for sale.
Origination, Purchase and Sale of Loans. The lending activities of
Oswego County Savings are subject to the written, non-discriminatory,
underwriting standards and loan origination procedures established by our Board
of Trustees, management, secondary market investors such as Freddie Mac and
private mortgage insurance companies. We obtain loan originations from a variety
of sources, including referrals from real estate brokers, developers, builders,
existing customers, newspaper, radio and walk-in customers. Loan applications
are taken by our lending personnel, and the loan origination department
supervises the procurement of credit reports, appraisals and other documentation
involved with a loan. Property valuations are performed by independent outside
appraisers licensed in New York State. We require a borrower to obtain hazard
insurance on any property securing a loan and we usually require title insurance
on all newly originated mortgage loans.
Our loan approval process is intended to assess the borrower's
ability to repay the loan, the viability of the loan and the adequacy of the
value of the property that will secure the loan. A loan application file is
first reviewed by a loan originator or branch manager and then underwritten to
established standards and policies. The Board has granted underwriting authority
to branch managers, loan underwriters, the senior loan officer and the president
in varying levels. Our Board Loan Committee usually must approve any loan we
make over $100,000, except those
48
<PAGE>
which conform to standards permitting their resale into the secondary market
(which must be approved by one of four designated officers).
Historically, we have originated substantially all of the loans in
our portfolio and held them until maturity. However, in early 1998, because of
customer preference for fixed-rate mortgage loans, we began originating
long-term, fixed-rate residential mortgage loans with terms conforming to
secondary market standards. We expect to begin selling our recently originated
fixed-rate mortgage loans into the secondary market during 1999. These loans
held for sale were $4.3 million at December 31, 1998. Historically, Oswego
County Savings rarely purchased loans. In the future, as we become more active
in commercial business lending, we may purchase more loans and more
participation interests in loans. If we begin purchasing loans or participating
interests, we expect that they would have to satisfy our own loan underwriting
standards.
The following table shows total loans originated and repaid during
the years ended December 31, 1998 and 1997. No loans were purchased or sold
during the periods shown.
Year Ended December 31,
-------------------------------
1998 1997
-------- ---------
(In Thousands)
Loan originations:
Residential mortgages, home equity and
commercial mortgage loans $6,214 $ 5,337
Commercial loans 296 30
Consumer loans 962 1,211
------ -----
Total loans originated 7,472 6,578
Loan principal reductions (15,050) (9,757)
Decrease due to other
items, net (801) (1,448)
--------- ----------
Net $(8,379) $(4,627)
======= ======
(1) Includes loans held for sale.
Residential Mortgages and Home Equity Loans. Historically, Oswego
County Savings has concentrated its lending activities on the origination of
loans secured primarily by first mortgage liens on existing single-family
(one-to four-units) residences and home equity loans secured by second mortgages
on single-family residences. At December 31, 1998, $56.5 million or 83.4% of our
total loans consisted of such loans.
From the early 1980s until early 1998, Oswego County Savings
originated primarily adjustable-rate residential mortgage loans in order to
manage its interest-rate risk. However, in February 1998, Oswego County Savings
commenced the origination of long-term, fixed-rate single-family residential
mortgage loans in order to provide a full range of products to its customers,
but only under terms, conditions and documentation which conform to standards
which permit their resale in the secondary market.
Our adjustable-rate, single-family, residential mortgage loans
generally have up to 30- year terms and an interest rate which adjusts every
year or three years in accordance with a designated index, (currently the weekly
average yield on U.S. Treasury securities adjusted to a constant comparable
maturity of one year or three years, respectively, as made available by the
Federal Reserve Board). Oswego County Savings generally does not offer deeply
discounted
49
<PAGE>
interest rates. Our loans generally have a cap on the amount of any increase or
decrease in the interest rate during the applicable adjustment period, and
various caps, depending on when the loan was originated, on the amount which the
interest rate can increase or decrease over the life of the loan. Our
adjustable-rate loans currently being originated are not assumable without our
consent, and do not contain prepayment penalties. Oswego County Savings has not
engaged in the practice of using a cap on the payments that could allow the loan
balance to increase rather than decrease, resulting in negative amortization.
Adjustable-rate loans decrease the risks associated with changes in interest
rates but involve other risks, primarily because as interest rates rise, the
payment by the borrower rises to the extent permitted by the terms of the loan,
thereby increasing the potential for default. At the same time, the
marketability of the underlying property may be adversely affected by higher
interest rates. We believe that these risks, which have not had a material
adverse effect on us to date, generally are less than the risks associated with
holding fixed-rate loans in an increasing interest rate environment.
Approximately $49.2 million or 87.0% of the permanent residential mortgage loans
in Oswego County Savings' loan portfolio at December 31, 1998 had adjustable
interest rates.
The demand for adjustable-rate loans in our primary market area has
been a function of several factors, including the level of interest rates, the
expectations of changes in the level of interest rates and the difference
between the interest rates and loan fees offered for fixed-rate loans and
adjustable-rate loans. The relative amount of fixed-rate and adjustable-rate
residential loans that can be originated at any time is largely determined by
the demand for each in a competitive environment. Due to the generally lower
rates of interest prevailing in recent periods, demand for adjustable-rate,
single-family residential mortgage loans in our primary market decreased as
consumer preference for fixed-rate loans increased. In order to meet the demands
of the marketplace, Oswego County Savings initiated its fixed-rate residential
mortgage loan program.
Pursuant to underwriting guidelines adopted by the Board of Trustees,
Oswego County Savings will lend up to 95% of the appraised value of the property
securing a single-family residential loan, and generally requires borrowers to
obtain private mortgage insurance on the portion of the principal amount of the
loan that exceeds 80% of the appraised value of the security property. Oswego
County Savings generally requires title insurance insuring the priority and
validity of its mortgage lien, as well as fire and extended coverage casualty
insurance in order to protect the properties securing its residential and other
mortgage loans. Borrowers may be required to advance funds, with each monthly
payment of principal and interest, to a loan escrow account from which the Bank
makes disbursements for items such as real estate taxes, hazard insurance
premiums and mortgage insurance premiums as they become due. The properties
securing all of Oswego County Savings' mortgage loans are appraised by
independent appraisers licensed in New York State.
Home equity loans are originated by Oswego County Savings for up to
75% of the appraised value, less the amount of any existing prior liens on the
property. We secure our home
50
<PAGE>
equity loans with a mortgage on the property (generally a second mortgage) and
will originate the loan even if another institution holds the first mortgage.
There is a maximum term of five years on fixed-rate and 15 years on
adjustable-rate home equity loans. At December 31, 1998, home equity loans
totaled $1.8 million or 2.6% of Oswego County Savings' total loans. We recently
began offering home equity lines of credit in amounts of up to 80% of the
appraised value, or 90% if we already have a first lien on the property, less
the amount of existing prior liens.
Consumer Loans. Oswego County Savings may make loans for a wide
variety of personal or consumer purposes. At December 31, 1998, $2.0 million or
3.0% of Oswego County's total loans consisted of consumer loans. We originate
consumer loans in order to provide a full range of financial services to our
customers and because such loans generally have shorter terms and higher
interest rates than single-family residential mortgage loans. The consumer loans
offered by Oswego County Savings include loans secured by deposit accounts,
automobile loans, recreational vehicle loans, boat loans and other miscellaneous
secured and unsecured personal consumer loans.
Oswego County Savings' loans secured by deposit accounts amounted to
$248,000 or .37% of Oswego County's total loans at December 31, 1998. Such loans
are originated for up to 100% of the account balance, with a hold placed on the
account restricting the withdrawal of the account balance. The interest rate on
the loan is typically equal to the interest rate paid on the deposit account
plus 3.0%. We offer automobile loans on both new and used vehicles, with most of
the loans secured by used vehicles. Our automobile loans have terms of up to
five years and have fixed interest rates. Automobile loans amounted to $529,000
or 0.78% of total loans at December 31, 1998. Our unsecured personal lines of
credit and loans amounted to $426,000 and $585,000, respectively, at December
31, 1998.
Consumer loans generally have shorter terms and higher interest rates
than mortgage loans but generally involve more credit risk than mortgage loans
because of the type and nature of the collateral and, in certain cases, the
absence of collateral. In addition, consumer lending collections are dependent
on the borrower's continuing financial stability, and thus are more likely to be
adversely affected by job loss, divorce, illness and personal bankruptcy. In
most cases, any repossessed collateral for a defaulted consumer loan will not
provide an adequate source of repayment of the outstanding loan balance because
of improper repair and maintenance of the underlying security. The remaining
deficiency often does not warrant further substantial collection efforts against
the borrower. Oswego County Savings believes that the generally higher yields
earned on consumer loans compensate for the increased credit risk associated
with such loans and that consumer loans are important to its efforts to increase
rate sensitivity, shorten the average maturity of its loan portfolio and provide
a full range of services to its customers.
Commercial Mortgage Loans. At December 31, 1998, $9.0 million or
13.2% of Oswego County Savings' total loans consisted of commercial mortgage
loans. At December 31, 1998, our commercial mortgage loan portfolio consisted of
72 loans with an average balance of approximately $124,000. A majority of our
commercial mortgage loans are secured by mixed-use (partly commercial and partly
residential) and by apartment buildings located in primary market area.
51
<PAGE>
Commercial mortgage lending is generally considered to involve a
higher degree of risk than single-family residential lending. Such lending
typically involves large loan balances concentrated in a single borrower or
groups of related borrowers. In addition, the payment experience on loans
secured by income-producing properties is typically dependent on the successful
operation of the related real estate project and thus may be subject to a
greater extent to adverse conditions in the real estate market or in the economy
generally.
Commercial Business Loans. Oswego County Savings had $265,000 in
commercial business loans at December 31, 1998. Prior to 1998, we had not been
an active originator of commercial business loans. However, we have implemented
a new commercial loan policy and have hired an experienced commercial loan
underwriter, and we expect to increase the amount of commercial business loans
which we originate. We plan to concentrate our efforts on making commercial
business loans in amounts of $50,000 to $1.0 million to small to medium sized
businesses located in our market area. We have targeted commercial business
loans for expansion due to the generally higher yields of such loans, their
relatively short terms and the prevalence of adjustable or floating rates of
interest.
Commercial business loans generally are deemed to involve a greater
degree of risk than single-family residential mortgage loans. While commercial
business lending is relatively new to us and we are attempting to aggressively
increase our originations of commercial business loans, Oswego County Savings
has hired an experienced commercial loan officer and has implemented policies
and procedures for commercial business lending which we think are prudent.
Loan Origination Fees. In addition to interest earned on loans, we
receive loan origination fees or "points" on the origination of commercial
mortgage loans. Loan points are a percentage of the principal amount of the
mortgage loan and are charged to the borrower in connection with the origination
of the loan.
Asset Quality
General. When a borrower fails to make a required payment on a loan,
we attempt to cure the deficiency by contacting the borrower and seeking
payment. Late charges are generally imposed following the tenth day after a
payment is due on consumer loans and the fifteenth day after a payment is due on
mortgage loans. In most cases, deficiencies are cured promptly. If a delinquency
extends beyond 30 days, the loan and payment history is reviewed and efforts are
made to collect the loan. While Oswego County Savings generally prefers to work
with borrowers to resolve such problems, when the account becomes 60 to 90 days
delinquent, we institute foreclosure or other proceedings, as necessary, to
minimize any potential loss.
A loan is placed on non-accrual status when it is 90 days or more
past due. In addition, Oswego County Savings places any loan on non-accrual
status if any part of it is classified as doubtful (or loss or if any part has
been charged off.) When a loan is placed on non-accrual status, total interest
accrued and unpaid to date is reversed and charged to interest income.
Subsequent payments are either applied to the outstanding principal balance or
recorded as interest income, depending on the assessment of the ultimate
collectibility of the loan.
52
<PAGE>
Real estate acquired by Oswego County Savings as a result of
foreclosure or by deed-in-lieu of foreclosure under generally accepted
accounting principles are classified as real estate owned until sold. Real
estate owned properties are carried at the lower of fair value minus estimated
costs to sell the property, or cost (generally the balance of the loan on the
property at the date of acquisition). Writedowns from recorded investments to
estimated fair value which are required at the time of foreclosure are charged
to the allowance for loan losses. After the date of acquisition, all costs
incurred in maintaining the property are expensed and costs incurred for the
improvement or development of such property are capitalized. Adjustments to
carrying value of such properties that result from subsequent declines in fair
value are charged to operations in the period in which the decline occurs.
Delinquent Loans. The following table sets forth information
concerning delinquent loans at December 31, 1998 and 1997, in dollar amount and
as a percentage of Oswego County Savings' total loan portfolio. The amounts
presented are the total outstanding principal balances of the related loans,
rather than the actual payment amounts which were past due.
<TABLE>
<CAPTION>
At December 31, 1998
-----------------------------------------------------------------------------------------------------------
Residential
Mortgages and Commercial Commercial Consumer
Home Equity Loans(1) Mortgages Loans Loans Total
----------------------- ---------------- --------------- ---------------- ------------------
Amount % Amount % Amount % Amount % Amount %
------ --- ------ --- ------ -- ------ -- ------ --
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans delinquent
for:
30 - 59 days $1,655 2.30% $51 .07% -- -- $ 9 .01% $1,715 2.38%
60 - 89 days 150 .21 -- -- -- -- 11 .02 161 .22
90 days and over 630 .87 637 .88 -- -- 7 .01 1,274 1.77
------ ---- --- --- --- --- --- --- ------ ----
Total delinquent
loans $2,435 3.38% $688 .95% -- -- $27 .04% $3,150 4.37%
====== ==== ==== === === === === === ====== ====
- ----------
(1) Includes loans for sale.
<CAPTION>
At December 31, 1997
-----------------------------------------------------------------------------------------------------------
Residential
Mortgages and Commercial Commercial Consumer
Home Equity Loans Mortgages Loans Loans Total
----------------------- ---------------- --------------- ---------------- ------------------
Amount % Amount % Amount % Amount % Amount %
------ --- ------ --- ------ -- ------ -- ------ --
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans delinquent
for:
30 - 59 days $2,693 3.35% $135 .17% $-- --% $ 8 .01% $2,836 3.53%
60 - 89 days 343 .43 -- -- -- -- 11 .02 354 .43
90 days and over 1,105 1.37 520 .65 -- -- 2 .00 1,627 2.02
------ ---- ---- --- --- --- --- --- ------ ----
Total delinquent
loans $4,141 5.15% $655 .82% $-- --% $21 .03% $4,817 6.00%
====== ==== ==== === === === === === ====== ====
</TABLE>
53
<PAGE>
Non-Performing Assets. The following table sets forth the amounts and
categories of Oswego County Savings' non-performing assets at the dates
indicated.
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------------
1998 1997 1996
------ ------ -----
(Dollars In Thousands)
<S> <C> <C> <C>
Non-accruing loans:
Residential mortgages and home equity loans $1,017 $1,323 $2,029
Commercial mortgages 671 449 122
Consumer -- 2 29
Commercial -- -- --
------ ------ ------
Total $1,688 $1,774 $2,180
====== ====== ======
Foreclosed assets:
Residential real estate 128 514 403
Commercial real estate 67 85 88
------ ------ ------
Consumer -- -- -
------ ------ ------
Commercial -- -- -
------ ------ ------
Total $ 195 $ 599 $ 491
====== ====== ======
Total non-performing assets $1,883 $2,373 $2,671
====== ====== ======
Total as a percentage of total assets 1.70% 2.12% 2.31%
====== ====== ======
</TABLE>
Oswego County Savings had no accruing loans which were more than 90
days delinquent at December 31, 1998, 1997 or 1996. If all non-accruing loans
had been current in accordance with their terms during the years ended December
31, 1998 and 1997, additional interest income on such loans would have amounted
to $81,000 and $122,000, respectively.
Classified Assets. Federal regulations require that each insured
savings bank classify its assets on a regular basis. In addition, in connection
with examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them. There are three
classifications for problem assets: "substandard," "doubtful" and "loss."
Substandard assets have one or more defined weaknesses and are characterized by
the distinct possibility that the insured institution will sustain some loss if
the deficiencies are not corrected. Doubtful assets have the weaknesses of
substandard assets with the additional characteristic that the weaknesses make
collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable, and there is a high possibility of loss. An
asset classified loss is considered uncollectible and of such little value that
continuance as an asset of the institution is not warranted. Another category
designated "special mention" also must be established and maintained for assets
which do not currently expose an insured institution to a sufficient degree of
risk to warrant classification as substandard, doubtful or loss. Assets
classified as substandard or doubtful require the institution to establish
general allowances for loan and lease losses. If an asset or portion thereof is
classified loss, the insured institution must either establish specific
allowances for loan losses in the amount of 100% of the portion of the asset
classified loss, or charge-off such amount. General loss allowances established
to cover possible losses related to assets classified substandard or doubtful
may be included in determining an institution's regulatory capital, while
specific valuation allowances for loan losses do not qualify as regulatory
capital. Federal examiners may disagree with an insured institution's
classifications and amounts reserved.
54
<PAGE>
Exclusive of any assets classified as loss which have been fully
reserved or charged-off, Oswego County Savings' classified assets at December
31, 1998 consisted of $1.3 million of assets classified as substandard, which
represented 1.1% of total assets. We had no loans classified as doubtful or loss
at such date.
Allowance for Loan Losses. At December 31, 1998, our allowance for
loan losses amounted to $1.1 million or 1.58% of the total loan portfolio.
Oswego County Savings' loan portfolio consists primarily of residential
mortgage, home equity and commercial mortgage loans and, to a lesser extent,
consumer loans and commercial loans. We regularly review the loan portfolio and
make provisions for loan losses in order to maintain the adequacy of the
allowance for loan losses. The allowance for loan losses consists of amounts
specifically allocated to non-performing loans and potential problem loans (if
any) as well as allowances determined for each major loan category. Loan
categories such as single-family residential mortgages and consumer loans are
generally evaluated on an aggregate or "pool" basis by applying loss factors to
the current balances of the various loan categories. The loss factors are
determined by management based on an evaluation of historical loss experience,
delinquency trends, volume and type of lending conducted, and the impact of
current economic conditions in our market area. While we use the best
information available to make evaluations, future adjustments to the allowance
may be necessary if conditions differ substantially from the assumptions used in
making the evaluation. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review our allowance for loan
losses. Such agencies may require Oswego County Savings to recognize additions
to the allowance based on their judgments about information available to them at
the time of their examinations.
The following table sets forth an analysis of Oswego County Savings'
allowance for loan losses during the periods indicated.
Year Ended December 31,
--------------------------
1998 1997
-------- --------
(Dollars In Thousands)
Total loans outstanding at end of period(1) $67,795 $80,460
======= =======
Average loans outstanding(2) $75,648 $83,388
======= =======
Allowance for loan losses at beginning of period $ 1,409 $ 1,583
Charge-offs(3) (526) (724)
Recoveries 65 25
------- -------
Net charge-offs (461) (699)
Provision for loan losses 120 525
------- -------
Allowance for loan losses at end of period $ 1,068 $ 1,409
======= =======
Allowance for loan losses as a percent of
total loans outstanding(1) 1.58% 1.75%
==== ====
Ratio of net charge-offs to average loans
outstanding(2) 0.61% 0.84%
==== ====
- ----------------------
(1) Excludes loans held for sale.
(2) Includes loans held for sale.
(3) Charge-offs in 1998 and 1997 primarily consisted of nonowner occupied
multifamily loans.
55
<PAGE>
The following table presents the allocation of Oswego County Savings'
allowance for loan losses by type of loan at each of the dates indicated.
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------------------------
1998 1997
------------------------------- ---------------------------------
Loan Loan
Category Category
Amount as a % Amount as a %
of of Total of of Total
Allowance Loans Allowance Loans
--------------- ------------- -------------- ------------
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Residential mortgages and
home equity loans $ 527 83.40% $ 702 83.78%
Commercial mortgages 408 13.20 550 13.85
Commercial loans 9 0.39 5 0.34
Consumer loans 42 3.01 38 2.03
Unallocated 82 -- 114 -
------ ----- ------ -----
Total $1,068 $100% $1,409 100%
====== ===== ====== =====
</TABLE>
Securities
Oswego County Savings has authority to invest in various types of
liquid assets, including United States Treasury obligations, securities of
various federal agencies and of state and municipal governments, certain
corporate securities, certificates of deposit at federally insured banks and
savings institutions and federal funds. Each purchase of a security is ratified
by the Board of Trustees and the Asset Liability Management Committee.
Oswego County Savings' securities portfolio's largest component are
securities issued by U.S. government-sponsored agencies which had a carrying
value of $20.3 million or 71.0% of the portfolio as of December 31, 1998. As of
that same date, the portfolio also included $1.0 million of U.S. Treasury
securities, $4.2 million of general obligations of corporations and
municipalities and $3.1 million of mortgage-backed securities.
At December 31, 1998, Oswego County Savings' investment securities
portfolio had an amortized cost of $28.5 million or 25.7% of total assets as of
such date. The amortized cost of securities classified as held to maturity at
December 31, 1998 was $13.7 million with a fair value of $13.8 million. The
amortized cost and fair value of securities available for sale at December 31,
1998 were both $14.8 million.
56
<PAGE>
The following table sets forth certain information relating to Oswego
County Savings' securities portfolio at the dates indicated.
<TABLE>
<CAPTION>
At December 31,
----------------------------------------------------------------------
1998 1997
-------------------------- --------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- -------- --------- ---------
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Securities available for sale
Debt securities:
United States Treasury $ 1,007 $ 1,020 $ 4,017 $ 4,027
United States Government
agency obligations 13,776 13,762 6,893 6,892
------- ------- ------- -------
Total debt securities 14,783 14,782 10,910 10,919
Equity securities - corporate
stocks 2 2 2 2
------- ------- ------- -------
Total securities available
for sale 14,785 14,784 10,912 10,921
------- ------- ------- -------
Securities held to maturity
Debt securities:
Corporate and municipal securities 4,125 4,156 4,809 4,823
Mortgage-backed securities:
GNMA 2,164 2,150 62 65
FNMA 426 419 54 56
FHLMC 22 23 29 30
Small Business
Administration 503 500 -- --
United States Government
agency obligations 6,491 6,544 2,338 2,348
------- ------- ------- -------
United States Treasury -- -- 3,149 3,152
Total securities held to
maturity 13,731 13,792 10,441 10,475
------- ------- ------- -------
Total securities $28,516 $28,576 $21,353 $21,396
======= ======= ======= =======
</TABLE>
Mortgage-Backed Securities. Mortgage-backed securities represent a
participation interest in a pool of single-family or multi-family mortgages, the
principal and interest payments on which are passed from the mortgage
originators, through intermediaries (generally U.S. Government agencies and
government-sponsored enterprises) that pool and repackage the participation
interests in the form of securities, to investors such as Oswego County Savings.
Such U.S. Government agencies and government-sponsored enterprises, which
guarantee the payment of principal and interest to investors, primarily include
Freddie Mac, Fannie Mae and Ginnie Mae.
Freddie Mac, which is a corporation chartered by the U.S. Government,
issues participation certificates backed principally by conventional mortgage
loans. Freddie Mac guarantees the timely payment of interest and the ultimate
return of principal on participation
57
<PAGE>
certificates. Fannie Mae is a private corporation chartered by the U.S. Congress
with a mandate to establish a secondary market for mortgage loans. Fannie Mae
guarantees the timely payment of principal and interest on Fannie Mae
securities. Ginnie Mae is a government agency within the Department of Housing
and Urban Development which is intended to help finance government-assisted
housing programs. The timely payment of principal and interest on GNMA
securities is guaranteed by the GNMA and backed by the full faith and credit of
the U.S. Government. Because these government sponsored agencies were
established to provide support for low- and middle-income housing, there are
limits to the maximum size of loans that qualify for these programs. To
accommodate larger-sized loans, and loans that, for other reasons, do not
conform to the agency programs, a number of private institutions have
established their own home-loan origination and securitization programs.
Mortgage-backed securities typically are issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages, i.e., fixed-rate or adjustable-rate, as well as
prepayment risk, are passed on to the certificate holder. The life of a
mortgage-backed pass-through security thus approximates the life of the
underlying mortgages.
At December 31, 1998, the amortized cost and fair value of Oswego
County Savings' mortgage-backed securities amounted $3.1 million, which
represented 2.8% of our total assets at that date. All of Oswego County Savings'
$3.1 million of mortgage-backed securities at December 31, 1998 were insured or
guaranteed by Ginnie Mae, Freddie Mac, the Small Business Administration and
Fannie Mae, and all of those securities were classified as held to maturity.
Approximately 95.0% of our mortgage-backed securities had adjustable rates of
interest at December 31, 1998.
Mortgage-backed securities generally yield less than the loans which
underlie such securities because of their payment guarantees or credit
enhancements which offer the investor nominal credit risk. In addition,
mortgage-backed securities are more liquid than individual mortgage loans and
may be used to collateralize borrowings or other obligations of Oswego County
Savings.
The following table sets forth the activity in our mortgage-backed
securities portfolio during the periods indicated.
At or For the Year Ended December 31,
-------------------------------------
1998 1997
---- ----
(Dollars in Thousands)
Mortgage-backed securities at
beginning of period (amortized cost) $ 145 $179
Purchases 3,425 --
Repayments (448) (34)
Discount accretion, net 7 --
------ ----
Mortgage-backed securities at end
of period (amortized cost) $3,115 $145
====== ====
Mortgage-backed securities at end
of period (fair value) $3,092 $151
====== ====
Weighted average yield at end of
period 6.91% 8.03%
58
<PAGE>
Sources of Funds
General. Deposits are the primary source of Oswego County Savings'
funds for lending and other investment purposes. In addition to deposits, we
derive funds from principal and interest payments on loans and mortgage-backed
securities. Loan repayments are a relatively stable source of funds, while
deposit inflows and outflows are significantly influenced by general interest
rates and money market conditions. While we generally have not used borrowings
as a source of funds, they may be used on a short-term basis to compensate for
reductions in the availability of funds from other sources, or on a longer term
basis for general business purposes.
Deposits. Oswego County Savings' deposit products include a broad
selection of deposit instruments, including demand deposits, money market
deposits, savings deposits and time deposits. Deposit account terms vary, with
the principal differences being the minimum balance required, the time periods
the funds must remain on deposit and the interest rate.
Our deposits are obtained primarily from residents of Oswego County
in New York State. We estimate that less than 1% of our current deposits are
obtained from customers residing outside of New York State. We do not pay fees
to brokers to solicit funds for deposit with Oswego County Savings or actively
solicit negotiable-rate certificates of deposit with balances of $100,000 or
more. Previous management of Oswego County Savings periodically would solicit
larger ($100,000) certificates of deposit from out-of-state residents. In order
to attract out-of-state deposits, we would pay higher rates. This practice was
discontinued in 1997 and substantially all certificates of deposit from
out-of-state residents matured in 1997 and 1998, and have not been renewed.
We set interest rates, maturity terms, service fees and withdrawal
penalties on a periodic basis. Determination of rates and terms are predicated
on funds acquisition and liquidity requirements, rates paid by competitors,
growth goals and federal and state regulations.
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<PAGE>
The following table sets forth activity in our deposits during the
periods indicated.
Year Ended December 31,
--------------------------------
1998 1997
---- ----
(Dollars In Thousands)
Beginning balance $97,899 $102,015
------- --------
Net decrease before
interest credited(1) (4,723) (7,854)
Interest credited 3,388 3,738
------- --------
Net decrease in deposits (1,335) (4,116)
------- --------
Ending balance $96,564 $ 97,899
======= ========
- ---------------------
(1) The information provided is net of deposits and withdrawals because the
gross amount of deposits and withdrawals is not readily available.
The following table sets forth the dollar amount of deposits in the
various types of deposit programs offered by Oswego County Savings at the dates
indicated.
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------------
1998 1997
------------------------------------------------------------------
Amount % Amount %
---------- -------- ---------- --------
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Time deposits:
2.00% - 3.99% $ 34 0.03% $ -- --%
4.00% - 5.99% 33,724 34.92 33,071 33.78
6.00% - 7.99% 4, 489 4.66 6,626 6.77
------- ------ ------- ------
Total time deposits: 38,247 39.61 39,697 40.55
------- ------ ------- ------
Transaction accounts:
Savings deposits 46,365 48.02 47,969 49.00
Money market deposits 322 0.33 566 0.58
Demand deposits 11,630 12.04 9,666 9.87
------- ------ ------- ------
Total transaction
accounts 58,317 60.39 58,201 59.45
------- ------ ------- ------
Total deposits $96,564 100.00% $97,899 100.00%
======= ====== ======= ======
</TABLE>
60
<PAGE>
The following table presents the average balance of each type of
deposit and the average rate paid on each type of deposit for the periods
indicated.
Year Ended December 31,
-------------------------------------------------
1998 1997
------------------- ---------------------
Average Average
Average Rate Average Rate
Balance Paid Balance Paid
------- ------- ------- -------
(Dollars In Thousands)
NOW $ 595 2.34% $ -- --%
Savings deposits 47,346 2.40 49,883 3.01
Demand deposits 10,474 -- 9,217 --
Money market deposits 500 2.73 793 2.68
Time deposits 38,257 5.41 40,708 5.44
------- ---- -------- ----
Total deposits $97,172 3.91% $100,601 4.09%
======= ==== ======== ====
The following table shows the interest rate and maturity information
for our certificates of deposit at December 31, 1998.
<TABLE>
<CAPTION>
Maturity Date
------------------------------------------------------------------------------------------------------------------
Over six
Six Months Months Over 1 Over 2 Over 3
or Less to 1 Year to 2 Years to 3 Years Years Total
------------------ ------------------ ------------------ ------------------ -------------- ----------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Amount $16,949 $11,350 4,122 1,897 3,929 $38,247
Average Rate 5.12% 5.17% 5.65% 5.48% 5.83% 5.29%
</TABLE>
The following table sets forth the maturities of our certificates of
deposit having principal amounts of $100,000 or more at December 31, 1998.
Certificates of deposit maturing
in quarter ending: Amount
-------------------------------- -------------------
(Dollars In Thousands)
March 31, 1999 $ 417
June 30, 1999 1,996
September 30, 1999 718
After September 30, 1999 2,447
------
Total certificates of deposit with
balances of $100,000 or more $5,578
======
Subsidiaries
Oswego County Savings currently has no subsidiaries.
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<PAGE>
Legal Proceedings
Oswego County Savings is involved in routine legal proceedings
occurring in the ordinary course of business which, in the aggregate, we believe
to be immaterial to our financial condition and results of operations.
Employees
Oswego County Savings had 48 full-time employees and six part-time
employees at December 31, 1998. None of these employees is represented by a
collective bargaining agent, and we believe that we enjoy good relations with
our personnel.
Properties
The following table sets forth certain information relating to Oswego
County Savings' offices at December 31, 1998.
Net Book Value
Owned of Property and Leasehold Deposits at
or Improvement at December 31,
Location Leased December 31, 1998 1998
- ----------------------- -------- ------------------------- -------------
Executive Office: (Dollars In Thousands)
44 East Bridge Street
Oswego, New York 13126 Owned $165 $43,020
Branch Offices:
4879 N Jefferson Street
Pulaski, New York 13142 Owned 357 29,705
1930 Rt. 3 West
Fulton, New York 13069 Owned 143 14,374
30 W. Utica Street
Oswego, New York 13126 Owned 903 9,465
-------
$96,564
=======
In addition to the above, we have contracted to purchase a building
at 700 North Main Street, Route 11 in North Syracuse, New York. We plan to open
a new branch office at this site in the summer of 1999.
62
<PAGE>
HOW WE ARE REGULATED
General
Oswego County Savings is a New York-chartered mutual savings bank,
and its deposit accounts are fully insured by the FDIC. Oswego County Savings is
subject to extensive regulation by both the Department and the FDIC. After the
reorganization, Oswego County will be a New York-chartered stock savings bank
with deposits insured by the FDIC and will continue to be subject to extensive
regulation by the Department and the FDIC. Except as otherwise indicated below,
the discussion that follows of the regulations that currently apply to Oswego
County Savings will apply to the same extent to Oswego County Savings after the
reorganization.
Oswego County Savings must file reports with the Department and the
FDIC concerning its activities and financial condition. Oswego County Savings
must obtain regulatory approval prior to entering into certain transactions,
such as mergers with, or acquisitions of, other depository institutions and
opening or acquiring branch offices. The Department and the FDIC periodically
examine Oswego County Savings' compliance with various regulatory requirements
to ensure that Oswego County Savings is being operated in a safe and sound
manner. This regulation and supervision is intended primarily for the protection
of the deposit insurance funds and depositors. The regulatory authorities have
extensive discretion in exercising their supervisory and enforcement activities,
including the setting of policies regarding asset classification and loan loss
reserves.
Oswego County Bancorp, as a bank holding company, is required to file
certain reports with, and otherwise comply with, the rules and regulations of
the Federal Reserve Board and the Department. As a publicly held company, Oswego
County Bancorp is also subject to rules and regulations of the SEC under the
federal securities laws. Any change in the regulations governing Oswego County
Savings or Oswego County Bancorp, whether by a bank regulatory agency or through
legislation, could have a material adverse impact on Oswego County and Oswego
County Bancorp and their operations and shareholders. The following is a summary
of laws and regulations applicable to Oswego County Savings, Oswego County
Bancorp and Oswego County MHC.
New York Regulation of Oswego County Savings
Powers. Oswego County Savings derives its lending, investment and
other powers primarily from provisions of the New York Banking Law and
regulations. Under these laws and regulations, savings banks, may invest in real
estate mortgages, consumer and commercial loans, certain types of debt
securities, including certain corporate debt securities and obligations of
federal, state and local governments and agencies, certain types of corporate
equity securities and certain other assets. A savings bank may also exercise
trust powers upon approval of the New York Banking Board. The exercise of these
63
<PAGE>
lending, investment and other powers, however, may be limited by federal law and
regulations. See "-- Federal Regulation of Oswego County Savings -- Activity
Restrictions on State-Chartered Banks."
Community Reinvestment Act. The New York Banking Law, like the
federal Community Reinvestment Act discussed below, requires New York banking
institutions to serve the credit needs of its local community. Under the
regulations, the Department makes biennial community reinvestment evaluations of
each banking institution and assesses each institution's compliance with the New
York regulations for community investment. Oswego County Savings' latest rating
from the Department was "satisfactory."
Limitations on Dividends. Under the New York Banking Law, Oswego
County Savings will not be able to declare, or pay any dividends if capital is
impaired or would be impaired as a result of the dividend. In addition, the New
York Banking Law provides that Oswego County Savings cannot declare or pay
dividends in any calendar year in excess of its "net profits" for that year
combined with its "retained net profits" of the two preceding years, less any
required transfer to surplus or a fund for the retirement of preferred stock,
without prior regulatory approval.
Enforcement. Under the New York Banking Law, the Superintendent may
issue an order to a banking institution to appear and explain an apparent
violation of law, to discontinue unauthorized or unsafe practices and to keep
prescribed books and accounts. The Superintendent also has authority to take
possession of a New York banking organization under certain circumstances,
including when it appears that the banking organization is conducting its
business in an unauthorized or unsafe manner, is in an unsound or unsafe
condition to transact its business or has an impairment of its capital.
Federal Regulation of Oswego County Savings
Capital Requirements. The FDIC has adopted risk-based minimum capital
regulations for insured state nonmember banks, such as Oswego County Savings.
The regulations establish a systematic framework that makes regulatory capital
requirements more sensitive to differences in risk profiles among insured
depository institutions. Risk-based capital ratios are determined by allocating
assets and specified off-balance sheet commitments to four risk-weighted
categories ranging from 0% to 100%, with higher levels of capital required for
the categories perceived as representing greater risk. State nonmember banks
must maintain a minimum ratio of qualifying total capital to risk-weighted
assets of 8.0%, and a minimum ratio of Tier 1 capital to risk-weighted assets of
4.0%. Tier 1 capital includes common equity, certain noncumulative perpetual
preferred stock and minority interests in equity accounts of consolidated
subsidiaries, less goodwill and certain other intangible assets except mortgage
servicing rights and purchased credit card relationships. Total capital consists
of Tier 1 capital plus supplementary (Tier 2) capital which includes, among
other items, cumulative perpetual and long-term, limited-life, preferred stock,
mandatory convertible securities, certain hybrid capital instruments,
term-subordinated debt and the allowance for loan and lease losses, subject to
certain limitations, less required deductions. In addition, insured state
nonmember banks must maintain a ratio of Tier 1 capital to average total assets
(leverage ratio) of at least 3% to 5%, depending on the bank's CAMELS rating.
64
<PAGE>
Capital requirements higher than these minimum requirements may be
established for a particular bank if the FDIC determines that a bank's capital
is, or may become, inadequate in view of its particular circumstances.
Individual minimum capital requirements may be appropriate if a bank is
receiving special supervisory attention, has a high degree of exposure to
interest rate risk or poses other safety and soundness concerns. Oswego County
currently is not subject to any individually imposed minimum capital
requirements.
Failure to meet capital guidelines could subject Oswego County
Savings to a variety of enforcement actions, including issuance of a capital
directive, the termination of deposit insurance, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, additional restrictions can be imposed upon banks that fail to meet
applicable capital requirements under the FDIC's prompt corrective action
regulations.
The FDIC assesses Oswego County Savings' exposure to declines in the
economic value of the bank's capital due to changes in interest rates when
assessing the bank's capital adequacy. FDIC examiners will evaluate Oswego
County Savings' capital for interest rate risk on a case-by-case basis, with
consideration of both quantitative and qualitative factors. Applicable
considerations include the quality of the bank's interest rate risk management
process, the overall financial condition of the bank and the level of other
risks at the bank for which capital is needed. Institutions with significant
interest rate risk may be required to hold additional capital.
Activity Restrictions on State-Chartered Banks. Section 24 of the
Federal Deposit Insurance Act generally limits the activities and investments
that state-chartered insured banks and their subsidiaries may engage in as
principals to those permissible for national banks and their subsidiaries,
except for certain exemptions. Any bank that held, at the time of passage of
Section 24, an impermissible investment or engaged in an impermissible activity
and that did not receive FDIC approval to retain the investment or to continue
the activity was required to submit to the FDIC a plan for divesting of the
investment or activity as quickly and prudently as possible.
Enforcement. The FDIC has extensive enforcement authority over Oswego
County Savings. This enforcement authority includes, among other things, the
ability to assess civil money penalties, to issue cease and desist orders and to
remove directors and officers. In general, these enforcement actions may be
initiated in response to violations of laws and regulations and to unsafe or
unsound practices.
The FDIC is required, with certain exceptions, to appoint a receiver
or conservator for an insured state bank if that bank is "critically
undercapitalized." For this purpose, "critically undercapitalized" means having
a ratio of tangible equity to total assets that is equal to or less than 2%. See
"-- Prompt Corrective Action." The FDIC may also appoint a conservator or
receiver for a state bank on the basis of the institution's financial condition
or upon the occurrence of certain events, including: (1) insolvency; (2)
substantial dissipation of assets or earnings through violations of law or
unsafe or unsound practices; (3) existence of an unsafe or unsound condition to
transact business; (4) likelihood that a bank will be unable to meet the demands
of its depositors or to pay its obligations in the normal course of business;
and (5)
65
<PAGE>
insufficient capital. In the event of any such appointment, it is likely that
stockholders of the institution would not receive anything for their interests
in the institution.
Deposit Insurance. Oswego County Savings pays insurance premiums to
the FDIC for its deposit insurance. The FDIC implements a risk-based deposit
insurance assessment system. Deposit insurance assessment rates currently are
within a range of $0.00 to $0.27 per $100 of insured deposits, depending on the
assessment risk classification assigned to each institution. Oswego County
Savings expects to incur no deposit insurance assessments for the first half of
1999. However, the deposit insurance assessments imposed by the FDIC are subject
to change. The deposits of all financial institutions insured by the Bank
Insurance Fund of the FDIC are also subject to a special Financing Corporation
special assessment.
FDIC insurance on deposits may be terminated by the FDIC, after
notice and hearing, upon a finding by the FDIC that the insured bank has engaged
or is engaging in unsafe or unsound practices, or is in an unsafe or unsound
condition to continue operations as an insured bank, or has violated any
applicable law, regulation, rule or order of, or condition imposed by or written
agreement entered into with the FDIC.
Community Reinvestment Act. Under the Community Reinvestment Act, as
implemented by FDIC regulations, a savings bank has an obligation consistent
with its safe and sound operation to help meet the credit needs of its entire
community, including low- and moderate-income neighborhoods. The Community
Reinvestment Act requires the FDIC, in connection with its examination of a
savings institution, to assess the institution's record of meeting the credit
needs of its community and to take such record into account in its evaluation of
certain applications by the institution.
The FDIC rates an institution based on its actual performance in
meeting community needs. The evaluation system focuses on a lending test, an
investment test, and a service test.
In its most recent examination for community reinvestment
performance, Oswego County Savings received a "Satisfactory" rating from the
FDIC.
Safety and Soundness Standards. Oswego County Savings is subject to
certain FDIC standards designed to maintain the safety and soundness of
individual banks and the banking system. The FDIC has prescribed safety and
soundness guidelines relating to (1) internal controls, information systems and
internal audit systems; (2) loan documentation; (3) credit underwriting; (4)
interest rate exposure; (5) asset growth and quality; (6) earnings; and (7)
compensation and benefit standards for officers, directors, employees and
principal stockholders. The guidelines are intended to set out standards that
the FDIC will use to identify and address problems at institutions before
capital becomes impaired. Institutions are required to, among other things,
establish and maintain a system to identify problem assets and prevent
deterioration of those assets in a manner commensurate with their size and the
nature and scope of their operations. Furthermore, institutions must establish
and maintain a system to evaluate and monitor earnings to ensure that earnings
are sufficient to maintain adequate capital and reserves.
A bank not meeting one or more of the safety and soundness guidelines
may be required to file a compliance plan with the FDIC. In the event that an
institution were to fail to submit an
66
<PAGE>
acceptable compliance plan or fail in any material respect to implement an
accepted compliance plan within the time allowed by the FDIC, the institution
would be required to correct the deficiency and the FDIC would also be
authorized to: (1) restrict asset growth; (2) require the institution to
increase its ratio of tangible equity to assets; (3) restrict the rates of
interest that the institution may pay; or (4) take any other action that would
better carry out the purpose of the corrective action. Oswego County Savings
believes it was in compliance with all such safety and soundness guidelines as
of the date of this prospectus.
Prompt Corrective Action. Under the FDIC's prompt corrective action
regulations, insured institutions will be considered:
(1) "well capitalized" if the institution has a total
risk-based capital ratio of 10% or greater, a Tier 1
risk-based capital ratio of 6% or greater, and a leverage
ratio of 5% or greater provided that the institution is not
subject to an order, written agreement, capital directive
or prompt corrective action directive to meet and maintain
a specified capital level for any capital measure;
(2) "adequately capitalized" if the institution has a total
risk-based capital ratio of 8% or greater, a Tier 1 risk
based capital ratio of 4% or greater and a leverage ratio
of 4% or greater (3% or greater if the institution is rated
composite CAMELS 1 in its most recent report of examination
and is not experiencing or anticipating significant
growth);
(3) "undercapitalized" if the institution has a total
risk-based capital ratio that is less than 8%, or a Tier 1
risk-based ratio of less than 4% and a leverage ratio that
is less than 4% (3% if the institution is rated composite
CAMELS 1 in its most recent report of examination and is
not experiencing or anticipating significant growth);
(4) "significantly undercapitalized" if the institution has a
total risk-based capital ratio that is less than 6%, Tier 1
risk-based capital ratio of less than 3% or a leverage
ratio that is less than 3%; and
(5) "critically undercapitalized" if the institution has a
ratio of tangible equity to total assets that is equal to
or less than 2%.
Under certain circumstances, the FDIC can reclassify a well
capitalized institution as adequately capitalized and may require an adequately
capitalized institution or an undercapitalized institution to comply with
supervisory actions as if it were in the next lower category (except that the
FDIC may not reclassify a significantly undercapitalized institution as
critically undercapitalized). At December 31, 1998, Oswego County Savings was
classified as a "well capitalized" institution.
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An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to the FDIC. An undercapitalized institution
also is generally prohibited from increasing its average total assets, making
acquisitions, establishing any branches, or engaging in any new line of
business, except in accordance with an accepted capital restoration plan or with
the approval of the FDIC. In addition, the FDIC may take any other action that
it determines will better carry out the purpose of prompt corrective action
initiatives.
Dividend Restrictions. Oswego County Savings is not permitted to pay
dividends if, as the result of the payment, it would become undercapitalized, as
defined in the prompt corrective action regulations of the FDIC. In addition, if
Oswego County Savings becomes "undercapitalized" under the "prompt corrective
action" initiatives of the FDIC, payment of dividends would be prohibited
without the prior approval of the FDIC. Oswego County Savings also could be
subject to these dividend restrictions if the FDIC determines that Oswego County
Savings is in an unsafe or unsound condition or engaging in an unsafe or unsound
practice.
Required Reserves. Under Federal Reserve Board regulations, Oswego
County Savings is required to maintain non-interest-earning reserves against its
transaction accounts (primarily NOW and regular checking accounts). The Federal
Reserve Board regulations generally require that reserves of 3% be maintained
against aggregate transaction accounts of $46.5 million or less (subject to
adjustment) and an initial reserve of $1,395,000 plus 10% (subject to adjustment
between 8% and 14%) against that portion of total transaction accounts in excess
of $46.5 million. The first $4.9 million of otherwise reservable balances
(subject to adjustments) are exempted from the reserve requirements. Because
required reserves must be maintained in the form of either vault cash, a
non-interest-bearing account at a Federal Reserve Bank or a pass-through account
as defined by the Federal Reserve Board, the effect of this reserve requirement
is to reduce Oswego County Savings' interest-earning assets.
Holding Company Regulation
Federal Bank Holding Company Regulation. Upon consummation of the
reorganization, the Oswego County MHC and Oswego County Bancorp, will become
bank holding companies. Bank holding companies are subject to comprehensive
regulation and regular examinations by the Federal Reserve Board. The Federal
Reserve Board also has extensive enforcement authority over bank holding
companies, including, among other things, the ability to assess civil money
penalties, to issue cease and desist or removal orders and to require that a
holding company divest subsidiaries (including its bank subsidiaries). In
general, enforcement actions may be initiated for violations of law and
regulations and unsafe or unsound practices.
After the reorganization and stock offering, the Oswego County MHC
and Oswego County Bancorp will be subject to capital adequacy guidelines for
bank holding companies (on a consolidated basis) which are substantially similar
to those of the FDIC for Oswego County Savings. On a pro forma consolidated
basis after the reorganization and stock offering, the pro forma regulatory
capital of Oswego County MHC and Oswego County Bancorp will exceed these
requirements.
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Under Federal Reserve Board policy, a bank holding company must serve
as a source of strength for its subsidiary bank. Under this policy the Federal
Reserve Board may require, and has required in the past, a holding company to
contribute additional capital to an undercapitalized subsidiary bank.
Under the Bank Holding Company Act, a bank holding company must
obtain Federal Reserve Board approval before: (1) acquiring, directly or
indirectly, ownership or control of any voting shares of another bank or bank
holding company if, after such acquisition, it would own or control more than 5%
of such shares (unless it already owns or controls the majority of such shares);
(2) acquiring all or substantially all of the assets of another bank or bank
holding company; or (3) merging or consolidating with another bank holding
company.
The Bank Holding Company Act also prohibits a bank holding company,
with certain exceptions, from acquiring direct or indirect ownership or control
of more than 5% of the voting shares of any company which is not a bank or bank
holding company, or from engaging directly or indirectly in activities other
than those of banking, managing or controlling banks, or providing services for
its subsidiaries. The principal exceptions to these prohibitions involve certain
non-bank activities which, have been identified by the Federal Reserve Board as
activities closely related to the business of banking or managing or controlling
banks.
Interstate Banking and Branching. Federal law allows the Federal
Reserve Board to approve an application of an adequately capitalized and
adequately managed bank holding company to acquire control of, or acquire all or
substantially all of the assets of, a bank located in a state other than the
holding company's home state, without regard to whether the transaction is
prohibited by the laws of any state. The Federal Reserve Board may not approve
the acquisition of a bank that has not been in existence for the minimum time
period (not exceeding five years) specified by the statutory law of the host
state. The Federal Reserve Board is prohibited from approving an application if
the applicant (and its depository institution affiliates) controls or would
control more than 10% of the insured deposits in the United States or 30% or
more of the deposits in the target bank's home state or in any state in which
the target bank maintains a branch. Individual states continue to have authority
to limit the percentage of total insured deposits in the state which may be held
or controlled by a bank or bank holding company to the extent such limitation
does not discriminate against out-of-state banks or bank holding companies.
Individual states may also waive the 30% statewide concentration limit referred
to above.
Additionally, beginning on June 1, 1997, the federal banking agencies
were authorized to approve interstate merger transactions without regard to
whether the transaction is prohibited by the law of any state, unless the home
state of one of the banks "opted out" by adopting a law which applies equally to
all out-of-state banks and expressly prohibits merger transactions
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involving out-of-state banks. Interstate acquisitions of branches are permitted
only if the law of the state in which the branch is located permits such
acquisitions. In response to the federal law, the State of New York enacted laws
allowing interstate mergers and branching on a reciprocal basis.
Federal law authorizes the FDIC to approve interstate branching de
novo by national and state banks, respectively, only in states which
specifically allow for such branching. The appropriate federal banking agencies
are required to prescribe regulations which prohibit any out-of-state bank from
using the interstate branching authority primarily for the purpose of deposit
production. The FDIC and Federal Reserve Board have adopted such regulations.
These regulations include guidelines to ensure that interstate branches operated
by an out-of-state bank in a host state are reasonably helping to meet the
credit needs of the communities which they serve. Should the FDIC determine that
a bank interstate branch is not reasonably helping to meet the credit needs of
the communities serviced by an interstate branch, the FDIC is authorized to
close the interstate branch or not permit the bank to open a new branch in the
state in which the bank previously opened an interstate branch.
New York State Bank Holding Company Regulation. In addition to the
federal bank holding company regulations, a bank holding company organized or
doing business in New York State also may be subject to regulation under the New
York State Banking Law. The term "bank holding company," for the purposes of the
New York State Banking Law, is defined generally to include any person, company
or trust that directly or indirectly either controls the election of a majority
of the directors or owns, controls or holds with power to vote more than 10% of
the voting stock of a bank holding company or, if the bank holding company is a
banking institution, another banking institution, or 10% or more of the voting
stock of each of two or more banking institutions. In general, a bank holding
company controlling, directly or indirectly, only one banking institution will
not be deemed to be a bank holding company for the purposes of the New York
State Banking Law. Neither Oswego County MHC nor Oswego County Bancorp will be a
bank holding company for purposes of New York State law upon the effective date
of the reorganization.
Mutual Holding Company Regulation. Under New York law, the Oswego
County MHC may exercise all powers and privileges of a New York-chartered mutual
savings bank,
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except for the power of accepting deposits. The Oswego County MHC is also
permitted to exercise all powers and engage in all activities permitted to a
bank holding company under the Bank Holding Company Act.
Dividend Waivers by the Oswego County MHC. It has been the policy of
many mutual holding companies to waive the receipt of dividends declared by any
savings institution subsidiary or mid-tier stock holding company. In connection
with its approval of the reorganization, however, it is expected that the
Federal Reserve Board will impose certain conditions on the waiver by the Oswego
County MHC of the receipt of dividends declared on the common stock. In
particular, the Oswego County MHC is expected to be required to obtain prior
Federal Reserve Board approval before it may waive any dividends. To date, the
Federal Reserve Board has not approved the waiver of dividends by mutual holding
companies under its supervision.
The terms of the Federal Reserve Board approval of the reorganization
are also expected to require that the amount of any waived dividends will not be
available for payment to minority stockholders and be excluded from capital for
purposes of calculating dividends payable to minority stockholders. Moreover,
the cumulative amount of any waived dividends must be maintained in a restricted
capital account which would be added to any liquidation account of Oswego County
Savings, and would not be available for distribution to minority stockholders.
The restricted capital account and liquidation account amounts would not be
reflected in Oswego County Savings' financial statements or the notes thereto,
but would be considered as a notational or memorandum account of Oswego County
Savings, and would be maintained in accordance with the rules, regulations and
policy of the Office of Thrift Supervision as administered by the Federal
Reserve Board, and any other rules, regulations and policies adopted by the
Federal Reserve Board.
Management does not believe that the Oswego County MHC will initially
waive dividends declared by Oswego County Bancorp. If the Oswego County MHC
decides that it is in its best interest to waive a particular dividend to be
paid by Oswego County Bancorp, and the Federal Reserve Board approves the
waiver, then Oswego County Bancorp would pay dividends only to minority
stockholders, and the amount of the dividend waived by the Oswego County MHC
would be treated in the manner described above. Oswego County MHC's decision to
waive a particular dividend will depend on a number of factors, including the
Oswego County MHC's capital needs, the investment alternatives available to the
Oswego County MHC as compared to those available to Oswego County Bancorp, and
regulatory approvals. There can be no assurance (1) that after the
reorganization the Oswego County MHC will waive dividends paid by Oswego County
Bancorp, (2) that the Federal Reserve Board will approve any dividend waivers by
the Oswego County MHC or (3) of the terms that may be imposed by the Federal
Reserve Board on any dividend waiver.
Conversion of the Oswego County MHC to Stock Form. New York law,
regulations of the Department and the plan of reorganization permit Oswego
County MHC to convert from the mutual to the capital stock form of organization
(a "conversion transaction"). There can be no
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assurance when, if ever, a conversion transaction will occur, and the board of
trustees has no current intention or plan to undertake a conversion transaction.
In a conversion transaction, the Oswego County MHC and Oswego County Bancorp
would merge with and into Oswego County Savings with Oswego County Savings as
the resulting entity, and certain depositors of Oswego County Savings would
receive the right to subscribe for additional shares of the resulting entity. In
a conversion transaction, each share of common stock outstanding immediately
prior to the completion of the conversion transaction held by persons other than
the Oswego County MHC would be automatically converted into and become the right
to receive a number of shares of common stock of the resulting entity determined
pursuant to an exchange ratio that ensures that after the conversion
transaction, the percentage of the to-be- outstanding shares of the resulting
entity issued to minority stockholders in exchange for their common stock would
be equal to the percentage of the outstanding shares of common stock held by
minority stockholders immediately prior to the conversion transaction. The total
number of shares held by minority stockholders after the conversion transaction
also would be affected by any purchases by those persons in the offering that
would be conducted as part of the conversion transaction. An appraiser will
access the value of any assets other than Oswego County Bancorp stock held by
Oswego County MHC. The value of those assets will cause a reduction in the
number of shares issued to minority shareholders in a conversion transaction.
In addition, if Oswego County MHC is permitted by state and federal
regulators to waive dividends it would otherwise be entitled to receive as a
shareholder of Oswego County Bancorp, the number of shares issued to minority
stockholders in a mutual-to-stock conversion would be reduced to reflect the
aggregate amount of dividends waived by the Oswego County MHC. To date, the
Federal Reserve Board has not approved the waiver of dividends by mutual holding
companies under its supervision.
TAXATION
Federal Taxation
General. The Oswego County MHC, Oswego County Bancorp and Oswego
County Savings will be subject to federal income taxation in the same general
manner as other corporations with some exceptions discussed below. The following
discussion of federal taxation is intended only to summarize certain pertinent
federal income tax matters and is not a comprehensive description of the tax
rules applicable to Oswego County MHC, Oswego County Bancorp and Oswego County
Savings. Oswego County Savings' federal income tax returns have been audited or
closed without audit by the Internal Revenue Service through 1994.
Method of Accounting. For federal income tax purposes, Oswego County
Savings currently reports its income and expenses on the accrual method of
accounting and uses a tax year ending December 31. After the reorganization,
Oswego County Bancorp and Oswego County Savings will file consolidated income
tax returns on the accrual method. Oswego County MHC will file a separate
return.
Bad Debt Reserves. In August 1997, legislation was enacted that
repealed the reserve method of accounting (including the percentage of taxable
income method) previously used by many savings institutions to calculate their
bad debt reserve for federal income tax purposes. Savings institutions with $500
million or less in assets may, however, continue to use the experience method.
Oswego County Savings must recapture that portion of its tax bad debt
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reserve at December 31, 1995 which exceeded the amount that could have been
taken under the experience method for post-1987 tax years. At December 31, 1995,
Oswego County Savings' post-1987 excess reserves amounted to approximately
$210,000. The recapture is occurring over a six-year period, which began on
January 1, 1996. The legislation also requires savings institutions to account
for bad debts for federal income tax purposes on the same basis as commercial
banks for tax years beginning after December 31, 1995. This change in tax
accounting method and recapture of excess bad debt reserves is adequately
provided for in Oswego County Savings' deferred tax liability.
At December 31, 1998, the total federal income bad debt tax reserves
of Oswego County Savings were approximately $1,107,000, exclusive of the
$105,000 post-1987 excess reserve which has not yet been recaptured.
Charitable Contributions. A corporation's deduction for charitable
contributions is limited to 10% of taxable income without regard to deductions
for charitable contributions, Net operating loss carrybacks and capital loss
carrybacks. Contributions which exceed the above limitation can be carried over
to the five succeeding tax years.
Distributions. Earnings appropriated to our bad debt reserve and
claimed as a tax deduction including our supplemental reserves for losses will
not be available for the payment of cash dividends or for distribution
(including distributions made on dissolution or liquidation), unless we include
the amount in income, along with the amount deemed necessary to pay the
resulting federal income tax. If such amount is used for any purpose other than
bad debt losses, including a dividend distribution or a distribution in
liquidation, it will be subject to federal income tax at the then current rate.
Capital Gains and Corporate Dividends-Received Deduction. Corporate
net capital gains are taxed at a maximum rate of 35%. Corporations which own 20%
or more of the stock of a corporation distributing a dividend may deduct 80% of
the dividends received. Corporations which own less than 20% of the stock of a
corporation distributing a dividend may deduct 70% of the dividends received.
However, a corporation that receives dividends from a member of the same
affiliated group of corporations may deduct 100% of the dividends received.
Minimum Tax. The alternative minimum tax (AMT) rules have been
devised to ensure that at least a minimum amount of income tax is paid by
high-income corporate taxpayers who take advantage of substantial tax savings
due to the use of certain tax deductions and exemptions. In essence, the AMT
functions as a recapture mechanism, reclaiming some of the tax deductions and
credits utilized by these taxpayers when calculating their regular federal
income tax liability. In general, a corporation's alternative minimum taxable
income (AMTI) is equal to its regular taxable income, increased by its
preference items for the year and adjusted by computing certain items under
special rules that negate the acceleration of certain tax benefits which are
available under the regular tax rules. The AMT rate is 20% of AMTI that exceeds
the AMTI exemption amount, reduced by the alternative minimum tax foreign tax
credit. Such preference items include adjustments for excess bad debts
deductions, accelerated depreciation deductions and net operating loss
carryovers.
Net Operating Loss Carryovers. For tax years beginning after August
5, 1997, a financial institution may carry back net operating losses to the
preceding two taxable years and
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forward to the succeeding 20 taxable years. At December 31, 1998, the Bank had
no net operating loss carryforwards for federal income tax purposes.
New York State Taxation
General. Oswego County Savings and Oswego County Bancorp will report
income on a combined calender year basis to New York State. The Oswego County
MHC will not be included in the combined return. The franchise tax on banking
corporations is imposed in an amount equal to the greater of: (a) 9% of "entire
net income" allocable to New York State; (b) 3% of "alternative entire net
income" allocable to New York State; (c) 0.01% of the average value of assets
allocable to New York State; or (d) nominal minimum tax. Entire net income is
based on federal taxable income, subject to certain modifications. Alternative
entire net income is equal to entire net income without certain modifications.
Bad Debt Deduction. New York State enacted legislation in 1996, which
among other things, decoupled the federal and New York State tax laws regarding
thrift bad debt deductions and permits the continued use of Oswego County
Savings debt reserve method under Section 593. Thus, provided Oswego County
Savings continues to satisfy certain definitional tests and other conditions, it
is permitted to continue to compute the annual for bad debt deduction using
either a six year moving average experience method or a statutory percentage
equal to 32% of Oswego County Savings' New York State taxable income.
MANAGEMENT
Management of Oswego County Bancorp
The board of directors of Oswego County Bancorp will consist of the
same individuals who serve as trustees of Oswego County Savings. The board of
directors of Oswego County Bancorp is divided into three classes, each of which
contains approximately one-third of the board. The directors will be elected by
the stockholders of Oswego County Bancorp for staggered three-year terms, or
until their successors are elected and qualified. One class of directors,
consisting of Messrs. Kreis and Schneible, has a term of office expiring at the
first annual meeting of stockholders, a second class, consisting of Messrs.
Frassinelli, and Heins, has a term of office expiring at the second annual
meeting of stockholders and a third class, consisting of Messrs. Brower, Shapiro
and Walrath, has a term of office expiring at the third annual meeting of
stockholders.
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The following individuals are the executive officers of Oswego County
Bancorp and hold the offices set forth below opposite their name.
Position Held with Oswego County
Executive Age(1) Bancorp
- -------------------------- ------- ----------------------------------------
Paul W. Scheible 50 Chairman of the Board
Gregory J. Kreis 52 President and Chief Executive Officer
Robert H. Hillick 51 Senior Vice President and Treasurer
Gregory H. May 45 Senior Vice President
Judith S. Percy 39 Senior Vice President
Mary E. Lilly 43 Vice President
Ronald Tascarella 40 Vice President
- -------------------------
(1) As of December 31, 1998.
The executive officers of Oswego County Bancorp are elected annually
and hold office until their respective successors have been elected and
qualified or until death, resignation or removal by the board of directors.
Information concerning the principal occupations, employment and
compensation of the directors and executive officers of Oswego County Bancorp
during the past five years is set forth under "-- Management of Oswego County
Savings." The Oswego County Bancorp initially will not compensate its directors
or executive officers, but may determine that compensation for its directors is
appropriate in the future. However, we do not anticipate providing separate
compensation to them unless they devote significant time to the separate
management of Oswego County Bancorp's affairs. We do not expect this to occur
until Oswego County Bancorp becomes actively engaged in additional businesses
other than holding the stock of Oswego County Savings.
Management of Oswego County Savings
Because Oswego County Savings is a mutual savings bank, the members
of its board of trustees have been appointed by other trustees. Upon completion
of the reorganization and stock offering, the trustees of Oswego County Savings
immediately prior to the stock offering will continue to serve Oswego County
Savings in its stock form as directors until successors are elected and
qualified. Currently, each trustee serves until December 31 of the year of his
seventy-fifth birthday. Following the reorganization and stock offering,
directors of Oswego County Savings will serve staggered three-year terms or
until their successors are elected and qualified. Because Oswego County Bancorp
will own all the issued and outstanding capital stock of Oswego County Savings
following the reorganization and stock offering, the board of directors of
Oswego County Bancorp will elect the directors of Oswego County Savings. Except
for Mr. Brower who will not serve on the board of the Oswego County MHC, the
persons who are serving as trustees of Oswego County Savings will also serve as
trustees of the Oswego County MHC and as directors of Oswego County Bancorp upon
consummation of the reorganization and stock offering.
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The following table sets forth certain information regarding the
board of directors of Oswego County Savings.
Positions Held
With Director
Name Age(1) Oswego County Savings(1) Since(2)
- ------------------- ------- ----------------------------- ---------
Michael R. Brower 48 Director 1996
Bruce P. Frassinelli 59 Chairman of the Board 1995
Paul J. Heins 59 Director 1989
Gregory J. Kreis 52 Director, President and Chief 1997
Executive Officer
Paul W. Schneible 50 Director 1996
Bernard Shapiro 72 Director 1963
Carl K. Walrath 71 Director 1974
- -----------------------------
(1) As of December 31, 1998.
(2) Includes service as a trustee of Oswego County Savings.
Biographical Information
The business experience of each director for at least the past five
years is set forth below.
Michael R. Brower. Mr. Brower is currently managing member and Chief
Executive Officer of the Oswego Cranberry Company. Previously, Mr. Brower served
as Executive Director, of the Oswego County Co-Operative Extension.
Bruce P. Frassinelli. Mr. Frassinelli retired as of January 1, 1999.
Previously, he was the publisher and editor of the Palladium Times Newspaper,
Oswego, New York.
Paul J. Heins. Mr. Heins is the owner of Paul's Big M Grocery Store,
Oswego, New York.
Gregory J. Kreis. Mr. Kreis has served as president and chief
executive officer of Oswego County Savings since January 1997. Previously, Mr.
Kreis served as president and chief executive office of Factory Point National
Bank, Manchester, Vermont.
Paul W. Schneible. Mr. Schneible is the owner of Paul W. Schneible,
CPA, Accountants and Consultants, Oswego, New York.
Bernard Shapiro. Mr. Shapiro is currently retired. Previously, Mr.
Shapiro was the owner of a retail clothing store.
Carl K. Walrath. Mr. Walrath is currently retired. Previously, Mr.
Walrath owned an insurance agency.
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Executive Officers Who Are Not Trustees
Each of the executive officers of Oswego County Savings will retain
his or her office following the reorganization. Officers are elected annually by
the board of directors of Oswego County Savings. Information about the current
position of each executive officer with Oswego County Savings who does not serve
as a director and their business experience for at least the past five years is
set forth below.
Robert H. Hillick. Mr. Hillick has been vice president and treasurer
since April 1997 and was promoted to senior vice president and treasurer in
December 1998. From 1993 until April 1997, he was the internal auditor. He is a
certified public accountant.
Gregory H. May. Mr. May was promoted to senior vice president,
consumer lending in December 1998. He joined Oswego County Savings in April 1997
as vice president, consumer lending. Prior to April 1997, he held a variety of
mortgage-related positions in upstate New York and most recently was regional
manager for the central region of Marine Midland Mortgage Company.
Judith S. Percy. Ms. Percy was promoted to senior vice president,
operations in December 1998. She is responsible for management information
systems as well as internal operations and facilities management. Previously,
she served as vice president of operations and has held a variety of positions
at Oswego County Savings since June 1979.
Mary E. Lilly. Ms. Lilly has been vice president, security and
compliance since May 1997. Previously, she had worked in most areas of Oswego
County Savings since starting in April 1974. Most recently she had managed the
Pulaski branch office.
Ronald Tascarella. Mr. Tascarella has been vice president, commercial
lending since June 1998. He has worked at several banks in central New York in
the commercial lending area since 1979. Most recently he had worked at
Skaneateles Savings Bank and The Savings Bank of Utica.
Meetings and Committees of Oswego County Savings
Oswego County Savings' board of trustees meets at least monthly and
may have additional special meetings. During the fiscal year ended December 31,
1998, the board of trustees held 15 meetings. No trustee attended fewer than 75%
in the aggregate of the total meetings of the board or committees on which the
trustee served for fiscal 1998. There are currently three committees of the
board of trustees consisting of the personnel and compensation committee, the
loan committee and the executive committee.
Compensation of Trustees
The chairman of the board of trustees receives $1,450 per board
meeting while the other non-employee trustees receive $1,250 per meeting. In
addition, the outside trustees receive $350 per committee meeting. Trustees
receive a fee only for the board and committee meetings that they attend.
Board fees are subject to periodic adjustment by the board of trustees.
See " -- Benefits -- Other Stock Benefit Plans."
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Deferred Compensation Plan for Trustees
In 1997, Oswego County Savings instituted a deferred compensation
plan for trustees who may elect to defer all or part of their trustee fees to
fund the plan. The plan provides that deferred fees are to be invested in mutual
funds, as selected by the individual trustees. At December 31, 1998, deferred
trustees fees included in Oswego County Savings' other liabilities aggregated
$184,000. Following consummation of the reorganization, the plan will continue
to operate in the same manner and will apply to the directors of Oswego County
Savings.
Executive Compensation
The following table sets forth the cash and certain other
compensation paid by Oswego County Savings for services rendered in all
capacities during the fiscal year ended December 31, 1998 to the president and
chief executive officer of Oswego County Savings. No other officers of Oswego
County Savings had compensation in excess of $100,000.
<TABLE>
<CAPTION>
====================================================================================================================================
Annual Compensation(1) Long Term Compensation
-------------------------------------- -------------------------------------
Awards Payouts
------------------------ --------
Other Securities
Name and Fiscal Annual Restricted Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Stock(3) Options(3) Payouts Compensation(4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gregory J. Kreis
President and Chief
Executive Officer 1998 $150,000 $ (2) - - - - - - - - $7,693
====================================================================================================================================
</TABLE>
(1) The Bank also provides Mr. Kreis with [the use of an automobile, club
membership dues and certain other personal benefits, the value of which is not
shown on the table.] The aggregate amount of these other benefits did not exceed
the lesser of $50,000 or 10% of Mr. Kreis's salary and bonus.
(2) Does not reflect the $20,000 bonus received in fiscal 1998 for his
performance in fiscal 1997.
(3) As a mutual savings bank, Oswego County Savings does not have stock-based
benefit plans. Oswego County Bancorp, however, intends to adopt stock-based
plans following the reorganization.
(4) Reflects a matching contribution of $5,338 made by Oswego County Savings
under a 401(k) plan and a life insurance premium of $2,355.
Report of Independent Compensation Consultant
Under the Department's regulations governing the reorganization,
Oswego County Savings must obtain the opinion of an independent compensation
consultant as to whether the total compensation for the executive officers and
trustees of Oswego County Savings, viewed as a whole and on an individual basis,
is reasonable and proper in comparison to the compensation provided to executive
officers and trustees of similar publicly traded financial institutions. Oswego
County Savings has obtained an opinion from ______________, which provides that,
based upon public data of similarly situated publicly traded financial
institutions operating in the relevant markets as of ________ ___, 1999, with
respect to the total cash compensation (base salary and annual incentive) for
executive officers and trustees of Oswego
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County Savings, their compensation, viewed as whole and on an individual basis,
is reasonable in comparison to the total compensation (base salary, annual
incentives and estimated present value of long-term incentives) provided by
similarly situated publicly traded financial institutions, and that, with
respect to the amount of shares of common stock to be reserved under the ESOP,
stock option plan and restricted stock plan that the amounts reserved for
granting are reasonable in comparison to similar publicly traded financial
institutions.
Benefits
401(k) Plan. Oswego County Savings has a tax-qualified savings plan
with a salary deferral feature. Generally, a full-time employee who has attained
the age of 21 and completed one year of employment is eligible to participate. A
participant may make a deferral from 2% to 9% of his compensation up to $10,000,
indexed annually. Oswego County Savings makes matching contributions of 50% of
each participant's annual deferrals up to a maximum of 3% of compensation.
Oswego County Savings made an aggregate matching contribution of $ 36,000 for
fiscal 1998.
A participant is fully vested for his own deferrals, and vests over
five years in any matching contributions, other permissible discretionary
contributions, and reallocations of plan forfeitures. The plan allows a
participant to direct the investment of his individual plan accounts among
several investment options.
As part of the reorganization, Oswego County Savings amended the
401(k) plan to permit investments in a fund established to invest primarily in
the common stock of Oswego County Bancorp. However, no 401(k) Plan participant
may purchase more than $150,000 of the common stock sold in the offering through
the 401(k) Plan's subscription rights nor may aggregate purchases by plan
participants exceed [5%] of the common stock sold in the offering. A
participant's ability to direct all or some of his vested account to purchase
common stock in the subscription offering will be dependent upon his or her
status as an eligible account holder, supplemental eligible account holder or
trustee, officer or employee of Oswego County Savings.
Oswego County Bancorp common stock will be held by the plan's trustee
for the benefit of the individual participants who choose to direct their
investments into the newly created fund. Generally, a participant will control
the exercise of the voting and tendering rights relating to the common stock
held for his benefit.
Defined Benefit Pension Plan. Oswego County Savings maintains a
non-contributory defined benefit pension plan covering substantially all of its
full-time employees. A participant is fully vested in the plan upon reaching
five years of service after obtaining the age of 18.
The normal retirement benefit is based upon a participant's highest
three-year average annual base earnings during the participant's final ten years
of service, subject to certain limitations required by the plan and the Internal
Revenue Code. The annual benefit provided to a participant at normal retirement
age (generally age 65) is determined as follows:
2% of the participant's average annual earnings.
multiplied by
the participant's years of credited service.
(Limited to 60% of the participant's average annual earnings)
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The plan also provides for early retirement benefits which are
calculated in the same manner as normal retirement benefits. However, benefits
are reduced when the participant chooses to begin the receipt of his benefits
prior to normal retirement age.
Employee Stock Ownership Plan. The Oswego County Bancorp has
established the ESOP for employees of Oswego County Bancorp and Oswego County
Savings to become effective upon the reorganization and stock offering.
Full-time employees of Oswego County Bancorp and Oswego County Savings who have
been credited with at least 1,000 hours of service during a twelve-month period
are eligible to participate in the ESOP.
It is anticipated that the ESOP will borrow funds from Oswego County
Bancorp to fund the purchase of up to 8% of the common stock sold in the stock
offering. It is anticipated that the loan will equal 100% of the aggregate
purchase price of the common stock acquired by the ESOP. The loan to the ESOP
will be repaid principally from Oswego County Bancorp's and Oswego County
Savings' contributions to the ESOP over a period of not less than 10 years. The
collateral for the loan will be the common stock purchased by the ESOP. Although
it is anticipated that Oswego County Savings will make contributions to the
ESOP, it is under no obligation to make those contributions. The interest rate
for the ESOP loan is expected to be New York prime rate plus 0.5%. Oswego County
Bancorp may, in any plan year, make additional discretionary contributions for
the benefit of plan participants in either cash or shares of common stock. These
purchases would be funded through additional borrowings by the ESOP or
additional contributions from Oswego County Bancorp. The timing, amount and
manner of future contributions to the ESOP will be affected by various factors,
including prevailing regulatory policies, the requirements of applicable laws
and regulations and market conditions.
Shares purchased by the ESOP with the proceeds of the loan will be
held in a suspense account and released to participant's accounts as debt
service payments are made. Shares released from the ESOP will be allocated to
each eligible participant's ESOP account based on the ratio of each such
participant's compensation to the total compensation of all eligible ESOP
participants. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount Oswego County Bancorp might otherwise have
contributed to the ESOP. Upon the completion of seven years of service, the
account balances of participants within the ESOP will become 100% vested. Credit
is given for years of service with Oswego County Savings prior to adoption of
the ESOP. In the case of a "change in control," as defined, however,
participants will become immediately fully vested in their account balances.
Benefits may be payable upon retirement or separation from service. The Oswego
County Bancorp's contributions to the ESOP are not fixed, so benefits payable
under the ESOP cannot be estimated.
Messrs. Kreis and Hillick will serve as trustees of the ESOP. Under
the ESOP, the trustees must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees, and unallocated
shares will be voted in the same ratio on any matter as those allocated shares
for which instructions are given.
See "Risk Factors - After the change in structure and stock offering,
our net income-to-equity ratio will be low compared to other companies and our
compensation expenses will
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increase. This could negatively impact the price of our stock." for discussion
which addresses compensation expense to be incurred as a result of the ESOP.
GAAP requires that any borrowing by the ESOP from an independent
third party be reflected as a liability on Oswego County Bancorp's statement of
financial condition. Since the ESOP is borrowing from Oswego County Bancorp,
such obligation is not treated as a liability, but the cost of the shares
acquired by the ESOP will be deducted from Oswego County Bancorp's stockholders'
equity. If the ESOP purchases newly issued shares from Oswego County Bancorp,
total stockholders' equity would neither increase nor decrease, but per share
stockholders' equity and per share net earnings would decrease as the newly
issued shares are allocated to the ESOP participants.
The ESOP will be subject to the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations of the IRS and the Department of Labor thereunder.
Other Stock Benefit Plans. In the future, we plan to consider the
implementation of a stock option plan and a restricted stock plan for the
benefit of selected directors, officers and employees. Each of these plans must
receive the approval of a majority of the shares of Oswego County Bancorp not
owned by Oswego County MHC. We anticipate that the stock option plan and
restricted stock plan will have reserved a number of shares equal to 10% and 3%,
respectively, of Oswego County Bancorp common stock sold in the stock offering.
For example, if we issue 540,500 shares of common stock in the stock offering,
we would reserve 54,050 shares in the stock option plan and 16,215 shares in the
restricted stock plan. At the issuance price of $10.00 per share, the shares
granted under the restricted stock plan would have an aggregate value of
$162,150. We plan to grant the options at an exercise price equal to the fair
market price of the common stock on the date of issuance. If we grant all of the
options, they would have an aggregate value of $54,050 for each $1.00 increase
in the market value of the common stock after the grant date. Grants of common
stock under the restricted stock plan will be made without cost to the
recipient. If a determination is made to implement a stock option plan or
restricted stock plan, it is anticipated that any such plans will be submitted
to stockholders for their consideration and more detailed information would be
provided at that time. If such plans are approved, and effected, they will have
a dilutive effect on Oswego County Bancorp's stockholders and affect Oswego
County Bancorp's net income and stockholders' equity, although the actual
results cannot be determined until such plans are implemented. Any stock option
plan or restricted stock plan will not be implemented less than six months after
the date of the completion of the reorganization.
Loans and Other Transactions with Officers and Trustees
Under New York Banking Law, Oswego County Savings, as a mutual
institution, is not permitted to make a loan to a trustee. It is permitted to
make a loan to a nontrustee who is an "executive officer" for regulatory
purposes if the loan is secured by a first mortgage on a primary residence or by
a deposit account with Oswego County Savings. However, it is Oswego County
Savings' policy not to make loans to its executive officers. Following the
reorganization, Oswego County Savings, as a stock institution, will not be
subject to this restriction.
Any loans we would make to our executive officers or our directors
following the reorganization are also subject to Sections 22(h), 23A and 23B of
the Federal Reserve Act which limit the amount of loans and other transactions
with affiliated persons of Oswego County Savings.
PROPOSED MANAGEMENT PURCHASES
The following table sets forth, for each of Oswego County Bancorp's
directors and for all of the directors and executive officers as a group, the
proposed purchases of common stock,
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assuming sufficient shares are available to satisfy their subscriptions. The
purchases shown below include shares of common stock purchased under the
existing 401(k) plan. The amounts include shares that may be purchased through
individual retirement accounts and by associates.
<TABLE>
<CAPTION>
At the Minimum of the Estimated At the Maximum of the
Offering Range Estimated Offering Range
------------------------------------- ----------------------------------
As a Percent
Number of As a Percent of Number of of Shares
Name Amount Shares Shares Offered(1) Shares Offered(1)
- ------------------------------ --------------- -------------- ---------------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Michael R. Brower $50,000 5,000 1.3 5,000 *
Bruce P. Frassinelli 7,500 750 * 750 *
Paul J. Heins 5,000 500 * 500 *
Gregory J. Kreis 150,000 15,000 3.8 15,000 2.8
Paul W. Schneible 50,000 5,000 * 5,000 *
Bernard Shapiro 25,000 2,500 * 2,500 *
Carl K. Walrath 25,000 2,500 * 2,500 *
All directors and executive $375,000 37,500 9.4 37,500 6.9
officers as a group (twelve
persons)
</TABLE>
- ----------------
(1) An asterisk indicates a percentage of shares offered of less than one
percent.
In addition, the ESOP currently intends to purchase 8% of the common
stock sold in the stock offering for the benefit of officers and employees.
Stock options and stock grants may also be granted in the future to directors,
officers and employees upon the receipt of stockholder approval of Oswego County
Bancorp's proposed stock benefit plans. See "Management Management of the Bank -
Benefits" for a description of these plans.
OUR CORPORATE CHANGE AND STOCK OFFERING
General
On March 19, 1998, the board of trustees of Oswego County Savings
adopted the Plan of Reorganization from a Mutual Savings Bank to a Mutual
Holding Company. The Plan was amended on December 17, 1998 and March 18, 1999.
Under this plan, Oswego County Savings will reorganize into the New York mutual
holding company structure as a wholly owned subsidiary of Oswego County Bancorp.
In turn Oswego County Bancorp will become a majority-owned subsidiary of Oswego
County MHC. Oswego County Bancorp will then sell 45.0% of its shares to the
public, contribute 1.8% to the Oswego County Foundation and issue 53.2% of its
shares to Oswego County MHC. Following receipt of all required regulatory
approvals, the approval of the
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depositors of Oswego County Savings entitled to vote on the plan of
reorganization, and the satisfaction of all other conditions precedent to the
reorganization, Oswego County Savings will complete the reorganization. Oswego
County Savings in its stock form will continue to conduct its business and
operations from the same offices with the same personnel as Oswego County
Savings conducted prior to the reorganization. The reorganization will not
affect the balances, interest rates or other terms of Oswego County Savings'
loans or deposit accounts, and the deposit accounts will continue to be insured
by the FDIC. Oswego County MHC initially will have $100,000 of net worth. When
the reorganization is completed, Oswego County MHC will use this capital for
general corporate purposes.
Under the plan of reorganization, we will accomplish our corporate
change as follows or in any other manner that is consistent with applicable New
York and federal law and regulations and the intent of the plan of
reorganization:
(1) Oswego County Savings will organize an interim New York
stock savings bank as a wholly owned subsidiary;
(2) The interim savings bank subsidiary of Oswego County
Savings will organize an interim New York stock savings
bank as a wholly owned subsidiary;
(3) The interim savings bank subsidiary of Oswego County
Savings will organize Oswego County Bancorp as a wholly
owned subsidiary;
(4) Oswego County Savings will convert its charter to a New
York stock savings bank charter to become Oswego County
Savings. The interim savings bank subsidiary of Oswego
County Savings will convert its charter to a New York
mutual holding company charter to become the Oswego County
MHC;
(5) simultaneously with step (4), the interim subsidiary of
Oswego County Savings' interim savings bank subsidiary will
merge with and into Oswego County Savings with Oswego
County Savings as the resulting institution;
(6) all of the initially issued stock of Oswego County Savings
will be transferred to Oswego County MHC in exchange for
depositor interests in Oswego County MHC;
(7) Oswego County MHC will contribute the capital stock of
Oswego County Savings to Oswego County Bancorp, and Oswego
County Savings will become a wholly owned subsidiary of
Oswego County Bancorp; and
(8) contemporaneously with the reorganization, Oswego County
Bancorp will offer for sale in the stock offering shares of
common stock based on the pro forma market value of Oswego
County Bancorp and Oswego County Savings.
Oswego County Bancorp expects to receive the approval of the Federal
Reserve Board to become a bank holding company and to own all of the common
stock of Oswego County Savings. Oswego County Bancorp intends to contribute at
least 50% of the net proceeds of the stock offering to Oswego County Savings.
The reorganization will occur only upon completion of the sale of all of the
shares of common stock to be issued under the plan of reorganization.
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The following is a summary of material aspects of the reorganization
and stock offering. The summary is qualified in its entirety by reference to the
provisions of the plan of reorganization. You may obtain a copy of the plan of
reorganization from Oswego County Savings upon request. Copies of the plan of
reorganization are available for inspection at any office of Oswego County
Savings and at the office of the New York Superintendent and the FDIC. The plan
of reorganization is also filed as an exhibit to the Registration Statement of
which this prospectus is a part, copies of which may be obtained from the SEC.
See "Additional Information."
The Board Of Trustees Of The Bank Has Adopted, The Department Has
Approved And The FDIC Has Indicated Its Intent To Issue A Letter Of Nonobjection
To The Plan Of Reorganization Subject To Approval By The Depositors Of Oswego
County Savings Entitled To Vote On The Matter And The Satisfaction Of Certain
Other Conditions. Department And FDIC Actions, However, Do Not Constitute A
Recommendation Or Endorsement Of The Plan Of Reorganization By Those Agencies.
Our Reasons For the Corporate Change
As a mutual institution, Oswego County Savings has no authority to
issue shares of capital stock and consequently has no access to market sources
of equity capital. Only by generating and retaining earnings from year to year
is Oswego County Savings able to enhance its capital position.
The form of corporate organizations used by commercial banks, most
major corporations and a majority of savings institutions is a stock
corporation. The reorganization will result in Oswego County Savings becoming a
stock form organization. The ability to raise new equity capital through the
issuance and sale of the capital stock of Oswego County Savings or Oswego County
Bancorp will allow Oswego County Savings the flexibility to increase its capital
position more rapidly than by accumulating earnings. It will also support future
growth and expanded operations, including increased lending and investment
activities, as business and regulatory needs require. The ability to attract new
capital also will help Oswego County Savings address the needs of the
communities it serves and increase its ability to make acquisitions or expand
into new businesses. The acquisition alternatives available to Oswego County
Savings are quite limited as a mutual institution, because of the regulatory
policy that the surviving institution in a merger involving a mutual institution
generally must be in mutual form. After the completion of the reorganization,
Oswego County Savings will have increased ability to merge with other mutual and
stock institutions and Oswego County Bancorp may acquire control of other mutual
or stock savings associations and retain the acquired association as a separate
subsidiary of Oswego County Bancorp. Finally, the ability to issue capital stock
will enable Oswego County Savings to establish stock compensation plans for
directors, officers and employees, giving them equity interests in Oswego County
Savings and greater incentive to improve its performance. For a description of
the stock benefit plans which Oswego County Bancorp may adopt in connection with
the reorganization, see "Management -- Benefits -- Other Stock Benefit Plans."
Although the reorganization will improve Oswego County Savings' ability to raise
capital and general business flexibility, the requirement in applicable laws and
regulations that a mutual holding company maintain at least a 51% ownership
interest in its savings association subsidiary will limit those advantages.
Those advantages are also limited by Oswego County Bancorp's proposed offering
of up to approximately 49% of its to-be-outstanding common stock,
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including the proposed issuance of shares to the Oswego County Charitable
Foundation, which will affect Oswego County Bancorp's ability to issue
additional shares of common stock in the future absent additional issuances of
stock to Oswego County MHC.
Oswego County Savings could also achieve the advantages of the
reorganization if it were to reorganize into a wholly owned subsidiary of a
stock-form holding company, known as a standard conversion, rather than as a
second-tier subsidiary of a mutual holding company. A standard conversion also
would free Oswego County Savings from the restrictions on its ability to raise
capital which result from the requirement that its mutual holding company
maintain a 51% ownership interest in Oswego County Bancorp.
FDIC and Department regulations require that a savings institution
converting to stock form in a standard conversion sell all of its
to-be-outstanding capital stock rather than a minority interest. A standard
conversion would raise substantially more equity capital than the equity capital
raised in a minority stock offering by a subsidiary of a mutual holding company.
A standard conversion would make it more difficult for Oswego County Savings to
maximize the return on its equity. A standard conversion also would eliminate
all aspects of the mutual form of organization. Completion of the reorganization
does not eliminate the possibility of the Oswego County MHC converting from
mutual to stock form in the future. However, a standard conversion is not
contemplated at this time. See "-Oswego County MHC May Consider Converting to
the Stock Form in the Future."
Oswego County Savings board of trustees considered the advantages and
disadvantages of the reorganization, as well as applicable fiduciary duties and
alternative transactions, including a reorganization into a wholly owned
subsidiary of a stock holding company rather than as a second-tier subsidiary of
a mutual holding company. After such consideration, the board of trustees
unanimously determined that the reorganization is in the best interests of
Oswego County Savings and equitable to its depositors.
Effects of the Corporate Change
General. The reorganization will have no effect on Oswego County
Savings' current business of accepting deposits and investing its funds in loans
and other investments permitted by law. The reorganization will not result in
any change in the existing services provided to depositors and borrowers, or in
existing offices, management and staff. The regulation, supervision and
examination of the Department and the FDIC will continue to apply to Oswego
County Savings.
Deposits and Loans. Each holder of a deposit account in Oswego County
Savings at the time of the reorganization will continue as an account holder in
Oswego County Savings after the reorganization. The reorganization will not
affect the deposit balance, interest rate or other terms of those accounts. The
FDIC will continue to insure each account to the same extent as before the
reorganization. Depositors in Oswego County Savings will continue to hold their
existing certificates, passbooks and other evidence of their accounts. The
reorganization will not affect the loans of any borrower from Oswego County
Savings. The amount, interest rate, maturity, security for and obligations under
each loan will remain as they existed prior to the reorganization. See "- Voting
Rights" and "- Stockholder and Depositors Rights If We Liquidate" below for a
discussion of the effects of the reorganization on the voting and liquidation
rights of the depositors of Oswego County Savings.
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Continuity. During the reorganization and stock offering process, the
normal business of Oswego County Savings of accepting deposits and making loans
will continue without interruption. Following completion of the reorganization
and stock offering, the regulations of the FDIC and Department will continue to
apply to Oswego County Savings. FDIC insurance of accounts will continue without
interruption. After the reorganization and stock offering, Oswego County Savings
will continue to provide services for depositors and borrowers under current
policies and by its current management and staff.
The board of trustees currently serving Oswego County Savings will
serve as the board of directors of Oswego County Savings after the
reorganization and stock offering. The board of directors of Oswego County
Bancorp will consist of the individuals currently serving on the board of
trustees of Oswego County Savings. All current officers of Oswego County Savings
will retain their positions with Oswego County Savings after the reorganization
and stock offering.
Voting Rights. After completion of the reorganization and stock
offering, the stockholders of Oswego County Bancorp will have exclusive voting
rights in the company. Oswego County Bancorp, in turn, will own all of the stock
of Oswego County Savings. The stockholders of Oswego County Bancorp will
consider all corporate matters, subject to the provisions of Oswego County
Bancorp's certificate of incorporation. Depositors in Oswego County Savings will
continue to hold limited voting rights to vote on a mutual-to-stock transaction
through their interest in the Oswego County MHC.
As a New York-chartered mutual holding company, the Oswego County MHC
will have no authorized capital stock and, thus, no stockholders. The plan of
reorganization provides that the board of trustees of the Oswego County MHC will
hold the governing authority of the Oswego County MHC. Successors to members of
the board of trustees of the MHC are elected by remaining members. As a result,
the board of trustees of the Oswego County MHC govern the operations of the
Oswego County MHC and Oswego County Bancorp, notwithstanding objections raised
by stockholders of Oswego County Bancorp.
Stockholders and Depositors Rights If We Liquidate. In the event of a
voluntary liquidation of Oswego County Savings prior to the reorganization,
holders of deposit accounts in Oswego County Savings would receive any assets of
Oswego County Savings remaining after the satisfaction of the claims of
depositors, to the extent of their deposit balances, and all other creditors.
Following the reorganization, the holder of the common stock, Oswego County
Bancorp, will receive to any assets remaining upon a liquidation, dissolution or
winding-up of Oswego County Savings. Except through their liquidation interests
in Oswego County MHC, discussed below, holders of deposit accounts in Oswego
County Savings would have no interest in these assets.
In the event of a voluntary or involuntary liquidation, dissolution
or winding up of Oswego County MHC following completion of the reorganization,
holders of deposit accounts in Oswego County Savings will receive, pro rata to
the value of their accounts, to distribution of any assets of the Oswego County
MHC remaining after the claims of all creditors of Oswego County MHC are
satisfied. Stockholders of Oswego County Bancorp will have no liquidation or
other rights with respect to Oswego County MHC unless they are also depositors
of Oswego County Savings.
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In the event of a liquidation, dissolution or winding up of Oswego
County Bancorp, each holder of common stock will receive, after payment of all
debts and liabilities of Oswego County Bancorp, a pro rata portion of all assets
of Oswego County Bancorp available for distribution to holders of the common
stock.
There currently are no plans to liquidate Oswego County Savings,
Oswego County Bancorp or Oswego County MHC.
If the Mutual Holding Company converts from a mutual to a stock-form
holding company, the amount available to the depositor of the Mutual Holding
Company's subsidiary savings bank becomes fixed as of the date of the statement
of financial condition contained in the final offering circular used in the
mutual-to-stock conversion. Each subsidiary savings bank at that time
establishes a liquidation account equal to the net worth of the subsidiary
savings bank as set forth in its latest statement of financial condition
contained in the offering circular utilized in the mutual-to-stock conversion.
Tax Effects of Our Corporate Change and Stock Offering. Oswego County Savings
has received an opinion from its special counsel, Elias, Matz, Tiernan & Herrick
L.L.P., Washington, D.C., as to the material federal income tax consequences of
the reorganization and stock offering to Oswego County Savings, Oswego County
Bancorp and Oswego County MHC. The opinion also addresses the generally
applicable material federal income tax consequences of the reorganization and
stock offering to Oswego County Savings' account holders and to persons who
purchase common stock in the stock offering.
The opinion provides that, among other things:
o Oswego County Savings' adoption of a charter in stock form,
known as the bank conversion, will qualify as a tax-free
reorganization under Internal Revenue Code of 1986, as
amended, Section 368(a)(1)(F);
o Oswego County Savings or the stock bank will recognize no
gain or loss in the bank conversion;
o The depositors of Oswego County Savings will receive no
gain or loss on the receipt of equity interests with
respect to Oswego County MHC in exchange for the surrender
of their equity interests;
o the receipt of stock by depositors for equity interests in
Oswego County MHC will constitute a tax-free exchange of
property solely for voting "stock" pursuant to Internal
Revenue Code Section 351;
o the transfer by Oswego County MHC of the stock bank's stock
to Oswego County Bancorp will constitute a tax-free
exchange of property solely for voting stock pursuant to
Internal Revenue Code Section 351;
o Oswego County MHC will recognize no gain or loss upon the
transfer of the stock bank stock to Oswego County Bancorp
in exchange for common stock pursuant to Internal Revenue
Code Section 351;
o Oswego County Bancorp will recognize no gain or loss upon
its receipt of stock bank stock from Oswego County MHC in
exchange for common stock;
o Oswego County Bancorp will recognize no gain or loss upon
the receipt of money in exchange for shares of common
stock;
o Oswego County Savings' account holders will recognize no
gain or loss upon the issuance to them of accounts in the
stock bank,
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in the same dollar amounts and on the same terms and
conditions as their accounts at Oswego County Savings
immediately prior to the reorganization and stock offering;
and
o account holders will recognize gain or loss upon the
receipt or exercise of subscription rights in the
reorganization and stock offering, except to the extent
that subscription rights are deemed to have value, as
discussed below.
The opinion of Elias, Matz, Tiernan & Herrick L.L.P. is based in part
upon, and subject to the continuing validity in all material respects through
the date of the reorganization and stock offering of various representations of
Oswego County Savings. It is also based upon certain assumptions and
qualifications, including that the reorganization and offering are consummated
in the manner and according to the terms provided in the plan of reorganization.
The opinion is also based upon the Internal Revenue Code, regulations now in
effect or proposed, current administrative rulings and practice and judicial
authority, all of which are subject to change and any change may be made with
retroactive effect. Unlike private letter rulings received from the IRS, an
opinion is not binding upon the IRS and there is no assurance that the IRS will
not take a position contrary to the positions reflected in the opinion, or that
by the courts will uphold the opinion if challenged by the IRS.
Oswego County Savings has also obtained an opinion from KPMG LLP that
the income tax effects of the reorganization and offering under New York tax
laws will be substantially the same as described above with respect to federal
income tax laws.
Oswego County Bancorp and Oswego County Savings have received a
letter from RP Financial stating its belief that the subscription rights do not
have any value, because those rights are acquired by the recipients without
cost, are nontransferable and of short duration, and afford the recipients the
right only to purchase the common stock at a price equal to its estimated fair
market value, which will be the same price as the purchase price for the
unsubscribed shares of common stock. If the subscription rights granted to
eligible subscribers are deemed to have an ascertainable value, receipt of those
rights would be taxable probably only to those eligible subscribers who exercise
the subscription rights, either as a capital gain or ordinary income, in an
amount equal to that value. Eligible subscribers are encouraged to consult with
their own tax advisor as to the tax consequences in the event that such
subscription rights are deemed to have an ascertainable value. Unlike private
rulings, the letter of RP Financial is not binding on the IRS, and the IRS could
disagree with conclusions reached in the letter. In the event of any
disagreement, there is no assurance that the IRS would not prevail in a judicial
or administrative proceeding.
Oswego County Charitable Foundation
General. To continue Oswego County Savings' commitment to the
communities that it serves, the plan of reorganization provides that Oswego
County Savings and Oswego County Bancorp will establish the Foundation, as a
non-stock Delaware corporation. The foundation will be funded with common stock
of Oswego County Bancorp. By increasing Oswego County Savings' visibility and
reputation in the communities that it serves, Oswego County Savings believes
that the foundation will enhance the long-term value of Oswego County Savings'
community banking franchise. The foundation will be
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dedicated to charitable purposes within the communities served by Oswego County
Savings, including community development activities.
Purpose of the Foundation. The purpose of the foundation is to
provide funding to support charitable causes and community development
activities. Traditionally, Oswego County Savings has emphasized community
lending and community development activities within the communities that it
serves. The foundation is being formed as a complement to Oswego County
Saving's existing community activities. While Oswego County Savings intends to
continue to emphasize community lending and community development activities
following the reorganization, such activities are not Oswego County Savings'
sole corporate purpose. The Oswego County Charitable Foundation, conversely,
will be completely dedicated to community activities and the promotion of
charitable causes, and may be able to support such activities in ways that are
not currently available to Oswego County Savings. Oswego County Savings believes
that the foundation will enable Oswego County Bancorp and Oswego County Savings
to assist their local community in areas beyond community development and
lending.
The board of directors believes the establishment of a charitable
foundation is consistent with Oswego County Savings' commitment to community
service. The board further believes that the funding of the foundation with
common stock of Oswego County Bancorp is a means of enabling the communities
served by Oswego County Savings to share in the growth and success of Oswego
County Bancorp long after completion of the reorganization and stock offering.
The foundation will accomplish that goal by providing for continued ties between
the foundation and Oswego County Savings, forming a partnership with Oswego
County Savings's community. The establishment of the foundation also will enable
Oswego County Bancorp and Oswego County Savings to develop a unified charitable
donation strategy. Oswego County Savings, however, does not expect the
contribution to the foundation to take the place of its traditional community
lending activities. In this respect, Oswego County Savings may continue to make
contributions to other charitable organizations and/or it may make additional
contributions to the foundation.
Structure of the Foundation. Under Oswego County Charitable
Foundation's bylaws, two members of Oswego County Bancorp's and Oswego County
Savings' boards of directors (Messrs. Kreis and Walrath) and three other
individuals chosen based on their commitment and service to charitable and
community purposes will comprise the foundation's initial board of directors.
None of these persons is affiliated with Oswego County Bancorp or Oswego County
Savings. There are no plans to change the size of the foundation's board of
directors during the one-year period after the completion of the reorganization.
Oswego County Savings currently intends that less than a majority of Oswego
County Savings's directors also will serve as directors of the foundation.
A nominating committee of the foundation's board will nominate
individuals eligible for election to the board of directors. The members of the
foundation, who are comprised of its board members, will elect the directors
from those nominated by the nominating committee. Directors will be divided into
three classes with each class appointed for three-year terms. It is not
anticipated that the members of Oswego County Bancorp's and Oswego County
Savings' boards of directors who also serve as a director of the foundation will
receive any additional compensation for serving as a director of the foundation.
No determination has been made
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whether the other foundation directors will receive any compensation. The
certificate of incorporation of the foundation provides that the corporation is
organized exclusively for charitable purposes, including community development,
as set forth in Section 501(c)(3) of the Internal Revenue Code. The foundation's
certificate of incorporation also provides that no part of the net earnings of
the foundation will inure to the benefit of, or be distributable to its
directors, officers or members. The foundation will make no award, grant or
distribution to any director, officer or employee of Oswego County Bancorp or
Oswego County Savings or to any of their affiliates. In addition, the conflict
of interest rules of the FDIC and the Department will apply to those persons, if
they serve as an officer, director or employee of the foundation.
The board of directors of the foundation will have the authority for
the affiars of the foundation. Among the responsibility of the foundation
directors is the establishment of the policies of the foundation with respect to
its grants or donations, consistent with the purposes of the foundation.
Although no formal policy governing foundation grants exists at this time, the
foundation's board of directors will adopt a policy upon establishment of the
foundation. As directors of a nonprofit corporation, directors of the foundation
will at all times be bound by their fiduciary duty to advance the foundation's
charitable goals, to protect the assets of the foundation and to act in a manner
consistent with its charitable purpose. The directors of the foundation will
also be responsible for directing the activities of the foundation, including
the management of the common stock of Oswego County Bancorp held by the
foundation. However, it is expected that as a condition to receiving the
approval of the Department and the nonobjection of the FDIC to the Oswego County
Savings' reorganization and stock offering, that the foundation will be required
to commit to the Department and the FDIC that all shares of common stock held by
the foundation will be voted in the same ratio as all other shares of Oswego
County Bancorp's common stock, other than shares held by Oswego County MHC, on
all proposals considered by stockholders. However, the Department and the FDIC
may waive this voting restriction under certain circumstances. If a waiver is
granted, the Department and the FDIC may impose additional conditions regarding
the composition of the Foundation's board of directors.
The foundation's place of business is expected to be located at
Oswego County Savings' administrative offices. Initially, the foundation is
expected to have no separate employees but will utilize the staff of Oswego
County Savings and may pay Oswego County Savings for the value of these
services. The board of directors of the foundation will appoint such officers as
may be necessary to manage the operations of the foundation. In this regard, it
is expected that Oswego County Savings will be required to provide the FDIC with
a commitment that, to the extent applicable, Oswego County Savings will comply
with the affiliate restrictions set forth in Sections 23A and 23B of the Federal
Reserve Act with respect to any transactions between Oswego County Savings and
the foundation.
Oswego County Bancorp intends to capitalize Oswego County Charitable
Foundation with the number of shares equal to 4.0 % of the shares of common
stock of Oswego County Bancorp sold in the stock offering which would have a
market value of $159,800 to $216,200 ($248,630 at the maximum, as adjusted),
based on the purchase price of $10.00 per share. Messrs. Kreis and Walrath, who
will serve as initial directors of the foundation, and their affiliates, intend
to purchase, subject to availability, an aggregate of 17,500 shares of common
stock. The shares of common stock to be acquired by the foundation, when
combined with the proposed purchases of shares of common stock by Messrs. Kreis
and Walrath and their affiliates will total 39,120
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shares or 3.3% of the total number of shares of common stock to be issued and
outstanding (assuming the sale of 540,500 shares of common stock).
Oswego County Charitable Foundation will receive working capital from
any dividends paid on the common stock, and subject to applicable federal and
state laws, loans collateralized by the common stock or from the proceeds of the
sale of any of the common stock in the open market permitted to provide the
foundation with additional liquidity. As a private foundation under Section
501(c)(3) of the Internal Revenue Code, the foundation will be required to
distribute annually in grants or donations, a minimum of 5% of the average fair
market value of its net investment assets. One of the conditions imposed on the
gift of common stock by Oswego County Bancorp is that the amount of common stock
that may be sold by the foundation in any one year shall not exceed 5% of the
average market value of the assets held by the foundation, except where the
board of directors of the foundation determines that the failure to sell an
amount of common stock greater than such amount would result in a longer-term
reduction of the value of the foundation's assets and as such would jeopardize
the foundation's capacity to carry out its charitable purposes. Failure to
distribute this minimum return will require the payment of substantial federal
taxes. Upon completion of the reorganization and the stock offering and the
contribution of shares of common stock to the foundation, Oswego County Bancorp
would have 887,230, 1,043,800, 1,200,370, and 1,380,426 shares issued and
outstanding based on the minimum, midpoint and maximum of the estimated offering
range. Because Oswego County Bancorp will have an increased number of shares
outstanding, the voting and ownership interests of minority stockholders in
Oswego County Bancorp's common stock would be diluted to 45.0% as compared to a
45.9% interest in Oswego County Bancorp if the foundation was not established.
For additional discussion of the dilutive effect, see "Pro Forma Data."
Tax Considerations. Oswego County Bancorp and Oswego County Savings
have been advised by their outside tax advisors that an organization created and
operated for the above charitable purposes would generally qualify as a Section
501(c)(3) exempt organization under the Internal Revenue Code, and that this
type of an organization would likely be classified as a private foundation as
determined in Section 501 of the Internal Revenue Code. The foundation will
submit a timely request to the IRS to be recognized as an exempt organization.
As long as the foundation files its application for recognition of tax-exempt
status within 15 months from the date of its organization, and provided the IRS
approves the application, the effective date of the foundation's status as a
Section 501(c)(3) organization will be the date of its organization. Oswego
County Bancorp's and Oswego County Savings' outside tax advisor, however, has
not rendered any advice on the regulatory condition to the contribution which is
expected to require that all shares of common stock of Oswego County Bancorp
held by the foundation must be voted in the same ratio as all other outstanding
shares of common stock of Oswego County Bancorp, other than shares held by
Oswego County MHC, on all proposals considered by stockholders of Oswego County
Bancorp. Consistent with the expected condition, in the event that Oswego County
Bancorp or the foundation receives an opinion of its legal counsel that
compliance with this voting restriction would have the effect of causing the
foundation to lose its tax-exempt status or otherwise have a material and
adverse tax consequence on the foundation, or subject the foundation to an
excise tax under Section 4941 of the Internal Revenue Code, it is expected that
the FDIC and the [Superintendent] would waive such voting restriction upon
submission of a legal opinion(s) by Oswego County Bancorp or the foundation
satisfactory to them. See "- Regulatory Conditions Imposed on the Foundation."
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Under Delaware law, Oswego County Bancorp is authorized by statute to
make charitable contributions and case law has recognized the benefits of such
contributions to a Delaware corporation. In this regard, Delaware case law
provides that a charitable gift must be within reasonable limits as to amount
and purpose to be valid. Under the Internal Revenue Code, Oswego County Bancorp
is generally allowed a deduction for charitable contributions made to qualifying
donees within the taxable year of up to 10% of its taxable income of the
consolidated group of corporations (with certain modifications) for that year.
Charitable contributions made by Oswego County Bancorp in excess of the annual
deductible amount will be deductible over each of the five succeeding taxable
years, subject to certain limitations. Oswego County Bancorp and Oswego County
Savings believe that the reorganization presents a unique opportunity to
establish and fund a charitable foundation given the substantial amount of
additional capital being raised in the reorganization. In making such a
determination, Oswego County Bancorp and Oswego County Savings considered the
dilutive impact of the contribution of common stock to the foundation on the
amount of common stock available to be offered for sale in the stock offering.
Based on such consideration, Oswego County Bancorp and Oswego County Savings
believe that the contribution to the foundation in excess of the 10% annual
deduction limitation is justified given Oswego County Savings' capital position
and its earnings, the substantial additional capital being raised in the stock
offering and the potential benefits of the foundation to the communities served
by Oswego County Savings. In this regard, assuming the sale of shares at the
maximum of the estimated offering range, Oswego County Bancorp would have pro
forma stockholders' equity of $15.9 million or 13.8% of pro forma consolidated
assets and Oswego County Saving's pro forma leverage, risk-based and total
capital ratios would be 11.9%, 17.3% and 18.6%, respectively. See "Oswego County
Savings Regulatory Capital Requirements," "Capitalization," "Comparison of
Valuation and Pro Forma Information with No Foundation" and "Pro Forma Data."
Oswego County Bancorp and Oswego County Savings believe that the amount of the
charitable contribution is reasonable given Oswego County Bancorp's and Oswego
County Saving's pro forma capital positions. As such, Oswego County Bancorp and
Oswego County Savings believe that the contribution does not raise safety and
soundness concerns.
Oswego County Bancorp and Oswego County Savings have received an
opinion of their outside tax advisors that Oswego County Bancorp's contribution
of its own stock to the foundation should not constitute an act of self-dealing.
Oswego County Bancorp should also, more likely than not be entitled to a
deduction in the amount of the fair market value of the stock at the time of the
contribution less the nominal par value that the foundation is required to pay
to Oswego County Bancorp for such stock, subject to the annual deduction
limitation described above. Oswego County Bancorp, however, would be able to
carry forward any unused portion of the deduction for five years following the
contribution, subject to certain limitations. Oswego County Bancorp's and Oswego
County Savings' outside tax advisors, however, have not rendered advice as to
fair market value for purposes of determining the amount of the tax deduction.
Assuming the close of the Offerings at the maximum of the estimated price range,
Oswego County Bancorp estimates that all of the contribution should be
deductible over the six-year period. Oswego County Bancorp and/or Oswego County
Savings may make further contributions to the foundation following the initial
contribution. In addition, Oswego County Savings and Oswego County Bancorp also
may continue to make charitable contributions to other qualifying organizations.
Any of
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these future contributions would be based on an assessment of, among other
factors, the financial condition of Oswego County Bancorp and Oswego County
Savings at that time, the interests of stockholders and depositors of Oswego
County Bancorp and Oswego County Savings, and the financial condition and
operations of the foundation.
Although Oswego County Bancorp and Oswego County Savings have
received an opinion of their outside tax advisors that Oswego County Bancorp
will more likely than not be entitled to a deduction for the charitable
contribution, there can be no assurances that the IRS will recognize the
foundation as a Section 501(c)(3) exempt organization or that a deduction for
the charitable contribution will be allowed. In either case, Oswego County
Bancorp's contribution to the foundation would be expensed without tax benefit,
resulting in a reduction in earnings in the year in which the IRS makes the
determination. [Cross references deleted]
As a private foundation, earnings and gains, if any, from the sale of
common stock or other assets are generally exempt from federal and state
corporate income taxation. However, investment income, such as interest,
dividends and capital gains, of a private foundation will generally be subject
to a federal excise tax of 2.0%. The foundation will be required to make an
annual filing with the IRS within four and one-half months after the close of
the foundation's fiscal year. The foundation also will be required to publish a
notice that the annual information return will be available for public
inspection for a period of 180 days after the date of the public notice. The
information return for a private foundation must include, among other things, an
itemized list of all grants made or approved, showing the amount of each grant,
the recipient, any relationship between a grant recipient and the foundation's
managers and a concise statement of the purpose of each grant. Numerous other
restrictions exist in the operation of the foundation including transactions
with related entities, level of investment and distributions for charitable
purposes.
Regulatory Conditions Imposed on the Foundation. Establishment of
Oswego County Foundation is expected to be subject to the following conditions
being agreed to in writing by the foundation as a condition to receiving the
FDIC's nonobjection and the Superintendent's approval of the reorganization:
(1) the foundation will be subject to examination by the FDIC
and the Department;
(2) the foundation must comply with supervisory directives
imposed by the FDIC and the Department;
(3) the foundation will operate in accordance with written
policies adopted by its board of directors, including a
conflict of interest policy;
(4) any shares of common stock held by the foundation must be
voted in the same ratio as all other shares of common
stock, other than shares held by Oswego County MHC, voting
on all proposals considered by stockholders of Oswego
County Bancorp; provided, however, that, consistent with
the condition, the FDIC and the Department would waive this
voting restriction under certain circumstances and subject
to certain conditions if compliance with the voting
restriction would:
o cause a violation of the law of the State of
Delaware;
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o would cause the foundation to lose its
tax-exempt status or otherwise have a material
and adverse tax consequence on the foundation;
or
o would cause the foundation to be subject to an
excise tax under Section 4941 of the Internal
Revenue Code;
(5) the foundation must submit a proposed operating plan to the
FDIC prior to the reorganization; and
(6) the foundation must submit annual reports to the FDIC.
In order to obtain a waiver of condition number 4 above, Oswego
County Bancorp's or the foundation's legal counsel would be required to render
an opinion satisfactory to the FDIC and the Department. While there is no
current intention for Oswego County Bancorp or the foundation to seek a waiver
from the FDIC and the Department from these restrictions, there can be no
assurances that a legal opinion addressing these issues could be rendered, or if
rendered, that the FDIC and the Department would grant an unconditional waiver
of the voting restriction. If the voting restriction is waived or becomes
unenforceable, the FDIC and the Department may either impose a condition that
provides a certain portion of the members of the foundation's board of directors
shall be persons who are not directors, officers or employees of Oswego County
Bancorp, Oswego County Savings or any affiliate or impose other conditions
relating to control of the foundation's common stock as is determined by the
FDIC or the Department to be appropriate at the time. In no event would the
voting restriction survive the sale of shares of the common stock held by the
foundation.
How We Determined Our Price and Number of Shares to be Issued in the Stock
Offering
The plan of reorganization requires that the basis for the purchase
price of the common stock is the appraised pro forma market value of Oswego
County Bancorp and Oswego County Savings, as determined by an independent
valuation. Oswego County Savings has retained RP Financial to make this
valuation. For its services in making the appraisal, RP Financial's fees and
out-of-pocket expenses are estimated to be $42,500. Oswego County Savings has
agreed to indemnify RP Financial and any employees of RP Financial who act for
or on behalf of RP Financial in connection with the appraisal against any and
all loss, cost, damage, claim, liability or expense of any kind, including
claims under federal and state securities laws, arising out of any misstatement
or untrue statement of a material fact or an omission to state a material fact
in the information supplied by Oswego County Savings to RP Financial, unless RP
Financial is determined to be negligent or otherwise at fault.
An appraisal has been made by RP Financial in reliance upon the
information contained in this prospectus, including the financial statements. RP
Financial also considered the following factors, among others:
o the present and projected operating results and financial
condition of Oswego County Bancorp and Oswego County
Savings and the economic and demographic conditions in
Oswego County Saving's existing marketing area;
o certain historical, financial and other information
relating to Oswego County Savings;
o a comparative evaluation of the operating and financial
statistics of Oswego County Savings with those of other
similarly situated publicly traded mutual holding companies
located in New York and the Northeast region;
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o the aggregate size of the stock offering;
o the impact of the reorganization and stock offering on
Oswego County Savings' net worth and earnings potential;
o the proposed dividend policy of Oswego County Bancorp and
Oswego County Savings; and
o the trading market for securities of comparable
institutions and general conditions in the market for such
securities.
In its review of the appraisal provided by RP Financial, the board of
trustees reviewed the methodologies and the appropriateness of the assumptions
used by RP Financial in addition to the factors enumerated above, and the board
of trustees believes that such assumptions were reasonable.
On the basis of the foregoing, RP Financial has advised Oswego County
Bancorp and Oswego County Savings that in its opinion, dated April 16, 1999, the
estimated pro forma market value of the common stock on a fully converted basis,
assuming a contribution to a charitable foundation in an amount equal to 4.0% of
the shares sold, ranged from a minimum of $8.9 million to a maximum of $12.0
million with a midpoint of $10.4 million. The board of trustees of Oswego County
Savings determined that the common stock should be sold at $10.00 per share and
that 45.9% of the to-be-outstanding shares, prior to the contribution to the
foundation, should be offered to minority stockholders. Based on the estimated
valuation range and the purchase price, the number of shares of common stock
that Oswego County Bancorp will issue will range from between 399,500 shares to
540,500 with a midpoint of 470,000 shares. The anticipated issuance to the
foundation of a number of shares equal to 4% of the shares of common stock sold
in the stock offering will result in shareholders other than Oswego County MHC
and the foundation owning 47.1% of the shares of the common stock outstanding at
the conclusion of the reorganization and stock offering. The remaining shares of
Oswego County Bancorp's common stock that are not sold in the stock offering or
contributed to the foundation will be issued to Oswego County MHC. The estimated
valuation range may be amended with the approval of the FDIC and Superintendent,
if required, or if necessitated by subsequent developments in the financial
condition of Oswego County Bancorp and Oswego County Savings or market
conditions generally. In the event the estimated valuation range is updated to
amend the value of the common stock below $4.0 million or above $5.4 million,
which is the maximum of the estimated valuation range, as adjusted by 15%, the
new appraisal will be filed with the SEC by post-effective amendment.
Based upon current market and financial conditions and recent
practices and policies of the FDIC and the Department, in the event Oswego
County Bancorp receives orders for common stock in excess of $5.4 million (the
maximum of the estimated offering range) and up to $6.2 million (the maximum of
the estimated offering range, as adjusted by 15%), Oswego County Bancorp may be
required by the FDIC and Department to accept all such orders. No assurances,
however, can be made that Oswego County Bancorp will receive orders for common
stock in excess of the maximum of the estimated offering range or that, if such
orders are received, that all such orders will be accepted because Oswego County
Bancorp's final valuation and number of
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shares to be issued are subject to the receipt of an updated appraisal from RP
Financial which reflects such an increase in the valuation and the approval of
such increase by the FDIC and Department. There is no obligation or
understanding on the part of management to take and/or pay for any shares in
order to complete the reorganization and stock offering.
RP Financial's valuation is not intended, and must not be construed,
as a recommendation of any kind as to the advisability of purchasing the shares.
RP Financial did not independently verify the financial statements and other
information provided by Oswego County Savings, nor did RP Financial value
independently the assets or liabilities of Oswego County Savings. The valuation
considers Oswego County Savings as a going concern and should not be considered
as an indication of the liquidation value of Oswego County Savings. Moreover,
because the valuation is necessarily based upon estimates and projections of a
number of matters, all of which are subject to change from time to time, no
assurance can be given that persons purchasing common stock in the stock
offering will thereafter be able to sell those shares at prices at or above the
purchase price or in the range of the valuation described above.
Prior to completion of the reorganization and stock offering, the
maximum of the estimated offering range may be increased up to 15% and the
number of shares of common stock may be increased to up to 621,575 shares to
reflect changes in market and financial conditions, without the resolicitation
of subscribers. See "- Limitations on Stock Purchases" as to the method of
distribution and allocation of additional shares that may be issued in the event
of an increase in the estimated offering range to fill unfilled orders in the
Subscription Offering.
No sale of shares of common stock in the reorganization and stock
offering may be consummated unless prior to such consummation RP Financial
confirms to Oswego County Savings, the FDIC and the Superintendent that nothing
of a material nature has occurred which, taking into account all relevant
factors, would cause it to conclude that the aggregate value of the common stock
to be issued is materially incompatible with the estimate of the aggregate
consolidated pro forma market value of Oswego County Bancorp and Oswego County
Savings. If this confirmation is not received, Oswego County Bancorp may cancel
the offerings, extend the offerings and establish a new estimated offering
range, extend, reopen or hold a new offering or take any other action the FDIC
and Superintendent may permit or require.
Depending upon market or financial conditions following the
commencement of the subscription offering, the total number of shares of common
stock may be increased or decreased without a resolicitation of subscribers,
provided that the product of the total number of shares times the purchase price
is not below the minimum or more than 15% above the maximum of the estimated
offering range. In the event market or financial conditions change so as to
cause the aggregate purchase price of the shares to be below the minimum of the
estimated offering range or more than 15% above the maximum of the range,
purchasers will be resolicited and be permitted to continue their orders, in
which case they will need to reconfirm their subscriptions prior to 20 days
before the end of the expiration of the resolicitation offering or their
subscription funds will be promptly refunded with interest at Oswego County
Savings' passbook rate of interest, or be permitted to modify or rescind their
subscriptions. Any change in the estimated offering range must be approved by
the FDIC the Superintendent. If the number of shares of common stock issued in
the reorganization is increased due to an increase of up to 15% in the estimated
offering range to reflect changes in market or financial conditions, persons who
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subscribed for the maximum number of shares will be given the opportunity to
subscribe for the adjusted maximum number of shares. If the estimated valuation
range is adjusted below $4.0 million or above $6.2 million, Oswego County
Bancorp will offer subscribers the opportunity to cancel their stock order. See
"- Limitations on Stock Purchases."
An increase in the number of shares of common stock as a result of an
increase in the estimated pro forma market value would decrease both a
subscriber's ownership interest and Oswego County Bancorp's pro forma net income
and stockholders' equity on a per share basis while increasing pro forma net
income and stockholders' equity on an aggregate basis. A decrease in the number
of shares of common stock would increase both a subscriber's ownership interest
and Oswego County Bancorp's pro forma net income and stockholders' equity on a
per share basis while decreasing pro forma net income and stockholders' equity
on an aggregate basis. See "Risk Factors - We intend to grant stock options and
restricted stock to the board and management following the change in structure
and stock offering which could further reduce your voting interest" and "Pro
Forma Data."
Copies of the appraisal report of RP Financial, including any
amendments, and the detailed report of the appraiser setting forth the method
and assumptions for the appraisal are available for inspection at each office
of Oswego County Savings and the other locations specified under "Additional
Information."
Subscription Offering and Subscription Rights
In accordance with the plan of reorganization, rights to subscribe
for the purchase of common stock have been granted to the following persons in
the following order of descending priority:
o Eligible account holders -- depositors of Oswego County
Savings with accounts of at least $100 as of the close of
business on September 30, 1997,
o tax-qualified employee stock benefit plans,
o Supplemental eligible account holders -- depositors of
Oswego County Savings with accounts of at least $100 as of
close of business on March 31, 1999, and
o trustees, officers and employees of Oswego County Savings.
All subscriptions received will be subject to the availability of
common stock after satisfaction of all subscriptions of all persons having prior
rights in the subscription offering and to the maximum and minimum purchase
limitations set forth in the plan of reorganization and as described below under
"- Limitations on Stock Purchases."
Preference Category No. 1: Eligible Account Holders. Each Eligible
Account Holder shall receive, without payment, first priority, nontransferable
subscription rights to subscribe for shares of common stock in an amount equal
to the greater of:
(1) $150,000 or 15,000 shares of common stock;
(2) one-tenth of one percent of the total offering of shares of
common stock; or
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(3) 15 times the product (rounded down to the next whole
number) obtained by multiplying the total number of shares
of common stock to be issued by a fraction, of which the
numerator is the amount of the qualifying deposits of the
Eligible Account Holder and the denominator of which is the
total amount of qualifying deposits of all Eligible Account
Holders, in each case as of the close of business on
September 30, 1997 (the "Eligibility Record Date"), subject
to the overall purchase limitations. See "- Limitations on
Stock Purchases."
If there are not sufficient shares available to satisfy all
subscriptions, shares first will be allocated among subscribing Eligible Account
Holders so as to permit each subscribing Eligible Account Holder, to the extent
possible, to purchase a number of shares sufficient to make his total allocation
equal to the lesser of the number of shares subscribed for or 100 shares. After
each subscribing Eligible Account Holder has been allocated the lesser of the
number of shares subscribed for or 100 shares, the remaining shares will be
allocated among the subscribing Eligible Account Holders whose subscriptions
remain unfilled in the proportion that the amounts of their respective eligible
deposits bear to the total amount of eligible deposits of all subscribing
Eligible Account Holders whose subscriptions remain unfilled, provided that no
fractional shares shall be issued.
To ensure proper allocation of stock, each Eligible Account Holder
must list on his subscription order form all accounts in which he has an
ownership interest. Failure to list an account could result in fewer shares
being allocated than if all accounts had been disclosed. The subscription rights
of Eligible Account Holders who are also trustees or officers of Oswego County
Savings or their associates will be subordinated to the subscription rights of
other Eligible Account Holders to the extent attributable to increased deposits
in the year preceding September 30, 1997.
Preference Category No. 2: Tax-Qualified Employee Stock Benefit
Plans: Each tax-qualified employee stock benefit plan, including the employee
stock ownership plan, shall receive, without payment, second priority,
nontransferable subscription rights to purchase, in the aggregate, up to 10% of
the common stock, including any increase in the number of shares of common stock
after the date hereof as a result of an increase of up to 15% in the maximum of
the estimated offering range. The ESOP intends to purchase 8% of the shares of
common stock sold in the stock offering, or 31,960 shares and 43,240 shares
based on the minimum and maximum of the estimated offering range, respectively.
If the number of shares is increased to 621,575 shares, the ESOP intends to
purchase 49,726 shares. Subscriptions by the ESOP will not be aggregated with
shares of common stock purchased directly by or which are otherwise attributable
to any other participants in the Subscription and Community Offerings, including
subscriptions of any of Oswego County Savings' directors, officers, employees or
their associates. See "Management - Benefits - Employee Stock Ownership Plan."
Preference Category No. 3: Supplemental Eligible Account Holders. To
the extent that there are sufficient shares remaining after satisfaction of
subscriptions by Eligible Account Holders and the Tax-Qualified Employee Stock
Benefit Plans, each Supplemental Eligible Account Holder will receive, without
payment therefor, third priority, nontransferable subscription rights to
subscribe for in the Subscription Offering up to the greater of:
(1) $150,000 or 15,000 shares of common stock;
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(2) one-tenth of one percent of the total offering of shares of
common stock; or
(3) 15 times the product (rounded down to the next whole
number) obtained by multiplying the total number of shares
of common stock to be issued by a fraction, of which the
numerator is the amount of qualifying deposit of the
Supplemental Eligible Account Holder and the denominator of
which is the total amount of qualifying deposits of all
Supplemental Eligible Account Holders, in each case as of
the close of business on March 31, 1999 (the "Supplemental
Eligibility Record Date"), subject to the overall purchase
limitations. See "- Limitations on Stock Purchases."
If there are not sufficient shares available to satisfy all
subscriptions of all Supplemental Eligible Account Holders, available shares
first will be allocated among subscribing Supplemental Eligible Account Holders
so as to permit each such Supplemental Eligible Account Holder, to the extent
possible, to purchase a number of shares sufficient to make his total allocation
equal to the lesser of the number of shares subscribed for or 100 shares.
Thereafter, any shares remaining available will be allocated among the
Supplemental Eligible Account Holders whose subscriptions remain unfilled in the
proportion that the amounts of their respective eligible deposits bear to the
total amount of eligible deposits of all subscribing Supplemental Eligible
Account Holders whose subscriptions remain unfilled, provided that no fractional
shares shall be issued.
Preference Category No. 4: Trustees, Officers and Employees. To the
extent that there are sufficient shares remaining after satisfaction of all
subscriptions by Eligible Account Holders, the ESOP and Supplemental Eligible
Account Holders, then trustees, officers and employees of Oswego County Savings
will receive, without payment, fourth priority, nontransferable subscription
rights to subscribe for, in this category, an aggregate of up to 15% of the
shares of common stock offered in the Subscription Offering. The ability of
trustees, officers and employees to purchase common stock under this category is
in addition to rights which are otherwise available to them under the plan of
reorganization as they may fall within higher priority categories, and the plan
of reorganization generally allows such persons to purchase in the aggregate up
to 24% of common stock sold in the stock offering. See "- Limitations on Stock
Purchases."
In the event of an over subscription in this category, subscription
rights will be allocated among the individual trustees, officers and employees
on a point system basis, whereby such individuals will receive subscription
rights in the proportion that the number of points assigned to each of them
bears to the total points assigned to all trustees, officers and employees,
provided that no fractional shares shall be issued. One point will be assigned
for each year of service with Oswego County Savings, one point for each salary
increment of $5,000 per annum and five points for each office presently held in
Oswego County Savings, including trusteeships. For information as to the number
of shares proposed to be purchased by certain of the trustees, directors and
officers, see "Proposed Management Purchases."
Expiration Date for the Subscription Offering. The Subscription
Offering will expire at 12:00, noon, Oswego, New York Time, on June __, 1999
(the "Subscription Expiration Date"), unless extended for up to 45 days or for
such additional periods by Oswego County Bancorp and Oswego County Savings as
may be approved by the FDIC and the Superintendent. The
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Subscription Offering may not be extended beyond _________, 2001. Subscription
rights which have not been exercised prior to the Subscription Expiration Date
(unless extended) will become void.
Oswego County Bancorp and Oswego County Savings will not execute
orders until at least the minimum number of shares of common stock (399,500
shares) have been subscribed for or otherwise sold. If all shares have not been
subscribed for or sold within 45 days after the Subscription Expiration Date,
unless such period is extended with the consent of the FDIC and the
Superintendent, all funds delivered to Oswego County Savings pursuant to the
Subscription Offering will be returned promptly to the subscribers with interest
and all withdrawal authorizations will be canceled. If an extension beyond the
45-day period following the Subscription Expiration Date is granted, Oswego
County Bancorp and Oswego County Savings will notify subscribers of the
extension of time and of any rights of subscribers to modify or rescind their
subscriptions.
Community Offering
To the extent that shares remain available for purchase after
satisfaction of all subscriptions of Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account Holders and
trustees, officers and employees of Oswego County Savings, we anticipate that we
will offer shares pursuant to the plan of reorganization to certain members of
the general public, with preference given to natural persons residing in Oswego
County, New York. These natural persons are referred to as preferred
subscribers. Persons, together with associates of and persons acting in concert
these such persons, may purchase up to the greater of (1) $150,000 or 15,000
shares of common stock, or (2) one-tenth of one percent (0.10%) of the total
offering of shares of common stock, subject to the maximum purchase limitations.
See "- Limitations on Stock Purchases." This amount may be increased at the sole
discretion of Oswego County Savings up to 5%, provided that any such increased
amount may not exceed the maximum purchase limit provided to subscribers in the
Subscription Offering. See "- Limitations on Stock Purchases." The opportunity
to subscribe for shares of common stock in any Community Offering category will
be subject to the right of Oswego County Bancorp and Oswego County Savings, in
their sole discretion, to accept or reject any orders made in the Community
Offering in whole or in part either at the time of receipt of an order or as
soon as practicable following the Expiration Date. The Community Offering may be
commenced concurrent with, during or promptly after the Subscription Offering.
If there are not sufficient shares available to fill the orders of
Preferred Subscribers after completion of the Community Offering, available
stock will be allocated first to each Preferred Subscriber whose order is
accepted by Oswego County Bancorp, in an amount equal to the lesser of 100
shares or the number of shares subscribed for by each such Preferred Subscriber,
if possible. Thereafter, unallocated shares will be allocated among the
Preferred Subscribers whose accepted orders remain unsatisfied on an equal
number of shares basis per order until all orders have been filled or the
remaining shares have been allocated, provided that no fractional shares shall
be issued.
Orders for common stock in the Community Offering will first be
filled to a maximum of 2% of the total number of shares of common stock sold in
the stock offering and thereafter any
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remaining shares shall be allocated on an equal number of shares basis per order
until all orders have been filled. If there are any shares remaining, shares
will be allocated to other members of the general public who subscribe in the
Community Offering applying the same allocation described above for Preferred
Subscribers.
Syndicated Community Offering
As a final step in the stock offering, the plan of reorganization
provides that, if feasible, all shares of common stock not purchased in the
Subscription and Community Offerings may be offered for sale to the general
public through a syndicate of registered broker-dealers known as selected
dealers. We call this the syndicated community offering. Oswego County Savings
expects to market any shares which remain unsubscribed after the Subscription
and Community Offerings through the Syndicated Community Offering. The Oswego
County Bancorp and Oswego County Savings have the right to reject orders in
whole or part in their sole discretion in the Syndicated Community Offering.
Neither Friedman Billings nor any registered broker-dealer shall have any
obligation to take or purchase any shares of common stock in the Syndicated
Community Offering; however, Friedman Billings has agreed to use its best
efforts in the sale of shares in the Syndicated Community Offering.
The price at which common stock is sold in the Syndicated Community
Offering will be the same price at which shares are offered and sold in the
Subscription and Community Offerings. No person will be permitted to subscribe
in the Syndicated Community Offering for more than $150,000 or 15,000 shares of
common stock, subject to the maximum purchase limitations. See "- Limitations on
Stock Purchases." This amount may be increased to up to 5% of the total offering
of shares in the Subscription Offering, provided that orders for common stock
in the Syndicated Community Offering will first be filled to a maximum of 2% of
the total number of shares of common stock sold in the stock offering.
Thereafter, any remaining shares will be allocated on an equal number of shares
basis per order until all orders have been filled.
Friedman Billings may enter into agreements with the selected
dealers, to assist in the sale of the shares in the Syndicated Community
Offering, although no such agreements exist as of the date of this prospectus.
No orders may be placed or filled by or for a selected dealer during the
Subscription Offering. After the close of the Subscription Offering, Friedman
Billings will instruct selected dealers as to the number of shares to be
allocated to each selected dealer. Only after the close of the Subscription
Offering and upon allocation of shares to selected dealers may selected dealers
take orders from their customers. During the Subscription and Community
Offerings, selected dealers may only solicit indications of interest from their
customers to place orders with Oswego County Bancorp on the date set as the
order date for the purchase of shares of common stock. When, and if, Friedman
Billings and Oswego County Savings believe that enough indications of interest
and orders have not been received in the Subscription and Community Offerings to
complete the reorganization and stock offering, Friedman Billings will request,
as of the order date, selected dealers to submit orders to purchase shares for
which they have previously received indications of interest from their
customers. Selected dealers will send confirmations of the orders to those
customers on the next business day after the order date. Selected dealers will
debit the accounts of their customers on the settlement date, which will be
three business days from the order date. Customers who authorize selected
dealers to debit their brokerage accounts are required to have the funds for
payment in their account on but not before the settlement date. On the
settlement date, selected dealers will remit funds to the account
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established by Oswego County Savings for each selected dealer. Each customer's
funds forwarded to Oswego County Savings, along with all other accounts held in
the same title, will be insured by the FDIC up to $100,000 in accordance with
applicable FDIC regulations. After payment has been received by Oswego County
Savings from selected dealers, funds will earn interest at Oswego County
Savings' passbook rate until the consummation or termination of the
reorganization and stock offering. Funds will be promptly returned, with
interest, in the event the reorganization and stock offering is not completed as
described above.
The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by Oswego County
Savings with the approval of the FDIC and the Superintendent. See "- How We
Determine Our Price and Number of Shares to be Issued in the Stock Offering"
above for a discussion of rights of subscribers, if any, in the event an
extension is granted.
Persons in Nonqualified States or Foreign Countries
Oswego County Savings will make reasonable efforts to comply with the
securities laws of all states in the United States in which persons reside who
are entitled to subscribe for stock pursuant to the plan of reorganization.
However, the plan of reorganization does not provide for the common stock to be
offered or sold to any person who resides in a foreign country.
Limitations on Stock Purchases
The plan of reorganization includes the following limitations on the
number of shares of common stock which may be purchased in the stock offering:
(1) No fewer than 25 shares of common stock may be
purchased, to the extent shares are available;
(2) Each Eligible Account Holder may subscribe for and
purchase in the Subscription Offering up to the greater of:
(a) $150,000 or 15,000 shares of common
stock;
(b) one-tenth of one percent of the total
offering of shares of common stock; or
(c) 15 times the product (rounded down to
the next whole number) obtained by
multiplying the total number of shares
of common stock to be issued by a
fraction, of which the numerator is
the amount of the qualifying deposit
of the Eligible Account Holder and the
denominator is the total amount of
qualifying deposits of all Eligible
Account Holders, in each case as of
the close of business on the
Eligibility Record Date, subject to
the overall limitation in clause (7)
below;
(3) The Tax-Qualified Employee Stock Benefit Plans,
including the employee stock ownership plan, may purchase in the
aggregate up to 10% of the shares of common stock sold in the stock
offering, including any additional shares issued in the event of an
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increase in the estimated offering range; although at this time the
employee stock ownership plan intends to purchase only 8% of those
shares;
(4) Each Supplemental Eligible Account Holder may subscribe
for and purchase in the Subscription Offering up to the greater of:
(a) $150,000 or 15,000 shares of common
stock;
(b) one-tenth of one percent of the total
offering of shares of common stock; or
(c) 15 times the product (rounded down to
the next whole number) obtained by
multiplying the total number of shares
of common stock to be issued by a
fraction, of which the numerator is
the amount of the qualifying deposit
of the Supplemental Eligible Account
Holder and the denominator is the
total amount of qualifying deposits of
all Supplemental Eligible Account
Holders, in each case as of the close
of business on the Supplemental
Eligibility Record Date, subject to
the overall limitation in clause (7)
below;
(5) Any Person purchasing shares of common stock in the
Community Offering may purchase in the Community Offering up to the
greater of:
(a) $150,000 or15,000 shares of common
stock; or
(b) one-tenth of one percent of the total
offering of shares of common stock,
subject to the overall limitation in
clause (7) below;
(6) Any person purchasing shares of common stock in the
Syndicated Community Offering may purchase in the Syndicated
Community Offering up to $150,000 or 15,000 shares of common stock,
subject to the overall limitation in clause (7) below;
(7) Except for the Tax-Qualified Employee Stock Benefit
Plans and certain Eligible Account Holders and Supplemental Eligible
Account Holders whose subscription rights are based upon the amount
of their deposits, the maximum number of shares of common stock
subscribed for or purchased in all categories of the stock offering
by any person, together with associates of and groups of persons
acting in concert with such persons, shall not exceed 5% of common
stock sold in stock offering; and
(8) No more than 25% of the total number of shares offered
for sale in the stock offering may be purchased by trustees and
officers of Oswego County Savings.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the depositors
of Oswego County Savings, the
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individual amount permitted to be subscribed for may be increased up to a
maximum of 5% of the number of shares sold in the stock offering. If such amount
is increased, subscribers for the maximum amount will be, and certain other
large subscribers in the sole discretion of Oswego County Savings may be, given
the opportunity to increase their subscriptions up to the then applicable limit.
The term "associate" of a person is defined to mean:
o any corporation or other organization (other than Oswego
County Bancorp, Oswego County MHC and Oswego County Savings
or a majority-owned subsidiary of the Oswego County
Savings) of which such person is a director, officer or
partner or is directly or indirectly the beneficial owner
of 10% or more of any class of equity securities
o any trust or other estate in which such person has a
substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity,
provided, however, that such term shall not include any
tax-qualified employee stock benefit plan of Oswego County
Bancorp and Oswego County Savings in which such person has
a substantial beneficial interest or serves as a trustee or
in a similar fiduciary capacity
o any relative or spouse of such person, or any relative of
such spouse, who either has the same home as such person or
who is a director or officer of Oswego County Savings or
any of their subsidiaries.
The term "acting in concert" is defined to mean (1) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement, or (2) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise.
Oswego County Savings may presume that certain persons are acting in concert
based upon, among other things, joint account relationships and the fact that
such persons have filed joint Schedules 13D with the SEC with respect to other
companies.
Marketing Arrangements
Oswego County Bancorp and Oswego County Savings have retained
Friedman Billings to consult with and to advise Oswego County Savings, and to
assist Oswego County Bancorp, on a best efforts basis, in the distribution of
the shares of common stock in the Subscription and Community Offering. The
services that Friedman Billings will provide include, but are not limited to:
o training the employees of Oswego County Savings who will
perform certain ministerial functions in the Subscription
and Community Offering regarding the mechanics and
regulatory requirements of the stock offering process;
o managing the Stock Center by assisting interested stock
subscribers and by keeping records of all stock orders;
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o preparing marketing materials; and
o assisting in the solicitation of proxies from Oswego County
Savings' depositors for use at Oswego County Savings'
special meeting.
For its services, Friedman Billings will receive a management fee of
$20,000 and a marketing fee of $100,000. In the event that selected dealers are
used to assist in the sale of shares of common stock in the Community Offering,
the dealers will be paid a fee of [up to ___%] a of the aggregate purchase price
of the shares sold by such dealers. Oswego County Savings has agreed to
indemnify Friedman Billings against certain claims or liabilities, including
certain liabilities under the Securities Act, and will contribute to payments
Friedman Billings may be required to make in connection with any such claims or
liabilities.
Sales of shares of common stock will be made primarily by registered
representatives affiliated with Friedman Billings or by the broker-dealers
managed by Friedman Billings. Friedman Billings has undertaken that the shares
of common stock will be sold in a manner which will ensure that the distribution
standards of the New York Stock Exchange (round lots, public shares, and
aggregate market value) will be met. The Stock Center will be established at the
main office of Oswego County Savings. Oswego County Bancorp will rely on Rule
3a4-1 of the Exchange Act and sales of common stock will be conducted within the
requirements of this rule, so as to permit officers, trustees, directors and
employees to participate in the sale of the common stock in those states where
the law permits. No officer, trustees, director or employee of Oswego County
Bancorp or Oswego County Savings will be compensated directly or indirectly by
the payment of commissions or other remuneration in connection with his or her
participation in the sale of common stock.
Oswego County Savings may utilize certain space in its offices for
activities related to the Offerings. FDIC and Department [rules] impose certain
restrictions on securities sales activities by Oswego County Bancorp or Oswego
County Savings. Among other requirements, if the offices of Oswego County
Savings or any affiliate are utilized, no commissions, bonuses, or payments may
be made to employees (except standard compensation to securities personnel of
registered broker-dealers), no offers or sales may be made by tellers or at the
teller counter, sales activities must be conducted in a segregated or separately
identifiable area of the Oswego County Savings' offices apart from the area used
by the general public for deposit activities and offers and sales must be made
only by regular, full-time Oswego County Savings employees or securities
personnel who are subject to supervision by a registered broker-dealer. In
addition, subscribers must sign a certification form acknowledging that the
common stock is not federally insured or guaranteed and that he or she has
received a copy of this prospectus and understands the risks involved in
purchasing any shares of common stock. Oswego County Bancorp and Oswego County
Savings will comply with the above-described FDIC and Department [rules] as well
as Federal and state securities laws.
Procedure for Purchasing Shares in the Subscription Offering
To ensure that each purchaser receives a prospectus at least 48 hours
before the Subscription Expiration Date, unless extended, in accordance with
Rule 15c2-8 of the Exchange Act, no prospectus will be mailed any later than
five days prior to that date or hand delivered any
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later than two days prior to such date. Execution of the order form will confirm
receipt or delivery in accordance with Rule 15c2-8. Order forms will only be
distributed with a prospectus.
To purchase shares in the Subscription Offering, an executed order
form with the required payment for each share subscribed for, or with
appropriate authorization for withdrawal from a deposit account at Oswego County
Savings, which may be given by completing the appropriate blanks in the order
form, must be received by Oswego County Savings by 12:00 noon, Oswego, New York
Time, on the Subscription Expiration Date, unless extended. In addition, Oswego
County Bancorp and Oswego County Savings will require a prospective purchaser to
execute a certification in the form required by applicable [FDIC and Department]
regulations in connection with any sale of common stock. Order forms, which are
not received by such time or are executed defectively or are received without
full payment, or appropriate withdrawal instructions, are not required to be
accepted. Further, Oswego County Savings will not accept orders submitted on
photocopied or facsimilied order forms nor order forms unaccompanied by an
executed certification form. Oswego County Savings has the right to waive or
permit the correction of incomplete or improperly executed forms, but does not
represent that it will do so. Once received, an executed order form may not be
modified, amended or rescinded without the consent of Oswego County Savings,
unless the stock offering has not been completed within 45 days after the end of
the Subscription Offering, unless that period has been extended.
To ensure that Eligible Account Holders and Supplemental Eligible
Account Holders are properly identified as to their stock purchase priority,
depositors as of the close of business on the Eligibility Record Date (September
30, 1997) or the Supplemental Eligibility Record Date (March 31, 1999) must list
all accounts on the stock order form giving all names in each account
and the account numbers.
Payment for subscriptions may be made:
o in cash if delivered in persons;
o by check or money order; or
o by authorization of withdrawal from deposit
accounts maintained with Oswego County Savings.
No wire transfers will be accepted. Interest will be paid on payments
made by cash, check or money order at Oswego County Savings' passbook rate of
interest from the date payment is received until completion or termination of
the stock offering. If payment is made by authorization of withdrawal from
deposit accounts, the funds authorized to be withdrawn from a deposit account
will continue to accrue interest at the contractual rates until completion or
termination of the reorganization, but a hold will be placed on such funds,
thereby making them unavailable to the depositor until completion or termination
of the stock offering.
If a subscriber authorizes Oswego County Savings to withdraw the
amount of the purchase price from his deposit account, Oswego County Savings
will do so as of the effective date of the stock offering. Oswego County Savings
will waive any applicable penalties for early withdrawal from certificate
accounts. If the remaining balance in a certificate account is reduced
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below the applicable minimum balance requirement at the time that the funds
actually are transferred under the authorization, the certificate will be
canceled at the time of the withdrawal, without penalty, and the remaining
balance will earn interest at the passbook rate.
If the ESOP subscribes for shares during the Subscription Offering,
the ESOP will not be required to pay for the shares subscribed for at the time
it subscribes, but rather, may pay for such shares of common stock subscribed
for by it at the purchase price upon consummation of the Subscription and
Community Offerings, if all shares are sold, or upon consummation of the
Syndicated Community Offering if shares remain to be sold in such offering,
provided that there is in force from the time of its subscription until such
time, a loan commitment from an unrelated financial institution or Oswego County
Bancorp to lend to the ESOP, at such time, the aggregate purchase price of the
shares for which it subscribed.
Owners of self-directed IRAs may use the assets of such IRAs to
purchase shares of common stock in the Subscription and Community Offerings
provided such IRAs are not maintained at Oswego County Savings. ERISA provisions
and IRS regulations require that officers, trustees and 10% stockholders who use
self-directed IRA funds to purchase shares of common stock in the Offerings make
such purchases for the exclusive benefit of the IRAs. Any interested parties
wishing to use IRA funds for stock purchases are advised to contact the Stock
Center at (315) ___-____ for additional information.
Restrictions on Transfer of Subscription Rights and Shares
Pursuant to the FDIC and Department [rules and regulations], no
person with subscription rights may transfer or enter into any agreement or
understanding to transfer the legal or beneficial ownership of the subscription
rights issued under the plan of reorganization or the shares of common stock to
be issued upon their exercise. Subscription rights may be exercised only by the
person to whom they are granted and only for his account. Each person exercising
such subscription rights will be required to certify that he is purchasing
shares solely for his own account and that he has no agreement or understanding
regarding the sale or transfer of those shares. FDIC and Department regulations
also prohibit any person from offering or making an announcement of an offer or
intent to make an offer to purchase such subscription rights or shares of common
stock prior to the completion of the stock offering.
Oswego County Savings will refer to the FDIC, Department and the SEC
any situations that it believes may involve a transfer of subscription rights
and will not honor orders believed by it to involve the transfer of subscription
rights.
Delivery of Certificates
Certificates representing common stock issued in the stock offering
will be mailed by Oswego County Bancorp's transfer agent to the persons entitled
thereto at the addresses of such persons appearing on the stock order form as
soon as practicable following consummation of the reorganization. Any
certificates returned as undeliverable will be held by Oswego County Bancorp
until claimed by persons legally entitled thereto or otherwise disposed of in
accordance with applicable law. Until certificates for common stock are
available and delivered to subscribers, subscribers may not be able to sell the
shares of common stock for which they have subscribed, even though trading of
the common stock may have commenced.
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Required Approvals and Nonobjections
Various approvals or nonobjections of the FDIC and Department are
required to complete the reorganization and stock offering. The FDIC has not
objected to and Department has approved the plan of reorganization, subject to
approval by Oswego County Savings' depositors and other standard conditions.
Oswego County Bancorp's bank holding company application is currently pending
with the Federal Reserve Board.
Oswego County Bancorp is required to make certain filings with state
securities regulatory authorities in connection with the issuance of common
stock in the stock offering.
Restrictions on Purchase or Transfer of Shares After the Corporate Change
All shares of common stock purchased in connection with the
reorganization by a director or an officer of Oswego County Bancorp or Oswego
County Savings will be subject to a restriction that the shares not be sold for
a period of one year following the reorganization except in the event of the
death of such director or officer or judicial declaration of incompetency or
pursuant to a merger or similar transaction approved by the FDIC and the
Department. Each certificate for restricted shares will bear a legend giving
notice of this restriction on transfer, and instructions will be issued that any
transfer within the time period of any certificate or record ownership of those
shares other than as provided above is a violation of the restriction. Any
shares of common stock issued at a later date within this one year period as a
stock dividend, stock split or otherwise with respect to the restricted stock
will be subject to the same restrictions.
Purchases of common stock by directors, executive officers and their
associates during the three-year period following completion of the
reorganization may be made only through a broker or dealer registered with the
SEC, except with the prior written approval of the FDIC and the Superintendent.
This restriction does not apply, however, to negotiated transactions involving
more than 1% of Oswego County Bancorp's outstanding common stock or to certain
purchases of stock pursuant to an employee stock benefit plan.
Except with the prior approval of the Superintendent, neither Oswego
County Bancorp nor Oswego County Savings may repurchase any of its outstanding
common stock prior to the first anniversary of the completion of the offering.
During the second and third years following the offering, neither company may
repurchase in excess of five percent of its outstanding common stock in any
12-month period without the prior approval of the Superintendent. In determining
whether to grant such approval, the Superintendent considers:
o the financial condition and history of Oswego County Bancorp or
Oswego County Savings, as the case may be;
o the adequacy of its capital structure;
o its future earnings prospects;
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o the quality of its management;
o whether the repurchase will result in fair treatment to the
shareholders of Oswego County Bancorp or Oswego County Savings, as
the case may be; and
o the public interest generally.
CERTAIN RESTRICTIONS ON ACQUISITION
OF OSWEGO COUNTY BANCORP AND OSWEGO COUNTY SAVINGS
The principal regulatory restrictions which affect the ability of any
person, firm or entity to acquire Oswego County Bancorp, Oswego County Savings
or their respective capital stock are described below. Also discussed are
certain provisions in Oswego County Bancorp's certificate of incorporation and
bylaws which may be deemed to affect the ability of a person, firm or entity to
acquire Oswego County Bancorp.
Oswego County MHC Structure. Under New York law, the plan of
reorganization and Oswego County Bancorp's governing corporate instruments, at
least 51% of Oswego County Bancorp's voting shares must be owned by Oswego
County MHC. Oswego County MHC will be controlled by its board of trustees, who
will consist of persons, except for one person, who also are members of the
board of directors of Oswego County Bancorp and Oswego County Savings. Oswego
County MHC will be able to elect all members of the board of directors of Oswego
County Bancorp, and as a general matter, will be able to control the outcome of
all matters presented to the stockholders of Oswego County Bancorp for
resolution by vote, except for matters that require a vote greater than a
majority. Oswego County MHC, acting through its board of trustees, will be able
to control the business and operations of Oswego County Bancorp and Oswego
County Savings will be able to prevent any challenge to the ownership or control
of Oswego County Bancorp by minority stockholders. Oswego County MHC's board of
trustees could prevent change in control even if it were supported by all of the
minority shareholders. Accordingly, a change in control of Oswego County Bancorp
or Oswego County Savings cannot occur unless it is supported by Oswego County
MHC or Oswego County MHC first converts to the stock form of organization.
Although New York law, applicable regulations and the plan of reorganization
permit Oswego County MHC to convert from the mutual to the capital stock form of
organization, it is not anticipated that a conversion of Oswego County MHC will
occur in the foreseeable future.
In addition to the anti-takeover aspects of the mutual holding
company structure, the following provisions of Oswego County Bancorp's
certificate of incorporation and bylaws and certain other regulatory provisions
will restrict the ability to stockholders to influence management policies, and
which may be deemed to have an anti-takeover effect. The following description
of certain of these provisions is necessarily general and, with respect to
provisions contained in Oswego County Bancorp's certification of incorporation
and bylaws and Oswego County Savings' proposed restated organizational
certificate and bylaws, reference should be made in each case to the document in
question. Each of these documents is part of Oswego County Savings' application
to the Superintendent and Oswego County Bancorp's registration
109
<PAGE>
statement filed with the SEC. See "Additional Information." The following
discussion does not reflect the powers and provisions of Oswego County Savings'
organization certificate.
Provisions of Oswego County Bancorp's Certificate of Incorporation and Bylaws
Restrictions on Call of Special Meetings. The certificate of
incorporation provides that a special meeting of stockholders may be called by
the chairman of the board of Oswego County Bancorp or pursuant to a resolution
adopted by a majority of the board of directors. Stockholders are not authorized
to call a special meeting of stockholders.
Absence of Cumulative Voting. The certificate of incorporation
provides that there shall be no cumulative voting rights in the election of
directors.
Preferred Shares. The certificate of incorporation authorizes the
board of directors to issue up to one million shares of preferred stock. The
board of directors may use these additional shares to deter future attempts to
gain control of Oswego County Bancorp. The board of directors also has sole
authority to determine the terms of any one or more series of preferred stock,
including voting rights, conversions rates, and liquidation preferences. As a
result of the ability to fix voting rights for a series of preferred stock, the
board has the power, to the extent consistent with its fiduciary duty, to issue
a series of preferred stock to persons friendly to management in order to
attempt to block a post-tender offer merger or other transaction by which a
third party seeks control, and thereby assist management to retain its position.
Limitation on Voting Rights. The certificate of incorporation
provides that (1) no person shall directly or indirectly offer to acquire or
acquire the beneficial ownership of more than 5% of any class of equity security
of Oswego County Bancorp, inclusive of shares of such class held by Oswego
County MHC (provided that such limitation shall not apply to Oswego County MHC
or any tax-qualified employee stock benefit plans maintained by Oswego County
Bancorp); and that (2) shares beneficially owned in violation of the stock
ownership restriction described above shall not be entitled to vote and shall
not be voted by any person or counted as voting stock in connection with any
matter submitted to a vote of stockholders. For these purposes, a person
(including management) who has obtained the right to vote shares of the common
stock pursuant to revocable proxies shall not be deemed to be the "beneficial
owner" of those shares if that person is not otherwise deemed to be a beneficial
owner of those shares.
Removal of Directors. Shareholders may remove any or all of the
directors. Removal may occur only for cause and only by the affirmative vote of
holders of at least 80% of the voting power entitled to vote in the election of
directors.
Amendments to Certificate of Incorporation and Bylaws. Amendments to
the certificate of incorporation must be approved by Oswego County Bancorp's
board of directors and also a majority of the outstanding shares of Oswego
County Bancorp's voting stock; provided, however, that approval by at least 80%
of the outstanding voting stock is generally required for certain provisions
(i.e., provisions relating to the call of special stockholder meetings,
cumulative voting, limitation on voting rights and director liability).
Indemnification and Limits of Liability. Oswego County Bancorp's
Certificate of Incorporation provides for the elimination of personal liability
of the directors and officers of Oswego County Bancorp for monetary damages to
the fullest extent permitted by Delaware law. Delaware law provides that
directors (but not officers) of corporations that have adopted this type of
provision will have no liability for monetary damages, except for (i) any breach
of the director's duty of loyalty to the corporation or its shareholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) the payment of certain unlawful dividends and
the making of certain stock purchases or redemptions, (iv) any transaction from
which the director derived an improper personal benefit. This provision would
absolve directors of personal liability for negligence in the performance of
their duties, including gross negligence. It would not permit a director to be
exculpated, however, for liability for actions involving conflicts of interest
or breaches of the traditional "duty of loyalty" to Oswego County Bancorp and
its shareholders, and it would not affect the availability of injunctive or
other equitable relief as a remedy.
Article 9 of the Certificate of Incorporation provides that the
Oswego County Bancorp shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceedings, including actions by or in the right of Oswego County
Bancorp, whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was a director, officer, employee or agent of
Oswego County Bancorp, or is or was serving at the request of Oswego County
Bancorp as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. The indemnification is
furnished to the full extent provided by law against expenses (including
attorney's fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with such actions, suit or proceeding. The
indemnification provisions also permit Oswego County Bancorp to pay reasonable
expenses in advance of the final disposition of any action, suit or proceeding
as authorized by the Oswego County Bancorp's board of directors, provided that
the indemnified person undertakes to repay Oswego County Bancorp if it is
ultimately determined that such person was not entitled to indemnification.
The rights of indemnification provided in the Oswego County Bancorp's
Certificate of Incorporation are not exclusive of any other rights which may be
available under Oswego County Bancorp's Bylaws, any insurance or other
agreement, by vote of shareholders or directors, regardless of whether directors
authorizing such indemnification are beneficiaries thereof or otherwise. In
addition, Oswego County Bancorp's Bylaws authorize it to maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
Oswego County Bancorp, whether or not Oswego County Bancorp would have the power
to provide indemnification to such person. By action of the board of directors,
Oswego County Bancorp may create and fund a trust fund or other fund or form of
self-insurance arrangement of nature, and may enter into agreements with its
officers, directors, employees and agents for the purpose of securing or
insuring in any manner its obligation to indemnify or advance expenses provided
for in the provisions in the Certificate of Incorporation and Bylaws regarding
indemnification. These provisions are designed to reduce, in appropriate cases,
the risks incident to serving as a director, officer, employee or agent and to
enable Oswego County Bancorp to attract and retain the best personnel available.
The bylaws may be amended by the affirmative vote of the total number
of directors of Oswego County Bancorp or the affirmative vote of at least 80% of
the total votes eligible to be voted at a duly constituted meeting of
stockholders.
Federal Reserve Board Regulations
The Change in Bank Control Act and the BHCA, together with the
Federal Reserve Board regulations under those acts, require that the consent of
the Federal Reserve Board be obtained prior to any person or company acquiring
"control" of a bank holding company. Control is conclusively presumed to exist
if an individual or company acquires more than 25% of any class of voting stock
of the bank holding company. Control is rebuttably presumed to exist if the
person acquires more than 10% of any class of voting stock of a bank holding
company if either (1) the holding company has registered securities under
Section 12 of the Exchange Act or (2) no other person will own a greater
percentage of that class of voting securities immediately after the transaction.
The regulations provide a procedure to rebut the rebuttable control presumption.
Since the common stock will be registered under Section 12 of
110
<PAGE>
the Exchange Act, any acquisition of 10% or more of the common stock will give
rise to a rebuttable presumption that the acquirer of such stock controls Oswego
County Bancorp, requiring the acquirer, prior to acquiring such stock, to rebut
the presumption of control to the satisfaction of the Federal Reserve Board or
obtain Federal Reserve Board approval for the acquisition of control.
Restrictions applicable to the operations of bank holding companies may deter
companies from seeking to obtain control of Oswego County Bancorp. See "How We
Are Regulated."
New York Banking Law
In addition to federal law, the New York State Banking Law generally
requires prior approval of the New York State Banking Board before any action is
taken that causes any entity or person to acquire direct or indirect control of
a banking institution which is organized in New York State. Control is presumed
to exist if any company or person directly or indirectly owns, controls or holds
with power to vote 10% or more of the voting stock of a banking institution or
of any company or person that owns, controls or holds with power to vote 10% or
more of the voting stock of a banking institution.
Benefit Plans
In addition to the provisions of Oswego County Bancorp's certificate
of incorporation and bylaws described above, certain benefit plans of Oswego
County Bancorp and Oswego County Savings adopted in connection with the
reorganization and stock offering contain provisions which also may discourage
hostile takeover attempts which the board of directors of Oswego County Savings
might conclude are not in the best interests of Oswego County Bancorp and Oswego
County Savings or Oswego County Bancorp's stockholders. For a description of the
benefit plans and the provisions of such plans relating to changes in control of
Oswego County Bancorp or Oswego County Savings, see "Management -- Benefits."
DESCRIPTION OF CAPITAL STOCK OF OSWEGO COUNTY BANCORP
General
Oswego County Bancorp is authorized to issue 7,500,000 shares of
common stock having a par value of $0.01 per share and 1,000,000 shares of
preferred stock having a par value of $0.01 per share (the "Preferred Stock").
Oswego County Bancorp currently expects to issue up to a maximum of 1,200,370
shares (1,380,426 shares in the event that the maximum of the estimated offering
range is increased by 15%) of common stock and no shares of preferred stock in
the stock offering. Each share of the common stock will have the same relative
rights as, and will be identical in all respects with, each other share of
common stock. Upon payment of the purchase price for the common stock in
accordance with the plan of reorganization, all of the stock will be duly
authorized, fully paid and nonassessable. Presented below is a description of
all aspects of Oswego County Bancorp's capital stock which are deemed material
to an investment decision with respect to the stock offering.
The common stock of Oswego County Bancorp will represent
nonwithdrawable capital, will not be an account of an insurable type, and will
not be insured by the FDIC.
111
<PAGE>
Common Stock
Distributions. Oswego County Bancorp can pay dividends if, as and
when declared by its board of directors, subject to compliance with limitations
which are imposed by law. See "Dividend Policy." The holders of common stock of
Oswego County Bancorp will be entitled to receive and share equally in any
dividends declared by the board of directors of Oswego County Bancorp out of
legally available funds. If Oswego County Bancorp issues preferred stock, the
holders thereof may have a priority over the holders of the common stock with
respect to dividends.
Voting Rights. Upon consummation of the reorganization, the holders
of common stock will possess exclusive voting rights in Oswego County Bancorp.
Each holder of common stock will be entitled to one vote per share and will not
have any right to cumulate votes in the election of directors. Under certain
circumstances, shares in excess of 10.0% of the issued and outstanding shares of
common stock may be considered "excess shares" and, accordingly, not be entitled
to vote. See "Restrictions on Acquisition of Oswego County Bancorp and Oswego
County Savings." If Oswego County Bancorp issues preferred stock, holders of the
preferred stock may also possess voting rights.
Liquidation. In the event of any liquidation, dissolution or winding
up of Oswego County Savings, Oswego County Bancorp, as holder of Oswego County
Savings' capital stock, would be entitled to receive, after payment or provision
for payment of all debts and liabilities of Oswego County Savings (including all
deposit accounts and accrued interest thereon), all assets of Oswego County
Savings available for distribution. In the event of liquidation, dissolution or
winding up of Oswego County Bancorp, the holders of its common stock would be
entitled to receive, after payment or provision for payment of all its debts and
liabilities, all of the assets of Oswego County Bancorp available for
distribution. If preferred stock is issued, the holders thereof may have a
priority over the holders of the common stock in the event of liquidation or
dissolution.
Rights to Buy Additional Shares. Holders of the common stock Oswego
County Bancorp will not be entitled to preemptive rights with respect to any
shares which may be issued. A preemptive right is a priority right to buy
additional shares if Oswego County Bancorp issues more shares in the future. The
common stock is not subject to redemption.
Preferred Stock
None of the shares of Oswego County Bancorp's authorized preferred
stock will be issued in the stock offering. Preferred stock may be issued with
preferences and designations determined by the board of directors from time to
time. The board of directors can, without stockholder approval, issue preferred
stock with voting, dividend, liquidation and conversion rights which could
dilute the voting strength of the holders of the common stock and may assist
management in impeding an unfriendly takeover or attempted change in control.
Oswego County Bancorp has no present plans to issue preferred stock.
112
<PAGE>
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for Oswego County Bancorp's common
stock is ___________________.
EXPERTS
The financial statements of Oswego County Savings as of December 31,
1998 and 1997, and for the years then ended have been included in this
prospectus in reliance upon the report of KPMG LLP, independent public
accountants, appearing elsewhere herein and upon the authority of said firm as
experts in accounting and auditing.
RP Financial has consented to the publication herein of the summary
of its report to Oswego County Savings setting forth its opinion as to the
estimated pro forma market value of the common stock upon reorganization and its
opinion with respect to subscription rights.
LEGAL AND TAX OPINIONS
The legality of the common stock and the federal income tax
consequences of the reorganization will be passed upon for Oswego County Savings
by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., special counsel to
Oswego County Savings and Oswego County Bancorp. The New York income tax
consequences of the reorganization will be passed upon for Oswego County Savings
by KPMG LLP. The federal income tax consequences of certain matters relating to
establishment of the foundation will be passed upon for Oswego County Savings by
KPMG LLP. Certain legal matters will be passed upon for Friedman Billings by
Breyer & Associates, PC, Washington, D.C.
ADDITIONAL INFORMATION
Oswego County Bancorp has filed with the SEC a registration statement
under the Securities Act with respect to the common stock offered by this
prospectus. As permitted by the rules and regulations of the SEC, this
prospectus does not contain all the information set forth in the registration
statement. The entire registration statement, including the appraisal report
which is an exhibit to the registration statement, can be examined without
charge at the public reference facilities of the SEC located at 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies of such material can be
obtained from the SEC at prescribed rates. In addition, the SEC maintains a web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, including Oswego County
Bancorp, that file electronically with the SEC. The prospectus includes a
summary of the provisions of material contracts and other documents that are
filed as exhibits to the registration statement. Those summaries are brief
descriptions and are not always complete. You should refer to the specific
contract or document for more detailed and complete information.
113
<PAGE>
Oswego County Savings has filed an application with the Department
with respect to the reorganization. Under the Department's rules and
regulations, this prospectus omits certain information contained in that
application. The application may be examined at the Department's office at 2
Rector Street, New York, New York and at Oswego County Savings' main office at
44 East Bridge Street, Oswego, New York 13126.
In connection with the reorganization, Oswego County Bancorp will
register its common stock with the SEC under Section 12 of the Exchange Act,
and, upon such registration, Oswego County Bancorp and the holders of its stock
will become subject to the proxy solicitation rules, reporting requirements and
restrictions on stock purchases and sales by directors, officers and greater
than 10% stockholders, the annual and periodic reporting and certain other
requirements of the Exchange Act. Under the plan of reorganization, Oswego
County Bancorp has undertaken that it will not terminate such registration for a
period of at least three years following the reorganization.
A copy of the plan of reorganization and the certificate of
incorporation and bylaws of Oswego County Bancorp and the organization
certificate and bylaws of Oswego County Savings and Oswego County MHC are
available without charge from Oswego County Savings. Requests for this
information should be directed by mail to: Lisa King, Oswego County Savings
Bank, 44 East Bridge Street, Oswego, New York 13126 or by telephone by
contacting Ms. King at (315) 343-4100.
A copy of the appraisal report is also available for inspection at
Oswego County Savings' main office located at the above address.
114
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report.............................................. F-1
Statements of Financial Condition as of December 31, 1998 and
1997 .......................................................... F-2
Statements of Income for the Years Ended December 31, 1998 and
1997........................................................... F-3
Statements of Net Worth and Comprehensive Income for the Years
Ended December 31, 1998 and 1997............................... F-4
Statements of Cash Flows for the Years Ended December 31, 1998
and 1997....................................................... F-5
Notes to Financial Statements............................................. F-6
All schedules are omitted as the required information is not applicable or the
information is presented in the financial statements.
[The financial statements of Oswego County Bancorp have been omitted because
Oswego County Bancorp has not yet issued any stock, has no assets or
liabilities, and has not conducted any business other than of an organizational
nature.]
115
<PAGE>
Independent Auditors' Report
The Board of Trustees
Oswego County Savings Bank:
We have audited the accompanying statements of financial condition of Oswego
County Savings Bank as of December 31, 1998 and 1997, and the related statements
of income, net worth and comprehensive income, and cash flows for the years then
ended. These financial statements are the responsibility of the Bank's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oswego County Savings Bank as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
February 12, 1999
Syracuse, New York
F-1
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Statements of Financial Condition
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Assets 1998 1997
--------------------- -------------------
<S> <C> <C>
Cash and due from banks $ 4,006,570 4,083,082
Federal funds sold and other short-term investments 2,600,000 2,681,128
Securities held to maturity, fair value of $13,791,754 in
1998 and $10,474,998 in 1997 13,729,905 10,441,133
Securities available for sale, at fair value 14,783,994 10,920,781
Loans 67,795,362 80,460,302
Less allowance for loan losses 1,068,420 1,408,797
--------------------- -------------------
Loans, net 66,726,942 79,051,505
--------------------- -------------------
Loans held for sale 4,286,280 --
Real estate owned 195,067 599,387
Premises and equipment, net 2,244,769 2,324,351
Accrued interest receivable 856,418 925,591
Other assets 1,435,960 966,423
--------------------- -------------------
Total assets $ 110,865,905 111,993,381
===================== ===================
Liabilities and Net Worth
Deposits:
Demand 11,629,803 9,665,784
Savings and money market 46,687,391 48,535,652
Time 38,247,054 39,697,366
--------------------- -------------------
96,564,248 97,898,802
Escrow deposits 1,318,444 1,458,361
Other liabilities 1,288,914 1,244,595
--------------------- -------------------
Total liabilities 99,171,606 100,601,758
--------------------- -------------------
Commitments and contingencies (note 11)
Net worth:
Surplus 3,728,639 3,728,639
Undivided profits, substantially restricted 7,966,281 7,657,573
Accumulated other comprehensive income (621) 5,411
--------------------- -------------------
Total net worth 11,694,299 11,391,623
--------------------- -------------------
Total liabilities and net worth $ 110,865,905 111,993,381
===================== ===================
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Statements of Income
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------------ ------------------
<S> <C> <C>
Interest income:
Loans $ 6,252,969 6,860,107
Securities 1,480,880 1,151,073
Federal funds sold and other short-term investments 180,949 240,519
------------------ ------------------
Total interest income 7,914,798 8,251,699
Interest expense on deposits 3,388,168 3,737,612
------------------ ------------------
Net interest income 4,526,630 4,514,087
Provision for loan losses 120,000 524,816
------------------ ------------------
Net interest income after provision for loan losses 4,406,630 3,989,271
------------------ ------------------
Noninterest income:
Service charges 387,125 415,445
Recovery for Nationar 22,192 54,400
Other 59,526 46,417
------------------ ------------------
Total noninterest income 468,843 516,262
------------------ ------------------
Noninterest expenses:
Salaries and employee benefits 1,923,984 1,923,888
Occupancy and equipment 670,735 600,078
Data processing 267,782 221,695
Office supplies, printing and postage 186,750 240,691
Professional fees 251,231 237,923
Merger expenses 171,213 145,278
Real estate owned, net 302,213 198,545
Trustee fees 151,918 172,175
Marketing and advertising 120,616 93,375
Deposit insurance premiums 11,738 12,342
Other 346,585 269,302
------------------ ------------------
Total noninterest expenses 4,404,765 4,115,292
------------------ ------------------
Income before income tax expense 470,708 390,241
Income tax expense 162,000 201,350
------------------ ------------------
Net income $ 308,708 188,891
================== ==================
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Statements of Net Worth and Comprehensive Income
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Accumulated
Other
Undivided Comprehensive Total
Surplus Profits Income Net Worth
---------------- ----------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 $ 3,728,639 7,468,682 -- 11,197,321
Comprehensive income:
Net income -- 188,891 -- 188,891
Net change in the unrealized gain
on securities available
for sale, net of taxes -- -- 5,411 5,411
------------------
Total comprehensive income 194,302
---------------- ----------------- -------------------- ------------------
Balance, December 31, 1997 3,728,639 7,657,573 5,411 11,391,623
Comprehensive income:
Net income -- 308,708 -- 308,708
Net change in the unrealized gain
(loss) on securities available
for sale, net of taxes -- -- (6,032) (6,032)
------------------
Total comprehensive income 302,676
---------------- ----------------- -------------------- ------------------
Balance, December 31, 1998 $ 3,728,639 7,966,281 (621) 11,694,299
================ ================= ==================== ==================
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Statements of Cash Flows
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------------ -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 308,708 188,891
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 256,136 167,572
Provision for loan losses 120,000 524,816
Recovery for Nationar (22,192) (54,400)
Loss on sale of real estate owned 145,171 254,427
Gain on sale of securities (2,292) --
Security amortization (accretion) 32,601 (14,393)
Deferred income taxes 98,730 11,088
Originations of loans held for sale (4,286,280) --
Change in:
Accrued interest receivable 69,173 (178,793)
Other assets (537,787) 236,894
Other liabilities 43,819 524,196
------------------ -----------------
Net cash provided by (used in) operating activities (3,774,213) 1,660,298
------------------ -----------------
Cash flows from investing activities:
Proceeds from maturity of and principal collected on
securities held to maturity 9,722,545 4,167,664
Proceeds from sale of securities available for sale 2,002,032 --
Proceeds from maturity of and principal collected on
securities available for sale 6,895,973 1,000,000
Purchases of securities held to maturity (13,038,664) (4,498,070)
Purchases of securities available for sale (12,778,000) (11,900,616)
Principal collections of loans, net of loan originations 11,929,496 3,204,679
Proceeds from sale of real estate owned 534,216 360,300
Purchases of premises and equipment, net (176,554) (396,834)
------------------ -----------------
Net cash provided by (used in) investing activities 5,091,044 (8,062,877)
------------------ -----------------
Cash flows from financing activities:
Net increase (decrease) in demand, savings and money market deposits 115,758 (390,850)
Net decrease in time deposits (1,450,312) (3,725,542)
Net decrease in escrow deposits (139,917) (258,949)
------------------ -----------------
Net cash used in financing activities (1,474,471) (4,375,341)
------------------ -----------------
Net decrease in cash and cash equivalents (157,640) (10,777,920)
Cash and cash equivalents at beginning of year 6,764,210 17,542,130
------------------ -----------------
Cash and cash equivalents at end of year $ 6,606,570 6,764,210
================== =================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 3,388,168 3,737,612
Income taxes 195,750 243,000
================== =================
Non-cash investing and financing activities:
Transfer of loans to real estate owned $ 275,067 723,123
================== =================
See accompanying notes to financial statements.
</TABLE>
F-5
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
(1) Reorganization, Stock Issuance and Merger
Oswego County Savings Bank (the Bank) is a mutual savings bank that is
subject to regulation by the New York State Banking Department and the
Federal Deposit Insurance Corporation (FDIC). The Bank provides financial
services to individuals and businesses primarily in Oswego County in New
York State.
On December 17, 1998, the Board of Trustees of the Bank adopted the
Amended and Restated Plan of Reorganization (the Plan), pursuant to which
the Bank will reorganize into the mutual holding company form of
organization as a wholly-owned subsidiary of Oswego County Bancorp, Inc.,
a mid-tier stock holding company that will be a majority-owned subsidiary
of Oswego County MHC (the MHC). Following receipt of all required
regulatory approvals, the approval of the depositors of the Bank entitled
to vote on the Plan of Reorganization, and the satisfaction of all other
conditions precedent to the Reorganization, the Bank will consummate the
Reorganization. Pursuant to the Plan, the Reorganization will be effected
in a manner that is consistent with applicable New York and federal law
and regulations. Contemporaneously with the Reorganization, Oswego County
Bancorp, Inc. will sell a Minority Interest in shares of Common Stock in
a public stock offering (Offering). Subsequent to the Reorganization and
Offering, the minority interest will represent 49% or less of the Oswego
County Bancorp, Inc.'s outstanding shares, with the MHC owning at least
51%.
The Reorganization will be accounted for as a change in corporate form
with no resulting change in the historical basis of the Bank's assets,
liabilities and equity. Subsequent to the Reorganization, the existing
liquidation rights of the Bank's depositors as of the effective date will
be transferred to the MHC, and records will be maintained to ensure such
rights receive statutory priority in the event of a future mutual to
stock conversion or the MHC's liquidation.
In the event that the Reorganization and Offering are not successfully
completed, the costs incurred in connection with the Reorganization and
Offering will be expensed at the time that the unsuccessful completion is
determined. The Bank has incurred stock issuance costs of $162,000 as of
December 31, 1998, which are included in other assets.
The Bank intends to establish a Foundation as part of the Offering, to
which it will make a contribution in the form of shares of common stock
equal to 4.0% of the shares sold in the Offering. The Foundation will be
dedicated exclusively to supporting charitable causes and community
development in the Bank's primary market area. The Bank will incur an
expense equal to the fair value of the shares contributed to the
Foundation, offset in part by a tax benefit, during the quarter in which
the contribution is made. This expense will likely have a material impact
on the Bank's earnings for such quarter and for fiscal 1999.
On September 4, 1997, the trustees of the Bank approved a proposed merger
and entered into a merger agreement with Pathfinder Bancorp, Inc.
(Pathfinder), a publicly traded bank which is 54% owned by Pathfinder
Bancorp M.H.C.. On January 28, 1999, the Bank terminated its proposed
merger with Pathfinder as a result of certain regulatory considerations.
Expenses related to this terminated merger, totaling $171,000 in 1998 and
$145,000 in 1997, are included in noninterest expenses.
F-6 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
(2) Summary of Significant Accounting Policies
The accounting policies of the Bank conform to generally accepted
accounting principles. The following is a description of the more
significant accounting policies followed by the Bank.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
(a) Securities
The Bank classifies its securities as either available for sale or
held to maturity, as the Bank does not hold any securities
considered to be trading. Held to maturity securities are those
debt securities for which the Bank has the positive intent and the
ability to hold until maturity. All other securities not included
in held to maturity are classified as available for sale.
Held to maturity securities are recorded at cost, adjusted for the
amortization or accretion of premiums or discounts. Available for
sale securities are recorded at fair value. Unrealized holding
gains and losses, net of the related tax effect, on available for
sale securities are excluded from earnings and are reported as
accumulated other comprehensive income (a component of net worth)
until realized.
A decline in the fair value of any available for sale or held to
maturity security below cost, that is deemed other than temporary,
is charged to earnings resulting in the establishment of a new
cost basis for the security.
Premiums and discounts are amortized or accreted over the life of
the related security as an adjustment to yield using the effective
interest method. Dividends and interest income are recognized when
earned. Realized gains and losses on securities are recognized on
the trade date and are calculated using the specific
identification method for determining the cost of securities sold.
(b) Loans
Loans (other than those held for sale) are reported at the
principal amount outstanding. Fees and certain direct origination
costs related to lending activities are recognized in income as
incurred, as the amounts are immaterial.
Mortgage loans originated and intended for sale in the secondary
market are carried at the lower of cost or estimated market value
in the aggregate. Net unrealized losses are recognized through a
valuation allowance by charges to income.
F-7 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
Generally, the Bank places all loans that are 90 days or more past
due on non-accrual status. In addition, the Bank places any loan
on non-accrual status if any part of it is classified as doubtful
or loss, or if any part has been charged off. When a loan is
placed on non-accrual status, total interest accrued and unpaid to
date is reversed by a charge to interest income. Subsequent
payments are either applied to the outstanding principal balance
or recorded as interest income, depending on the assessment of the
ultimate collectibility of the loan.
(c) Allowance for Loan Losses
The Bank's provision for loan losses charged to operations is
based upon management's evaluation of the loan portfolio. The
allowance for loan losses is maintained at an amount management
deems adequate to provide for probable loan losses considering the
character of the loan portfolio, economic conditions, analysis of
specific loans and historical loss experience. While management
uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as
an integral part of their examination process, periodically review
the Bank's allowance for loan losses. Such agencies may require
the Bank to recognize additions to the allowance based on their
judgments about information available to them at the time of their
examinations.
The Bank considers a loan impaired when, based on current
information and events, it is probable that it will be unable to
collect all amounts of principal and interest under the original
terms of the agreement. Large groups of smaller balance,
homogeneous loans such as the Bank's residential mortgages, home
equity loans and consumer loans are collectively evaluated for
impairment. Accordingly, the Bank measures impaired commercial
mortgages and commercial loans based on the present value of
future cash flows discounted at the loan's effective interest
rate, or at the fair value of the collateral if the loan is
collateral dependent. Impairment losses are recognized as a
component of the allowance for loan losses.
(d) Real Estate Owned
Real estate owned includes property acquired through, or in lieu
of, formal foreclosure. Write-downs to estimated fair value which
are required at the time of foreclosure are charged to the
allowance for loan losses. After transfer, the property is carried
at the lower of cost or fair value, less estimated selling
expenses. Adjustments to the carrying value of such properties
that result from subsequent declines in fair value are charged to
operations in the period in which the declines occur.
(e) Premises and Equipment
Land is carried at cost and buildings, furniture and equipment are
stated at cost less accumulated depreciation. Depreciation is
computed primarily on the straight-line method over the estimated
service lives of the assets.
F-8 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
(f) Income Taxes
Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to temporary
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences
are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income tax expense in the period which includes the enactment
date.
(g) Pension and Other Postretirement Benefits
The Bank has a defined benefit pension plan covering substantially
all of its employees. Benefits are based on credited years of
service and the employee's average compensation prior to
retirement. The Bank's funding policy is to contribute annually at
least the minimum required by law. Plan assets are invested in the
general account of the Retirement System for Savings Institutions.
The Bank sponsors an unfunded defined benefit plan that covers all
of its full time employees and provides postretirement medical and
life insurance benefits. Employees are eligible for these benefits
if they retire under the Bank's defined benefit pension plan and
have attained age 55 with at least 5 years of service. Employees
are required to contribute a portion of the premium. The Bank
accrues the cost of these benefits to employees and the employees'
beneficiaries during the years that the employees render the
necessary service.
In 1998, the Bank adopted Statement of Financial Accounting
Standards (SFAS) No. 132, Employers' Disclosures about Pensions
and Other Postretirement Benefits. This statement revises
employers' disclosures about pension and other postretirement
benefit plans. It does not change the measurement or the
recognition of these plans. The statement did not impact its
financial position or results of operations of the Bank.
(h) Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks and Federal funds
sold and other short-term investments with maturities less than 90
days.
(i) Financial Instruments With Off-Balance Sheet Risk
The Bank does not engage in the use of derivative financial
instruments and the Bank's only financial instruments with
off-balance sheet risk are commercial and residential mortgage
commitments. These off-balance sheet items are shown in the Bank's
statement of financial condition upon funding.
F-9 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
(j) Comprehensive Income
In 1998, the Bank adopted the provisions of SFAS No. 130,
Reporting Comprehensive Income. This statement establishes
standards for reporting and display of comprehensive income and
its components. Comprehensive income, presented in the statements
of net worth and comprehensive income, consists of net income and
the net change for the period in after-tax unrealized gains or
losses on securities available for sale. Accumulated other
comprehensive income in the accompanying statements of financial
condition represents the net unrealized gains or losses on
securities available for sale as of the reporting dates. Prior
year financial statements have been reclassified to conform to the
requirements of SFAS No. 130.
(k) Segment Information
In 1998, the Bank adopted the provisions of SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 131 requires public companies to report
financial and other information about key revenue producing
segments of the entity for which such information is available and
is utilized by the chief operating decision maker. Specific
information to be reported for individual segments includes profit
or loss, certain specific revenue and expense items, and total
assets. A reconciliation of segment financial information to
amounts reported in the financial statements is also provided. As
a community-oriented financial institution, substantially all of
the Bank's operations involve the delivery of loan and deposit
products to customers. Management makes operating decisions and
assesses performance based on an ongoing review of these community
banking operations, which constitute the Bank's only operating
segment for financial reporting purposes. Therefore, the adoption
of SFAS No. 131 did not result in any changes in the Bank's
reporting.
(l) Other Accounting Standards
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued in June 1998. This statement requires that
all derivatives be recognized as either assets or liabilities in
the statement of financial condition and that those instruments be
measured at fair value. The accounting for changes in the fair
value of a derivative (that is, gains and losses) depends on the
intended use of the derivative and the resulting designation. This
statement is effective for fiscal years beginning after June 15,
1999, although earlier adoption is permitted. The Bank
anticipates, based on current activities, that the adoption of
SFAS No. 133 will not have an effect on its financial position or
results of operations. SFAS No. 133 also permits certain
reclassification of securities to the available for sale category
from the held to maturity category. The Bank has no current
intention to reclassify any securities pursuant to SFAS No. 133.
F-10 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
In October 1998, the FASB issued SFAS No. 134, Accounting for
Mortgage-Backed Securities Retained After the Securitization of
Mortgage Loans Held for Sale by a Mortgage-Banking Enterprise,
which amends SFAS No. 65, Accounting for Certain Mortgage Banking
Activities. This statement conforms the subsequent accounting for
securities retained after the securitization of mortgage loans by
a mortgage banking enterprise with the accounting for such
securities by a nonmortgage banking enterprise. This statement is
effective for the first quarter beginning after December 15, 1998,
and will not have any impact on the Bank's financial position or
results of operations as the Bank does not currently securitize
mortgage loans.
(3) Securities
The amortized cost and fair value of securities are as follows:
<TABLE>
<CAPTION>
December 31, 1998
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Securities available for sale
Debt securities:
United States Treasury $ 1,007,329 12,981 -- 1,020,310
United States Government
agency obligations 13,775,760 46,954 60,556 13,762,158
--------------- --------------- -------------- ---------------
Total debt securities 14,783,089 59,935 60,556 14,782,468
--------------- --------------- -------------- ---------------
Equity securities:
Corporate stocks 1,526 -- -- 1,526
--------------- --------------- -------------- ---------------
Total securities available
for sale $ 14,784,615 59,935 60,556 14,783,994
=============== =============== ============== ===============
Securities held to maturity
Debt securities:
United States Government
agency obligations $ 6,490,874 57,163 4,352 6,543,685
Corporate and municipal securities 4,124,589 36,764 5,107 4,156,246
Mortgage-backed securities:
Ginnie Mae 2,164,204 2,701 17,263 2,149,642
Fannie Mae 425,714 1,690 8,133 419,271
Freddie Mac 22,024 886 -- 22,910
Small Business Administration 502,500 -- 2,500 500,000
--------------- --------------- -------------- ---------------
Total securities held
to maturity $ 13,729,905 99,204 37,355 13,791,754
=============== =============== ============== ===============
</TABLE>
F-11 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
<TABLE>
<CAPTION>
December 31, 1997
--------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Securities available for sale
Debt securities:
United States Treasury $ 4,016,906 10,457 483 4,026,880
United States Government
agency obligations 6,893,178 10,765 11,568 6,892,375
-------------- ------------- ------------- --------------
Total debt securities 10,910,084 21,222 12,051 10,919,255
-------------- ------------- ------------- --------------
Equity securities:
Corporate stocks 1,526 -- -- 1,526
-------------- ------------- ------------- --------------
Total securities available
for sale $ 10,911,610 21,222 12,051 10,920,781
============== ============= ============= ==============
Securities held to maturity
Debt securities:
United States Treasury $ 3,148,730 3,804 62 3,152,472
United States Government
agency obligations 2,337,957 9,852 -- 2,347,809
Corporate and municipal securities 4,809,088 15,775 1,478 4,823,385
Mortgage-backed securities:
Ginnie Mae 62,175 2,968 -- 65,143
Fannie Mae 54,115 2,001 -- 56,116
Freddie Mac 29,068 1,005 -- 30,073
-------------- ------------- ------------- --------------
Total securities held
to maturity $ 10,441,133 35,405 1,540 10,474,998
============== ============= ============= ==============
</TABLE>
Proceeds from the sale of securities available for sale during 1998 were
$2,002,032, with gross gains of $2,448 and gross losses of $156 realized
on those sales. The Bank did not sell any securities available for sale
in 1997. No securities held to maturity were sold in 1998 and 1997.
The reclassification adjustment for net gains on sales of securities
included in net income, net of tax, was $1,375 which adjusted the change
in unrealized loss on securities available for sale for the year ended
December 31, 1998 to $4,657. The Bank had no reclassification adjustment
in 1997.
F-12 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
The following is a tabulation of debt securities, excluding
mortgage-backed securities, by the period remaining to the earlier of
maturity or call date as of December 31, 1998:
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
------------------------------- ------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Due in one year or less $ 1,007,330 1,020,310 757,027 760,635
Due after one year through five years 10,977,548 11,006,875 8,175,433 8,235,586
Due after five years through ten years 2,798,211 2,755,283 1,233,085 1,252,884
Due after ten years -- -- 449,918 450,826
--------------- -------------- -------------- --------------
Total $ 14,783,089 14,782,468 10,615,463 10,699,931
=============== ============== ============== ==============
</TABLE>
(4) Loans
The following is a summary of loans outstanding:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1998 1997
------------------- ------------------
<S> <C> <C>
Residential mortgages and
home equity loans $ 56,542,818 67,404,958
Commercial mortgages 8,949,614 11,144,890
Commercial loans 265,536 276,443
Consumer loans 2,037,394 1,634,011
------------------- ------------------
Total loans 67,795,362 80,460,302
Allowance for loan losses (1,068,420) (1,408,797)
------------------- ------------------
Net loans $ 66,726,942 79,051,505
=================== ==================
</TABLE>
The Bank's market area is generally Oswego County in Central New York
State. Substantially all of the Bank's portfolio is located in its market
area and, accordingly, the ultimate collectibility of the Bank's loan
portfolio is susceptible to changes in market conditions in this area.
The Bank's concentration of credit risk by loan type is shown in the
above schedule of loans outstanding. Other than general economic risks,
management is not aware of any material concentrations of credit risk to
any industry or individual borrower.
Residential mortgage loans classified as held for sale were $4,286,000 at
December 31, 1998 and none at December 31, 1997. The Bank had no sales of
loans during 1998 or 1997 and there were no outstanding commitments to
sell loans at December 31, 1998. An adjustment to reduce loans held for
sale to the lower of aggregate cost or market value was not required at
December 31, 1998.
F-13 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
(5) Allowance for Loan Losses
The following is a summary of changes in the allowance for loan losses:
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------
1998 1997
------------------- ------------------
<S> <C> <C>
Balance at beginning of year $ 1,408,797 1,583,299
Provision for loan losses 120,000 524,816
Loan charge-offs (525,704) (724,304)
Recoveries 65,327 24,986
------------------- ------------------
Balance at end of year $ 1,068,420 1,408,797
=================== ==================
</TABLE>
The principal balance of all loans not accruing interest amounted to
approximately $1,688,000 and $1,774,000 at December 31, 1998 and 1997,
respectively. The forgone interest income on non-accruing loans was
$81,400 and $121,600 for the years ended December 31, 1998 and 1997,
respectively.
At December 31, 1998 and 1997, the recorded investment in impaired loans
totaled $979,900 and $1,308,800, respectively. The impairment allowance
associated with these loans was $168,000 and $315,900 at December 31,
1998 and 1997, respectively. The average recorded investment in impaired
loans during the year was approximately $1,301,000 and $1,728,000 for
1998 and 1997, respectively. The amount of interest income recognized on
impaired loans (while such loans were considered impaired) was not
significant for the years ended December 31, 1998 and 1997.
(6) Premises and Equipment
Premises and equipment at December 31 consist of the following:
<TABLE>
<CAPTION>
1998 1997
------------------- ------------------
<S> <C> <C>
Land $ 426,250 426,250
Buildings and improvements 2,569,185 2,556,974
Furniture and equipment 1,932,299 1,893,794
------------------- ------------------
4,927,734 4,877,018
Accumulated depreciation 2,682,965 2,552,667
------------------- ------------------
Net $ 2,244,769 2,324,351
=================== ==================
</TABLE>
On December 16, 1998, the Bank entered into an agreement to purchase a
bank branch building located in North Syracuse, New York for
approximately $575,000. The purchase is expected to be completed by July
15, 1999.
F-14 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
(7) Deposits
Time deposit contractual maturities are summarized as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------
1998 1997
------------------- ------------------
<S> <C> <C>
Within one year $ 28,299,303 30,331,083
After one year and within two years 4,121,692 5,626,894
After two years and within three years 1,897,166 1,996,810
After three years and within four years 1,169,240 893,080
After four years and within five years 2,759,653 849,499
------------------- ------------------
$ 38,247,054 39,697,366
=================== ==================
</TABLE>
Certificates of deposit of $100,000 and over were $5,577,867 and
$4,218,572 at December 31, 1998 and 1997, respectively.
(8) Income Taxes
Total income tax expense for the years ended December 31 was allocated as
follows:
<TABLE>
<CAPTION>
1998 1997
------------------- ------------------
<S> <C> <C>
Income before income tax expense $ 162,000 201,350
Change in net worth for unrealized gain
(loss) on securities available for sale (3,760) 3,760
------------------- ------------------
Total $ 158,240 205,110
=================== ==================
</TABLE>
Income tax expense attributable to income from operations consisted of
the following:
<TABLE>
<CAPTION>
Current Deferred Total
------------------ ---------------- --------------
<S> <C> <C> <C>
Year ended
December 31, 1998:
Federal $ 51,509 74,257 125,766
State 11,761 24,473 36,234
------------------- ------------------- -------------------
Total $ 63,270 98,730 162,000
=================== =================== ===================
Year ended
December 31, 1997:
Federal 141,318 21,645 162,963
State 48,944 (10,557) 38,387
------------------- ------------------- -------------------
Total $ 190,262 11,088 201,350
=================== =================== ===================
</TABLE>
F-15 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
Actual income tax expense attributable to income before income taxes
differed from the amounts computed by applying the Federal statutory
income tax rate to pre-tax income as follows:
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------
1998 1997
------------------- ------------------
<S> <C> <C>
Federal income tax expense
at statutory rate $ 160,041 132,682
Increase (decrease) resulting from:
Merger costs (46,323) 46,323
Tax-exempt interest income (12,525) (2,762)
State taxes, net of Federal income
tax benefit 23,914 25,335
Nondeductible expenses 3,749 1,266
Other, net 33,144 (1,494)
------------------- ------------------
Actual income tax expense $ 162,000 201,350
=================== ==================
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31 are presented below:
<TABLE>
<CAPTION>
1998 1997
------------------- ------------------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 426,727 662,535
Postretirement benefits 162,595 119,467
Deferred compensation 150,455 104,607
Other 63,310 7,530
------------------- ------------------
Total gross deferred tax assets 803,087 894,139
------------------- ------------------
Deferred tax liabilities:
Excess tax bad debt reserve over base year 211,106 223,021
Depreciation 97,219 116,893
Prepaid pension expenses 114,229 79,592
Net unrealized gain on securities
available for sale -- 3,760
Other 13,289 8,659
------------------- ------------------
Total gross deferred tax
liabilities 435,843 431,925
------------------- ------------------
Net deferred tax asset, included in
other assets $ 367,244 462,214
=================== ==================
</TABLE>
F-16 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
At December 31, 1998, the Bank's base-year tax bad debt reserves of
approximately $1,107,000 represent aggregate bad debt deductions taken
under the Internal Revenue Code, for which a deferred tax liability has
not been provided. The use of these reserves for purposes other than to
absorb losses on loans, or if the Bank fails to qualify as a bank for
Federal income tax purposes, would result in taxable income to the Bank.
However, management does not intend to enter into any transactions that
would cause these reserves to become taxable and, accordingly, associated
deferred tax liabilities of approximately $450,000 have not been
recognized.
Realization of deferred tax assets is dependent upon the generation of
future taxable income or the existence of sufficient taxable income
within the loss carryback period. A valuation allowance is provided when
it is more likely than not that some portion or all of the deferred tax
assets will not be realized. In assessing the need for a valuation
allowance, management considers the scheduled reversal of the deferred
tax liabilities, the level of historical taxable income and projected
future taxable income over the periods in which the temporary differences
comprising the deferred tax assets will be deductible. Based on its
assessment, management determined that no valuation allowance is
necessary.
(9) Benefit Plans
Pension and Other Postretirement Benefit Plans
The following table sets forth the defined benefit pension plan's and the
other postretirement benefit plan's change in benefit obligation, change
in fair value of plan assets, and the funded status for the years ended
December 31, 1998 and 1997, using the most recent actuarial data measured
at October 1, 1998 and 1997:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
------------------------- ------------------------
1998 1997 1998 1997
------- ------- ------ --------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 2,960,364 3,011,700 756,037 949,079
Service cost 66,829 67,689 42,444 19,148
Interest cost 202,349 221,786 52,923 66,436
Amendments -- -- (70,713) --
Actuarial (gain)/loss 172,319 288,712 82,802 (255,408)
Benefits paid (164,217) (164,056) (22,314) (23,218)
Settlements -- (465,467) -- --
------------- ------------- ------------- -------------
Benefit obligation at end of year 3,237,644 2,960,364 841,179 756,037
------------- ------------- ------------- -------------
Change in plan assets:
Fair value of plan assets at beginning of year 3,587,233 3,446,413 -- --
Actual return on plan assets 6,660 751,499 -- --
Employer contributions -- 18,844 22,314 23,218
Benefits paid (164,217) (164,056) (22,314) (23,218)
Settlements -- (465,467) -- --
------------- ------------- ------------- -------------
Fair value of plan assets at end of year 3,429,676 3,587,233 -- --
------------- ------------- ------------- -------------
Funded status (deficit) 192,032 626,869 (841,179) (756,037)
Unamortized net (asset) obligation at transition (50,395) (83,034) 434,081 659,662
Unrecognized net (gain) loss subsequent
to transition 141,853 (348,033) -- (168,092)
Unamortized prior service cost 2,512 3,478 -- (41,146)
------------- ------------- ------------- -------------
Prepaid (accrued) benefit cost $ 286,002 199,280 (407,098) (305,613)
============= ============= ============= =============
</TABLE>
F-17 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
Pension cost (income) consists of the following components for the years
ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------------------- ------------------
<S> <C> <C>
Service cost $ 66,829 67,689
Interest on projected benefit obligation 202,349 221,786
Expected return on plan assets (280,410) (269,831)
Amortization of net transition asset (21,355) (24,713)
Amortization of unrecognized gain (2,943) --
Amortization of prior service cost 966 966
Settlement credit (52,158) --
---------------- ------------------
Net periodic pension cost (income) $ (86,722) (4,103)
================ ==================
Weighted average discount rate 6.50% 7.25%
================ ==================
Expected long-term rate of return 8.00% 8.00%
================ ==================
</TABLE>
The projected benefit obligation assumed a long-term rate of increase in
future compensation levels of 4.5% for 1998 and 5.0% for 1997. The
unamortized net asset at transition is being amortized over 12 years from
inception.
Net periodic postretirement benefit cost for the years ended December 31,
1998 and 1997 included the following components:
<TABLE>
<CAPTION>
1998 1997
------------------- ------------------
<S> <C> <C>
Service cost $ 42,444 19,148
Interest cost on accumulated benefit
obligation 52,923 66,436
Amortization of transition obligation 38,804 38,804
Amortization of prior service asset (2,420) --
Amortization of unrecognized loss (7,952) --
---------------- ------------------
Net periodic postretirement benefit cost $ 123,799 124,388
================ ==================
</TABLE>
For measurement purposes, a 9.0% and 9.5% annual rate of increase in the
per capita cost of average health care benefits for retirees was assumed
for 1998 and 1997, respectively. The rate was assumed to decrease
gradually to 5.0% by 2008 and remain at that level thereafter. The health
care cost trend rate assumption has a significant effect on the amounts
reported. To illustrate, increasing the assumed health care cost trend
rates by 1% in each year would increase the accumulated postretirement
benefit obligation at December 31, 1998 by $69,174, and the net periodic
postretirement benefit cost by $2,345 for the year then ended. The
weighted average discount rate used in determining the accumulated
postretirement obligation was 6.5% for 1998 and 7.0% for 1997.
F-18 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
Other Benefit Plans
In 1997, the Bank instituted a nonqualified deferred compensation plan
for Trustees (the "Trustees' Deferred Compensation Plan"), under which
participants may elect to defer all or part of their annual trustee fees
to fund the Trustees' Deferred Compensation Plan. The plan provides that
deferred fees are to be invested in mutual funds, as selected by the
individual trustees. At December 31, 1998 and 1997, deferred trustees
fees included in other liabilities aggregated $183,654 and $83,569,
respectively.
The Bank sponsors a defined contribution profit sharing 401(k) plan
covering substantially all employees. The Bank matches certain
percentages of each eligible employee's contribution to the plan. Expense
for the plan amounted to $37,583 and $47,409 in 1998 and 1997,
respectively.
(10) Regulatory Capital Requirements
The Bank is subject to various regulatory capital requirements
administered by the Federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory (and possibly
additional discretionary) actions by regulators that, if undertaken,
could have a direct material effect on the Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that
involve quantitative measures of the Bank's assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory accounting
practices. The Bank's capital amounts and classification are also subject
to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined), and Tier I capital (as
defined) to average assets (as defined). Management believes, as of
December 31, 1998 and 1997, that the Bank meets all capital adequacy
requirements to which it is subject.
As of December 31, 1998, the most recent notification from the FDIC
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 I risk-based, and Tier
I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the
Bank's category.
F-19 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
The Bank's regulatory capital amounts and ratios are presented in the
following table:
<TABLE>
<CAPTION>
To Be "Well
Capitalized" Under
Actual Minimum Regulatory Regulatory Capital
Regulatory Capital Capital Requirements Requirements
---------------------- --------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
--------- ------- ------- --------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1998:
Total Capital
(to risk weighted assets) $ 12,639,099 16.7% $ 6,046,720 8.0% $ 7,558,400 10.0%
Tier I Capital
(to risk weighted assets) 11,694,299 15.5 3,023,360 4.0 4,535,040 6.0
Tier I Capital
(to average assets) 11,694,299 10.7 4,387,200 4.0 5,484,000 5.0
As of December 31, 1997:
Total Capital
(to risk weighted assets) $ 12,154,623 19.9% $ 4,883,440 8.0% $ 6,104,300 10.0%
Tier I Capital
(to risk weighted assets) 11,391,623 18.7 2,441,720 4.0 3,662,580 6.0
Tier I Capital
(to average assets) 11,391,623 10.0 4,543,520 4.0 5,679,400 5.0
</TABLE>
(11) Commitments and Contingencies
In the normal course of business, there are various outstanding
commitments and contingent liabilities, such as guarantees, and
commitments to extend credit, which are not reflected in the accompanying
financial statements. The Bank does not anticipate losses as a result of
these transactions. Mortgage and other loan commitments outstanding at
December 31, 1998 and 1997 amounted to $2.4 million and $120,000,
respectively. Fixed interest rates on mortgage and other loan commitments
outstanding can change prior to closing only if interest rates decrease.
Variable rate loans float prior to closing. Outstanding commitments on
letters of credit at December 31, 1998 and 1997 amounted to $20,000 and
$90,500, respectively.
In February 1995, the Superintendent of Banks for the State of New York
seized Nationar, a check-clearing and trust company, freezing all of
Nationar's assets. On that date, the Bank had demand accounts with
Nationar of approximately $62,700, Nationar capital stock of $5,400,
Nationar preferred stock of $19,200, a pledged security of $80,000 held
by Nationar and Nationar capital debentures of $120,000. Based on
information set forth in certain publicly available documents, at the
time, management believed that there was a reasonable likelihood that the
Bank would not recover all amounts owed by Nationar. Accordingly,
management charged-off the Bank's investments in Nationar stock during
1995 and established additional loss provisions of $120,000 and $14,200
during 1995 and 1996, respectively. The Bank received distributions
totaling $22,000, $54,000 and $154,300 in 1998, 1997 and 1996,
respectively, which were credited to noninterest income. Total losses net
of distributions received over the three-year period, relating to
Nationar, were approximately $57,000.
F-20 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
In the normal conduct of business, the Bank is currently involved in
various litigation matters. In the opinion of management, the ultimate
disposition of these matters should not have a material adverse effect on
the financial position of the Bank.
(12) Fair Value of Financial Instruments
SFAS No. 107, Disclosures About Fair Value of Financial Instruments, as
amended by SFAS No. 119, Disclosure About Derivative Financial
Instruments and Fair Value of Financial Instruments, requires disclosures
about the fair value of financial instruments for which it is practicable
to estimate fair value. The definition of a financial instrument includes
many of the assets and liabilities recognized in the Bank's statement of
financial condition, as well as certain off-balance sheet items. Fair
value is defined in SFAS Nos. 107 and 119 as the amount at which a
financial instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used by the Bank in estimating
the fair values of its financial instruments:
(a) Cash and Cash Equivalents
For these short-term instruments that are available on demand or
that generally mature in ninety days or less, the carrying value
approximates fair value.
(b) Securities
Fair values for securities are based on quoted market prices,
where available. Where quoted market prices are not available,
fair values are based on quoted market prices of comparable
instruments.
(c) Loans
For variable rate loans that reprice frequently and have no
significant credit risk, fair values are based on carrying
amounts. The fair values of fixed rate loans are estimated through
discounted cash flow analyses using interest rates currently being
offered for loans with similar terms and credit quality.
Delinquent loans are valued using the discounted cash flow methods
described above. While credit risk is a component of the discount
rate used to value loans, delinquent loans are presumed to possess
additional risk. Therefore, the calculated fair values of loans
are reduced by the allowance for loan losses.
F-21 (Continued)
<PAGE>
OSWEGO COUNTY SAVINGS BANK
Notes to Financial Statements
December 31, 1998 and 1997
(d) Deposits
The fair values disclosed for demand, savings and money market
deposits are, by definition, equal to the carrying amounts payable
on demand at the reporting date. The fair value of fixed maturity
time deposits is estimated using a discounted cash flow approach.
This approach applies interest rates currently being offered on
these accounts to a schedule of weighted average expected monthly
maturities on time deposits.
The estimated fair values of the Bank's financial instruments as
of December 31, 1998 and 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
------------------------------- -------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 6,606,570 6,606,570 6,764,210 6,764,210
Securities 28,513,899 28,575,748 21,361,914 21,395,779
Net loans 71,013,222 71,037,893 79,051,505 78,960,453
Financial liabilities:
Demand, savings and money
market deposits 58,317,194 58,317,194 58,201,436 58,201,436
Time deposits 38,247,054 38,214,263 39,697,366 39,693,795
Escrow deposits 1,318,444 1,318,444 1,458,361 1,458,361
</TABLE>
The fair value of commitments to extend credit are equal to the
deferred fees outstanding, as the contractual rates and fees
approximate those currently charged to originate similar
commitments.
Fair value estimates are made at a specific point in time, based
on relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and, therefore,
cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
F-22
<PAGE>
<TABLE>
<S> <C>
============================================================================== ==============================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than as contained in this
Prospectus in connection with the offering made hereby, and, if given or made, Oswego County Bancorp, Inc.
such information shall not be relied upon as having been authorized by Oswego (in organization)
County Bancorp, Oswego County Savings or Friedman, Billings and Ramsey & Co.,
Inc. This Prospectus does not constitute an offer to sell or a solicitation of (Holding Company for
an offer to buy any of the securities offered hereby to any person in any Oswego County Savings Bank)
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so, or to
any person to whom it is unlawful. Neither the delivery of this Prospectus nor
any sale hereunder shall under any circumstances create any implication that
there has been no change in the affairs of Oswego County Bancorp or Oswego Up to 700,925 Shares
County Savings since any of the dates as of which information is furnished
herein or since the date hereof.
Common Stock
Table of Contents
Page
----
Questions and Answers....................................
Summary..................................................
Selected Financial and Other Data........................
Risk Factors............................................. -------------------------------
Oswego County Bancorp, Inc...............................
Oswego County Savings Bank............................... PROSPECTUS
Oswego County MHC........................................
How We Intend to Use the Proceeds........................ -------------------------------
Market for the Common Stock..............................
Our Policy Regarding Dividends...........................
Oswego County Savings Bank Exceeds All
Regulatory Capital Requirements..........................
Capitalization...........................................
Pro Forma Data........................................... Friedman, Billings, Ramsey & Co., Inc.
Comparison of Valuation and Pro Forma
Information With No Foundation........................
Management's Discussion and Analysis of Financial
Condition and Results of Operations...................
Business ................................................
How We Are Regulated..................................... _______________, 1999
Taxation.................................................
Management...............................................
Proposed Management Purchases............................
Our Corporate Change and Stock Offering..................
Certain Restrictions on Acquisition of
Oswego County Bancorp and Oswego
County Savings .......................................
Description of Capital Stock of Oswego County
Bancorp...............................................
Transfer Agent and Registrar.............................
Experts..................................................
Legal and Tax Opinions...................................
Additional Information...................................
Index to Financial Statements............................
Until __________ ___, 199__ (90 days after the date of this prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
============================================================================== ==============================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Compensation Consultant...................................... $ 20,000
SEC filing fees.............................................. 2,500
Department filing fees....................................... 10,000
Nasdaq filing fees .......................................... 1,200
Printing, postage and mailing ............................... 60,000
Legal fees .................................................. 150,000
Blue Sky filing fees and expenses............................ 10,000
Investment bankers and expenses.............................. 110,000
Investment bankers counsel................................... 40,000
Accounting fees.............................................. 125,000
Appraiser's fees............................................. 42,500
Conversion agent fees and expenses........................... 11,000
Miscellaneous................................................ 10,000
--------
Total........................................................ $592,200
========
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their capacity
as such. The Certificate of Incorporation of the Company provides that the
directors, officers, employees and agents of the Company shall be indemnified to
the full extent permitted by law. Such indemnity shall extend to expenses,
including attorney's fees, judgments, fines and amounts paid in the settlement,
prosecution or defense of the foregoing actions.
Article 9 of the Registrant's Certificate of Incorporation provides as follows:
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
II-1
<PAGE>
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article
9 shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, if required under the Delaware
General Corporation Law, that an advancement of expenses incurred by an
indemnitee in his or her capacity as a Director of Officer (and not in any other
capacity in which service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article 9 shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article 9 is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses), it shall be a defense that, and (ii) in any suit by
the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the Corporation shall be entitled to recover such expenses upon
a final adjudication that, the indemnitee has not met any applicable standard
for indemnification set forth in the Delaware General Corporation Law. Neither
the failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense
II-2
<PAGE>
to such suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Article 9 or
otherwise, shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article 9 shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article 9 with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
Item 15 Recent Sales of Unregistered Securities
Not applicable.
II-3
<PAGE>
Item 16. Exhibits and Financial Statements Schedules
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(a) List of Exhibits (filed herewith unless otherwise noted)
1.1 *Engagement Letter with Friedman, Billings, Ramsey & Co., Inc.
1.2 Form of Agency Agreement with Friedman, Billings, Ramsey & Co., Inc.
2.1 Amended and Restated Plan of Reorganization from Mutual Savings Bank to
Mutual Holding Company and Plan of Stock Issuance.
3.1 Certificate of Incorporation of Oswego County Bancorp, Inc.
3.2 Bylaws of Oswego County Bancorp, Inc.
3.3 *Restated New York Organization Certificate of Oswego County Savings
Bank
3.4 Restated Bylaws of Oswego County Savings Bank
3.5 *Restated Organization Certificate of Oswego County MHC
3.6 Bylaws of Oswego County MHC
4.1 *Form of Stock Certificate of Oswego County Bancorp, Inc.
4.2 Form of Stock Certificate of Oswego County Savings Bank
5.0 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. re: legality
8.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. re: federal tax
matters
8.2 Opinion re: New York tax matters
8.3 *Letter of RP Financial, LC. re: Subscription Rights
23.1 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibits
5.0 and 8.1, respectively)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of RP Financial, LC.
24.0 *Power of Attorney.
27.0 *Financial Data Schedule
99.1 Appraisal Report of RP Financial, LC., dated April 16, 1999
99.2 *Subscription Order Form and Instructions
99.3 Additional Solicitation Material
99.4 Proxy Statement and Form of Proxy
- ---------------------------------
* Previously filed.
(b) Financial Statement Schedules
All schedules have been omitted as not applicable or not required under
the rules of Regulation S-X.
II-4
<PAGE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement, certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Form SB-2 Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the State of New
York on May 3, 1999.
Oswego County Bancorp, Inc.
(in organization)
By: /s/ Gregory J. Kreis
-------------------------------
Gregory J. Kreis
President and Chief Executive Officer
<TABLE>
<CAPTION>
Name Title Date
- ----------------------------------- ---------------------------------- ---------------------------
<S> <C> <C>
/s/ Gregory Kreis Director, President and May 3, 1999
- ---------------------------- Chief Executive Officer
Gregory J. Kreis
/s/ Gregory Kreis Senior Vice President and May 3, 1999
- ---------------------------- Treasurer
Robert H. Hillick
/s/ Gregory Kreis Director May 3, 1999
- ----------------------------
Michael R. Brower
/s/ Gregory Kreis Chairman of the Board May 3, 1999
- ----------------------------
Bruce P. Frassinelli
/s/ Gregory Kreis Director May 3, 1999
- ----------------------------
Paul J. Heins
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Name Title Date
- ----------------------------------- ---------------------------------- ---------------------------
<S> <C> <C>
/s/ Gregory Kreis Director May 3, 1999
- ----------------------------
Paul W. Schneible
/s/ Gregory Kreis Director May 3, 1999
- ----------------------------
Bernard Shapiro
/s/ Gregory Kreis Director May 3, 1999
- ----------------------------
Carl K. Walrath
</TABLE>
- ---------------
* By: Gregory J. Kreis
Attorney-In-Fact
II-7
Exhibit 1.2
OSWEGO COUNTY BANCORP, INC.
450,000 to 609,500 Shares
COMMON STOCK
(Par Value $.0l Per Share)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
___________, 1999
Friedman, Billings, Ramsey & Co., Inc.
1001 Nineteenth Street North
10th Floor
Arlington, Virginia 22209
Ladies and Gentlemen:
Oswego County Bancorp, Inc., a Delaware corporation (the "Company"),
Oswego County MHC, a New York State chartered mutual holding company ("MHC") and
Oswego County Savings Bank, a New York State chartered mutual savings bank (the
"Bank") (reference to the "Bank" includes the Bank in the mutual or stock form,
as indicated by the context) with its deposit accounts insured by the Bank
Insurance Fund ("BIF") administered by the Federal Deposit Insurance Corporation
("FDIC"), hereby confirm, jointly and severally, their agreement with Friedman,
Billings, Ramsey & Co., Inc. ("FBR" or the "Agent"), as follows:
Section 1. The Offering. The Bank, in accordance with its Plan of
Reorganization from Mutual Saving Bank to Mutual Holding Company and Stock
Issuance Plan adopted by its Board of Trustees and subsequently amended and
restated (the "Plan"), intends to convert from a New York State chartered mutual
savings bank to a New York State chartered stock savings bank, and will issue
all of its issued and outstanding capital stock to the Company. In addition,
pursuant to the Plan, the Company will offer and sell up to 609,500 shares of
its common stock, par value, $.01 per share (the "Shares" or "Common Stock"), in
a subscription offering (the "Subscription Offering") to (1) depositors of the
Bank with account balances of $100.00 or more as of September 30, 1997
("Eligible Account Holders"), (2) the Oswego County Bancorp, Inc. Employee Stock
Ownership Plan (the "ESOP"), (3) depositors of the Bank with account balances of
$100.00 or more as of March 31, 1999 ("Supplemental Eligible Account Holders"),
and (4) employees, officers and trustees of the Bank. To the extent Shares
remain unsold in the Subscription Offering, the Company is offering for sale in
a community offering (the "Community Offering" and when referred to together
with the Subscription Offering, the "Subscription and Community Offering"), the
Shares
<PAGE>
not so subscribed for or ordered in the Subscription Offering to members of the
general public, with preference given to natural persons residing Oswego County
("Other Subscribers"), (all such offerees being referred to in the aggregate as
"Eligible Offerees"). It is anticipated that shares not subscribed for in the
Subscription and Community Offering will be offered to certain members of the
general public on a best efforts basis through a selected dealers arrangement
(the "Syndicated Community Offering") (the Subscription Offering, Community
Offering and Syndicated Community Offering are collectively referred to as the
"Offering"). It is acknowledged that the purchase of Shares in the Offering is
subject to the maximum and minimum purchase limitations as described in the Plan
and that the Company may reject, in whole or in part, any orders received in the
Community Offering or Syndicated Community Offering. Collectively, these
transactions are referred to herein as the "Reorganization." The Company will
issue the Shares at a purchase price of $10.00 per share (the "Purchase Price").
In connection with the Reorganization and pursuant to the terms of the
Plan as described in the Prospectus (as hereinafter defined), immediately
following the consummation of the Reorganization, subject to the approval of the
members of Bank and compliance with certain conditions as may be imposed by
regulatory authorities, the Company will contribute newly issued Common Stock
equal to 4% of such Shares sold in the Reorganization to the Oswego County
Charitable Foundation (the "Foundation") such shares hereinafter being referred
to as the ("Foundation Shares").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (File No. 333-69959) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares and the Foundation Shares under the Securities
Act of 1933 (the "1933 Act"), and has filed such amendments thereof and such
amended prospectuses as may have been required to the date hereof. The term
"Registration Statement" shall include all exhibits thereto, as amended,
including post-effective amendments. The prospectus, as amended, on file with
the Commission at the time the Registration Statement initially became effective
is hereinafter called the "Prospectus," except that if any Prospectus is filed
by the Company pursuant to Rule 424(b) or (c) of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations") differing from
the prospectus on file at the time the Registration Statement initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission.
In accordance with the rules and regulations of the New York State Bank
Department (the "Department") and the rules and regulations of the Federal
Deposit Insurance Corporation ("FDIC") (the "MHC Regulations"), the Bank has
filed with the Department and the FDIC, a Notice of Intent to Convert to Stock
Form (the "Notice") and an Application for Approval of a Mutual Savings Bank
Holding Company Reorganization (the "MHC Application"), including the Prospectus
and the Reorganization Valuation Appraisal Report prepared by RP Financial, LC
(the "Appraisal") and has filed such amendments thereto as may have been
required by the Department and the FDIC. The Bank has also filed an Application
for Merger ("Merger Application") with the FDIC pursuant to Section 18(c) of the
Federal Deposit Insurance Act. The Notice, the MHC Application and the Merger
Application are collectively referred to as the "Reorganization Applications."
In addition,
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the Company has filed with the Federal Reserve Bank of New York ("Federal
Reserve Bank") its application on Form Y-3 (the "Holding Company Application")
to acquire the Bank and to become a registered bank holding company under the
Bank Holding Company Act of 1956, as amended ("BHCA").
Section 2. Retention of Agent; Compensation; Sale and Delivery of the
Shares. On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company, the MHC and
the Bank hereby appoint FBR as their Agent to consult with and advise the Bank,
and to assist the Company with the solicitation of subscriptions and purchase
orders for Shares, in connection with the Company's sale of Common Stock in the
Subscription and Community Offering. On the basis of the representations and
warranties herein contained, and subject to the terms and conditions herein set
forth, FBR hereby accepts such appointment and agrees to use its best efforts to
assist the Company with the solicitation of subscriptions and purchase orders
for Shares in accordance with this Agreement; provided, however, that the Agent
shall not be obligated to take any action which is inconsistent with any
applicable laws, regulations, decisions or orders. In connection with the
Subscription and Community Offering, FBR will render the following services: (i)
act as the financial advisor to the Bank; (ii) create marketing materials and
formulate a marketing plan; (iii) conduct training for all trustees and
employees of the Bank in connection with their role in the stock offering
process; (iv) manage the information stock center by staffing it with FBR
personnel to assist interested stock subscribers and by keeping records of all
stock orders; and (v) provide general advisory services including capital
management strategies, dividend policy and mergers and acquisitions strategies
for a period of one year following the completion of the Offering.
The appointment of the Agent hereunder shall terminate upon the earlier
to occur of (a) forty-five (45) days after the last day of the Subscription
Offering, unless the Company and the Agent agree in writing to extend such
period and the FDIC and the Department agree to extend the period of time in
which the Shares may be sold, or (b) the receipt and acceptance of subscriptions
and purchase orders for all of the Shares.
If any of the Shares remain available after the expiration of the
Subscription and Community Offering, at the request of the MHC, the Company and
the Bank, the Agent will seek to form a syndicate of registered broker or
dealers ("Selected Dealers") to assist in the solicitation of purchase orders of
such Securities on a best efforts basis, subject to the terms and conditions set
forth in a selected dealers' agreement (the "Selected Dealers' Agreement"),
substantially in the form set forth in Exhibit A to this Agreement. FBR will
endeavor to limit the aggregate fees to be paid by the MHC, the Company and the
Bank under any such Selected Dealers' Agreement to an amount competitive with
gross underwriting discounts charged at such time for underwritings of
comparable amounts of stock sold at a comparable price per share in a similar
market environment. The Agent will endeavor to distribute the Shares among the
Selected Dealers in a fashion which best meets the distribution objective of the
Company and the requirements of the Plan, which may result in limiting the
allocation of stock to certain Selected Dealers. It is understood that in no
event shall the Agent be obligated to act as a Selected Dealer or to take or
purchase any Shares.
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In the event the Company is unable to sell at least the minimum of the
Shares, as set forth on the cover page of the Prospectus (or such lesser amount
approved by the Department and the FDIC), within the period herein provided,
this Agreement shall terminate and the Company shall refund to any persons who
have subscribed for any of the Shares the full amount which it may have received
from them, together with interest as provided in the Prospectus, and no party to
this Agreement shall have any obligation to the others hereunder, except for the
obligations of the MHC, the Company and the Bank as set forth in this Section 2
and Sections 6, 8 and 9 hereof and the obligations of the Agent as provided in
Sections 8 and 9 hereof. Appropriate arrangements for placing the funds received
from subscriptions for Shares or other offers to purchase Shares in special
interest-bearing accounts with the Bank until all Shares are sold and paid for
were made prior to the commencement of the Subscription Offering, with provision
for refund to the purchasers as set forth above, or for delivery to the Company
if all Shares are sold.
If at least the total minimum of Shares, as set forth on the cover page
of the Prospectus (or such lesser amount approved by the Department and the
FDIC), are sold, the Company agrees to issue or have issued the Shares sold and
to release for delivery certificates for such Shares at the Closing Date against
payment therefor by release of funds from the special interest-bearing accounts
referred to above. The closing shall be held at the offices of Elias, Matz,
Tiernan & Herrick L.L.P., at 10:00 a.m., local time, or at such other place and
time as shall be agreed upon by the parties hereto, on a business day to be
agreed upon by the parties hereto. The Company shall notify the Agent by
telephone, confirmed in writing, when funds shall have been received for all the
Shares. One or more certificates for Shares shall be delivered in such
denomination or denominations and registered in such name or names as FBR
requests. Notwithstanding the foregoing, certificates for Shares purchased
through Selected Dealers shall be made available to the Agent for inspection at
least 48 hours prior to the Closing Date at such office as the Agent shall
designate. The date upon which the Company shall release for delivery all of the
Shares, in accordance with the terms hereof, is herein called the "Closing
Date."
The Company will pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Shares.
In addition to reimbursement of the expenses specified in Section 6
hereof, the Agent will receive the following compensation for its services
hereunder:
(a) a management fee of $20,000 (the "Management Fee") (in recognition
of services already provided by FBR, the Bank will make advance payment to FBR
of the Management Fee, which Management Fee shall be credited against the
Marketing Fee (as defined below)); FBR is entitled to the Management Fee
irrespective of any termination or abandonment of the Plan or the Reorganization
for any reason; and
(b) a marketing fee of $100,000 payable in immediately available funds
at the Closing Date (the "Marketing Fee").
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 11(a) hereof or the Plan or Reorganization is terminated
or abandoned by the Company or the Bank,
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no fee other than the Management Fee shall be payable by the Bank to FBR;
provided, however, the Bank shall reimburse the Agent for all of its reasonable
out-of-pocket expenses incurred prior to termination, including the reasonable
fees and disbursements of counsel for the Agent in accordance with the
provisions of Section 6 hereof.
Section 3. Prospectus; Offering. The Shares are to be initially offered
in the Offering at the Purchase Price.
Section 4. Representations and Warranties of the Company, the MHC and
the Bank. The Company, the MHC and the Bank jointly and severally represent and
warrant to and agree with the Agent as follows:
(a) The Registration Statement which was prepared by the Company,
the MHC and the Bank and filed with the Commission was
declared effective by the Commission on _________, 1999. At
the time the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement),
became effective, the Registration Statement contained all
statements that were required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations,
complied in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the Registration
Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), and any
information regarding the Company or the MHC or the Bank or
the Foundation contained in Sales Information (as such term is
defined in Section 8 hereof) authorized by the Company, the
MHC or the Bank for use in connection with the Offering, did
not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and
at the time any Rule 424(b) or (c) Prospectus was filed with
the Commission and at the Closing Date referred to in Section
2, the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement
thereto), and any information regarding the Company, the MHC,
the Bank or the Foundation contained in Sales Information (as
such term is defined in Section 8 hereof) authorized by the
Company, the MHC or the Bank for use in connection with the
Offering will contain all statements that are required to be
stated therein in accordance with the 1933 Act and the 1933
Act Regulations and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this Section 4(a) shall not apply to statements or omissions
made in reliance upon and in conformity with written
information furnished to the Company, the MHC or the Bank by
the Agent or its counsel expressly regarding the Agent for use
in the Prospectus under the caption "Our Corporate Change and
Stock Offering-Marketing
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Arrangements" or statements in or omissions from any Sales
Information or information filed pursuant to state securities
or blue sky laws or regulations regarding the Agent.
(b) The Notice and MHC Applications which were prepared by the
Company, the MHC and the Bank and filed with the Department
and the FDIC were approved by the Department on _________,
1999, including the waiver of certain provisions of the MHC
Regulations specified in such approval with respect to the
establishment of and contribution to the Foundation, and the
related Prospectus has been authorized for use by the
Department. The Merger Application was filed with the FDIC on
__________, 1999 pursuant to the Bank Merger Act, and approved
by the FDIC on _______, 1999. The FDIC has issue a letter of
intent not to object to the Notice and MHC Application. At the
time of the approval of the MHC Application, including the
Prospectus (including any amendment or supplement thereto), by
the Department and at all times subsequent thereto until the
Closing Date, the MHC Application, including the Prospectus
(including any amendment or supplement thereto), will comply
in all material respects with the MHC Regulations, except to
the extent waived in writing by the Department. The
Reorganization Applications, including the Prospectus
(including any amendment or supplement thereto), do not
include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this Section 4(b) shall not apply to statements or omissions
made in reliance upon and in conformity with written
information furnished to the Company, the MHC or the Bank by
the Agent or its counsel expressly regarding the Agent for use
in the Prospectus contained in the Notice and MHC Application
under the caption "Our Corporate Change and Stock
Offering-Marketing Arrangements" or statements in or omissions
from any sales information.
(c) The Holding Company Application for approval pursuant to the
BHCA and the regulations promulgated thereunder, has been
prepared by the Bank, the MHC and the Company in material
conformity with the requirements of the BHCA and the
regulations promulgated thereunder and has been filed with the
Federal Reserve Bank. A conformed copy of the Holding Company
Application has been delivered to the Agent. As of the Closing
Date, approval of the Company's acquisition of the Bank will
have been obtained from the Federal Reserve Bank.
(d) No order has been issued by the Department or the FDIC
(hereinafter any reference to the FDIC shall include the BIF)
preventing or suspending the use of the Prospectus, and no
action by or before any such government entity to revoke any
approval, authorization or order of effectiveness related to
the
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Reorganization is, to the best knowledge of the Company, the
MHC or the Bank, pending or threatened.
(e) As of the Closing Date, the MHC will be duly organized and
will be validly existing as a New York State chartered mutual
holding company under the laws of the State of New York, duly
authorized to conduct its business and own its property as
described in the Registration Statement and the Prospectus; as
of the Closing Date, the MHC will have obtained all licenses,
permits and other governmental authorizations required for the
conduct of its business except those that individually or in
the aggregate would not materially adversely affect the
financial condition, earnings, capital, assets or properties
of the Company, MHC and Bank taken as a whole; as of the
Closing Date, all such licenses, permits and governmental
authorizations will be in full force and effect and the MHC
will be in compliance therewith in all material respects; as
of the Closing Date, the MHC will be duly qualified as a
foreign corporation to transact business in each jurisdiction
in which the failure to be so qualified in one or more of such
jurisdictions would have a material adverse effect on the
financial condition, earnings, capital, assets, properties or
business of the Company, MHC and Bank considered as one
enterprise.
(f) The MHC does not own any equity securities or any equity
interest in any business enterprise except as described in the
Prospectus.
(g) At the Closing Date, the Plan will have been adopted by the
Boards of Trustees of the Company, the MHC and the Bank and
approved by the members of the Bank, and the offer and sale of
the Shares and all actions in connection with the contribution
to the Foundation will have been conducted in all material
respects in accordance with the Plan, the MHC Regulations, and
all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions
precedent to the Reorganization imposed upon the Company, the
MHC or the Bank by the Department, the FDIC, the Commission,
the Federal Reserve Bank or any other regulatory authority and
in the manner described in the Prospectus. No person has
sought to obtain review of the final action of the Department
or the FDIC in approving the Plan or the Reorganization
Applications or of the Federal Reserve Bank in approving the
Holding Company Application pursuant to any applicable statute
or regulation.
(h) The Bank has been organized and is a validly existing New York
State chartered savings bank in mutual form of organization
and upon the Reorganization will become a duly organized and
validly existing New York State chartered savings bank in
capital stock form of organization, in both instances duly
authorized to conduct its business and own its property as
described in the Registration Statement and the Prospectus;
the Bank has
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obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of its
business; all such licenses, permits and governmental
authorizations are in full force and effect, and the Bank is
in all material respects complying with all laws, rules,
regulations and orders applicable to the operation of its
business; the Bank is existing under the laws of the federal
government and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which its ownership of property or leasing of property or
the conduct of its business requires such qualification,
unless the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations
or income of the Bank. Upon completion of the sale by the
Company of the Shares contemplated by the Prospectus, (i) the
Bank will be converted pursuant to the Plan to a New York
State chartered stock savings bank, (ii) all of the issued and
outstanding capital stock of the Bank will be owned by the
Company, (iii) the Company will have no direct subsidiaries
other than the Bank, and (iv) the Company will be a
majority-owned subsidiary of the MHC. The Reorganization will
have been effected in all material respects in accordance with
all applicable statutes, regulations, decisions and orders;
and, except with respect to the filing of certain post-sale,
post-Reorganization reports, and documents in compliance with
the 1933 Act Regulations, the Department and FDIC resolutions
or letters of approval, all terms, conditions, requirements
and provisions with respect to the Reorganization imposed by
the Commission, the Department, the FDIC and the Federal
Reserve Bank, if any, will have been complied with by the
Company, the MHC and the Bank in all material respects or
appropriate waivers will have been obtained and all material
notice and waiting periods will have been satisfied, waived or
elapsed.
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus,
and at the Closing Date the Company will be qualified to do
business as a foreign corporation in each jurisdiction in
which the conduct of its business requires such qualification,
except where the failure to so qualify would not have a
material adverse effect on the condition, financial or
otherwise, or the business, operations or income of the
Company. The Company has obtained all material licenses,
permits and other governmental authorizations currently
required for the conduct of its business; all such licenses,
permits and governmental authorizations are in full force and
effect, and the Company is in all material respects complying
with all laws, rules, regulations and orders applicable to the
operation of its business.
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(j) The Bank does not own equity securities or any equity interest
in any other business enterprise except as described in the
Prospectus or as would not be material to the operations of
the Bank.
(k) The Bank is a member of the Federal Home Loan Bank of New York
("FHLB-New York"). The deposit accounts of the Bank are
insured by the FDIC up to the applicable limits; and no
proceedings for the termination or revocation of such
insurance are pending or, to the best knowledge of the Company
or the Bank, threatened. Upon consummation of the
Reorganization, the liquidation account for the benefit of
Eligible Account Holders and Supplemental Eligible Account
Holders will be duly established in accordance with the
requirements of the MHC Regulations.
(l) The Company, the MHC and the Bank have good and marketable
title to all real property and good title to all other assets
material to the business of the Company, the MHC and the Bank,
taken as a whole, and to those properties and assets described
in the Registration Statement and Prospectus as owned by them,
free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Registration
Statement and Prospectus, or are not material to the business
of the Company, the MHC and the Bank, taken as a whole; and
all of the leases and subleases material to the business of
the Company, the MHC and the Bank, taken as a whole, under
which the Company, the MHC or the Bank hold properties,
including those described in the Registration Statement and
Prospectus, are in full force and effect.
(m) The Company and the Bank have received an opinion of their
special counsel, Elias, Matz, Tiernan & Herrick L.L.P., with
respect to the federal income tax consequences of the
Reorganization and the opinions of KPMG LLP with respect to
New York State income tax consequences of the Reorganization
and the federal income tax consequences of the proposed
establishment of, and contribution to, the Foundation; all
material aspects of the opinions of Elias, Matz, Tiernan &
Herrick L.L.P., and KPMG LLP are accurately summarized in the
Registration Statement and will be accurately summarized in
the Prospectus; and further represent and warrant that the
facts upon which such opinions are based are truthful,
accurate and complete.
(n) The Company, the MHC and the Bank have all such power,
authority, authorizations, approvals and orders as may be
required to enter into this Agreement, to carry out the
provisions and conditions hereof and to issue and sell the
Shares to be sold by the Company, and to issue and contribute
the Foundation Shares and any related cash contribution,
subject to satisfaction of conditions imposed by the
Department, the FDIC and the Federal Reserve Bank in
connection with their respective approvals of the
Reorganization Applications and the Holding Company
Application as the case may be. The consummation of the
Reorganization, the execution, delivery and
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performance of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly
authorized by all necessary corporate action on the part of
the Company, the MHC and the Bank and this Agreement has been
validly executed and delivered by the Company, the MHC and the
Bank and is the valid, legal and binding agreement of the
Company, the MHC and the Bank enforceable in accordance with
its terms (except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or
similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of
savings bank holding companies, the accounts of whose
subsidiaries are insured by the FDIC or by general equity
principles regardless of whether such enforceability is
considered in a proceeding in equity or at law, and except to
the extent if any, that the provisions of Sections 8 and 9
hereof may be unenforceable as against public policy).
(o) The Company, the MHC and the Bank are not in violation of any
directive received from the Department, the FDIC, or any other
agency to make any material change in the method of conducting
their businesses so as to comply in all material respects with
all applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of
the Department and the FDIC) and, except as may be set forth
in the Registration Statement and the Prospectus, there is no
suit or proceeding or charge or action before or by any court,
regulatory authority or governmental agency or body, pending
or, to the knowledge of the Company, the MHC or the Bank,
threatened, which might materially and adversely affect the
Reorganization, the performance of this Agreement or the
consummation of the transactions contemplated in the Plan and
as described in the Registration Statement and the Prospectus
or which might result in any material adverse change in the
condition (financial or otherwise), earnings, capital or
properties of the Company, the MHC and the Bank, or which
would materially affect their properties and assets.
(p) The financial statements, schedules and notes related thereto
which are included in the Prospectus fairly present the
balance sheet, income statement, statement of changes in
equity and cash flows of the Bank at the respective dates
indicated and for the respective periods covered thereby and
comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act Regulations and the
Department and generally accepted accounting principles
(including those requiring the recording of certain assets at
their current market value). Such financial statements,
schedules and notes related thereto have been prepared in
accordance with generally accepted accounting principles
consistently applied through the periods involved, present
fairly in all material respects the information required to be
stated therein and are consistent with the most recent
financial statements and other reports filed by the Bank with
its supervisory and regulatory
10
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authorities. The other financial, statistical and pro forma
information and related notes included in the Prospectus
present fairly the information shown therein on a basis
consistent with the audited and unaudited financial statements
of the Bank included in the Prospectus, and as to the pro
forma adjustments, the adjustments described therein have been
properly applied on the basis described therein.
(q) Since the respective dates as of which information is given in
the Registration Statement including the Prospectus: (i) there
has not been any material adverse change, financial or
otherwise, in the condition of the Company, the MHC or the
Bank considered as one enterprise, or in the earnings, capital
or properties of the Company, the MHC or the Bank, whether or
not arising in the ordinary course of business; (ii) there has
not been any material increase in the long-term debt of the
Bank or in the principal amount of the Bank's assets which are
classified by the Bank as substandard, doubtful or loss or in
loans past due 90 days or more or real estate acquired by
foreclosure, by deed-in-lieu of foreclosure or deemed
in-substance foreclosure or any material decrease in retained
earnings or total assets of the Bank nor has the Company, the
MHC or the Bank issued any securities (other than in
connection with the incorporation of the Company) or incurred
any liability or obligation for borrowing other than in the
ordinary course of business; (iii) there have not been any
material transactions entered into by the Company, the MHC or
the Bank; (iv) there has not been any material adverse change
in the aggregate dollar amount of the Bank's deposits or its
net worth; (v) there has been no material adverse change in
the Company's, the MHC's or the Bank's relationship with its
insurance carriers, including, without limitation,
cancellation or other termination of the Company's, the MHC's
or the Bank's fidelity bond or any other type of insurance
coverage; (vi) except as disclosed in the Prospectus there has
been no material change in management of the Company, the MHC
or the Bank, neither of which has any material undisclosed
liability of any kind, contingent or otherwise; (vii) the
Company, the MHC or the Bank has not sustained any material
loss or interference with its respective business or
properties from fire, flood, windstorm, earthquake, accident
or other calamity, whether or not covered by insurance; (viii)
the Company, the MHC or the Bank is not in default in the
payment of principal or interest on any outstanding debt
obligations; (ix) the capitalization, liabilities, assets,
properties and business of the Company, the MHC and the Bank
conform in all material respects to the descriptions thereof
contained in the Prospectus; and (x) neither the Company, the
MHC nor the Bank has any material contingent liabilities,
except as set forth in the Prospectus. All documents made
available to or delivered or to be made available to or
delivered by the Bank, the MHC or the Company or their
representatives in connection with the issuance and sale of
the Shares, including records of account holders, depositors
and other members of the Bank, or in connection with the
Agent's
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exercise of due diligence, except for those documents which
were prepared by parties other than the Bank, the MHC, the
Company or their representatives, to the best knowledge of the
Bank, the MHC and the Company, were on the dates on which they
were delivered, or will be on the dates on which they are to
be delivered, true, complete and correct in all material
respects.
(r) As of the date hereof and as of the Closing Date, neither the
Company, the MHC nor the Bank is (i) in violation of its
certificate of incorporation or charter or bylaws,
respectively (and the Bank will not be in violation of its
charter or bylaws in capital stock form upon consummation of
the Reorganization), or (ii) in default in the performance or
observance of any material obligation, agreement, covenant, or
condition contained in any material contract, lease, loan
agreement, indenture or other instrument to which it is a
party or by which it or any of its property may be bound; the
consummation of the Reorganization, the execution, delivery
and performance of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly
authorized by all necessary corporate action on the part of
the Company, the MHC and the Bank and this Agreement has been
validly executed and delivered by the Company, the MHC and the
Bank and is a valid, legal and binding Agreement of the
Company, the MHC and the Bank enforceable in accordance with
its terms, except as the enforceability thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws now or
hereafter in effect relating to or affecting the enforcement
of creditors' rights generally or the rights of creditors of
savings institutions, (ii) general equitable principles, (iii)
laws relating to the safety and soundness of insured
depository institutions, and (iv) applicable law or public
policy with respect to the indemnification and/or contribution
provisions contained herein, and except that no representation
or warranty need be made as to the effect or availability of
equitable remedies or injunctive relief (regardless of whether
such enforceability is considered in a proceeding in equity or
at law). The consummation of the transactions herein
contemplated will not: (i) conflict with or constitute a
breach of, or default under, or result in the creation of any
material lien, charge or encumbrance (with the exception of
the liquidation account established in the Reorganization)
upon any of the assets of the Company, the MHC or the Bank
pursuant to the certificate of incorporation of the Company or
the charter and bylaws of the Bank and the MHC (in either
mutual or capital stock form), or any material contract, lease
or other instrument to which the Company, the MHC or the Bank
has a beneficial interest, or any applicable law, rule,
regulation or order; (ii) violate any authorization, approval,
judgement, decree, order, statute, rule or regulation
applicable to the Company, the MHC or the Bank, except for
such violations which would not have a material adverse effect
on the financial condition and results of
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operations of the Company, the MHC and the Bank on a
consolidated basis; or (iii) with the exception of the
liquidation account established in the Reorganization, result
in the creation of any material lien, charge or encumbrance
upon any property of the Company, the MHC or the Bank.
(s) No default exists, and no event has occurred which with notice
or lapse of time, or both, would constitute a default, on the
part of the Company, the MHC or the Bank in the due
performance and observance of any term, covenant or condition
of any indenture, mortgage, deed of trust, note, bank loan or
credit agreement or any other instrument or agreement to which
the Company, the MHC or the Bank is a party or by which any of
them or any of their property is bound or affected, except
such defaults which would not have a material adverse affect
on the financial condition or results of operations of the
Company, the MHC and the Bank on a consolidated basis; such
agreements are in full force and effect; and no other party to
any such agreements has instituted or, to the best knowledge
of the Company, the MHC and the Bank, threatened any action or
proceeding wherein the Company, the MHC or the Bank would or
might be alleged to be in default thereunder.
(t) Upon consummation of the Reorganization, the authorized,
issued and outstanding equity capital of the Company will be
within the range set forth in the Prospectus under the caption
"Capitalization," and no Shares have been or will be issued
and outstanding prior to the Closing Date; the Shares and the
Foundation Shares will have been duly and validly authorized
for issuance and, when issued and delivered by the Company
pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and in the Prospectus,
will be duly and validly issued, fully paid and
non-assessable, except for shares purchased by the ESOP with
funds borrowed from the Company to the extent payment therefor
in cash has not been received by the Company; except to the
extent that subscription rights and priorities pursuant
thereto exist pursuant to the Plan, no preemptive rights exist
with respect to the Shares or the Foundation Shares; and the
terms and provisions of the Shares and the Foundation Shares
will conform in all material respects to the description
thereof contained in the Registration Statement and the
Prospectus. To the best knowledge of the Company, the MHC and
the Bank, upon the issuance of the Shares and the Foundation
Shares, good title to the Shares and the Foundation Shares
will be transferred from the Company to the purchasers thereof
(or the Foundation, as appropriate) against payment therefor,
subject to such claims as may be asserted against the
purchasers thereof by third-party claimants.
(u) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Shares,
except for the approval of the Commission, the
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Department, the FDIC, the Federal Reserve Bank and any
necessary qualification, notification, registration or
exemption under the securities or blue sky laws of the various
states in which the Shares are to be offered, and except as
may be required under the rules and regulations of the NASD
and or The Nasdaq Stock Market.
(v) KPMG LLP which has certified the audited financial statements
and schedules of the Bank included in the Prospectus, has
advised the Company, the MHC and the Bank in writing that they
are, with respect to the Company, the MHC and the Bank,
independent public accountants within the meaning of the Code
of Professional Ethics of the American Institute of Certified
Public Accountants and applicable regulations of the
Department and the FDIC.
(w) RP Financial LC, which has prepared the Appraisal as of
___________, 1999 (as amended or supplemented, if so amended
or supplemented), has advised the Company in writing that it
is independent of the Company, the MHC and the Bank within the
meaning of the MHC Regulations and the BHCA.
(x) The Company, the MHC and the Bank have timely filed all
required federal, state and local tax returns; the Company,
the MHC and the Bank have paid all taxes that have become due
and payable in respect of such returns, except where permitted
to be extended, have made adequate reserves for similar future
tax liabilities and no deficiency has been asserted with
respect thereto by any taxing authority.
(y) The Bank is in compliance in all material respects with the
applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of
1970, as amended, and the regulations and rules thereunder.
(z) To the knowledge of the Company, the MHC and the Bank, neither
the Company, the MHC, the Bank nor employees of the Company,
the MHC or the Bank have made any payment of funds of the MHC,
the Company or the Bank as a loan for the purchase of the
Shares or made any other payment of funds prohibited by law,
and no funds have been set aside to be used for any payment
prohibited by law.
(aa) Prior to the Reorganization, neither the Company, the MHC nor
the Bank has: (i) issued any securities within the last 18
months (except for notes to evidence other bank loans and
reverse repurchase agreements or other liabilities in the
ordinary course of business or as described in the
Prospectus); (ii) had any material dealings within the 12
months prior to the date hereof with any member of the NASD,
or any person related to or associated with such member, other
than discussions and meetings relating
14
<PAGE>
to the proposed Offering and routine purchases and sales of
United States government and agency securities; (iii) entered
into a financial or management consulting agreement except as
contemplated hereunder; and (iv) engaged any intermediary
between the Agent and the Company, the MHC and the Bank in
connection with the offering of the Shares, and no person is
being compensated in any manner for such service. Appropriate
arrangements have been made for placing the funds received
from subscriptions for Shares in a special interest-bearing
account with the Bank until all Shares are sold and paid for,
with provision for refund to the purchasers in the event that
the Reorganization is not completed for whatever reason or for
delivery to the Company if all Shares are sold.
(bb) The Company, the MHC and the Bank have not relied upon the
Agent or its legal counsel or other advisors for any legal,
tax or accounting advice in connection with the
Reorganization.
(cc) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(dd) Any certificates signed by an officer of the Company, the MHC
or the Bank pursuant to the conditions of this Agreement and
delivered to the Agent or their counsel that refers to this
Agreement shall be deemed to be a representation and warranty
by the Company, the MHC or the Bank to the Agent as to the
matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
(ee) The Foundation has been or will be duly incorporated and is or
will be validly existing as a private charitable foundation in
good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus; the Foundation will not be a bank holding company
within the meaning of 12 C.F.R. Section 1841 as a result of
the issuance of the Foundation Shares to it in accordance with
the terms of the Plan and in the amounts as described in the
Prospectus; to the knowledge of the Bank, the MHC and the
Company, all approvals required to establish the Foundation
and to contribute the Foundation Shares thereto and cash in an
amount equal to 4.0% of the Shares sold in the Offering have
been obtained as described in the Prospectus; except as
specifically disclosed in the Prospectus, there are no
agreements and/or understandings, written or oral or
otherwise, between the Company, the MHC, and/or the Bank and
the Foundation with respect to the control, directly or
indirectly, over the voting and the acquisition or disposition
of the shares of Common Stock to be contributed by the Company
to the Foundation; the Foundation Shares to be issued to the
Foundation in accordance with the Plan and as described in the
Prospectus will have been duly authorized for issuance and,
when issued and contributed
15
<PAGE>
by the Company pursuant to the Plan, will be duly and validly
issued and fully paid and non-assessable.
Section 5. Covenants of the Company, the MHC and the Bank. The Company,
the MHC and the Bank hereby jointly and severally covenant with FBR as follows:
(a) The Company will not, at any time after the date the
Registration Statement is declared effective, file any
amendment or supplement to the Registration Statement without
providing the Agent and its counsel an opportunity to review
such amendment or supplement or file any amendment or
supplement to which amendment or supplement the Agent or its
counsel shall reasonably object.
(b) The MHC and Bank will not, at any time after the
Reorganization Applications are approved by the Department and
the FDIC, file any amendment or supplement to such
Reorganization Applications without providing the Agent and
its counsel an opportunity to review such amendment or
supplement or file any amendment or supplement to which
amendment or supplement the Agent or its counsel shall
reasonably object.
(c) The Company will not, at any time before the Holding Company
Application is approved by the Federal Reserve Bank, file any
amendment or supplement to such Holding Company Application
without providing the Agent and its counsel an opportunity to
review the nonconfidential portions of such amendment or
supplement or file any amendment or supplement to which
amendment or supplement the Agent or its counsel shall
reasonably object.
(d) The Company, the MHC and the Bank will use their best efforts
to cause any post-effective amendment to the Registration
Statement to be declared effective by the Commission and any
post-effective amendment to the Reorganization Applications to
be approved by the Department and the FDIC and will
immediately upon receipt of any information concerning the
events listed below notify the Agent: (i) when the
Registration Statement, as amended, has become effective; (ii)
when the Reorganization Applications have been approved by the
Department and the FDIC; (iii) any comments from the
Commission, the Department, the FDIC or any other governmental
entity with respect to the Reorganization or the transactions
contemplated by this Agreement; (iv) of the request by the
Commission, the Department, the FDIC or any other governmental
entity for any amendment or supplement to the Registration
Statement or the Reorganization Applications or for additional
information; (v) of the issuance by the Commission, the
Department, the FDIC or any other governmental entity of any
order or other action suspending the Offering or the use of
the Registration Statement or the Prospectus or any other
filing of the Company, the MHC or the Bank under the MHC
Regulations, or other applicable law, or the threat of any
such
16
<PAGE>
action; (vi) the issuance by the Commission, the Department,
the FDIC or any authority of any stop order suspending the
effectiveness of the Registration Statement or of the
initiation or threat of initiation or threat of any
proceedings for that purpose; or (vii) of the occurrence of
any event mentioned in paragraph (h) below. The Company, the
MHC and the Bank will make every reasonable effort (i) to
prevent the issuance by the Commission, the Department, the
FDIC or any state authority of any such order and, if any such
order shall at any time be issued, (ii) to obtain the lifting
thereof at the earliest possible time.
(e) The Company, the MHC and the Bank will deliver to the Agent
and to its counsel two conformed copies of the Registration
Statement, the MHC Application, the Notice, the Merger
Application and the Holding Company Application, as originally
filed and of each amendment or supplement thereto, including
all exhibits. Further, the Company, the MHC and the Bank will
deliver such additional copies of the foregoing documents to
counsel to the Agent as may be required for any NASD and "blue
sky" filings.
(f) The Company, the MHC and the Bank will furnish to the Agent,
from time to time during the period when the Prospectus (or
any later prospectus related to this offering) is required to
be delivered under the 1933 Act or the Securities Exchange Act
of 1934 (the "1934 Act"), such number of copies of such
Prospectus (as amended or supplemented) as the Agent may
reasonably request for the purposes contemplated by the 1933
Act, the 1933 Act Regulations, the 1934 Act or the rules and
regulations promulgated under the 1934 Act (the "1934 Act
Regulations"). The Company authorizes the Agent to use the
Prospectus (as amended or supplemented, if amended or
supplemented) in any lawful manner contemplated by the Plan in
connection with the sale of the Shares by the Agent.
(g) The Company, the MHC and the Bank will comply with any and all
material terms, conditions, requirements and provisions with
respect to the Reorganization, and the transactions
contemplated thereby, including those conditions relating to
the operation of the Foundation, imposed by the Commission,
the Department, the FDIC or the MHC Regulations, and by the
1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934
Act Regulations to be complied with prior to or subsequent to
the Closing Date and when the Prospectus is required to be
delivered, and during such time period the Company, the MHC
and the Bank will comply, at their own expense, with all
material requirements imposed upon them by the Commission, the
Department, the FDIC or the Federal Reserve Bank or the MHC
Regulations, and by the 1933 Act, the 1933 Act Regulations,
the 1934 Act and the 1934 Act Regulations, including, without
limitation, Rule 10b-5 under the 1934 Act, in each case as
from time to time in force, so far as
17
<PAGE>
necessary to permit the continuance of sales or dealing in the
Common Stock during such period in accordance with the
provisions hereof and the Prospectus.
(h) If, at any time during the period when the Prospectus relating
to the Shares is required to be delivered, any event relating
to or affecting the Company, the MHC or the Bank shall occur,
as a result of which it is necessary or appropriate, in the
opinion of counsel for the Company, the MHC and the Bank or in
the reasonable opinion of the Agent's counsel, to amend or
supplement the Registration Statement or Prospectus in order
to make the Registration Statement or Prospectus not
misleading in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, the Company, the
MHC and the Bank will immediately so inform the Agent and
prepare and file, at their own expense, with the Commission,
the Department and the FDIC and furnish to the Agent a
reasonable number of copies of an amendment or amendments of,
or a supplement or supplements to, the Registration Statement
or Prospectus (in form and substance reasonably satisfactory
to the Agent and its counsel after a reasonable time for
review) which will amend or supplement the Registration
Statement or Prospectus so that as amended or supplemented it
will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at
the time the Prospectus is delivered to a purchaser, not
misleading. For the purpose of this Agreement, the Company,
the MHC and the Bank each will timely furnish to the Agent
such information with respect to itself as the Agent may from
time to time reasonably request.
(i) The Company, the MHC and the Bank will take all necessary
actions, in cooperating with the Agent, and furnish to
whomever the Agent may direct, such information as may be
required to qualify or register the Shares for offering and
sale by the Company or to exempt such Shares from
registration, or to exempt the Company as a broker-dealer and
its officers, trustees and employees as broker-dealers or
agents under the applicable securities or blue sky laws of
such jurisdictions in which the Shares are required under the
MHC Regulations to be sold or as the Agent and the Company,
the MHC and the Bank may reasonably agree upon; provided,
however, that the Company shall not be obligated to file any
general consent to service of process, to qualify to do
business in any jurisdiction in which it is not so qualified,
or to register its trustees or officers as brokers, dealers,
salesmen or agents in any jurisdiction. In each jurisdiction
where any of the Shares shall have been qualified or
registered as above provided, the Company will make and file
such statements and reports in each fiscal period as are or
may be required by the laws of such jurisdiction.
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<PAGE>
(j) The Company, the MHC and the Bank will not sell or issue,
contract to sell or otherwise dispose of, for a period of 90
days after the Closing Date, without the Agent's prior written
consent, any Common Stock other than the Shares or the
Foundation Shares or other than in connection with any plan or
arrangement described in the Prospectus, including existing
stock benefit plans.
(k) The Company shall register its Common Stock under Section
12(g) of the 1934 Act on or prior to the Closing Date pursuant
to the Plan and shall request that such registration be
effective prior to or upon completion of the Reorganization.
The Company shall maintain the effectiveness of such
registration for not less than three years or such shorter
period as may be required by the Department or the FDIC.
(l) During the period during which the Company's Common Stock is
registered under the 1934 Act or for three (3) years from the
date hereof, whichever period is greater, the Company will
furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report of the Company
(including a consolidated balance sheet and statements of
consolidated income, shareholders' equity and cash flows of
the Company and its subsidiaries as at the end of and for such
year, certified by independent public accountants in
accordance with Regulation S-X under the 1933 Act and the 1934
Act).
(m) During the period of three years from the date hereof, the
Company will furnish to the Agent: (i) as soon as practicable
after such information is publicly available, a copy of each
report of the Company furnished to or filed with the
Commission under the 1934 Act or any national securities
exchange or system on which any class of securities of the
Company is listed or quoted (including, but not limited to,
reports on Forms 10-K, 10-Q and 8-K and all proxy statements
and annual reports to stockholders), (ii) a copy of each other
non-confidential report of the Company mailed to its
stockholders or filed with the Commission, the Department, the
FDIC or any other supervisory or regulatory authority or any
national securities exchange or system on which any class of
securities of the Company is listed or quoted, each press
release and material news items and additional documents and
information with respect to the Company, MHC or the Bank as
the Agent may reasonably request; and (iii) from time to time,
such other non confidential information concerning the
Company, the MHC or the Bank as the Agent may reasonably
request.
(n) The Company, the MHC and the Bank will use the net proceeds
from the sale of the Shares in the manner set forth in the
Prospectus under the caption "How We Intend to Use the
Proceeds."
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<PAGE>
(o) Other than as permitted by the MHC Regulations, the 1933 Act,
the 1933 Act Regulations, and the laws of any state in which
the Shares are registered or qualified for sale or exempt from
registration, neither the Company, the MHC nor the Bank will
distribute any prospectus, offering circular or other offering
material in connection with the offer and sale of the Shares.
(p) The Company will use its best efforts to (i) encourage and
assist a market maker to establish and maintain a market for
the Shares and (ii) list and maintain quotation of the Shares
on a national or regional securities exchange or on the Nasdaq
Stock Market effective on or prior to the Closing Date.
(q) The Bank will maintain appropriate arrangements for depositing
all funds received from persons mailing subscriptions for or
orders to purchase Shares in the Offering on an
interest-bearing basis at the rate described in the Prospectus
until the Closing Date and satisfaction of all conditions
precedent to the release of the Bank's obligation to refund
payments received from persons subscribing for or ordering
Shares in the Offering in accordance with the Plan and as
described in the Prospectus or until refunds of such funds
have been made to the persons entitled thereto or withdrawal
authorizations canceled in accordance with the Plan and as
described in the Prospectus. The Bank will maintain such
records of all funds received to permit the funds of each
subscriber to be separately insured by the FDIC (to the
maximum extent allowable) and to enable the Bank to make the
appropriate refunds of such funds in the event that such
refunds are required to be made in accordance with the Plan
and as described in the Prospectus.
(r) The Company will promptly take all necessary action to
register as a bank holding company under the BHCA within 180
days of the Closing Date.
(s) The Company, the MHC and the Bank will take such actions and
furnish such information as are reasonably requested by the
Agent in order for the Agent to ensure compliance with the
NASD's "Interpretation Relating to Free Riding and
Withholding."
(t) Neither the Company, the MHC nor the Bank will amend the Plan
without notifying the Agent prior thereto.
(u) The Company shall assist the Agent, if necessary, in
connection with the allocation of the Shares in the event of
an oversubscription and shall provide
20
<PAGE>
the Agent with any information necessary to assist the Company
in allocating the Shares in such event and such information
shall be accurate and reliable in all material respects. The
Agent shall be entitled to rely on such information and shall
have no liability in respect of its reasonable reliance
thereon, including without limitation, no liability for or
related to any denial or grant of a subscription in whole or
in part.
(v) Prior to the Closing Date, the Company, the MHC and the Bank
will inform the Agent of any event or circumstances of which
it is aware as a result of which the Registration Statement
and/or Prospectus, as then amended or supplemented, would
contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein not misleading.
(w) Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date,
except as otherwise may be indicated or contemplated therein
or set forth in an amendment or supplement thereto, neither
the Company, the MHC nor the Bank will have: (i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except borrowings from the
same or similar sources indicated in the Prospectus in the
ordinary course of its business, or (ii) entered into any
transaction which is material in light of the business and
properties of the Company and the Bank, taken as a whole.
(x) The facts and representations provided to Elias, Matz, Tiernan
& Herrick L.L.P., by the Bank, the MHC and the Company and
upon which Elias, Matz, Tiernan & Herrick L.L.P., will base
its opinion under Section 7(c)(1) are and will be truthful,
accurate and complete.
(y) The Company, the MHC and the Bank shall use their best efforts
to ensure that the Foundation submits within the time frames
required by applicable law a request to the Internal Revenue
Service to be recognized as a tax-exempt organization under
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"); the Company, the MHC and the Bank will
take no action which will result in the possible loss of the
Foundation's tax-exempt status; and neither the Company, the
MHC nor the Bank will contribute any additional assets to the
Foundation until such time that such additional contributions
will be deductible for federal and state income tax purposes.
Section 6. Payment of Expenses. Whether or not the Reorganization is
completed or the sale of the Shares by the Company is consummated, the Company,
the MHC and the Bank jointly and severally agree to pay or reimburse the Agent
for all expenses incident to the performance of their obligations under this
Agreement, including but not limited to (i) the cost of obtaining all securities
and bank regulatory approvals, (ii) the printing and filing of the Registration
Statement,
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<PAGE>
the Reorganization Applications and the Holding Company Application as
originally filed and of each amendment thereto, (iii) the preparation, issuance
and delivery of the certificates for the Shares to the purchasers in the
Offering, (iv) the fees and disbursements of the Company's, the MHC's and the
Bank's counsel, accountants, conversion agent, appraiser and other advisors, (v)
the qualification of the Shares under securities laws in accordance with the
provisions of Section 5(i) hereof, including filing fees and the fees and
disbursements of counsel in connection therewith and in connection with the
preparation of the Blue Sky Survey, (vi) the printing and delivery to the Agent
of copies of the Registration Statement as originally filed and of each
amendment thereto and the printing and delivery of the Prospectus and any
amendments or supplements thereto to the purchasers in the Offering and the
Agent, (vii) the printing and delivery to the Agent of copies of a Blue Sky
Survey, and (viii) the fees and expenses incurred in connection with the listing
of the Common Stock on the Nasdaq Stock Market. In the event the Agent incurs
any such fees and expenses on behalf of the Bank, the MHC or the Company, the
Bank will reimburse the Agent for such fees and expenses whether or not the
Reorganization is consummated; provided, however, that the Agent shall not incur
any substantial expenses on behalf of the Bank, the MHC or the Company pursuant
to this Section without the prior approval of the Bank or the Company.
The Company and the Bank jointly and severally agree to pay certain
expenses incident to the performance of the Agent's obligations under this
Agreement, including (i) the filing fees paid or incurred by the Agent in
connection with all filings with the NASD, (ii) legal fees and expenses of the
Agent's counsel and (iii) all reasonable out of pocket expenses incurred by the
Agent relating to the Offerings, including, without limitation, advertising,
promotional, syndication and travel expenses and fees, provided that should the
expenses in clauses (ii) and/or (iii) above exceed $50,000 in the aggregate, the
Company must approve such expenses above that amount for FBR to be reimbursed.
All fees and expenses to which the Agent is entitled to reimbursement under this
paragraph of this Section 6 shall be due and payable upon receipt by the Company
or the Bank of a written accounting therefor setting forth in reasonable detail
the expenses incurred by the Agent.
Section 7. Conditions to the Agent's Obligations. The obligations of
the Agent hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived in writing by the Agent, to the condition that
all representations and warranties of the Company, the MHC and the Bank herein
are, at and as of the commencement of the Offering and at and as of the Closing
Date, true and correct in all material respects, the condition that the Company,
the MHC and the Bank shall have performed all of their obligations hereunder to
be performed on or before such dates, and to the following further conditions:
(a) At the Closing Date, the Company, the MHC and the Bank shall
have conducted the Reorganization in all material respects in
accordance with the Plan, the MHC Regulations, and all other
applicable laws, regulations, decisions and orders, including
all terms, conditions, requirements and provisions precedent
to the Reorganization imposed upon them by the Department, the
FDIC and the Federal Reserve Bank.
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<PAGE>
(b) The Registration Statement shall have been declared effective
by the Commission and the Reorganization Applications shall be
approved by the Department and the FDIC not later than 5:30
p.m. on the date of this Agreement, or with the Agent's
consent at a later time and date; and at the Closing Date, no
stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or
proceedings therefore initiated or threatened by the
Commission or any state authority, and no order or other
action suspending the authorization of the Prospectus or the
consummation of the Reorganization shall have been issued or
proceedings therefore initiated or, to the Company's, the
MHC's or the Bank's knowledge, threatened by the Commission,
the Department, the FDIC, the Federal Reserve Bank or any
state authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of Elias, Matz,
Tiernan & Herrick L.L.P., special counsel for the Company, the
MHC and the Bank, in form and substance to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation under the
laws of the State of Delaware.
(ii) The Company has corporate power and
authority to own, lease and operate its properties
and to conduct its business as described in the
Registration Statement and the Prospectus.
(iii) The Bank has been organized and is a
validly existing New York State chartered savings
bank in capital stock form of organization,
authorized to conduct its business and own its
property as described in the Registration Statement
and the Prospectus. All of the outstanding capital
stock of the Bank upon completion of the
Reorganization will be duly authorized and, upon
payment therefor, will be validly issued, fully paid
and non-assessable and will be owned by the Company,
free and clear of any liens, encumbrances, claims or
other restrictions.
(iv) The Bank is a member of the FHLB-New
York. The deposit accounts of the Bank are insured by
the FDIC up to the maximum amount allowed under law
and no proceedings for the termination or revocation
of such insurance are pending or, to such counsel's
Actual Knowledge, threatened; the description of the
liquidation account as set forth in the Prospectus
under the captions "Our Corporate Change and Stock
Offering-Effects of the Corporate Change-Depositors
Rights if We Liquidate," to the extent that such
information constitutes matters of law and legal
conclusions, has been reviewed by such counsel and is
accurately described in all material respects.
23
<PAGE>
(v) The MHC has been duly organized and is
validly existing as a New York State chartered mutual
holding company, duly authorized to conduct its
business and own its properties as described in the
Registration Statement and Prospectus.
(vi) Upon consummation of the Reorganization
and the issuance of Foundation Shares to the
Foundation immediately upon completion thereof
subject to compliance with all conditions imposed
upon the Foundation and the contribution thereof by
the Department and the FDIC under the terms of the
Departments approval order and the FDIC's no
objection letter, in an amount as described in the
Prospectus, the authorized, issued and outstanding
capital stock of the Company will be within the range
set forth in the Prospectus under the caption
"Capitalization," and no shares of Common Stock have
been issued prior to the Closing Date; at the time of
the Reorganization, the Shares subscribed for
pursuant to the Offering and the Foundation Shares
will have been duly and validly authorized for
issuance, and when issued and delivered by the
Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan and
Prospectus, will be duly and validly issued and fully
paid and non-assessable; the issuance of the Shares
and the Foundation Shares is not subject to
preemptive rights and the terms and provisions of the
Shares and the Foundation Shares conform in all
material respects to the description thereof
contained in the Prospectus. To such counsel's Actual
Knowledge, upon the issuance of the Shares and the
Foundation Shares, good title to the Shares and the
Foundation Shares will be transferred by the Company
to the purchasers thereof against payment therefor,
subject to such claims as may be asserted against the
purchasers thereof by third-party claimants.
(vii) The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby, including the establishment of
the Foundation and the contribution thereto of the
Foundation Shares, have been duly and validly
authorized by all necessary action on the part of the
Company, the MHC and the Bank; and this Agreement is
a valid and binding obligation of the Company, the
MHC and the Bank, enforceable in accordance with its
terms, except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency,
reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter
in effect relating to or affecting the enforcement of
creditors' rights generally or the rights of
creditors of savings institutions, the deposits of
which are insured by the FDIC and their holding
companies, (ii) general equitable principles, (iii)
laws relating to the safety and soundness of insured
depository institutions and their holding companies,
and (iv) applicable law or public policy with respect
to the indemnification and/or contribution provisions
contained herein, including without limitation the
provisions of Sections 23A and 23B of the Federal
Reserve Act and except
24
<PAGE>
that no opinion need be expressed as to the effect or
availability of equitable remedies or injunctive
relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(viii) The MHC Application (including
therewith, the establishment of the Foundation and
the contribution of the Foundation Shares thereto)
and the Notice have been approved by the Department
and the FDIC, the Merger Application has been
approved by the FDIC, and the Prospectus has been
authorized for use by the Department. The Federal
Reserve Bank has approved the Holding Company
Application and issued its order of approval under
the bank holding company provisions of the BHCA, the
purchase by the Company of all of the issued and
outstanding capital stock of the Bank has been
authorized by the Department and the FDIC, and no
action has been taken, and to such counsel's Actual
Knowledge none is pending or threatened, to revoke
any such authorization or approval.
(ix) The Plan and the establishment and
funding of the Foundation has been duly adopted by
the required vote of the trustees of the Company, the
MHC and the Bank, and based upon the certificate of
the inspector of election, by the members of the
Bank.
(x) Subject to the satisfaction of the
conditions to the Department's and the FDIC's
approval of the Reorganization and the Federal
Reserve Bank's approval of the Holding Company
Application, no further approval, registration,
authorization, consent or other order of any federal
regulatory agency is required in connection with the
execution and delivery of this Agreement, the
issuance of the Shares and the Foundation Shares and
the consummation of the Reorganization, except as may
be required under the securities or blue sky laws of
various jurisdictions (as to which no opinion need be
rendered) and except as may be required under the
rules and regulations of the NASD and/or the Nasdaq
Stock Market (as to which no opinion need be
rendered). To such counsel's Actual Knowledge, the
Reorganization has been consummated in all material
respects in accordance with MHC Regulations, except
that no opinion is rendered with respect to (a) the
MHC Application, the Registration Statement or
Prospectus, which are covered by other clauses of
this opinion, (b) the satisfaction of the
post-Reorganization conditions in the MHC Regulations
or in the Department or FDIC approvals of the MHC
Application and the Federal Reserve Bank's approval
of the Holding Company Application, (c) the
securities or "blue sky" laws of various
jurisdictions, and (d) the rules and regulations of
the NASD and or the Nasdaq Stock Market.
(xi) The Registration Statement is effective
under the 1933 Act, and no stop order suspending the
effectiveness has been issued under the
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1933 Act or proceedings therefor initiated or, to
such counsel's Actual Knowledge, threatened by the
Commission.
(xii) At the time the MHC Application,
including the Prospectus contained therein, and the
Notice and Merger Application were approved by the
Department and the FDIC, the MHC Application,
including the Prospectus contained therein, and the
Notice and Merger Application complied as to form in
all material respects with the requirements of the
MHC Regulations, federal law and all applicable rules
and regulations promulgated thereunder (other than
the financial statements, the notes thereto, and
other tabular, financial, statistical and appraisal
data included therein, as to which no opinion need be
rendered).
(xiii) At the time that the Registration
Statement became effective, (i) the Registration
Statement (as amended or supplemented, if so amended
or supplemented) (other than the financial
statements, the notes thereto, and other tabular,
financial, statistical and appraisal data included
therein, as to which no opinion need be rendered),
complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act
Regulations, and (ii) the Prospectus (other than the
financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data
included therein, as to which no opinion need be
rendered) complied as to form in all material
respects with the requirements of the 1933 Act, the
1933 Act Regulations, the MHC Regulations and
applicable law.
(xiv) The terms and provisions of the Shares
of the Company conform, in all material respects, to
the description thereof contained in the Registration
Statement and Prospectus, and the form of certificate
used to evidence the Shares is in due and proper
form.
(xv) There are no legal or governmental
proceedings pending or threatened which are required
to be disclosed in the Registration Statement and
Prospectus, other than those disclosed therein, and
to such counsel's Actual Knowledge, all pending legal
and governmental proceedings to which the Company,
the MHC, the Bank or the Foundation is a party or of
which any of their property is the subject, which are
not described in the Registration Statement and the
Prospectus, including ordinary routine litigation
incidental to the Company's, the MHC's or the Bank's
business, are, considered in the aggregate, not
material.
(xvi) To such counsel's Actual Knowledge,
there are no material contracts, indentures,
mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to
in the MHC Application, the Registration Statement or
the Prospectus or required to be filed as exhibits
thereto other than those described or referred to
therein or filed as
26
<PAGE>
exhibits thereto in the MHC Application, the
Registration Statement or the Prospectus. The
description in the MHC Application, the Registration
Statement and the Prospectus of such documents and
exhibits is accurate in all material respects and
fairly presents the information required to be shown.
(xvii) To such counsel's Actual Knowledge,
the Company, the MHC and the Bank have conducted the
Reorganization, in all material respects, in
accordance with all applicable requirements of the
Plan and applicable law, except that no opinion is
rendered with respect to (a) the MHC Application, the
Registration Statement or Prospectus, which are
covered by other clauses of this opinion, (b) the
satisfaction of the post-Reorganization conditions in
the MHC Regulations or in the Department and FDIC
approvals of the MHC Application and the Federal
Reserve Bank's approval of the Holding Company
Application, (c) the securities or "blue sky" laws of
various jurisdictions, and (d) the rules and
regulations of the NASD and the Nasdaq Stock Market.
The Plan complies in all material respects with all
applicable federal laws, rules, regulations,
decisions and orders including, but not limited to,
the MHC Regulations; no order has been issued by the
Department, the Commission, the FDIC, the Federal
Reserve Bank or any state authority to suspend the
Offering or the use of the Prospectus, and no action
for such purposes has been instituted or, to such
counsel's Actual Knowledge, threatened by the
Department, the Commission, the FDIC, the Federal
Reserve Bank or any state authority and no person has
sought to obtain regulatory or judicial review of the
final action of the Department, the FDIC or the
Federal Reserve Bank, approving the Plan, the MHC
Application, the Holding Company Application or the
Prospectus.
(xviii) To such counsel's Actual Knowledge,
the Company, the MHC, and the Bank have obtained all
material licenses, permits and other governmental
authorizations currently required for the conduct of
their businesses and all such licenses, permits and
other governmental authorizations are in full force
and effect, and the Company, the MHC and the Bank are
in all material respects complying therewith, except
where the failure to have such licenses, permits and
other governmental authorizations or the failure to
be in compliance therewith would not have a material
adverse effect on the business or operations of the
Bank, the MHC and the Company taken as a whole.
(xix) To such counsel's Actual Knowledge,
neither the Company, the MHC nor the Bank is in
violation of its certificate of incorporation and
bylaws or its Charter and bylaws, as appropriate or,
to such counsel's Actual Knowledge, in default or
violation of any obligation, agreement, covenant or
condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or
its property may be bound, except for such defaults
or violations which would
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<PAGE>
not have a material adverse impact on the financial
condition or results of operations of the Company,
the MHC and the Bank on a consolidated basis; to such
counsel's Actual Knowledge, the execution and
delivery of this Agreement, the occurrence of the
obligations herein set forth and the consummation of
the transactions contemplated herein will not
conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or
assets of the Company, the MHC or the Bank pursuant
to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which
the Company, the MHC or the Bank is a party or by
which any of them may be bound, or to which any of
the property or assets of the Company, the MHC or the
Bank are subject (other than the establishment of the
liquidation account); and, such action will not
result in any violation of the provisions of the
certificate of incorporation or bylaws of the Company
or the Charter or bylaws of the MHC or the Bank or,
to such counsel's Actual Knowledge, result in any
violation of any applicable federal law, act,
regulation (except that no opinion with respect to
the securities and blue sky laws of various
jurisdictions or the rules or regulations of the NASD
need be rendered) or order or court order, writ,
injunction or decree.
(xx) The Company's certificate of
incorporation and bylaws comply in all material
respects with the General Corporation Laws of the
State of Delaware. The Bank's and MHC's charter and
bylaws comply in all material respects with the rules
and regulations of the Department.
(xxi) To such counsel's Actual Knowledge,
neither the Company, the MHC nor the Bank is in
violation of any directive from the Department or the
FDIC to make any material change in the method of
conducting its respective business.
(xxii) The information in the Prospectus
under the captions "How We Are Regulated," "Our
Corporate Change and Stock Offering," "Certain
Restrictions on Acquisition of Oswego County Bancorp
and Oswego County Savings" and "Description of
Capital Stock of Oswego County Bancorp," to the
extent that such information constitutes matters of
law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed
by such counsel and is correct in all material
respects. The description of the Reorganization
process under the caption "Our Corporate Change and
Stock Offering" in the Prospectus has been reviewed
by such counsel and fairly describes such process in
all material respects. The discussion of statutes or
regulations described or referred to in the
Prospectus are accurate summaries and fairly present
the information required to be shown. The information
under the caption "Our Corporate Change and Stock
Offering-Tax Effects of the Corporate Change and
Stock Offering" has been reviewed by such counsel and
fairly describes the opinions rendered by
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Elias, Matz, Tiernan & Herrick L.L.P., and KPMG LLP
to the Company, the MHC and the Bank with respect to
such matters.
(xxiii) The Foundation has been duly
incorporated and is validly existing as a non-stock
corporation in good standing under the laws of the
State of Delaware with corporate power and authority
to own, lease and operate its properties and to
conduct its business as described in the Prospectus;
the Foundation is not a bank holding company within
the meaning of BHCA as a result of the issuance of
the Foundation Shares to it in accordance with the
terms of the Plan and in the amounts as described in
the Prospectus; no approvals are required to
establish the Foundation and to contribute the
Foundation Shares and cash amounts thereto as
described in the Prospectus other than those set
forth in the Department approval order or the FDIC
non-objection letter; the Foundation Shares to be
issued to the Foundation in accordance with the Plan
and as described in the Prospectus will have been
duly authorized for issuance and, when issued and
contributed by the Company pursuant to the Plan, will
be duly and validly issued and fully paid and
non-assessable.
In addition, such counsel shall state that
during the preparation of the Reorganization
Applications, the Registration Statement and the
Prospectus, they participated in conferences with
certain officers of, the independent public and
internal accountants for, and other representatives
of the Company, the MHC and the Bank, at which
conferences the contents of the Reorganization
Applications, the Registration Statement and the
Prospectus and related matters were discussed and,
while such counsel have not confirmed the accuracy or
completeness of or otherwise verified the information
contained in the Reorganization Applications, the
Registration Statement or the Prospectus, and do not
assume any responsibility for such information, based
upon such conferences and a review of documents
deemed relevant for the purpose of rendering their
view (relying as to materiality as to factual matters
on certificates of officers and other factual
representations by the Company, the MHC and the
Bank), nothing has come to their attention that would
lead them to believe that the Reorganization
Applications, the Registration Statement, the
Prospectus, or any amendment or supplement thereto
(other than the financial statements, the notes
thereto, and other tabular, financial, statistical
and appraisal data included therein as to which no
view need be rendered) contained an untrue statement
of a material fact or omitted to state a material
fact required to be stated therein or necessary to
make the statements therein, in light of the
circumstances under which they were made, not
misleading.
In giving such opinion, such counsel may rely as to all matters of
fact on certificates of officers or trustees of the Company, the MHC and the
Bank and certificates of public officials. Such counsel's opinion shall be
limited to matters governed by federal, New York and Delaware law.
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<PAGE>
With respect to matters involving the application of New York and Delaware law,
such counsel may rely, to the extent it deems proper and as specified in its
opinion, solely upon the opinion of local counsel. The opinion of Elias, Matz,
Tiernan & Herrick L.L.P., shall be governed by the Legal Opinion Accord
("Accord") of the American Bar Association Section of Business Law (1991). The
term "Actual Knowledge" as used herein shall have the meaning set forth in the
Accord. For purposes of such opinion, no proceedings shall be deemed to be
pending, no order or stop order shall be deemed to be issued, and no action
shall be deemed to be instituted unless, in each case, a director or executive
officer of the Company, the MHC or the Bank shall have received a copy of such
proceedings, order, stop order or action. In addition, such opinion may be
limited to present statutes, regulations and judicial interpretations and to
facts as they presently exist; in rendering such opinion, such counsel need
assume no obligation to revise or supplement it should the present laws be
changed by legislative or regulatory action, judicial decision or otherwise; and
such counsel need express no view, opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any proposed or pending
regulations or policy statements issued by any regulatory agency, whether or not
promulgated pursuant to any such legislation, would affect the validity of the
Reorganization or any aspect thereof. Such counsel may assume that any agreement
is the valid and binding obligation of any parties to such agreement other than
the Company, the MHC or the Bank.
The favorable opinion, dated as of the Closing Date and addressed to
the Agent and for their benefit, of the Bank's local counsel, in form and
substance to the effect that, to the best of such counsel's knowledge, (i) the
Company, the MHC and the Bank have good and marketable title to all properties
and assets which are material to the business of the Company, the MHC and the
Bank and to those properties and assets described in the Registration Statement
and Prospectus, as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the Registration
Statement and Prospectus, or are not material in relation to the business of the
Company, the MHC and the Bank considered as one enterprise; (ii) all of the
leases and subleases material to the business of the Company, the MHC and the
Bank under which the Company, the MHC and the Bank hold properties, as described
in the Registration Statement and Prospectus, are in full force and effect; and
(iii) the Bank is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which its ownership of property
or leasing of property or the conduct of its business requires such
qualification, unless the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the condition,
financial or otherwise, or the business, operations or income of the Bank.
(d) At the Closing Date, the Agent shall have received
the favorable opinion, dated as of the Closing Date,
of Breyer & Associates PC, the Agent's counsel, with
respect to such matters as the Agent may reasonably
require. Such opinion may rely upon the opinions of
counsel to the Company, the MHC and the Bank, and as
to matters of fact, upon certificates of officers and
trustees of the Company, the MHC and the Bank
delivered pursuant hereto or as such counsel shall
reasonably request.
(e) At the Closing Date, the Agent shall receive a
certificate of the Chief Executive Officer and the
Principal Financial and/or Accounting Officer of
30
<PAGE>
the Company, the MHC and the Bank in form and
substance reasonably satisfactory to the Agent's
Counsel, dated as of such Closing Date, to the effect
that: (i) they have carefully reviewed the Prospectus
and, in their opinion, at the time the Prospectus
became authorized for final use, the Prospectus did
not contain any untrue statement of a material fact
or omit to state a material fact necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not
misleading; (ii) since the date the Prospectus became
authorized for final use, no event has occurred which
should have been set forth in an amendment or
supplement to the Prospectus which has not been so
set forth, including specifically, but without
limitation, any material adverse change in the
condition, financial or otherwise, or in the
earnings, capital, properties or business of the
Company, the MHC or the Bank, and the conditions set
forth in this Section 7 have been satisfied; (iii)
since the respective dates as of which information is
given in the Registration Statement and the
Prospectus, there has been no material adverse change
in the condition, financial or otherwise, or in the
earnings, capital or properties of the Company, the
MHC or the Bank, independently, or of the Company,
the MHC and the Bank, considered as one enterprise,
whether or not arising in the ordinary course of
business; (iv) the representations and warranties in
Section 4 are true and correct with the same force
and effect as though expressly made at and as of the
Closing Date; (v) the Company, MHC and the Bank have
complied in all material respects with all agreements
and satisfied all conditions on their part to be
performed or satisfied at or prior to the Closing
Date and will comply in all material respects with
all obligations to be satisfied by them after the
Reorganization; (vi) no stop order suspending the
effectiveness of the Registration Statement has been
initiated or, to the best knowledge of the Company,
the MHC or the Bank, threatened by the Commission or
any state authority; (vii) no order suspending the
Offering, the Reorganization, the acquisition of all
of the shares of the Bank by the Company or the
effectiveness of the Prospectus has been issued and
no proceedings for that purpose are pending or, to
the best knowledge of the Company, the MHC or the
Bank, threatened by the Department, the Commission,
the FDIC, the Federal Reserve Bank or any state
authority; and (viii) to the best knowledge of the
Company, the MHC or the Bank, no person has sought to
obtain review of the final action of the Department
or the FDIC approving the Plan.
(f) Prior to and at the Closing Date: (i) in the
reasonable opinion of the Agent, there shall have
been no material adverse change in the condition,
financial or otherwise, or in the earnings or
business of the Company, the MHC or the Bank
independently, or of the Company, the MHC and the
Bank, considered as one enterprise, from that as of
the latest dates as of which such condition is set
forth in the Prospectus other than transactions
referred to or contemplated therein; (ii) the
Company, the MHC or the Bank shall not have received
from the Department or the FDIC any direction (oral
or written) to
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<PAGE>
make any material change in the method of conducting
their business with which it has not complied (which
direction, if any, shall have been disclosed to the
Agent) or which materially and adversely would affect
the business, operations or financial condition or
income of the Company, the MHC and the Bank taken as
a whole; (iii) the Company, the MHC and the Bank
shall not have been in default (nor shall an event
have occurred which, with notice or lapse of time or
both, would constitute a default) under any provision
of any agreement or instrument relating to any
outstanding indebtedness; (iv) no action, suit or
proceeding, at law or in equity or before or by any
federal or state commission, board or other
administrative agency, shall be pending or, to the
knowledge of the Company, the MHC or the Bank,
threatened against the Company, the MHC or the Bank
or affecting any of their properties wherein an
unfavorable decision, ruling or finding would
materially and adversely affect the business,
operations, financial condition or income of the
Company, the MHC and the Bank taken as a whole; and
(v) the Shares have been qualified or registered for
offering and sale or exempted therefrom under the
securities or blue sky laws of the jurisdictions as
the Agent shall have reasonably requested and as
agreed to by the Company, the MHC and the Bank.
(g) Concurrently with the execution of this Agreement,
the Agent shall receive a letter from KPMG LLP dated
as of the date of the Prospectus and addressed to the
Agent: (i) confirming that KPMG LLP is a firm of
independent public accounts within the meaning of
Rule 101 of the Code of Professional Ethics of the
American Institute of Certified Public Accountants
and applicable regulations of the Department and the
FDIC and stating in effect that in its opinion the
financial statements, schedules and related notes of
the Bank as of December 31, 1998 and 1997 and for
each of the two years in the period ended December
31, 1998, as are included in the Prospectus and
covered by their opinion included therein, comply as
to form in all material respects with the applicable
accounting requirements and related published rules
and regulations of the Department and the FDIC and
the 1933 Act; (ii) stating in effect that, on the
basis of certain agreed upon procedures (but not an
audit in accordance with generally accepted auditing
standards) consisting of a reading of the latest
available unaudited interim financial statements of
the Bank prepared by the Bank, a reading of the
minutes of the meetings of the Board of Trustees and
members of the Bank and consultations with officers
of the Bank responsible for financial and accounting
matters, nothing came to their attention which caused
them to believe that: (A) the unaudited financial
statements included in the Prospectus are not in
conformity with the 1933 Act, applicable accounting
requirements of the Department and the FDIC and
generally accepted accounting principles applied on a
basis substantially consistent with that of the
audited financial statements included in the
Prospectus; or (B) during the period from the date of
the latest unaudited financial statements included in
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<PAGE>
the Prospectus to a specified date not more than
three business days prior to the date of the
Prospectus, except as has been described in the
Prospectus, there was any increase in borrowings,
other than normal deposit fluctuations, by the Bank;
or (c) there was any decrease in the net assets of
the Bank at the date of such letter as compared with
amounts shown in the latest unaudited statement of
condition included in the Prospectus; and (iii)
stating that, in addition to the audit referred to in
their opinion included in the Prospectus and the
performance of the procedures referred to in clause
(ii) of this subsection (g), they have compared with
the general accounting records of the Bank, which are
subject to the internal controls of the Bank, the
accounting system and other data prepared by the
Bank, directly from such accounting records, to the
extent specified in such letter, such amounts and/or
percentages set forth in the Prospectus as the Agent
may reasonably request; and they have reported on the
results of such comparisons.
(h) At the Closing Date, the Agent shall receive a letter
dated the Closing Date, addressed to the Agent,
confirming the statements made by KPMG LLP in the
letter delivered by it pursuant to subsection (g) of
this Section 7, the "specified date" referred to in
clause (ii) of subsection (g) thereof to be a date
specified in such letter, which shall not be more
than three business days prior to the Closing Date.
(i) At the Closing Date, the Agent shall receive a letter
from RP Financial LC, dated the date thereof and
addressed to counsel for the Agent (i) confirming
that said firm is independent of the Company, the MHC
and the Bank and is experienced and expert in the
area of corporate appraisals within the meaning of
applicable regulations of the Department and the
FDIC, (ii) stating in effect that the Appraisal
prepared by such firm complies in all material
respects with the applicable requirements of the
Department and the FDIC, and (iii) further stating
that their opinion of the aggregate pro forma market
value of the Company, the MHC and the Bank expressed
in their Appraisal dated as of ___________, 1999, and
most recently updated, remains in effect.
(j) The Company, the MHC and the Bank shall not have
sustained since the date of the latest financial
statements included in the Prospectus any material
loss or interference with its business from fire,
explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or
court or governmental action, order or decree,
otherwise than as set forth or contemplated in the
Registration Statement and Prospectus and since the
respective dates as of which information is given in
the Registration Statement and Prospectus, there
shall not have been any change in the long-term debt
of the Company, the MHC or the Bank other than debt
incurred in relation to the purchase of Shares by the
Bank's Eligible Plans, or any change, or any
development involving a prospective change, in or
affecting
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the general affairs, management, financial position,
stockholders' equity or results of operations of the
Company or the Bank, otherwise than as set forth or
contemplated in the Registration Statement and
Prospectus, the effect of which, in any such case
described above, is in FBR's reasonable judgment
sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the
Subscription Offering or the delivery of the Shares
on the terms and in the manner contemplated in the
Prospectus.
(k) At or prior to the Closing Date, the Agent shall
receive: (i) a copy of the letters from the
Department and the FDIC approving the Reorganization
Applications and authorizing the use of the
Prospectus; (ii) a copy of the order from the
Commission declaring the Registration Statement
effective; (iii) certificate from the State of
Delaware evidencing the incorporation and good
standing of the Company; (iv) a certificate from the
FDIC evidencing the Bank's insurance of accounts;
(iv) a certificate from the Department evidencing the
corporate existence of the Bank and the MHC; (v) a
certificate from the FDIC evidencing the Bank's
insurance of accounts; (vi) a certificate of the
FHLB-New York evidencing the Bank's membership
thereof; (vii) a copy of the letter from the Federal
Reserve Bank approving the Company's Holding Company
Application; (viii) a copy of the Bank's New York
State stock charter; and (ix) a copy of the Company's
Delaware certificate of incorporation; and (x) a copy
of the MHC's New York State charter.
(l) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or
limitation in trading in securities generally on the
New York Stock Exchange or in the over-the-counter
market, or quotations halted generally on the Nasdaq
Stock Market, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices
for securities have been required by either of such
exchanges or the NASD or by order of the Commission
or any other governmental authority; (ii) a general
moratorium on the operations of commercial banks,
federal or state savings institutions or a general
moratorium on the withdrawal of deposits from
commercial banks or federal or state savings
institutions declared by federal or state
authorities; (iii) the engagement by the United
States in hostilities which have resulted in the
declaration, on or after the date hereof, of a
national emergency or war; or (iv) a material decline
in the price of equity or debt securities if the
effect of such a declaration or decline, in the
Agent's reasonable judgement, makes it impracticable
or inadvisable to proceed with the Offering or the
delivery of the shares on the terms and in the manner
contemplated in the Registration Statement and the
Prospectus.
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(m) At or prior to the Closing Date, counsel to the Agent
shall have been furnished with such documents and
opinions as they may reasonably require for the
purpose of enabling them to pass upon the sale of the
Shares and the issuance of the Foundation Shares as
herein contemplated and related proceedings or in
order to evidence the occurrence or completeness of
any of the representations or warranties, or the
fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company,
the MHC or the Bank in connection with the
Reorganization and the sale of the Shares and the
issuance of the Foundation Shares as herein
contemplated shall be satisfactory in form and
substance to FBR and its counsel.
Section 8. Indemnification.
(a) The Company, the MHC and the Bank jointly and
severally agree to indemnify and hold harmless the
Agent, its respective officers and trustees,
employees and agents, and each person, if any, who
controls the Agent within the meaning of Section 15
of the 1933 Act or Section 20(a) of the 1934 Act,
from and against any and all loss, liability, claim,
damage or expense whatsoever (including but not
limited to settlement expenses), joint or several,
that the Agent or any of them may suffer or to which
the Agent and any such persons may become subject
under all applicable federal or state laws or
otherwise, and to promptly reimburse the Agent and
any such persons upon written demand for any expense
(including reasonable fees and disbursements of
counsel) incurred by the Agent or any of them in
connection with investigating, preparing or defending
any actions, proceedings or claims (whether commenced
or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or
are based upon any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the
Reorganization Applications (or any amendments or
supplements thereto), the Holding Company Application
or any instrument or document executed by the
Company, the MHC or the Bank or based upon written
information supplied by the Company, the MHC or the
Bank filed in any state or jurisdiction to register
or qualify any or all of the Shares or to claim an
exemption therefrom, or provided to any state or
jurisdiction to exempt the Company as a broker-dealer
or its officers, trustees and employees as
broker-dealers or agent, under the securities laws
thereof (collectively, the "Blue Sky Application"),
or any document, advertisement, oral statement or
communication ("Sales Information") prepared, made or
executed by or on behalf of the Company, the MHC or
the Bank with their consent or based upon written or
oral information furnished by or on behalf of the
Company, the MHC or the Bank, whether or not filed in
any jurisdiction, in order to qualify or register the
Shares or to claim an exemption therefrom under the
securities laws thereof; (ii) arise out of or are
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based upon the omission or alleged omission to state
in any of the foregoing documents or information, a
material fact required to be stated therein or
necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading; or (iii) arise from any theory of
liability whatsoever relating to or arising from or
based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement
thereto), the Reorganization Applications (or any
amendments or supplements thereto), the Holding
Company Application, any Blue Sky Application or
Sales Information or other documentation distributed
in connection with the Reorganization; provided,
however, that no indemnification is required under
this paragraph (a) to the extent (1) such losses,
claims, damages, liabilities or actions arise out of
or are based upon any untrue material statement or
alleged untrue material statement in, or material
omission or alleged material omission from, the
Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the
Reorganization Applications (or any amendments or
supplements thereto), the Holding Company
Application, any Blue Sky Application or Sales
Information made in reliance upon and in conformity
with information furnished in writing to the Company,
the MHC or the Bank by the Agent or its counsel
regarding the Agent provided, that it is agreed and
understood that the only information furnished in
writing to the Company, the MHC or the Bank by the
Agent regarding the Agent is set forth in the
Prospectus under the caption "Our Corporate Change
and Stock Offering-Marketing Arrangements", (2) any
settlement by the Agent is effected without the prior
written consent of the Company, the MHC or the Bank,
and (3) that any loss, claim, damage or liability is
found in a final judgment by a court to have resulted
primarily from the Agent's gross negligence or
willful misconduct; and, provided further, that such
indemnification shall be to the extent permitted by
the Commissioner, the Department, the FDIC and the
Federal Reserve Bank.
(b) The Agent agrees to indemnify and hold harmless the
Company, the MHC and the Bank, their trustees and
officers and each person, if any, who controls the
Company, the MHC or the Bank within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the
1934 Act against any and all loss, liability, claim,
damage or expense whatsoever (including but not
limited to settlement expenses), joint or several,
which they, or any of them, may suffer or to which
they, or any of them may become subject under all
applicable federal and state laws or otherwise, and
to promptly reimburse the Company, the MHC, the Bank,
and any such persons upon written demand for any
expenses (including reasonable fees and disbursements
of counsel) incurred by them, or any of them, in
connection with investigating, preparing or defending
any actions, proceedings or claims (whether commenced
or threatened) to the extent such losses, claims,
damages, liabilities or actions:
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<PAGE>
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any
amendment or supplement thereto), the Reorganization
Applications (or any amendments or supplements
thereto), the Holding Company Application, the
preliminary or final Prospectus (or any amendment or
supplement thereto), any Blue Sky Application or
Sales Information, (ii) are based upon the omission
or alleged omission to state in any of the foregoing
documents a material fact required to be stated
therein or necessary to make the statements therein,
in the light of the circumstances under which they
were made, not misleading, or (iii) arise from any
theory of liability whatsoever relating to or arising
from or based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement
thereto), the Reorganization Applications (or any
amendments or supplements thereto), the Holding
Company Application, or any Blue Sky Application or
Sales Information or other documentation distributed
in connection with the Reorganization; provided,
however, that the Agent's obligations under this
Section 8(b) shall exist only if and only to the
extent (i) that such untrue statement or alleged
untrue statement was made in, or such material fact
or alleged material fact was omitted from, the
Registration Statement (or any amendment or
supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement thereto),
the Reorganization Applications (or any amendments or
supplements thereto), or any Blue Sky Application or
Sales Information in reliance upon and in conformity
with information furnished in writing to the Company,
the MHC or the Bank by the Agent or its counsel
regarding the Agent, provided, that it is agreed and
understood that the only information furnished in
writing to the Company, the MHC or the Bank by the
Agent regarding the Agent is set forth in the
Prospectus under the caption "Our Corporate Change
and Stock Offering-Marketing Arrangements". The
indemnification provided for in this Section 8 (b)
shall not be applicable (1) with respect to any loss,
liability, claim, damage, or expense whatsoever if it
is determined by final judgment of a court having
jurisdiction over the matter that such loss,
liability, claim, damage or expense was primarily a
result of the Company's, the MHC's or the Bank's
willful misconduct or gross negligence or (2) to any
settlement by any such party effected without the
prior written consent of the Agent.
(c) Each indemnified party shall give prompt written
notice to each indemnifying party of any action,
proceeding, claim (whether commenced or threatened),
or suit instituted against it in respect of which
indemnity may be sought hereunder, but failure to so
notify an indemnifying party shall not relieve it
from any liability which it may have on account of
this Section 8 or otherwise. An indemnifying party
may participate at its own expense in the defense of
such action. In addition, if it so elects within a
reasonable time after receipt of such notice, an
indemnifying party, jointly with any other
indemnifying parties receiving such notice, may
assume defense of
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<PAGE>
such action with counsel chosen by it and approved by
the indemnified parties that are defendants in such
action, unless such indemnified parties reasonably
object to such assumption on the ground that there
may be legal defenses available to them that are
different from or in addition to those available to
such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying
parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred
thereafter in connection with such action, proceeding
or claim, other than reasonable costs of
investigation. In no event shall the indemnifying
parties be liable for the fees and expenses of more
than one separate firm of attorneys (and any special
counsel that said firm may retain) for each
indemnified party in connection with any one action,
proceeding or claim or separate but similar or
related actions, proceedings or claims in the same
jurisdiction arising out of the same general
allegations or circumstances.
(d) In addition to, and without limiting, the provisions
of Section (8)(a) hereof, in the event that any
Agent, any person, if any, who controls the Agent
within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act or any of its partners,
directors, officers and employees is requested or
required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or
inquiry brought by or on behalf of or against the
Company, the MHC, the Bank, the Agent or any of their
respective affiliates or any participant in the
transactions contemplated hereby in which the Agent
or such person or agent is not named as a defendant,
the Company, the MHC and the Bank jointly and
severally agree to reimburse the Agent for all
reasonable and necessary out-of-pocket expenses
incurred by it in connection with preparing or
appearing as a witness or otherwise giving testimony
and to compensate the Agent in an amount to be
mutually agreed upon.
(e) The agreements contained in this Section 8 and in
Section 9 hereof and the representations and
warranties of the Company, the MHC and the Bank set
forth in this Agreement shall remain operative and in
full force and effect regardless of: (i) any
investigation made by or on behalf of agent or their
officers, trustees or controlling persons, agent or
employees or by or on behalf of the Company, the MHC
or the Bank or any officers, trustees or controlling
persons, agent or employees of the Company, the MHC
or the Bank; (ii) delivery of and payment hereunder
for the Shares; or (iii) any termination of this
Agreement.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the MHC, the Bank or the Agent, the
Company, the MHC, the Bank and the Agent shall contribute to the aggregate
losses, claims, damages and liabilities (including any investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding
38
<PAGE>
of any claims asserted, but after deducting any contribution received by the
Company, the MHC, the Bank or the Agent from persons other than the other party
thereto, who may also be liable for contribution) in such proportion so that the
Agent is responsible for that portion represented by the percentage that the
fees paid to the Agent pursuant to Section 2 of this Agreement (not including
expenses) bears to the gross proceeds received by the Company from the sale of
the Shares in the Offering, and the Company, the MHC and the Bank shall be
responsible for the balance. If, however, the allocation provided above is not
permitted by applicable law or if the indemnified party failed to give the
notice required under Section 8 above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault of the
Company, the MHC and the Bank on the one hand and the Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereto), but also the relative benefits received by the Company, the MHC and
the Bank on the one hand and the Agent on the other from the Offering (before
deducting expenses). The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the MHC and/or the Bank on the one hand or
the Agent on the other and the parties' relative intent, good faith, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the MHC, the Bank and the Agent agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro-rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to above in this Section 9.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof) referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, proceeding or claim.
It is expressly agreed that the Agent shall not be liable for any loss,
liability, claim, damage or expense or be required to contribute any amount
which in the aggregate exceeds the amount paid (excluding reimbursable expenses)
to the Agent under this Agreement. It is understood that the above stated
limitation on the Agent's liability is essential to the Agent and that the Agent
would not have entered into this Agreement if such limitation had not been
agreed to by the parties to this Agreement. No person found guilty of any
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not found guilty
of such fraudulent misrepresentation. The obligations of the Company, the MHC
and the Bank under this Section 9 and under Section 8 shall be in addition to
any liability which the Company and the Bank may otherwise have. For purposes of
this Section 9, each of the Agent's, the Company's, the MHC or the Bank's
officers and trustees and each person, if any, who controls the Agent or the
Company or the MHC or the Bank within the meaning of the 1933 Act and the 1934
Act shall have the same rights to contribution as the Agent, the Company, the
MHC or the Bank. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action, suit, claim or proceeding against such
party in respect of which a claim for contribution may be made against another
party under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9.
39
<PAGE>
Section 10. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Company, the MHC, the Bank and the Agent and
the representations and warranties and other statements of the Company, the MHC,
the Bank and the Agent set forth in or made pursuant to this Agreement shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of the Agent, the
Company, the MHC, the Bank or any controlling person referred to in Section 8
hereof, and shall survive the issuance of the Shares, and any successor or
assign of the Agent, the Company, the MHC, the Bank, and any such controlling
person shall be entitled to the benefit of the respective agreements,
indemnities, warranties and representations.
40
<PAGE>
Section 11. Termination.
(a) The Agent may terminate this Agreement, by notice to
the Company, the MHC and the Bank, at any time at or
prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective
dates as of which information is given in the
Registration Statement, any material adverse change
in the financial condition, results of operations or
business affairs of the Company, the MHC or the Bank,
or the Company, the MHC and the Bank considered as
one enterprise, whether or not arising in the
ordinary course of business; (ii) if there has
occurred any material adverse change in the financial
markets in the United States or elsewhere or any
outbreak of hostilities or escalation thereof or
other calamity or crisis the effect of which, in the
judgment of the Agent, are so material and adverse as
to make it impracticable to market the Shares or to
enforce contracts, including subscriptions or orders,
for the sale of the Shares; (iii) or if trading
generally on either the New York Stock Exchange or
Nasdaq-Amex Stock Market has been suspended, or
minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities
have been required, by either of said exchanges or by
order of the Commission or any other governmental
authority, or if a banking moratorium has been
declared by either Federal or New York authorities;
(iv) if any condition specified in Section 7 shall
not have been fulfilled when and as required to be
fulfilled; (v) if there shall have been such material
adverse change in the condition or prospects of the
Company MHC or the Bank or the prospective market for
the Company's securities as in the Agent's good faith
opinion would make it inadvisable to proceed with the
offering, sale or delivery of the Shares; (vi) if in
the Agent's good faith opinion, the price for the
Shares established by the Company is not reasonable
or equitable under then prevailing market conditions;
or (vii) if the Reorganization is not consummated on
or prior to ____________, 1999.
(b) If this Agreement is terminated pursuant to this
Section, such termination shall be without liability
of any party to any other party except as provided in
Sections 2, 6, 8 and 9 hereof and the provisions of
Sections 8 and 9 hereof shall survive any termination
of this Agreement.
(c) If the Agent elects to terminate this Agreement as
provided in this Section, the Company, the MHC and
the Bank shall be notified promptly by telephone,
confirmed in writing.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Friedman,
Billings, Ramsey & Co., Inc., 1001 Nineteenth Street
41
<PAGE>
North, 10th Floor, Arlington, Virginia 22209, Attention: [NAME], [TITLE] (with a
copy to Breyer & Associates PC, Attention: John F. Breyer, Esq.) and, if sent to
the Company, the MHC and the Bank, shall be mailed, delivered or telegraphed and
confirmed to the Company, the MHC and the Bank at 44 East Bridge Street, Oswego,
New York 13126, Attention: [NAME], [TITLE] (with a copy to Elias, Matz, Tiernan
& Herrick L.L.P., Attention: Jack Soukenik, Esq.).
Section 13. Parties. The Company, the MHC and the Bank shall be
entitled to act and rely on any request, notice, consent, waiver or agreement
purportedly given on behalf of the Agent when the same shall have been given by
the undersigned. The Agent shall be entitled to act and rely on any request,
notice, consent, waiver or agreement purportedly given on behalf of the Company,
the MHC or the Bank, when the same shall have been given by the undersigned or
any other officer of the Company, the MHC or the Bank. This Agreement shall
inure solely to the benefit of, and shall be binding upon, the Agent, the
Company, the MHC, the Bank, and their respective successors and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provision herein contained. It is understood and agreed that this Agreement is
the exclusive agreement among the parties hereto, and supersedes any prior
agreement among the parties and may not be varied except in writing signed by
all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company, the MHC and the Bank. At the closing, the Company, the MHC and
the Bank shall deliver to the Agent in next day funds the commissions, fees and
expenses due and owing to the Agent as set forth in Sections 2 and 6 hereof and
the opinions and certificates required hereby and other documents deemed
reasonably necessary by the Agent shall be executed and delivered to effect the
sale of the Shares as contemplated hereby and pursuant to the terms of the
Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 16. Construction. This Agreement shall be construed in
accordance with the laws of the State of ___________.
Section 17. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
If the foregoing correctly sets forth the arrangement among the
Company, the MHC, the Bank and the Agent, please indicate acceptance thereof in
the space provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
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<PAGE>
Section 18. Entire Agreement. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct or dealing shall be construed to modify, amend or otherwise
affect any of the provisions hereof.
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<PAGE>
Very truly yours,
OSWEGO COUNTY BANCORP, INC. OSWEGO COUNTY SAVINGS BANK
By Its Authorized By Its Authorized
Representative: Representative:
_________________________________________ ________________________
Gregory J. Kreis Gregory J. Kreis
Director, President and Chief Executive Director, President and
Officer Chief Executive
Officer
OSWEGO COUNTY MHC
By Its Authorized
Representative:
_________________________________________
Gregory J. Kreis
Director, President and Chief Executive
Officer
Accepted as of the date first above written
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By Its Authorized
Representative:
_________________________________________
44
<PAGE>
EXHIBIT A
SELECTED DEALERS' AGREEMENT
OSWEGO COUNTY BANCORP, INC.
Up to 609,500 Shares (Anticipated Maximum)
(Par Value $.01 Per Share)
______________, 1999
Gentlemen:
We have agreed to Oswego County Bancorp, Inc., a Delaware corporation
(the "Company"), Oswego County MHC, a New York State chartered mutual holding
company ("MHC") and Oswego County Savings Bank, a New York State chartered
mutual savings bank (the "Bank"), in connection with the offer and sale of up to
609,500 shares of the Company's common stock, $.01 par value per share (the
"Common Stock"), to be issued in connection with the Plan (as defined herein).
The total number of shares of Common Stock to be offered may be decreased to a
minimum of 450,500 shares, or increased to a maximum of 700,925 shares. The
price per share has been fixed at $10.00. The Common Stock, the number of shares
to be issued, and certain of the terms on which they are being offered, are more
fully described in the enclosed prospectus dated __________, 1999 (the
"Prospectus").
The Common Stock is being offered in accordance in accordance with the
Plan of Reorganization from Mutual Saving Bank to Mutual Holding Company and
Stock Issuance Plan adopted by the Board of Trustees of the Bank and
subsequently amended and restated (the "Plan"), pursuant to which the Bank
intends to convert from a New York State chartered mutual savings bank to a New
York State chartered stock savings bank, and will issue all of its issued and
outstanding capital stock to the Company. Pursuant to the Plan, the Company is
offering to certain of the Bank's depositors, its tax qualified employee benefit
plans and trustees, and officers and employees of the Bank the right to
subscribe for the Common Stock in a subscription offering (the "Subscription
Offering"). To the extent Common Stock is not subscribed for in the Subscription
Offering, such Common Stock may be offered to certain members of the general
public, in a public offering and/or direct community offering (the "Public
Offering," and together with the Subscription Offering, as each may be extended
or reopened from time to time, the "Subscription/Public Offering") to be
commenced concurrently with the Subscription Offering. It is currently
anticipated by the Bank, the Company and the MHC that any Common Stock not
subscribed for in the Subscription/Public Offering will be offered in a
syndicated public offering (the "Syndicated Public Offering"). The
Subscription/Public Offering and the Syndicated Public Offering are hereinafter
referred to collectively as the "Offerings," and the conversion of the Bank from
mutual to stock form, the formation of the mutual holding company, the
acquisition of all of the capital stock of the Bank by the Company and the
Offerings are hereinafter referred to collectively as the "Reorganization." The
Offering is further being conducted in accordance with the regulations of the
<PAGE>
New York State Department of Bank, the Federal Deposit Insurance Corporation and
the Federal Reserve Bank, subject to the restrictions contained in the Plan.
The Common Stock is being offered in the Syndicated Public Offering by
broker/ dealers licensed by the National Association of Securities Dealers, Inc.
("NASD") which have been approved by the Company ("Approved Brokers").
We are offering the selected dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Common Stock
in the Syndicated Public Offering and we will pay you a fee in the amount of up
to ____________ percent (___%) of the dollar amount of the Common Stock sold on
behalf of the Company by you, as evidenced by the authorized-designation of your
firm on the order form or forms or summary record, in the event indications of
interest are solicited (the "Purchase Record") accompanying funds transmitted
for payment therefor to the special account established by the Company for the
purpose of holding such funds. It is understood, of course, that payment of your
fee will be made only out of compensation received by us for the Common Stock
sold on behalf of the Company by you, as evidenced in accordance with the
preceding sentence. As soon as practicable after the Closing Date of the
offering, we will remit to you, only out of our compensation as provided above,
the fees to which you are entitled hereunder.
Each order form for the purchase of Common Stock or the Purchase Record
must set forth the identity and address of each person to whom the certificates
for such Common Stock should be issued and delivered. Such order form for the
Purchase Record should clearly identify your firm. You shall instruct any
subscriber who elects to send his order form to you to make any accompanying
check payable to "Oswego County Bancorp, Inc."
This offer is made subject to the terms and conditions herein set forth
and is made only to selected dealers who are (i) members in good standing of the
NASD who are to comply with all applicable rules of the NASD, including, without
limitation, the NASD's Interpretation on Free-Riding and Withholding and Rule
2740 of the NASD's Rules of the Association, or (ii) foreign dealers not
eligible for membership in the NASD who agree (A) not to sell any Common Stock
within the United States, its territories or possessions or to persons who are
citizens thereof or resident therein and (B) in making other sales to comply
with the above-mentioned NASD Interpretation, Rules 2730, 2740 and 2750 of the
above-mentioned Rules as if they were NASD members, and Rule 2420 of such Rules
as it applies to non-member brokers or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and
we, acting on behalf of the Company, reserve the right in our unfettered
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
other person is authorized by the Company, or by us to give any information or
make any representations other than those contained in the Prospectus in
connection with the sale of any of the Common Stock. No selected dealer is
authorized to act as agent for us when soliciting offers to buy the Common Stock
from the public or otherwise. No selected dealer shall engage in any stabilizing
(as defined in Regulation M promulgated under the Securities Exchange Act of
1934) with respect to the Company's Common Stock during the offering.
2
<PAGE>
We and each selected dealer assisting in selling Common Stock pursuant
hereto agree to comply with the applicable requirements of the Securities
Exchange Act of 1934 and applicable state rules and regulations. Each selected
dealer that is not a $______ net capital reporting broker/dealer agrees that it
will not use a sweep arrangement and that it will transmit all customer checks
by noon of the next business day after receipt thereof. In addition, we and each
selected dealer confirm that the Securities and Exchange Commission interprets
Rule 15c2-8 promulgated under the Securities Exchange Act of 1934 as requiring
that a Prospectus be supplied to each person who is expected to receive a
confirmation of sale 48 hours prior to delivery of such person's order form or
mailing of such confirmation in the event indications of interest are solicited.
We and each selected dealer further agree that to the extent that your
customers desire to pay for shares with funds held by or to be deposited with
us, in accordance with the interpretation of the Securities and Exchange
Commission of Rule 15c2-4 promulgated under the Securities Exchange Act of 1934,
either (a) upon receipt of an executed order form or direction to execute an
order form on behalf of a customer to forward the offering price of the Common
Stock ordered on or before twelve noon Eastern time of the next business day
following receipt or execution of an order form by us to the Company for deposit
in a segregated account or (b) to solicit indications of interest in which event
(i) we will subsequently contact any customer indicating interest to confirm the
interest and give instructions to execute and return an order form or to receive
authorization to execute the order form on the customer's behalf, (ii) we will
mail acknowledgments of receipt of orders to each customer confirming interest
on the business day following such conformation, (iii) we will debit accounts of
such customers on the fifth business day (the "debit date") following receipt of
the confirmation referred to in (i), and (iv) we will forward the Purchase
Record together with such funds to the Company on or before twelve noon on the
next business day and each selected dealer acknowledges that if the procedure in
(b) is adopted, our customers' funds are not required to be in their accounts
until the debit date.
Unless earlier terminated by us, this Agreement shall terminate upon
the Closing Date of the Offering. We may terminate this Agreement or any
provisions hereof at any time by written or telegraphic notice to you. Of
course, our obligations hereunder are subject to the successful completion of
the Reorganization.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem
advisable in respect of all matters pertaining to the offering. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Common Stock has been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
3
<PAGE>
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
State of New York.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Friedman, Billings,
Ramsey & Co., Inc., 1001 Nineteenth Street North, 10th Floor, Arlington,
Virginia 22209. The enclosed duplicate copy will evidence the agreement between
us.
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By: __________________________________
James R. Kleeblatt
Managing Director
CONFIRMED AS OF:
______________, 1999.
__________________________________
(Name of Dealer)
By: __________________________________
Its: __________________________________
4
Ehibit 2.1
OSWEGO COUNTY SAVINGS BANK
AMENDED AND RESTATED PLAN OF REORGANIZATION
FROM MUTUAL SAVINGS BANK TO MUTUAL HOLDING COMPANY
AND PLAN OF STOCK ISSUANCE
1. GENERAL.
On March 19, 1998, the Board of Trustees of Oswego County Savings Bank
(the "Bank" or "Oswego"), a New York-chartered, mutual savings bank, adopted a
Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company,
pursuant to which the Bank proposed to reorganize into the mutual holding
company form of organization pursuant to the laws of the State of New York (the
"MHC Reorganization"). On December 17, 1998, the Bank's Board of Trustees
determined to amend and restate the Bank's Plan of Reorganization and adopted an
Amended and Restated Plan of Reorganization and Plan of Stock Issuance (the
"Plan"). The December 17, 1998 amendment to the Plan included provisions for (i)
the organization of a mid-tier stock holding company that will hold all of the
common stock of the Bank following the MHC Reorganization; (ii) the public
offering by the mid-tier stock holding company of a minority ownership interest
in its common stock; and (iii) the organization of a charitable foundation.
As part of the MHC Reorganization, the Bank will (i) organize an
interim New York stock savings bank as a wholly owned subsidiary ("Interim
One"); (ii) Interim One will organize an interim New York stock savings bank as
a wholly owned subsidiary ("Interim Two"); (iii) Interim One will organize a
Delaware stock corporation ("SHC") as a wholly owned subsidiary of Interim One;
(iv) the Bank will convert to stock form and exchange its charter for a New York
stock savings bank charter ("Stock-form Bank"); (v) the shares of Interim One
will be cancelled and its charter will be exchanged for a New York mutual
holding company charter ("MHC"); (vi) Interim Two will merge with and into the
Stock-form Bank, with Stock-form Bank surviving as a subsidiary of MHC; (vii)
depositors of the Bank will hold certain liquidation and limited voting rights
in the MHC; and (viii) the MHC will transfer all of the outstanding shares of
Stock-form Bank to SHC. The MHC Reorganization shall be accomplished in
accordance with the procedures set forth in this Plan and the requirements of
applicable laws and regulations and the policies of the Banking Department of
the State of New York (the "Department").
Upon consummation of the MHC Reorganization, the converted Stock-form
Bank will be deemed to be a continuation of the Bank, and all property of the
Bank, including its right, title and interest in and to all property of whatever
kind and nature, all interests and assets previously existing or pertaining to
the Bank, or which would issue to the Bank immediately by operation of law and
without the necessity of any conveyance or transfer and without any further act
or deed, will vest in the Stock-form Bank. The Stock-form Bank will have, hold
and enjoy the same in its right and fully to the same extent as the same was
possessed, held and enjoyed by the Bank. The Stock-form Bank will continue to
have, succeed to, and be responsible for all rights, liabilities and obligations
of the Bank and, immediately upon consummation of the MHC Reorganization, will
continue its main office, its branch offices and other operations at the then
current locations of the Bank.
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This Plan is subject to the approval of the Department and the
nonobjection of the FDIC and must receive the affirmative vote of its depositors
by the margins set forth in Section 3 of this Plan. Implementation of this Plan
also is subject to the approval of all other applicable regulatory authorities,
as well as the receipt of favorable rulings or opinions as to the tax
consequences of the MHC Reorganization.
The MHC Reorganization will enable the Bank to raise new equity capital
through the issuance and sale of shares of capital stock of the SHC. Ready
access to new sources of capital not historically available to mutual savings
institutions will allow the Bank the flexibility to enhance its capital position
more rapidly than by accumulating earnings, and at times deemed advantageous by
the Boards of Directors of the Stock-form Bank and the SHC, thereby supporting
future deposit growth and expanded operations (including increased lending and
investment activities) as business and regulatory needs dictate. The ability to
attract new capital also will assist in increasing the capabilities of the Bank
to address the needs of the communities it serves, as well as enhance its
ability to effect acquisitions. The ability of the SHC to issue capital stock
also will enable the SHC and the Stock-form Bank to establish stock compensation
plans for directors, officers and employees, thereby granting them equity
interests in the SHC and greater incentive to improve its performance.
It is anticipated that the SHC will conduct an initial offering of its
common stock (which in the aggregate shall be 49% or less of the total
to-be-outstanding common stock of the SHC) following consummation of the MHC
Reorganization (the "Stock Offering"), subject to the approval of the Board of
Directors of the SHC and the Department. The actual issuance of shares of common
stock of the SHC in this manner shall not be a condition to the MHC
Reorganization, unless otherwise required by the Board of Trustees of the Bank.
As part of the MHC Reorganization, and consistent with the Bank's
ongoing commitment either to combine with Oswego City or to remain an
independent community-oriented savings bank, the Bank may establish a charitable
foundation. The charitable foundation would be intended to compliment the Bank's
existing community reinvestment and charitable activities in a manner that would
allow the local community to share in the growth and success of the Bank. The
SHC may donate to the charitable foundation immediately following the MHC
Reorganization cash, securities or Common Stock in an amount equal to up to 4%
of the Common Stock issued in the Stock Offering.
In adopting this Plan, the Board of Trustees of the Bank determined
that the MHC Reorganization was advisable and in the best interests of the Bank
and its depositors.
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2. DEFINITIONS.
In most cases, the meaning of the terms used in this Plan are made
clear from their context and the language of the Plan. Certain of these terms,
however, require further explanation, as follows:
2.1. "Acting in Concert" means (i) knowing participation in a joint
activity or interdependent conscious parallel action towards a common goal
whether or not pursuant to an express agreement; (ii) a combination or pooling
of votes or other interests in the securities of an issuer for a common purpose
pursuant to any contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise; or (iii) a person or company which
acts in concert with another persons or company ("other party") shall also be
deemed to be acting in concert with any person or company who is also acting in
concert with the other party, except that any Tax- Qualified Employee Benefit
Plan or Non-Tax-Qualified Employee Benefit Plan will not be deemed to be acting
in concert with another Tax-Qualified Employee Benefit Plan or Non-Tax-Qualified
Employee Benefit Plan or with its trustee or a person who serves in a similar
capacity solely for the purpose of determining whether stock held by the trustee
and stock held by the plan will be aggregated. The determination of whether a
group is acting in concert shall be made solely by the Board of Trustees of the
Bank or officers delegated by such Board, and may be based on any evidence upon
which the Board or such delegatee chooses to rely.
2.2. "Actual Purchase Price" means the price per share at which the
Common Stock is ultimately sold by the SHC to Participants in the Subscription
Offering and Persons in the Community Offering and/or Syndicated Community
Offering in accordance with the terms hereof.
2.3. "Affiliate" means a Person who, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with the Person specified.
2.4. "Associate," when used to indicate a relationship with any Person,
means (i) a corporation or organization (other than the Bank, MHC or a
majority-owned subsidiary of either of the same) of which such Person is a
director, officer or partner or is, directly or indirectly, the beneficial owner
of 10% or more of any class of equity securities; (ii) any trust or other estate
in which such Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity (exclusive of any
tax-qualified employee stock benefit plan and any non-tax-qualified employee
stock benefit plan of the Bank or the SHC in which such Person has a substantial
beneficial interest or serves as a trustee or in a similar fiduciary capacity);
(iii) any relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person or who is a director or officer of the Bank or
the Stock-form Bank or any of their subsidiaries; and (iv) any Person acting in
concert with any of the Persons or entities specified in clauses (i) through
(iii) above.
2.5. "Bank" means Oswego County Savings Bank, a New York-chartered
mutual savings bank.
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2.6. "Banking Board" means the New York Banking Board.
2.7. "BHCA" means the Bank Holding Company Act of 1956, as amended.
2.8. "Capital Stock" means any and all authorized capital stock of the
SHC.
2.9. "Code" means the Internal Revenue Code of 1986, as amended.
2.10. "Common Stock" means common stock, par value $0.01 per share, of
the SHC.
2.11. "Community Offering" means the offering for sale by the SHC of
any shares of Common Stock not subscribed for in the Subscription Offering to
certain Persons who receive a Prospectus, with a preference to natural persons
residing in Oswego County, New York.
2.12. "Department" means the Banking Department of the State of New
York or any successor thereto.
2.13. "Deposit Account" means withdrawable or repurchasable shares,
investment certificates or deposits or other savings accounts, including money
market deposit accounts, negotiable order of withdrawal accounts and demand
accounts, held by an account holder or depositor of the Bank.
2.14 "Depositors" means the holders of Qualifying Deposits on the
Voting Record Date.
2.15. "Director, Trustee, Officer and Employee" means the terms as
applied respectively to any Person who is a Director, Trustee, Officer or
Employee of the Bank, the Stock-form Bank, the SHC, the MHC or any subsidiary
thereof.
2.16. "Effective Date" means the date upon which the MHC Reorganization
is completed pursuant to this Plan and applicable laws and regulations.
2.17. "Eligible Account Holder" means any Person holding a Qualifying
Deposit on the Eligibility Record Date for purposes of determining eligibility
for Subscription Rights.
2.18. "Eligibility Record Date" means the date for determining
Qualifying Deposits of Eligible Account Holders and is the close of business on
September 30, 1997.
2.19. "Employee" means any person who is a full or part-time employee
of the Bank or the Stock-form Bank at the Effective Date.
2.20. "Estimated Price Range " means the range of the estimated
aggregate pro forma market value of the total number of shares of Common Stock
to be issued in the Stock Issuance, as determined by the Independent Appraiser
in accordance with Section 9 hereof.
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2.21. "FDIC" means the Federal Deposit Insurance Corporation.
2.22. "FRB" means the Board of Governors of the Federal Reserve System.
2.23. "Foundation" means the charitable foundation organized in
connection with this Plan.
2.24. "Independent Appraiser" means the independent investment banking
or financial consulting firm retained by the Bank to prepare the Independent
Valuation.
2.25. "Independent Valuation" means the estimated pro forma market
value of the Common Stock to be outstanding upon consummation of the MHC
Reorganization and the Stock Issuance, as determined by the Independent
Appraiser in accordance with Section 9 hereof.
2.26. "Initial Purchase Price" means the price per share to be paid
initially by Participants for shares of Common Stock subscribed for in the
Subscription Offering and by Persons for shares of Common Stock ordered in the
Community Offering and/or Syndicated Community Offering.
2.27. "Insider" means any officer, trustee or director of the Bank or
any Affiliate of the Bank, and any Person acting in concert with any such
officer, trustee or director.
2.28. "MHC" means the mutual holding company resulting from the MHC
Reorganization, which mutual holding company shall be named "Oswego County MHC"
or such other name as may be selected by the Board of Trustees of the MHC.
2.29. "MHC Reorganization" collectively means all steps which are
necessary for the Bank to reorganize into the mutual holding company form of
organization in the manner specified herein.
2.30. "Merger" means the merger of the Bank with and into the
Stock-form Bank pursuant to the terms of the Agreement of Merger included as
Appendix A hereto.
2.31. "NYBL" means the New York Banking Law.
2.32. "Offerings" means the Subscription Offering, the Community
Offering and the Syndicated Community Offering or Public Offering.
2.33. "Officer" means the chairman of the Board of Trustees, president,
vice-president, secretary, treasurer or principal financial officer,
comptroller or principal accounting officer and any other Person performing
similar functions with respect to any organization, whether incorporated or
unincorporated.
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2.34. "Order Form" means the form provided on behalf of the Bank,
containing all such terms and provisions as set forth in Section 18 hereof, to a
Person by which Common Stock may be ordered in the Stock Offering.
2.35. "Other Investors" means Persons within or without the State of
New York who may be offered the opportunity to purchase Common Stock in the
Stock Offering to be conducted by the Bank pursuant to this Plan.
2.36. "Participant " means any Eligible Account Holder, Tax-Qualified
Employee Stock Benefit Plan, Supplemental Eligible Account Holder, and Director,
Trustee, Officer and Employee.
2.37. "Person" means any corporation, partnership, trust,
unincorporated association or any other entity or a natural person.
2.38. "Plan" means this Amended and Restated Plan of Reorganization
from Mutual Savings Bank to Mutual Holding Company and Plan of Stock Issuance,
including all Appendices hereto, as adopted by the Board of Trustees of the Bank
and as may be amended from time to time pursuant to the terms hereof.
2.39. "Preferred Stock" means any and all authorized Preferred Stock of
the SHC.
2.40. "Prospectus" means the one or more documents to be used in
offering the Common Stock in the Subscription Offering and, to the extent
applicable, Community Offering and Syndicated Community Offering and for
providing information to Participants and other Persons in connection with such
offerings.
2.41. "Public Offering" means an underwritten firm commitment offering
to the public through one or more underwriters.
2.42. "Purchase Price" means the uniform price per share at which the
Common Stock is ultimately sold by the SHC to Persons in the Stock Offering in
accordance with the terms hereof.
2.43. "Qualifying Deposit" means the aggregate balance of all Deposit
Accounts of each account holder or depositor in the Bank at the close of
business on the Eligibility Record Date, the Supplemental Record Date or the
Voting Record Date, as the case may be, provided such aggregate balance is not
less than $100.00.
2.44. "SEC" means the Securities and Exchange Commission.
2.45. "SHC" means "Oswego County Bancorp, Inc.," a to-be-formed
Delaware stock corporation, which, upon consummation of the MHC Reorganization,
shall own 100% of the issued and outstanding shares of capital stock of the
Stock-form Bank and which shall be a majority-owned subsidiary of the MHC.
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2.46. "Special Meeting" means the Special Meeting of Depositors of the
Bank called for the sole purpose of submitting this Plan and related documents
to the Depositors for their approval or disapproval, including any adjournment
of such meeting.
2.47. "Stock-form Bank" means Oswego County Savings Bank, a New
York-chartered, stock subsidiary of the SHC upon consummation of the MHC
Reorganization.
2.48. "Stock Offering" means the offering for sale by the SHC of shares
of Common Stock to the Persons and in the priorities set forth in Section 10 of
this Plan, subject to the other provisions of this Plan, including without
limitation the limitations on purchases of Common Stock set forth in Section 16
hereof.
2.49. "Subscription Offering" means the offering of the Common Stock to
Participants.
2.50. "Subscription Rights" means non-transferable rights to subscribe
for Common Stock granted to Participants pursuant to the terms of this Plan.
2.51. "Superintendent" means the Superintendent of the Banking
Department of the State of New York.
2.52. "Supplemental Eligibility Record Date" if applicable, means the
date for determining Qualifying Deposits of Supplemental Eligible Account
Holders and shall be required by the FDIC if the Eligibility Record Date is more
than 15 months prior to the date of the latest amendment to the Notice of Intent
to Convert to the Stock Form and the Application for Approval of a Mutual
Savings Bank Holding Company Reorganization filed prior to approval of such
notice and application by the FDIC and the Superintendent, respectively. If
applicable, the Supplemental Eligibility Record Date shall be the last day of
the calendar quarter preceding the FDIC and the Superintendent nonobjection and
approval of such notice and application submitted by the Bank pursuant to the
Plan.
2.53. "Supplemental Eligible Account Holder" if applicable, means any
Persons, except Trustees and Officers of the Bank and their Associates, holding
a Qualifying Deposit at the close of business on the Supplemental Eligibility
Record Date.
2.54. "Syndicated Community Offering " means the offering for sale by a
syndicate of broker-dealers to the general public of shares of Common Stock not
purchased in the Subscription Offering and the Community Offering.
2.55. "Tax-Qualified Employee Stock Benefit Plan" means any defined
benefit plan or defined contribution plan, such as an employee stock ownership
plan, stock bonus plan, profit- sharing plan or other plan, which is established
for the benefit of the Employees of the Bank, the MHC, the SHC, the Stock-form
Bank or any of its Affiliates and which, with its related trust, meets the
requirements to be qualified under Section 401 of the Code as from time to time
in effect. A
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("Non-Tax-Qualified Employee Stock Benefit Plan") is any defined benefit plan or
defined contribution plan which is not so qualified.
2.56. "Voting Record Date" means the date for determining the
eligibility of Depositors to vote at the Special Meeting.
3. GENERAL PROCEDURE FOR THE MHC REORGANIZATION.
The Bank shall provide the Superintendent with written notice of the
proposed MHC Reorganization. Such notice shall include a copy of this Plan, the
proposed organization certificate and bylaws for MHC, the SHC and the Stock-form
Bank and such other information as is required by applicable laws and
regulations or as the Superintendent may otherwise require. After the Bank's
adoption of the Plan, the Bank shall provide public notice of its plan to
reorganize. Such notice shall also be made by means of the posting of a notice
in a conspicuous place in its branch offices (which term shall not include
separate electronic facilities), the issuance of a press release containing all
material details of the proposed MHC Reorganization (and such other information
required to make the press release not false or misleading) and the placing of
an advertisement containing such material details (and such other information,
if any) in a newspaper of general circulation in the communities where the
principal office and branches of the Bank are located. In addition to the
foregoing, the Bank shall file such applications, publish such notices and take
such other action as may be necessary to obtain the approval of the
Superintendent and, to the extent required, the Banking Board, of this Plan and
the transactions contemplated hereby.
Simultaneously with or as soon as practicable after the Bank's
submission to the Superintendent of its application to reorganize, the Bank and
the Stock-form Bank shall submit to the FDIC a notice of its intent to
reorganize into a mutual holding company organization and applications to secure
deposit insurance for the Stock-form Bank and to obtain permission to merge the
Bank with and into the Stock-form Bank pursuant to the Agreement of Merger
included as Appendix A hereto. In connection therewith, the Bank and the
Stock-form Bank shall cause the publication of such notices and take such other
actions as may be required by applicable laws and regulations. Approval of such
applications by the FDIC is a condition precedent to consummation of the MHC
Reorganization.
Simultaneously with or as soon as practicable after the Bank's
submission to the Superintendent of its application to reorganize, the MHC shall
submit an application to the FRB pursuant to Section 3 of the BHCA to acquire
the SHC and the Stock-form Bank and to operate them after the MHC
Reorganization. Simultaneously with or as soon as practicable after the Bank's
submission to reorganize, SHC shall submit an application to the FRB pursuant to
Section 3 of the BHCA to acquire the Stock-form Bank and to operate the
Stock-form Bank after the MCH Reorganization. In connection therewith, the MHC,
the SHC and the Stock-form Bank shall cause the publication of such notices and
take such other actions as may be required by applicable laws and regulations.
Approval of such applications by the FRB is a condition precedent to the
consummation of the MHC Reorganization.
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When the Superintendent shall have determined to approve or disapprove
the Plan or the MHC Reorganization, the Superintendent shall so advise the Bank
in writing. In order to approve the Plan, no provision contained in this Plan
may be determined by the Superintendent to be inequitable or detrimental to any
of the Bank, MHC, the SHC, the Stock-form Bank or the depositors of the Bank, or
to be contrary to the public interest.
If this Plan is approved by the Superintendent, and following the
receipt of all other required regulatory approvals, the Superintendent shall
endorse approval on an organization certificate for each of the MHC and the
Stock-form Bank and cause them to be filed in the office of the Superintendent
and with the clerk of the county in which the principal office of each is
located. Upon the filing of such organization certificates, the existence of MHC
and the Stock-form Bank shall commence.
If approved by the Superintendent, the Bank shall submit this Plan, as
well as the organization certificate and bylaws of the MHC and the Stock-form
Bank to be effective upon consummation of the MHC Reorganization, to the Bank's
Eligible Account Holders for approval at the Special Meeting, which shall be
held upon written notice given no less than 20 days nor more than 45 days prior
to the date of such meeting. Such notice shall be sent by first class mail
postage prepaid and shall consist of a notice of Special Meeting and be
accompanied by a proxy statement and proxy card which includes such information
as is required by applicable laws and regulations or as the Superintendent
otherwise may require. At the Special Meeting, (i) all Depositors shall be
entitled to approve or disapprove this Plan, either in person or by valid proxy,
(ii) each Eligible Account Holder shall be entitled to cast one vote for each
full $100 of Qualifying Deposits, (iii) no Eligible Account Holder shall be
entitled to cast more than 1,000 votes, and (iv) no specific minimum amount of
Qualifying Deposits shall be required to be present either in person or by proxy
at the Special Meeting in order to constitute a quorum for the transaction of
business. This Plan must be approved by the affirmative vote of (i) at least 75%
of the aggregate dollar amount of the book value of deposits of the Bank
represented at the Special Meeting either in person or by valid proxy and
entitled to vote there at and (ii) at least a majority of the total votes
eligible to be cast by Depositors entitled to vote at the Special Meeting.
Within five days after the Special Meeting, the President and Secretary of the
Bank shall certify to the Superintendent the result of the vote taken at such
meeting.
Following the approval of the Depositors of this Plan and the receipt
of all required regulatory approvals, including without limitation the
Superintendent, the Banking Board, the FDIC and the FRB, the Bank will (i)
organize Interim One; (ii) Interim One will organize Interim Two; (iii) Interim
One will organize SHC as a wholly owned subsidiary of Interim One; (iv) the Bank
will convert to stock form and exchange its charter for a New York stock savings
bank charter (Stock- form Bank); (v) the shares of Interim One will be cancelled
and its charter will be exchanged for a New York mutual holding company charter;
(vi) Interim Two will merge with and into the Stock- form Bank, with the
Stock-form Bank surviving as a subsidiary of the MHC; (vii) former depositors of
the Bank will have limited voting and liquidated interests in the MHC; and
(viii) the MHC will transfer all of the outstanding shares of Stock-form Bank to
the SHC. The MHC will have an
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Organization Certificate and Bylaws in the form attached hereto as Exhibits A
and B, respectively, which are incorporated herein. Additionally, the SHC will
have an Organization Certificate and Bylaws in the form attached hereto as
Exhibits C and D, respectively, and the Stock-form Bank will have an
Organization Certificate and Bylaws in the form attached hereto as Exhibits E
and F, respectively, which are incorporated herein by reference.
Upon consummation of the MHC Reorganization, substantially all of the
assets and liabilities of the Bank shall be vested in the Stock-form Bank as the
survivor of the merger of Interim Two into the Stock-form Bank. All assets,
rights, obligations and liabilities of whatever nature of the Bank that are not
expressly retained by the MHC shall be deemed transferred to the Stock-form
Bank.
The trustees and officers of the Bank shall take all appropriate
actions to facilitate the MHC Reorganization, including obtaining insurance of
deposits for the Stock-form Bank, taking all appropriate actions to effect the
transactions referenced in the immediately preceding paragraph and preparing,
filing and prosecuting such applications, filings and notices as may be required
under applicable laws and regulations and policies of the Department and the
FDIC to effect the MHC Reorganization.
As a result of the MHC Reorganization, the Bank will become a New
York-chartered stock-form savings bank and a wholly owned subsidiary of the
SHC, and the SHC will be a majority owned subsidiary of the MHC.
4. POWERS AND AUTHORITIES OF THE MHC, THE SHC AND THE STOCK-FORM BANK.
The rights and powers of the MHC, the SHC and the Stock-form Bank upon
consummation of the MHC Reorganization will be as specified in their respective
Organization Certificate and Bylaws, applicable laws and regulations (including,
in the case of the MHC and SHC, the BHCA and rules and regulations thereunder)
and policies of governing regulatory authorities. In addition, although the SHC
will be organized under the laws of the State of Delaware, it may also be
subject to rules and policies under New York law and the oversight of the
Superintendent.
Upon consummation of the MHC Reorganization, the MHC and SHC shall (i)
possess all the rights, powers and privileges, except deposit-taking powers, and
shall be subject to all the limitations, not inconsistent with Article VI-C of
the NYBL, of a mutual savings bank under Articles VI and XVI of the NYBL, and
(ii) be subject to the BHCA, provided that, notwithstanding anything herein to
the contrary, the MHC and the SHC shall not exercise any rights, powers or
privileges pursuant to any provision of federal law applicable to bank holding
companies or savings and loan holding companies which are not also authorized
under Article VI of the NYBL.
Notwithstanding any inconsistent provisions of Sections 14-e, 600, 601,
601-a or 601-b of the NYBL, and subject to the General Regulations of the
Banking Board, the MHC may:
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(a) merge with, acquire or purchase the assets of a mutual holding
company established pursuant to Article VI-C of the NYBL or the savings
and loan holding company provisions of the Home Owners' Loan Act, as
amended;
(b) acquire or purchase the assets or stock of a stock savings bank, a
stock savings and loan association, a stock federal savings bank or a
stock federal savings and loan association;
(c) acquire a mutual savings bank, a mutual savings and loan
association, a federal mutual savings bank or a federal mutual savings
and loan association through the merger of such institutions with a
stock subsidiary of such mutual holding company; and
(d) engage in any other acquisition or combination specifically
permitted by general or special regulations promulgated by the Banking
Board; provided, however, that under current law the Banking Board
shall have no power to permit any insurance activities other than those
expressly authorized under the NYBL or to expand by interpretation the
express provisions of federal law set forth in the BHCA.
Except to the extent permitted in Sections 3(f)(2) and (3) of the BHCA
and authorized by the NYBL, the powers of the MHC and the SHC shall not include
the power to directly or indirectly engage in: the sale or underwriting of
insurance; the formation or acquisition of an insurance agency or an insurance
company; or the issue, sale, distribution and underwriting of, or to deal in,
any security arising out of a contract issued by an insurance company and
subject to the supervision of the Superintendent of Insurance of the State of
New York.
The MHC and the SHC may not dispose of any interest in the common stock
of Stock-form Bank upon consummation of the MHC Reorganization except (i)
pursuant to an offering of common stock of the Bank following consummation of
the MHC Reorganization conducted in compliance with Article VI-C of the NYBL and
Parts 86 and 111 of the General Regulations of the Banking Board or (ii)
pursuant a pledge of such stock to secure borrowings upon the receipt of written
approval of the Superintendent.
Except to the extent such provisions are inconsistent with Article VI-C
of the NYBL, upon consummation of the MHC Reorganization the Bank shall be
subject to the same provisions of the NYBL as apply to savings banks which have
converted to stock form pursuant to Sections 14-e and 9019 of the NYBL.
Following consummation of the MHC Reorganization, the SHC shall have
authority to issue to Persons other than the MHC an amount of common stock and
securities convertible into common stock which in the aggregate is no more than
49% of the issued and outstanding common stock of the SHC, which authority shall
be conducted in accordance with the requirements of Article VI-C of the NYBL and
Parts 86 and 111 of the General Regulations of the Banking Board. Following
consummation of the MHC Reorganization, the SHC and the Bank also shall have
authority to issue equity or debt securities other than common stock and
securities convertible into common stock,
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subject to the terms of its organization certificate, including any amendments
thereto and any required regulatory approvals.
5. TAX CONSEQUENCES.
Consummation of the MHC Reorganization is expressly conditioned upon
prior receipt by the Bank and/or the SHC of (i) a ruling of the United States
Internal Revenue Service and/or an opinion of counsel to the effect that the MHC
Reorganization will not result in any gain or loss for federal income tax
purposes to the Bank, the Stock-form Bank, the MHC, the SHC or Depositors; and
(ii) a ruling and/or an opinion of counsel or tax advisor with respect to New
York taxation, to the effect that consummation of the MHC Reorganization will
not result in a taxable reorganization under the provisions of the applicable
codes or recapture of income or bad debt reserves by the MHC, the SHC, the Bank
or the Stock-form Bank.
6. TRANSFER OF DEPOSIT ACCOUNTS.
Each Deposit Account in the Bank at the time of the MHC Reorganization
will become, without further action by the account holder, a Deposit Account in
the Stock-form Bank after the MHC Reorganization, equivalent in withdrawable
amount to the withdrawal value, and subject to the same terms and conditions
(except as to liquidation rights), as such Deposit Account in the Bank at the
time of the MHC Reorganization.
7. VOTING AND OTHER RIGHTS OF SHAREHOLDERS OF THE STOCK-FORM
BANK.
Following the MHC Reorganization, voting rights with respect to the
Stock-form Bank will be held and exercised exclusively by the holder or holders
of the capital stock of the Stock-form Bank. Neither depositors in nor borrowers
from the Stock-form Bank will have any voting rights with respect to the
Stock-form Bank in their capacities as such.
8. LIQUIDATION RIGHTS.
(a) In the event of a liquidation of the subsidiary savings bank(s) and
subject to the rights of creditors, the depositors of the MHC's subsidiary
savings bank(s) as of the date of the liquidation shall have an interest in the
entire net worth of the MHC. The amount distributed in a liquidation shall not
be a fixed amount but may increase or decrease over time. The rights of the
depositor of the MHC's subsidiary savings bank(s) to the MHC's net worth shall
not operate to restrict the use or application of the MHC's net worth accounts.
(b) In the event of a complete liquidation of the MHC, the entire net
worth of the MHC shall be distributed ratably among all the depositors of its
subsidiary savings bank(s) as of the date of the liquidation.
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(c) Upon the conversion of the MHC from a mutual to a stock-form
holding company pursuant to the terms of Section 23 hereof, the amount available
to the depositor of the MHC's subsidiary savings bank(s) shall become fixed as
of the date of the statement of financial condition contained in the final
offering circular utilized in the mutual-to-stock conversion. Each subsidiary
savings bank shall at that time establish a liquidation account, which
liquidation account shall in the aggregate equal the net worth of the subsidiary
savings bank as set forth in its latest statement of financial condition
contained in the offering circular utilized in the mutual-to stock conversion.
The liquidation account established by a subsidiary savings bank shall comply
with the rules contained in Section 86.4(g) of the General Regulations of the
Bank Board.
9. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF COMMON STOCK.
(a) The price at which shares of Common Stock shall be sold shall be
based on a pro forma valuation of the aggregate market value of the Common Stock
prepared by the Independent Appraiser. The valuation shall be based on financial
information relating to the SHC and the Bank, economic and financial conditions,
a comparison of the SHC and the Bank with selected publicly held financial
institutions and holding companies and with comparable financial institutions
and mutual holding companies and such other factors as the Independent Appraiser
may deem to be important, including, but not limited to, the projected operating
results and financial condition of the SHC and the Bank. The valuation shall be
stated in terms of an Estimated Price Range, the maximum of which shall
generally be no more than 15% above the average of the minimum and maximum of
such price range and the minimum of which shall generally be no more than 15%
below such average. The valuation shall be updated during the Offerings as
market and financial conditions warrant and as may be required by the
Superintendent and the FDIC.
(b) Based upon the Independent Valuation, the Boards of Directors of
the SHC and the Bank shall fix the Initial Purchase Price and the number of
shares of Common Stock to be offered in the Subscription Offering, Community
Offering and/or Syndicated Community Offering. The Actual Purchase Price and the
total number of shares of Common Stock to be issued in the Offerings shall be
determined by the Boards of Directors of the SHC and the Bank upon conclusion of
such offerings in consultation with the Independent Appraiser and any financial
advisor or investment banker retained by the Bank in connection with such
offerings.
(c) Subject to the approval of the Superintendent and the FDIC, the
Estimated Price Range may be increased or decreased to reflect market and
economic conditions prior to completion of the Offerings and under such
circumstances the SHC may increase or decrease the total number of shares of
Common Stock to be issued in the Offerings to reflect any such change.
Notwithstanding anything to the contrary contained in this Plan, no
resolicitation of subscribers shall be required and subscribers shall not be
permitted to modify or cancel their subscriptions unless the gross proceeds from
the sale of the Common Stock issued in the Offerings are less than the minimum
or more than 15% above the maximum of the Estimated Price Range set forth in the
Prospectus. In the event of an increase in the total number of shares offered in
the Offerings due to
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an increase in the Estimated Price Range, the priority of share allocation shall
be as set forth in this Plan.
10. GENERAL PROCEDURE FOR THE STOCK OFFERING.
(a) As soon as practicable after the registration of the Common Stock
under the Securities Act of 1933, as amended, and after the receipt of all
required regulatory approvals, the Common Stock shall be first offered for sale
in a Subscription Offering to Eligible Account Holders, Tax-Qualified Employee
Stock Benefit Plans, Supplemental Eligible Account Holders, Trustees, Officers
and Employees. In the event of an oversubscription of shares of Common Stock,
the shares shall be sold, subject to the formulae set forth in Sections 11
through 14 of this Plan, in the following order of preference: (i) Eligible
Account Holders; (ii) Tax Qualified Employee Stock Benefit Plans; (iii)
Supplemental Eligible Account Holders; and (iv) Trustees, Officers and
Employees. It is anticipated that any shares of Common Stock remaining unsold
after the Subscription Offering will be sold through a Community Offering and/or
a Syndicated Community Offering. The purchase price per share for the Common
Stock shall be a uniform price determined in accordance with Section 9 hereof.
(b) The SHC and the Bank may retain and pay for the services of
financial and other advisors and investment bankers to assist in connection with
any or all aspects of the Offerings, including in connection with the
Subscription Offering, Community Offering and/or any Syndicated Community
Offering, the payment of fees to brokers and investment bankers for assisting
Persons in completing and/or submitting Order Forms. All fees, expenses,
retainers and similar items shall be reasonable.
11. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
(a) Each Eligible Account Holder shall receive, without payment,
non-transferable Subscription Rights to purchase up to the greater of (i)
$150,000 of Common Stock (or such maximum purchase limitation as may be
established for the Community Offering and/or Syndicated Community Offering or
Public Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering or (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Common Stock
offered in the Subscription Offering by a fraction, of which the numerator is
the amount of the Qualifying Deposits of the Eligible Account Holder and the
denominator is the total amount of all Qualifying Deposits of all Eligible
Account Holders.
(b) In the event of an oversubscription for shares of Common Stock
pursuant to Section 5(a), available shares shall be allocated among subscribing
Eligible Account Holders so as to permit each such Eligible Account Holder, to
the extent possible, to purchase a number of shares which will make his or her
total allocation equal to the lesser of the number of shares subscribed for or
100 shares. Any available shares remaining after each subscribing Eligible
Account Holder has been allocated the lesser of the number of shares subscribed
for or 100 shares shall be allocated among
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the subscribing Eligible Account Holders in the proportion which the Qualifying
Deposit of each such subscribing Eligible Account Holder bears to the total
Qualifying Deposits of all such subscribing Eligible Account Holders, provided
that no fractional shares shall be issued. Subscription Rights of Eligible
Account Holders who are also Trustees or Officers of the Bank and their
Associates shall be subordinated to those of other Eligible Account Holders to
the extent that they are attributable to increased deposits during the one year
period preceding the Eligibility Record Date.
12. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT
PLANS
Tax-Qualified Employee Stock Benefit Plans, including the employee
stock ownership plan to be established by the Bank ("ESOP"), shall receive,
without payment, non-transferable Subscription Rights to purchase in the
aggregate up to 10% of the Common Stock, including shares of Common Stock to be
issued in the Offerings as a result of an increase in the Estimated Price Range
after commencement of the Subscription Offering and prior to completion of the
Offering. The subscription rights granted to Tax-Qualified Employee Stock
Benefit Plans shall be subject to the availability of shares of Common Stock
after taking into account the shares of Common Stock purchased by Eligible
Account Holders. Shares of Common Stock purchased by any individual participant
("Plan Participant") in a Tax-Qualified Employee Stock Benefit Plan using funds
therein pursuant to the exercise of subscription rights granted to such
Participant in his individual capacity as an Eligible Account Holder and/or
Supplemental Eligible Account Holder and/or purchases by such Plan Participant
in the Community Offering shall not be deemed to be purchases by a Tax-
Qualified Employee Stock Benefit Plan for purposes of calculating the maximum
amount of Common Stock that Tax-Qualified Employee Stock Benefit Plans may
purchase pursuant to the first sentence of this Section 12 if the individual
Plan Participant controls or directs the investment authority with respect to
such account or subaccount. Consistent with applicable laws and regulations and
policies and practices of the Superintendent and the FDIC, the ESOP may use
funds contributed by the SHC or the Bank and/or borrowed from an independent
financial institution to exercise such Subscription Rights, and the SHC and the
Bank may make scheduled discretionary contributions thereto, provided that such
contributions do not cause the SHC or the Bank to fail to meet any applicable
capital maintenance requirements.
13. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT
HOLDERS.
(a) Each Supplemental Eligible Account Holder shall receive, without
payment, non-transferable Subscription Rights to purchase up to the greater of
(i) $150,000 of Common Stock (or such maximum purchase limitation as may be
established for the Community Offering and/or Syndicated Community Offering or
Public Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering or (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Common Stock
offered in the Subscription Offering by a fraction, of which the numerator is
the amount of the Qualifying Deposits
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of the Supplemental Eligible Account Holder and the denominator is the total
amount of all Qualifying Deposits of all Supplemental Eligible Account Holders,
subject to the availability of shares of Common Stock for purchase after taking
into account the shares of Common Stock purchased by Eligible Account Holders
and the ESOP through the exercise of Subscription Rights under Sections 11 and
12 hereof.
(b) In the event of an oversubscription for shares of Common Stock
pursuant to Section 13(a), available shares shall be allocated among subscribing
Supplemental Eligible Account Holders so as to permit each such Supplemental
Eligible Account Holder, to the extent possible, to purchase a number of shares
sufficient to make his or her total allocation (including the number of shares,
if any, allocated in accordance with Section 11(a)) equal to the lesser of the
number of shares subscribed for or 100 shares. Any remaining available shares
shall be allocated among subscribing Supplemental Eligible Account Holders in
the proportion that the amount of their respective Qualifying Deposits bears to
the total amount of the Qualifying Deposits of all subscribing Supplemental
Eligible Account Holders, provided that no fractional shares shall be issued.
14. SUBSCRIPTION RIGHTS OF TRUSTEES, OFFICERS AND EMPLOYEES.
(a) To the extent that there are sufficient shares remaining after
satisfaction of all subscriptions under the above categories, Trustees, Officers
and Employees of the Bank shall receive, without payment, non-transferable
subscription rights to purchase in this category, in the aggregate, up to 24% of
the shares of Common Stock offered in the Subscription Offering.
(b) In the event of oversubscription pursuant to Section 14(a),
Subscription Rights for the purchase of such shares shall be allocated among the
individual Trustees, Officers and Employees of the Bank on a point system basis,
whereby a point will be assigned for each year of employment and for each salary
increment of $5,000 per annum and five points for each office held in the Bank,
including a trusteeship. If any such Trustee, Officer or Employee does not
subscribe for his or her full allocation of shares, any shares not subscribed
for may be purchased by other Trustees, Officers and Employees in proportion to
their respective subscriptions, provided that no fractional shares shall be
issued.
15. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING, PUBLIC
OFFERING AND OTHER OFFERINGS.
(a) If less than the total number of shares of the Common Stock are
sold in the Subscription Offering, it is anticipated that all remaining shares
of Common Stock shall, if practicable, be sold directly by the SHC and the Bank
in a Community Offering and/or a Syndicated Community Offering. Subject to the
requirements set forth herein, Common Stock sold in the Community Offering
and/or the Syndicated Community Offering shall achieve the widest possible
distribution of such stock.
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(b) In the event of a Community Offering, all shares of Common Stock
which are not subscribed for in the Subscription Offering shall be offered for
sale by means of a direct community marketing program, which may provide for the
use of brokers, dealers or investment banking firms experienced in the sale of
financial institution securities. Any available shares in excess of those not
subscribed for in the Subscription Offering will be available for purchase by
members of the general public who receive a Prospectus, with preference given to
natural persons residing in Oswego County, New York ("Preferred Subscribers").
(c) A Prospectus and Order Form shall be furnished to such Persons as
the SHC and the Bank may select in connection with the Community Offering and
each order for Common Stock in the Community Offering shall be subject to the
absolute right of the SHC and the Bank to accept or reject any such order in
whole or in part either at the time of receipt of an order or as soon as
practicable following completion of the Community Offering. Available shares
will be allocated first to each Preferred Subscriber whose order is accepted by
the SHC, in an amount equal to the lesser of 100 shares or the number of shares
subscribed for by each such Preferred Subscriber, if possible. Thereafter, any
shares remaining will be allocated among the Preferred Subscribers whose
subscriptions remain unsatisfied on an equal number of shares basis per order
until all orders have been filled or the remaining shares have been allocated,
provided no fractional shares shall be issued. If there are any shares remaining
after all subscriptions by Preferred Subscribers have been satisfied, such
remaining shares shall be allocated to Other Account Holders of the general
public who purchase in the Community Offering applying the same allocation
described above for Preferred Subscribers.
(d) The amount of Common Stock that any Person together with any
Associate thereof or group of Persons acting in concert may purchase in the
Community Offering shall not exceed the greater of (i) $150,000 or (ii)
one-tenth of 1% of the total offering of shares in the Subscription Offering,
provided, however, that this amount may be increased to 5% of the total offering
of shares in the Subscription Offering, subject to any required regulatory
approval but without the further approval of Depositors; provided, further, that
orders for Common Stock in the Community Offering shall first be filled to a
maximum of 2% of the total number of shares of Common Stock sold in the
Offerings and thereafter any remaining shares shall be allocated on an equal
number of shares basis per order until all orders have been filled, provided no
fractional shares shall be issued. The SHC and the Bank may commence the
Community Offering concurrently with, at any time during, or as soon as
practicable after the end of, the Subscription Offering, and the Community
Offering must be completed within 45 days after the completion of the
Subscription Offering, unless extended by the SHC and the Bank with any required
regulatory approval.
(e) Subject to such terms, conditions and procedures as may be
determined by the SHC and the Bank, all shares of Common Stock not subscribed
for in the Subscription Offering or ordered in the Community Offering may be
sold by a syndicate of broker-dealers to the general public in a Syndicated
Community Offering. Each order for Common Stock in the Syndicated Community
Offering shall be subject to the absolute right of the SHC and the Bank to
accept or reject any such order in whole or in part either at the time of
receipt of an order or as soon as practicable after
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completion of the Syndicated Community Offering. The amount of Common Stock that
any Person together with any Associate thereof or group of Persons acting in
concert may purchase in the Syndicated Community Offering shall not exceed
$150,000 provided, however, that this amount may be increased to 5% of the total
offering of shares in the Subscription Offering, subject to any required
regulatory approval but without the further approval of the Depositors; provided
further that orders for Common Stock in the Syndicated Community Offering shall
first be filled to a maximum of 2% of the total number of shares of Common Stock
sold in the Offering and thereafter any remaining shares shall be allocated on
an equal number of shares basis per order until all orders have been filled,
provided no fractional shares shall be issued. The SHC and the Bank may commence
the Syndicated Community Offering concurrently with, at any time during, or as
soon as practicable after the end of the Subscription Offering and/or Community
Offering, and the Syndicated Community Offering must be completed within 45 days
after the completion of the Subscription Offering, unless extended by the SHC
and the Bank with any required regulatory approval.
(f) The SHC and the Bank may sell any shares of Common Stock remaining
following the Subscription Offering, Community Offering and/or the Syndicated
Community Offering in a Public Offering. The provisions of Section 15 hereof
shall not be applicable to the sales to underwriters for purposes of the Public
Offering but shall be applicable to sales by the underwriters to the public. The
price to be paid by the underwriters in such an offering shall be equal to the
Actual Purchase Price less an underwriting discount to be negotiated among such
underwriters and the Bank and the SHC, subject to any required regulatory
approval or consent.
(g) If for any reason a Syndicated Community Offering or Public
Offering of shares of Common Stock not sold in the Subscription Offering and the
Community Offering cannot be effected, or in the event that any insignificant
residue of shares of Common Stock is not sold in the Subscription Offering,
Community Offering or Syndicated Community Offering, the SHC and the Bank shall
use their best efforts to obtain other purchases in such manner and upon such
condition as may be satisfactory to the Superintendent and the FDIC.
16. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF COMMON STOCK.
(a) The aggregate amount of outstanding Common Stock owned or
controlled by Persons other than the MHC at the close of the Stock Offering
shall be no more than 49% of the total outstanding Common Stock.
(b) The aggregate amount of Common Stock acquired in the Stock Offering
by any one or more Tax-Qualified Employee Stock Benefit Plans, exclusive of any
Common Stock acquired by such plans in the secondary market, shall not exceed
ten percent (10%) of the (i) outstanding shares of Common Stock, or (ii)
stockholders' equity of the SHC, in each case held by Persons other than the MHC
at the close of the Stock Offering.
(c) The aggregate amount of Common Stock acquired in the Stock Offering
by any Non- Tax-Qualified Employee Stock Benefit Plan or any Insider of the Bank
and his or her Associates,
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exclusive of any Common Stock acquired by said plan, or such Insider and his or
her Associates, in the secondary market, shall not exceed ten percent (10%) of
the (i) outstanding shares of Common Stock, or (ii) stockholders' equity of the
SHC, held by Persons other than the MHC at the close of the Stock Offering.
(d) The aggregate amount of Common Stock acquired in the Stock Offering
by all Insiders of the Bank shall not exceed twenty-five percent (25%) of the
(i) outstanding shares of Common Stock, or (ii) stockholders' equity of the SHC,
held by Persons other than the MHC at the close of the Stock Offering.
(e) Except in the case of Tax-Qualified Employee Stock Benefit Plans in
the aggregate, as set forth in Section 16(b) hereof, and certain Eligible
Account Holders and Supplemental Eligible Account Holders, and in addition to
the other restrictions and limitations set forth herein, the maximum amount of
Common Stock which any Person together with any Associate or group of Persons
acting in concert may, directly or indirectly, subscribe for or purchase in the
Stock Offering (including without limitation the Subscription Offering,
Community Offering and/or Syndicated Community Offering), shall not exceed 5% of
the total number of shares sold in the Offering.
(f) No Person may purchase fewer than 25 shares of Common Stock in the
Stock Offering, to the extent such shares are available; provided, however, that
if the Actual Purchase Price is greater than $20.00 per share, such minimum
number of shares shall be adjusted so that the aggregate Actual Purchase Price
for such minimum shares will not exceed $500.00.
(g) For purposes of the foregoing limitations and the determination of
Subscription Rights, (i) Trustees and Officers shall not be deemed to be
Associates or a group acting in concert solely as a result of their capacities
as such, (ii) shares purchased by Tax-Qualified Employee Stock Benefit Plans
shall not be attributable to the individual trustees or beneficiaries of any
such plan for purposes of determining compliance with the limitations set forth
in Section 16(e) hereof, and (iii) shares purchased by Tax-Qualified Employee
Stock Benefit Plans shall not be attributable to the individual trustees or
beneficiaries of any such plan for purposes of determining compliance with the
limitation set forth in Section 16(d) hereof.
(h) Subject to any required regulatory approval and the requirements of
applicable laws and regulations, the SHC and the Bank may increase or decrease
any of the purchase limitations set forth herein at any time. In the event that
either an individual purchase limitation or the number of shares of Common Stock
to be sold in the Stock Offering is increased after commencement of the Stock
Offering, any Person who ordered the maximum number of shares of Common Stock
shall be permitted to purchase an additional number of shares such that such
Person may subscribe for the then maximum number of shares permitted to be
subscribed for by such Person, subject to the rights and preferences of any
person who has priority rights to purchase shares of Common Stock in the Stock
Offering. In the event that either an individual purchase limitation or the
number of shares of Common Stock to be sold in the Stock Offering is decreased
after commencement of the Stock Offering, the orders of any Person who
subscribed for the maximum number of shares of Common
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Stock shall be decreased by the minimum amount necessary so that such Person
shall be in compliance with the then maximum number of shares permitted to be
subscribed for by such Person.
(i) The SHC and the Bank shall have the right to take any action as
they may, in their sole discretion, deem necessary, appropriate or advisable in
order to monitor and enforce the terms, conditions, limitations and restrictions
contained in this Section 16 and elsewhere in this Plan and the terms,
conditions and representations contained in the Order Form, including, but not
limited to, the absolute right (subject only to any necessary regulatory
approvals or concurrence) to reject, limit or revoke acceptance of any order and
to delay, terminate or refuse to consummate any sale of Common Stock which they
believe might violate, or is designed to, or is any part of a plan to, evade or
circumvent such terms, conditions, limitations, restrictions and
representations. Any such action shall be final, conclusive and binding on all
Persons and the SHC and the Bank shall be free from any liability to any Person
on account of any such action.
17. TIMING OF STOCK OFFERING, MANNER OF PURCHASING COMMON
STOCK AND ORDER FORMS.
(a) The Stock Offering may be commenced concurrently with or at any
time after the mailing to the Depositors of the proxy statement to be used in
connection with the Special Meeting. The Stock Offering may be closed before the
Special Meeting, provided that the offer and sale of the Common Stock shall be
conditioned upon the approval of the Plan by the Depositors at the Special
Meeting.
(b) The exact timing of the commencement of the Stock Offering shall be
determined by the Bank and the SHC in consultation with the Independent
Appraiser and any financial or advisory or investment banking firm retained by
it in connection with the Stock Offering. The Bank and the SHC may consider a
number of factors in determining the exact timing of the commencement of the
Stock Offering, including, but not limited to, its current and projected future
earnings, local and national economic conditions and the prevailing market for
stocks in general and stocks of financial institutions in particular. The Bank
and the SHC shall have the right to withdraw, terminate, suspend, delay, revoke
or modify any such Stock Offering, at any time and from time to time, as they in
their sole discretion may determine, without liability to any Person, subject to
any necessary regulatory approval or concurrence.
(c) The Bank and the SHC shall have the absolute right, in their sole
discretion and without liability to any Person, to reject any Order Form,
including, but not limited to, any Order Form (i) that is improperly completed
or executed; (ii) that is not timely received; (iii) that is not accompanied by
the proper payment (or authorization of withdrawal for payment); (iv) submitted
by a Person whose representations the Bank and the SHC believes to be false or
who they otherwise believe, either alone, or acting in concert with others, is
violating, evading or circumventing, or intends to violate, evade or circumvent,
the terms and conditions of this Plan. The Bank and the SHC may, but will not be
required to, waive any irregularity on any Order Form or may require the
submission of corrected Order Forms or the remittance of full payment for shares
of Common Stock by such date
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as they may specify. The interpretation of the Bank and the SHC of the terms and
conditions of the Order Forms shall be final and conclusive.
(d) The SHC and the Bank shall make reasonable efforts to comply with
the securities laws of all jurisdictions in the United States in which
Participants reside. However, no Participant will be offered or receive any
Common Stock under the Plan if such Participant resides in a foreign country.
18. PAYMENT FOR COMMON STOCK.
(a) Payment for shares of Common Stock ordered by Persons in the Stock
Offering shall be equal to the Purchase Price per share multiplied by the number
of shares which are being ordered. Such payment may be made in cash, if
delivered in person, or by check or money order at the time the Order Form is
delivered to the Bank. In addition, the Bank and the SHC may elect to provide
Persons who have a Deposit Account with the Bank the opportunity to pay for
shares of Common Stock by authorizing the Bank to withdraw from such Deposit
Account an amount equal to the aggregate Purchase Price of such shares.
(b) Consistent with applicable laws and regulations and policies and
practices of the Superintendent and the FDIC, payment for shares of Common Stock
ordered by Tax-Qualified or Non-Tax-Qualified Employee Stock Benefit Plans may
be made with funds contributed by the Bank and/or funds obtained pursuant to a
loan from an unrelated financial institution pursuant to a loan commitment which
is in force from the time that any such plan submits an Order Form until the
closing of the transactions contemplated hereby.
(c) If a Person authorizes the Bank to withdraw the amount of the
Purchase Price from his or her Deposit Account, the Bank shall have the right to
make such withdrawal or to freeze funds equal to the aggregate Purchase Price
upon receipt of the Order Form. Notwithstanding any regulatory provisions
regarding penalties for early withdrawals from certificate accounts, the Bank
and the SHC may allow payment by means of withdrawal from certificate accounts
without the assessment of such penalties. In the case of an early withdrawal of
only a portion of such account, the certificate evidencing such account shall be
cancelled if any applicable minimum balance requirement ceases to be met. In
such case, the remaining balance will earn interest at the regular passbook
rate. However, where any applicable minimum balance is maintained in such
certificate account, the rate of return on the balance of the certificate
account shall remain the same as prior to such early withdrawal. This waiver of
the early withdrawal penalty applies only to withdrawals made in connection with
the purchase of Common Stock and is entirely within the discretion of the Bank.
(d) The Bank shall pay interest at not less than the passbook rate for
all amounts paid in cash, by check or money order to purchase shares of Common
Stock in the Stock Offering from the date payment is received until the Stock
Offering is completed or terminated.
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(e) Neither the Bank, the MHC, the SHC, the Stock-form Bank nor any
Affiliate thereof shall knowingly loan funds or otherwise extend credit to any
Person to purchase Common Stock.
(f) Each share of Common Stock issued in the Stock Offering shall be
non-assessable upon payment in full of the Purchase Price.
19. CONDITIONS TO THE OFFERING.
Consummation of the Stock Offering is subject to (i) consummation of
the MHC Reorganization, (ii) the receipt of all required federal and New York
State approvals for the issuance of Common Stock in the Stock Offering,
including without limitation the approval of the Superintendent and the FDIC,
and (iii) the sale in the Stock Offering of such minimum number of shares of
Common Stock within the Estimated Valuation Range as may be determined by the
Boards of Trustees of the Bank and the Board of Directors of the SHC.
20. REQUIREMENT FOLLOWING STOCK OFFERING FOR REGISTRATION,
MARKET MAKING AND STOCK EXCHANGE LISTING.
If the SHC has more than thirty-five (35) holders of any class of
Capital Stock at the close of the Stock Offering, the SHC shall register that
class of stock pursuant to the Securities Exchange Act of 1934, as amended, and
shall undertake not to deregister such stock for a period of three years
thereafter. In addition, if the SHC has more than one-hundred (100) holders of
any class of Capital Stock at the close of the Stock Offering, the SHC, to the
extent required by applicable laws and regulations and policies of the
Superintendent and the FDIC, shall use its best efforts to (i) encourage and
assist a market maker to establish and maintain a market for that class of stock
and (ii) list that class of stock on a national or regional securities exchange
or to have quotations for that class of stock disseminated on the Nasdaq Stock
Market.
21. REQUIREMENTS FOR CAPITAL STOCK PURCHASES BY DIRECTORS AND
OFFICERS FOLLOWING THE STOCK OFFERING.
For a period of three years following the Stock Offering, Insiders and
their Associates may not purchase, without the prior written approval of the
Superintendent and the FDIC, the Common Stock except from a broker-dealer
registered with the SEC. This prohibition shall not apply, however, to purchases
of Common Stock made by and held by any Tax-Qualified or Non-Tax-Qualified
Employee Stock Benefit Plan which may be attributable to individual Insiders and
their Associates.
The foregoing restriction on purchases of Common Stock shall be in
addition to any restrictions that may be imposed by federal and state securities
laws.
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22. RESTRICTIONS ON TRANSFER OF COMMON STOCK.
All shares of the Common Stock which are purchased in the Stock
Offering by Persons other than Insiders shall be transferable without
restriction. Unless otherwise permitted by the Superintendent and the FDIC,
shares of Common Stock purchased by Insiders and their Associates in the Stock
Offering shall be subject to the restriction that such shares shall not be sold
or otherwise disposed of for value for a period of one year following the date
of purchase, except for any disposition of such shares following the death or
judicial declaration of incompetency of the Insider or Associate. The shares of
Common Stock issued by the SHC to Insiders and their Associates shall bear the
following legend giving appropriate notice of such one year restriction:
The shares represented by this certificate may not be sold by the
registered holder hereof for a period of one year from the date of the
issuance printed hereon, except in the event of the death or judicial
declaration of incompetency of the registered holder.
In addition, the SHC shall give appropriate instructions to the
transfer agent for its Common Stock with respect to the applicable restrictions
relating to the transfer of restricted stock. Any shares issued at a later date
as a stock dividend, stock split or otherwise with respect to any such
restricted stock shall be subject to the same holding period restrictions as may
then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
23. SUBSEQUENT OFFERING OF CAPITAL STOCK OF THE SHC AND CONVERSION OF THE
MHC INTO A STOCK HOLDING COMPANY.
If approved by the Superintendent and/or any other applicable
regulatory authority, following consummation of the MHC Reorganization (i) the
SHC may sell shares of its capital stock to third persons other than the MHC and
(ii) the MHC may convert from a mutual to a stock form holding company, in each
case subject to the requirements of applicable laws and regulations, in each
case subject to the requirements of Article VI-C of the NYBL and Parts 86 and
111 of the General Regulations of the Bank Board and any other applicable laws
and regulations. The MHC, the SHC and the Bank are authorized to apply to the
Superintendent in connection with any such transaction for such variations from
the requirements of the General Regulations of the Bank Board and this Plan as
may be necessary and proper to effect the transaction.
The SHC may conduct one or more offerings of its capital stock (which
in the aggregate shall be no more than 49% of the total to-be-outstanding voting
stock of the SHC) following consummation of the MHC Reorganization, subject to
the approval of the Board of Directors of the SHC, the Bank and the
Superintendent and, if applicable, the FDIC. Each such offering shall be
conducted pursuant to a Stock Issuance Plan which meets the requirements of
applicable laws and
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regulations and policies of the Department and/or any other regulatory
authority. The actual timing of any offering of the SHC's capital stock shall be
in the discretion of the Board of Directors of the SHC. The Plan of Stock
Issuance adopted by the Bank in connection with this Plan, as amended, is hereby
incorporated herein by reference.
Neither the MHC, the SHC, the Bank nor the Stock-form Bank shall,
directly or indirectly, loan funds or otherwise extend credit to any Person for
the purpose of purchasing capital stock of the SHC issued in connection with any
of the transactions referred to in this Section 23.
24. STOCK COMPENSATION PLANS.
(a) The SHC, the MHC, the Stock-form Bank and the Bank are authorized
to adopt Tax-Qualified Employee Stock Benefit Plans in connection with the MHC
Reorganization, including, without limitation, the ESOP. Subsequent to the
Offerings, the SHC and the Bank are authorized to adopt Non-Tax Qualified
Employee Stock Benefit Plans, including without limitation, stock option plans
and restricted Plans, provided however that, any such plan shall be implemented
in accordance with applicable law and the regulations of the Superintendent and
the FDIC, including any required stockholder approval.
(b) Existing as well as any newly created Tax-Qualified Employee Stock
Benefit Plans may purchase shares of Common Stock in the Stock Offering, to the
extent permitted by the terms of such benefit plans and this Plan.
(c) The MHC, the SHC and the Stock-form Bank are authorized to enter
into employment or severance agreements with their executive officers.
25. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION.
As part of the MHC Reorganization, the SHC and the Bank intend to
establish a charitable foundation that will qualify as an exempt organization
under Section 501(c)(3) of the Code. To fund the Foundation, the Bank will
contribute funds prior to completion of the MHC Reorganization or, immediately
subsequent to the MHC Reorganization, the SHC will contribute authorized but
unissued shares of Common Stock in an amount not to exceed 4.0% of the number of
shares of Common Stock sold in the Stock Offering (provided, however, that
such amount may be reduced by the SHC and the Bank), or a combination thereof,
subject to the receipt of any required regulatory approval or consent. The
Foundation is being formed in connection with the MHC Reorganization in order to
complement the Bank's existing community reinvestment activities and to share
with the Bank's local community a part of the Bank's financial success as a
locally headquartered, community minded, financial services institution.
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26. TRUSTEES AND OFFICERS.
Unless otherwise required by the Superintendent or the FDIC, each
Person serving as a trustee of the Bank at the time of the MHC Reorganization
shall serve as a trustee or director, as the case may be, of the MHC, the SHC
and the Stock-form Bank thereafter for the terms respectively specified in the
Organization Certificate and Bylaws of the MHC, the SHC and the Stock-form Bank
and until his or her successor is elected and qualified. The officers of the
MHC, the SHC and the Stock-form Bank shall be selected by their respective Board
of Directors or Trustees upon formation of such entity.
27. EXPENSES OF THE MHC REORGANIZATION AND STOCK OFFERING.
The Bank and the SHC shall use their best efforts to ensure that the
expenses incurred by them in connection with the Stock Offering are reasonable.
28. AMENDMENT OR TERMINATION.
If necessary or desirable, the terms of the Plan may be substantially
amended by a majority vote of the Bank's Board of Trustees as a result of
comments from regulatory authorities or otherwise, at any time prior to
submission of the Plan and proxy materials to the Depositors. At any time after
submission of the Plan and proxy materials to the Depositors, the terms of the
Plan that relate to the Reorganization may be amended by a majority vote of the
Board of Trustees only with the concurrence of the Superintendent, and, if
applicable, the FDIC. Terms of the Plan relating to the Stock Offering
including, without limitation, Section 9 through 25, may be amended by a
majority vote of the Bank's Board of Trustees as a result of comments from
regulatory authorities or otherwise at any time prior to the approval of the
Plan by the Superintendent. The Plan may be terminated by a majority vote of the
Board of Trustees at any time prior to the earlier of approval of the Plan by
the Superintendent and the date of the Special Meeting, and may be terminated by
a majority vote of the Board of Trustees at any time thereafter with the
concurrence of the Superintendent. In its discretion, the Board of Trustees may
modify or terminate the Plan upon the order of the regulatory authorities
without a resolicitation of proxies or another meeting of the Depositors;
however, any material amendment of the terms of the Plan that relate to the
Reorganization which occur after the Special Meeting shall require a
resolicitation of Depositors.
The Plan shall be terminated if the Reorganization is not completed
within 24 months from the date upon which the Superintendent approves the Plan,
and may not be extended.
29. INTERPRETATION OF THE PLAN.
References herein to the NYBL and the General Regulations of the
Banking Board shall in all cases be deemed to refer to the provisions of the
same which were in effect at the time of adoption of this Plan by the Board of
Trustees and Depositors and any subsequent amendments to such provisions.
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Appendix A
AGREEMENT OF MERGER
Agreement of Merger, dated _____________, 1999, between Oswego County
Savings Bank ("the Bank"), a New York-chartered stock savings bank, and Interim
Two Savings Bank ("Subsidiary Bank") a newly formed New York-chartered stock
savings bank which is wholly owned by Oswego County MHC ("MHC"), a New
York-chartered mutual holding company.
W I T N E S S E T H:
WHEREAS, the Bank has adopted an Amended and Stated Plan of
Reorganization from Mutual Savings Bank to Mutual Holding Company and Plan of
Stock Issuance (the "Plan of MHC Reorganization"); and
WHEREAS, the Plan of MHC Reorganization requires that the Subsidiary
Bank be merged with and into the Bank pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Plan of MHC Reorganization,
the parties hereto do mutually agree, intending to be legally bound, as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "Effective Time" shall mean the date and time at which the merger
contemplated by this Agreement of Merger becomes effective as provided in
Section 2.2 of this Agreement of Merger.
1.2 "Merger" shall refer to the merger of the Bank with and into
Subsidiary Bank as provided in Section 2.1 of this Agreement of Merger.
1.3 "Merging Corporations" shall collectively refer to Subsidiary Bank
and the Bank.
1.4 "NYBL" shall mean the New York Banking Law.
1.5 "Superintendent" shall mean the Superintendent of the Banking
Department of the State of New York.
1.6 "Surviving Corporation" shall refer to the Bank as the surviving
corporation of the Merger.
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ARTICLE II
TERMS OF THE MERGER
2.1 The Merger.
(a) Subject to the terms and conditions set forth herein and in the
Plan of MHC Reorganization, at the Effective Time, the Subsidiary Bank shall be
merged with and into the Bank pursuant to Section 601 of the NYBL. The Bank
shall be the Surviving Corporation of the Merger and shall continue to be
governed by the NYBL.
(b) As a result of the Merger, each share of common stock, par value
$1.00 per share, of the Bank issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding and shall constitute the only
shares of capital stock of the Surviving Corporation issued and outstanding
immediately after the Effective Time.
(c) At the Effective Time, the Surviving Corporation shall be
considered the same business and corporate entity as each of the Merging
Corporations and thereupon and thereafter all the property, rights, powers and
franchises of each of the Merging Corporations shall vest in the Surviving
Corporation and the Surviving Corporation shall be subject to and be deemed to
have assumed all of the debts, liabilities, obligations and duties of each of
the Merging Corporations and shall have succeeded to all of each of their
relationships, fiduciary or otherwise, as fully and to the same extent as if
such property, rights, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
by the Surviving Corporation. Schedule 2.1 contains a list of each of the
deposit-taking offices of the Bank which shall be operated by the Surviving
Corporation. In addition, any reference to either of the Merging Corporations in
any contract, will or document, whether executed or taking effect before or
after the Effective Time, shall be considered a reference to the Surviving
Corporation if not inconsistent with the other provisions of the contract, will
or document; and any pending action or other judicial proceeding to which either
of the Merging Corporations is a party shall not be deemed to have abated or to
have been discontinued by reason of the Merger, but may be prosecuted to final
judgment, order or decree in the same manner as if the Merger had not been made
or the Surviving Corporation may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of the Merging Corporations
if the Merger had not occurred.
2.2 Effective Time. The Merger shall become effective (a) on the date
and at the time immediately after which the Superintendent has (i) endorsed his
or her approval on this Agreement of Merger and caused said Agreement to be
filed with the Office of Superintendent pursuant to the provisions of Section
601-b of the NYBL, together with such certificates and other documents as may be
required by said Section 601-b or the Superintendent, and (ii) filed this
Agreement of Merger, together with the officers' certificates and the
resolutions of the Superintendent approving this Agreement of Merger, in the
office of the clerk of the county in which the principal office of the Surviving
Corporation is located, or (b) at such later time as may have been previously
specified by both of the parties hereto in a joint notice to the Superintendent.
2.3 Name of the Surviving Corporation. The name of the Surviving
Corporation shall be "Oswego County Savings Bank."
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2.4 Organization Certificate. On and after the Effective Time, the
Organization Certificate of the Bank shall be the Organization Certificate of
the Surviving Corporation until amended in accordance with applicable law.
2.5 Bylaws. On and after the Effective Time, the Bylaws of the Bank
shall be the Bylaws of the Surviving Corporation until amended in accordance
with applicable law.
2.6 Directors, Trustees and Officers. On and after the Effective Time,
until changed in accordance with the Organization Certificate and Bylaws of the
Surviving Corporation, (i) the directors of the Surviving Corporation shall be
the directors of the Bank immediately prior to the Effective Time and (ii) the
officers of the Surviving Corporation shall be the officers of the Bank
immediately prior to the Effective Time. The directors and officers of the
Surviving Corporation shall hold office in accordance with the Organization
Certificate and Bylaws of the Surviving Corporation.
ARTICLE III
MISCELLANEOUS
3.1 Conditions Precedent. The respective obligations of each party
under this Agreement of Merger shall be subject to (i) the satisfaction of the
conditions set forth herein and in the Plan of MHC Reorganization and (ii) the
approval of this Agreement of Merger by MHC, in its capacity as sole stockholder
of Subsidiary Bank.
3.2 Termination. This Agreement of Merger shall be terminated
automatically without further act or deed of either of the parties hereto in the
event of the termination of the Plan of MHC Reorganization in accordance with
the terms thereof.
3.3 Amendments. To the extent permitted by the NYBL, this Agreement of
Merger may be amended by a subsequent writing signed by the parties hereto upon
the approval of the board of directors of the Bank and the board of directors of
the Subsidiary Bank.
3.4 Successors. This Agreement of Merger shall be binding on the
successors of Subsidiary Bank and the Bank.
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IN WITNESS WHEREOF, Subsidiary Bank and the Bank have caused this
Agreement of Merger to be executed by their duly authorized officers as of the
day and year first above written.
OSWEGO COUNTY SAVINGS BANK
ATTEST:
By:
- ------------------------- --------------------------------------
Secretary Gregory J. Kreis,
President and Chief Executive Officer
INTERIM TWO SAVINGS BANK
ATTEST:
By:
- ------------------------- -------------------------------------
Secretary Gregory J. Kreis,
President and Chief Executive Officer
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Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
OSWEGO COUNTY BANCORP, INC.
ARTICLE 1. CORPORATE TITLE. The name of the Corporation is Oswego County
Bancorp, Inc. (hereinafter referred to as the "Corporation").
ARTICLE 2. REGISTERED OFFICE. The address of the registered office of the
Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name of the
registered agent at that address is The Corporation Trust Company.
ARTICLE 3. PURPOSE. The purpose of the Corporation is to engage in any lawful
act or activity for which a corporation may be organized under the General
Corporation Law of Delaware.
ARTICLE 4. CAPITAL STOCK.
A. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 8.5 million consisting of 7.5
million shares of Common Stock, par value one cent ($.01) per share (the "Common
Stock") and 1.0 million shares of Preferred Stock, par value one cent ($.01) per
share (the "Preferred Stock").
B. 1. Notwithstanding any other provision of this Certificate of
Incorporation, in no event shall any record owner of any outstanding Common
Stock which is beneficially owned, directly or indirectly, by a person who, as
of any record date for the determination of stockholders entitled to vote on any
matter, beneficially owns in excess of 5% of the then-outstanding shares of
Common Stock (the "Limit"), be entitled, or permitted to any vote in respect of
the shares held in excess of the Limit, except that such restriction and all
restrictions set forth in this subsection "B"shall not apply to Oswego County
MHC (the "Mutual Holding Company"), or any tax qualified employee stock benefit
plan established by the Corporation, which shall be able to vote in respect to
shares held in excess of the Limit. The number of votes which may be cast by any
record owner by virtue of the provisions hereof in respect of Common Stock
beneficially owned by such person owning shares in excess of the Limit shall be
a number equal to the total number of votes which a single record owner of all
Common Stock owned by such person would be entitled to cast, multiplied by a
fraction, the numerator of which is the number of shares of such class or series
which are both beneficially owned by such person and owned of record by such
record owner and the denominator of which is the total number of shares of
Common Stock beneficially owned by such person owning shares in excess of the
Limit.
2. The following definitions shall apply to this Section B of this
Article 4:
(a) "Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as in effect on the date of filing
<PAGE>
of this Certificate of Incorporation.
(b) "Beneficial ownership" shall be determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934 (or any successor rule or statutory provision), or, if said Rule
13d-3 shall be rescinded and there shall be no successor rule or statutory
provision thereto, pursuant to said Rule 13d-3 as in effect on the date of
filing of this Certificate of Incorporation; provided, however, that a person
shall, in any event, also be deemed the "beneficial owner" of any Common Stock:
(1) which such person or any of its affiliates beneficially owns,
directly or indirectly; or
(2) which such person or any of its affiliates has (i) the right to
acquire (whether such right is exercisable immediately or only after the passage
of time), pursuant to any agreement, arrangement or understanding (but shall not
be deemed to be the beneficial owner of any voting shares solely by reason of an
agreement, contract, or other arrangement with this Corporation to effect any
transaction which is described in any one or more clauses of Section A of
Article 8) or upon the exercise of conversion rights, exchange rights, warrants,
or options or otherwise, or (ii) sole or shared voting or investment power with
respect thereto pursuant to any agreement, arrangement, understanding,
relationship or otherwise (but shall not be deemed to be the beneficial owner of
any voting shares solely by reason of a revocable proxy granted for a particular
meeting of stockholders, pursuant to a public solicitation of proxies for such
meeting, with respect to shares of which neither such person nor any such
affiliate is otherwise deemed the beneficial owner); or
(3) which are beneficially owned, directly or indirectly, by any other
person with which such first mentioned person or any of its affiliates acts as a
partnership, limited partnership, syndicate or other group pursuant to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of this Corporation; and
provided further, however, that (1) no Director or Officer of this Corporation
(or any affiliate of any such Director or Officer) shall, solely by reason of
any or all of such Directors or Officers acting in their capacities as such, be
deemed, for any purposes hereof, to beneficially own any Common Stock
beneficially owned by another such Director or Officer (or any affiliate
thereof), and (2) neither any employee stock ownership plan or similar plan of
this Corporation or any subsidiary of this Corporation, nor any trustee with
respect thereto or any affiliate of such trustee (solely by reason of such
capacity of such trustee), shall be deemed, for any purposes hereof, to
beneficially own any Common Stock held under any such plan. For purposes of
computing the percentage beneficial ownership of Common Stock of a person the
outstanding Common Stock shall include shares deemed owned by such person,
through application of this subsection but shall not include any other Common
Stock which may be issuable by this Corporation pursuant to any agreement, or
upon exercise of conversion rights, warrants or options, or otherwise. For all
other purposes, the outstanding Common Stock shall include only Common Stock
then outstanding and shall not include any Common Stock which may be issuable by
this Corporation pursuant to any agreement, or upon the exercise of conversion
rights, warrants or options, or otherwise.
2
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(c) A "person" shall include an individual, firm, a group
acting in concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an unincorporated organization
or similar company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities or any other entity.
3. The Board of Directors shall have the power to construe and apply
the provisions of this section and to make all determinations necessary or
desirable to implement such provisions, including but not limited to matters
with respect to (i) the number of shares of Common Stock beneficially owned by
any person, (ii) whether a person is an affiliate of another, (iii) whether a
person has an agreement, arrangement, or understanding with another as to the
matters referred to in the definition of beneficial ownership, (iv) the
application of any other definition or operative provision of the section to the
given facts, or (v) any other matter relating to the applicability or effect of
this section.
4. The Board of Directors shall have the right to demand that any
person who is reasonably believed to beneficially own Common Stock in excess of
the Limit (or holds of record Common Stock beneficially owned by any person in
excess of the Limit) supply the Corporation with complete information as to (i)
the record owner(s) of all shares beneficially owned by such person who is
reasonably believed to own shares in excess of the Limit, (ii) any other factual
matter relating to the applicability or effect of this section as may reasonably
be requested of such person.
5. Except as otherwise provided by law or expressly provided in this
section, the presence, in person or by proxy, of the holders of record of shares
of capital stock of the Corporation entitling the holders thereof to cast a
majority of the votes (after giving effect, if required, to the provisions of
this section) entitled to be cast by the holders of shares of capital stock of
the Corporation entitled to vote shall constitute a quorum at all meetings of
the stockholders, and every reference in this Certificate of Incorporation to a
majority or other proportion of capital stock (or the holders thereof) for
purposes of determining any quorum requirement or any requirement for
stockholder consent or approval shall be deemed to refer to such majority or
other proportion of the votes (or the holders thereof) then entitled to be cast
in respect of such capital stock, after giving effect to the provisions of this
section.
6. Any constructions, applications, or determinations made by the Board
of Directors pursuant to this section in good faith and on the basis of such
information and assistance as was then reasonably available for such purpose
shall be conclusive and binding upon the Corporation and its stockholders.
7. In the event that any provision (or portion thereof) of this section
shall be found to be invalid, prohibited or unenforceable for any reason, the
remaining provisions (or portions thereof) of this section shall remain in full
force and effect, and shall be construed as if such invalid, prohibited or
unenforceable provision had been stricken herefrom or otherwise rendered
inapplicable, it being the intent of this Corporation and its stockholders that
such remaining provision (or portion thereof) of this section remain, to the
fullest extent permitted by law, applicable
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<PAGE>
and enforceable as to all stockholders, including stockholders owning an amount
of stock over the Limit, notwithstanding any such finding.
ARTICLE 5. MANAGEMENT OF CORPORATION. The following provisions are inserted
for the management of the business and the conduct of the affairs of the
Corporation, and for further definition, limitation and regulation of the powers
of the Corporation and of its Directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by statute or by this Certificate of
Incorporation or the Bylaws of the Corporation, the Directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation.
B. The Directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
C. Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may be effected by the unanimous consent in
writing by such stockholders.
D. 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 the Corporation would have if there were no
vacancies on the Board of Directors (the "Board") or as otherwise provided in
the Bylaws.
ARTICLE 6. DIRECTORS
A. The number of Directors shall be fixed from time to time exclusively
by the Board of Directors pursuant to a resolution adopted by a majority of the
Board. The Directors shall be divided 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. At each
annual meeting of stockholders following such initial classification and
election, Directors elected to succeed those Directors whose terms expire shall
be elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election.
B. 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
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<PAGE>
they have been chosen expires. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any incumbent
Director.
C. Advance notice of stockholder nominations for the election of
Directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
D. Any Director, or the entire Board of Directors, may be removed from
office at any time, but only for cause and only by the affirmative vote of the
holders of at least 80% of the voting power of all of the then-outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of Directors (after giving effect to the provisions of Article 4 of
this Certificate of Incorporation ("Article 4")), voting together as a single
class.
ARTICLE 7. BYLAWS. The Board of Directors is expressly empowered to adopt, amend
or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of
the Bylaws of the Corporation by the Board of Directors shall require the
approval of a majority of the Board. The stockholders shall also have power to
adopt, amend or repeal the Bylaws of the Corporation; provided, however, that,
in addition to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least 80% of the voting power of all of
the then-outstanding shares of the capital stock of the Corporation entitled to
vote generally in the election of Directors (after giving effect to the
provisions of Article 4), voting together as a single class, shall be required
to adopt, amend or repeal any provisions of the Bylaws of the Corporation.
ARTICLE 8. EVALUATION OF OFFERS. The Board of Directors of the Corporation, when
evaluating any offer of another Person (as defined in Article 4 hereof) to (A)
make a tender or exchange offer for any equity security of the Corporation, (B)
merge or consolidate the Corporation with another corporation or entity or (C)
purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation, may, in connection with the exercise of its judgment
in determining what is in the best interest of the Corporation and its
stockholders, give due consideration to all relevant factors, including, without
limitation, the social and economic effect of acceptance of such offer on the
Corporation's present and future customers and employees and those of its
subsidiaries; on the communities in which the Corporation and its subsidiaries
operate or are located; on the ability of the Corporation to fulfill its
corporate objectives as a savings bank holding company; and on the ability of
its subsidiary savings bank to fulfill the objectives of a stock savings bank
under applicable statutes and regulations.
ARTICLE 9. INDEMNIFICATION.
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director,
5
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Officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article
9 shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, if required under the Delaware
General Corporation Law, that an advancement of expenses incurred by an
indemnitee in his or her capacity as a Director of Officer (and not in any other
capacity in which service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article 9 shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article 9 is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses), it shall be a defense that, and (ii) in any suit by
the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the Corporation shall be entitled to recover such expenses upon
a final adjudication that, the indemnitee has not met any applicable standard
for indemnification set forth
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in the Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article 9 or otherwise, shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article 9 shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article 9 with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ARTICLE 10. LIMITATION OF LIABILITY. A Director of this Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director, except for liability (i) for any
breach of the Director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
Director derived an improper personal benefit. If the Delaware General
Corporation Law is amended to authorize corporate action further eliminating or
limiting the personal liability of Directors, then the liability of a Director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a Director of the Corporation existing at the time
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of such repeal or modification.
ARTICLE 11. MUTUAL HOLDING COMPANY. At all times so long as the Mutual Holding
Company shall be in existence, the Mutual Holding Company shall own at least a
majority of the Voting Stock of the Corporation and the Corporation shall not be
authorized to issue any shares of Voting Stock or take any action while the
Mutual Holding Company is in existence if after such issuance or action the
Mutual Holding Company shall own less than the majority of the Corporation's
Voting Stock. For these purposes, "Voting Stock" means common stock or preferred
stock, or similar interests if the shares by statute, charter or in any manner,
entitle the holder: (i) to vote for or to select Directors of the Corporation;
and (ii) to vote on or to direct the conduct of the operations or other
significant policies of the Corporation. Notwithstanding anything in the
preceding sentence, preferred stock is not "Voting Stock" if: (i) voting rights
associated with the preferred stock are limited solely to the type customarily
provided by statute with regard to matters that would significantly and
adversely affect the rights or preferences of the preferred stock, such as the
issuance of additional amounts or classes of senior securities, the modification
of the terms of the preferred stock, the dissolution of the Corporation, or the
payment of dividends by the Corporation when preferred dividends are in arrears;
(ii) the preferred stock represents an essentially passive investment or
financing device and does not otherwise provide the holder with control over the
Corporation; and (iii) the preferred stock does not at the time entitle the
holder, by statute, charter, or otherwise, to select or to vote for the
selection of Directors of the Corporation. Notwithstanding anything in the
preceding two sentences, "Voting Stock" shall be deemed to include preferred
stock and other securities that, upon transfer or otherwise, are convertible
into Voting Stock or exercisable to acquire Voting Stock where the holder of the
stock, convertible security or right to acquire Voting Stock has the
preponderant economic risk in the underlying Voting Stock. Securities
immediately convertible into Voting Stock at the option of the holder without
payment of additional consideration shall be deemed to constitute the Voting
Stock into which they are convertible; other convertible securities and rights
to acquire Voting Stock shall not be deemed to vest the holder with the
preponderant economic risk in the underlying Voting Stock if the holder has paid
less than 50% of the consideration required to directly acquire the Voting Stock
and has no other economic interest in the underlying Voting Stock.
ARTICLE 12. CONVERSION OF MUTUAL HOLDING COMPANY. The Mutual Holding
Corporation may elect to convert to stock form (a "Conversion Transaction") in
accordance with the Amended and Restated Plan of Reorganization from a Mutual
Savings Bank to a Mutual Holding Company and Stock Issuance Plan, dated March
18, 1999 (the "Plan"), and applicable law and regulation to the extent such
applicable law and regulation does not diminish the ownership rights of Minority
Stockholders (as hereinafter defined). In a Conversion Transaction, the Mutual
Holding Corporation will merge with and into Oswego County Savings Bank (the
"Bank") or the Corporation (or an affiliate or successor corporation of either),
with the Bank or the Corporation, respectively, as the resulting entity, and the
depositors of the Bank will receive the right to subscribe for a number of
shares of common stock of the Corporation, as determined by the formula set
forth in the following paragraphs and in the Plan. The additional shares of
Common Stock of the Corporation
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issued in the Conversion Transaction shall be sold at their aggregate pro forma
market value. In the event that the Mutual Holding Company merges into the
Corporation, a liquidation account may be established and maintained in the
Corporation.
In any Conversion Transaction, stockholders of the Corporation other
than the Mutual Holding Company ("Minority Stockholders"), if any, will be
entitled to maintain the same percentage ownership interest in the Corporation
after the Conversion Transaction as their ownership interest in the Corporation
immediately prior to the Conversion Transaction (i.e., the "Minority Ownership
Interest"), subject only to adjustment as set forth in the Plan (if required by
federal or state law, regulation, or regulatory policy) to reflect (i) the
cumulative effect of the aggregate amount of dividends waived by the Mutual
Holding Company, and (ii) the market value of assets of the Mutual Holding
Company (other than Common Stock of the Corporation).
The adjustment referred to in clause (i) above would require that the
Minority Ownership Interest (expressed as a percentage) be adjusted by
multiplying the Minority Ownership Interest by a fraction, the numerator of
which is equal to the Corporation's stockholders' equity at the time of the
Conversion Transaction less the aggregate dollar amount of dividends waived by
the Mutual Holding Company, and the denominator of which is equal to the
Corporation's stockholders' equity at the time of the Conversion Transaction.
The adjusted Minority Ownership Interest (expressed as a percentage)
resulting from the immediately preceding paragraph would be further adjusted
pursuant to clause (ii) above by multiplying it by a fraction, the numerator of
which is equal to the pro forma market value of the Corporation less the market
value of assets of the Mutual Holding Company other than Corporation Common
Stock, and the denominator of which is equal to the pro forma market value of
the Corporation.
At the sole discretion of the Board of Trustees of the Mutual Holding
Company and the Board of Directors of the Corporation, a Conversion Transaction
may be effected in any other manner necessary to qualify the Conversion
Transaction as a tax-free reorganization under applicable federal and state tax
laws, provided such Conversion Transaction does not diminish the rights and
ownership interest of Minority Stockholders as set forth in the preceding
paragraphs of this Article 12. If a Conversion Transaction does not occur, the
Mutual Holding Company will always own a majority of the Voting Stock of the
Corporation.
ARTICLE 13. AMENDMENTS. The Corporation reserves the right to amend or repeal
any provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this reservation; provided, however, that,
notwithstanding any other provision of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series of the stock of the
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least 80% of the voting power of all of
the then-outstanding shares of the capital stock of the Corporation entitled to
vote generally
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in the election of Directors (after giving effect to the provisions of Article
4), voting together as a single class, shall be required to amend or repeal this
Article 13, Section C of Article 4, Sections C or D of Article 5, Article 6,
Article 7, Article 8 or Article 10.
ARTICLE 14. SOLE INCORPORATOR . The name and mailing address of the sole
incorporator are as follows:
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming
a corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and accordingly, have hereto set my hand this 21st day of April, 1999.
----------------------
Incorporator
10
Exhibit 3.2
BYLAWS
OF
OSWEGO COUNTY BANCORP, INC.
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 Oswego County Bancorp, Inc.
("Corporation"), special meetings of stockholders of the Corporation may be
called 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 "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. 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 Article 4 of the
Corporation's Certificate of Incorporation), shall constitute 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 shall constitute a quorum entitled to take action with
respect to that vote on that matter.
<PAGE>
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 constituting a quorum, then except as otherwise required by law,
those present 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, the Chief Executive Officer 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 procedure 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 office 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 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
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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 or she should so determine, he or she 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 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 office 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 is required to be disclosed in solicitations of proxies for the
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934 (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
notice of nomination (x) the name and address, as they appear on the
Corporation's books, of such 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 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). 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 should so determine, he or she shall declare to the meeting and the
defective nomination shall be disregarded.
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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 or by a transmission permitted by law filed in
accordance with the procedure established for the meeting. Any copy, 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 by a voice vote; provided, however, that upon demand therefor by a
stockholder entitled to vote or by his or her proxy, a stock vote shall be
taken. Every stock vote shall be taken by ballots, each of which shall state the
name of the stockholder or proxy voting and such other information as may be
required under the procedure 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 or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by the Certificate of Incorporation or by law, all
other matters shall be determined by a majority of the votes present and cast at
a properly called meeting of stockholders.
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 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
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annual or special meeting of stockholders of the Corporation and may be effected
by the unanimous consent in writing by such stockholders.
ARTICLE II - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS, NUMBER AND TERM OF OFFICE. The business and
affairs of the Corporation shall be under the direction of its Board of
Directors. The number of Directors who shall constitute the Board shall be such
number as the Board of Directors shall from time-to-time by resolution so
designate. The Board of Directors shall annually elect a Chairman of the Board
from among its members who shall, when present, preside at its meetings.
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, commencing with the first
annual meeting, 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.
SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall,
subject to the provisions of these Bylaws and to the direction of the Board of
Directors, serve in a general executive capacity and, when present, shall
preside at all meetings of the Board of Directors or the stockholders of the
Corporation. The Chairman of the Board shall perform all duties and have all
powers which are commonly incident to the office of Chairman of the Board or
which are delegated to him or her by the Board of Directors. He or she shall
have power to sign all stock certificates, contracts and other instruments of
the Corporation which are authorized.
SECTION 3. 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.
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SECTION 4. REGULAR MEETINGS. Each regular meetings of the Board of
Directors shall be held at such place, on such date, and at such time 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 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President of the Bank. If the
President or Chairman is absent or disabled, any two or more directors may call
a special meeting. Notice of the place, date, and time of each such special
meeting shall be given to each Director by whom it is not waived by mailing
written notice not less than five (5) days before the meeting 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 6. QUORUM. At any meeting of the Board of Directors, a majority
of the 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 7. 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.
SECTION 8. 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 9. 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;
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(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;
(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; and
(8) To adopt from time-to-time regulations, not inconsistent with these
Bylaws, for the management of the Corporation's business and affairs.
SECTION 10. 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.
SECTION 11. DIRECTORS' AGE LIMITATION AND DIRECTORS EMERITI. No person
shall be eligible for election as a Director who is seventy-five (75) years of
age or more.
The Board may elect annually Emeriti Members of the Board consisting of
former Board Members who have retired after being no longer eligible for
re-election as a Director because of the age limit set forth in this section. No
Emeritus Member may be elected or serve after their seventy-fifth (75th)
birthday. Directors Emeriti must have previously served as members of the Board
of Directors. Emeriti Members are entitled to receive notice of all Board
Meetings. They may attend Board Meetings but shall not have the right to vote
nor shall such position carry with it any of the responsibilities, powers and
privileges of the regular members of the Board.
ARTICLE III - COMMITTEES
SECTION 1. COMMITTEE OF THE BOARD OF DIRECTORS. The Board of Directors,
by a vote of a majority of the Whole Board, 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 those
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
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Directors to declare a dividend, to authorize the issuance of stock or to adopt
a certificate of ownership and merger pursuant to 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 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;
one-third (1/3) of the members shall constitute a quorum unless the committee
shall consist of one (1) or two (2) members, in which event one (1) member shall
constitute a quorum; and all matters 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.
SECTION 3. EXECUTIVE COMMITTEE. There will be an Executive Committee
consisting of at least five members, all of whom shall be Board Members. At the
annual Board meeting the Directors will elect the members to the Executive
Committee and the Chairman of the Committee. These elected members will serve
until the next annual meeting or until their successors are elected. Except as
otherwise limited by law, the Executive Committee will have power to decide all
Corporation matters which need to be decided between regular Board meetings. The
President or the Chairman of the Board will call Executive Committee meetings.
If the President or the Chairman of the Board is absent or disabled, any two
members of the Executive Committee may do so. In order to conduct an Executive
Committee meeting, at least four members must be present (called a "Quorum").
The Executive Committee will keep a record of all business transacted at its
meetings and will report all such business to the Board of Directors at the
first regular meeting following each Executive Committee meeting. If a vacancy
occurs among the Executive Committee members between annual Board meetings, the
Board upon nomination by the President, will elect a replacement.
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, President
and Chief Executive Officer, one or more Vice Presidents, and a Secretary and
from time to time may choose such other Officers as it may deem proper. Any
number of offices may be held by the same person.
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(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 (without prejudice to any contract rights that an Officer may have).
(c) All Officers chosen by the Board of Directors shall each 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. The Chairman of the Board shall
preside at all annual and special meetings of the stockholders and at all
meetings of the Board and the Executive Committee. The Chairman shall perform
such other duties as may be assigned to him by the Board.
SECTION 3. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President and
Chief Executive Officer (the "President") 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
offices of President and Chief Executive Officer or which are delegated to him
or her by the Board of Directors. The Chairman of the Board, if present, shall
preside at all meetings of the Executive Committee of the Board. Subject to the
direction of the Board of Directors, the President 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,
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 or her absence or during his
disability 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 an 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 offices 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.
SECTION 6. 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.
SECTION 7. 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 the Corporation may hold securities
9
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and otherwise to exercise any and all rights and powers which the Corporation
may possess by reason of its ownership of securities in such other corporation.
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 day next
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 of 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.
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.
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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 U.S. mails, postage prepaid, or by sending such notice by
facsimile transmission or by 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 facsimile transmission 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.
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 Chief
Financial Officer or by an Assistant Secretary or an assistant to the Chief
Financial Officer.
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
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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.
ARTICLE VIII - AMENDMENT
The Board of Directors may amend, alter or repeal these Bylaws at any
meeting of the Board, provided notice of the proposed change is given not less
than two 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 these 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 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.
12
Exhibit 3.4
BYLAWS
OF
OSWEGO COUNTY SAVINGS BANK
ARTICLE I
OFFICES
The principal office of Oswego County Savings Bank (the "Bank") shall be located
in the State of New York, City of Oswego, County of Oswego. Subject to
applicable banking laws and any required approval of the Superintendent of Banks
of the State of New York (the "Superintendent"), the Bank also may have other
offices at such other places as the Board of Directors (the "Board") may from
time to time designate or the business of the Bank may require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meetings. The annual meeting of stockholders of the Bank for
the election of directors and the transaction of any other business as may
properly come before such meeting shall be held each year on a date to be fixed
by the Board, but in no event later than April 30th of any year, at such time
and at such place in the City of Oswego as may be designated by the Board.
Section 2. Special Meetings. Special meetings of the stockholders of the Bank
may be called only by the Board of Directors pursuant to (i) the affirmative
vote of two thirds of the directors then in office, (ii) the Chairman of the
Board, (iii) the President, or (iv) the holders of not less than 25% of the
issued and outstanding capital stock of the Bank entitled to vote generally in
an election of directors.
Section 3. Notice of Meetings. Written notice stating the place, day and hour of
any meeting of stockholders and the purpose or purposes for which the meeting is
called shall be delivered to each stockholder of record entitled to vote at such
meeting, either personally or by mail not less than ten (10) nor more than fifty
(50) days before the date of such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the U.S. mail, with postage thereon
prepaid, addressed to the stockholder at his address as it appears on the stock
transfer books or records of the Bank as of the record date prescribed in
Section 5 of this Article I, or at such other address as the stockholder shall
have furnished in writing to the Secretary of the Bank. Notice of any special
meeting shall indicate that the notice is being issued by or at the direction of
the person or persons calling such meeting. When any meeting of stockholders,
either annual or special, is adjourned to another time
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2
or place, no notice of the adjourned meeting must be given, other than an
announcement at the meeting at which such adjournment is taken giving the time
and place to which the meeting is adjourned. However, if after adjournment the
Board fixes a new record date for the adjourned meeting, notice of the adjourned
meeting shall be given to each stockholder of record on the new record date.
Section 4. Waiver of Notice. Notice of meeting need not be given to any
stockholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting. The attendance of any stockholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice of such stockholders.
Section 5. Fixing of Record Date. For the purpose of determining stockholders
entitled to notice of and to vote at any meeting of stockholders or any
adjournment thereof, or stockholders entitled to receive payment of any dividend
or the allotment of any rights, or in order to make a determination of
stockholders for any other proper purpose, the Board shall fix in advance a date
as the record date for any such determination of stockholders. Such date in any
case shall be not more than fifty (50) days and, in the case of a meeting of
stockholders, not less than ten (10) days prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this Section 5, such determination
shall, unless otherwise provided by the Board, also apply to any adjournment
thereof.
Section 6. Quorum. The holders of a majority of the shares of the capital stock
of the Bank issued and outstanding and entitled to vote thereat, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. When
a quorum is once present to organize a meeting, such quorum is not broken by the
subsequent withdrawal of any stockholders.
Section 7. Adjournments. Whether or not a quorum is present at any annual or
special meeting of stockholders, a majority in interest of those present in
person or by proxy and entitled to vote may adjourn the meeting from time to
time to another time or place, at which time, if a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 8. Conduct of Meetings. The Chairman of the Board or, in his absence,
the President, or, if the Chairman of the Board and the President are absent or
otherwise unable to conduct any such meetings, such other person as shall be
appointed by a majority of the Board shall serve as chairman at all meetings of
the stockholders. The Secretary of the Bank or, in his absence, such other
person as the chairman of the meeting shall appoint,
shall serve as secretary of the meeting. The chairman of the meeting shall
conduct all meetings of the stockholders in accordance with the best interests
of the Bank and shall have the authority and discretion to establish reasonable
procedural rules for the conduct of such meetings.
<PAGE>
3
Section 9. Voting. At each meeting of the stockholders, every stockholder of
record of the Bank entitled to vote at such meeting shall be entitled to vote in
person or by proxy the common or other shares of voting stock standing in his
name on the books of the Bank and entitled to be voted at such meeting at the
time fixed pursuant to Article II, Section 5 of these Bylaws. Each share of
common stock shall be entitled to one vote per share, and there shall be no
cumulative voting in elections of directors. Except as permitted by law, shares
of its own stock belonging to the Bank shall not be voted directly or
indirectly. At all meetings of stockholders all matters, except elections of
directors and where other provision is made by law or by the Restated
Organization Certificate of the Bank or by these Bylaws, shall be decided by a
majority of the votes cast by the stockholders present in person or by proxy and
entitled to vote thereon, provided that a quorum is present. Directors are to be
elected by a plurality of votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present. If, at any meeting of
stockholders, due to a vacancy or vacancies or otherwise, directors of more than
one class of the Board are to be elected, each class of directors to be elected
at the meeting shall be elected in a separate election by a plurality vote.
Section 10. Proxies. All proxies shall be in writing, signed by the stockholder
or by his duly authorized attorney-in-fact, and shall be filed with the
Secretary of the Bank before being voted. No proxy shall be valid after eleven
(11) months from the date of its execution unless otherwise provided in the
proxy. The attendance at any meeting by a stockholder who shall have previously
given a proxy applicable thereto shall not, as such, have the effect of revoking
the proxy. The Bank may treat any duly executed proxy as not revoked and in full
force and effect until it receives a duly executed instrument revoking it, or a
duly executed proxy bearing a later date.
Section 11. Voting of Shares in the Name of Two or More Persons. When ownership
stands in the name of two or more persons, in the absence of written directions
to the Bank to the contrary, at any meeting of the stockholders of the Bank any
one or more of such stockholders may cast, in person or by proxy, all votes to
which such ownership is entitled. In the event an attempt is made to cast
conflicting votes, in person or by proxy, by the several persons in whose names
shares of stock stand, the vote or votes to which those persons are entitled
shall be cast as directed by a majority of those holding such stock and present
in person or by proxy at such meeting, but no votes shall be cast for such stock
if a majority cannot agree.
Section 12. Inspectors of Election. In advance of any meeting of stockholders,
the Board shall appoint one or more persons, other than officers, directors or
nominees for office, as inspectors of election to act at such meeting or any
adjournment thereof. Such appointment shall not be altered at the meeting. If
inspectors of election are not so appointed, the chairman of the meeting shall
make such appointment at the meeting. In case any person appointed as inspector
fails to appear or fails or refuses to act, the vacancy may be filled by
appointment by the Board in advance of the meeting or at the meeting by the
chairman of the meeting.
Section 13. Action by Written Consent. Whenever stockholders of the Bank are
required or permitted to take any action by vote, such action may be taken
without a meeting upon written
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4
consent, setting forth the action so taken, signed by the holders of all
outstanding shares of capital stock of the Bank entitled to vote thereon.
ARTICLE III
CAPITAL STOCK
Section 1. Certificates of Stock. Certificates of stock shall be in such form as
shall be approved by the Board, provided that each certificate shall when issued
state upon the face thereof (a) that the Bank is a corporation organized under
the laws of the State of New York; (b) the name of the person to whom the
certificate is issued; (c) the number, class and series, if any, which the
certificate represents; and (d) the par value of each share represented by the
certificate; and further provided, that each certificate shall, when issued,
state upon the back thereof the existence of any supermajority voting provisions
in the Restated Organization Certificate required to be noted on such
certificate under Section 6016 of the New York Banking Law. Each certificate
shall further state that the Corporation will furnish to any stockholder upon
request and without charge a statement of the rights and preferences of the
shares of each class or series of stock, or shall set forth such statement on
the certificate itself. The certificates shall be numbered in the order of their
issue, and shall be signed by the Chairman of the Board, the President or any
Vice President and the Secretary or any Assistant Secretary, and the seal of the
Bank or a facsimile thereof shall be impressed, affixed or reproduced thereon.
If the certificates are signed by a Transfer Agent acting on behalf of the Bank,
or are registered by a Registrar, the signatures of the officers of the Bank may
be a facsimile. In case any officer or officers who shall have signed any such
certificate or certificates shall cease to be such officer or officers of the
Bank, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Bank, such
certificate or certificates may nevertheless be adopted by the Bank and be
issued and delivered as though the person or persons who signed such certificate
or certificates have not ceased to be such officer or officers of the Bank.
Section 2. Transfer Agent and Registrar. The Board shall have power to appoint
one or more Transfer Agents and Registrars for the transfer and registration of
certificates of stock of any class, and may require that stock certificates
shall be countersigned and registered by one or more of such Transfer Agents and
Registrars.
Section 3. Registration and Transfer of Shares. The name of each person owning a
share of the capital stock of the Bank shall be entered on the books of the Bank
together with the number of shares held by him, the numbers of the certificates
covering such shares and the dates of issue of such certificates. The shares of
stock of the Bank shall be transferable on the books of the Bank by the holders
thereof in person, or by their duly authorized attorneys or legal
representatives, on surrender and cancellation of certificates for a like number
of shares, accompanied by an assignment or power of transfer endorsed thereon or
attached thereto, duly executed, with such proof of the
<PAGE>
5
authenticity of the signature as the Bank or its agents may reasonably require
and with proper evidence of payment of all applicable transfer taxes. A record
shall be made of each transfer.
Section 4. Lost, Destroyed and Mutilated Certificates. The holder of any stock
of the Bank shall immediately notify the Bank of any loss, theft, destruction or
mutilation of the certificates therefor. The Bank may issue a new certificate of
stock in the place of any certificate theretofore issued by it alleged to have
been lost, stolen or destroyed and the Board may, in its discretion, require the
owner of the lost, stolen or destroyed certificate, or his legal
representatives, to give the Bank a bond, in such sum not exceeding double the
value of the stock and with such surety or sureties as they may require, to
indemnify it against any claim that may be made against it by reason of the
issue of such new certificate and against all other liability in the premises,
or may refer such owner to such remedy or remedies as he may have under the laws
of the State of New York.
Section 5. Holder of Record. The Bank shall be entitled to treat the holder of
record of any share or shares of stock as the holder thereof in fact and shall
not be bound to recognize any equitable or other claim to or interest in such
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by law.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Responsibilities; Number of Directors; Oath. The affairs of the Bank
shall be managed by its Board of Directors, which may exercise all such
authority and powers of the Bank and do all such lawful acts and things as are
not by law, the Restated Organization Certificate or these Bylaws directed or
required to be exercised or done by the stockholders. The number of directors
shall not be less than seven (7) nor more than twenty (20). The exact number of
directors shall be fixed from time to time by the Board pursuant to a resolution
adopted by a majority of the Board. Directors of the Bank shall, upon taking
office, take and subscribe to an oath as provided in Section 7015 of the New
York Banking Law, which oath shall be transmitted to the Superintendent in
accordance with such law.
Section 2. Term. Directors shall be elected for a term of office to expire at
the succeeding annual meeting of stockholders and until their respective
successors are elected and qualified.
Section 3. Qualifications.
(a) Each director shall be at least 18 years of age and at least one-half of the
directors shall be citizens of the United States. Not more than one-third of the
total number of directors may be officers of the Bank.
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6
(b) No director shall serve beyond the next annual meeting of the Bank following
his attainment of age 75.
(c) Each director also shall meet such qualifications as may be specified in
applicable provisions of the New York Banking Law and regulations of the New
York Banking Board thereunder.
Section 4. Regular Meetings. A regular meeting of the Board shall be held,
without notice other than these Bylaws, at the principal office of the Bank on a
date to be designated by the Board of Directors, except that when any such
regular meeting date is a holiday the meeting shall be held on the following
Monday; provided, however, that the Board may, by prior action, designate a
different day in the same month for the holding of any regular meeting. The
regular meeting in April of each year shall be the annual meeting for the
election of officers. The Board may provide, by resolution, the time and place,
within or without the State of New York, for the holding of additional regular
meetings without notice other than such resolution.
Section 5. Special Meetings. Special meetings of the Board may be called at any
time by or at the request of the Chairman of the Board or the President. Special
meetings of the Board also may be convened upon the written request of a
majority of the members of the Board. The persons authorized to call special
meetings of the Board may fix any place, within or without the State of New
York, as the place for holding any special meeting of the Board called by such
persons.
Section 6. Conduct of Meetings. Meetings of the Board shall be presided over by
the Chairman of the Board and in the absence or disability of the Chairman of
the Board by the Vice Chairman or the President. If the Chairman of the Board,
the Vice Chairman and the President are absent from any meeting of the Board,
the directors present shall, by a majority vote, designate one of the directors
present to serve as chairman of such meeting. The chairman (or other person
presiding) shall conduct all meetings of the Board in accordance with the best
interests of the Bank and shall have the authority and discretion to establish
reasonable procedural rules for the conduct of Board meetings. Any one or more
directors may participate in a meeting of the Board or committee by means of a
conference telephone or communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at any such meeting.
Section 7. Notice. At least two (2) days notice of special meetings shall be
given to each director if given in person or by telephone, telegraph, telecopy,
cable or wireless. Five (5) days notice of a special meeting is required if
notice is given by mail. The object of the special meeting need not be stated in
the notice. Such notice shall be deemed to be delivered when deposited in the
U.S. mail, with postage thereon prepaid if mailed, or when delivered to the
telegraph company if sent by telegram. Any director may waive notice of any
regular or special meeting by a writing filed with the Secretary. The attendance
of a director at a regular or special meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
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7
Section 8. Quorum and Voting Requirements. A quorum at any meeting of the Board
shall consist of not less than a majority of the Board. Except as otherwise
required by law, a majority vote of the directors present at a meeting, if a
quorum is present at the time of such vote, shall constitute an act of the
Board.
Section 9. Resignation. Any director may resign at any time by sending a written
notice of such resignation to the principal office of the Bank addressed to the
Chairman of the Board or the President. Unless otherwise specified therein, such
resignation shall take effect upon receipt thereof.
Section 10. Vacancies. All vacancies in the office of director, including
vacancies created by newly created directorships resulting from an increase in
the number of directors, may be filled by a majority of the directors then
holding office at any regular or special meeting of the Board called for that
purpose. Any director so elected shall serve until the succeeding annual meeting
of stockholders and until his successor is elected and qualified.
Section 11. Removal. Any director (including persons elected by directors to
fill vacancies in the Board) may be removed from office with or without cause by
the affirmative vote of a majority of the votes eligible to be cast by
stockholders entitled to vote in an election of directors at a duly constituted
meeting of stockholders called expressly for such purpose.
Section 12. Compensation. The Board shall fix the compensation of directors for
attendance at meetings of the Board and of committees thereof, and for such
other services as are permitted by the New York Banking Law.
Section 13. Director Emeritus. Any director, upon mandatory retirement because
of age, shall be eligible for election by the Board as a director emeritus for a
term of one year. A director emeritus may attend meetings of the Board but shall
not be counted in determining a quorum and shall not have the right to vote.
Service as a director emeritus shall not exceed two years.
ARTICLE V
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 1. Executive Committee.
(a) The Board may appoint from the Board an Executive Committee of not less than
five directors of the Bank, and may delegate to such committee, except as
otherwise provided by Section 7012 of the New York Banking Law, the powers of
the Board in the management of the business and affairs of the Bank in the
intervals between meetings of the Board in all cases in which specific
directions shall not have been given by the Board, as well as the power to
authorize the seal of the Bank to be affixed to all papers which may require it.
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(b) The Executive Committee, by a vote of a majority of its members, may appoint
a chairman and fix its rules of procedure, determine its manner of acting and
specify what notice, if any, of meetings shall be given, except as the Board
shall by resolution otherwise provide. A majority of the Board shall have the
power to change the membership of the Executive Committee at any time, to fill
vacancies therein and to discharge such committee or to remove any member
thereof, either with or without cause, at any time.
(c) Meetings of the Executive Committee shall be held at such times and places
as the chairman of the Executive Committee may determine. The Executive
Committee shall keep minutes of all business transacted by it. All completed
action by the Executive Committee shall be reported to the Board at its meeting
next succeeding such action or at its meeting held in the month following the
taking of such action, and shall be subject to revision or alteration by the
Board.
Section 2. Examining Committee. The Board shall designate not less than three
members of the Board who are not employed by the Bank to constitute an Examining
Committee, which shall examine the accounts, property and concerns of the Bank
as provided in Section 254 of the New York Banking Law and make such other
examinations as the Board shall direct. The Examining Committee may employ
certified public accountants and such other assistants as it may deem necessary
to aid in its examination, and shall report to the Board at its regular meeting
following the completion of such examination. Meetings of the Examining
Committee shall be held at such times and at such places as the chairman of the
Examining Committee may determine. The Examination Committee, by a vote of a
majority of its members, may fix its rules of procedure, determine its manner of
acting and specify what notice, if any, of meetings shall be given, except as
the Board shall by resolution otherwise provide. A majority of the Board shall
have the power to change the membership of the Examining Committee at any time,
to fill vacancies therein and to discharge such committee or to remove any
member thereof, either with or without cause, at any time, provided that the
Bank shall have at all times an Examining Committee which complies with the New
York Banking Law.
Section 3. Other Committees. The Board may, by resolutions passed by a majority
of the Board, designate persons who are not necessarily directors to constitute
other committees, which shall in each case consist of three or more directors,
and shall have and may execute such powers as may be determined and specified in
the respective resolutions appointing them. A majority of all the members of any
such committee may fix its rules of procedure, determine its manner of acting
and fix the time and place of its meetings and specify what notice thereof, if
any, shall be given, unless the Board shall otherwise by resolution provide. A
majority of the Board shall have the power to change the membership of any such
committee at any time, to fill vacancies therein and to discharge any such
committee or to remove any member thereof, either with or without cause, at any
time.
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ARTICLE VI
OFFICERS
Section 1. Titles. The officers of the Bank shall be a Chairman of the Board, a
President, one or more Vice Presidents, a Secretary, a Treasurer, a Comptroller
and an Auditor. Other officers may be appointed in accordance with the
provisions of this Article VI and any two or more offices may be held by the
same person, except the offices of President and Secretary. Officers of the Bank
shall furnish to the Board a bond in such amount as the Board may deem
necessary.
Section 2. Election, Term of Office and Qualifications. The officers of the Bank
shall be elected annually by the Board. Each officer, except as may be appointed
in accordance with the provisions of this Article VI, shall hold office until
his successor shall have been chosen and shall qualify or until his death or
until he shall have resigned or until he shall have been removed in the manner
hereinafter provided.
Section 3. Removal of Officers. Any officer elected or appointed by the Board
may be removed by the Board, or his authority suspended by it, with or without
cause. Such removal or suspension without cause, however, shall be without
prejudice to his contract rights, if any. The election or appointment of an
officer shall not be deemed of itself to create contract rights.
Section 4. Vacancies in Elected Office. All vacancies in an elected office may
be filled by election at a regular or special meeting of the Board.
Section 5. Chairman of the Board and Vice Chairman of the Board. The Chairman of
the Board shall preside at all annual and special meetings of the stockholders
and at all meetings of the Board. The Chairman shall perform such other duties
as may be assigned to him by the Board. In the absence of the Chairman of the
Board, the Vice Chairman of the Board shall preside over any meetings and
perform such duties otherwise reserved for the Chairman of the Board.
Section 6. President. The President shall be a director of the Bank and shall,
in the absence of the Chairman and the Vice Chairman, preside at annual or
special meetings of the stockholders and at meetings of the Board. The President
also shall be the Chief Executive Officer of the Bank and, as such, shall have
executive management of the operations of the Bank, subject to the control of
the Board and the Executive Committee. The President shall perform such other
duties as may be assigned to him by the Chairman or the Board.
Section 7. Vice Presidents. Each Vice President shall have such powers and
duties as may be assigned or delegated by the Chairman, the President or the
Board. The Board may designate one or more Vice Presidents as Executive Vice
President, Senior Vice President or Administrative Vice President.
Section 8. Secretary. The Secretary shall give due notice of meetings of the
Board and of the Executive Committee, attend meetings of the Board and keep the
minutes thereof. The Secretary shall conduct all correspondence relating to the
Board and its proceedings and shall perform such other duties as may be assigned
to him by the Chairman, the President or the Board.
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Section 9. Treasurer. Except as provided in Article VII, Section 4 hereof, the
Treasurer shall have charge of all securities held by the Bank other than real
estate bonds, mortgage notes, mortgages and deeds of trust, and see that they
are kept in the vaults of the Bank, or deposited with such bank or trust company
as may from time to time be designated by the Board as custodian thereof. He
shall see that income on all securities and depository balances under his
control are collected and received by the Bank, or credited to its account with
an authorized depository thereof. He shall have charge of all funds of the Bank
and see that the same, except such amount as may be necessary for the daily
business of the Bank, are deposited in such institutions as may be designated by
the Board. He shall prepare and present such reports as the Chairman, the
President or the Board may from time to time direct. He shall, subject to the
direction of the Chairman, the President or the Board, make all investments of
the funds of the Bank except mortgage and real estate investments. He shall
perform such other duties as may be assigned to him by the Chairman, the
President or the Board.
Section 10. Auditor. The Auditor shall make such examinations of the accounts,
records and transactions of the Bank as may be required by the Board or the
Examining Committee thereof, and he shall perform such other duties as are
prescribed in an audit program approved by the Board, to which he shall be
responsible, and such other audit duties as may be assigned by the Chairman or
by the President. He shall be free to examine any department or section of Bank
routine without previous officer consultation. He shall maintain a summary
record of dates of completed audits, and shall make periodic comprehensive
reports to the Board or to the Examining Committee thereof, which shall include
such suggestions and recommendations which he may consider advisable to make.
The Auditor shall perform such other duties, not incompatible with his primary
duty, as may be assigned to him by the Chairman, the President or the Board. The
Board in its discretion may select an outside third party to perform the duties
and responsibilities of the Auditor.
Section 11. Other Officers and Employees. All other officers and employees shall
have such authority and shall perform such duties as may be assigned to them,
from time to time, by the Chairman, the President or the Board.
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ARTICLE VII
DEPOSITORIES; AUTHORIZED SIGNATURES; AND VOTING OF SHARES
Section 1. Uninvested Funds. Uninvested funds, except cash on hand at all
offices of the Bank, shall be deposited in the name of the Bank in such accounts
and in such banks or trust companies as shall be designated by the Board and may
be withdrawn or transferred in such manner as the Board shall authorize.
Section 2. Power of Execution. Authority to execute, or to execute and attest,
all orders, documents and other instruments affecting the right, title and
interest of the Bank in all other property, whether real or personal, within
such limits as the Board shall define, shall be vested in any executive officers
and in such other officers as the Board shall designate.
Section 3. Nominees. The Board may, by resolution, designate a nominee or
nominees in whose name securities may be registered.
Section 4. Voting of Shares Owned by the Bank. Subject to the specific
directions of the Board or the Executive Committee, any share or shares of stock
issued by any other corporation and owned or controlled by the Bank may be voted
at any stockholders meeting of the other corporation by the Chairman or the
President, or in their absence by any Vice President of the Bank. Whenever in
the judgment of the Chairman or the President, or in their absence, of any Vice
President, it is desirable for the Bank to execute a proxy or give a stockholder
consent with respect to any share or shares of stock issued by any other
corporation and owned or controlled by the Bank, the proxy or consent shall be
executed in the name of the Bank by the Chairman or the President or one of the
Vice Presidents of the Bank without necessity of any authorization by the Board.
Any person or persons designated in the manner above stated as the proxy or
proxies of the Bank shall have full right, power and authority to vote the share
or shares of stock issued by the other corporation.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification of Directors, Officers and Employees. The Bank shall,
to the fullest extent permitted by Sections 7019-7022, inclusive, of the New
York Banking Law and any and all amendments thereof, indemnify any person who is
made, or threatened to be made, a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person or his testator or
intestate is or was a director, officer or employee of the Bank, or is or was
serving at the request of the Bank in any capacity for another corporation, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, against judgments, fines, amounts paid in settlement and reasonable
expenses, including
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attorneys' fees, actually and necessarily incurred by the person in connection
with such action, suit or proceeding, or any appeal therein.
Section 2. Advances of Expenses. Expenses incurred in defending a civil,
criminal, administrative or investigative action, suit or proceeding, or threat
thereof, shall be paid by the Bank in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer or employee to repay such amount if it is ultimately
determined that such person is not entitled to be indemnified by the Bank as
authorized in this Article VIII, or where indemnification is granted, to repay
any amount by which the expenses advanced by the Bank exceed the indemnification
to which such person is entitled.
Section 3. Exclusivity. The indemnification and advancement of expenses provided
by this Article VIII shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any agreement, vote of independent
directors, resolution of the stockholders or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, provided that no other such rights to indemnification may be made to or
on behalf of any director or officer of the Bank if a judgment or other final
adjudication adverse to the director or officer establishes that his acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that he personally
gained in fact a financial profit or other advantage to which he was not legally
entitled. The indemnification and advancement of expenses provided by this
Article VIII shall continue as to a person who has ceased to be director,
officer or employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 4. Purchase of Insurance. The Bank may purchase and maintain insurance:
(a) To indemnify the Bank for any obligation which it incurs as a result of the
indemnification of any director, officer or employee under the provisions of
this Article VIII;
(b) To indemnify directors, officers or employees in instances in which they may
be indemnified by the Bank under the provisions of this Article VIII; and
(c) To indemnify directors, officers or employees in instances in which they may
not otherwise be indemnified by the Bank under the provisions of this Article
VIII, provided that the contract of insurance covering such directors and
officers provides, in a manner acceptable to the Superintendent of Insurance of
the State of New York, for a retention amount and for co-insurance.
Section 5. Notice. No payment of indemnification, advancement or allowance under
this Article VIII shall be made unless the Bank has filed such notice as may be
required by the New York Banking Law or otherwise.
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ARTICLE IX
RULES AND REGULATIONS GOVERNING DEPOSITS AND DEPOSITORS
Management of the Bank shall, consistent with the applicable provisions of the
New York Banking Law and any other applicable laws and regulations, adopt rules
and regulations defining the types of deposits accepted, procedures for
deposits, withdrawals, transfers and stop payments relating to such accounts,
rules relating to the title and ownership thereof, periodic statements, service
charges, and such other matters as management shall deem necessary. Such rules
and regulations may be amended from time to time as management shall deem
necessary.
ARTICLE X
INTEREST
Section 1. Rates. The Board shall, by resolution, authorize the appropriate
officers or employees of the Bank to fix the rates of interest to be paid and
term thereof on such types of accounts offered by the Bank in conformity with
law.
Section 2. Crediting to Accounts. Interest shall be credited to depositors'
accounts as an addition to the amount on deposit therein.
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ARTICLE XI
SAFE DEPOSIT FACILITIES
Section 1. Safe Deposit Facilities. The Bank may provide safe deposit facilities
to individuals and organizations as provided by the laws of the State of New
York for the safekeeping of personal property and papers of any kind.
Section 2. Rules and Regulations. The renter of a safe shall subscribe his
signature to a contract agreeing to be bound by the rules and regulations of the
Safe Deposit Department and any amendments thereto.
ARTICLE XII
DIVIDENDS
The Board shall have power, subject to the requirements of the Restated
Organization Certificate, the Banking Law of the State of New York, the
regulations of the New York Banking Board and any other applicable laws and
regulations, to declare and pay dividends out of surplus or net profits of the
Bank and to pay such dividends to the stockholders and to fix the date or dates
for the payment of such dividends.
ARTICLE XIII
FISCAL YEAR
The fiscal year of the Bank shall end on the 31st day of December of each year.
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ARTICLE XIV
SEAL
The Board shall provide a corporate seal which shall include the name of the
Bank. The year of incorporation of the Bank and an emblem may appear on such
seal.
ARTICLE XV
EMERGENCY MANAGEMENT
When there shall occur or exist an acute emergency as defined in Article 7,
Chapter 1, Title 26 of the Unconsolidated Laws of the State of New York, as the
same may be amended from time to time, the management and control of the Bank
shall be conducted in conformance with said Article 7 as amended, any provision
of these Bylaws or resolution of the Board to the contrary notwithstanding.
ARTICLE XVI
AMENDMENTS
In furtherance of and not in limitation of the powers conferred by law, the
Board is expressly authorized to adopt, amend, alter, change or repeal from time
to time these Bylaws, except such provisions of the Bylaws as shall have been
made from time to time by the holders of shares of capital stock entitled to
vote thereon, by the affirmative vote of a majority of the Board. The
stockholders of the Bank may adopt, amend, alter, change or repeal these Bylaws,
including any provision thereof adopted by the Board, by the affirmative vote of
the holders of not less than a majority of the issued and outstanding shares of
capital stock of the Bank entitled to vote thereon at any meeting of
stockholders called for that purpose.
ARTICLE XVII
USE OF PRONOUNS
Use of the masculine general in these Bylaws shall be considered to represent
either masculine or feminine gender whenever appropriate.
Exhibit 3.6
BYLAWS
OF
Oswego County, MHC
ARTICLE I
OFFICES
The principal office of Oswego County, MHC (the "Corporation") shall be
located in the State of New York, City of Oswego, County of Oswego. Subject to
applicable banking laws and any required approval of the Superintendent of Banks
of the State of New York (the "Superintendent"), the Corporation also may have
other offices at such other places as the Board of Trustees (the "Board") may
from time to time designate or the business of the Corporation may require.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Responsibilities; Number of Trustees; Oath. The Board shall
have the entire management and control of the affairs of the Corporation. The
number of trustees shall not be less than six (6) nor more than twenty (20). The
exact number of trustees shall be fixed from time to time by the Board pursuant
to a resolution adopted by a majority of the Board. Trustees of the Corporation
shall, upon taking office, take and subscribe to an oath as provided in Section
246 of the New York Banking Law, which oath shall be transmitted to the
Superintendent in accordance with such law.
Section 2. Qualifications.
(a) Each trustee shall be at least 18 years of age and at least
one-half of the trustees shall be citizens of the United States. Not more than
one-third of the total number of trustees may be officers of the Corporation.
(b) No person who is 70 years of age or more shall be eligible for
initial election as a trustee and no trustee shall serve beyond the 31st day of
December in the year in which he reaches his 75th birthday. This provision is
not applicable to a person serving as a trustee of Oswego County Savings Bank
upon consummation of the MHC Reorganization.
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(c) Each trustee also shall meet such qualifications as may be
specified in applicable provisions of the New York Banking Law and regulations
of the New York Banking Board thereunder.
Section 3. Regular Meetings. A regular meeting of the Board shall be
held, without notice other than these Bylaws, on the third Thursday of each
December, March, June and September, except that when any such regular meeting
date is a holiday the meeting shall be held on the following Monday; provided,
however, that the Board may, by prior action, designate a different day in the
same month for the holding of any regular meeting. A regular or special meeting
shall be held each year following the annual meeting of Oswego County Bancorp,
Inc. and shall be the Annual Meeting for the election of officers. The Board may
provide, by resolution, the time and place, within or without the State of New
York, for the holding of additional regular meetings without notice other than
such resolution. The Board shall hold not less than 10 regular monthly meetings
per year.
Section 4. Special Meetings. Special meetings of the Board may be
called at any time by or at the request of the Chairman of the Board or the
President. Special meetings of the Board also may be convened upon the written
request of a majority of the members of the Board. The persons authorized to
call special meetings of the Board may fix any place, within or without the
State of New York, as the place for holding any special meeting of the Board
called by such persons.
Section 5. Conduct of Meetings. Meetings of the Board shall be presided
over by the Chairman of the Board and in the absence or disability of the
Chairman of the Board by the Vice Chairman of the Board and in the absence or
disability of the Vice Chairman of the Board by the President. If the Chairman
of the Board, Vice Chairman and the President are absent from any meeting of the
Board, the trustees present shall, by a majority vote, designate one of the
trustees present to serve as chairman of such meeting. The chairman (or other
person presiding) shall conduct all meetings of the Board in accordance with the
best interests of the Corporation and shall have the authority and discretion to
establish reasonable procedural rules for the conduct of Board meetings. Any one
or more trustees may participate in a meeting of the Board or committee by means
of a conference telephone or communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at any such meeting.
Section 6. Notice. At least two (2) days notice of special meetings
shall be given to each trustee if given in person or by telephone, telegraph,
telecopy, cable or wireless. Five (5) days notice of a special meeting is
required if notice is given by mail. The object of the special meeting need not
be stated in the notice. Such notice shall be deemed to be delivered when
deposited in the U.S. mail, with postage thereon prepaid if mailed, or when
delivered to the telegraph company if sent by telegram. Any trustee may waive
notice of any regular or special meeting by a writing filed with the Secretary.
The attendance of a trustee at a regular or special meeting shall constitute a
waiver of notice of such meeting, except where a trustee attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
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Section 7. Quorum and Voting Requirements. A quorum at any meeting of
the Board shall consist of not less than a majority of the Board. Except as
otherwise required by law, a majority vote of the trustees present at a meeting,
if a quorum is present at the time of such vote, shall constitute an act of the
Board.
Section 8. Resignation. Any trustee may resign at any time by sending a
written notice of such resignation to the principal office of the Corporation
addressed to the Chairman of the Board or the President. Unless otherwise
specified therein, such resignation shall take effect upon receipt thereof.
Section 9. Vacancies. All vacancies in the office of trustee, including
vacancies created by newly-created trusteeships resulting from an increase in
the number of trustees, may be filled by a majority of the trustees then holding
office at any regular meeting of the Board called for that purpose. The office
of a trustee shall become vacant in the manner specified in Section 248 of the
New York Banking Law. The Corporation shall report any vacancy in the office of
trustee to the Superintendent within ten days of the occurrence of such vacancy
and shall likewise report the name, address, age and occupation of the person
elected to fill any such vacancy and the name of the person whose place he
fills.
Section 10. Removal. Any trustee (including persons elected by trustees
to fill vacancies in the Board) may be removed from office pursuant to the
requirements set forth in Section 248 of the New York Banking Law.
Section 11. Declaration. In each year every trustee shall subscribe and
acknowledge a declaration that he has not resigned, become ineligible or in any
other manner vacated his office as trustee. Such declaration shall be filed with
the Superintendent on or before the first day of [March], unless extended in the
discretion of the Superintendent.
Section 12. Compensation. The Board shall fix the compensation of
trustees for attendance at meetings of the Board and of committees thereof and
for such other services as are specified in Section 249 of the New York Banking
Law.
Section 13. Trustee Emeritus. Any trustee, upon mandatory retirement
because of age, shall be eligible for election by the Board as a trustee
emeritus for a term of one year. A trustee emeritus may attend meetings of the
Board but shall not be counted in determining a quorum and shall not have the
right to vote.
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ARTICLE III
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 1. Executive Committee.
(a) The Board may appoint from the Board an Executive Committee of not
less than four trustees of the Corporation, and may delegate to such committee,
except as otherwise provided by Section 246-a of the New York Banking Law, the
powers of the Board in the management of the business and affairs of the
Corporation in the intervals between meetings of the Board in all cases in which
specific directions shall not have been given by the Board, as well as the power
to authorize the seal of the Corporation to be affixed to all papers which may
require it.
(b) The Executive Committee, by a vote of a majority of its members,
may appoint a chairman and fix its rules of procedure, determine its manner of
acting and specify what notice, if any, of meetings shall be given, except as
the Board shall by resolution otherwise provide. A majority of the Board shall
have the power to change the membership of the Executive Committee at any time,
to fill vacancies therein and to discharge such committee or to remove any
member thereof, either with or without cause, at any time.
(c) Meetings of the Executive Committee shall be held at such times and
places as the chairman of the Executive Committee may determine. The Executive
Committee shall keep minutes of all business transacted by it. All completed
action by the Executive Committee shall be reported to the Board at its meeting
next succeeding such action or at its meeting held in the month following the
taking of such action, and shall be subject to revision or alteration by the
Board.
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Section 2. Other Committees. The Board may, by resolutions passed by a
majority of the Board, designate persons who are not necessarily trustees to
constitute other committees, which shall in each case consist of two or more
trustees, officers or other persons and shall have and may execute such powers
as may be determined and specified in the respective resolutions appointing
them. A majority of all the members of any such committee may fix its rules of
procedure, determine its manner of acting and fix the time and place of its
meetings and specify what notice thereof, if any, shall be given, unless the
Board shall otherwise by resolution provide. A majority of the Board shall have
the power to change the membership of any such committee at any time, to fill
vacancies therein and to discharge any such committee or to remove any member
thereof, either with or without cause, at any time.
ARTICLE IV
OFFICERS
Section 1. Titles. The officers of the Corporation shall be a Chairman
of the Board, a President, a Secretary and a Treasurer. Other officers may be
appointed in accordance with the provisions of this Article IV and any two or
more offices may be held by the same person, except the offices of President and
Secretary. Officers of the Corporation shall furnish to the Board a bond in such
amount as the Board may deem necessary.
Section 2. Election, Term of Office and Qualifications. The officers of
the Corporation shall be elected annually by the Board. Each officer, except as
may be appointed in accordance with the provisions of this Article IV, shall
hold office until his successor shall have been chosen and shall qualify or
until his death or until he shall have resigned or until he shall have been
removed in the manner hereinafter provided.
Section 3. Removal of Officers. Any officer elected or appointed by the
Board may be removed by the Board, or his authority suspended by it, with or
without cause. Such removal or suspension without cause, however, shall be
without prejudice to his contract rights, if any. The election or appointment of
an officer shall not be deemed of itself to create contract rights.
Section 4. Vacancies in Elected Office. All vacancies in an elected
office may be filled by election at a regular or special meeting of the Board.
Section 5. Chairman of the Board. The Chairman of the Board shall
preside at all annual and special meetings of the stockholders and at all
meetings of the Board. The Chairman shall perform such other duties as may be
assigned to him by the Board.
Section 6. President. The President shall be a trustee of the
Corporation and shall, in the absence of the Chairman, preside at annual or
special meetings of the stockholders and at meetings
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6
of the Board. The President also shall be the Chief Executive Officer of the
Corporation and, as such, shall have executive management of the operations of
the Corporation, subject to the control of the Board and the Executive
Committee. The President shall perform such other duties as may be assigned to
him by the Chairman or the Board.
Section 7. Secretary. The Secretary shall give due notice of meetings
of the Board and of the Executive Committee, attend meetings of the Board and
keep the minutes thereof. The Secretary shall conduct all correspondence
relating to the Board and its proceedings and shall perform such other duties as
may be assigned to him by the Chairman, the President or the Board.
Section 8. Treasurer. Except as provided in Article V, Section 4
hereof, the Treasurer shall have charge of all securities held by the
Corporation other than any real estate bonds, mortgage notes, mortgages and
deeds of trust, and see that they are kept in the vaults of the Corporation, or
deposited with such bank or trust company as may from time to time be designated
by the Board as custodian thereof. He shall see that income on all securities
and depository balances under his control are collected and received by the
Corporation, or credited to its account with an authorized depository thereof.
He shall have charge of all funds of the Corporation and see that the same,
except such amount as may be necessary for the daily business of the
Corporation, are deposited in such institutions as may be designated by the
Board. He shall prepare and present such reports as the Chairman, the President
or the Board may from time to time direct. He shall, subject to the direction of
the Chairman, the President or the Board, make all investments of the funds of
the Corporation. He shall perform such other duties as may be assigned to him by
the Chairman, the President or the Board.
<PAGE>
7
consider advisable to make. The Auditor shall perform such other duties, not
incompatible with his primary duty, as may be assigned to him by the Chairman,
the President or the Board.
Section 9. Other Officers and Employees. All other officers and
employees shall have such authority and shall perform such duties as may be
assigned to them, from time to time, by the Chairman, the President or the
Board.
ARTICLE V
DEPOSITORIES; AUTHORIZED SIGNATURES; AND VOTING OF SHARES
Section 1. Uninvested Funds. Uninvested funds shall be deposited in the
name of the Corporation in such accounts and in such banks or trust companies as
shall be designated by the Board and may be withdrawn or transferred in such
manner as the Board shall authorize.
Section 2. Power of Execution. Authority to execute, or to execute and
attest, all orders, documents and other instruments affecting the right, title
and interest of the Corporation in all other property, whether real or personal,
within such limits as the Board shall define, shall be vested in any executive
officers and in such other officers as the Board shall designate.
Section 3. Nominees. The Board may, by resolution, designate a nominee
or nominees in whose name securities may be registered.
Section 4. Voting of Shares Owned by the Corporation. Subject to the
specific directions of the Board or the Executive Committee, any share or shares
of stock issued by any other corporation and owned or controlled by the
Corporation may be voted at any stockholders meeting of the other corporation by
the Chairman or the President, or in their absence by any Vice President of the
Corporation. Whenever in the judgment of the Chairman or the President, or in
their absence, of any Vice President, it is desirable for the Corporation to
execute a proxy or give a stockholder consent with respect to any share or
shares of stock issued by any other corporation and owned or controlled by the
Corporation, the proxy or consent shall be executed in the name of the
Corporation by the Chairman or the President or one of the Vice Presidents of
the Corporation without necessity of any authorization by the Board. Any person
or persons designated in the manner above stated as the proxy or proxies of the
Corporation shall have full right, power and authority to vote the share or
shares of stock issued by the other corporation.
ARTICLE VI
INDEMNIFICATION
Section 1. Indemnification of Trustees, Officers and Employees. The
Corporation shall, to the fullest extent permitted by Sections 9006-9009,
inclusive, of the New York Banking Law and any and all amendments thereof,
indemnify any person who is made, or threatened to be made, a
<PAGE>
8
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person or his testator or intestate is or was a trustee, officer or
employee of the Corporation, or is or was serving at the request of the
Corporation in any capacity for another corporation, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, against judgments,
fines, amounts paid in settlement and reasonable expenses, including attorneys'
fees, actually and necessarily incurred by the person in connection with such
action, suit or proceeding, or any appeal therein.
Section 2. Advances of Expenses. Expenses incurred in defending a
civil, criminal, administrative or investigative action, suit or proceeding, or
threat thereof, shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the trustee, officer or employee to repay such amount if it is
ultimately determined that such person is not entitled to be indemnified by the
Corporation as authorized in this Article VI, or where indemnification is
granted, to repay any amount by which the expenses advanced by the Corporation
exceed the indemnification to which such person is entitled.
Section 3. Exclusivity. The indemnification and advancement of expenses
provided by this Article VI shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any agreement, vote of independent
trustees or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, provided that no other
such rights to indemnification may be made to or on behalf of any trustee or
officer of the Corporation if a judgment or other final adjudication adverse to
the trustee or officer establishes that his acts were committed in bad faith or
were the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled. The
indemnification and advancement of expenses provided by this Article VI shall
continue as to a person who has ceased to be trustee, officer or employee and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
<PAGE>
9
Section 4. Purchase of Insurance. The Corporation may purchase and
maintain insurance:
(a) To indemnify the Corporation for any obligation which it incurs as
a result of the indemnification of any trustee, officer or employee under the
provisions of this Article VI;
(b) To indemnify trustees, officers or employees in instances in which
they may be indemnified by the Corporation under the provisions of this Article
VI; and
(c) To indemnify trustees, officers or employees in instances in which
they may not otherwise be indemnified by the Corporation under the provisions of
this Article VI, provided that the contract of insurance covering such trustees
and officers provides, in a manner acceptable to the Superintendent of Insurance
of the State of New York, for a retention amount and for co-insurance.
Section 5. Notice. No payment of indemnification, advancement or
allowance under this Article VI shall be made unless the Corporation has filed
such notice as may be required by the New York Banking Law or otherwise.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall end on the 31st day of
December of each year.
ARTICLE VIII
SEAL
The Board shall provide a corporate seal which shall include the name
of the Corporation. The year of incorporation of the Corporation and an emblem
may appear on such seal.
<PAGE>
10
ARTICLE IX
EMERGENCY MANAGEMENT
When there shall occur or exist an acute emergency as defined in
Article 7, Chapter 1, Title 26 of the Unconsolidated Laws of the State of New
York, as the same may be amended from time to time, the management and control
of the Corporation shall be conducted in conformance with said Article 7, as
amended, any provision of these Bylaws or resolution of the Board to the
contrary notwithstanding.
ARTICLE X
AMENDMENTS
In furtherance of and not in limitation of the powers conferred by law,
the Board is expressly authorized to adopt, amend, alter, change or repeal from
time to time these Bylaws.
ARTICLE XI
USE OF PRONOUNS
Use of the masculine general in these Bylaws shall be considered to
represent either masculine or feminine gender whenever appropriate.
Exhibit 4.2
(FORM OF STOCK CERTIFICATE - FRONT SIDE)
NUMBER SHARES
OSWEGO COUNTY SAVINGS BANK
OSWEGO, NEW YORK
$.01 par value common stock -- fully paid and non-assessable
This certifies that Oswego County Bancorp, Inc. is the owner of 100 shares of
the common stock of Oswego County Savings Bank (the "Savings Bank"), a stock
savings bank organized under the laws of the State of New York.
The shares evidenced by this Certificate are transferable only on the books of
the Savings Bank by the holder hereof, in person or by attorney or legal
representative, upon surrender of this Certificate properly endorsed.
The interest in the Savings Bank evidenced by this Certificate may not be
retired or withdrawn except as provided by the Rules and Regulations of the New
York State Banking Department and the Organization Certificate and Bylaws of
the Savings Bank, and the capital stock evidenced hereby is not an account of an
insurable type and is not insured by the Bank Insurance Fund of the Federal
Deposit Insurance Corporation or Oswego County Savings Bank.
IN WITNESS THEREOF, the Savings Bank has caused this Certificate to be executed
by the facsimile signatures of its duly authorized officers and has caused its
facsimile seal to be affixed hereto.
Date:
______________________________ ____________________________________
Gregory J. Kreis
Corporate Secretary President and Chief Executive Officer
<PAGE>
(SEAL)
(FORM OF STOCK CERTIFICATE - BACK SIDE)
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - . . . . . . .Custodian . . . . . . . . .under Uniform Gifts
(Cust) (Minor)
to Minors Act. . . . . . . . .
(State)
Additional abbreviations may also be used though not in the above list.
For valued received, _________________________________________
______________________________ hereby sell, assign and transfer unto
_____________________________, ________________ shares of the common stock
evidenced by this Certificate, and do hereby irrevocably constitute and appoint
_____________________, Attorney, to transfer the said shares on the books of the
within named Savings Bank, with full power of substitution.
Date ___________________
______________________________
Signature
______________________________
Signature
Exhibit 5.0
LAW OFFICES
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
TIMOTHY B. MATZ 12TH FLOOR KEVIN M. HOULIHAN
STEPHEN M. EGE 734 15TH STREET, N.W. KENNETH B. TABACH
RAYMOND A. TIERNAN WASHINGTON, D.C. 20005 PATRICIA J. WOHL
GERARD L. HAWKINS _______ FIORELLO J. VICENCIO*
NORMAN B. ANTIN DAVID TEEPLES
JOHN P. SOUKENIK* TELEPHONE: (202) 347-0300 CRISTIN ZEISLER
GERALD F. HEUPEL, JR. FACSIMILE: (202) 347-2172 ANDREW ROSENSTEIN
JEFFREY A. KOEPPEL WWW.EMTH.COM ERIC M. MARION*
DANIEL P. WEITZEL DANIEL R. KLEINMAN*
PHILIP ROSS BEVAN -------------------
HUGH T. WILKINSON ALLIN P. BAXTER
JEFFREY D. HAAS JACK I. ELIAS
SHERYL JONES ALU
W. MICHAEL HERRICK
*NOT ADMITTED IN D.C.
______________ __, 1999
VIA EDGAR
Board of Directors
Oswego County Bancorp, Inc.
44 East Bridge Street
Oswego, New York 13126
Ladies and Gentlemen:
We have acted as special counsel to Oswego County Bancorp, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission pursuant to the Securities
Act of 1993, as amended, of the Registration Statement on Form SB-2 (the
"Registration Statement"), relating to the issuance of up to 621,575 shares of
the Company's common stock, par value $0.01 per share (the "Common Stock"), in
connection with the reorganization of Oswego County Savings Bank, a New York
chartered mutual savings bank (the "Bank"), into the mutual holding company form
of ownership, whereby the Bank will (i) organize an interim New York stock
savings bank as a wholly owned subsidiary ("Interim One"); (ii) Interim One will
organize an interim New York stock savings bank as a wholly owned subsidiary
("Interim Two"); (iii) Interim One will organize a Delaware stock corporation
("SHC") as a wholly owned subsidiary of Interim One; (iv) the Bank will convert
to stock form and exchange its charter for a New York stock savings bank charter
("Stock-form Bank"); (v) the shares of Interim One will be canceled and its
charter will be exchanged for a New York mutual holding company charter ("MHC");
(vi) Interim Two will merge with and into the Stock-form Bank, with Stock-form
Bank surviving as a subsidiary of the MHC; (vii) depositors of the Bank will
hold certain liquidation and limited voting rights in the MHC; and (viii) the
MHC will transfer all of the outstanding shares of Stock-form Bank to the SHC
(the "Reorganization"). The shares of Common Stock are being offered hereby
pursuant to the Bank's Amended and Restated Plan of Reorganization from Mutual
Savings Bank to Mutual Holding Company and Plan of Stock Issuance (the "Plan of
Reorganization").
<PAGE>
Board of Directors
[Date], 1999
Page 2
In this regard, we have examined (i) the Certificate of Incorporation
and Bylaws of the Company; (ii) resolutions of the Boards of Directors of the
Bank and the Company; (iii) the Plan of Reorganization; and (iv) such other
documents and matters of law as we deemed appropriate for the purposes of this
opinion.
Based on the foregoing, we are of the opinion as of the date hereof that
the Common Stock has been duly and validly authorized, and when issued in
accordance with the terms of the Plan of Reorganization, and upon receipt of the
consideration required thereby, will be legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Company's Registration Statement and to the references to this firm under the
heading "Legal and Tax Opinions" in the Prospectus contained in the Registration
Statement.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: [Draft]
---------------------------
John P. Soukenik, a Partner
Exhibit 8.1
March 19, 1999
Board of Trustees
Oswego County Savings Bank
44 East Bridge Street
Oswego, New York 13126-2547
Re: Mutual Holding Company Formation and Stock Issuance
Gentlemen:
We have been requested as special counsel to Oswego County Savings
Bank, a New York-chartered mutual savings bank, (the "Bank") to express our
opinion concerning the federal income tax consequences relating to the proposed
conversion of the Bank from a mutual savings bank to a New York-chartered stock
savings bank to be called Oswego County Savings Bank (referred to as "Stock
Bank" after the conversion) and the formation of Oswego County MHC, a New
York-chartered mutual holding company (the "Mutual Holding Company") which will
acquire the stock of the Stock Bank and subsequently contribute the Stock Bank's
stock to Oswego County Bancorp, Inc. (the "Stock Holding Company").
For the purposes of this opinion, we have examined such documents and
questions of law as we have considered necessary and appropriate, including but
not limited to: the Amended and Restated Plan of Reorganization from Mutual
Savings Bank to Mutual Holding Company and Plan of Stock Issuance, adopted on
March 19, 1998, as amended December 17, 1998 and March 18, 1999 (the "Plan of
Reorganization and Stock Issuance") , as adopted by the Bank's Board of
Trustees, as well as certain other documents relating to the Reorganization (as
defined below), some of which are described or referred to in the Plan of
Reorganization and Stock Issuance and which we deemed necessary to examine in
order to issue the opinions set forth below. Unless otherwise defined, all terms
used herein have the meanings given to such terms in the Plan of Reorganization
and Stock Issuance.
In our examination, we have assumed the authenticity of original
documents, the accuracy of copies and the genuineness of all signatures thereon.
We have further assumed the absence of adverse facts not apparent from the face
of the instruments and documents we examined.
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 2
In issuing our opinions, we have assumed that the Plan of
Reorganization and Stock Issuance has been duly and validly authorized and has
been approved and adopted by the Board of Trustees of the Bank at a meeting duly
called and held; that the Bank will comply with the terms and conditions of the
Plan of Reorganization and Stock Issuance, and that the various representations
and warranties which have been provided to us are accurate, complete and true.
Accordingly, we express no opinion concerning the effect, if any, of variations
from the foregoing. We specifically express no opinion concerning tax matters
relating to the Reorganization under federal income tax laws, except on the
basis of the documents and assumptions described herein, and we express no
opinion concerning tax matters relating to the Reorganization under state or
local tax laws.
For purposes of this opinion, we are relying on the representations
provided to us by the Bank, which are incorporated herein by reference and we
have assumed that the activities of the persons and entities identified in the
Plan of Reorganization and Stock Issuance will be conducted strictly in
accordance with the terms thereof. Any variations may affect the opinions we are
rendering.
We have referred solely to existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), existing and proposed Treasury
Regulations promulgated thereunder, current administrative rulings, notices and
procedures and court decisions. Additionally, we reviewed certain Internal
Revenue Service (the "IRS") rulings which analyze transactions similar in form
to the transaction contemplated by the Plan of Reorganization and Stock
Issuance. See PLR 98-25-025 (June 16, 1998); PLR 97-41-020 (Oct. 10, 1997); and
PLR 97-35-028 (Aug. 29, 1997). Such laws, regulations, administrative rulings,
notices and procedures and court decisions are subject to change at any time.
Any such change could affect the continuing validity of the opinions set forth
below. This opinion is as of the date hereof, and we disclaim any obligation to
advise you of any change in any matter considered herein after the date hereof.
We emphasize that the outcome of litigation cannot be predicted with
certainty and, although we have attempted in good faith to opine as to the
probable outcome of the merits of each tax issue with respect to which an
opinion was requested, there can be no assurance that our conclusions are
correct or that they would be adopted by the IRS or a court.
BACKGROUND
As a New York-chartered mutual savings bank, the Bank, in mutual form,
has no authorized capital stock. Holders of the Bank's deposit accounts possess
certain liquidation and limited voting rights in the Bank (the "Account
Holders"). Specifically, each Account Holder has the right to share pro rata in
any proceeds distributed pursuant to a liquidation of the Bank and each Account
Holder has the right to vote on certain corporate matters (collectively referred
to as "Ownership Rights").
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 3
Ownership Rights cease upon the closing of the Account Holder's deposit
accounts. Additionally, the Bank has a self-sustaining Board of Trustees,
whereby the Trustees fill vacancies in the Board of Trustees as vacancies
arise.
Pursuant to the Plan of Reorganization and Stock Issuance, the Stock
Holding Company will be incorporated under Delaware law and is expected to
receive the approval of the Board of Governors of the Federal Reserve System
(the "Federal Reserve") to serve as the Stock Bank's holding company. Subsequent
to the Reorganization, the Stock Holding Company will have no significant assets
other than the outstanding capital stock of the Stock Bank, the Offering's (as
defined below) net proceeds (after deducting any amounts infused into the Stock
Bank, certain expenses associated with the Offering and amounts used to fund the
Stock Holding Company's Employee Stock Ownership Plan (the "ESOP")), and a note
receivable from the ESOP. The Stock Holding Company's principal business will be
overseeing the business of the Stock Bank and investing the portion of the net
proceeds retained by it.
Further, the Bank will organize the Mutual Holding Company as a New
York-chartered mutual corporation with the powers set forth in its proposed
organizational certificate and bylaws. For as long as they remain Account
Holders, persons who had Ownership Rights with respect to the Bank as of the
date of the Reorganization will continue to have such rights solely with respect
to the Mutual Holding Company after the Reorganization. All persons who become
Account Holders after the Reorganization will also have liquidation and limited
voting rights with respect to the Mutual Holding Company. In the same manner as
the Bank, the Mutual Holding Company will be managed by a self-sustaining Board
of Trustees.
The Mutual Holding Company's principal assets will be the shares of the
Stock Holding Company's common stock (the "Common Stock") received pursuant to
the Plan of Reorganization and Stock Issuance and monies received as its initial
capitalization. Immediately after consummation of the Reorganization, it is
expected that the Mutual Holding Company will not engage in any business
activity other than its investment in, and control of, a majority of the issued
and outstanding shares of Common Stock. The Mutual Holding Company and Stock
Holding Company will each be deemed bank holding companies pursuant to Section 3
of the Bank Holding Company Act (12 U.S.C. ss.1842) and will be regulated by the
Federal Reserve. The Stock Bank will continue to be subject to and regulated by
the Federal Deposit Insurance Corporation and the New York State Banking
Department.
The primary purpose of the Reorganization is to establish a structure
that will allow the Bank to compete more effectively in the financial services
marketplace by strengthening its own franchise or by combining with other
financial institutions. The additional capital raised in the Offering will
support the growth and expansion of the Stock Bank as an independent
organization. The Stock
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 4
Bank can utilize its increased capital to expand its lending and investment
activities. This new corporate structure will expand the investment and
operating authority currently available to the Bank. In addition, the Offering
will provide depositors with the opportunity to become stockholders of the Stock
Holding Company.
Although the Bank believes that the Reorganization will create a
corporate structure more suited for business combinations (such as mergers and
acquisitions) with and/or into other financial institutions, the Bank has
represented that, as of the date of this opinion, the Bank has no intention or
contemplation of entering into any such transaction. This representation
includes the terminated merger previously contemplated between the Bank and
Oswego City Savings Bank ("Oswego City"). Oswego City and the Bank entered into
an Agreement and Plan of Merger, dated September 5, 1997 which was amended on
January 13, 1998, April 30, 1998 and December 18, 1998 ("Oswego City Merger
Agreement"). Pursuant to the Oswego City Merger Agreement, the Bank agreed to
merge into Oswego City. However, due to concerns of certain bank regulatory
agencies, the Oswego City Merger Agreement was terminated on January 28, 1999.
Accordingly, the Bank currently has no plans to merge with or into any other
entity, including Oswego City. Subsequent to the Reorganization, the Stock Bank
will operate independently and assess its business prospects accordingly.
PROPOSED TRANSACTION
The Board of Trustees of the Bank adopted the Plan of Reorganization
and Stock Issuance. For what are represented to be valid business purposes, the
Bank's Board of Trustees has decided to convert to a mutual holding company
structure pursuant to Sections 333.4 and 303.161 of Title 12 of the Code of
Federal Regulations and Parts 86 and 111 of the General Regulations of the New
York State Banking Board. Pursuant to the Plan of Reorganization and Stock
Issuance, the following steps will occur on approximately the same date:
(i) The Bank will organize an interim New York-chartered stock
savings bank ("Interim One") as its wholly owned subsidiary;
(ii) Interim One will complete the organization, by the receipt of
stock, of a Delaware incorporated holding company and will hold
such company as its wholly owned subsidiary ("Stock Holding
Company"); and
(iii) Interim One will organize a New York-chartered stock savings
bank as its wholly owned subsidiary ("Interim Two").
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 5
The following transactions will occur simultaneously:
(iv) The Bank will convert its charter to a New York-chartered stock
savings bank organization and become a stock savings bank (the
"Stock Bank"). Such charter conversion is hereinafter referred
to as the "Bank Conversion." In the Bank Conversion, Account
Holders will constructively receive ownership interests in the
Stock Bank in exchange for their Ownership Rights in the Bank;
(v) Interim One will cancel its outstanding stock and convert its
charter to a New York-chartered mutual holding company charter
and thereby become the Mutual Holding Company;
(vi) Interim Two will merge with and into the Stock Bank with the
Stock Bank surviving. In connection with the merger, the shares
of Interim Two common stock owned by the Mutual Holding Company
prior to the merger shall be converted into and become shares of
Stock Bank common stock, and the former Account Holders of the
Bank who constructively hold ownership interests in the Stock
Bank will be deemed to transfer their ownership interests in the
Stock Bank to the Mutual Holding Company in exchange for
ownership interests in the Mutual Holding Company;
(vii) The Mutual Holding Company will contribute all of the Stock
Bank's outstanding shares of common stock to the Stock Holding
Company, its wholly owned subsidiary; and
(viii) Immediately following the contribution set forth in subparagraph
(vii), above, the Stock Holding Company will, subject to the
provisions of the Plan of Reorganization and Stock Issuance,
sell approximately 45.3% of its Common Stock in a Subscription
Offering and, if applicable, a Community Offering and/or
syndicated community offering (as such terms are defined in the
Plan of Reorganization and Stock Issuance and collectively
referred to as the "Offering").
The above-described transactions are referred to herein collectively as
the "Reorganization."
Those persons who, as of the date of the Bank Conversion (the
"Effective Date"), hold depository rights with respect to the Bank will
thereafter have such rights solely with respect to the
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 6
Stock Bank. Each deposit account with the Bank at the time of the exchange will
become a deposit account in the Stock Bank in the same amount and upon the same
terms and conditions. Following the completion of the Reorganization, all
depositors who had Ownership Rights with respect to the Bank immediately prior
to the Reorganization will continue to have such rights solely with respect to
the Mutual Holding Company for as long as they continue to hold deposit accounts
in the Stock Bank. All new depositors of the Stock Bank after the completion of
the Reorganization will have ownership interests solely with respect to the
Mutual Holding Company so long as they continue to hold deposit accounts in the
Stock Bank.
The shares of Interim Two common stock owned by the Mutual Holding
Company prior to the Reorganization shall be converted into and become shares of
common stock of the Stock Bank on the Effective Date. The ownership interests in
the Stock Bank constructively received by the former members of the Bank will be
converted into ownership interests of the Mutual Holding Company. As a result,
the Stock Bank will be a wholly owned subsidiary of the Stock Holding Company,
which will be a wholly owned subsidiary of the Mutual Holding Company. The
Mutual Holding Company will not have any capital stock.
The Stock Holding Company will have the power to issue shares of
capital stock (including common and preferred stock) to persons other than the
Mutual Holding Company. As long as the Mutual Holding Company is in existence,
however, the Mutual Holding Company must own at least fifty-one (51%) percent of
the voting stock of the Stock Holding Company.
Pursuant to the Plan of Reorganization and Stock Issuance, the shares
of Common Stock to be issued will first be offered through the Subscription
Offering pursuant to non-transferable subscription rights on the basis of
preference categories in the following order of priority:
(1) Eligible Account Holders;
(2) Tax-Qualified Employee Stock Benefit Plans;
(3) Supplemental Eligible Account Holders; and
(4) Employees, officers and trustees of the Bank.
Any shares of Common Stock not subscribed for in the Subscription
Offering may be offered in a Community Offering and, if necessary, a syndicated
community offering.
The Plan of Reorganization and Stock Issuance provides that the Stock
Bank and the Stock Holding Company will form a charitable foundation to be named
the Oswego County Foundation
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 7
(the "Foundation"). The Foundation will be incorporated under Delaware law as a
non-stock corporation, and the Stock Holding Company will contribute to the
Foundation a number of shares of Common Stock equal to 4.0% of the shares of
Common Stock sold in the Offering. The Foundation will be dedicated to
supporting charitable organizations within the communities served by the Stock
Bank. The Foundation will submit a request to the IRS to be recognized as an
exempt organization under Code Section 501(c)(3).
OPINIONS
Based upon the forgoing and in reliance thereon, and subject to the
conditions, facts, representations and assumptions set forth herein, we are of
the opinion that:
With respect to the Bank Conversion:
1. The Bank Conversion is a mere change in identity and form and
therefore qualifies as a reorganization within the meaning of Section
368(a)(1)(F) of the Code. (Rev. Rul. 80-105, 1980-1 C.B. 78.).
2. No gain or loss will be recognized by the Bank or the Stock
Bank as a result of the Bank Conversion. (Code Sections 361(a), 357(a)
and 1032(a)).
3. The Stock Bank's holding period for the assets received from
the Bank will include the period during which such assets were held by
the Bank. (Code Section 1223(2)).
4. The Stock Bank's basis in the assets of the Bank will be the
same as the basis of such assets in the hands of the Bank immediately
prior to the proposed transaction. (Code Section 362(b)).
5. The Stock Bank will succeed to and take into account the
Bank's earnings and profits, as of the date of the proposed
transaction. (Code Section 381).
With respect to the contribution of ownership interests in the Stock
Bank to the Mutual Holding Company for ownership interests therein (the "351
Transaction"):
6. The exchange of ownership interests in the Stock Bank for
ownership interests in the Mutual Holding Company will constitute a
tax-free exchange of property solely for voting stock pursuant to
Section 351 of the Code. Ownership interests in the Mutual Holding
Company will be treated as "stock" within the meaning of Code Section
351(a).
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 8
7. No gain or loss will be recognized by Account Holders of the
Bank on the transfer of their Ownership Rights in the Bank solely for
constructive ownership interests in the Stock Bank followed by an
exchange of their ownership interests in the Stock Bank solely for
ownership interests in the Mutual Holding Company. (Code Section
351(a)).
8. The basis in the ownership interests of the Mutual Holding
Company received in the transaction will be the same as the basis of
the property transferred in exchange therefor, reduced by the sum of
the liabilities assumed by the Mutual Holding Company or to which
assets transferred are taken subject to. (Code Section 358(a)(1)).
9. The Mutual Holding Company will recognize no gain or loss
upon the receipt of property from the owners of the Stock Bank in
exchange for ownership interests in the Mutual Holding Company. (Code
Section 1032(a)).
10. The Mutual Holding Company's basis in the property received
from the owners of the Stock Bank will be the same as the basis of such
property in the hands of the owners of the Stock Bank immediately prior
to the 351 Transaction. (Code Section 362(a)).
11. The Mutual Holding Company's holding period for the property
received from the owners of the Stock Bank will include the period
during which such property was held by the owners of the Stock Bank.
(Code Section 1223(2)).
With respect to the transfer of the Stock Bank's common stock by the
Mutual Holding Company to the Stock Holding Company and cash contributions from
the Stock Holding Company to the Stock Bank:
12. The transfer by the Mutual Holding Company of the common
stock of the Stock Bank, a wholly owned subsidiary, to its other wholly
owned subsidiary, the Stock Holding Company, will constitute a tax-free
exchange of property solely for voting stock pursuant to Code Section
351. The Mutual Holding Company will not receive additional shares of
Common Stock in this exchange because, at the time of the transfer, the
Mutual Holding Company will already own all of the outstanding shares
of Common Stock and the issuance of additional shares of Common Stock
would have no substantive effect.
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 9
13. The Mutual Holding Company will recognize no gain or loss
upon the transfer of the Stock Bank common stock to the Stock Holding
Company. (Code Section 351(a)).
14. The Stock Holding Company will recognize no gain or loss on
its receipt of the Stock Bank common stock. (Code Section 1032(a)).
15. The Stock Holding Company's basis in the Stock Bank common
stock will equal the basis of the Stock Bank common stock in the Mutual
Holding Company's hands immediately before the exchange. (Code Section
362(a)).
16. The Mutual Holding Company will increase its basis in its
shares of Common Stock by the Mutual Holding Company's basis in the
Stock Bank common stock transferred. (Code Section 358(a)).
17. The Stock Holding Company's holding period for the shares of
the Stock Bank common stock received from the Mutual Holding Company
will include the period that the Mutual Holding Company held, or is
deemed to have held, the shares. (Code Section 1223(2)).
18. No gain or loss will be recognized by the Stock Bank upon
its receipt of money from the Stock Holding Company. (Code Section
1032(a)). The Stock Holding Company will not receive additional shares
of Stock Bank common stock in exchange for any such money received
because the issuance of additional Stock Bank common stock to the Stock
Holding Company would be meaningless. The Stock Holding Company will be
solely contributing money to the Stock Bank and therefore will not
recognize any gain or loss upon such transfer. (Code Section 351(a);
Rev. Rul. 69-357, 1969-1 C.B. 101).
With respect to Account Holders and the issuance of Common Stock
pursuant to the Plan of Reorganization and Stock Issuance:
19. No gain or loss will be recognized by the Stock Holding
Company upon its receipt of money in exchange for shares of the Common
Stock (Code Section 1032(a)).
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 10
20. No gain or loss will be recognized by Eligible Account
Holders or Supplemental Eligible Account Holders of the Bank upon the
issuance to them of deposit accounts in the Stock Bank in the same
dollar amount and on the same terms and conditions in exchange for
their deposit accounts in the Bank held immediately prior to the
Reorganization. (Code Section 1001(a); Treas. Reg. Section
1.1001-1(a)).
21. The tax basis of the deposit accounts of the Eligible
Account Holders and Supplemental Eligible Account Holders in the Stock
Bank received as part of the Reorganization will equal the tax basis of
such account holders' corresponding deposit accounts in the Bank
surrendered in exchange therefor. (Code Section 1012).
22. Each depositor of the Bank will recognize gain upon the
receipt of his or her subscription rights deemed to have been received
for federal income tax purposes, but only to the extent of the excess
of the fair market value of a depositor's interest in such subscription
rights over the depositor's basis in the former interests in the Bank
other than deposit accounts. We understand that the Bank has received a
letter from RP Financial, LC. ("RP Financial") in which RP Financial
states its belief that, (i) the subscription rights will have no
ascertainable market value and (ii) the price of which the subscription
rights are exercisable will not be more or less than the estimated pro
forma value of the shares upon issuance. In the event that such a gain
is realized, it would be subject to immediate recognition.
23. No gain or loss will be recognized upon the exercise of a
subscription right in the Reorganization. (Rev. Rul. 56-572, 1956-2
C.B. 182).
24. The basis of the shares of Common Stock acquired in the
Offering will be equal to the purchase price of such shares, increased,
in the case of such shares acquired pursuant to the exercise of
subscription rights, by the fair market value, if any, of the
subscription rights exercised. (Code Section 1012).
25. The holding period of the Common Stock acquired pursuant to
the exercise of subscription rights will commence on the date on which
the subscription rights are exercised. (Code Section 1223(6)). The
holding period of the Common Stock acquired in the Community Offering
will commence on the date immediately following the date on which such
stock is purchased. (Rev. Rul. 70-598, 1970-2 C.B.
168; Rev. Rul. 66-97, 1966-1 C.B. 190).
<PAGE>
Board of Trustees
Oswego County Savings Bank
March 19, 1999
Page 11
* * *
26. The establishment of the Foundation by the Stock Bank and
the Stock Holding Company and the subsequent contribution of shares of
Common Stock to the Foundation by the Stock Holding Company will not
affect any of the foregoing opinions.
The opinions expressed above are limited to the income tax consequences
of the Reorganization under current federal tax laws. Further, our opinions are
based upon research of the Code, applicable Treasury Regulations, current
published administrative decisions of the IRS, existing judicial decisions as of
the date hereof and representations made by the Bank's management. No assurance
can be given that legislative, administrative or judicial decisions or
interpretations may not be forthcoming that will significantly change the
opinions set forth herein. We express no opinions other than those stated
immediately above as our opinions.
We hereby consent to the filing of this opinion as an exhibit to the
Bank's Form 86-AC and to the Stock Holding Company's Registration Statement on
Form SB-2 as filed with the Securities and Exchange Commission. We also consent
to the references to our firm in the Prospectus contained in Form SB-2 under the
captions "Effects of the Corporate Change - Tax Effects of Our Corporate Change
and Stock Offering" and "Legal and Tax Opinions," and to the summary of our
opinion in such Prospectus.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ John P. Soukenik
--------------------------------
John P. Soukenik, a Partner
Exhibit 8.2
March 24, 1999
Board of Trustees
Oswego County Savings Bank
c/o Gregory Kreis
President and CEO
44 East Bridge Street
Oswego, New York 13126
RE: Oswego County Savings Bank
Mutual Holding Company Formation and Stock Issuance
State & Local Tax Considerations
Dear Members of the Board:
We have been requested by Oswego County Savings Bank, a New York State chartered
mutual savings bank ("Bank"), Oswego County, MHC, a New York chartered mutual
holding company ("Mutual Holding Company") and Oswego County Bancorp, Inc. a
Delaware corporation ("Stock Holding Company") to express our opinion concerning
certain New York State income tax consequences relating to the proposed Amended
and Restated Plan of Reorganization from Mutual Savings Bank to Mutual Holding
Company and Plan of Stock Issuance initially adopted by the board of trustees of
the Bank on March 19, 1998 as amended December 17, 1998 and March 18, 1999
("Plan of Reorganization"). Our opinion is limited to the New York State income
tax consequences of the transaction. Any other state tax considerations that may
result from the transaction are outside the scope of this opinion.
In connection therewith, we are relying on the facts and conclusions reached in
the attached Federal tax opinion ("Federal Opinion") rendered by the Bank's
special counsel, Elias, Matz, Tiernan & Herrick L.L.P., on March 19, 1999.
Background
As outlined in the attached Federal Opinion, it is intended that at the
conclusion of the Plan of Reorganization the Bank will be a wholly owned
subsidiary of the Stock Holding Company of which at least 51% will be owned by
the Mutual Holding Company and up to 49% will be offered in a Subscription
Offering and, if applicable, in a Community Offering (as defined in the Plan of
Reorganization).
<PAGE>
Page 2
April 29, 1999
The Bank currently files a Federal income tax return and a New York State
banking corporation franchise tax return on a calendar year basis (i.e., January
1st through December 31st).
Discussion
Banking Corporation Franchise Tax
Treatment of Reorganization
For purposes of Article 32 of the New York State Tax Law ("NYTL"), Section
1453(a) provides that entire net income means total income from all sources
which shall be the same as the entire taxable income (but not alternative
minimum taxable income) which the taxpayer is required to report to the United
States Treasury Department, subject to the modifications and adjustments
hereinafter provided. NYTL Sections 1453(b) through (k) and NYS Tax Regulations
Sections 18-2.3, 18-2.4, and 18-2.5 thereunder, provide for the modifications or
adjustments required by NYTL Section 1453(a). There is no modification or
adjustment applicable to a transaction where, for Federal income tax purposes,
the transaction constitutes a tax free exchange within the meaning of IRC
Sections 351 and 368(a)(1)(F). Therefore, for purposes of NYTL Section 1453, the
Reorganization transaction will be treated the same as it is for Federal income
tax purposes.
No Combination After Reorganization
Pursuant to NYS Tax Regulations Sections 21-2.2 and 21-2.3, a bank holding
company which is exercising its corporate franchise or doing business in New
York State in a corporate or organized capacity, is or may be required to file a
return on a combined basis with the following corporations (all of which are NYS
taxpayers, i.e., are subject to NYTL Article 32):
Corporations required to file a combined return:
o any banking corporation or bank holding company which owns or controls,
directly or indirectly, 80 percent or more if its voting stock, and
o any banking corporation or bank holding company in which it owns or
controls, directly, or indirectly, 80 percent or more of its voting
stock.
Corporations permitted or required to file a combined return (at the discretion
of the Tax commissioner):
o any banking corporation or bank holding company which owns or controls,
directly or indirectly, 65 percent or more if its voting stock, and
<PAGE>
Page 3
April 29, 1999
o any banking corporation or bank holding company in which it owns or
controls, directly or indirectly, 65 percent or more of the voting
stock.
The Plan of Reorganization provides that the public offering of the Stock
Holding Company is intended to sell up to 49 percent of the outstanding shares
of the Stock Holding Company to purchasers other than Mutual Holding Company.
Should, in fact, the public offering exceed 35 percent, the above criteria will
not be satisfied and Mutual Holding Company will be ineligible to file a
combined NYS banking corporation franchise tax return with the Stock Holding
Company. Stock Holding Company and Stock Bank will meet the 80% control
requirement and will have New York State nexus. Therefore, they should be
required to file a combined New York State return.
Personal Income Tax
The beneficial ownership interest of the Bank is held by its depositors by
reason of their right to their respective deposit accounts and interest on those
accounts. After the Plan of Reorganization, each holder of a deposit account in
the Bank immediately preceding the reorganization will continue as an account
holder in the Stock Bank after the reorganization. The reorganization will not
affect the deposit balance, interest rate, and other terms of such accounts.
Therefore the deposit account holders will not recognize gain or loss with
respect to the deposit accounts as a result of the Plan of Reorganization.
Section 611(a) of Article 22 of the Tax Law provides: "[t]he New York taxable
income of a resident individual is his New York adjusted gross income less his
New York deductions and New York exemptions, as determined under this part."
Section 612(a) of the Tax Law provides: "[t]he New York adjusted gross income of
a resident individual means his Federal adjusted gross income as defined in the
laws of the United States Internal Revenue Code for the taxable year, with
certain modifications as specified in section 612." Section 612 of the Tax Law
does not contain any modification that affects the shareholders or stockholders
of the banks or corporations that are each a party to a transaction, that for
Federal income tax purposes constitutes a tax-free transaction pursuant to
Section 351(a) or 368(a) of the Internal Revenue Code.
The transactions contemplated by the Plan of Reorganization constitute tax-free
transactions pursuant to Section 351(a) and 368(a) the depositors will not
recognize any Federal taxable income with respect to their deposit accounts.
Accordingly, the depositors will not recognize any New York State taxable income
for purposes of the NYS Personal Income Tax with respect to their deposit
accounts as a result of the transactions contemplated by the Plan of
Reorganization.
<PAGE>
Page 4
April 29, 1999
Opinion
Scope of the Opinion
You have submitted for our consideration certain facts relating to the Mutual
Holding Company formation and stock issuance as set-forth above and the Plan of
Reorganization. Our opinions are based upon the facts set forth in this letter
and the Federal Opinion and assumes that the Federal Opinion concerning certain
Federal income tax matters relating to the Plan of Reorganization will represent
the probable outcome. If any fact or representation contained herein is not
entirely complete or accurate, it is imperative that you inform us immediately
in writing because the incompleteness or inaccuracy could cause us to change our
opinion.
This opinion is rendered only with respect to the holdings set forth herein and
KPMG expresses no opinion with respect to any other legal, Federal, state or
local tax aspect of these transactions. No inference should be drawn regarding
any matter not specifically opined upon.
In rendering our opinion, we are relying upon the attached Federal Opinion, the
relevant provisions of the Internal Revenue Code, NYTL, as well as all
regulations promulgated thereunder and judicial and administrative
interpretations thereof, all of which are subject to change or modification by
subsequent legislative, regulatory, administrative or judicial decisions. Any
such changes could also have an effect on the validity of our opinion. We assume
no duty to inform you of any changes in our opinion in the event of such change.
This opinion is not binding upon any tax authority or any court and no assurance
can be given that a position contrary to that expressed herein will not be
asserted by a tax authority and ultimately sustained by a court. However, KPMG
believes that there is sufficient authority to support the opinion expressed
herein.
Furthermore, the conclusions contained herein regarding NYS taxes could change
if the Federal law on which such conclusions are premised were to change since a
taxpayer's "entire net income" for purposes of the NYS banking corporation tax
law is, with modifications not relevant here, the same as Federal taxable
income; and the base for taxation under the NYS Personal Income Tax is, with
modifications not relevant here, the same as Federal adjusted gross income.
Subject to the above, we opine as follows:
1. For purposes of the NYS Franchise Tax on Banking Corporations, the
Plan of Reorganization should constitute a tax free transaction
for such purposes.
<PAGE>
Page 5
April 29, 1999
2. For purposes of the NYS Personal Income Tax, no taxable income
should be realized by eligible account holders and new
stockholders of Stock Bank.
3. For purposes of the NYS Personal Income Tax, the basis of the
deposit accounts in the Stock Bank to be received by the deposit
account holders should be the same as the basis of their deposit
accounts in the Bank surrendered in exchange therefor.
Very truly yours,
/s/ KPMG LLP
Exhibit 23.2
Independent Auditors' Consent
The Board of Trustees
Oswego County Savings Bank:
We consent to the inclusion in the Registration Statement on Form SB-2 of Oswego
County Bancorp, Inc. of our report dated February 12, 1999, on the statements of
financial condition of Oswego County Savings Bank as of December 31, 1998 and
1997, and the related statements of income, net worth and comprehensive income,
and cash flows for the years then ended. We further consent to the use of our
opinions included herein regarding certain income tax consequences of the
proposed reorganization and offering and of the proposed charitable foundation.
We consent to the references to our firm under the heading "OUR CORPORATE CHANGE
AND STOCK OFFERING - Tax Effects of Our Corporate Change and Stock Offering",
"OUR CORPORATE CHANGE AND STOCK OFFERING - Tax Considerations", "EXPERTS", and
"LEGAL AND TAX OPINIONS" in the prospectus.
/s/ KPMG LLP
Syracuse, New York
May 3, 1999
Exhibit 23.3
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
May 3, 1999
Board of Trustees
Oswego County Savings Bank
44 East Bridge Street
Oswego, New York 13126
Members of the Board:
We hereby consent to the use of our firm's name in the Application for
Conversion on Form 86-AC of Oswego County Savings Bank, Oswego, New York, and
any amendments thereto, and in the Form SB-2 Registration Statement and any
amendments thereto for Oswego County Bancorp, Inc. We also hereby consent to the
inclusion of, summary of and references to our Appraisal Report and our
statement concerning subscription rights in such filings including the
Prospectus of Oswego County Bancorp, Inc.
Sincerely,
RP FINANCIAL, LC.
/S/ RP Financial, LC.
Exhibit 99.1
- -------------------------------------------------------------------------------
PRO FORMA VALUATION
UPDATE REPORT
OSWEGO COUNTY SAVINGS BANK
Oswego, New York
Dated As Of:
April 16, 1999
- -------------------------------------------------------------------------------
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE>
[INSERT RP FINANCIAL, LC. LETTERHEAD]
April 16, 1999
Board of Trustees
Oswego County Savings Bank
44 East Bridge Street
Oswego, New York 13126
Members of the Board:
At your request, we have completed and hereby provide an updated
independent appraisal of the estimated pro forma market value of the stock to be
issued by Oswego County Savings Bank, Oswego, New York ("OCSB" or the "Bank").
This appraisal is furnished pursuant to the requirements of 563b.7 and has been
prepared in accordance with the "Guidelines for Appraisal Reports for the
Valuation of Savings and Loan Associations Converting from Mutual to Stock Form
of Organization" ("Valuation Guidelines") of the Office of Thrift Supervision
("OTS"), including the most recent revisions as of October 21, 1994, and
applicable regulatory interpretations thereof. Such Valuation Guidelines are
relied upon by the New York State Department of Banking (the "Department") and
the Federal Deposit Insurance Corporation ("FDIC") in evaluating conversion
appraisals in the absence of separate written valuation guidelines by the
respective agencies.
We understand that the Board of Trustees of Oswego County Savings Bank,
Oswego, New York ("OCSB" or the "Bank") has adopted a Plan of Reorganization
from Mutual Savings Bank to Mutual Holding Company and Plan of Stock Issuance,
incorporated herein by reference, in which the Bank will reorganize from the
mutual form of organization to the mutual holding company form of organization.
In the reorganization process, to become effective concurrent with the
completion of the stock sale, OCSB will become a wholly-owned subsidiary of
Oswego County Bancorp, Inc. (the "Holding Company"), and the Holding Company
will issue a majority of its common stock to Oswego County M.H.C. (the "MHC")
and sell a minority of its common stock to the public. It is anticipated that
the public shares will be offered in the Subscription Offering to the Bank's
Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible
Account Holders, and Trustees, Officers and Employees with any shares not sold
in the Subscription Offering sold in the Community Offering. In addition, the
Holding Company intends to donate to a charitable foundation, immediately
following the conversion, authorized but unissued shares of the Holding Company
stock equal to 4.0 percent of the number of shares of Common Stock issued in the
Offering.
[INSERT RP FINANCIAL, LC. LETTERHEAD]
<PAGE>
Board of Trustees
April 16, 1999
Page 2
The aggregate amount of Common Stock sold by the Holding Company cannot
exceed the appraised value of the Bank. Immediately following the conversion,
the primary assets of the Holding Company will be the capital stock of the Bank
and the net conversion proceeds remaining after purchase of the Bank's common
stock by the Holding Company. The Holding Company will use up to 50 percent of
the net conversion proceeds to purchase the Bank's common stock. The remaining
net conversion proceeds, retained at the Holding Company, will be used to fund a
loan to the Employee Stock Ownership Plan ("ESOP") with the remainder to be used
as general working capital.
On September 5, 1997, OCSB and Oswego City Savings Bank ("City
Savings") and Pathfinder Bancorp, Inc. (the "Company"), the mid-tier holding
company for City Savings which owns 100 percent of City Savings' common stock,
entered into an Agreement and Plan of Merger (the "Agreement"). The Agreement
was terminated as of January 28, 1999 by mutual agreement. An original appraisal
dated April 17, 1998 (the "Original Appraisal") and updated valuation dated
December 4, 1998 (the "First Update") were filed in conjunction with the merger
transaction with City Savings. This updated appraisal reflects a "stand alone"
reorganization of OCSB. However, the basis of the updated appraisal remains
unchanged as the Original Appraisal and First Update were prepared assuming OCSB
was undertaking a stand alone reorganization as required by the Agreement.
This updated appraisal reflects the following items: (1) an updated
comparison of OCSB's financial condition and operating results versus those
reported in the most recent updated valuation as of March 5, 1999 (the "Second
Update"); (2) an updated comparison of the Bank's financial condition and
operating results versus the Peer Group companies identified in the Second
Update; and (3) a review of stock market conditions since the Second Update,
along with updated stock prices as of April 16, 1999. The Original Appraisal as
well as the First and Second Updates are incorporated herein by reference. The
methodology applied in this updated appraisal, as in the Original Appraisal and
previously filed updates, places primary emphasis on the current market pricing
of public MHCs on a fully converted basis.
Discussion of Relevant Considerations
1. Financial Results
Table 1 presents summary balance sheet and income statement
details for the twelve months ended December 31, 1998 and updated unaudited
financial information through March 31, 1999. The overall composition of OCSB's
updated balance sheet did not change significantly from the quarter ended
December 31, 1998, as the loan portfolio balance and total assets diminished
nominally while the balance of deposits increased slightly. Updated reported
earnings for the trailing twelve months ended March 31, 1999, reflect modest
improvement, increasing from $309,000 to $357,000.
OCSB's total assets decreased modestly December 31, 1998, to
March 31, 1999, to equal $110.7 million. The Bank's assets decreased,
notwithstanding growth in the Bank's
<PAGE>
Table 1
Oswego County Savings Bank
Recent Financial Data
<TABLE>
<CAPTION>
At December 31, 1998 At March 31, 1999
------------------------ --------------------------
(% of (% of
Amount Assets) Amount Assets)
------ ------- ------ -------
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
Balance Sheet Data
- ------------------
Total Assets $ 110,866 100.00% $110,748 100.00%
Cash and Due from Banks 4,007 3.61% 5,060 4.57%
Federal Funds Sold and Short-Term Investments 2,600 2.35% 1,400 1.26%
Securities Held to Maturity 13,730 12.38% 13,647 12.32%
Securities Available for Sale 14,784 13.34% 14,925 13.48%
Loans, Net 71,013 64.05% 70,961 64.07%
Deposits 96,564 87.10% 97,021 87.61%
Net Worth 11,694 10.55% 11,780 10.64%
12 Months Ended 12 Months Ended
December 31, 1998 March 31, 1999
------------------------ ------------------------
(% of Avg. (% of Avg.
Amount Assets)(1) Amount Assets)(1)
($000) (%) ($000) (%)
Summary Income Statement
- ------------------------
Interest Income $ 7,915 7.10% $ 7,773 7.09%
Interest Expense (3,388) -3.04% (3,265) -2.98%
-------- ----- -------- -----
Net In terest Income $ 4,527 4.06% $4,508 4.11%
Provision for Loan Losses (120) -0.11% (120) -0.11%
-------- ----- -------- -----
Net Interest Income After Provisions $ 4,407 3.95% $4,388 4.00%
Other Income 447 0.40% 462 0.42%
Operating Expense (4,234) -3.80% (4,168) -3.80%
-------- ----- -------- -----
Net Operating Income $ 620 0.56% $682 0.62%
Non-Operating Income (149) -0.13% (149) -0.14%
Net Income Before Tax 471 0.42% 533 0.49%
Income Taxes (162) -0.15% (176) -0.16%
-------- ----- ------- -----
Net Income/(Loss) $309 0.28% $358 0.33%
Adjusted Net Income
- -------------------
Net Operating Income $620 0.56% $682 0.62%
Less: Income Tax Effect(2) (248) -0.22% (273) -0.25%
--------- ----- ------- -----
Adjusted Net Income $372 0.33% $409 0.37%
Memo:
Expense Coverage Ratio 106.92% 105.28%
Efficiency Ratio(2) 85.13% 83.86%
Return on Average Equity 2.70% 3.03%
Effective Tax Rate 34.43% 33.02%
</TABLE>
(1) Ratios are as a percent of average assets. (2) Assumes an effective state
and federal tax rate of 40%.
Source: Prospectus.
<PAGE>
Board of Trustees
April 16, 1999
Page 4
deposit balances. The loan portfolio balance reduced by $52,000 to equal $70.961
million as the Bank has continued experience relatively high loan prepayments in
excess of the level of loan originations for portfolio. The loan portfolio
composition continues to reflect the Bank's emphasis on residential lending, as
such loans comprised in excess of 80 percent of total loans. As discussed in the
Original Appraisal and subsequent updates, the Bank's residential mortgage loan
portfolio is primarily comprised of one year adjustable ARM loans. The Bank
commenced offering ARMs which were fixed for the first 3, 5, 7, and 10 years and
adjustable annually thereafter several years ago; however, such loans do not
constitute the majority of the ARM portfolio.
Management has implemented a plan to increase loan
originations and diversify into commercial lending. In this regard, two mortgage
originators and a commercial lender will be employed in the Syracuse area and
commence originating loans by the second quarter of 1999. Moreover, OCSB will
enhance its presence in the market by originating fixed rate residential
mortgage loans for resale. OCSB will also seek to increase the Bank's assets and
liabilities to achieve economies of scale and improve the Bank's competitive
posture; an office facility has recently been acquired in North Syracuse and is
expected to enhance the ability to realize retail growth including growth in
loans and deposits.
The balance of interest-earning assets was comprised of cash
and investments which, in aggregate, remained substantially unchanged over the
quarter and equaled $35.1 million. The composition of the investment portfolio
continues to reflect efforts by new management to more actively manage
investments to enhance yields and earnings.
Retail deposits continue to be the principal source of funds
for OCSB. Deposits have increased from $96.6 million reported as of December 31,
1998, to $97.0 million as of March 31, 1999. The increase is the result of
normal deposit flows as well as branch incentive programs and expansion of
commercial lending.
Modest earnings for the three months ended March 31, 1999,
increased retained earnings to $11.8 million, equal to 10.71 percent of assets.
All of the Bank's capital is tangible capital.
OCSB's operating results for the twelve months ended December
31, 1998, and March 31, 1999, are also set forth in Table 1. The Bank's updated
earnings for the trailing twelve months ended March 31, 1999, reflect an
increase, primarily as a result of lower operating expenses. OCSB reported
earnings of $357,000 for the twelve months ended March 31, 1999, versus earnings
of $309,000 for the twelve months ended December 31, 1998. During that time
period, OCSB's net interest margin remained relatively stable at $4.5 million,
equal to 4.06 percent of average assets for the twelve months ended March 31,
1999. Likewise, loan loss provisions remained stable and thus, net interest
income after loan loss provisions was substantially unchanged.
Non-interest operating income increased nominally to equal
$0.462 million for the twelve months ended March 31, 1999, or 0.42 percent of
assets. Core earnings were further improved by the reduction of operating
expenses to equal $4.168 million, or 3.80 percent of average assets. As
discussed in the Original Appraisal and subsequent updates, the Bank's operating
expenses are high in relation to industry averages, particularly given the
Bank's
<PAGE>
Board of Trustees
April 16, 1999
Page 5
relatively traditional operations (i.e., limited activity in terms of commercial
and consumer lending, which tend to be labor intensive, or other fee generating
activities), due to a number of factors, including: (1) the Bank maintains a
relatively high proportion of savings and transaction accounts which are
typically more expensive to service than CDs; (2) the limited increase in asset
size since 1993 has amplified normal inflationary pressures; and (3) the Bank's
average branch size is below industry averages.
The Bank reported a net non-operating expense for the twelve
months ended March 31, 1999, equal to $149,000, or 0.14 percent of average
assets, which was unchanged from the level reported for the twelve months ended
December 31, 1998. The expense is principally attributable to $171,213 of merger
costs realized at the end of fiscal 1998 as a result of the termination of the
Agreement with City Savings. The Bank is in a fully taxable position with
respect to both state and federal income taxes. For the twelve months ended
March 31, 1999, OCSB reported a tax expense of $176,000, or 0.16 percent of
average assets.
2. Peer Group Financial Comparisons
Tables 2 and 3 present updated financial characteristics and
operating results for the Bank, the Peer Group and all publicly-traded savings
institutions. As discussed in the Original Appraisal and subsequent updates, the
Peer Group is comprised solely of publicly-traded MHCs on a fully converted
basis, excluding those companies which have announced or completed second step
conversion offerings or which otherwise have unusual operating or pricing
characteristics which warrant their exclusion from the Peer Group. In this
updated analysis, we have excluded recently converted MHCs from the Peer Group
(i.e., MHC's which converted subsequent to June 30, 1998); however, we will
separately analyze a group of the most recently converted MHCs as a proxy as to
how the market may view OCSB's new issue.
The Bank's and the Peer Group's ratios are through March 31,
1999 or the latest publicly available date. In general, the comparative balance
sheet ratios for the Bank and the Peer Group did not vary significantly from the
ratios exhibited in the Second Update. Relative to the Peer Group, the Bank's
composition of interest-earning assets continued to reflect a higher
concentration of loans and lower concentration of MBS and investment securities.
Loans equaled 64.1 percent for OCSB versus 59.2 percent for the Peer Group.
After the minority stock issuance, the level of cash and investments for the
Bank would be expected to increase modestly until such time as the proceeds
could be redeployed into loans.
The updated mix of interest-bearing liabilities ("IBLs")
maintained by the Bank and the Peer Group was essentially the same as was
recorded in the Second Update. The Bank continued to rely solely on deposits to
fund assets while the Peer Group continued to rely more heavily on borrowings as
a funding source. The balance of deposits equaled 87.6 percent of assets for the
Bank versus 72.5 percent for the Peer Group, while the Peer Group supplemented
deposits with borrowed funds equal to 12.5 percent of assets.
The Bank posted an updated equity-to-assets ratio of 10.6
percent versus a comparative ratio of 13.5 percent for the Peer Group.
<PAGE>
<TABLE>
<CAPTION>
Table 2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of December 31, 1998
Balance Sheet as a Percent of Assets
-----------------------------------------------------------------------------------------
Cash & Borrowed Subd. Net Goodwill & Tang. Net
Investments Loans MBS Deposits Funds Debt Worth Intang. Worth
----------- ----- --- -------- ----- ---- ----- ------- -----
Oswego County Savings Bank
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1999 29.2 64.1 2.4 87.6 - - 10.6 - 10.6
All Public Companies 19.7 67.0 9.9 69.3 16.1 0.1 12.9 0.3 12.6
State of NY 6.3 32.0 58.1 67.7 15.7 - 14.2 0.6 13.6
Comparable Group Average 26.5 59.2 10.6 72.5 12.5 0.1 13.5 0.3 13.2
Comparable Group
Florida Companies
FFFL Fidelity Bancshares MHC of FL (1) 20.3 62.5 13.4 69.3 20.7 - 6.1 0.2 5.9
Mid-Atlantic Companies
ALLB Alliance Bank MHC of PA 38.9 52.7 5.6 77.9 11.1 - 10.6 - 10.6
SBFL Finger Lakes Fin. MHC of NY 35.3 51.4 9.8 71.7 19.4 - 7.8 - 7.8
HARS Harris Fin. MHC of PA 53.3 42.7 0.1 48.3 42.8 - 7.6 0.2 7.3
LFED Leeds Fed. Bksr. MHC of MD 31.8 61.8 3.8 82.0 0.2 - 16.0 - 16.0
NBCP Niagara Bancorp of NY MHC (1) 36.1 49.3 10.1 70.9 8.2 - 18.2 - 18.2
NWSB Northwest Bancorp MHC of PA (1) 20.6 74.7 0.9 81.0 10.0 - 7.8 1.3 6.5
PHSB PHS Bancorp MHC of PA 23.1 40.9 33.2 74.1 13.2 - 11.9 - 11.9
PBHC Pathfinder BC MHC of NY 19.3 63.0 10.2 78.8 9.2 - 11.0 1.6 9.3
PLSK Pulaski SB, MHC of NJ 18.8 50.5 27.9 87.5 0.2 - 11.4 - 11.4
SKBO Skibo Fin. Corp. MHC of PA 19.6 41.6 35.3 51.6 30.5 - 16.6 - 16.6
Midwest Companies
JXSB Jacksonville SB, MHC of IL 11.7 78.0 5.9 87.3 0.1 - 10.7 - 10.7
WAYN Wayne Savings Bank MHC of OH 14.0 79.0 2.7 85.3 4.5 - 9.3 - 9.3
WCFB Webster City FSB MHC of IA (1) 27.6 60.3 10.6 73.0 1.4 - 24.5 - 24.5
New England Companies
BRKL Brookline Bancorp MHC of MA (1) 36.1 62.5 0.1 56.1 9.4 - 32.9 - 32.9
PBCT Peoples Bank, MHC of CT 23.4 65.3 4.8 69.9 18.7 1.5 8.6 1.4 7.2
Southeast Companies
GBNK Gaston Fed. Bancorp MHC of NC 21.1 70.7 5.9 67.4 12.4 - 18.9 - 18.9
<CAPTION>
Balance Sheet Annual Growth Rates
------------------------------------------------------------------------
Cash & Loans Borrows. Net Tang. Net
Assets Investments & MBS Deposits & Subdebt Worth Worth
------ ----------- ----- -------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Oswego County Savings Bank
March 31, 1999 1.36 21.85 (6.98) (0.30) - 4.63 4.63
All Public Companies 14.24 12.04 12.68 10.48 10.84 1.29 0.16
State of NY 19.00 10.75 21.24 8.89 14.52 1.42 (0.43)
Comparable Group Average 14.29 30.17 8.69 7.43 2.49 4.35 3.07
Comparable Group
Florida Companies
FFFL Fidelity Bancshares MHC of FL (1) 43.30 N.M. 19.63 31.16 N.M. 6.41 4.18
Mid-Atlantic Companies
ALLB Alliance Bank MHC of PA 8.25 13.67 5.36 5.21 47.91 2.08 2.08
SBFL Finger Lakes Fin. MHC of NY 14.00 42.96 2.11 8.52 48.25 1.31 1.31
HARS Harris Fin. MHC of PA 13.41 9.33 16.99 5.16 25.21 5.68 15.06
LFED Leeds Fed. Bksr. MHC of MD 7.73 19.49 2.73 8.55 (12.00) 3.37 3.37
NBCP Niagara Bancorp of NY MHC (1) 21.63 52.03 6.71 0.25 N.M. N.M. N.M.
NWSB Northwest Bancorp MHC of PA (1) 28.49 24.12 28.58 22.84 N.M. 9.06 1.97
PHSB PHS Bancorp MHC of PA 12.18 37.51 6.46 3.92 N.M. 2.01 2.01
PBHC Pathfinder BC MHC of NY 3.37 3.11 2.94 5.13 0.10 (5.50) (4.91)
PLSK Pulaski SB, MHC of NJ 9.94 60.40 2.32 14.08 (91.93) 5.15 5.15
SKBO Skibo Fin. Corp. MHC of PA 4.44 55.59 (3.69) 0.15 15.47 0.79 0.79
Midwest Companies
JXSB Jacksonville SB, MHC of IL 0.74 14.03 (1.42) 0.48 (47.91) 3.94 3.94
WAYN Wayne Savings Bank MHC of OH 5.06 (4.81) 5.98 6.51 (14.29) 3.29 3.29
WCFB Webster City FSB MHC of IA (1) (1.00) 6.44 (3.62) (3.95) N.M. 3.29 3.29
New England Companies
BRKL Brookline Bancorp MHC of MA (1) 22.94 52.97 10.75 (2.70) 27.89 N.M. N.M.
PBCT Peoples Bank, MHC of CT 21.20 2.28 29.04 19.23 28.70 20.06 1.40
Southeast Companies
GBNK Gaston Fed. Bancorp MHC of NC 27.26 93.64 16.93 1.77 N.M. N.M. N.M.
</TABLE>
Regulatory Capital
-----------------------
Reg.
Tangible Core Cap.
-------- ---- ----
Oswego County Savings Bank
March 31, 1999 10.60 10.60 16.70
All Public Companies 11.14 11.18 21.93
State of NY 11.90 12.07 24.53
Comparable Group Average 12.12 12.41 24.42
Comparable Group
Florida Companies
FFFL Fidelity Bancshares MHC of FL (1) 7.60 7.60 15.00
Mid-Atlantic Companies
ALLB Alliance Bank MHC of PA N.M. 10.69 25.22
SBFL Finger Lakes Fin. MHC of NY 7.55 7.55 17.04
HARS Harris Fin. MHC of PA 6.67 6.67 12.02
LFED Leeds Fed. Bksr. MHC of MD 15.32 15.32 32.31
NBCP Niagara Bancorp of NY MHC (1) 18.53 18.53 33.73
NWSB Northwest Bancorp MHC of PA (1) N.M. 6.45 12.55
PHSB PHS Bancorp MHC of PA 11.31 11.31 27.46
PBHC Pathfinder BC MHC of NY 9.00 9.00 14.96
PLSK Pulaski SB, MHC of NJ 11.41 11.41 25.86
SKBO Skibo Fin. Corp. MHC of PA 15.68 15.68 49.76
Midwest Companies
JXSB Jacksonville SB, MHC of IL N.M. 10.50 15.56
WAYN Wayne Savings Bank MHC of OH 8.60 8.60 16.10
WCFB Webster City FSB MHC of IA (1) 24.60 24.60 53.30
New England Companies
BRKL Brookline Bancorp MHC of MA (1) N.M. 25.86 N.M.
PBCT Peoples Bank, MHC of CT 6.50 6.50 9.90
Southeast Companies
GBNK Gaston Fed. Bancorp MHC of NC 14.74 14.74 29.89
(1) Financial information is for the quarter ending September 30, 1998.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
<TABLE>
<CAPTION>
Table 3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1998
Net Interest Income Other Income
----------------------------------- ----------------------
Loss NII
Net Provis. After Loan R.E. Other
Income Income Expense NII on IEA Provis. Fees Oper. Income
------ ------ ------- --- ------ ------- ---- ----- ------
Oswego County Savings Bank
March 31, 1999 0.33 7.09 2.98 4.11 0.11 4.00 - - 0.42
All Public Companies 0.86 7.29 4.03 3.26 0.13 3.13 0.10 0.01 0.35
State of NY 0.62 7.02 3.59 3.42 0.14 3.28 0.09 - 0.29
Comparable Group Average 0.84 7.05 3.92 3.13 0.12 3.01 0.15 0.00 0.29
Comparable Group
Florida Companies
FFFL Fidelity Bancshares MHC of FL (1) 0.61 7.07 4.53 2.54 - 2.54 0.04 0.01 0.38
Mid-Atlantic Companies
ALLB Alliance Bank MHC of PA 0.74 7.13 3.86 3.27 0.07 3.21 - 0.06 0.23
SBFL Finger Lakes Fin. MHC of NY 0.28 7.09 4.26 2.83 0.09 2.74 0.05 (0.01) 0.25
HARS Harris Fin. MHC of PA 0.82 7.01 4.58 2.43 0.11 2.32 0.01 0.02 0.22
LFED Leeds Fed. Bksr. MHC of MD (3) 1.09 6.56 4.12 2.44 - 2.44 - - 0.13
NBCP Niagara Bancorp of NY MHC (1) 0.69 6.89 3.65 3.25 0.12 3.12 0.15 - 0.47
NWSB Northwest Bancorp MHC of PA (1) 0.81 7.48 4.17 3.31 0.17 3.14 0.15 - 0.16
PHSB PHS Bancorp MHC of PA 0.65 7.01 3.71 3.30 0.16 3.14 - - 0.33
PBHC Pathfinder BC MHC of NY 0.61 7.13 3.53 3.59 0.19 3.40 0.03 - 0.46
PLSK Pulaski SB, MHC of NJ 0.54 7.06 4.09 2.96 0.06 2.90 0.08 - 0.02
SKBO Skibo Fin. Corp. MHC of PA 0.52 6.66 4.05 2.62 0.02 2.59 0.02 (0.01) 0.03
Midwest Companies
JXSB Jacksonville SB, MHC of IL 0.64 7.59 4.23 3.37 0.33 3.04 0.16 - 0.39
WAYN Wayne Savings Bank MHC of OH 0.67 7.44 4.31 3.13 0.02 3.11 - - 0.26
WCFB Webster City FSB MHC of IA (1) 1.39 7.02 3.53 3.49 - 3.49 - - 0.22
New England Companies
BRKL Brookline Bancorp MHC of MA (1) 2.26 7.64 3.35 4.29 0.01 4.27 - 0.02 0.15
PBCT Peoples Bank, MHC of CT 1.00 6.45 3.33 3.12 0.50 2.63 1.77 (0.02) 0.88
Southeast Companies
GBNK Gaston Fed. Bancorp MHC of NC 0.93 6.55 3.32 3.23 0.11 3.12 0.05 - 0.32
<CAPTION>
G&A/Other Exp. Non-Op. Items Yields, Costs and Spreads
------------------- ----------------- --------------------------------
Total
Other G&A Goodwill Net Extraord. Yield Cost Yield-Cost
Income Expense Amort. Gains Items on Assets of Funds Spread
------ ------- ------ ----- ----- --------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oswego County Savings Bank
March 31, 1999 0.42 3.80 - (0.14) - 7.64 3.91 3.73
All Public Companies 0.46 2.31 0.03 0.07 - 7.18 4.49 2.69
State of NY 0.37 2.29 0.05 (0.06) - 6.17 3.66 2.51
Comparable Group Average 0.44 2.21 0.03 0.09 - 6.92 4.32 2.60
Comparable Group
Florida Companies
FFFL Fidelity Bancshares MHC of FL (1) 0.42 2.10 0.04 0.13 - 7.34 5.03 2.31
Mid-Atlantic Companies
ALLB Alliance Bank MHC of PA 0.28 2.36 - - - 7.35 4.34 3.00
SBFL Finger Lakes Fin. MHC of NY 0.29 2.49 - (0.09) - 7.35 4.70 2.66
HARS Harris Fin. MHC of PA 0.25 1.74 0.11 0.41 - 7.26 5.06 2.21
LFED Leeds Fed. Bksr. MHC of MD (3) 0.13 0.87 - - - - - -
NBCP Niagara Bancorp of NY MHC (1) 0.62 2.18 - (0.51) - 7.19 4.36 2.82
NWSB Northwest Bancorp MHC of PA (1) 0.31 2.07 0.10 0.04 - 7.76 4.61 3.15
PHSB PHS Bancorp MHC of PA 0.33 2.72 - 0.06 - 7.23 4.28 2.95
PBHC Pathfinder BC MHC of NY 0.49 2.98 0.16 0.12 - 7.71 4.05 3.66
PLSK Pulaski SB, MHC of NJ 0.10 2.10 - (0.03) 7.27 4.67 2.59
SKBO Skibo Fin. Corp. MHC of PA 0.04 1.83 - (0.07) - 6.89 4.98 1.91
Midwest Companies
JXSB Jacksonville SB, MHC of IL 0.55 2.95 - 0.39 - 7.93 4.84 3.09
WAYN Wayne Savings Bank MHC of OH 0.26 2.47 - 0.12 - 7.75 4.80 2.95
WCFB Webster City FSB MHC of IA (1) 0.22 1.46 - - - 7.14 4.73 2.41
New England Companies
BRKL Brookline Bancorp MHC of MA (1) 0.17 1.13 - 0.21 - 7.74 4.77 2.97
PBCT Peoples Bank, MHC of CT 2.63 3.99 0.11 0.72 - 6.98 3.71 3.28
Southeast Companies
GBNK Gaston Fed. Bancorp MHC of NC 0.37 2.16 - 0.09 - 6.69 4.53 2.16
</TABLE>
MEMO: MEMO:
Assets/ Effective
FTE Emp. Tax Rate
-------- --------
Oswego County Savings Bank
March 31, 1999 2,408 33.08
All Public Companies 4,247 36.67
State of NY 4,663 36.02
Comparable Group Average 4,544 36.16
Comparable Group
Florida Companies
FFFL Fidelity Bancshares MHC of FL (1) 3,964 42.60
Mid-Atlantic Companies
ALLB Alliance Bank MHC of PA 3,759 33.97
SBFL Finger Lakes Fin. MHC of NY 3,103 39.26
HARS Harris Fin. MHC of PA 4,581 27.54
LFED Leeds Fed. Bksr. MHC of MD (3) 12,074 N.M.
NBCP Niagara Bancorp of NY MHC (1) 3,669 34.03
NWSB Northwest Bancorp MHC of PA (1) 3,087 38.21
PHSB PHS Bancorp MHC of PA 2,908 20.70
PBHC Pathfinder BC MHC of NY 2,825 29.01
PLSK Pulaski SB, MHC of NJ 4,162 37.74
SKBO Skibo Fin. Corp. MHC of PA 7,897 48.35
Midwest Companies
JXSB Jacksonville SB, MHC of IL 2,040 37.45
WAYN Wayne Savings Bank MHC of OH 2,945 34.00
WCFB Webster City FSB MHC of IA (1) 4,484 37.91
New England Companies
BRKL Brookline Bancorp MHC of MA (1) 9,114 35.84
PBCT Peoples Bank, MHC of CT 2,826 47.12
Southeast Companies
GBNK Gaston Fed. Bancorp MHC of NC 3,809 34.79
(1) Financial information is for the quarter ending September 30, 1998.
(3) Income and expense information has been annualized from available financial
information.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
Board of Trustees
April 16, 1999
Page 8
Table 3 displays updated operating results for the Bank and
the Peer Group, based on their respective earnings for the most recent twelve
months. While the Bank's earnings reflect improvement, earnings remain below the
Peer Group average, primarily owing to the Bank's comparatively higher operating
expenses. The Bank continued to maintain an advantage relative to the Peer Group
in the area of net interest income, with updated ratios of 4.11 percent and 3.13
percent, respectively. The Bank's ratio of net interest income to average assets
can be expected to improve following the mutual holding company reorganization
and minority stock offering as the proceeds are reinvested into interest-earning
assets.
Non-interest income generated by the Bank fell short of the
Peer Group average (0.42 percent of assets for the Bank versus 0.44 percent of
assets for the Peer Group). Although the Bank's operating expenses remain above
the Peer Group average, OCSB's expense levels have nonetheless improved based on
updated financial information (operating expenses were 3.80 percent of average
assets for the Bank versus 2.21 percent for the Peer Group). As discussed in the
Original Appraisal and subsequent updates, the reasons for the higher operating
expenses are related, in part, to the relatively high number of employees in
comparison to total assets ($2.4 million of assets per employee for the Bank
versus an average of $4.5 million for the Peer Group). Additionally, the Bank's
deposit structure, which provides it with a relatively low cost of funds, is
somewhat more costly to service (i.e., transaction and passbook savings accounts
are more costly to process and service than are higher costing CDs and
borrowings). Last, the Bank has been incurring expenses related to the merger
and to resolve asset quality problems; such expenses may likely diminish or be
eliminated in the future.
Loan loss provisions remained unchanged for OCSB such that the
level reported over the most recent twelve month period approximated the Peer
Group average.
3. Stock Market Conditions
Since the date of the Second Update, the performance of the
overall stock market has been largely bullish, with a moderate trading range
established in the early Spring giving way to a significant rally both in the
Dow Jones Industrial Average ("DJIA") and in the technology sector. On April 16,
1999, the DJIA closed at 10494, an increase of 7.8 percent since the date of the
Second Update of 9736. Since the date of the Second Update, the market for
thrift issues has generally underperformed the overall stock market. A continued
flattening of the yield curve and the possibility that the economic turmoil in
foreign markets would translate into a slow down in domestic lending were noted
as reasons for the unloading of financial stocks. The market for financial
stocks, and MHC issues in particular, has remained lackluster particularly in
comparison to the broader market indices. On April 16, 1999, the SNL index had
closed down 0.1 percent since the Second Update (from 721.2 to 720.3 as of April
16th) and, certainly more relevant to the Bank's offering, the MHC index closed
down 1.7 percent since the date of the Second Update (from 794.7 to 781.3 as of
April 16th).
As shown in Table 4 below, consistent with the SNL index, the
pricing measures for all publicly-traded thrifts showed a moderate reduction
since the date of the Second Update, with pricing ratios indicating a slight
decline. Consistent with the SNL MHC index, the Peer Group's pricing measures
(fully converted basis) decreased more significantly since the date of
<PAGE>
Board of Trustees
April 16, 1999
Page 9
the Second Update in an amount generally in excess of the industry overall. This
change is indicative of the continued weakened market for thrifts and MHCs. As
in the Second Update, the Peer Group pricing ratios were evaluated on a fully
converted basis, including the potential dilution impact of the FDIC/OTS
policies regarding waived dividends and assets held at the MHC level solely for
the benefit of mutual members. The fully converted pricing ratios place all
public MHCs on a comparable basis, and have become the industry standard for
evaluating MHC pricing as adopted by major investment banking company research
analysts. As in the Second Update, the Peer Group pricing ratios (fully
converted basis) reflected a lower P/B ratio and a higher core P/E multiple
relative to the comparative averages for all publicly-traded SAIF-insured
thrifts.
Table 4
Oswego County Savings Bank
Average Pricing Characteristics
<TABLE>
<CAPTION>
March 5, April 16, %
1999 1999 Change
---- ---- ------
<S> <C> <C> <C>
Peer Group (fully converted)
Price/earnings (x) 17.47x 17.21x (1.5)%
Price/core earnings (x) 19.31 18.25 (5.5)
Price/book (%) 83.32% 79.37% (4.7)
Price/assets (%) 17.98 16.71 (7.1)
All Public Companies
Price/earnings (x) 16.18x 15.78x (2.5)%
Price/core earnings (x) 17.17 16.66 (3.0)
Price/book (%) 120.63% 115.97% (3.9)
Price/assets (%) 14.83 14.22 (4.1)
Recently Converted MHCs (fully converted) (1)
Price/core earnings (x) 16.07x 14.12x (12.1)%
Price/book (%) 66.46% 60.77% (8.5)
Recent Full Conversions (1)
Price/core earnings (x) 18.41x 16.67x (9.5)%
Price/book (%) 76.96% 68.00% (11.6)
</TABLE>
(1) Ratios based on offerings completed for prior three months.
The new issue market is separate and distinct from the market
for seasoned issues like the Peer Group companies. Accordingly, as discussed in
the Original Appraisal and subsequent updates, RP Financial has considered the
pro forma pricing and trading level of recently converted companies in the
Update. Since the date of the Second Update, market interest for converting
thrifts has remained weak. Unlike past conversion markets where most offerings
were significantly oversubscribed, the most recent conversion activity indicates
that
<PAGE>
Board of Trustees
April 16, 1999
Page 10
most issues have closed within their offering ranges -- in the aftermarket
trading either flat or below their IPO prices. Even those few institutions that
oversubscribed in the offering phase have not realized significant aftermarket
price appreciation. The average one month change for standard conversion
offerings and mutual holding companies completed during the latest three months
equaled negative 4.9 percent and negative 5.8 percent, respectively (see Table
5). The current trading prices of recently completed conversions and MHCs (fully
converted basis) indicates that new issues continue to trade at a substantial
discount to the market overall, as recently completed conversions and MHCs trade
at average P/B ratios of 68.00% and 62.48% (fully converted), respectively,
versus an average P/B ratio of 115.97% for the universe of all publicly traded
institutions (see Table 6).
During calendar 1999, there have been five mutual holding
company offerings that have been completed involving companies which were
subsequently publicly traded. The companies, their IPO prices, and their current
trading characteristics including fully converted pricing ratios are shown in
Table 7 below. Three of the five companies are trading below their initial
offering prices (including the three most recent transactions). Of particular
relevance to the Bank's valuation is the pricing and aftermarket trading of
Gouverneur Bancorp which also based in upstate New York. The final pricing of
Gouverner reflected a pro forma P/B ratio of 56.1 percent (full conversion
basis); the stock traded relatively flat initially but the issue is currently
trading below the IPO price. Similarly, two other recently converted MHCs
(Capitol Federal and Florida First Bancorp) are trading below their IPO prices.
This information, particularly the current pricing ratios and the weak
aftermarket trading of the recent MHCs, suggests continued weakness in IPO
market as it pertains to MHC institutions.
Table 7
Oswego County Savings Bank
Recent MHC Offerings
<TABLE>
<CAPTION>
At April 16, 1999
-------------------------------------
IPO Share Pct
Mutual Holding Company Date Price Change P/B(1) P/E(1)
- ---------------------- ---- ----- ------ ----- ------
($) (%) (%) (x)
<S> <C> <C> <C> <C> <C>
Florida First Bancorp, FL 04/07/99 $9.50 (5%) 67.9% 17.0x
Capitol Financial, KS 04/01/99 $9.50 (5%) 61.2% 12.2x
Gouverneur Bancorp, NY 03/24/99 $4.63 (7%) 53.1% 13.2x
Provident Bancorp, NY 01/08/99 $10.25 3% 68.8% 14.1x
Ridgewood Financial, NJ 01/08/99 $7.63 9% 65.1% 15.9x
Averages (1%) 63.2% 14.5x
</TABLE>
(1) Reflects fully-converted pricing ratios on a pro forma basis.
<PAGE>
RP Financial, LC.
<TABLE>
<CAPTION>
Table 5
Pricing Characteristics and After-Market Trends
Recent Conversions Completed (Last Three Months)
Institutional Information Pre-Conversion Data
-------------------------------- Offering Information
Financial Info. Asset Quality
--------------- -------------
Conversion Equity/ NPAs/ Res. Gross % % of Exp./
Institution State Date Ticker Assets Assets Assets Cov. Proc. Offered Mid. Proc.
- ----------- ----- ---- ------ ------ ------ ------ ---- ----- ------- ---- -----
($MIL) (%) (%) (%) ($MIL.) (%) (%) (%)
Standard Conversions
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First Bancorp of Indiana IN 04/07/99 FBEI $ 112 13.52% 0.04% 581% $ 22.7 100% 120% 3.3%
PFSB Bancorp, Inc. MO* 04/01/99 Pink 61 9.97% 0.23% 183% 5.6 100% 86% 9.6%
Troy Financial Corp. NY 03/31/99 TRYF 717 9.91% 1.89% 71% 117.3 100% 132% 2.2%
Woronoco Bancorp, Inc. MA 03/19/99 WRO 369 9.30% 0.41% 177% 55.5 100% 132% 2.7%
South Jersey Financial Corp. NJ 02/12/99 SJFC 261 10.09% 0.14% 227% 35.1 100% 115% 3.6%
Averages - Standard Conversions: 304 10.56% 0.54% 248% $ 47.3 100% 117% 4.3%
Medians - Standard Conversions: 261 9.97% 0.23% 183% $ 35.1 100% 120% 3.3%
Second Step Conversions
First Federal Bankshares, Inc. IA* 04/14/99 FFSX $ 684 6.69% 0.37% N.M. $ 26.4 N.A. 85% 5.0%
Averages - Standard Conversions: $ 684 6.69% 0.37% N.M. $ 26.4 N.A. 85% 5.0%
Medians - Standard Conversions: $ 684 6.69% 0.37% N.M. $ 26.4 N.A. 85% 5.0%
Mutual Holding Companies(6)
FloridaFirst Bancorp MHC FL 04/07/99 FFBK $ 430 8.51% 0.29% 262% $ 27.0 47.0% 132% 4.7%
Capitol Federal Financial KS* 04/01/99 CFFN 5,365 12.49% 0.14% 72% 378.1 43.0% 100% 1.6%
Gouverneur Bancorp MHC NY 03/24/99 GOUV 59 19.33% 133.33% 72% 5.4 45.0% 86% 11.7%
Averages - Mutual Holding Companies: $1,952 13.44% 44.59% 135% $136.8 45.0% 106% 6.0%
Medians - Mutual Holding Companies: $ 430 12.49% 0.29% 72% $ 27.0 45.0% 100% 4.7%
Averages - All Conversions: $ 895 11.09% 15.20% 206% $ 74.8 N.A. 110% 4.9%
Medians - All Conversions: $ 369 9.97% 0.29% 180% $ 27.0 N.A. 115% 3.6%
<CAPTION>
Institutional Information Contribution to Insider Purchases
Charitable Found.
-----------------
Benefit Plans
------------- Initial
Conversion % of Recog. Mgmt.& Dividend
Institution State Date Ticker Form Offering ESOP Plans Dirs. Yield
- ----------- ----- ---- ------ ---- -------- ---- ----- ----- -----
(%) (%) (%) (%)(2) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
First Bancorp of Indiana IN 04/07/99 FBEI N.A. N.A. 8.0% 4.0% 4.3% 0.00%
PFSB Bancorp, Inc. MO* 04/01/99 Pink N.A. N.A. 8.0% 4.0% 18.5% 0.00%
Troy Financial Corp. NY 03/31/99 TRYF Stock 3.48% 8.0% 4.0% 0.9% 0.00%
Woronoco Bancorp, Inc. MA 03/19/99 WRO Stock 8.00% 8.0% 4.0% 1.0% 0.00%
South Jersey Financial Corp. NJ 02/12/99 SJFC Stock 8.00% 8.0% 4.0% 1.2% 0.00%
Averages - Standard Conversions: N.A. N.A. 8.0% 4.0% 5.2% 0.00%
Medians - Standard Conversions: N.A. N.A. 8.0% 4.0% 1.2% 0.00%
Second Step Conversions
First Federal Bankshares, Inc. IA* 04/14/99 FFSX N.A. N.A. 7.0% 3.0% 2.9% 2.91%
Averages - Standard Conversions: N.A. N.A. 7.0% 3.0% 2.9% 2.91%
Medians - Standard Conversions: N.A. N.A. 7.0% 3.0% 2.9% 2.91%
Mutual Holding Companies(6)
FloridaFirst Bancorp MHC FL 04/07/99 FFBK N.A. N.A. 8.0% 4.0% 4.7% 0.00%
Capitol Federal Financial KS* 04/01/99 CFFN Csh/Stk 8.00% 8.0% 4.0% 0.9% 4.00%
Gouverneur Bancorp MHC NY 03/24/99 GOUV N.A. N.A. 8.0% 4.0% 4.3% 4.00%
Averages - Mutual Holding Companies: N.A. N.A. 8.0% 4.0% 3.3% 2.67%
Medians - Mutual Holding Companies: N.A. N.A. 8.0% 4.0% 4.3% 4.00%
Averages - All Conversions: N.A. N.A. 7.9% 3.9% 4.3% 1.21%
Medians - All Conversions: N.A. N.A. 8.0% 4.0% 2.9% 0.00%
<CAPTION>
Institutional Information Pro Forma Data
----------------------------------------------
Pricing Ratios(3) Financial Charac.
------------------- -------------------
Conversion Core IPO
Institution State Date Ticker P/TB P/E P/A ROA TE/A ROE Price
- ----------- ----- ---- ------ ---- --- --- --- ---- --- -----
(%) (X) (%) (%) (%) (%) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
First Bancorp of Indiana IN 04/07/99 FBEI 66.0% 26.8x 17.3% 0.6% 26.2% 2.5% $10.00
PFSB Bancorp, Inc. MO* 04/01/99 Pink 53.3% 15.3 8.5% 0.6% 16.0% 3.5% 10.00
Troy Financial Corp. NY 03/31/99 TRYF 70.9% 36.2 14.9% 0.4% 20.9% 2.0% 10.00
Woronoco Bancorp, Inc. MA 03/19/99 WRO 72.5% 16.7 14.4% 0.9% 19.9% 4.3% 10.00
South Jersey Financial Corp. NJ 02/12/99 SJFC 66.9% 12.8 13.0% 1.0% 19.5% 5.2% 10.00
Averages - Standard Conversions: 65.9% 21.6x 13.6% 0.7% 20.5% 3.5% $10.00
Medians - Standard Conversions: 66.9% 16.7x 14.4% 0.6% 19.9% 3.5% $10.00
Second Step Conversions
First Federal Bankshares, Inc. IA* 04/14/99 FFSX 102.9% 12.8x 6.8% 0.5% 6.6% 8.1% $10.00
Averages - Standard Conversions: 102.9% 12.8x 6.8% 0.5% 6.6% 8.1% $10.00
Medians - Standard Conversions: 102.9% 12.8x 6.8% 0.5% 6.6% 8.1% $10.00
Mutual Holding Companies(6)
FloridaFirst Bancorp MHC FL 04/07/99 FFBK 67.3% 17.7x 12.0% 0.5% 12.3% 4.5% $10.00
Capitol Federal Financial KS* 04/01/99 CFFN 65.2% 14.3 15.3% 1.0% 17.5% 5.9% 10.00
Gouverneur Bancorp MHC NY 03/24/99 GOUV 56.1% 15.5 17.3% 0.6% 26.2% 2.5% 5.00
Averages - Mutual Holding Companies: 62.9% 15.8x 14.9% 0.7% 18.6% 4.3% $8.33
Medians - Mutual Holding Companies: 65.2% 15.5x 15.3% 0.6% 17.5% 4.5% $10.00
Averages - All Conversions: 69.0% 18.7x 13.3% 0.7% 18.3% 4.3% $9.44
Medians - All Conversions: 66.9% 15.5x 14.4% 0.6% 19.5% 4.3% $10.00
<CAPTION>
Institutional Information Post-IPO Pricing Trends
------------------------------------------------------------
Closing Price:
------------------------------------------------------------
First After After
Conversion Trading % First % First %
Institution State Date Ticker Day Change Week(4) Change Month(5) Change
- ----------- ----- ---- ------ --- ------ ------- ------ -------- ------
($) (%) ($) (%) ($) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Standard Conversions
First Bancorp of Indiana IN 04/07/99 FBEI $9.19 -8.1% $9.06 -9.4% $9.06 -9.4%
PFSB Bancorp, Inc. MO* 04/01/99 Pink 10.00 0.0% 10.00 0.0% 8.50 -15.0%
Troy Financial Corp. NY 03/31/99 TRYF 10.00 0.0% 10.00 0.0% 9.81 -1.9%
Woronoco Bancorp, Inc. MA 03/19/99 WRO 9.56 -4.4% 9.69 -3.1% 9.00 -10.0%
South Jersey Financial Corp. NJ 02/12/99 SJFC 10.88 8.7% 10.75 7.5% 11.19 11.9%
Averages - Standard Conversions: $9.92 -0.8% $9.90 -1.0% $9.51 -4.9%
Medians - Standard Conversions: $10.00 0.0% $10.00 0.0% $9.06 -9.4%
Second Step Conversions
First Federal Bankshares, Inc. IA* 04/14/99 FFSX $9.69 -3.1% $10.00 0.0% $10.00 0.0%
Averages - Standard Conversions: $9.69 -3.1% $10.00 0.0% $10.00 0.0%
Medians - Standard Conversions: $9.69 -3.1% $10.00 0.0% $10.00 0.0%
Mutual Holding Companies(6)
FloridaFirst Bancorp MHC FL 04/07/99 FFBK $7.88 -21.3% $9.00 -10.0% $9.50 -5.0%
Capitol Federal Financial KS* 04/01/99 CFFN 9.72 -2.8% 9.72 -2.8% 9.50 -5.0%
Gouverneur Bancorp MHC NY 03/24/99 GOUV 5.06 1.3% 5.00 0.0% 4.63 -7.5%
Averages - Mutual Holding Companies: $7.55 -7.6% $7.91 -4.3% $7.88 -5.8%
Medians - Mutual Holding Companies: $7.88 -2.8% $9.00 -2.8% $9.50 -5.0%
Averages - All Conversions: $9.11 -3.3% $9.25 -2.0% $9.02 -4.7%
Medians - All Conversions: $9.69 -2.8% $9.72 0.0% $9.50 -5.0%
</TABLE>
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not
Applicable, Not Available.
(1) Non-OTS regulated thrift.
(2) As a percent of MHC offering for MHC transactions.
(3) Does not take into account the adoption of SOP 93-6.
(4) Latest price if offering is less than one week old. April 16, 1999
(5) Latest price if offering is more than one week but less than one month old.
(6) Mutual holding company pro forma data on full conversion basis.
(7) Simultaneously converted to commercial bank charter.
<PAGE>
Table 6
Market Pricing Comparatives
Prices As of April 16, 1999
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization -------------------
-------------------- Core Book
Price/ Market 12 Month Value/
Financial Institution Share(1) Value EPS(2) Share
- --------------------- -------- ----- ------ -----
($) ($MIL) ($) ($)
<S> <C> <C> <C> <C>
All Public Companies $14.83 $175.99 $0.90 $13.15
Recent Conversions(8) 7.81 56.83 0.56 14.43
Recent MHCs(9) 7.88 311.82 0.56 12.74
Recent Conversions(8)
FBEI First Bancorp of Indiana of IN 9.06 20.58 0.37 15.16
FFSXD First Federal Bankshares of IA 9.88 47.6 0.78 14.15
SJFC South Jersey Fin. Corp. of NJ 1.31 42.9 0.78 14.95
TRYF Troy Financial Corp. of NY 9.81 119.08 0.28 14.1
WRO Woronoco Bancorp, Inc. of MA 9 53.99 0.6 13.8
Recent MHCs(9)
CFFN Capitol Federal Financial of KS 9.5 869.47 0.78 15.51
FFBK FloridaFirst Bancorp MHC of FL 9.5 54.85 0.56 13.98
GOUV Gouverneur Bancorp MHC of NY 4.63 11.14 0.35 8.72
<CAPTION>
Dividends(4)
Pricing Ratios (3) ---------------------------
------------------------------------------------- Amount/ Payout
Financial Institution P/E P/B P/A P/TB P/Core Share Yield Ratio(5)
- --------------------- --- --- --- ---- ------ ----- ----- --------
(X) (%) (%) (%) (X) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
All Public Companies 15.78x 115.97% 14.22% 120.61% 16.66x $0.35 2.34% 33.02%
Recent Conversions(8) 16.15x 68.00% 12.93% 74.37% 16.67x 0.1 0.97% 12.31%
Recent MHCs(9) 14.12x 60.77% 14.58% 60.77% 14.12x - 0.00% 0.00%
Recent Conversions(8)
FBEI First Bancorp of Indiana of IN 24.49x 59.76% 15.63% 59.76% 24.49x - 0.00% 0.00%
FFSXD First Federal Bankshares of IA 10.62x 69.82% 6.74% 101.65% 12.67x 0.48 4.86% 61.54%
SJFC South Jersey Fin. Corp. of NJ 14.50x 75.65% 14.74% 75.65% 14.50x - 0.00% 0.00%
TRYF Troy Financial Corp. of NY N.M. 69.57% 14.57% 69.57% N.M. - 0.00% 0.00%
WRO Woronoco Bancorp, Inc. of MA 15.00x 65.22% 12.98% 65.22% 15.00x - 0.00% 0.00%
Recent MHCs(9)
CFFN Capitol Federal Financial of KS 12.18x 61.25% 14.21% 61.25% 12.18x - 0.00% 0.00%
FFBK FloridaFirst Bancorp MHC of FL 16.96x 67.95% 11.48% 67.95% 16.96x - 0.00% 0.00%
GOUV Gouverneur Bancorp MHC of NY 13.23x 53.10% 18.06% 53.10% 13.23x - 0.00% 0.00%
<CAPTION>
Financial Characteristics(6)
----------------------------------------------------------------
Reported Core
Total Equity/ NPAs/ ------------ -------------
Financial Institution Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------ ------ ------ --- --- --- ---
($MIL) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
All Public Companies $1,436 13.32% 0.61% 0.88% 7.64% 0.82% 7.12%
Recent Conversions(8) 473 19.23% 0.39% 0.72% 4.11% 0.70% 3.90%
Recent MHCs(9) 2,219 24.70% N.A. 1.07% 4.35% 1.07% 4.35%
Recent Conversions(8)
FBEI First Bancorp of Indiana of IN 132 26.15% N.A. 0.64% 2.44% 0.64% 2.44%
FFSXD First Federal Bankshares of IA 707 9.65% 0.46% 0.63% 6.57% 0.53% 5.51%
SJFC South Jersey Fin. Corp. of NJ 291 19.49% 0.25% 1.02% 5.22% 1.02% 5.22%
TRYF Troy Financial Corp. of NY 817 20.94% N.A. 0.42% 1.99% 0.42% 1.99%
WRO Woronoco Bancorp, Inc. of MA 416 19.90% 0.45% 0.87% 4.35% 0.87% 4.35%
Recent MHCs(9)
CFFN Capitol Federal Financial of KS 6,118 23.20% N.A. 1.17% 5.03% 1.17% 5.03%
FFBK FloridaFirst Bancorp MHC of FL 478 16.90% N.A. 0.68% 4.01% 0.68% 4.01%
GOUV Gouverneur Bancorp MHC of NY 62 34.01% N.A. 1.37% 4.01% 1.37% 4.01%
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax-effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/Core = Price to estimated core earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month earnings and average equity and assets balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
(8) Includes converted last three months (no MHCs); pro forma basis.
(9) Includes MHCs converted last 3 months; full conversion basis.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
Board of Trustees
April 16, 1999
Page 13
Summary of Adjustments
There were no material changes in the updated financial
conditions of the Bank and the Peer Group of public MHCs, and the differences
between the Bank's and the Peer Group remained the same as discussed in the
Second Update. The Bank strengthening earnings represents a trend which was
anticipated in the Second Update. The differences between the Bank's financial
condition and operations and those of the Peer Group remained unchanged from the
prior updated valuations. Thus, the valuation adjustments for profitability,
growth, and viability of earnings remain unchanged from those applied in the
Second Update. The factors concerning the valuation parameters of asset growth,
primary market area, dividends, liquidity of the shares, management and effect
of government regulation and regulatory reform did not change since the Second
Update date. Accordingly, those parameters were not discussed further in this
Update.
The general market for MHC stocks has declined as indicated by
the reduction in the SNL MHC Index and the Peer Group pricing ratios (fully
converted basis) since the date of the Second Update. Additionally, the recent
publicly traded MHCs have experienced weak aftermarket trading. After
considering these factors, we concluded that the "moderate downward" adjustment
for marketing of the issue as applied in the Second Update should be increased
to adequately capture current market conditions and a "sizeable downward"
adjustment was thus warranted for this factor.
Summary of Adjustments
As summarized below, we have made only one adjustment to the
valuation parameters considered in the Second Update.
<TABLE>
<CAPTION>
Previous Valuation Current Valuation
Key Valuation Parameters: Adjustment Adjustment
------------------------- ------------------ ------------------
<S> <C> <C>
Financial Condition Moderate Downward Same
Profitability, Growth & Viability
of Earnings Significant Downward Same
Asset Growth Moderate Downward Same
Primary Market Area No Adjustment Same
Dividends Moderate Downward Same
Liquidity of the Shares Slight Downward Same
Marketing of the Issue Moderate Downward Sizeable Downward
Management No Adjustment Same
Effect of Govt. Regulations &
Regulatory Reform No Adjustment Same
</TABLE>
<PAGE>
Board of Trustees
April 16, 1999
Page 14
Valuation Approaches
In applying the accepted valuation methodology promulgated by
the OTS, i.e., the pro forma market value approach, we considered the three key
pricing ratios in valuing the Bank's to-be-issued stock -- price/earnings
("P/E"), price/book ("P/B"), and price/assets ("P/A") approaches -- all
performed on a pro forma basis including the effects of the conversion proceeds.
In computing the pro forma impact of the conversion and the related pricing
ratios, the valuation parameters for effective tax rate, offering expenses and
stock benefit plan assumptions reflect the assumptions set forth in the
prospectus. In this regard, the assumption for stock purchased by the
Recognition Plan has been reduced from 4 percent to 3 percent. Additionally,
consistent with the prospectus, we have considered the after-tax impact of the
stock contribution equal to 4.0 percent of the shares sold in the offering to
the Charitable Foundation. The pro assumptions are summarized in Exhibits 3 and
4.
Based on the decrease in the market pricing of the Peer Group
and the market for thrift stocks in general, and the downgrading of one
valuation parameter, we have concluded that the pro forma market value of the
Bank's stock as a mutual holding company on a fully-converted basis, taking into
account the dilutive impact of the 4.0 percent contribution to the Charitable
Foundation, is equal to $10,250,000 at the midpoint, which reflects a 10.9
percent reduction from the $11,500,000 midpoint value reached in the Second
Update. Accordingly, RP Financial concluded that the pro forma value range of a
100 percent interest in the Bank's conversion stock ranged from $8,712,500 at
the minimum to $11,787,500 at the maximum and $13,555,630 at the supermaximum of
the revised valuation range. The total shares issued and aggregate market value
of the shares increases following the contribution of 4.0 percent of the shares
to a Charitable Foundation.
The Bank has adopted Statement of Position ("SOP" 93-6) which
will cause earnings per share computations to be based on shares issued and
outstanding excluding shares owned by an ESOP where there is not a commitment to
release such shares. For the purpose of preparing the pro forma pricing tables
and exhibits, we have reflected all shares issued in the offering including
shares purchased by the ESOP as outstanding to capture the full dilutive impact
of such stock to the Bank's shareholders. However, we have considered the impact
of the Bank's adoption of SOP 93-6 in the determination of the Bank's pro forma
value. The same methodology was applied in the Original Appraisal and subsequent
updates.
1. Price-to-Book ("P/B"). The application of the P/B valuation
method requires calculating the Bank's pro forma market value by applying a
valuation P/B ratio (fully converted basis) to the Bank's pro forma book value
(fully converted basis). In applying the P/B approach, we also considered
tangible book value (i.e., book value net of goodwill and other intangible
assets) because historically the market has not generally given credit to an
institution for intangible assets.
The updated valuation reflects a fully converted P/B and
tangible P/B equal to 52.40 percent at the midpoint. Relative to the Peer
Group's P/B and tangible P/B ratios (fully converted basis) of 79.37 percent and
80.81 percent, the indicated discounts are 34.0 percent and
<PAGE>
Board of Trustees
April 16, 1999
Page 15
35.2 percent which is slightly greater than the 33 percent discount applied in
the Second Update. RP Financial considered these discounts to be appropriate in
light of the downward adjustments indicated above and given the limited
applicability of the earnings approach in view of the Bank's current low
earnings levels.
2. Price-to-Earnings ("P/E"). The application of the P/E
valuation method requires calculating the Bank's pro forma market value by
applying a valuation P/E multiple (fully converted basis) to the pro forma
earnings base. Ideally, the pro forma earnings base is composed principally of
the Bank's recurring earnings base, that is, earnings adjusted to exclude any
one-time non-operating items, plus the estimated after-tax earnings benefit of
the reinvestment of net conversion proceeds. In the case of the Bank however,
the earnings approach is rendered less meaningful by a number of factors
including: (1) the Bank's current low earnings levels; and (2) the high level of
NPAs, and low reserve coverage (management has indicated however that loan loss
provisions are expected to be lower in the future). Based on the foregoing
considerations, we have de-emphasized the earnings approach in comparison to
institutions with more higher and more stable earnings streams.
Based on reported earnings for the twelve months ended March
31, 1999 of $357,000, the Bank's pro forma P/E multiple (fully converted basis)
at the $10,250,000 midpoint value was 21.05 times, which is at a premium of
22.31 percent relative to the Peer Group average (fully converted basis) of
17.21 times earnings.
3. Price-to-Assets ("P/A"). The P/A valuation methodology
determines market value by applying a valuation P/A ratio (fully converted
basis) to the Bank's pro forma asset base, conservatively assuming no deposit
withdrawals are made to fund stock purchases. In all likelihood there will be
deposit withdrawals, which results in understating the pro forma P/A ratio which
is computed herein. At the midpoint of the updated valuation range, the Bank's
full conversion value equaled 8.93 percent (fully converted basis) of pro forma
assets. Comparatively, the Peer Group companies exhibited an average P/A ratio
(fully converted basis) of 16.71 percent, which implies a 46.6 percent discount
being applied to the Bank's pro forma P/A ratio (fully converted basis).
Valuation Conclusion
Based on the foregoing, it is our opinion that, as of April
16, 1999, the pro forma market value range of a 100 percent ownership interest
in the Bank, taking into account the dilutive impact of the 4.0 percent stock
contribution to the Charitable Foundation, was $10,250,000. Accordingly, RP
Financial concluded that the pro forma value range of a 100 percent interest in
the Bank's conversion stock ranged from $8,712,500 at the minimum to $11,787,500
at the maximum and $13,555,630 at the supermaximum of the revised valuation
range. The total shares issued and the aggregate market value of the shares
increases following the contribution of 4.0 percent of the shares sold in the
offering to a Charitable Foundation as follows:
<PAGE>
Board of Trustees
April 16, 1999
Page 16
<TABLE>
<CAPTION>
Shares
--------------------------------------------------------------------
Foundation
Issued Sold Contributed and
Total to to to Offering Pricing Ratios
Shares MHC Public Foundation Shares P/B P/E
------ --- ------ ---------- ------ --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Shares(1)
Minimum 887,230 471,750 399,500 15,980 415,480
Midpoint 1,043,800 555,000 470,000 18,800 488,800
Maximum 1,200,370 638,250 540,500 21,620 562,120
Supermaximum 1,380,426 733,988 621,575 24,863 646,438
Distribution of Shares
Minimum 100.00% 53.17% 45.03% 1.80% 46.83%
Midpoint 100.00% 53.17% 45.03% 1.80% 46.83%
Maximum 100.00% 53.17% 45.03% 1.80% 46.83%
Supermaximum 100.00% 53.17% 45.03% 1.80% 46.83%
Aggregate Market Value(1)
Minimum $8,872,300 $4,717,500 $3,995,000 $159,800 $4,154,800 60.34% 21.89x
Midpoint 10,438,000 5,550,000 4,700,000 188,000 4,888,000 68.03% 25.04x
Maximum 12,003,700 6,382,500 5,405,000 216,200 5,621,200 75.12% 28.03x
Supermaximum 13,804,255 7,339,875 6,215,750 248,630 6,464,380 82.59% 31.27x
</TABLE>
(1) Based on offering price of $10.00 per share.
The pro forma valuation calculations relative to the Peer
Group (fully converted basis) are shown in Table 8 and are detailed in Exhibit 3
and Exhibit 4; the pro forma valuation calculations relative to the Peer Group
based on reported financials are shown in Table 9 and are detailed in Exhibits 5
and 6.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ William E. Pommerening
----------------------------
William E. Pommerening
Chief Executive Officer
/s/ James P. Hennessey
----------------------------
James P. Hennessey
Senior Vice President
<PAGE>
RP Financial, LC.
Table 8
Public Market Pricing (Fully Converted Basis)
Oswego County Savings Bank and the Comparables
As of April 16, 1999
<TABLE>
<CAPTION>
Fully Converted Per Share Data(8)
Implied Value ---------------------
------------------ Core Book Pricing Ratios(3)
Price/ Market 12 Month Value/ ------------------------------
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A
- --------------------- -------- ----- ------ ----- --- --- ---
($) ($Mil) ($) ($) (x) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
Oswego County Savings Bank
Superrange $10.00 $14.10 $0.39 $16.41 25.42x 60.93% 11.54%
Range Maximum 10.00 12.26 0.43 17.65 23.18x 56.64% 10.16%
Range Midpoint 10.00 10.66 0.48 19.08 21.05x 52.40% 8.93%
Range Minimum 10.00 9.06 0.53 21.02 18.72x 47.58% 7.67%
All Public Thrifts(7) 14.83 175.99 0.90 13.15 15.78x 115.97% 14.22%
- ---------------------
All Non-MHC State of NY(7)
Averages 19.30 525.22 0.95 15.81 15.92x 112.20% 16.60%
Medians - - - - 14.85x 100.89% 14.74%
Peer Group MHC Institutions, Full Conversion Basis
Averages 12.59 255.23 0.70 15.57 17.21x 79.37% 16.71%
Medians - - - - 16.53x 78.49% 14.87%
Peer Group MHC Institutions, Full Conversion Basis
ALLB Alliance Bank MHC of PA (19.9) 10.00 35.32 0.82 16.12 12.20x 62.03% 11.42%
BRKL Brookline Bncp. MHC of MA (47.0) 11.75 338.38 0.74 14.97 15.26x 78.49% 34.05%
FFFL Fidelity Bcsh. MHC of FL (47.9) 17.00 125.00 1.18 20.65 12.69x 82.32% 8.02%
SBFL Finger Lakes Fin. MHC of NY (33.1) 11.50 41.33 0.45 12.81 28.75x 89.77% 13.49%
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 12.00 53.87 0.60 14.82 19.05x 80.97% 21.92%
HARS Harris Fin. MHC of PA (24.9) 12.56 483.84 0.59 13.37 16.53x 93.94% 17.14%
JXSB Jacksonville SB, MHC of IL (45.6) 10.50 21.17 0.50 14.69 14.58x 71.48% 11.71%
LFED Leeds Fed. Bksr. MHC of MD (36.5) 11.75 64.17 0.81 15.79 14.51x 74.41% 18.33%
NBCP Niagara Bancorp of NY MHC (45.4) 10.25 306.05 0.60 13.59 22.78x 75.42% 19.42%
NWSB Northwest Bcrp. MHC of PA (30.5) 9.63 475.32 0.60 10.83 15.53x 88.92% 14.87%
PHSB PHS Bancorp MHC of PA (45.0) 10.63 30.81 0.67 15.77 15.41x 67.41% 11.81%
PBHC Pathfinder BC MHC of NY (46.0) 10.13 28.40 0.54 13.22 17.17x 76.63% 13.02%
PBCT Peoples Bank, MHC of CT (43.2) 29.13 2,215.39 1.12 27.19 17.24x 107.13% 19.90%
PLSK Pulaski SB, MHC of NJ (47.0) 8.88 19.39 0.62 14.66 14.80x 60.57% 9.28%
SKBO Skibo Fin. Corp. MHC of PA (45.0) 6.50 23.15 0.35 10.98 19.12x 59.20% 14.10%
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 17.00 43.16 0.84 17.60 18.48x 96.59% 15.00%
WCFB Webster City FSB MHC of IA (45.6) 14.75 34.09 0.80 17.56 18.44x 84.00% 30.53%
Dividends(4)
--------------------------------
------------------- Amount/ Payout Total Equity/
Financial Institution P/TB P/Core Share Yield Ratio(5) Assets Assets
- --------------------- ---- ------ ----- ----- -------- ------ ------
(%) (x) ($) (%) (%) ($Mil) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
Oswego County Savings Bank
Superrange 60.93% 23.24x - 0.00% 0.00% $122 18.93%
Range Maximum 56.64% 21.10x - 0.00% 0.00% 121 17.93%
Range Midpoint 52.40% 19.09x - 0.00% 0.00% 119 17.04%
Range Minimum 47.58% 16.90x - 0.00% 0.00% 188 16.12%
All Public Thrifts(7) 120.61% 16.66x 0.35 2.34% 33.02% 1,436 13.32%
- ---------------------
All Non-MHC State of NY(7)
Averages 117.17% 17.60x 0.42 1.94% 35.92% 3,273 14.74%
Medians 106.69% 16.88x - - - - -
Peer Group MHC Institutions, Full Conversion Basis
Averages 80.81% 18.25x 0.41 3.13% 45.57% 1,408 21.14%
Medians 80.97% 18.44x - - - - -
Peer Group MHC Institutions, Full Conversion Basis
ALLB Alliance Bank MHC of PA (19.9) 62.03% 12.20x 0.36 3.60% 43.90% 309 18.42%
BRKL Brookline Bncp. MHC of MA (47.0) 78.49% 15.88x 0.20 1.70% 27.03% 994 43.38%
FFFL Fidelity Bcsh. MHC of FL (47.9) 83.70% 14.41x 1.00 5.88% N.M. 1,559 9.74%
SBFL Finger Lakes Fin. MHC of NY (33.1) 89.77% 25.56x 0.24 2.09% 53.33% 306 15.02%
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 80.97% 20.00x 0.20 1.67% 33.33% 246 27.07%
HARS Harris Fin. MHC of PA (24.9) 95.01% 21.29x 0.24 1.91% 40.68% 2,823 18.25%
JXSB Jacksonville SB, MHC of IL (45.6) 71.48% 21.00x 0.30 2.86% 60.00% 181 16.39%
LFED Leeds Fed. Bksr. MHC of MD (36.5) 74.41% 14.51x 0.56 4.77% 69.14% 350 24.63%
NBCP Niagara Bancorp of NY MHC (45.4) 75.42% 17.08x 0.16 1.56% 26.67% 1,576 25.74%
NWSB Northwest Bcrp. MHC of PA (30.5) 95.92% 16.05x 0.16 1.66% 26.67% 3,197 16.72%
PHSB PHS Bancorp MHC of PA (45.0) 67.41% 15.87x 0.28 2.63% 41.79% 261 17.52%
PBHC Pathfinder BC MHC of NY (46.0) 84.14% 18.76x 0.24 2.37% 44.44% 218 16.99%
PBCT Peoples Bank, MHC of CT (43.2) 114.69% 26.01x 0.92 3.16% N.M. 11,135 18.57%
PLSK Pulaski SB, MHC of NJ (47.0) 60.57% 14.32x 0.32 3.60% 51.61% 209 15.32%
SKBO Skibo Fin. Corp. MHC of PA (45.0) 59.20% 18.57x 0.30 4.62% N.M. 164 23.81%
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 96.59% 20.24x 0.62 3.65% 73.81% 288 15.53%
WCFB Webster City FSB MHC of IA (45.6) 84.00% 18.44x 0.80 5.42% N.M. 112 36.35%
Financial Characteristics(6)
---------------------------------------------------
Reported Core
NPAs/ ------------------- --------------------
Financial Institution Assets ROA ROE ROA ROE
- --------------------- ------ --- --- --- ---
(%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C>
Oswego County Savings Bank
Superrange 0.63% 0.45% 2.40% 0.50% 2.62%
Range Maximum 0.63% 0.44% 2.44% 0.48% 2.68%
Range Midpoint 0.64% 0.42% 2.49% 0.47% 2.75%
Range Minimum 0.65% 0.41% 2.54% 0.45% 2.81%
All Public Thrifts(7) 0.61% 0.88% 7.64% 0.82% 7.12%
- ---------------------
All Non-MHC State of NY(7)
Averages 0.63% 0.75% 5.54% 0.86% 5.85%
Medians - - - - -
Peer Group MHC Institutions, Full Conversion Basis
Averages 0.52% 1.04% 4.92% 0.98% 4.61%
Medians - - - - -
Peer Group MHC Institutions, Full Conversion Basis
ALLB Alliance Bank MHC of PA (19.9) 0.56% 0.96% 5.10% 0.96% 5.10%
BRKL Brookline Bncp. MHC of MA (47.0) N.A. 2.38% 5.96% 2.29% 5.73%
FFFL Fidelity Bcsh. MHC of FL (47.9) 0.26% 0.72% 6.60% 0.63% 5.82%
SBFL Finger Lakes Fin. MHC of NY (33.1) 0.43% 0.50% 3.12% 0.56% 3.51%
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 0.21% 1.16% 4.84% 1.10% 4.61%
HARS Harris Fin. MHC of PA (24.9) 0.63% 1.10% 5.71% 0.85% 4.44%
JXSB Jacksonville SB, MHC of IL (45.6) 0.93% 0.81% 4.96% 0.56% 3.45%
LFED Leeds Fed. Bksr. MHC of MD (36.5) 0.80% 1.26% 5.13% 1.26% 5.13%
NBCP Niagara Bancorp of NY MHC (45.4) 0.26% 0.94% 4.11% 1.25% 5.48%
NWSB Northwest Bcrp. MHC of PA (30.5) 0.78% 1.07% 5.83% 1.03% 5.64%
PHSB PHS Bancorp MHC of PA (45.0) 0.22% 0.81% 4.40% 0.79% 4.28%
PBHC Pathfinder BC MHC of NY (46.0) 1.27% 0.78% 4.38% 0.71% 4.01%
PBCT Peoples Bank, MHC of CT (43.2) 0.50% 1.23% 6.30% 0.82% 4.18%
PLSK Pulaski SB, MHC of NJ (47.0) 0.53% 0.66% 4.17% 0.68% 4.31%
SKBO Skibo Fin. Corp. MHC of PA (45.0) 0.46% 0.75% 3.11% 0.78% 3.20%
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 0.42% 0.83% 5.27% 0.76% 4.81%
WCFB Webster City FSB MHC of IA (45.6) 0.04% 1.65% 4.60% 1.65% 4.60%
</TABLE>
(1) Current stock price of minority stock. Average of High/Low or Bid/Ask price
per share.
(2) EPS (estimate core basis) is based on reported trailing twelve month
data, adjusted to omit non-operating items (including the SAIF
assessment) on a tax-effected basis. Public MHC data reflects additional
earnings from reinvestment of proceeds of second step conversion.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/Core = Price to core earnings. Ratios are
pro forma assuming a second step conversion to full stock form.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings (earnings adjusted to reflect second step conversion).
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month earnings and average equity and assets balances. (7)
Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
(8) Figures estimated by RP Financial to reflect a second step conversion of
the MHC to full stock form.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained from
sources we believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Table 9
Public Market Pricing
Oswego County Savings Bank and the Comparables
As of April 16, 1999
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization ---------------------
---------------------- Core Book Pricing Ratios(3)
Price/ Market 12 Month Value/ ----------------------------------
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A
($) ($Mil) ($) ($) (x) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
Oswego County Savings Bank
Superrange $10.00 $13.80 $0.32 $12.11 31.27x 82.59% 11.92%
Range Maximum 10.00 12.00 0.36 13.31 28.03x 75.12% 10.43%
Range Midpoint 10.00 10.44 0.40 14.70 25.04x 68.03% 9.12%
Range Minimum 10.00 8.87 0.46 16.57 21.89x 60.34% 7.80%
All Public Thrifts(7) 14.83 175.99 0.90 13.15 15.78x 115.97% 14.22%
All Non-MHC State of NY(7)
Averages 19.30 525.22 0.95 15.81 15.92x 112.20% 16.60%
Medians - - - - 14.85x 100.89% 14.74%
Comparable Group Averages
Averages 12.59 91.65 0.52 9.27 20.99x 138.81% 17.66%
Medians - - - - 19.95x 124.45% 15.76%
Comparable Group
ALLB Alliance Bank MHC of PA (19.9) 10.00 6.50 0.62 9.09 16.13x 110.01% 11.61%
BRKL Brookline Bncp. MHC of MA (47.0) 11.75 160.68 0.58 9.65 19.26x 121.76% 40.05%
FFFL Fidelity Bcsh. MHC of FL (47.9) 17.00 55.42 1.00 13.42 14.53x 126.68% 7.72%
SBFL Finger Lakes Fin. MHC of NY (33.1) 11.50 13.57 0.25 6.15 N.M. 186.99% 14.54%
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 12.00 25.36 0.43 9.34 26.09x 128.48% 24.23%
HARS Harris Fin. MHC of PA (24.9) 12.56 106.03 0.38 5.63 22.04x 223.09% 16.90%
JXSB Jacksonville SB, MHC of IL (45.6) 10.50 9.12 0.34 9.53 18.42x 110.18% 11.83%
LFED Leeds Fed. Bksr. MHC of MD (36.5) 11.75 22.28 0.65 9.89 18.08x 118.81% 18.97%
NBCP Niagara Bancorp of NY MHC (45.4) 10.25 138.40 0.45 8.76 N.M. 117.01% 21.31%
NWSB Northwest Bcrp. MHC of PA (30.5) 9.63 139.04 0.42 4.79 21.89x 201.04% 15.78%
PHSB PHS Bancorp MHC of PA (45.0) 10.63 13.20 0.51 10.57 19.69x 100.57% 12.01%
PBHC Pathfinder BC MHC of NY (46.0) 10.13 11.99 0.38 8.14 23.02x 124.45% 13.64%
PBCT Peoples Bank, MHC of CT (43.2) 29.13 806.41 0.76 13.59 19.95x 214.35% 18.42%
PLSK Pulaski SB, MHC of NJ (47.0) 8.88 8.79 0.51 10.82 18.12x 82.07% 9.37%
SKBO Skibo Fin. Corp. MHC of PA (45.0) 6.50 6.73 0.24 7.22 29.55x 90.03% 14.93%
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 17.00 20.35 0.62 10.06 24.29x 168.99% 15.76%
WCFB Webster City FSB MHC of IA (45.6) 14.75 14.19 0.62 10.91 23.79x 135.20% 33.15%
Dividends(4) Financial Characteristics(6)
------------------------------- -----------------------------
------------------- Amount/ Payout Total Equity/ NPAs/
Financial Institution P/TB P/Core Share Yield Ratio(5) Assets Assets Assets
(%) (x) ($) (%) (%) ($Mil) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oswego County Savings Bank
Superrange 82.59% 27.97x - 0.00% 0.00% $116 14.44% 0.66%
Range Maximum 75.12% 24.99x - 0.00% 0.00% 115 13.89% 0.66%
Range Midpoint 68.03% 22.26x - 0.00% 0.00% 114 13.41% 0.67%
Range Minimum 60.34% 19.40x - 0.00% 0.00% 114 12.92% 0.67%
All Public Thrifts(7) 120.61% 16.66x 0.35 2.34% 33.02% 1,436 13.32% 0.61%
All Non-MHC State of NY(7)
Averages 117.17% 17.60x 0.42 1.94% 35.92% 3,273 14.74% 0.63%
Medians 106.69% 16.88x - - - - - -
Comparable Group Averages
Averages 145.53% 22.18x 0.41 3.13% 19.46% 1,265 13.52% 0.52%
Medians 128.48% 22.78x - - - - - -
Comparable Group
ALLB Alliance Bank MHC of PA (19.9) 110.01% 16.13x 0.36 3.60% 11.53% 282 10.56% 0.56%
BRKL Brookline Bncp. MHC of MA (47.0) 121.76% 20.26x 0.20 1.70% 16.50% 838 32.89% N.A.
FFFL Fidelity Bcsh. MHC of FL (47.9) 130.27% 17.00x 1.00 5.88% N.M. 1,498 6.09% 0.26%
SBFL Finger Lakes Fin. MHC of NY (33.1) 186.99% N.M. 0.24 2.09% N.M. 282 7.77% 0.43%
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 128.48% 27.91x 0.20 1.67% 22.03% 221 18.86% 0.21%
HARS Harris Fin. MHC of PA (24.9) 230.04% N.M. 0.24 1.91% 15.88% 2,497 7.57% 0.63%
JXSB Jacksonville SB, MHC of IL (45.6) 110.18% N.M. 0.30 2.86% N.M. 169 10.74% 0.93%
LFED Leeds Fed. Bksr. MHC of MD (36.5) 118.81% 18.08x 0.56 4.77% N.M. 314 15.96% 0.80%
NBCP Niagara Bancorp of NY MHC (45.4) 117.01% 22.78x 0.16 1.56% 16.13% 1,431 18.22% 0.26%
NWSB Northwest Bcrp. MHC of PA (30.5) 242.57% 22.93x 0.16 1.66% 11.62% 2,889 7.85% 0.78%
PHSB PHS Bancorp MHC of PA (45.0) 100.57% 20.84x 0.28 2.63% 24.71% 244 11.94% 0.22%
PBHC Pathfinder BC MHC of NY (46.0) 145.97% 26.66x 0.24 2.37% 27.31% 203 10.96% 1.27%
PBCT Peoples Bank, MHC of CT (43.2) 255.08% N.M. 0.92 3.16% N.M. 9,919 8.59% 0.50%
PLSK Pulaski SB, MHC of NJ (47.0) 82.07% 17.41x 0.32 3.60% 29.47% 200 11.42% 0.53%
SKBO Skibo Fin. Corp. MHC of PA (45.0) 90.03% 27.08x 0.30 4.62% N.M. 150 16.58% 0.46%
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 168.99% 27.42x 0.62 3.65% N.M. 268 9.32% 0.42%
WCFB Webster City FSB MHC of IA (45.6) 135.20% 23.79x 0.80 5.42% N.M. 94 24.52% 0.04%
Financial Characteristics(6)
-----------------------------------------
Reported Core
------------------- --------------------
Financial Institution ROA ROE ROA ROE
(%) (%) (%) (%)
<S> <C> <C> <C> <C>
Oswego County Savings Bank
Superrange 0.38% 2.64% 0.43% 2.95%
Range Maximum 0.37% 2.68% 0.42% 3.01%
Range Midpoint 0.36% 2.72% 0.41% 3.06%
Range Minimum 0.36% 2.76% 0.40% 3.11%
All Public Thrifts(7) 0.88% 7.64% 0.82% 7.12%
All Non-MHC State of NY(7)
Averages 0.75% 5.54% 0.86% 5.85%
Medians - - - -
Comparable Group Averages
Averages 0.84% 6.63% 0.78% 5.94%
Medians - - - -
Comparable Group
ALLB Alliance Bank MHC of PA (19.9) 0.74% 6.86% 0.74% 6.86%
BRKL Brookline Bncp. MHC of MA (47.0) 2.25% 8.05% 2.14% 7.65%
FFFL Fidelity Bcsh. MHC of FL (47.9) 0.61% 8.98% 0.52% 7.67%
SBFL Finger Lakes Fin. MHC of NY (33.1) 0.27% 3.25% 0.34% 4.07%
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 0.94% 6.12% 0.87% 5.72%
HARS Harris Fin. MHC of PA (24.9) 0.82% 10.27% 0.55% 6.85%
JXSB Jacksonville SB, MHC of IL (45.6) 0.65% 6.10% 0.38% 3.64%
LFED Leeds Fed. Bksr. MHC of MD (36.5) 1.05% 6.57% 1.05% 6.57%
NBCP Niagara Bancorp of NY MHC (45.4) 0.69% 4.92% 1.04% 7.38%
NWSB Northwest Bcrp. MHC of PA (30.5) 0.82% 9.59% 0.78% 9.15%
PHSB PHS Bancorp MHC of PA (45.0) 0.65% 5.16% 0.61% 4.88%
PBHC Pathfinder BC MHC of NY (46.0) 0.61% 5.24% 0.53% 4.53%
PBCT Peoples Bank, MHC of CT (43.2) 1.00% 11.11% 0.52% 5.78%
PLSK Pulaski SB, MHC of NJ (47.0) 0.54% 4.64% 0.56% 4.83%
SKBO Skibo Fin. Corp. MHC of PA (45.0) 0.52% 3.06% 0.57% 3.34%
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 0.67% 7.06% 0.59% 6.26%
WCFB Webster City FSB MHC of IA (45.6) 1.39% 5.77% 1.39% 5.77%
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax-effected basis, and is shown on a pro forma basis where appropriate.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/Core = Price to core earnings. Ratios are
pro forma assuming a second step conversion to full stock form.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity and
total assets balances.
(7) Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been obtained from
sources we believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
EXHIBITS
<PAGE>
LIST OF EXHIBITS
Exhibit
Number Description
- ------- -----------
1 Stock Prices: As of April 16, 1999
2 Calculation of Implied per Share Data for MHC on Fully Converted Basis
3 Pro Forma Analysis Sheet: Full Conversion Value
4 Pro Forma Effects: Full Conversion Value
5 Pro Forma Analysis Sheet: MHC Offering
6 Pro Forma Effects: MHC Offering
7 Firm Qualifications Statement
<PAGE>
EXHIBIT 1
Stock Prices
As of April 16, 1999
<PAGE>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
-----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1998(2)
--------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHC)
--------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(272) 14.89 8,623 169.2 21.52 12.90 14.71 1.33 -25.70 -4.77
NYSE Traded Companies(7) 28.08 54,594 1,629.2 40.35 21.09 27.80 7.65 -34.67 6.92
AMEX Traded Companies(23) 13.07 3,367 41.4 19.08 11.47 12.98 1.05 -28.57 -3.42
NASDAQ Listed OTC Companies(242) 14.65 7,692 136.0 21.17 12.78 14.46 1.16 -25.20 -5.26
California Companies(18) 19.53 22,403 651.8 27.72 15.24 19.09 7.87 -29.96 3.28
Florida Companies(7) 9.96 23,710 227.8 20.04 7.89 9.46 4.32 -41.73 3.65
Mid-Atlantic Companies(49) 14.72 12,319 205.5 21.55 12.60 14.58 0.78 -25.41 -4.73
Mid-West Companies(129) 14.44 5,978 115.2 20.64 12.93 14.43 -0.45 -25.49 -6.72
New England Companies(8) 15.78 7,851 192.4 22.39 12.51 14.93 3.90 -24.87 -2.44
North-West Companies(13) 16.25 10,330 193.8 23.18 14.21 15.87 2.27 -24.25 -4.98
South-East Companies(39) 14.60 3,714 58.9 21.05 12.80 14.40 1.64 -23.63 -5.35
South-West Companies(5) 19.49 8,525 292.7 26.83 14.54 18.16 11.84 -20.64 7.34
Western Companies (Excl CA)(4) 11.03 2,680 26.7 15.72 10.25 10.53 5.13 -24.99 -7.95
Thrift Strategy(235) 14.32 5,566 93.5 20.70 12.61 14.15 1.01 -25.28 -5.43
Mortgage Banker Strategy(21) 19.84 25,107 641.1 28.52 16.23 19.67 2.60 -27.74 -4.35
Real Estate Strategy(7) 16.13 8,429 104.7 24.47 13.47 16.06 0.93 -29.46 1.48
Diversified Strategy(7) 19.40 64,451 1,442.4 26.67 13.01 18.41 9.15 -28.53 8.55
Retail Banking Strategy(2) 12.88 1,281 16.5 21.63 11.69 13.25 -2.79 -38.67 -2.79
Companies Issuing Dividends(229) 15.42 8,191 171.4 22.15 13.38 15.24 1.49 -25.47 -5.15
Companies Without Dividends(43) 11.89 11,093 156.4 17.96 10.16 11.65 0.39 -27.20 -2.62
Equity/Assets < 6%(20) 16.56 25,386 461.2 24.83 12.94 16.21 1.43 -35.93 -4.15
Equity/Assets 6-12%(125) 16.20 8,726 220.3 23.49 13.78 16.00 1.80 -26.95 -4.66
Equity/Assets > 12%(127) 13.39 6,032 76.7 19.14 12.05 13.25 0.86 -23.15 -4.97
Converted Last 3 Mths (no MHC)(5) 9.81 5,804 56.8 15.93 9.49 7.91 0.73 -16.34 -13.05
Actively Traded Companies(26) 23.32 39,339 1,023.5 31.38 18.86 23.03 1.62 -24.49 -3.44
Market Value Below $20 Million(67) 11.29 1,298 13.2 16.66 10.28 11.43 -0.94 -26.82 -5.58
Holding Company Structure(241) 15.25 8,607 175.6 21.74 13.19 15.09 1.07 -25.45 -4.52
Assets Over $1 Billion(54) 19.55 30,147 670.5 27.63 15.22 18.90 4.79 -26.66 -3.01
Assets $500 Million-$1 Billion(41) 15.65 6,224 87.6 23.79 13.56 15.47 1.27 -25.51 -5.65
Assets $250-$500 Million(61) 14.59 3,940 51.5 20.74 12.96 14.45 1.59 -24.90 -3.34
Assets less than $250 Million(116) 12.63 1,702 20.4 18.35 11.57 12.63 -0.41 -25.74 -6.05
Goodwill Companies(108) 15.98 16,323 311.2 23.47 13.29 15.64 2.80 -27.85 -4.33
Non-Goodwill Companies(161) 14.27 3,583 77.7 20.46 12.71 14.19 0.37 -24.83 -5.17
Acquirors of FSLIC Cases(7) 30.09 47,778 1,645.7 40.04 24.16 30.33 0.71 -27.83 -0.28
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- -------
($) ($) ($) ($) ($)
Market Averages. SAIF-Insured Thrifts(no MHC)
---------------------------------------------
<S> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(272) 0.95 0.90 13.55 13.07 126.87
NYSE Traded Companies(7) 1.64 1.67 18.88 17.34 271.95
AMEX Traded Companies(23) 0.72 0.68 14.25 13.97 124.66
NASDAQ Listed OTC Companies(242) 0.95 0.90 13.32 12.86 122.60
California Companies(18) 1.25 1.04 15.76 15.16 225.21
Florida Companies(7) 0.35 0.32 8.87 8.37 93.49
Mid-Atlantic Companies(49) 0.94 0.93 13.11 12.54 139.88
Mid-West Companies(129) 0.89 0.86 13.67 13.28 113.24
New England Companies(8) 1.18 1.06 13.91 13.39 177.27
North-West Companies(13) 1.13 1.07 14.39 12.89 122.61
South-East Companies(39) 0.92 0.87 13.32 13.17 96.20
South-West Companies(5) 1.86 1.80 15.20 13.85 258.63
Western Companies (Excl CA)(4) 0.75 0.73 11.18 11.18 68.72
Thrift Strategy(235) 0.91 0.86 13.61 13.24 117.78
Mortgage Banker Strategy(21) 1.44 1.31 14.21 12.79 198.76
Real Estate Strategy(7) 1.05 0.97 12.00 11.62 170.20
Diversified Strategy(7) 0.54 0.63 10.87 9.54 175.31
Retail Banking Strategy(2) 4.18 3.32 17.27 15.93 208.73
Companies Issuing Dividends(229) 0.99 0.96 13.82 13.35 124.71
Companies Without Dividends(43) 0.71 0.59 12.03 11.49 139.20
Equity/Assets < 6%(20) 1.07 1.05 12.00 10.29 257.76
Equity/Assets 6-12%(125) 1.11 1.02 13.15 12.50 154.07
Equity/Assets > 12%(127) 0.78 0.77 14.16 14.04 81.32
Converted Last 3 Mths (no MHC)(5) 0.59 0.56 14.43 13.55 83.61
Actively Traded Companies(26) 1.52 1.57 15.33 13.95 200.76
Market Value Below $20 Million(67) 0.71 0.67 12.69 12.57 96.87
Holding Company Structure(241) 0.97 0.92 13.70 13.22 128.36
Assets Over $1 Billion(54) 1.19 1.17 13.73 12.42 193.50
Assets $500 Million-$1 Billion(41) 1.06 0.99 13.76 13.13 138.56
Assets $250-$500 Million(61) 1.01 0.91 13.67 13.30 122.82
Assets less than $250 Million(116) 0.78 0.74 13.34 13.24 94.05
Goodwill Companies(108) 1.01 0.94 13.15 11.94 153.30
Non-Goodwill Companies(161) 0.92 0.88 13.80 13.80 110.58
Acquirors of FSLIC Cases(7) 2.53 2.55 20.61 18.70 279.74
</TABLE>
- ----------
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1997 or 1998.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
<TABLE>
<CAPTION>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
--------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(53) 16.72 12,481 264.2 23.39 13.53 16.07 4.28 -25.24 -4.46
NYSE Traded Companies(5) 30.29 52,321 1,444.1 38.25 24.35 28.65 4.75 -19.84 -7.04
AMEX Traded Companies(5) 14.32 2,477 38.6 22.43 12.35 13.63 5.71 -34.06 -4.47
NASDAQ Listed OTC Companies(43) 15.36 8,843 147.8 21.69 12.36 14.84 4.05 -24.82 -4.14
California Companies(1) 15.88 7,166 113.8 24.00 9.00 14.63 8.54 -27.82 4.96
Mid-Atlantic Companies(20) 19.46 21,895 534.8 24.80 14.85 18.40 5.90 -16.66 -2.68
New England Companies(27) 16.00 7,990 130.1 23.47 13.43 15.50 4.12 -29.09 -6.32
North-West Companies(2) 12.78 6,083 78.1 17.50 11.65 12.94 -1.24 -23.91 3.58
South-East Companies(3) 9.73 2,455 21.3 17.92 9.36 9.88 -1.67 -42.08 -6.84
Thrift Strategy(42) 16.72 8,658 192.7 22.96 13.64 16.05 4.37 -23.95 -3.63
Mortgage Banker Strategy(6) 18.06 28,092 602.5 26.78 14.74 17.85 1.32 -29.24 -10.47
Real Estate Strategy(2) 12.35 7,497 91.4 19.19 8.00 11.51 6.84 -32.73 1.10
Diversified Strategy(3) 17.00 35,556 656.0 25.04 13.44 15.84 7.33 -29.42 -7.14
Companies Issuing Dividends(47) 17.57 13,153 288.9 24.45 14.28 16.97 3.30 -25.20 -4.48
Companies Without Dividends(6) 10.40 7,446 78.5 15.42 7.92 9.37 11.67 -25.53 -4.33
Equity/Assets < 6%(4) 14.83 5,141 78.9 23.57 12.49 14.66 1.46 -32.20 -3.77
Equity/Assets 6-12%(29) 17.54 12,276 247.6 24.26 13.85 16.83 5.21 -24.71 -3.58
Equity/Assets > 12%(20) 15.91 14,329 327.6 22.07 13.29 15.26 3.51 -24.56 -5.89
Actively Traded Companies(13) 21.52 20,097 437.1 30.35 17.94 20.62 4.69 -29.51 -6.84
Market Value Below $20 Million(8) 12.58 1,549 16.9 19.73 10.26 12.45 1.73 -36.07 -9.41
Holding Company Structure(40) 16.91 9,973 184.5 23.38 13.71 16.15 4.89 -24.68 -4.52
Assets Over $1 Billion(17) 23.01 31,521 737.3 29.78 17.77 21.70 5.69 -19.17 -4.32
Assets $500 Million-$1 Billion(9) 16.58 6,269 85.0 23.99 14.20 16.63 0.30 -25.32 -4.58
Assets $250-$500 Million(15) 13.70 3,747 47.5 20.19 11.68 13.10 5.27 -26.94 -3.26
Assets less than $250 Million(12) 11.97 1,945 20.6 18.15 9.54 11.63 4.24 -31.29 -5.95
Goodwill Companies(28) 17.51 19,359 423.6 25.06 13.72 16.91 4.84 -26.39 -5.36
Non-Goodwill Companies(25) 15.90 5,329 98.4 21.65 13.34 15.20 3.70 -24.04 -3.52
<CAPTION>
Current Per Share Financials
-----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
EPS(3) EPS(3) Share Share(4) Share
-------- ------- ------- ------- --------
($) ($) ($) ($) ($)
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
<S> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(53) 1.21 1.16 13.22 12.66 124.02
NYSE Traded Companies(5) 1.78 1.77 22.33 19.69 149.60
AMEX Traded Companies(5) 1.07 1.16 12.83 12.50 118.20
NASDAQ Listed OTC Companies(43) 1.16 1.08 12.16 11.82 121.61
California Companies(1) 2.07 2.06 14.78 14.74 144.10
Mid-Atlantic Companies(20) 1.16 1.12 14.91 13.95 116.99
New England Companies(27) 1.32 1.20 12.56 12.16 135.81
North-West Companies(2) 1.13 1.03 9.64 9.64 91.58
South-East Companies(3) 0.30 0.73 10.92 10.74 75.05
Thrift Strategy(42) 1.13 1.11 13.80 13.30 119.64
Mortgage Banker Strategy(6) 1.64 1.27 12.26 11.58 153.89
Real Estate Strategy(2) 1.41 1.39 9.94 9.92 97.41
Diversified Strategy(3) 1.32 1.39 9.63 8.08 140.47
Companies Issuing Dividends(47) 1.21 1.17 13.56 12.93 127.95
Companies Without Dividends(6) 1.18 1.08 10.66 10.65 94.56
Equity/Assets < 6%(4) 1.38 1.00 8.43 8.18 179.20
Equity/Assets 6-12%(29) 1.41 1.26 12.50 11.94 142.08
Equity/Assets > 12%(20) 0.88 1.03 15.29 14.67 85.79
Actively Traded Companies(13) 1.94 1.68 15.86 15.14 160.68
Market Value Below $20 Million(8) 0.89 0.93 13.01 12.78 128.03
Holding Company Structure(40) 1.16 1.16 13.49 13.13 119.78
Assets Over $1 Billion(17) 1.68 1.60 14.95 13.62 139.33
Assets $500 Million-$1 Billion(9) 1.35 1.09 13.37 13.01 144.96
Assets $250-$500 Million(15) 0.97 1.02 12.04 11.87 106.89
Assets less than $250 Million(12) 0.75 0.78 12.19 12.04 107.88
Goodwill Companies(28) 1.32 1.18 13.31 12.21 142.57
Non-Goodwill Companies(25) 1.10 1.13 13.13 13.13 104.72
</TABLE>
- ----------
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1997 or 1998.
Percent change figures are actual year-to-date and are not annualized.
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics. (9) For MHC institutions, market value
reflects share price multiplied by public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(24) 10.38 10,758 41.4 17.66 9.36 9.78 1.98 -27.68 -7.85
BIF-Insured Thrifts(4) 15.32 30,947 279.4 25.53 11.64 14.94 4.61 -29.05 4.64
AMEX Traded Companies(1) 4.63 2,384 5.0 5.25 4.63 4.88 -5.12 -7.40 -7.40
NASDAQ Listed OTC Companies(27) 11.32 14,059 78.0 19.29 9.87 10.73 2.63 -28.63 -6.01
Florida Companies(2) 13.25 6,278 40.6 20.25 12.44 8.63 -1.22 -24.52 -15.14
Mid-Atlantic Companies(19) 9.43 9,244 33.4 16.87 8.43 9.15 2.88 -27.01 -5.78
Mid-West Companies(4) 12.94 24,505 100.7 22.20 11.78 12.89 0.42 -31.02 -7.40
New England Companies(2) 20.44 45,647 483.5 29.49 14.54 20.19 3.81 -31.38 3.80
South-East Companies(1) 12.00 4,461 25.4 17.25 10.00 11.50 4.35 -31.43 -7.69
Thrift Strategy(26) 10.33 10,988 46.1 17.60 9.27 9.73 2.41 -26.87 -6.44
Mortgage Banker Strategy(1) 12.56 33,584 106.0 27.50 11.00 11.97 4.93 -52.60 -7.85
Diversified Strategy(1) 29.13 62,715 806.4 41.00 19.19 29.63 -1.69 -29.18 5.43
Companies Issuing Dividends(20) 12.05 12,847 80.6 22.05 10.47 11.77 3.17 -37.58 -6.73
Companies Without Dividends(8) 8.65 15,631 62.3 10.63 7.72 7.39 0.32 -3.61 -4.40
Equity/Assets < 6%(1) 17.00 6,803 55.4 31.00 17.00 17.25 -1.45 -44.04 -25.27
Equity/Assets 6-12%(12) 12.32 14,496 98.8 24.24 10.44 12.18 1.63 -39.88 -4.07
Equity/Assets > 12%(15) 9.70 13,415 57.9 13.61 8.59 8.74 3.19 -17.19 -6.38
Market Value Below $20 Million(2) 6.76 2,246 6.9 12.50 6.44 6.69 -0.33 -30.93 -9.30
Holding Company Structure(7) 10.57 7,545 35.0 16.38 9.41 10.23 3.54 -17.52 -3.97
Assets Over $1 Billion(6) 14.68 45,287 267.4 24.83 12.18 14.32 4.58 -28.98 -5.65
Assets $500 Million-$1 Billion(2) 11.00 18,429 100.1 15.12 8.82 10.53 4.36 -15.54 2.34
Assets $250-$500 Million(11) 10.28 4,354 17.9 16.84 9.32 9.22 1.98 -20.80 -4.74
Assets less than $250 Million(9) 9.68 2,833 12.1 17.95 8.67 9.57 0.88 -38.53 -9.83
Goodwill Companies(9) 12.93 19,658 135.2 21.02 10.90 12.72 2.80 -27.62 -2.70
Non-Goodwill Companies(16) 10.65 6,588 31.5 19.23 9.48 10.38 2.68 -32.16 -8.01
MHC Institutions(28) 11.08 13,642 75.4 18.79 9.69 10.52 2.35 -27.87 -6.06
MHC Converted Last 3 Months(3) 7.88 33,216 129.9 9.75 7.13 4.67 -0.69 -5.80 -5.80
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
---------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
($) ($) ($) ($) ($)
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(24) 0.49 0.47 9.21 9.16 76.46
BIF-Insured Thrifts(4) 0.72 0.53 10.06 9.22 78.12
AMEX Traded Companies(1) 0.28 0.28 6.53 6.53 23.61
NASDAQ Listed OTC Companies(27) 0.53 0.49 9.44 9.26 78.66
Florida Companies(2) 0.76 0.66 11.07 10.89 154.49
Mid-Atlantic Companies(19) 0.43 0.43 8.70 8.59 68.33
Mid-West Companies(4) 0.63 0.58 10.34 10.34 75.83
New England Companies(2) 1.04 0.67 11.62 10.54 93.75
South-East Companies(1) 0.46 0.43 9.34 9.34 49.52
Thrift Strategy(26) 0.49 0.47 9.31 9.22 73.66
Mortgage Banker Strategy(1) 0.57 0.41 5.63 5.46 74.34
Diversified Strategy(1) 1.46 0.76 13.59 11.42 158.16
Companies Issuing Dividends(20) 0.54 0.48 9.19 8.95 80.78
Companies Without Dividends(8) 0.48 0.49 9.70 9.70 66.49
Equity/Assets < 6%(1) 1.09 0.88 12.49 12.14 230.33
Equity/Assets 6-12%(12) 0.58 0.47 8.90 8.54 90.15
Equity/Assets > 12%(15) 0.44 0.46 9.47 9.47 55.70
Market Value Below $20 Million(2) 0.39 0.40 8.68 8.68 59.20
Holding Company Structure(7) 0.49 0.49 9.73 9.56 71.19
Assets Over $1 Billion(6) 0.76 0.60 9.37 8.79 106.13
Assets $500 Million-$1 Billion(2) 0.60 0.59 9.91 9.91 58.38
Assets $250-$500 Million(11) 0.46 0.46 9.14 9.14 74.69
Assets less than $250 Million(9) 0.44 0.40 9.42 9.28 63.61
Goodwill Companies(9) 0.63 0.51 9.28 8.75 99.18
Non-Goodwill Companies(16) 0.48 0.47 9.43 9.43 68.15
MHC Institutions(28) 0.53 0.48 9.34 9.17 76.70
MHC Converted Last 3 Months(3) 0.45 0.45 9.01 9.01 54.82
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1997 or 1998.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash
dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities
or unusual operating characteristics.
(9) For MHC institutions, market
value reflects share price multiplied by public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of
institutions included in the respective averages. All figures have been
adjusted for stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
BYS Bay State Bancorp of MA* 20.88 2,408 50.3 32.63 19.25 20.75 0.63 -30.84 -12.56
CFB Commercial Federal Corp. of NE 23.75 60,696 1,441.5 37.75 19.63 23.00 3.26 -36.04 2.41
DME Dime Bancorp, Inc. of NY* 23.19 111,346 2,582.1 32.69 18.19 23.50 -1.32 -26.52 -11.66
DSL Downey Financial Corp. of CA 20.44 28,146 575.3 35.00 17.75 18.50 10.49 -38.67 -19.65
FED FirstFed Fin. Corp. of CA 16.00 21,127 338.0 26.94 14.13 16.25 -1.54 -23.48 -10.51
GSB Golden State Bancorp of CA 23.06 128,598 2,965.5 24.25 11.94 24.25 -4.91 N.A. 38.67
GDW Golden West Fin. Corp. of CA 93.00 56,313 5,237.1 114.25 72.38 96.31 -3.44 -11.96 1.43
GPT GreenPoint Fin. Corp. of NY* 34.75 94,642 3,288.8 42.63 25.19 33.75 2.96 -14.32 -1.08
JSB JSB Financial, Inc. of NY* 54.81 9,506 521.0 59.69 45.00 49.00 11.86 -6.21 0.79
OCN Ocwen Financial Corp. of FL 9.00 60,800 547.2 27.75 6.00 8.31 8.30 -66.43 -26.89
SIB Staten Island Bancorp of NY* 17.81 43,705 778.4 23.63 14.13 16.25 9.60 -21.30 -10.68
WES Westcorp Inc. of Orange CA 11.31 26,475 299.4 16.50 5.81 8.00 41.38 -31.45 62.97
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 17.69 1,820 32.2 25.00 15.00 17.75 -0.34 -30.30 1.09
ANE Alliance Bncp of New Eng of CT* 10.88 2,292 24.9 16.08 9.13 9.50 14.53 -31.66 -7.40
BKC American Bank of Waterbury CT* 21.44 4,703 100.8 32.56 17.88 20.38 5.20 -28.53 -5.76
BFD BostonFed Bancorp of MA 17.38 5,112 88.8 24.88 14.00 17.13 1.46 -28.33 -1.42
CNY Carver Bancorp, Inc. of NY 10.19 2,314 23.6 15.75 6.50 11.00 -7.36 -33.75 16.46
CBK Citizens First Fin.Corp. of IL 15.00 2,234 33.5 21.00 13.25 14.63 2.53 -27.71 8.07
EFC EFC Bancorp, Inc of IL 10.06 7,117 71.6 14.81 9.06 9.88 1.82 -32.39 -7.54
EBI Equality Bancorp, Inc. of MO 9.88 2,520 24.9 15.63 8.50 9.00 9.78 -36.26 4.00
ESX Essex Bancorp of Norfolk VA(8) 2.19 1,061 2.3 4.38 1.38 2.25 -2.67 -51.33 52.08
FCB Falmouth Bancorp, Inc. of MA* 14.38 1,387 19.9 21.63 13.00 13.88 3.60 -31.52 -4.13
FAB FirstFed America Bancorp of MA 13.19 7,465 98.5 23.25 10.75 12.38 6.54 -39.72 -3.65
GAF GA Financial Corp. of PA 14.50 7,041 102.1 22.00 11.38 14.13 2.62 -32.96 -6.45
GOV Gouverneur Bcp MHC of NY (45.0 4.63 2,384 5.0 5.25 4.63 4.88 -5.12 -7.40 -7.40
HBS Haywood Bancshares, Inc. of NC* 14.00 1,250 17.5 24.00 13.75 14.13 -0.92 -41.67 -11.84
KNK Kankakee Bancorp, Inc. of IL 23.63 1,367 32.3 37.38 21.75 24.63 -4.06 -35.70 -8.23
KYF Kentucky First Bancorp of KY 12.00 1,201 14.4 15.88 12.00 12.25 -2.04 -17.24 -6.83
LO Local Financial Corp of OK 9.81 20,537 201.5 13.75 6.94 9.44 3.92 N.A. 9.00
NBN Northeast Bancorp of ME* 10.88 2,755 30.0 17.88 8.00 10.25 6.15 -36.93 6.77
NEP Northeast PA Fin. Corp of PA 10.25 6,427 65.9 16.00 8.94 10.25 0.00 -34.13 -11.87
PDB Piedmont Bancorp, Inc. of NC 9.00 2,616 23.5 10.63 8.25 8.50 5.88 -16.28 0.00
SPN Security of PA Financial of PA 9.25 1,587 14.7 10.56 9.13 9.25 0.00 -7.50 -9.76
SZB SouthFirst Bancshares of AL 12.38 902 11.2 21.25 12.00 12.63 -1.98 -42.42 -24.97
SRN Southern Banc Company of AL 11.88 1,173 13.9 17.00 11.63 11.88 0.00 -30.12 -1.49
SSM Stone Street Bancorp of NC(8) 19.00 1,692 32.1 20.50 12.88 13.25 43.40 -6.77 33.33
TSH Teche Holding Company of LA 15.25 3,001 45.8 21.25 13.13 15.25 0.00 -26.51 -0.85
FTF Texarkana Fst. Fin. Corp of AR 23.38 1,589 37.2 30.63 20.00 23.38 0.00 -17.24 1.08
THR Three Rivers Fin. Corp. of MI 13.50 793 10.7 19.43 12.69 13.13 2.82 -30.95 0.00
WSB Washington SB, FSB of MD 3.94 4,424 17.4 8.06 3.75 3.94 0.00 -50.00 -12.44
WFI Winton Financial Corp. of OH 13.13 4,015 52.7 20.63 10.50 12.75 2.98 -20.42 2.98
WRO Woronoco Bancorp, Inc of MA 9.00 5,999 54.0 9.69 8.69 8.88 1.35 -10.00 -10.00
NASDAQ Listed OTC Companies
- ---------------------------
AMFC AMB Financial Corp. of IN 13.50 870 11.7 19.38 11.00 13.44 0.45 -23.94 11.29
ASBP ASB Financial Corp. of OH 10.63 1,655 17.6 16.75 9.81 10.75 -1.12 -25.40 -10.97
ABBK Abington Bancorp of MA* 14.31 3,347 47.9 21.88 12.50 14.50 -1.31 -32.66 3.10
AABC Access Anytime Bancorp of NM 9.25 1,236 11.4 12.50 6.38 6.75 37.04 -21.28 27.59
AFBC Advance Fin. Bancorp of WV 10.63 1,031 11.0 18.50 10.63 10.63 0.00 -41.75 -15.84
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
---------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
BYS Bay State Bancorp of MA* -0.49 0.62 24.68 24.68 142.91
CFB Commercial Federal Corp. of NE 1.20 1.55 15.55 12.42 198.96
DME Dime Bancorp, Inc. of NY* 2.13 0.72 12.44 10.37 200.46
DSL Downey Financial Corp. of CA 2.06 2.10 17.07 16.91 222.78
FED FirstFed Fin. Corp. of CA 1.64 1.55 12.16 12.10 174.05
GSB Golden State Bancorp of CA -0.53 0.42 12.30 5.12 426.67
GDW Golden West Fin. Corp. of CA 7.72 7.48 55.48 55.48 683.12
GPT GreenPoint Fin. Corp. of NY* 1.58 1.62 18.98 8.26 147.61
JSB JSB Financial, Inc. of NY* 4.67 4.90 40.25 40.25 170.59
OCN Ocwen Financial Corp. of FL -0.02 -0.17 7.18 6.97 54.41
SIB Staten Island Bancorp of NY* 1.01 1.00 15.31 14.90 86.42
WES Westcorp Inc. of Orange CA -0.56 -1.21 12.43 12.40 143.66
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 1.62 1.51 17.68 17.68 154.99
ANE Alliance Bncp of New Eng of CT* 1.12 0.77 7.94 7.83 123.73
BKC American Bank of Waterbury CT* 2.28 2.05 13.45 13.07 142.46
BFD BostonFed Bancorp of MA 1.49 1.22 16.00 15.46 222.83
CNY Carver Bancorp, Inc. of NY -2.21 -2.14 13.34 12.87 181.72
CBK Citizens First Fin.Corp. of IL 0.90 0.71 16.12 16.12 128.59
EFC EFC Bancorp, Inc of IL 0.04 0.55 12.47 12.47 59.14
EBI Equality Bancorp, Inc. of MO 0.47 -0.04 10.32 10.32 114.73
ESX Essex Bancorp of Norfolk VA(8) 0.95 0.95 0.78 0.69 217.76
FCB Falmouth Bancorp, Inc. of MA* 0.73 0.52 16.03 16.03 82.02
FAB FirstFed America Bancorp of MA 0.94 0.82 14.15 14.15 192.65
GAF GA Financial Corp. of PA 1.17 1.20 15.51 15.38 116.93
GOV Gouverneur Bcp MHC of NY (45.0 0.28 0.28 6.53 6.53 23.61
HBS Haywood Bancshares, Inc. of NC* 0.21 1.49 17.24 16.70 120.76
KNK Kankakee Bancorp, Inc. of IL 1.67 1.61 29.02 24.94 301.23
KYF Kentucky First Bancorp of KY 0.72 0.71 11.62 11.62 66.53
LO Local Financial Corp of OK 0.90 0.88 5.78 4.92 103.67
NBN Northeast Bancorp of ME* 0.99 0.96 9.51 8.86 122.03
NEP Northeast PA Fin. Corp of PA 0.09 0.56 13.26 13.26 81.38
PDB Piedmont Bancorp, Inc. of NC 0.62 0.60 7.91 7.91 49.41
SPN Security of PA Financial of PA 0.53 0.53 13.77 13.77 77.91
SZB SouthFirst Bancshares of AL 0.50 0.27 17.43 16.99 176.49
SRN Southern Banc Company of AL 0.46 0.46 15.45 15.35 87.82
SSM Stone Street Bancorp of NC(8) 0.95 0.95 16.84 16.84 75.22
TSH Teche Holding Company of LA 1.26 1.23 17.26 17.26 138.40
FTF Texarkana Fst. Fin. Corp of AR 2.12 2.05 16.94 16.94 120.39
THR Three Rivers Fin. Corp. of MI 0.90 0.80 14.81 14.76 124.61
WSB Washington SB, FSB of MD 0.28 0.23 5.48 5.48 60.17
WFI Winton Financial Corp. of OH 0.97 0.74 6.89 6.79 92.64
WRO Woronoco Bancorp, Inc of MA 0.60 0.60 13.80 13.80 69.36
NASDAQ Listed OTC Companies
- ---------------------------
AMFC AMB Financial Corp. of IN 0.24 0.76 15.42 15.42 134.38
ASBP ASB Financial Corp. of OH 0.65 0.63 9.30 9.30 72.98
ABBK Abington Bancorp of MA* 1.31 0.90 9.88 9.04 176.62
AABC Access Anytime Bancorp of NM 0.61 0.52 8.03 8.03 98.52
AFBC Advance Fin. Bancorp of WV 0.72 0.62 14.84 14.84 118.28
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
---------------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market ------------- -----------------------
Price/ Out- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) standing ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- -------- -------- ---------- ----- ----- ----- ----- ------ -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALBC Albion Banc Corp. of Albion NY 10.00 753 7.5 11.00 7.63 9.75 2.56 0.00 9.53
ABCL Alliance Bancorp, Inc. of IL 18.94 11,464 217.1 29.25 15.00 19.25 -1.61 -32.36 -3.17
ALLB Alliance Bank MHC of PA (19.9) 10.00 3,274 6.5 39.00 9.75 10.00 0.00 -70.59 -14.89
AHCI Ambanc Holding Co., Inc. of NY* 15.13 5,408 81.8 20.00 12.00 15.63 -3.20 -19.86 -14.76
ASBI Ameriana Bancorp of IN 15.50 3,511 54.4 20.00 15.50 15.50 0.00 -22.50 -12.68
ABCW Anchor Bancorp Wisconsin of WI 19.25 17,900 344.6 24.13 15.38 17.25 11.59 -14.94 -19.79
ANDB Andover Bancorp, Inc. of MA* 29.00 6,520 189.1 39.88 25.56 27.88 4.02 -19.22 -16.26
ASFC Astoria Financial Corp. of NY 49.00 54,762 2,683.3 60.13 30.13 49.09 -0.18 -12.89 7.10
BCSB BCSB Bankcorp MHC of MD (38.6) 9.00 6,117 21.2 12.63 8.09 8.25 9.09 -10.00 2.86
BKCT Bancorp Connecticut of CT* 14.00 5,134 71.9 21.50 13.50 13.75 1.82 -30.00 -6.67
BPLS Bank Plus Corp. of CA 4.50 19,434 87.5 15.88 2.28 4.25 5.88 -72.10 2.74
BNKU Bank United Corp. of TX 40.81 31,563 1,288.1 56.00 25.50 39.44 3.47 -26.64 3.97
BWFC Bank West Fin. Corp. of MI 8.25 2,624 21.6 14.63 8.25 8.75 -5.71 -42.11 -13.16
BANC BankAtlantic Bancorp of FL 9.00 37,156 334.4 15.06 6.50 7.75 16.13 -40.75 26.23
BKUNA BankUnited Fin. Corp. of FL 8.06 18,206 146.7 18.50 6.13 7.75 4.00 -51.53 0.75
BFSB Bedford Bancshares, Inc. of VA 12.06 2,298 27.7 16.25 10.50 11.88 1.52 -16.83 4.87
BFFC Big Foot Fin. Corp. of IL 12.13 2,406 29.2 21.63 12.13 12.50 -2.96 -44.38 -14.88
BYFC Broadway Fin. Corp. of CA 6.75 932 6.3 12.04 6.63 6.75 0.00 -43.94 -2.74
BRKL Brookline Bncp MHC of MA(47.0)* 11.75 28,578 160.7 17.98 9.88 10.75 9.30 -33.58 2.17
CBES CBES Bancorp, Inc. of MO 13.50 891 12.0 22.80 13.00 14.25 -5.26 -41.00 -11.13
CITZ CFS Bancorp, Inc. of IN 10.25 22,959 235.3 11.44 8.31 10.06 1.89 2.50 1.89
CFSB CFSB Bancorp of Lansing MI(8) 27.00 8,163 220.4 28.75 20.00 27.63 -2.28 5.59 10.75
CKFB CKF Bancorp of Danville KY 17.13 794 13.6 19.88 15.00 17.75 -3.49 -11.01 0.00
CNSB CNS Bancorp, Inc. of MO 10.38 1,452 15.1 18.25 10.38 10.75 -3.44 -43.12 -7.24
CNYF CNY Financial Corp of NY* 11.75 5,251 61.7 12.25 8.88 11.31 3.89 17.50 18.93
CBCI Calumet Bancorp of Chicago IL(8) 31.25 3,146 98.3 38.25 26.00 27.75 12.61 -15.27 15.19
CAFI Camco Fin. Corp. of OH 13.75 5,477 75.3 20.67 13.13 13.63 0.88 -32.37 -8.33
CMRN Cameron Fin. Corp. of MO 13.44 2,190 29.4 22.19 11.88 12.38 8.56 -38.21 -14.50
CFFN Capitol Fincl MHC of KS (43.0) 9.50 91,512 359.2 14.50 8.88 9.13 4.05 -5.00 -5.00
CFNC Carolina Fincorp of NC* 7.63 1,906 14.5 18.88 6.88 7.88 -3.17 -58.33 -4.63
CASB Cascade Financial Corp. of WA 17.00 4,329 73.6 17.00 10.00 15.75 7.94 41.67 30.77
CATB Catskill Fin. Corp. of NY* 15.00 4,358 65.4 18.25 11.75 14.75 1.69 -14.29 7.14
CAVB Cavalry Bancorp of TN 22.50 7,161 161.1 24.75 18.50 22.00 2.27 -6.76 5.88
CNIT Cenit Bancorp of Norfolk VA 20.00 4,809 96.2 28.29 16.50 19.50 2.56 -27.27 -6.45
CEBK Central Bancorp of MA* 17.50 1,967 34.4 31.50 16.25 17.00 2.94 -43.09 -7.89
CENB Century Bancorp, Inc. of NC 13.88 1,237 17.2 22.25 12.00 13.75 0.95 -30.60 2.81
COFI Charter One Financial of OH 28.63 165,399 4,735.4 34.64 18.25 27.88 2.69 -13.95 3.17
CVAL Chester Valley Bancorp of PA 18.00 3,682 66.3 21.59 17.33 18.00 0.00 -14.08 -4.66
CLAS Classic Bancshares, Inc. of KY 13.63 1,298 17.7 19.63 12.00 14.50 -6.00 -30.57 -7.59
CBSA Coastal Bancorp of Houston TX 17.50 6,409 112.2 26.67 14.31 16.38 6.84 -28.07 0.00
CFCP Coastal Fin. Corp. of SC 17.50 6,273 109.8 21.63 14.13 18.44 -5.10 -0.17 -13.07
COHB Cohoes Bancorp of NY* 9.75 9,258 90.3 11.69 9.50 9.69 0.62 -2.50 -2.50
CFKY Columbia Financial of KY 13.00 2,671 34.7 16.50 11.63 12.75 1.96 -20.00 5.01
CMSB Commonwealth Bancorp Inc of PA 14.38 14,721 211.7 24.25 10.63 14.13 1.77 -36.96 -7.58
CFTP Community Fed. Bancorp of MS 14.56 4,279 62.3 18.25 11.50 14.25 2.18 -21.30 2.18
CFFC Community Fin. Corp. of VA 11.00 2,572 28.3 16.38 10.63 11.00 0.00 -31.25 -7.41
CIBI Community Inv. Bancorp of OH 8.75 1,218 10.7 15.25 8.63 8.75 0.00 -31.80 -28.57
CMSV Community Svgs Bcshrs of FL 12.00 10,549 126.6 39.00 10.56 11.94 0.50 -68.21 11.63
COOP Cooperative Bancshares of NC 11.00 3,046 33.5 19.75 10.00 11.50 -4.35 -42.95 -7.41
CRZY Crazy Woman Creek Bncorp of WY 12.38 909 11.3 20.00 11.88 12.50 -0.96 -27.43 3.17
CRSB Crusader Holding Corp of PA 9.50 3,833 36.4 17.86 9.19 9.88 -3.85 -36.67 -9.52
DNFC D&N Financial Corp. of MI(8) 21.81 9,394 204.9 29.50 15.94 21.00 3.86 -26.69 -7.70
DCBI Delphos Citizens Bancorp of OH 16.00 1,681 26.9 22.25 14.25 14.25 12.28 -22.89 -5.88
DCOM Dime Community Bancorp of NY* 22.13 11,505 254.6 29.31 15.00 20.13 9.94 -18.79 7.27
ESBF ESB Financial Corp of PA 14.00 5,266 73.7 20.00 14.00 14.75 -5.08 -23.95 -13.53
<CAPTION>
Current Per Share Financials
---------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- ------ ------ ------ -------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
ALBC Albion Banc Corp. of Albion NY 0.48 0.47 8.53 8.53 101.55
ABCL Alliance Bancorp, Inc. of IL 1.21 1.37 16.22 16.10 172.93
ALLB Alliance Bank MHC of PA (19.9) 0.62 0.62 9.09 9.09 86.12
AHCI Ambanc Holding Co., Inc. of NY* 0.19 0.30 15.88 14.42 136.00
ASBI Ameriana Bancorp of IN 1.09 0.98 12.92 12.33 115.56
ABCW Anchor Bancorp Wisconsin of WI 1.30 1.14 7.61 7.50 118.63
ANDB Andover Bancorp, Inc. of MA* 2.67 2.60 18.58 18.58 216.30
ASFC Astoria Financial Corp. of NY 0.18 0.32 25.79 21.30 375.95
BCSB BCSB Bankcorp MHC of MD (38.6) 0.20 0.28 7.43 7.43 45.88
BKCT Bancorp Connecticut of CT* 1.24 1.07 9.72 9.72 101.55
BPLS Bank Plus Corp. of CA -2.90 -2.53 6.55 5.82 191.01
BNKU Bank United Corp. of TX 3.84 3.55 22.37 20.53 469.65
BWFC Bank West Fin. Corp. of MI 0.17 0.29 8.80 8.80 76.85
BANC BankAtlantic Bancorp of FL -0.22 -0.14 6.47 4.98 101.97
BKUNA BankUnited Fin. Corp. of FL 0.28 0.16 10.45 8.71 210.50
BFSB Bedford Bancshares, Inc. of VA 0.92 0.92 9.41 9.41 69.44
BFFC Big Foot Fin. Corp. of IL 0.37 0.30 15.04 15.04 89.58
BYFC Broadway Fin. Corp. of CA 0.37 0.05 13.85 13.85 149.65
BRKL Brookline Bncp MHC of MA(47.0)* 0.61 0.58 9.65 9.65 29.34
CBES CBES Bancorp, Inc. of MO 1.06 0.72 18.39 18.39 167.48
CITZ CFS Bancorp, Inc. of IN 0.08 0.36 11.33 11.33 64.05
CFSB CFSB Bancorp of Lansing MI(8) 1.45 1.33 8.49 8.49 107.85
CKFB CKF Bancorp of Danville KY 0.97 0.85 17.46 17.46 82.59
CNSB CNS Bancorp, Inc. of MO 0.59 0.48 14.97 14.97 65.70
CNYF CNY Financial Corp of NY* 0.24 0.40 15.06 15.06 53.55
CBCI Calumet Bancorp of Chicago IL(8) 1.87 1.84 27.92 27.92 152.29
CAFI Camco Fin. Corp. of OH 1.28 0.96 10.98 10.36 116.33
CMRN Cameron Fin. Corp. of MO 1.02 1.00 18.67 18.67 100.89
CFFN Capitol Fincl MHC of KS (43.0) 0.64 0.64 10.85 10.85 62.20
CFNC Carolina Fincorp of NC* 0.46 0.51 8.28 8.28 61.15
CASB Cascade Financial Corp. of WA 0.94 0.81 7.76 7.76 113.15
CATB Catskill Fin. Corp. of NY* 0.90 0.87 15.62 15.62 74.30
CAVB Cavalry Bancorp of TN 0.80 0.64 13.29 13.29 50.96
CNIT Cenit Bancorp of Norfolk VA 1.27 1.16 10.41 9.65 133.30
CEBK Central Bancorp of MA* 1.49 1.14 19.40 17.79 188.78
CENB Century Bancorp, Inc. of NC 0.74 0.74 15.19 15.19 76.90
COFI Charter One Financial of OH 1.10 1.39 11.34 10.36 147.93
CVAL Chester Valley Bancorp of PA 1.04 0.94 9.23 9.23 111.49
CLAS Classic Bancshares, Inc. of KY 0.76 0.95 16.09 13.93 109.13
CBSA Coastal Bancorp of Houston TX 2.57 2.64 18.01 13.10 487.80
CFCP Coastal Fin. Corp. of SC 1.12 0.91 6.26 6.26 106.18
COHB Cohoes Bancorp of NY* 0.60 0.59 14.01 14.01 66.14
CFKY Columbia Financial of KY 0.37 0.37 14.19 14.19 44.96
CMSB Commonwealth Bancorp Inc of PA 0.74 0.55 13.05 10.35 153.35
CFTP Community Fed. Bancorp of MS 0.75 0.46 13.88 13.88 67.37
CFFC Community Fin. Corp. of VA 0.75 0.54 10.42 10.38 74.85
CIBI Community Inv. Bancorp of OH 0.72 0.71 8.25 8.25 94.32
CMSV Community Svgs Bcshrs of FL 0.56 0.56 12.45 12.45 79.44
COOP Cooperative Bancshares of NC 0.78 0.73 10.38 10.38 127.96
CRZY Crazy Woman Creek Bncorp of WY 0.77 0.78 15.65 15.65 68.98
CRSB Crusader Holding Corp of PA 1.06 0.98 6.56 6.26 67.03
DNFC D&N Financial Corp. of MI(8) 1.71 1.30 12.29 11.47 214.83
DCBI Delphos Citizens Bancorp of OH 1.01 1.01 15.74 15.74 71.71
DCOM Dime Community Bancorp of NY* 1.39 1.36 15.42 13.44 159.03
ESBF ESB Financial Corp of PA 1.10 1.03 11.60 10.30 184.66
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
-------------------------------- ----------------------------------------------
52 Week (1) % Change From
Shares Market ------------ -------------------------------
Price/ Out- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) standing ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- -------- -------- ---------- ----- ----- ----- ----- ------ -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EGLB Eagle BancGroup of IL 20.50 1,080 22.1 23.13 14.00 21.63 -5.22 -1.82 1.23
EBSI Eagle Bancshares of Tucker GA 18.25 5,636 102.9 26.50 17.00 17.50 4.29 -29.48 -0.71
ESBK Elmira Svgs Bank (The) of NY* 23.00 763 17.5 30.71 15.48 23.00 0.00 -25.11 -0.43
EMLD Emerald Financial Corp. of OH(8) 19.25 10,283 197.9 21.00 9.94 19.19 0.31 43.23 76.93
EFBC Empire Federal Bancorp of MT 11.63 2,222 25.8 17.50 10.63 11.75 -1.02 -32.11 -21.84
EFBI Enterprise Fed. Bancorp of OH(8) 46.50 2,211 102.8 49.88 25.00 44.88 3.61 47.62 -3.13
EQSB Equitable FSB of Wheaton MD 18.75 1,229 23.0 33.75 16.13 18.00 4.17 -43.18 -10.20
FCBF FCB Fin. Corp. of Neenah WI(8) 33.50 3,841 128.7 37.00 22.00 30.25 10.74 -1.12 19.90
FFDF FFD Financial Corp. of OH 17.00 1,449 24.6 24.00 13.00 18.00 -5.56 -26.09 25.93
FFLC FFLC Bancorp of Leesburg FL 17.50 3,671 64.2 21.75 15.00 16.00 9.38 -12.50 7.69
FFWC FFW Corporation of Wabash IN 14.75 1,442 21.3 19.50 14.00 15.00 -1.67 -18.06 -4.84
FFYF FFY Financial Corp. of OH 17.00 7,743 131.6 18.56 13.13 18.38 -7.51 -1.28 -2.52
FMCO FMS Financial Corp. of NJ 8.25 7,232 59.7 16.67 7.63 8.50 -2.94 -44.37 -9.64
FFHH FSF Financial Corp. of MN 13.50 2,973 40.1 21.00 13.38 13.88 -2.74 -31.23 -9.27
FDTR Federal Trust Corp of FL 2.31 4,942 11.4 4.75 2.31 2.50 -7.60 -47.26 0.00
FBCI Fidelity Bancorp of Chicago IL 22.00 2,322 51.1 25.88 16.00 23.13 -4.89 -14.56 -8.33
FSBI Fidelity Bancorp, Inc. of PA 17.75 1,981 35.2 28.00 16.38 17.63 0.68 -30.39 2.90
FFFL Fidelity Bcsh MHC of FL (47.9) 17.00 6,803 55.4 31.00 17.00 17.25 -1.45 -44.04 -25.27
FFED Fidelity Fed. Bancorp of IN 3.13 3,148 9.9 9.63 2.75 3.88 -19.33 -66.16 -7.40
FFOH Fidelity Financial of OH 12.50 5,613 70.2 19.88 11.81 12.13 3.05 -37.12 -3.85
SBFL Fingr Lakes Fin.MHC OF NY(33.1 11.50 3,570 13.6 20.63 9.00 11.25 2.22 -40.66 0.00
FBEI First Bancorp of Indiana of IN 9.06 2,272 20.6 9.38 9.06 0.00 -1.00 -9.40 -9.40
FBSI First Bancshares, Inc. of MO 12.00 2,149 25.8 14.50 11.50 11.50 4.35 -18.64 -5.88
FBBC First Bell Bancorp of PA 18.00 5,973 107.5 21.38 12.88 16.50 9.09 -11.68 16.13
FCAP First Capital, Inc. of IN 9.00 1,292 11.6 10.63 8.75 8.88 1.35 -10.00 -10.00
FSTC First Citizens Corp of GA(8) 39.13 2,812 110.0 40.88 22.00 40.00 -2.17 18.58 35.49
FCME First Coastal Corp. of ME* 9.63 1,361 13.1 14.63 8.00 9.31 3.44 -33.03 -6.05
FDEF First Defiance Fin.Corp. of OH 10.38 7,575 78.6 15.63 10.13 10.50 -1.14 -33.29 -27.16
FESX First Essex Bancorp of MA* 16.38 7,619 124.8 25.25 13.75 15.13 8.26 -33.50 -9.00
FFES First Fed of E. Hartford CT 24.50 2,757 67.5 40.75 20.50 22.13 10.71 -39.51 -9.26
BDJI First Fed. Bancorp. of MN 12.13 993 12.0 20.25 11.75 12.13 0.00 -37.79 -17.76
FFBH First Fed. Bancshares of AR 15.88 4,513 71.7 30.13 15.75 16.13 -1.55 -43.79 -14.76
FTFC First Fed. Capital Corp. of WI 13.69 18,361 251.4 18.38 11.75 12.75 7.37 -17.03 -16.42
FFKY First Fed. Fin. Corp. of KY 20.50 4,127 84.6 29.75 20.50 23.00 -10.87 -17.80 -23.36
FFBZ First Federal Bancorp of OH 8.25 3,151 26.0 14.50 8.25 8.56 -3.62 -33.36 -21.43
FFSXD First Federal Bankshares of IA 9.88 4,818 47.6 39.00 9.69 9.68 2.07 -73.48 -57.04
FFCH First Fin. Holdings Inc. of SC 18.06 13,486 243.6 25.00 14.50 17.31 4.33 -26.29 -4.95
FFHS First Franklin Corp. of OH 13.63 1,704 23.2 20.42 12.00 13.75 -0.87 -24.28 -9.13
FGHC First Georgia Hold. Corp of GA 8.50 4,799 40.8 15.75 7.25 7.25 17.24 -5.56 -5.56
FFSL First Independence Corp. of KS 10.81 964 10.4 14.81 9.25 11.50 -6.00 -27.01 6.71
FISB First Indiana Corp. of IN 18.97 12,665 240.3 28.00 17.38 18.94 0.16 -29.74 -5.15
FKAN First Kansas Financial of KS 10.13 1,554 15.7 12.50 9.00 10.25 -1.17 1.30 -2.41
FKFS First Keystone Fin. Corp of PA 14.00 2,269 31.8 21.50 11.75 14.13 -0.92 -33.33 -3.45
FLKY First Lancaster Bncshrs of KY 11.75 888 10.4 16.13 11.75 12.50 -6.00 -24.19 -14.17
FLFC First Liberty Fin. Corp. of GA 20.63 13,557 279.7 25.50 17.00 20.13 2.48 -13.14 -1.76
CASH First Midwest Fin., Inc. of IA 14.94 2,515 37.6 24.25 14.13 14.75 1.29 -39.64 -0.40
FMSB First Mutual SB of Bellevue WA* 12.56 4,670 58.7 16.36 10.85 12.75 -1.49 -21.06 4.23
FNFI First Niles Financial of OH 10.94 1,754 19.2 11.63 10.25 11.06 -1.08 9.40 -3.27
FNGB First Northern Cap. Corp of WI 10.69 8,752 93.6 14.00 9.50 10.06 6.26 -20.46 -8.08
FPFC First Place Fin. Corp of OH 9.81 10,342 101.5 11.44 9.75 9.88 -0.71 -1.90 -1.90
FWWB First Savings Bancorp of WA 20.56 11,302 232.4 25.34 18.06 18.13 13.40 -13.83 -14.33
FSFF First SecurityFed Fin of IL 11.44 5,855 67.0 17.25 10.69 12.00 -4.67 -26.48 -12.00
FSLA First Sentinal Bancorp of NJ 7.09 42,675 302.6 10.75 6.75 7.75 -8.52 -32.48 -12.79
SOPN First Svgs Bancorp of NC 20.00 3,569 71.4 25.75 19.13 19.13 4.55 -21.57 -10.11
FBNW FirstBank Corp of ID 14.50 1,747 25.3 23.75 13.00 15.00 -3.33 -34.09 -2.55
<CAPTION>
Current Per Share Financials
-----------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------ ------ -------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
EGLB Eagle BancGroup of IL 0.84 0.35 18.24 18.24 166.76
EBSI Eagle Bancshares of Tucker GA 1.79 1.72 13.22 13.22 242.58
ESBK Elmira Svgs Bank (The) of NY* 1.73 1.64 19.79 19.79 320.63
EMLD Emerald Financial Corp. of OH(8) 0.75 0.66 5.33 5.27 65.01
EFBC Empire Federal Bancorp of MT 0.56 0.68 16.34 16.34 49.12
EFBI Enterprise Fed. Bancorp of OH(8) 1.10 1.01 17.52 12.63 246.07
EQSB Equitable FSB of Wheaton MD 2.60 1.53 16.29 16.29 312.34
FCBF FCB Fin. Corp. of Neenah WI(8) 1.79 1.57 20.01 20.01 136.93
FFDF FFD Financial Corp. of OH 0.58 0.38 11.26 11.26 74.17
FFLC FFLC Bancorp of Leesburg FL 1.20 1.20 14.50 14.50 126.35
FFWC FFW Corporation of Wabash IN 1.37 1.20 13.73 12.73 148.63
FFYF FFY Financial Corp. of OH 1.01 0.99 10.64 10.64 86.89
FMCO FMS Financial Corp. of NJ 0.73 0.73 6.01 5.99 95.66
FFHH FSF Financial Corp. of MN 1.05 0.97 14.65 13.67 145.83
FDTR Federal Trust Corp of FL 0.09 0.08 2.65 2.65 35.30
FBCI Fidelity Bancorp of Chicago IL 1.60 1.60 18.68 18.66 232.85
FSBI Fidelity Bancorp, Inc. of PA 1.49 1.47 14.80 14.80 221.19
FFFL Fidelity Bcsh MHC of FL (47.9) 1.09 0.88 12.49 12.14 230.33
FFED Fidelity Fed. Bancorp of IN -0.37 -0.32 2.55 2.55 61.73
FFOH Fidelity Financial of OH 0.81 0.79 12.05 10.81 92.50
SBFL Fingr Lakes Fin.MHC OF NY(33.1 0.20 0.15 6.15 6.15 79.10
FBEI First Bancorp of Indiana of IN 0.37 0.37 15.16 15.16 57.97
FBSI First Bancshares, Inc. of MO 0.79 0.81 11.40 10.95 82.02
FBBC First Bell Bancorp of PA 1.31 1.30 12.37 12.37 128.51
FCAP First Capital, Inc. of IN 0.67 0.67 13.50 13.50 81.42
FSTC First Citizens Corp of GA(8) 1.88 1.63 14.29 11.87 149.41
FCME First Coastal Corp. of ME* 1.15 0.88 11.99 11.99 140.64
FDEF First Defiance Fin.Corp. of OH 0.41 0.20 12.37 10.61 103.68
FESX First Essex Bancorp of MA* 1.45 1.35 12.74 9.54 163.80
FFES First Fed of E. Hartford CT 1.87 2.05 26.48 26.48 358.73
BDJI First Fed. Bancorp. of MN 0.84 0.84 13.32 13.32 130.40
FFBH First Fed. Bancshares of AR 1.34 1.31 17.95 17.95 136.29
FTFC First Fed. Capital Corp. of WI 1.06 0.73 6.68 5.95 97.30
FFKY First Fed. Fin. Corp. of KY 1.50 1.47 13.70 10.97 116.05
FFBZ First Federal Bancorp of OH 0.42 0.40 5.32 5.31 69.72
FFSXD First Federal Bankshares of IA 0.93 0.78 14.15 9.72 146.67
FFCH First Fin. Holdings Inc. of SC 1.28 1.26 9.13 9.13 140.35
FFHS First Franklin Corp. of OH 1.08 0.91 12.29 12.25 141.03
FGHC First Georgia Hold. Corp of GA 0.44 0.44 3.37 3.18 41.05
FFSL First Independence Corp. of KS 1.01 1.01 12.79 12.79 131.43
FISB First Indiana Corp. of IN 1.51 0.97 13.10 12.97 141.81
FKAN First Kansas Financial of KS 0.43 0.39 13.80 13.64 68.99
FKFS First Keystone Fin. Corp of PA 1.22 1.09 11.39 11.39 188.22
FLKY First Lancaster Bncshrs of KY 0.29 0.29 14.77 14.77 63.19
FLFC First Liberty Fin. Corp. of GA 1.16 1.06 9.20 8.42 117.14
CASH First Midwest Fin., Inc. of IA 1.08 0.99 16.56 14.81 188.26
FMSB First Mutual SB of Bellevue WA* 1.11 0.92 7.42 7.42 104.76
FNFI First Niles Financial of OH 0.32 0.32 15.38 15.38 50.04
FNGB First Northern Cap. Corp of WI 0.78 0.70 8.69 8.69 82.23
FPFC First Place Fin. Corp of OH 0.55 0.55 13.18 13.18 62.19
FWWB First Savings Bancorp of WA 1.19 1.09 15.12 12.59 130.02
FSFF First SecurityFed Fin of IL 0.91 0.91 14.45 14.41 57.74
FSLA First Sentinal Bancorp of NJ 0.36 0.33 7.03 6.84 43.47
SOPN First Svgs Bancorp of NC 1.48 1.48 19.47 19.47 80.64
FBNW FirstBank Corp of ID 1.16 0.73 16.08 16.08 116.55
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
Out- --------------- -----------------------
Price/ stand- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) ing ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFDB FirstFed Bancorp, Inc. of AL 9.13 2,302 21.0 15.94 9.00 9.13 0.00 -23.53 -17.97
FSPT FirstSpartan Fin. Corp. of SC 28.25 3,788 107.0 47.25 24.50 28.75 -1.74 -38.76 -6.24
FLAG Flag Financial Corp of GA 10.13 6,560 66.5 19.38 9.13 10.00 1.30 -26.75 -11.91
FLGS Flagstar Bancorp, Inc of MI 26.50 13,670 362.3 29.88 20.25 23.00 15.22 -2.32 1.42
FFBK FloridaFirst MHC of FL (47.0) 9.50 5,753 25.7 9.50 7.88 0.00 -1.00 -5.00 -5.00
FFIC Flushing Fin. Corp. of NY* 14.50 10,346 150.0 19.92 12.00 13.38 8.37 -21.62 -8.29
FTSB Fort Thomas Fin. Corp. of KY 12.00 1,474 17.7 15.75 10.25 13.25 -9.43 -22.58 -14.29
FKKY Frankfort First Bancorp of KY 14.75 1,557 23.0 17.38 13.63 14.63 0.82 -11.30 -2.51
FTNB Fulton Bancorp, Inc. of MO 13.75 1,659 22.8 23.25 13.31 14.13 -2.69 -41.49 -15.70
GUPB GFSB Bancorp, Inc of Gallup NM 14.50 1,052 15.3 17.00 13.00 14.50 0.00 -2.23 1.75
GSLA GS Financial Corp. of LA 10.38 2,947 30.6 20.00 10.25 10.75 -3.44 -49.07 -20.15
GOSB GSB Financial Corp. of NY* 13.75 2,156 29.6 17.75 8.31 13.94 -1.36 -19.12 -1.79
GBNK Gaston Fed Bncp MHC of NC(47.0 12.00 4,461 25.4 17.25 10.00 11.50 4.35 -31.43 -7.69
GCFC Grand Central Fin Corp of OH 10.25 1,939 19.9 11.00 10.25 10.25 0.00 2.50 -4.65
GTPS Great American Bancorp of IL 15.00 1,320 19.8 23.00 13.50 15.06 -0.40 -32.58 3.45
PEDE Great Pee Dee Bancorp of SC 11.50 2,143 24.6 17.38 10.63 11.50 0.00 -26.98 -4.17
GSFC Green Street Fin. Corp. of NC 12.00 4,083 49.0 17.88 10.88 11.13 7.82 -34.25 -15.07
GFED Guaranty Fed Bancshares of MO 11.06 5,917 65.4 13.75 10.13 10.50 5.33 -17.71 -5.39
HEMT HF Bancorp of Hemet CA(8) 17.69 6,399 113.2 18.13 12.00 17.44 1.43 1.78 5.99
HFFC HF Financial Corp. of SD 12.50 4,148 51.9 24.17 12.13 14.63 -14.56 -44.44 -31.51
HMNF HMN Financial, Inc. of MN 11.31 5,294 59.9 19.00 10.50 11.00 2.82 -40.47 -3.74
HALL Hallmark Capital Corp. of WI 10.13 2,880 29.2 16.75 9.50 10.75 -5.77 -38.61 -7.91
HRBF Harbor Federal Bancorp of MD 16.00 1,797 28.8 23.41 16.00 16.13 -0.81 -28.15 -20.00
HARB Harbor Florida Bancshrs of FL 11.88 30,643 364.0 13.50 8.75 11.94 -0.50 -5.41 6.17
HFSA Hardin Bancorp of Hardin MO 15.75 739 11.6 20.50 14.25 16.50 -4.55 -17.67 -17.11
HARL Harleysville SB of PA 17.00 2,246 38.2 35.00 15.69 16.75 1.49 -43.80 -27.66
HFGI Harrington Fin. Group of IN 7.63 3,205 24.5 11.63 7.50 7.50 1.73 -34.39 -4.63
HARS Harris Fin. MHC of PA (24.9) 12.56 33,584 106.0 27.50 11.00 11.97 4.93 -52.60 -7.85
HFFB Harrodsburg 1st Fin Bcrp of KY 13.38 1,827 24.4 17.69 13.00 13.00 2.92 -23.54 -7.72
HHFC Harvest Home Fin. Corp. of OH 15.50 875 13.6 17.00 11.75 14.50 6.90 3.33 5.08
HAVN Haven Bancorp of Woodhaven NY 12.06 8,860 106.9 28.75 10.50 11.13 8.36 -56.93 -19.60
HTHR Hawthorne Fin. Corp. of CA 14.50 5,190 75.3 21.75 12.00 13.50 7.41 -25.64 -9.38
HMLK Hemlock Fed. Fin. Corp. of IL 13.50 1,782 24.1 19.00 12.63 13.19 2.35 -28.95 -0.95
HBSC Heritage Bancorp, Inc of SC 19.25 4,447 85.6 22.38 14.00 19.50 -1.28 -12.50 -8.33
HFWA Heritage Financial Corp of WA 8.50 9,793 83.2 15.88 8.13 8.63 -1.51 -46.68 -12.82
HCBC High Country Bancorp of CO 10.88 1,323 14.4 15.25 10.25 10.63 2.35 -28.66 -15.53
HBNK Highland Bancorp of CA 37.06 2,194 81.3 43.50 31.50 37.00 0.16 -1.83 17.65
HIFS Hingham Inst. for Sav. of MA* 16.00 1,964 31.4 24.50 14.88 15.19 5.33 -33.33 -3.03
HBFW Home Bancorp of Fort Wayne IN 27.50 2,185 60.1 35.25 26.50 27.63 -0.47 -18.23 -3.51
HCFC Home City Fin. Corp. of OH 15.75 859 13.5 22.75 11.00 16.00 -1.56 -17.11 16.67
HOMF Home Fed Bancorp of Seymour IN 20.75 5,079 105.4 33.75 20.50 21.00 -1.19 -36.41 -6.74
HWEN Home Financial Bancorp of IN 7.88 891 7.0 9.50 6.50 7.50 5.07 -17.05 5.07
HLFC Home Loan Financial Corp of OH 13.63 2,225 30.3 16.75 11.45 14.00 -2.64 -17.39 0.96
HPBC Home Port Bancorp, Inc. of MA* 22.88 1,842 42.1 27.00 19.13 21.63 5.78 -13.66 -6.61
HSTD Homestead Bancorp, Inc. of LA 7.75 1,478 11.5 20.00 6.63 7.75 0.00 -22.50 -5.37
HFBC HopFed Bancorp of KY 20.50 4,034 82.7 23.50 15.25 20.25 1.23 -1.20 19.26
HZFS Horizon Fin'l. Services of IA 8.00 880 7.0 16.88 8.00 10.00 -20.00 -51.52 -36.00
HRZB Horizon Financial Corp. of WA* 13.00 7,496 97.4 18.63 12.44 13.13 -0.99 -26.76 2.93
HRBT Hudson River Bancorp Inc of NY 10.38 17,854 185.3 13.69 8.88 10.31 0.68 3.80 -8.22
ITLA ITLA Capital Corp of CA* 15.88 7,166 113.8 24.00 9.00 14.63 8.54 -27.82 4.96
ICBC Independence Comm Bnk Cp of NY 12.44 74,124 922.1 19.13 11.00 12.25 1.55 -30.43 -21.96
IFSB Independence FSB of DC 12.88 1,281 16.5 21.63 11.69 13.25 -2.79 -38.67 -2.79
INBI Industrial Bancorp of OH 19.00 4,831 91.8 23.50 16.25 19.00 0.00 -20.44 -5.00
ISFC Innes Street Financial of NC 12.25 2,248 27.5 13.63 11.25 11.50 6.52 22.50 -7.13
IWBK Interwest Bancorp of WA 22.25 15,674 348.7 31.33 17.75 21.38 4.07 -21.93 0.54
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- -------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
ASDAQ Listed OTC Companies (continued)
- --------------------------------------
FFDB FirstFed Bancorp, Inc. of AL 0.64 0.64 7.91 7.34 80.86
FSPT FirstSpartan Fin. Corp. of SC 1.86 1.68 28.50 28.50 140.13
FLAG Flag Financial Corp of GA 0.42 0.31 7.30 7.30 83.96
FLGS Flagstar Bancorp, Inc of MI 3.00 3.00 11.99 11.75 222.86
FFBK FloridaFirst MHC of FL (47.0) 0.43 0.43 9.64 9.64 78.64
FFIC Flushing Fin. Corp. of NY* 0.99 0.99 12.77 12.28 110.39
FTSB Fort Thomas Fin. Corp. of KY 0.66 0.66 8.81 8.81 71.53
FKKY Frankfort First Bancorp of KY 1.07 1.07 14.13 14.13 87.87
FTNB Fulton Bancorp, Inc. of MO 0.65 0.55 15.22 15.22 70.24
GUPB GFSB Bancorp, Inc of Gallup NM 0.84 0.84 12.47 12.47 127.16
GSLA GS Financial Corp. of LA 0.46 0.41 16.46 16.46 53.46
GOSB GSB Financial Corp. of NY* 0.29 0.43 14.55 14.55 63.52
GBNK Gaston Fed Bncp MHC of NC(47.0 0.46 0.43 9.34 9.34 49.52
GCFC Grand Central Fin Corp of OH 0.43 0.43 15.76 15.76 71.11
GTPS Great American Bancorp of IL 0.64 0.64 17.53 17.53 118.99
PEDE Great Pee Dee Bancorp of SC 0.39 0.39 14.45 14.45 32.24
GSFC Green Street Fin. Corp. of NC 0.68 0.68 14.84 14.84 42.06
GFED Guaranty Fed Bancshares of MO 0.56 0.56 11.23 11.23 48.75
HEMT HF Bancorp of Hemet CA(8) -0.13 -0.07 13.19 11.48 159.65
HFFC HF Financial Corp. of SD 1.34 1.14 12.81 12.81 145.28
HMNF HMN Financial, Inc. of MN 0.77 0.41 12.93 11.87 131.22
HALL Hallmark Capital Corp. of WI 1.02 0.90 11.96 11.96 167.17
HRBF Harbor Federal Bancorp of MD 1.02 1.02 16.16 16.16 126.63
HARB Harbor Florida Bancshrs of FL 0.59 0.58 8.40 8.31 46.43
HFSA Hardin Bancorp of Hardin MO 1.45 0.97 16.79 16.79 176.07
HARL Harleysville SB of PA 1.53 1.50 11.87 11.87 187.17
HFGI Harrington Fin. Group of IN -1.31 -0.58 5.98 5.98 171.59
HARS Harris Fin. MHC of PA (24.9) 0.57 0.41 5.63 5.46 74.34
HFFB Harrodsburg 1st Fin Bcrp of KY 0.79 0.79 15.43 15.43 60.58
HHFC Harvest Home Fin. Corp. of OH 0.63 0.61 11.79 11.79 109.43
HAVN Haven Bancorp of Woodhaven NY 0.92 0.84 13.53 12.83 270.38
HTHR Hawthorne Fin. Corp. of CA 2.13 2.13 15.69 15.69 272.15
HMLK Hemlock Fed. Fin. Corp. of IL 0.87 0.88 15.27 15.27 114.72
HBSC Heritage Bancorp, Inc of SC 0.87 0.87 20.98 20.98 68.34
HFWA Heritage Financial Corp of WA 0.44 0.30 9.75 8.89 42.07
HCBC High Country Bancorp of CO 0.62 0.62 13.63 13.63 83.05
HBNK Highland Bancorp of CA 3.92 3.55 19.80 19.80 275.66
HIFS Hingham Inst. for Sav. of MA* 1.53 1.49 12.05 12.05 132.42
HBFW Home Bancorp of Fort Wayne IN 1.38 1.39 18.30 18.30 174.99
HCFC Home City Fin. Corp. of OH 1.11 1.11 12.65 12.65 99.37
HOMF Home Fed Bancorp of Seymour IN 2.06 1.70 13.66 13.34 145.38
HWEN Home Financial Bancorp of IN 0.34 0.29 8.07 8.07 57.87
XLFC Home Loan Financial Corp of OH 0.56 0.56 13.83 13.83 38.85
HPBC Home Port Bancorp, Inc. of MA* 1.93 2.19 13.05 13.05 149.60
HSTD Homestead Bancorp, Inc. of LA 0.29 0.24 10.79 10.79 60.09
HFBC HopFed Bancorp of KY 0.73 0.73 15.15 15.15 54.54
HZFS Horizon Fin'l. Services of IA -0.64 0.84 8.33 8.33 97.50
HRZB Horizon Financial Corp. of WA* 1.14 1.14 11.86 11.86 78.39
HRBT Hudson River Bancorp Inc of NY 0.11 0.17 12.73 12.72 46.70
ITLA ITLA Capital Corp of CA* 2.07 2.06 14.78 14.74 144.10
ICBC Independence Comm Bnk Cp of NY 0.03 0.53 12.33 11.66 71.68
IFSB Independence FSB of DC 4.18 3.32 17.27 15.93 208.73
INBI Industrial Bancorp of OH 1.18 1.18 12.57 12.57 80.33
ISFC Innes Street Financial of NC 0.63 0.60 16.05 16.05 93.82
IWBK Interwest Bancorp of WA 1.89 1.57 11.18 10.28 165.98
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
Shares Market 52 Week (1) % Change From
Out- Market -------------- --------------------
Price/ stand- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) ing ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
IPSW Ipswich SB of Ipswich MA* 10.38 2,392 24.8 20.75 9.69 10.13 2.47 -38.94 -3.44
JXVL Jacksonville Bancorp of TX 15.38 2,367 36.4 22.00 13.50 13.75 11.85 -24.98 3.36
JXSB Jcksnville SB,MHC of IL (45.6) 10.50 1,908 9.1 24.50 10.00 10.88 -3.49 -54.35 -8.70
JSBA Jefferson Svgs Bancorp of MO 13.44 10,025 134.7 31.88 10.63 11.19 20.11 -56.48 2.36
KSBK KSB Bancorp of Kingfield ME* 11.88 1,269 15.1 19.38 8.00 11.00 8.00 -38.70 -23.35
KFBI Klamath First Bancorp of OR 16.25 8,900 144.6 21.88 14.00 14.63 11.07 -23.99 -16.15
LSBI LSB Fin. Corp. of Lafayette IN 27.13 920 25.0 32.00 26.25 28.00 -3.11 -10.99 -4.81
LVSB Lakeview Financial of NJ(8) 22.06 4,874 107.5 28.75 13.50 22.00 0.27 -6.13 -1.96
LARK Landmark Bancshares, Inc of KS 17.75 1,232 21.9 29.25 17.75 19.88 -10.71 -32.38 -24.88
LARL Laurel Capital Group of PA 15.81 2,189 34.6 21.75 15.50 16.38 -3.48 -27.31 -9.03
LSBX Lawrence Savings Bank of MA* 10.25 4,353 44.6 18.75 8.38 8.63 18.77 -44.98 -19.98
LFED Leeds Fed Bksr MHC of MD (36.5 11.75 5,067 22.3 21.00 11.50 11.50 2.17 -43.54 -20.34
LXMO Lexington B&L Fin. Corp. of MO 10.75 1,009 10.8 17.25 10.38 10.81 -0.56 -35.36 -6.52
LIBB Liberty Bancorp MHC of NJ (47) 8.88 3,901 16.3 11.69 7.25 8.50 4.47 -11.20 -1.33
LFCO Life Financial Corp of CA(8) 5.19 6,562 34.1 25.38 2.25 3.06 69.61 -79.03 12.10
LNCB Lincoln Bancorp of IN 9.81 6,809 66.8 11.44 9.69 9.88 -0.71 -1.90 -9.83
LFBI Little Falls Bancorp of NJ(8) 20.50 2,478 50.8 22.25 11.50 19.63 4.43 -7.87 2.50
LOGN Logansport Fin. Corp. of IN 11.50 1,199 13.8 19.38 11.38 11.38 1.05 -41.03 -14.81
MAFB MAF Bancorp, Inc. of IL 23.44 24,970 585.3 28.83 19.38 22.25 5.35 -16.05 -11.55
MBLF MBLA Financial Corp. of MO 18.50 1,247 23.1 27.00 15.00 18.75 -1.33 -31.48 -1.33
MECH MECH Financial Inc of CT* 30.00 5,298 158.9 34.00 20.63 29.75 0.84 -4.40 8.11
MFBC MFB Corp. of Mishawaka IN 21.25 1,464 31.1 27.75 18.00 21.63 -1.76 -21.30 -2.30
MSBF MSB Financial, Inc of MI 12.00 1,313 15.8 16.88 11.00 12.50 -4.00 -20.58 -12.73
MARN Marion Capital Holdings of IN 21.00 1,556 32.7 28.94 19.75 20.25 3.70 -26.65 5.00
MRKF Market Fin. Corp. of OH 8.25 1,327 10.9 16.00 8.25 8.25 0.00 -48.05 -25.88
MASB MassBank Corp. of Reading MA* 36.75 3,499 128.6 53.50 29.50 37.75 -2.65 -30.99 -6.08
MFLR Mayflower Co-Op. Bank of MA* 14.00 1,351 18.9 17.92 11.33 14.75 -5.08 -19.22 -4.57
MDBK Medford Bancorp, Inc. of MA* 16.13 8,293 133.8 22.06 13.50 15.63 3.20 -26.48 -3.70
MBFC MegaBank Financial Corp of CO 9.31 7,607 70.8 11.13 9.06 9.19 1.31 N.A. -2.00
MWBX MetroWest Bank of MA* 5.81 14,258 82.8 8.44 5.50 5.56 4.50 -27.92 -4.13
METF Metropolitan Fin. Corp. of OH 8.00 7,756 62.0 15.46 7.00 7.88 1.52 -48.05 -23.81
MCBN Mid-Coast Bancorp of ME 7.38 715 5.3 12.75 7.00 7.38 0.00 -40.96 5.43
MWBI Midwest Bancshares, Inc. of IA(8) 13.50 1,078 14.6 17.00 10.75 15.00 -10.00 -16.31 9.05
MFFC Milton Fed. Fin. Corp. of OH 13.00 2,205 28.7 16.44 12.31 12.88 0.93 -20.63 -16.83
MBBC Monterey Bay Bancorp of CA 11.94 3,505 41.8 19.60 10.00 10.00 19.40 -37.81 -16.56
MONT Montgomery Fin. Corp. of IN 9.00 1,590 14.3 13.25 8.94 9.00 0.00 -30.77 -11.15
MSBK Mutual SB, FSB of Bay City MI(8) 12.00 4,290 51.5 12.88 5.75 11.13 7.82 -5.88 39.05
MYST Mystic Financial of MA* 10.88 2,574 28.0 18.00 9.75 10.13 7.40 -38.29 -11.18
NHTB NH Thrift Bancshares of NH 14.63 2,104 30.8 21.75 12.00 14.75 -0.81 -29.70 -5.61
NSLB NS&L Bancorp, Inc of Neosho MO 14.25 739 10.5 15.42 10.42 16.75 -14.93 -1.59 34.05
NMSB Newmil Bancorp, Inc. of CT* 11.13 3,777 42.0 14.63 10.00 10.88 2.30 -21.89 -6.31
NBCP Niagara Bancorp MHC of NY(45.4* 10.25 29,756 138.4 17.00 8.50 9.25 10.81 2.50 0.00
NBSI North Bancshares of Chicago IL 11.75 1,252 14.7 18.00 10.75 11.75 0.00 -33.80 -6.00
FFFD North Central Bancshares of IA 16.25 2,964 48.2 24.88 15.00 16.00 1.56 -32.29 -3.73
NEIB Northeast Indiana Bncrp of IN 13.50 1,653 22.3 20.68 13.25 13.88 -2.74 -32.50 -19.40
NWSB Northwest Bcrp MHC of PA (30.5 9.63 47,349 139.0 18.00 8.50 8.69 10.82 -45.56 -1.23
NWEQ Northwest Equity Corp. of WI(8) 22.06 825 18.2 25.00 15.63 22.00 0.27 4.40 0.27
NTMG Nutmeg FS&LA of CT 8.50 1,325 11.3 10.40 8.25 8.50 0.00 0.00 -10.53
OHSL OHSL Financial Corp. of OH 14.00 2,471 34.6 17.75 12.88 14.25 -1.75 -17.65 0.86
OCFC Ocean Fin. Corp. of NJ 14.50 14,627 212.1 20.00 12.00 13.81 5.00 -23.68 -12.81
ONFC Oneida Fincl MHC of NY (44.5) 9.13 3,580 14.5 11.00 7.75 8.88 2.82 -8.70 -17.00
OTFC Oregon Trail Fin. Corp. of OR 12.44 4,189 52.1 18.00 11.00 12.50 -0.48 -29.92 1.55
OFCP Ottawa Financial Corp. of MI 20.94 5,448 114.1 26.59 18.88 20.75 0.92 -20.74 -1.46
PBOC PBOC Holdings of CA 8.78 21,041 184.7 14.50 8.00 8.78 0.00 N.A. -14.34
PFFB PFF Bancorp of Pomona CA 17.25 15,442 266.4 21.13 11.94 16.25 6.15 -14.81 7.81
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
-----------------------------------------
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
IPSW Ipswich SB of Ipswich MA* 1.10 0.97 5.95 5.95 113.43
JXVL Jacksonville Bancorp of TX 1.44 1.44 15.14 15.14 110.02
JXSB Jcksnville SB,MHC of IL (45.6) 0.57 0.41 9.53 9.53 88.72
JSBA Jefferson Svgs Bancorp of MO 0.71 0.67 12.35 10.14 138.00
KSBK KSB Bancorp of Kingfield ME* 1.36 1.33 10.79 9.67 135.00
KFBI Klamath First Bancorp of OR 1.11 1.07 16.42 15.18 117.72
LSBI LSB Fin. Corp. of Lafayette IN 1.89 1.65 19.78 19.78 253.06
LVSB Lakeview Financial of NJ(8) 1.94 0.83 10.17 6.56 117.60
LARK Landmark Bancshares, Inc of KS 1.93 1.56 18.93 18.93 181.57
LARL Laurel Capital Group of PA 1.48 1.45 11.17 11.17 103.21
LSBX Lawrence Savings Bank of MA* 2.02 1.98 10.73 10.73 78.12
LFED Leeds Fed Bksr MHC of MD (36.5 0.65 0.65 9.89 9.89 61.95
LXMO Lexington B&L Fin. Corp. of MO 0.61 0.61 15.51 14.53 101.07
LIBB Liberty Bancorp MHC of NJ (47) 0.36 0.36 8.83 8.83 66.76
LFCO Life Financial Corp of CA(8) 1.78 1.87 9.38 9.38 57.96
LNCB Lincoln Bancorp of IN 0.52 0.52 14.48 14.48 54.96
LFBI Little Falls Bancorp of NJ(8) 0.71 0.69 15.11 14.10 141.49
LOGN Logansport Fin. Corp. of IN 1.04 1.04 13.75 13.75 80.14
MAFB MAF Bancorp, Inc. of IL 1.53 1.49 13.80 11.35 165.03
MBLF MBLA Financial Corp. of MO 1.50 1.50 22.74 22.74 166.86
MECH MECH Financial Inc of CT* 1.64 1.66 18.00 17.86 192.41
MFBC MFB Corp. of Mishawaka IN 1.64 1.69 21.36 21.36 228.60
MSBF MSB Financial, Inc of MI 0.90 0.79 10.25 10.25 64.17
MARN Marion Capital Holdings of IN 1.46 1.46 22.13 21.65 125.09
MRKF Market Fin. Corp. of OH 0.37 0.37 11.57 11.57 42.20
MASB MassBank Corp. of Reading MA* 3.12 2.57 31.58 31.18 270.54
MFLR Mayflower Co-Op. Bank of MA* 1.16 0.94 10.13 10.00 111.11
MDBK Medford Bancorp, Inc. of MA* 1.48 1.32 12.33 11.75 138.81
MBFC MegaBank Financial Corp of CO 0.55 0.55 3.60 3.60 30.34
MWBX MetroWest Bank of MA* 0.57 0.56 3.54 3.54 48.42
METF Metropolitan Fin. Corp. of OH 0.88 0.69 5.50 5.15 175.79
MCBN Mid-Coast Bancorp of ME 0.42 0.34 7.44 7.44 99.21
MWBI Midwest Bancshares, Inc. of IA(8) 1.27 1.13 11.16 11.16 150.57
MFFC Milton Fed. Fin. Corp. of OH 0.69 0.55 11.78 11.78 112.95
MBBC Monterey Bay Bancorp of CA 0.41 0.40 11.95 10.92 129.76
MONT Montgomery Fin. Corp. of IN 0.66 0.66 12.38 12.38 76.40
MSBK Mutual SB, FSB of Bay City MI(8) 0.62 0.28 8.42 8.42 131.57
MYST Mystic Financial of MA* 0.69 0.65 13.70 13.70 81.38
NHTB NH Thrift Bancshares of NH 1.48 1.35 13.20 11.68 153.71
NSLB NS&L Bancorp, Inc of Neosho MO 0.63 0.60 14.12 14.01 87.75
NMSB Newmil Bancorp, Inc. of CT* 0.72 0.54 9.23 9.23 94.72
NBCP Niagara Bancorp MHC of NY(45.4* 0.35 0.50 8.87 8.87 50.70
NBSI North Bancshares of Chicago IL 0.41 0.37 10.51 10.51 100.50
FFFD North Central Bancshares of IA 1.48 1.47 16.26 14.11 113.59
NEIB Northeast Indiana Bncrp of IN 1.45 1.45 15.13 15.13 128.51
NWSB Northwest Bcrp MHC of PA (30.5 0.44 0.42 4.79 3.97 61.02
NWEQ Northwest Equity Corp. of WI(8) 1.34 1.22 14.55 14.55 120.23
NTMG Nutmeg FS&LA of CT 0.88 0.31 5.30 5.30 79.63
OHSL OHSL Financial Corp. of OH 0.87 0.79 10.94 10.94 108.12
OCFC Ocean Fin. Corp. of NJ 0.89 0.92 13.52 13.45 106.77
ONFC Oneida Fincl MHC of NY (44.5) 0.34 0.34 11.70 11.70 64.99
OTFC Oregon Trail Fin. Corp. of OR 0.79 0.79 14.69 14.69 72.38
OFCP Ottawa Financial Corp. of MI 1.59 1.40 13.47 11.08 172.18
PBOC PBOC Holdings of CA 0.56 -0.04 8.58 8.58 158.50
PFFB PFF Bancorp of Pomona CA 1.14 1.11 15.28 15.13 191.51
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
-------------------------------- ----------------------------------------------
52 Week (1) % Change From
Shares Market ------------- -----------------------
Price/ Out- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) standing ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- -------- -------- ---------- ----- ----- ----- ----- ------ -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PHSB PHS Bancorp MHC of PA (45.0) 10.63 2,760 13.2 22.00 9.88 10.13 4.94 -51.68 -24.77
PSFI PS Financial of Chicago IL 10.06 1,843 18.5 14.88 8.50 9.75 3.18 -27.52 0.60
PSBI PSB Bancorp Inc. of PA* 6.08 3,101 18.9 10.69 5.63 5.63 7.99 -40.97 -20.31
PVFC PVF Capital Corp. of OH 11.75 3,991 46.9 18.83 10.00 12.56 -6.45 -31.21 1.03
PBCI Pamrapo Bancorp, Inc. of NJ 22.75 2,843 64.7 32.38 22.13 22.50 1.11 -18.75 -4.73
PFED Park Bancorp of Chicago IL 13.75 2,187 30.1 19.75 13.25 13.69 0.44 -26.67 -0.94
PVSA Parkvale Financial Corp of PA 19.38 6,236 120.9 28.00 19.38 20.38 -4.91 -23.40 -6.87
PBHC Pathfinder BC MHC of NY (46.0)* 10.13 2,738 12.0 26.13 9.00 10.13 0.00 -55.96 10.95
PEEK Peekskill Fin. Corp. of NY 13.00 2,842 36.9 18.13 12.00 13.38 -2.84 -26.76 -18.44
PFSB PennFed Fin. Services of NJ 15.25 8,793 134.1 18.38 10.25 14.75 3.39 -15.28 17.31
PBKB People's Bancshares of MA* 19.00 3,320 63.1 27.75 15.00 19.25 -1.30 -28.65 -7.32
TSBS Peoples Bancorp Inc of NJ(8)* 11.25 35,742 402.1 13.23 6.97 10.88 3.40 6.53 3.40
PFDC Peoples Bancorp of Auburn IN 19.38 3,243 62.8 22.88 19.25 19.38 0.00 -9.86 -3.10
PBCT Peoples Bank, MHC of CT (43.2)* 29.13 62,715 806.4 41.00 19.19 29.63 -1.69 -29.18 5.43
PFFC Peoples Fin. Corp. of OH 9.25 1,284 11.9 15.63 8.75 9.00 2.78 -39.34 -15.91
PHBK Peoples Heritage Fin Grp of ME* 19.00 87,546 1,663.4 26.00 13.81 17.63 7.77 -26.21 -5.00
PSFC Peoples Sidney Fin. Corp of OH 12.75 1,713 21.8 24.38 12.50 12.75 0.00 -33.35 -24.47
PERM Permanent Bancorp, Inc. of IN 11.00 3,980 43.8 18.25 10.50 10.75 2.33 -39.33 -17.36
PCBC Perry Co. Fin. Corp. of MO 21.50 810 17.4 24.13 18.00 21.50 0.00 -9.47 8.15
PHFC Pittsburgh Home Fin Corp of PA 13.69 1,841 25.2 18.50 12.13 13.38 2.32 -24.49 -5.59
PFSL Pocahontas Bancorp of AR 6.88 6,245 43.0 10.38 6.50 7.00 -1.71 -32.48 -11.23
PTRS Potters Financial Corp of OH 12.25 1,026 12.6 18.18 11.82 13.00 -5.77 -30.91 -32.62
PRBC Prestige Bancorp of PA 11.25 997 11.2 21.02 11.25 12.00 -6.25 -40.94 -7.33
PFNC Progress Financial Corp. of PA 17.00 5,086 86.5 21.67 11.50 14.63 16.20 -11.87 37.32
PBCP Provident Bncp MHC of NY (46.7 10.25 8,280 39.6 12.25 7.75 10.31 -0.58 2.50 2.50
PROV Provident Fin. Holdings of CA 16.38 4,618 75.6 24.13 14.00 16.13 1.55 -31.75 -3.99
PULB Pulaski Financial Corp of MO 9.25 3,966 36.7 28.45 9.00 9.13 1.31 -67.31 -6.38
PLSK Pulaski SB, MHC of NJ (47.0) 8.88 2,108 8.8 19.75 8.25 8.50 4.47 -54.46 -11.20
QCFB QCF Bancorp of Virginia MN 25.00 1,151 28.8 31.00 25.00 25.00 0.00 -18.70 -1.96
QCBC Quaker City Bancorp of CA 15.50 5,730 88.8 21.25 11.75 14.88 4.17 -17.55 -3.13
QCSB Queens County Bancorp of NY* 31.88 21,251 677.5 31.88 22.88 28.56 11.62 8.69 7.16
RELY Reliance Bancorp, Inc. of NY 28.13 8,706 244.9 41.94 21.50 28.00 0.46 -32.02 1.15
RCBK Richmond County Fin Corp of NY 15.00 25,493 382.4 19.75 11.31 15.25 -1.64 -21.30 -6.60
RSBI Ridgewood Fin. MHC of NJ (47.0 7.63 3,180 11.4 11.88 7.25 7.88 -3.17 9.00 9.00
RIVR River Valley Bancorp of IN 12.50 1,173 14.7 20.75 12.50 13.25 -5.66 -35.90 -15.25
RVSB Riverview Bancorp of WA 11.50 6,013 69.1 19.13 11.25 11.50 0.00 -31.87 -6.12
RSLN Roslyn Bancorp, Inc. of NY* 17.44 41,400 722.0 30.50 13.31 17.44 0.00 -37.29 -18.88
SCCB S. Carolina Comm. Bnshrs of SC 14.00 579 8.1 22.88 13.25 14.00 0.00 -34.88 0.86
SFED SFS Bancorp of Schenectady NY 18.38 1,208 22.2 27.88 18.25 18.25 0.71 -24.61 -13.51
SGVB SGV Bancorp of W. Covina CA 11.38 2,181 24.8 18.81 10.75 11.13 2.25 -38.49 -8.96
SCFS Seacoast Fin Serv Corp of MA* 9.69 26,686 258.6 11.13 9.56 9.75 -0.62 -3.10 -5.46
SKAN Skaneateles Bancorp Inc of NY(8)* 24.38 1,451 35.4 25.25 12.63 23.94 1.84 17.49 55.39
SKBO Skibo Fin Corp MHC of PA(45.0) 6.50 3,445 6.7 14.00 6.00 6.50 0.00 -53.00 -14.81
SOBI Sobieski Bancorp of S. Bend IN 14.50 730 10.6 20.00 12.75 14.69 -1.29 -30.95 11.54
SFFS Sound Fed Bp MHC of NY (46.1) 9.19 5,212 22.1 10.13 8.50 8.94 2.80 -8.10 -2.65
SJFC South Jersey Fin. Corp of NJ 11.31 3,793 42.9 11.56 10.63 11.31 0.00 13.10 13.10
SSFC South Street Fin. Corp. of NC* 7.56 4,209 31.8 10.88 7.44 7.63 -0.92 -26.24 -4.06
SBAN SouthBanc Shares Inc. of SC 21.00 3,554 74.6 22.50 15.00 19.00 10.53 -6.67 11.23
SCBS Southern Commun. Bncshrs of AL 11.00 1,080 11.9 18.75 10.75 11.25 -2.22 -43.96 -12.00
SMBC Southern Missouri Bncrp of MO 14.00 1,343 18.8 22.25 12.38 14.63 -4.31 -34.88 -4.31
SVRN Sovereign Bancorp, Inc. of PA 14.25 164,068 2,338.0 20.25 9.00 13.88 2.67 -33.13 0.00
STFR St. Francis Cap. Corp. of WI 40.38 4,610 186.2 44.75 34.50 39.75 1.58 -10.76 -4.43
SPBC St. Paul Bancorp, Inc. of IL 23.50 40,725 957.0 27.22 16.81 21.72 8.20 -11.12 -13.67
SFFC StateFed Financial Corp. of IA 9.75 1,545 15.1 14.75 9.00 10.00 -2.50 -32.20 -2.50
SFIN Statewide Fin. Corp. of NJ 22.44 4,152 93.2 26.69 15.25 21.06 6.55 -2.43 18.11
<CAPTION>
Current Per Share Financials
------------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------ ------ -------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
PHSB PHS Bancorp MHC of PA (45.0) 0.54 0.51 10.57 10.57 88.50
PSFI PS Financial of Chicago IL 0.81 0.79 11.41 11.41 55.77
PSBI PSB Bancorp Inc. of PA* 0.29 0.17 9.80 9.80 52.89
PVFC PVF Capital Corp. of OH 1.26 1.19 8.49 8.49 109.22
PBCI Pamrapo Bancorp, Inc. of NJ 1.55 1.55 17.51 17.44 145.44
PFED Park Bancorp of Chicago IL 0.98 0.98 16.93 16.93 93.18
PVSA Parkvale Financial Corp of PA 1.87 1.81 13.76 13.70 186.20
PBHC Pathfinder BC MHC of NY (46.0)* 0.44 0.29 8.14 6.94 74.29
PEEK Peekskill Fin. Corp. of NY 0.63 0.65 15.10 15.10 75.12
PFSB PennFed Fin. Services of NJ 1.30 1.24 11.47 10.07 175.42
PBKB People's Bancshares of MA* 1.66 0.63 10.44 10.29 284.53
TSBS Peoples Bancorp Inc of NJ(8)* 0.34 0.33 9.55 9.28 41.16
PFDC Peoples Bancorp of Auburn IN 1.32 1.32 13.86 13.86 97.43
PBCT Peoples Bank, MHC of CT (43.2)* 1.46 0.76 13.59 11.42 158.16
PFFC Peoples Fin. Corp. of OH 0.81 0.34 11.20 11.20 67.97
PHBK Peoples Heritage Fin Grp of ME* 1.07 1.30 8.70 7.28 115.40
PSFC Peoples Sidney Fin. Corp of OH 0.46 0.46 10.79 10.79 63.32
PERM Permanent Bancorp, Inc. of IN 0.71 0.66 10.17 7.70 125.12
PCBC Perry Co. Fin. Corp. of MO 0.97 0.96 20.61 20.61 121.60
PHFC Pittsburgh Home Fin Corp of PA 0.99 1.07 13.09 12.95 209.95
PFSL Pocahontas Bancorp of AR 0.43 0.43 8.87 8.45 64.08
PTRS Potters Financial Corp of OH 1.08 0.97 10.87 10.87 131.07
PRBC Prestige Bancorp of PA 0.75 0.73 14.80 14.80 177.91
PFNC Progress Financial Corp. of PA 0.98 0.91 8.17 7.16 127.29
PBCP Provident Bncp MHC of NY (46.7 0.59 0.59 10.18 10.18 87.42
PROV Provident Fin. Holdings of CA 1.21 0.65 18.53 18.53 188.45
PULB Pulaski Financial Corp of MO 0.43 0.31 13.01 13.01 54.60
PLSK Pulaski SB, MHC of NJ (47.0) 0.49 0.51 10.82 10.82 94.78
QCFB QCF Bancorp of Virginia MN 2.14 2.08 17.12 17.12 126.27
QCBC Quaker City Bancorp of CA 1.41 1.30 13.55 13.55 160.55
QCSB Queens County Bancorp of NY* 1.27 1.26 7.03 7.03 82.20
RELY Reliance Bancorp, Inc. of NY 2.19 2.19 20.36 13.85 283.98
RCBK Richmond County Fin Corp of NY 0.40 0.85 11.88 11.84 68.89
RSBI Ridgewood Fin. MHC of NJ (47.0 0.37 0.37 8.23 8.23 81.42
RIVR River Valley Bancorp of IN 1.07 0.92 15.87 15.68 117.96
RVSB Riverview Bancorp of WA 0.80 0.77 9.85 9.55 50.37
RSLN Roslyn Bancorp, Inc. of NY* 1.27 1.12 14.47 14.41 90.22
SCCB S. Carolina Comm. Bnshrs of SC 0.75 0.75 16.44 16.44 78.70
SFED SFS Bancorp of Schenectady NY 1.75 2.84 19.54 19.54 147.49
SGVB SGV Bancorp of W. Covina CA 0.97 0.96 14.26 14.10 211.62
SCFS Seacoast Fin Serv Corp of MA* 0.78 0.75 9.87 9.87 69.36
SKAN Skaneateles Bancorp Inc of NY(8)* 1.14 1.06 13.16 12.90 190.32
SKBO Skibo Fin Corp MHC of PA(45.0) 0.22 0.24 7.22 7.22 43.55
SOBI Sobieski Bancorp of S. Bend IN 0.81 0.79 17.24 17.24 140.97
SFFS Sound Fed Bp MHC of NY (46.1) 0.63 0.63 10.02 10.02 52.59
SJFC South Jersey Fin. Corp of NJ 0.78 0.78 14.95 14.95 76.72
SSFC South Street Fin. Corp. of NC* 0.23 0.20 7.24 7.24 43.23
SBAN SouthBanc Shares Inc. of SC 0.63 1.38 17.09 17.09 104.29
SCBS Southern Commun. Bncshrs of AL 0.71 0.71 7.93 7.93 63.31
SMBC Southern Missouri Bncrp of MO 0.83 0.89 16.29 16.29 117.93
SVRN Sovereign Bancorp, Inc. of PA 0.80 0.85 7.34 4.74 133.57
STFR St. Francis Cap. Corp. of WI 3.20 2.81 24.68 21.80 439.05
SPBC St. Paul Bancorp, Inc. of IL 0.64 1.13 12.52 12.51 148.17
SFFC StateFed Financial Corp. of IA 0.65 0.65 10.50 10.50 59.42
SFIN Statewide Fin. Corp. of NJ 0.85 0.85 14.57 14.55 172.81
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-A (continued)
Weekly Thrift Market Line - Part One
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
-------------------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market ------------- -----------------------
Price/ Out- Capital- Last Last 52 Wks Dec 31,
Financial Institution Share(1) standing ization(9) High Low Week Week Ago(2) 1998(2)
- --------------------- -------- -------- ---------- ----- ----- ----- ----- ------ -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STSA Sterling Financial Corp. of WA 14.50 8,056 116.8 27.13 14.00 16.50 -12.12 -46.30 -14.71
THRD TF Financial Corp. of PA 16.56 3,147 52.1 29.00 15.50 15.50 6.84 -43.01 -4.00
THTL Thistle Group Holdings of PA 8.31 9,000 74.8 10.06 7.63 8.38 -0.84 -16.90 -13.71
TSBK Timberland Bancorp of WA 11.88 5,968 70.9 18.38 10.75 11.00 8.00 -34.00 -3.02
TRIC Tri-County Bancorp of WY 11.56 879 10.2 16.50 9.81 9.81 17.84 -18.88 -17.43
TRYF Troy Financial Corp of NY 9.81 12,139 119.1 10.00 9.38 9.69 1.24 -1.90 -1.90
TWIN Twin City Bancorp, Inc. of TN 13.25 1,202 15.9 15.00 12.75 13.69 -3.21 -8.62 -8.62
USAB USABancshares, Inc of PA* 10.88 2,007 21.8 13.31 6.94 8.25 31.88 -3.29 20.89
UCBC Union Community Bancorp of IN 10.75 2,890 31.1 15.50 10.63 11.00 -2.27 -28.33 -4.44
UFBS Union Fincl. Bancshares of SC 13.50 1,345 18.2 16.67 12.00 12.00 12.50 -8.54 4.98
UCFC United Community Fin. of OH 12.25 34,716 425.3 17.94 10.75 10.75 13.95 22.50 -17.67
UBMT United Fin. Corp. of MT 22.50 1,698 38.2 31.50 21.00 22.50 0.00 -21.05 2.27
UPFC United PanAm Fin. Corp of CA 4.63 17,523 81.1 13.94 3.00 3.38 36.98 N.A. 10.50
UTBI United Tenn. Bancshares of TN 12.00 1,382 16.6 16.00 9.88 12.13 -1.07 -23.81 0.00
VCAP Virginia Capital Bcshrs of VA 13.00 11,405 148.3 13.75 11.94 12.06 7.79 30.00 -3.70
WHGB WHG Bancshares of MD 9.38 1,379 12.9 18.50 9.13 9.50 -1.26 -47.15 -21.83
WSFS WSFS Financial Corp. of DE* 15.63 11,503 179.8 23.88 12.75 14.75 5.97 -28.56 -7.41
WVFC WVS Financial Corp. of PA 15.00 3,266 49.0 20.13 14.75 15.00 0.00 -24.05 -1.64
WRNB Warren Bancorp of Peabody MA* 8.81 7,827 69.0 14.38 7.00 8.38 5.13 -37.65 -2.76
WSBI Warwick Community Bncrp of NY* 12.88 6,607 85.1 17.63 10.38 12.19 5.66 -26.40 -12.68
WFSL Washington Federal, Inc. of WA 22.00 55,899 1,229.8 27.39 20.23 21.50 2.33 -19.18 -9.32
WAYN Wayne Svgs Bks MHC of OH (48.2 17.00 2,484 20.3 28.18 15.75 16.81 1.13 -34.97 -8.11
WCFB Wbstr Cty FSB MHC of IA (45.6) 14.75 2,116 14.2 21.63 12.50 14.75 0.00 -29.76 -7.81
WBST Webster Financial Corp. of CT 31.69 37,327 1,182.9 35.63 18.88 28.31 11.94 -10.73 15.49
WEFC Wells Fin. Corp. of Wells MN 15.75 1,652 26.0 22.00 14.75 16.00 -1.56 -24.10 0.00
WEBK West Essex MHC of NJ (42.2) 9.25 4,197 16.4 10.13 8.41 9.13 1.31 -7.50 -2.01
WSTR WesterFed Fin. Corp. of MT 17.19 4,512 77.6 26.25 16.19 17.00 1.12 -33.88 -5.18
WOFC Western Ohio Fin. Corp. of OH 22.25 2,122 47.2 26.75 19.75 22.38 -0.58 -14.03 2.30
WEHO Westwood Hmstd Fin Corp of OH 9.56 2,329 22.3 15.00 9.25 9.63 -0.73 -34.65 0.63
WGBC Willow Grv Bcp MHC of PA (45.3 9.38 5,143 21.0 10.50 9.13 9.13 2.74 -6.20 -9.63
FFWD Wood Bancorp of OH(8) 19.13 2,709 51.8 20.38 12.25 18.75 2.03 -4.35 6.28
YFCB Yonkers Fin. Corp. of NY 15.00 2,726 40.9 19.88 13.00 14.63 2.53 -23.59 6.69
YFED York Financial Corp. of PA 14.44 9,701 140.1 24.35 14.31 14.38 0.42 -40.70 -8.67
<CAPTION>
Current Per Share Financials
------------------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------ ------ -------- -------
($) ($) ($) ($) ($)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
STSA Sterling Financial Corp. of WA 0.73 1.05 14.77 7.18 287.31
THRD TF Financial Corp. of PA 1.28 1.13 16.73 14.39 211.51
THTL Thistle Group Holdings of PA 0.29 0.30 11.14 11.14 54.67
TSBK Timberland Bancorp of WA 0.94 0.91 13.22 13.22 45.15
TRIC Tri-County Bancorp of WY 1.07 0.97 11.85 11.85 92.52
TRYF Troy Financial Corp of NY 0.28 0.28 14.10 14.10 67.32
TWIN Twin City Bancorp, Inc. of TN 1.05 0.92 11.77 11.77 94.21
USAB USABancshares, Inc of PA* 0.74 0.62 6.77 6.74 82.27
UCBC Union Community Bancorp of IN 0.64 0.64 14.02 14.02 37.43
UFBS Union Fincl. Bancshares of SC 1.16 1.02 11.42 10.07 140.82
UCFC United Community Fin. of OH 0.25 0.25 13.38 13.38 36.22
UBMT United Fin. Corp. of MT 1.39 1.37 17.98 16.80 136.96
UPFC United PanAm Fin. Corp of CA 0.39 -1.28 4.73 4.60 24.29
UTBI United Tenn. Bancshares of TN 0.80 0.81 14.45 13.59 70.24
VCAP Virginia Capital Bcshrs of VA 0.77 0.77 15.47 15.47 49.89
WHGB WHG Bancshares of MD 0.50 0.50 11.68 11.68 100.57
WSFS WSFS Financial Corp. of DE* 1.44 1.51 7.45 7.42 142.20
WVFC WVS Financial Corp. of PA 1.07 1.14 9.98 9.98 98.10
WRNB Warren Bancorp of Peabody MA* 0.75 0.72 5.10 5.10 50.73
WSBI Warwick Community Bncrp of NY* 0.19 0.64 12.75 12.75 67.37
WFSL Washington Federal, Inc. of WA 2.02 1.97 13.67 12.74 102.38
WAYN Wayne Svgs Bks MHC of OH (48.2 0.70 0.64 10.06 10.06 107.90
WCFB Wbstr Cty FSB MHC of IA (45.6) 0.62 0.62 10.91 10.91 44.50
WBST Webster Financial Corp. of CT 1.78 1.77 14.87 12.77 242.02
WEFC Wells Fin. Corp. of Wells MN 1.50 1.39 15.67 15.67 116.15
WEBK West Essex MHC of NJ (42.2) 0.27 0.27 10.76 10.76 80.14
WSTR WesterFed Fin. Corp. of MT 1.54 1.52 20.09 15.76 215.11
WOFC Western Ohio Fin. Corp. of OH 0.61 0.46 22.43 22.43 154.44
WEHO Westwood Hmstd Fin Corp of OH 0.57 0.59 10.29 10.29 55.76
WGBC Willow Grv Bcp MHC of PA (45.3 0.58 0.66 10.48 10.48 81.08
FFWD Wood Bancorp of OH(8) 0.92 0.76 8.91 8.91 63.51
YFCB Yonkers Fin. Corp. of NY 1.01 0.92 15.38 15.38 140.49
YFED York Financial Corp. of PA 0.91 0.70 11.66 11.66 130.16
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-B
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ______________________ _______________ NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(272) 13.32 13.03 0.85 7.09 6.15 0.79 6.53 0.70 141.23 0.88
NYSE Traded Companies(7) 7.90 7.36 0.45 6.15 3.74 0.41 6.57 2.05 130.73 2.18
AMEX Traded Companies(23) 12.79 12.67 0.65 5.03 4.86 0.65 4.70 0.65 189.80 0.84
NASDAQ Listed OTC Companies(242) 13.54 13.24 0.88 7.31 6.34 0.81 6.69 0.67 137.48 0.84
California Companies(18) 7.94 7.71 0.56 5.97 6.80 0.00 1.54 1.48 120.30 2.08
Florida Companies(7) 11.04 10.63 0.47 3.37 3.03 0.43 2.99 1.62 124.08 0.98
Mid-Atlantic Companies(49) 11.38 11.08 0.75 7.68 6.33 0.78 7.58 0.67 122.27 0.92
Mid-West Companies(129) 14.29 14.02 0.86 6.51 5.85 0.83 6.31 0.61 141.87 0.72
New England Companies(8) 8.84 8.57 0.74 9.44 7.72 0.61 7.52 0.56 245.77 1.03
North-West Companies(13) 15.38 14.46 1.12 8.28 6.79 1.05 7.69 0.54 189.20 0.83
South-East Companies(39) 16.19 16.03 1.04 7.69 6.17 0.98 7.23 0.60 148.22 0.81
South-West Companies(5) 8.03 7.76 0.84 11.47 9.17 0.81 11.04 0.78 61.95 0.62
Western Companies (Excl CA)(4) 15.94 15.94 1.23 9.12 6.77 1.21 8.98 0.78 127.54 1.05
Thrift Strategy(235) 14.19 13.94 0.87 6.80 6.02 0.82 6.29 0.66 139.64 0.81
Mortgage Banker Strategy(21) 7.45 6.73 0.76 10.40 6.82 0.64 8.89 0.68 175.74 1.03
Real Estate Strategy(7) 7.15 6.94 0.68 6.65 9.21 0.62 6.10 0.93 133.49 1.72
Diversified Strategy(7) 7.73 7.26 0.42 5.66 2.10 0.41 6.42 1.75 111.03 1.93
Retail Banking Strategy(2) 8.27 7.63 2.00 24.20 32.45 1.59 19.22 0.00 0.00 0.72
Companies Issuing Dividends(229) 13.69 13.40 0.88 7.25 6.16 0.86 6.98 0.61 145.62 0.82
Companies Without Dividends(43) 11.18 10.96 0.65 6.16 6.08 0.39 3.94 1.29 113.31 1.28
Equity/Assets < 6%(20) 4.71 4.15 0.41 7.00 5.64 0.39 7.03 1.03 112.67 1.27
Equity/Assets 6-12%(125) 8.74 8.35 0.76 8.74 6.70 0.70 8.01 0.66 148.09 0.91
Equity/Assets > 12%(127) 18.99 18.84 1.00 5.52 5.70 0.93 5.03 0.69 139.26 0.79
Converted Last 3 Mths (no MHC)(5) 19.23 18.62 0.71 4.11 5.98 0.69 3.90 0.46 106.33 0.66
Actively Traded Companies(26) 8.58 7.91 0.92 10.75 6.45 0.91 11.08 0.78 132.81 0.98
Market Value Below $20 Million(67) 14.16 14.05 0.77 5.41 6.01 0.73 5.06 0.76 151.79 0.74
Holding Company Structure(241) 13.26 12.98 0.86 7.13 6.15 0.80 6.61 0.72 138.60 0.87
Assets Over $1 Billion(54) 8.85 8.23 0.68 8.56 6.05 0.68 8.40 0.87 141.19 1.20
Assets $500 Million-$1 Billion(41) 11.51 11.10 0.80 7.55 6.10 0.75 7.14 0.62 126.49 0.91
Assets $250-$500 Million(61) 13.45 13.16 0.96 7.91 6.85 0.78 6.29 0.67 151.08 0.91
Assets less than $250 Million(116) 15.92 15.83 0.89 5.84 5.85 0.86 5.58 0.66 141.48 0.71
Goodwill Companies(108) 10.29 9.56 0.77 8.00 6.37 0.66 7.04 0.78 131.22 1.08
Non-Goodwill Companies(161) 15.18 15.18 0.90 6.56 6.02 0.87 6.24 0.64 148.38 0.75
Acquirors of FSLIC Cases(7) 8.47 7.70 1.10 11.55 9.97 1.08 12.23 0.53 106.13 0.85
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. SAIF-Insured Thrifts(no MHCs)
- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(272) 15.81 113.07 13.80 117.92 16.61 0.35 2.38 33.62
NYSE Traded Companies(7) 12.88 139.36 10.53 138.72 11.95 0.19 0.72 11.11
AMEX Traded Companies(23) 15.60 94.16 11.69 95.40 16.24 0.33 2.53 31.45
NASDAQ Listed OTC Companies(242) 15.89 114.01 14.10 119.46 16.74 0.35 2.42 34.26
California Companies(18) 13.41 111.88 8.59 108.49 14.41 0.12 0.59 9.52
Florida Companies(7) 22.12 112.46 12.90 121.37 21.34 0.18 1.40 21.88
Mid-Atlantic Companies(49) 14.77 113.93 11.92 121.45 15.78 0.33 2.10 32.68
Mid-West Companies(129) 16.11 108.91 14.34 112.81 17.09 0.36 2.57 35.93
New England Companies(8) 13.59 117.89 9.40 124.55 16.89 0.35 2.20 28.12
North-West Companies(13) 15.45 118.92 16.06 135.00 16.62 0.42 2.47 36.64
South-East Companies(39) 17.33 120.10 17.22 122.53 16.88 0.44 3.11 40.66
South-West Companies(5) 12.11 122.53 9.41 133.09 12.77 0.39 2.18 26.47
Western Companies (Excl CA)(4) 15.34 128.77 18.56 128.77 15.57 0.31 2.68 39.40
Thrift Strategy(235) 16.07 108.01 14.24 111.68 16.72 0.36 2.51 35.12
Mortgage Banker Strategy(21) 14.90 145.41 10.73 168.68 17.30 0.29 1.68 24.76
Real Estate Strategy(7) 11.15 131.58 9.64 134.82 12.57 0.19 1.02 15.31
Diversified Strategy(7) 17.30 177.26 13.04 183.13 17.47 0.37 1.76 39.35
Retail Banking Strategy(2) 3.08 74.58 6.17 80.85 3.88 0.00 0.00 0.00
Companies Issuing Dividends(229) 15.93 114.37 14.33 119.64 16.71 0.41 2.80 39.82
Companies Without Dividends(43) 15.10 105.66 10.81 107.87 15.89 0.00 0.00 0.00
Equity/Assets < 6%(20) 13.08 139.01 6.67 155.45 12.23 0.19 0.89 11.83
Equity/Assets 6-12%(125) 14.84 127.16 10.88 134.56 15.93 0.35 2.21 30.67
Equity/Assets > 12%(127) 17.17 95.71 17.67 96.70 17.77 0.38 2.77 40.14
Converted Last 3 Mths (no MHC)(5) 16.15 68.01 12.93 74.37 16.66 0.10 0.97 10.32
Actively Traded Companies(26) 15.34 157.10 13.01 174.95 15.69 0.47 2.20 31.56
Market Value Below $20 Million(67) 16.88 92.10 12.56 92.89 17.72 0.33 2.86 39.02
Holding Company Structure(241) 15.84 114.69 13.91 119.58 16.63 0.36 2.38 33.67
Assets Over $1 Billion(54) 14.62 141.58 11.88 156.73 15.73 0.34 1.74 25.98
Assets $500 Million-$1 Billion(41) 14.76 120.30 12.49 126.34 15.87 0.35 2.27 31.18
Assets $250-$500 Million(61) 14.85 109.73 14.11 112.96 15.41 0.33 2.15 31.13
Assets less than $250 Million(116) 17.10 99.15 14.96 99.99 17.83 0.36 2.83 39.42
Goodwill Companies(108) 15.08 125.36 12.00 137.94 16.08 0.37 2.26 31.36
Non-Goodwill Companies(161) 16.30 105.83 14.99 105.83 16.99 0.34 2.51 35.88
Acquirors of FSLIC Cases(7) 11.66 140.44 11.60 143.16 11.39 0.37 1.59 23.84
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1997 or 1998.
Percent change figures are actual year-to-date and are not annualized (3)
EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities
or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of
institutions included in the respective averages. All figures have been
adjusted for stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang.
Reported Earnings Core Earnings
Equity/ Equity/ ______________________ _______________ NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(53) 11.95 11.57 1.03 10.25 7.35 1.01 9.56 0.50 208.66 1.26
NYSE Traded Companies(5) 15.53 13.77 1.22 8.77 5.12 1.28 7.56 0.87 121.47 0.93
AMEX Traded Companies(5) 11.49 11.23 0.92 9.74 7.32 0.98 9.66 0.69 195.73 1.16
NASDAQ Listed OTC Companies(43) 11.56 11.34 1.02 10.50 7.63 0.99 9.80 0.43 221.17 1.31
California Companies(1) 10.26 10.23 1.46 14.17 13.04 1.45 14.10 0.00 0.00 1.98
Mid-Atlantic Companies(20) 14.90 14.25 1.02 8.28 5.54 1.02 7.77 0.61 157.13 1.13
New England Companies(27) 9.78 9.52 1.07 12.06 8.67 1.00 10.92 0.48 249.87 1.38
North-West Companies(2) 11.11 11.11 1.32 12.73 8.80 1.22 11.40 0.06 0.00 1.19
South-East Companies(3) 14.85 14.71 0.47 2.85 3.52 0.83 5.31 0.31 164.09 0.54
Thrift Strategy(42) 12.92 12.58 1.00 9.17 6.86 1.01 8.73 0.48 206.33 1.17
Mortgage Banker Strategy(6) 8.58 8.18 1.11 13.75 9.19 0.88 10.40 0.42 289.24 1.27
Real Estate Strategy(2) 10.15 10.14 1.50 14.37 10.77 1.47 14.04 0.89 113.87 1.75
Diversified Strategy(3) 6.85 5.78 1.00 14.88 7.90 1.07 15.95 0.87 133.35 2.00
Companies Issuing Dividends(47) 11.91 11.48 1.00 10.06 6.90 0.99 9.44 0.49 197.89 1.22
Companies Without Dividends(6) 12.25 12.24 1.30 11.67 10.72 1.18 10.51 0.57 305.60 1.56
Equity/Assets < 6%(4) 4.94 4.80 0.88 16.73 9.43 0.71 12.90 0.40 252.35 1.48
Equity/Assets 6-12%(29) 8.83 8.46 1.08 12.28 8.30 0.99 11.08 0.49 217.99 1.41
Equity/Assets > 12%(20) 18.01 17.58 0.99 5.90 5.51 1.12 6.62 0.53 183.95 0.97
Actively Traded Companies(13) 10.48 10.04 1.35 13.53 9.45 1.24 11.57 0.32 257.42 1.10
Market Value Below $20 Million(8) 12.21 12.04 0.76 7.21 7.07 0.78 7.14 0.76 164.51 1.07
Holding Company Structure(40) 12.54 12.29 1.02 9.47 6.93 1.04 9.22 0.40 233.88 1.26
Assets Over $1 Billion(17) 11.13 10.24 1.26 11.94 7.56 1.22 11.25 0.55 195.86 1.34
Assets $500 Million-$1 Billion(9) 10.58 10.36 1.04 11.37 7.98 0.91 9.29 0.43 220.89 1.28
Assets $250-$500 Million(15) 12.39 12.29 1.00 10.60 7.66 1.06 10.39 0.40 250.33 1.33
Assets less than $250 Million(12) 13.53 13.42 0.76 6.76 6.24 0.77 6.55 0.62 156.24 0.99
Goodwill Companies(28) 10.08 9.34 0.98 10.81 7.62 0.91 9.54 0.64 186.11 1.31
Non-Goodwill Companies(25) 13.89 13.89 1.08 9.67 7.07 1.12 9.59 0.35 236.21 1.20
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. BIF-Insured Thrifts(no MHCs)
- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BIF-Insured Thrifts(53) 13.16 127.04 14.42 130.57 14.54 0.40 2.26 30.21
NYSE Traded Companies(5) 15.56 141.32 20.49 140.98 16.82 0.70 1.98 35.81
AMEX Traded Companies(5) 12.45 116.35 12.38 119.87 14.59 0.43 2.84 28.57
NASDAQ Listed OTC Companies(43) 12.97 126.59 13.93 130.87 14.34 0.36 2.23 29.78
California Companies(1) 7.67 107.44 11.02 107.73 7.71 0.00 0.00 0.00
Mid-Atlantic Companies(20) 16.03 122.52 18.04 123.59 17.67 0.43 1.86 32.51
New England Companies(27) 11.83 133.51 12.21 139.02 13.40 0.40 2.37 29.34
North-West Companies(2) 11.36 139.44 14.29 139.44 12.53 0.32 2.49 28.31
South-East Companies(3) 16.59 92.59 13.85 93.47 12.18 0.43 4.34 52.17
Thrift Strategy(42) 13.74 118.66 14.91 119.03 15.22 0.42 2.34 32.17
Mortgage Banker Strategy(6) 11.08 147.87 12.20 158.53 13.04 0.34 1.79 20.35
Real Estate Strategy(2) 9.71 140.09 14.19 140.24 9.97 0.18 2.04 24.00
Diversified Strategy(3) 13.30 185.59 12.49 214.44 12.37 0.41 2.37 31.82
Companies Issuing Dividends(47) 13.42 130.63 14.80 134.72 15.01 0.45 2.56 34.86
Companies Without Dividends(6) 11.54 100.70 11.61 100.87 10.86 0.00 0.00 0.00
Equity/Assets < 6%(4) 10.66 177.77 8.73 182.01 12.32 0.33 2.08 22.49
Equity/Assets 6-12%(29) 12.46 138.84 13.04 146.47 13.66 0.43 2.37 28.70
Equity/Assets > 12%(20) 15.38 99.59 17.66 95.30 16.50 0.37 2.15 34.88
Actively Traded Companies(13) 11.31 142.75 14.14 153.65 11.86 0.60 2.72 31.99
Market Value Below $20 Million(8) 14.25 96.24 11.06 98.39 14.40 0.29 2.03 24.08
Holding Company Structure(40) 13.33 124.28 15.10 129.08 14.96 0.42 2.34 32.18
Assets Over $1 Billion(17) 14.48 147.70 17.25 156.69 14.76 0.55 2.15 29.88
Assets $500 Million-$1 Billion(9) 11.59 131.69 12.41 135.24 13.15 0.52 3.07 36.72
Assets $250-$500 Million(15) 11.31 124.43 13.83 125.75 14.70 0.29 2.06 31.06
Assets less than $250 Million(12) 14.47 100.75 12.85 102.24 15.01 0.25 2.05 24.48
Goodwill Companies(28) 13.19 135.19 12.73 142.46 13.91 0.39 2.05 25.68
Non-Goodwill Companies(25) 13.13 118.20 16.18 118.20 15.17 0.41 2.48 35.38
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1997 or 1998.
Percent change figures are actual year-to-date and are not annualized (3)
EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities
or unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of
institutions included in the respective averages. All figures have been
adjusted for stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded
companies, and RP Financial, Inc. calculations. The information
provided in this report has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(24) 13.77 13.70 0.72 5.58 4.77 0.70 5.33 0.49 106.65 0.80
BIF-Insured Thrifts(4) 17.48 16.74 1.16 7.35 4.49 1.04 6.00 0.59 250.56 1.40
AMEX Traded Companies(1) 27.66 27.66 1.19 4.29 6.05 1.19 4.29 0.00 0.00 0.00
NASDAQ Listed OTC Companies(27) 13.81 13.63 0.77 5.89 4.68 0.73 5.47 0.51 131.67 0.90
Florida Companies(2) 8.84 8.76 0.54 6.42 5.47 0.48 5.61 0.30 67.69 0.33
Mid-Atlantic Companies(19) 13.70 13.53 0.68 5.28 4.58 0.68 5.21 0.56 104.38 0.87
Mid-West Companies(4) 15.51 15.51 0.93 6.21 5.12 0.87 5.63 0.46 59.47 0.55
New England Companies(2) 20.74 20.06 1.62 9.58 5.10 1.33 6.72 0.41 379.80 1.91
South-East Companies(1) 18.86 18.86 0.94 6.12 3.83 0.87 5.72 0.21 307.76 0.97
Thrift Strategy(26) 14.78 14.66 0.77 5.46 4.72 0.76 5.33 0.50 132.58 0.87
Mortgage Banker Strategy(1) 7.57 7.34 0.82 10.27 4.54 0.59 7.39 0.63 57.88 0.86
Diversified Strategy(1) 8.59 7.22 1.00 11.11 5.01 0.52 5.78 0.56 186.50 1.63
Companies Issuing Dividends(20) 13.57 13.33 0.78 6.18 4.39 0.73 5.57 0.51 136.03 0.89
Companies Without Dividends(8) 16.14 16.14 0.79 4.96 5.58 0.80 5.05 0.51 115.99 0.93
Equity/Assets < 6%(1) 5.42 5.27 0.52 8.38 6.41 0.42 6.76 0.30 67.69 0.33
Equity/Assets 6-12%(12) 9.87 9.49 0.66 6.63 4.76 0.55 5.49 0.63 100.34 0.90
Equity/Assets > 12%(15) 18.43 18.43 0.90 5.02 4.59 0.93 5.28 0.41 168.83 0.94
Market Value Below $20 Million(2) 19.54 19.54 0.86 4.47 5.78 0.88 4.56 0.53 96.32 1.00
Holding Company Structure(7) 14.43 14.20 0.72 5.31 4.67 0.75 5.39 0.52 114.82 0.78
Assets Over $1 Billion(6) 10.73 10.21 0.82 8.37 5.11 0.74 7.02 0.51 118.29 0.93
Assets $500 Million-$1 Billion(2) 22.27 22.27 1.46 6.92 5.47 1.41 6.72 0.60 324.58 1.62
Assets $250-$500 Million(11) 12.80 12.80 0.64 5.08 4.47 0.65 5.16 0.48 94.43 0.70
Assets less than $250 Million(9) 16.74 16.56 0.78 4.81 4.62 0.73 4.40 0.52 134.01 0.92
Goodwill Companies(9) 10.51 9.99 0.66 6.90 4.66 0.57 5.81 0.68 94.65 0.90
Non-Goodwill Companies(16) 15.53 15.53 0.82 5.41 4.57 0.82 5.31 0.41 155.47 0.89
MHC Institutions(28) 14.30 14.13 0.78 5.83 4.73 0.75 5.42 0.51 131.67 0.90
MHC Converted Last 3 Months(3) 19.12 19.12 0.92 4.88 5.77 0.92 4.88 0.00 0.00 0.00
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- ----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
Market Averages. MHC Institutions
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts(24) 20.35 117.04 15.09 119.22 20.87 0.26 2.25 23.25
BIF-Insured Thrifts(4) 22.88 144.03 23.08 159.59 20.38 0.38 2.20 49.02
AMEX Traded Companies(1) 16.54 70.90 19.61 70.90 16.54 0.00 0.00 0.00
NASDAQ Listed OTC Companies(27) 20.93 122.74 16.10 126.99 21.03 0.29 2.33 29.90
Florida Companies(2) 18.84 117.33 9.73 119.29 20.71 0.50 2.94 0.00
Mid-Atlantic Companies(19) 20.91 114.94 14.54 118.62 19.84 0.20 2.03 26.87
Mid-West Companies(4) 20.34 125.48 19.00 125.48 22.70 0.43 2.98 26.32
New England Companies(2) 19.61 168.06 29.23 188.42 20.26 0.56 2.43 47.90
South-East Companies(1) 26.09 128.48 24.23 128.48 27.91 0.20 1.67 43.48
Thrift Strategy(26) 20.74 113.37 16.12 115.94 20.83 0.25 2.22 25.72
Mortgage Banker Strategy(1) 22.04 223.09 16.90 230.04 0.00 0.24 1.91 42.11
Diversified Strategy(1) 19.95 214.35 18.42 255.08 0.00 0.92 3.16 63.01
Companies Issuing Dividends(20) 21.76 133.77 17.16 139.50 22.22 0.39 3.14 47.34
Companies Without Dividends(8) 18.63 88.71 13.89 88.71 18.39 0.00 0.00 0.00
Equity/Assets < 6%(1) 15.60 136.11 7.38 140.03 19.32 1.00 5.88 0.00
Equity/Assets 6-12%(12) 20.14 142.93 13.41 152.15 20.93 0.31 2.29 42.39
Equity/Assets > 12%(15) 21.68 102.25 19.07 102.25 20.88 0.21 1.96 14.42
Market Value Below $20 Million(2) 17.33 76.49 14.49 76.49 16.97 0.16 1.80 32.65
Holding Company Structure(7) 22.70 109.83 15.14 112.90 21.23 0.16 1.21 20.41
Assets Over $1 Billion(6) 20.60 162.95 15.66 178.47 19.40 0.41 2.36 37.44
Assets $500 Million-$1 Billion(2) 18.32 111.22 25.89 111.22 18.82 0.10 0.85 16.39
Assets $250-$500 Million(11) 19.58 114.99 14.17 114.99 19.62 0.24 2.16 13.38
Assets less than $250 Million(9) 22.45 102.21 16.98 104.60 23.25 0.27 2.57 38.26
Goodwill Companies(9) 19.43 144.04 14.06 156.77 18.46 0.37 2.64 32.67
Non-Goodwill Companies(16) 21.96 114.48 17.55 114.48 22.06 0.28 2.44 33.82
MHC Institutions(28) 20.76 120.89 16.23 124.99 20.83 0.28 2.24 28.40
MHC Converted Last 3 Months(3) 17.82 85.67 15.65 85.67 17.82 0.00 0.00 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1997 or 1998.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BYS Bay State Bancorp of MA* 17.27 17.27 -0.40 -2.17 -2.35 0.50 2.75 0.55 149.26 0.99
CFB Commercial Federal Corp. of NE 7.82 6.24 0.76 10.27 5.05 0.99 13.26 0.78 76.98 0.83
DME Dime Bancorp, Inc. of NY* 6.21 5.17 1.09 17.78 9.18 0.37 6.01 NA NA 0.89
DSL Downey Financial Corp. of CA 7.66 7.59 0.98 12.68 10.08 0.99 12.92 0.46 108.30 0.56
FED FirstFed Fin. Corp. of CA 6.99 6.95 0.88 14.41 10.25 0.83 13.62 0.84 285.70 3.05
GSB Golden State Bancorp of CA 2.88 1.20 -0.13 -4.57 -2.30 0.10 3.62 0.62 172.13 1.91
GDW Golden West Fin. Corp. of CA 8.12 8.12 1.11 14.94 8.30 1.07 14.48 NA NA 0.90
GPT GreenPoint Fin. Corp. of NY* 12.86 5.60 1.12 10.08 4.55 1.15 10.34 2.12 38.13 1.20
JSB JSB Financial, Inc. of NY* 23.59 23.59 2.83 11.78 8.52 2.97 12.36 0.16 230.69 0.50
OCN Ocwen Financial Corp. of FL 13.20 12.81 -0.04 -0.28 -0.22 -0.31 -2.38 7.56 10.52 2.05
SIB Staten Island Bancorp of NY* 17.72 17.24 1.43 6.38 5.67 1.41 6.32 0.65 67.81 1.07
WES Westcorp Inc. of Orange CA 8.65 8.63 -0.39 -4.42 -4.95 -0.84 -9.56 NA NA 5.99
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 11.41 11.41 1.05 9.16 9.16 0.97 8.54 0.24 396.80 1.19
ANE Alliance Bncp of New Eng of CT* 6.42 6.33 1.00 13.68 10.29 0.69 9.40 0.23 467.89 1.71
BKC American Bank of Waterbury CT* 9.44 9.17 1.63 17.85 10.63 1.46 16.05 1.40 71.92 1.74
BFD BostonFed Bancorp of MA 7.18 6.94 0.72 9.26 8.57 0.59 7.58 0.09 795.14 0.89
CNY Carver Bancorp, Inc. of NY 7.34 7.08 -1.20 -14.71 -21.69 -1.16 -14.25 2.46 58.28 2.35
CBK Citizens First Fin.Corp. of IL 12.54 12.54 0.71 5.30 6.00 0.56 4.18 0.41 105.81 0.54
EFC EFC Bancorp, Inc of IL 21.09 21.09 0.07 0.37 0.40 0.93 5.03 0.28 114.51 0.44
EBI Equality Bancorp, Inc. of MO 9.00 9.00 0.45 4.56 4.76 -0.04 -0.39 0.35 36.27 0.45
ESX Essex Bancorp of Norfolk VA(8) 0.36 0.32 0.48 NM 43.38 0.48 NM 0.79 100.54 0.95
FCB Falmouth Bancorp, Inc. of MA* 19.54 19.54 0.94 4.40 5.08 0.67 3.13 NA NA 0.67
FAB FirstFed America Bancorp of MA 7.34 7.34 0.54 5.95 7.13 0.47 5.19 0.22 373.31 1.47
GAF GA Financial Corp. of PA 13.26 13.15 1.01 7.38 8.07 1.03 7.57 0.23 85.59 0.51
GOV Gouverneur Bcp MHC of NY (45.0 27.66 27.66 1.19 4.29 6.05 1.19 4.29 NA NA NA
HBS Haywood Bancshares, Inc. of NC* 14.28 13.83 0.17 1.20 1.50 1.23 8.49 0.56 89.50 0.68
KNK Kankakee Bancorp, Inc. of IL 9.63 8.28 0.58 5.85 7.07 0.56 5.64 0.82 70.78 0.96
KYF Kentucky First Bancorp of KY 17.47 17.47 1.06 6.10 6.00 1.04 6.02 0.14 356.25 0.84
LO Local Financial Corp of OK 5.58 4.75 0.91 17.11 9.17 0.89 16.73 0.20 653.42 2.03
NBN Northeast Bancorp of ME* 7.79 7.26 0.86 11.58 9.10 0.84 11.23 0.56 153.59 1.01
NEP Northeast PA Fin. Corp of PA 16.29 16.29 0.12 0.78 0.88 0.76 4.85 0.26 168.71 0.80
PDB Piedmont Bancorp, Inc. of NC 16.01 16.01 1.25 7.65 6.89 1.21 7.41 0.57 139.05 1.07
SPN Security of PA Financial of PA 17.67 17.67 0.68 3.85 5.73 0.68 3.85 1.52 21.73 0.59
SZB SouthFirst Bancshares of AL 9.88 9.63 0.28 2.82 4.04 0.15 1.52 1.58 24.46 0.58
SRN Southern Banc Company of AL 17.59 17.48 0.51 2.93 3.87 0.51 2.93 NA NA 0.24
SSM Stone Street Bancorp of NC(8) 22.39 22.39 1.38 5.36 5.00 1.38 5.36 0.19 308.64 0.73
TSH Teche Holding Company of LA 12.47 12.47 0.92 6.92 8.26 0.90 6.76 0.22 386.54 1.06
FTF Texarkana Fst. Fin. Corp of AR 14.07 14.07 1.80 12.20 9.07 1.74 11.80 NA NA 0.65
THR Three Rivers Fin. Corp. of MI 11.89 11.84 0.72 5.62 6.67 0.64 4.99 1.10 46.36 0.76
WSB Washington SB, FSB of MD 9.11 9.11 0.46 5.23 7.11 0.38 4.30 NA NA 1.09
WFI Winton Financial Corp. of OH 7.44 7.33 1.05 14.08 7.39 0.80 10.74 0.50 46.93 0.27
WRO Woronoco Bancorp, Inc of MA 19.90 19.90 0.87 4.35 6.67 0.87 4.35 NA NA NA
NASDAQ Listed OTC Companies
- ---------------------------
AMFC AMB Financial Corp. of IN 11.47 11.47 0.19 1.48 1.78 0.60 4.69 0.43 100.00 0.56
ASBP ASB Financial Corp. of OH 12.74 12.74 0.92 6.76 6.11 0.90 6.56 0.34 183.74 0.94
ABBK Abington Bancorp of MA* 5.59 5.12 0.79 12.67 9.15 0.54 8.70 0.12 420.93 0.85
AABC Access Anytime Bancorp of NM 8.15 8.15 0.65 8.03 6.59 0.56 6.84 0.42 116.70 0.67
AFBC Advance Fin. Bancorp of WV 12.55 12.55 0.65 4.80 6.77 0.56 4.13 0.61 73.56 0.53
ALBC Albion Banc Corp. of Albion NY 8.40 8.40 0.49 5.74 4.80 0.48 5.62 0.34 101.91 0.45
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NYSE Traded Companies
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BYS Bay State Bancorp of MA* NM 84.60 14.61 84.60 NM 0.20 0.96 NM
CFB Commercial Federal Corp. of NE 19.79 152.73 11.94 191.22 15.32 0.26 1.09 21.67
DME Dime Bancorp, Inc. of NY* 10.89 186.41 11.57 223.63 NM 0.20 0.86 9.39
DSL Downey Financial Corp. of CA 9.92 119.74 9.17 120.88 9.73 0.32 1.57 15.53
FED FirstFed Fin. Corp. of CA 9.76 131.58 9.19 132.23 10.32 0.00 0.00 0.00
GSB Golden State Bancorp of CA NM 187.48 5.40 NM NM 0.00 0.00 NM
GDW Golden West Fin. Corp. of CA 12.05 167.63 13.61 167.63 12.43 0.56 0.60 7.25
GPT GreenPoint Fin. Corp. of NY* 21.99 183.09 23.54 NM 21.45 0.88 2.53 55.70
JSB JSB Financial, Inc. of NY* 11.74 136.17 32.13 136.17 11.19 1.80 3.28 38.54
OCN Ocwen Financial Corp. of FL NM 125.35 16.54 129.12 NM 0.00 0.00 NM
SIB Staten Island Bancorp of NY* 17.63 116.33 20.61 119.53 17.81 0.40 2.25 39.60
WES Westcorp Inc. of Orange CA NM 90.99 7.87 91.21 NM 0.20 1.77 NM
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares, Inc of LA 10.92 100.06 11.41 100.06 11.72 0.52 2.94 32.10
ANE Alliance Bncp of New Eng of CT* 9.71 137.03 8.79 138.95 14.13 0.20 1.84 17.86
BKC American Bank of Waterbury CT* 9.40 159.41 15.05 164.04 10.46 0.84 3.92 36.84
BFD BostonFed Bancorp of MA 11.66 108.63 7.80 112.42 14.25 0.40 2.30 26.85
CNY Carver Bancorp, Inc. of NY NM 76.39 5.61 79.18 NM 0.00 0.00 NM
CBK Citizens First Fin.Corp. of IL 16.67 93.05 11.66 93.05 21.13 0.00 0.00 0.00
EFC EFC Bancorp, Inc of IL NM 80.67 17.01 80.67 18.29 0.40 3.98 NM
EBI Equality Bancorp, Inc. of MO 21.02 95.74 8.61 95.74 NM 0.24 2.43 51.06
ESX Essex Bancorp of Norfolk VA(8) 2.31 280.77 1.01 317.39 2.31 0.00 0.00 0.00
FCB Falmouth Bancorp, Inc. of MA* 19.70 89.71 17.53 89.71 27.65 0.28 1.95 38.36
FAB FirstFed America Bancorp of MA 14.03 93.22 6.85 93.22 16.09 0.20 1.52 21.28
GAF GA Financial Corp. of PA 12.39 93.49 12.40 94.28 12.08 0.64 4.41 54.70
GOV Gouverneur Bcp MHC of NY (45.0 16.54 70.90 19.61 70.90 16.54 0.00 0.00 0.00
HBS Haywood Bancshares, Inc. of NC* NM 81.21 11.59 83.83 9.40 0.64 4.57 NM
KNK Kankakee Bancorp, Inc. of IL 14.15 81.43 7.84 94.75 14.68 0.48 2.03 28.74
KYF Kentucky First Bancorp of KY 16.67 103.27 18.04 103.27 16.90 0.50 4.17 69.44
LO Local Financial Corp of OK 10.90 169.72 9.46 199.39 11.15 0.00 0.00 0.00
NBN Northeast Bancorp of ME* 10.99 114.41 8.92 122.80 11.33 0.21 1.93 21.21
NEP Northeast PA Fin. Corp of PA NM 77.30 12.60 77.30 18.30 0.20 1.95 NM
PDB Piedmont Bancorp, Inc. of NC 14.52 113.78 18.21 113.78 15.00 0.48 5.33 NM
SPN Security of PA Financial of PA 17.45 67.18 11.87 67.18 17.45 0.00 0.00 0.00
SZB SouthFirst Bancshares of AL 24.76 71.03 7.01 72.87 NM 0.60 4.85 NM
SRN Southern Banc Company of AL 25.83 76.89 13.53 77.39 25.83 0.35 2.95 NM
SSM Stone Street Bancorp of NC(8) 20.00 112.83 25.26 112.83 20.00 0.47 2.47 49.47
TSH Teche Holding Company of LA 12.10 88.35 11.02 88.35 12.40 0.50 3.28 39.68
FTF Texarkana Fst. Fin. Corp of AR 11.03 138.02 19.42 138.02 11.40 0.64 2.74 30.19
THR Three Rivers Fin. Corp. of MI 15.00 91.15 10.83 91.46 16.88 0.46 3.41 51.11
WSB Washington SB, FSB of MD 14.07 71.90 6.55 71.90 17.13 0.10 2.54 35.71
WFI Winton Financial Corp. of OH 13.54 190.57 14.17 193.37 17.74 0.30 2.28 30.93
WRO Woronoco Bancorp, Inc of MA 15.00 65.22 12.98 65.22 15.00 0.00 0.00 0.00
NASDAQ Listed OTC Companies
- ---------------------------
AMFC AMB Financial Corp. of IN NM 87.55 10.05 87.55 17.76 0.32 2.37 NM
ASBP ASB Financial Corp. of OH 16.35 114.30 14.57 114.30 16.87 0.40 3.76 61.54
ABBK Abington Bancorp of MA* 10.92 144.84 8.10 158.30 15.90 0.20 1.40 15.27
AABC Access Anytime Bancorp of NM 15.16 115.19 9.39 115.19 17.79 0.20 2.16 32.79
AFBC Advance Fin. Bancorp of WV 14.76 71.63 8.99 71.63 17.15 0.32 3.01 44.44
ALBC Albion Banc Corp. of Albion NY 20.83 117.23 9.85 117.23 21.28 0.12 1.20 25.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -------------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ----------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ABCL Alliance Bancorp, Inc. of IL 9.38 9.31 0.77 8.51 6.39 0.87 9.63 0.19 167.28 0.52
ALLB Alliance Bank MHC of PA (19.9) 10.56 10.56 0.74 6.86 6.20 0.74 6.86 NA NA NA
AHCI Ambanc Holding Co., Inc. of NY* 11.68 10.60 0.18 1.57 1.26 0.28 2.49 0.47 142.30 1.15
ASBI Ameriana Bancorp of IN 11.18 10.67 0.98 8.47 7.03 0.88 7.61 0.39 81.16 0.49
ABCW Anchor Bancorp Wisconsin of WI 6.41 6.32 1.14 17.78 6.75 1.00 15.60 0.47 205.01 1.18
ANDB Andover Bancorp, Inc. of MA* 8.59 8.59 1.27 15.26 9.21 1.23 14.86 0.25 300.29 1.00
ASFC Astoria Financial Corp. of NY 6.86 5.67 0.07 1.00 0.37 0.13 1.78 0.58 61.79 0.84
BCSB BCSB Bankcorp MHC of MD (38.6) 16.19 16.19 0.44 3.69 2.22 0.62 5.17 0.42 102.87 0.66
BKCT Bancorp Connecticut of CT* 9.57 9.57 1.30 13.09 8.86 1.12 11.30 0.31 347.25 1.95
BPLS Bank Plus Corp. of CA 3.43 3.05 -1.39 -34.90 NM -1.22 -30.45 1.88 151.78 3.83
BNKU Bank United Corp. of TX 4.76 4.37 0.90 18.22 9.41 0.83 16.85 0.63 55.74 0.53
BWFC Bank West Fin. Corp. of MI 11.45 11.45 0.24 1.92 2.06 0.41 3.27 0.51 30.93 0.24
BANC BankAtlantic Bancorp of FL 6.35 4.88 -0.23 -3.50 -2.44 -0.15 -2.23 0.92 109.31 1.52
BKUNA BankUnited Fin. Corp. of FL 4.96 4.14 0.15 3.04 3.47 0.08 1.74 0.68 25.24 0.22
BFSB Bedford Bancshares, Inc. of VA 13.55 13.55 1.38 10.18 7.63 1.38 10.18 0.58 85.09 0.58
BFFC Big Foot Fin. Corp. of IL 16.79 16.79 0.41 2.37 3.05 0.33 1.92 0.11 125.52 0.24
BYFC Broadway Fin. Corp. of CA 9.25 9.25 0.26 2.69 5.48 0.04 0.36 0.93 83.15 1.00
BRKL Brookline Bncp MHC of MA(47.0)* 32.89 32.89 2.25 8.05 5.19 2.14 7.65 0.26 573.09 2.18
CBES CBES Bancorp, Inc. of MO 10.98 10.98 0.73 5.59 7.85 0.50 3.80 2.30 25.49 0.66
CITZ CFS Bancorp, Inc. of IN 17.69 17.69 0.15 1.12 0.78 0.68 5.06 0.70 51.99 0.73
CFSB CFSB Bancorp of Lansing MI(8) 7.87 7.87 1.38 17.62 5.37 1.26 16.16 0.18 314.52 0.64
CKFB CKF Bancorp of Danville KY 21.14 21.14 1.22 5.66 5.66 1.07 4.96 0.64 35.15 0.25
CNSB CNS Bancorp, Inc. of MO 22.79 22.79 0.88 3.69 5.68 0.72 3.00 0.21 202.97 0.66
CNYF CNY Financial Corp of NY* 28.12 28.12 0.45 2.25 2.04 0.75 3.76 0.43 208.53 1.54
CBCI Calumet Bancorp of Chicago IL(8) 18.33 18.33 1.21 6.85 5.98 1.19 6.74 1.15 109.62 1.66
CAFI Camco Fin. Corp. of OH 9.44 8.91 1.20 12.37 9.31 0.90 9.28 0.96 29.22 0.33
CMRN Cameron Fin. Corp. of MO 18.51 18.51 1.02 5.09 7.59 1.00 4.99 1.24 56.72 0.82
CFFN Capitol Fincl MHC of KS (43.0) 17.44 17.44 1.03 5.90 6.74 1.03 5.90 NA NA NA
CFNC Carolina Fincorp of NC* 13.54 13.54 0.76 4.41 6.03 0.85 4.89 0.14 304.38 0.56
CASB Cascade Financial Corp. of WA 6.86 6.86 0.90 12.93 5.53 0.78 11.14 0.30 284.77 1.11
CATB Catskill Fin. Corp. of NY* 21.02 21.02 1.27 5.68 6.00 1.23 5.49 0.18 349.30 1.37
CAVB Cavalry Bancorp of TN 26.08 26.08 1.69 6.69 3.56 1.35 5.35 0.07 NA 1.34
CNIT Cenit Bancorp of Norfolk VA 7.81 7.24 0.91 12.11 6.35 0.83 11.06 0.23 273.00 0.82
CEBK Central Bancorp of MA* 10.28 9.42 0.78 7.89 8.51 0.60 6.03 0.38 210.28 1.03
CENB Century Bancorp, Inc. of NC 19.75 19.75 0.93 4.32 5.33 0.93 4.32 0.13 454.47 0.77
COFI Charter One Financial of OH 7.67 7.00 0.88 11.87 3.84 1.11 14.99 0.51 114.93 0.82
CVAL Chester Valley Bancorp of PA 8.28 8.28 1.04 12.18 5.78 0.94 11.01 0.35 237.34 1.20
CLAS Classic Bancshares, Inc. of KY 14.74 12.76 0.70 4.72 5.58 0.87 5.90 0.84 71.21 0.87
CBSA Coastal Bancorp of Houston TX 3.69 2.69 0.55 15.06 14.69 0.57 15.47 1.00 44.22 0.81
CFCP Coastal Fin. Corp. of SC 5.90 5.90 1.14 19.28 6.40 0.93 15.66 0.49 176.35 1.32
COHB Cohoes Bancorp of NY* 21.18 21.18 0.91 4.28 6.15 0.89 4.21 0.78 65.81 0.79
CFKY Columbia Financial of KY 31.56 31.56 0.84 3.54 2.85 0.84 3.54 0.14 177.51 0.46
CMSB Commonwealth Bancorp Inc of PA 8.51 6.75 0.47 5.36 5.15 0.35 3.99 0.49 86.69 0.71
CFTP Community Fed. Bancorp of MS 20.60 20.60 1.23 5.42 5.15 0.75 3.32 0.46 58.19 0.54
CFFC Community Fin. Corp. of VA 13.92 13.87 1.04 7.47 6.82 0.75 5.38 0.42 139.75 0.71
CIBI Community Inv. Bancorp of OH 8.75 8.75 0.83 8.29 8.23 0.82 8.18 0.69 74.27 0.68
CMSV Community Svgs Bcshrs of FL 15.67 15.67 0.70 4.50 4.67 0.70 4.50 0.25 151.85 0.58
COOP Cooperative Bancshares of NC 8.11 8.11 0.62 7.89 7.09 0.58 7.39 1.08 28.02 0.37
CRZY Crazy Woman Creek Bncorp of WY 22.69 22.69 1.13 4.89 6.22 1.15 4.95 0.52 89.16 0.94
CRSB Crusader Holding Corp of PA 9.79 9.34 1.93 20.19 11.16 1.78 18.67 1.04 45.18 0.79
DNFC D&N Financial Corp. of MI(8) 5.72 5.34 0.84 15.07 7.84 0.64 11.45 0.46 116.84 0.84
DCBI Delphos Citizens Bancorp of OH 21.95 21.95 1.49 6.20 6.31 1.49 6.20 NA NA 0.12
DCOM Dime Community Bancorp of NY* 9.70 8.45 0.97 8.70 6.28 0.95 8.51 0.32 208.05 1.10
ESBF ESB Financial Corp of PA 6.28 5.58 0.60 9.42 7.86 0.56 8.82 0.51 96.28 1.32
EGLB Eagle BancGroup of IL 10.94 10.94 0.51 4.47 4.10 0.21 1.86 0.85 66.19 0.89
EBSI Eagle Bancshares of Tucker GA 5.45 5.45 0.87 13.37 9.81 0.83 12.85 0.85 65.00 1.29
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
------------------------------------------------ -------------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ABCL Alliance Bancorp, Inc. of IL 15.65 116.77 10.95 117.64 13.82 0.56 2.96 46.28
ALLB Alliance Bank MHC of PA (19.9) 16.13 110.01 11.61 110.01 16.13 0.36 3.60 58.06
AHCI Ambanc Holding Co., Inc. of NY* NM 95.28 11.13 104.92 NM 0.28 1.85 NM
ASBI Ameriana Bancorp of IN 14.22 119.97 13.41 125.71 15.82 0.60 3.87 55.05
ABCW Anchor Bancorp Wisconsin of WI 14.81 252.96 16.23 256.67 16.89 0.20 1.04 15.38
ANDB Andover Bancorp, Inc. of MA* 10.86 156.08 13.41 156.08 11.15 0.84 2.90 31.46
ASFC Astoria Financial Corp. of NY NM 190.00 13.03 230.05 NM 0.96 1.96 NM
BCSB BCSB Bankcorp MHC of MD (38.6) NM 121.13 19.62 121.13 NM 0.50 5.56 NM
BKCT Bancorp Connecticut of CT* 11.29 144.03 13.79 144.03 13.08 0.56 4.00 45.16
BPLS Bank Plus Corp. of CA NM 68.70 2.36 77.32 NM 0.00 0.00 NM
BNKU Bank United Corp. of TX 10.63 182.43 8.69 198.78 11.50 0.64 1.57 16.67
BWFC Bank West Fin. Corp. of MI NM 93.75 10.74 93.75 28.45 0.24 2.91 NM
BANC BankAtlantic Bancorp of FL NM 139.10 8.83 180.72 NM 0.10 1.11 NM
BKUNA BankUnited Fin. Corp. of FL 28.79 77.13 3.83 92.54 NM 0.00 0.00 0.00
BFSB Bedford Bancshares, Inc. of VA 13.11 128.16 17.37 128.16 13.11 0.36 2.99 39.13
BFFC Big Foot Fin. Corp. of IL NM 80.65 13.54 80.65 NM 0.00 0.00 0.00
BYFC Broadway Fin. Corp. of CA 18.24 48.74 4.51 48.74 NM 0.20 2.96 54.05
BRKL Brookline Bncp MHC of MA(47.0)* 19.26 121.76 40.05 121.76 20.26 0.20 1.70 32.79
CBES CBES Bancorp, Inc. of MO 12.74 73.41 8.06 73.41 18.75 0.56 4.15 52.83
CITZ CFS Bancorp, Inc. of IN NM 90.47 16.00 90.47 28.47 0.32 3.12 NM
CFSB CFSB Bancorp of Lansing MI(8) 18.62 318.02 25.03 318.02 20.30 0.52 1.93 35.86
CKFB CKF Bancorp of Danville KY 17.66 98.11 20.74 98.11 20.15 0.54 3.15 55.67
CNSB CNS Bancorp, Inc. of MO 17.59 69.34 15.80 69.34 21.63 0.30 2.89 50.85
CNYF CNY Financial Corp of NY* NM 78.02 21.94 78.02 29.38 0.16 1.36 66.67
CBCI Calumet Bancorp of Chicago IL(8) 16.71 111.93 20.52 111.93 16.98 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 10.74 125.23 11.82 132.72 14.32 0.45 3.27 35.16
CMRN Cameron Fin. Corp. of MO 13.18 71.99 13.32 71.99 13.44 0.28 2.08 27.45
CFFN Capitol Fincl MHC of KS (43.0) 14.84 87.56 15.27 87.56 14.84 0.00 0.00 0.00
CFNC Carolina Fincorp of NC* 16.59 92.15 12.48 92.15 14.96 0.24 3.15 52.17
CASB Cascade Financial Corp. of WA 18.09 219.07 15.02 219.07 20.99 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 16.67 96.03 20.19 96.03 17.24 0.37 2.47 41.11
CAVB Cavalry Bancorp of TN 28.13 169.30 44.15 169.30 NM 0.20 0.89 25.00
CNIT Cenit Bancorp of Norfolk VA 15.75 192.12 15.00 207.25 17.24 0.60 3.00 47.24
CEBK Central Bancorp of MA* 11.74 90.21 9.27 98.37 15.35 0.32 1.83 21.48
CENB Century Bancorp, Inc. of NC 18.76 91.38 18.05 91.38 18.76 0.68 4.90 NM
COFI Charter One Financial of OH 26.03 252.47 19.35 276.35 20.60 0.56 1.96 50.91
CVAL Chester Valley Bancorp of PA 17.31 195.02 16.14 195.02 19.15 0.32 1.78 30.77
CLAS Classic Bancshares, Inc. of KY 17.93 84.71 12.49 97.85 14.35 0.32 2.35 42.11
CBSA Coastal Bancorp of Houston TX 6.81 97.17 3.59 133.59 6.63 0.32 1.83 12.45
CFCP Coastal Fin. Corp. of SC 15.63 279.55 16.48 279.55 19.23 0.28 1.60 25.00
COHB Cohoes Bancorp of NY* 16.25 69.59 14.74 69.59 16.53 0.24 2.46 40.00
CFKY Columbia Financial of KY NM 91.61 28.91 91.61 NM 0.28 2.15 NM
CMSB Commonwealth Bancorp Inc of PA 19.43 110.19 9.38 138.94 26.15 0.36 2.50 48.65
CFTP Community Fed. Bancorp of MS 19.41 104.90 21.61 104.90 NM 0.34 2.34 45.33
CFFC Community Fin. Corp. of VA 14.67 105.57 14.70 105.97 20.37 0.32 2.91 42.67
CIBI Community Inv. Bancorp of OH 12.15 106.06 9.28 106.06 12.32 0.24 2.74 33.33
CMSV Community Svgs Bcshrs of FL 21.43 96.39 15.11 96.39 21.43 0.44 3.67 NM
COOP Cooperative Bancshares of NC 14.10 105.97 8.60 105.97 15.07 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY 16.08 79.11 17.95 79.11 15.87 0.40 3.23 51.95
CRSB Crusader Holding Corp of PA 8.96 144.82 14.17 151.76 9.69 0.00 0.00 0.00
DNFC D&N Financial Corp. of MI(8) 12.75 177.46 10.15 190.15 16.78 0.20 0.92 11.70
DCBI Delphos Citizens Bancorp of OH 15.84 101.65 22.31 101.65 15.84 0.24 1.50 23.76
DCOM Dime Community Bancorp of NY* 15.92 143.51 13.92 164.66 16.27 0.60 2.71 43.17
ESBF ESB Financial Corp of PA 12.73 120.69 7.58 135.92 13.59 0.36 2.57 32.73
EGLB Eagle BancGroup of IL 24.40 112.39 12.29 112.39 NM 0.40 1.95 47.62
EBSI Eagle Bancshares of Tucker GA 10.20 138.05 7.52 138.05 10.61 0.64 3.51 35.75
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -------------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ----------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ESBK Elmira Svgs Bank (The) of NY* 6.17 6.17 0.56 8.99 7.52 0.53 8.52 0.63 106.95 0.85
EMLD Emerald Financial Corp. of OH(8) 8.20 8.11 1.22 14.82 3.90 1.08 13.04 0.30 88.86 0.34
EFBC Empire Federal Bancorp of MT 33.27 33.27 1.15 3.21 4.82 1.39 3.90 0.30 67.28 0.44
EFBI Enterprise Fed. Bancorp of OH(8) 7.12 5.13 0.60 6.70 2.37 0.55 6.15 0.01 NA 0.42
EQSB Equitable FSB of Wheaton MD 5.22 5.22 0.91 17.46 13.87 0.54 10.28 0.29 55.52 0.24
FCBF FCB Fin. Corp. of Neenah WI(8) 14.61 14.61 1.31 8.95 5.34 1.15 7.85 0.21 351.56 1.02
FFDF FFD Financial Corp. of OH 15.18 15.18 0.86 4.54 3.41 0.56 2.97 0.09 289.25 0.34
FFLC FFLC Bancorp of Leesburg FL 11.48 11.48 1.05 8.40 6.86 1.05 8.40 0.15 314.83 0.57
FFWC FFW Corporation of Wabash IN 9.24 8.56 0.97 10.30 9.29 0.85 9.02 0.58 88.89 0.75
FFYF FFY Financial Corp. of OH 12.25 12.25 1.21 9.33 5.94 1.18 9.15 0.54 74.09 0.57
FMCO FMS Financial Corp. of NJ 6.28 6.26 0.79 12.85 8.85 0.79 12.85 0.65 74.12 1.11
FFHH FSF Financial Corp. of MN 10.05 9.37 0.75 7.23 7.78 0.69 6.68 0.22 117.87 0.42
FDTR Federal Trust Corp of FL 7.51 7.51 0.28 3.45 3.90 0.25 3.07 1.41 46.05 0.74
FBCI Fidelity Bancorp of Chicago IL 8.02 8.01 0.73 7.47 7.27 0.73 7.47 0.13 87.62 0.14
FSBI Fidelity Bancorp, Inc. of PA 6.69 6.69 0.72 10.48 8.39 0.72 10.34 0.16 316.74 0.99
FFFL Fidelity Bcsh MHC of FL (47.9) 5.42 5.27 0.52 8.38 6.41 0.42 6.76 0.30 67.69 0.33
FFED Fidelity Fed. Bancorp of IN 4.13 4.13 -0.58 -11.08 -11.82 -0.50 -9.58 0.61 332.29 2.88
FFOH Fidelity Financial of OH 13.03 11.69 0.86 6.89 6.48 0.84 6.72 0.35 92.55 0.40
SBFL Fingr Lakes Fin.MHC OF NY(33.1 7.77 7.77 0.27 3.25 1.74 0.20 2.44 0.43 95.84 0.81
FBEI First Bancorp of Indiana of IN 26.15 26.15 0.64 2.44 4.08 0.64 2.44 NA NA 0.65
FBSI First Bancshares, Inc. of MO 13.90 13.35 0.99 7.06 6.58 1.01 7.24 1.50 20.88 0.37
FBBC First Bell Bancorp of PA 9.63 9.63 1.08 10.51 7.28 1.07 10.43 0.05 194.19 0.15
FCAP First Capital, Inc. of IN 16.58 16.58 0.82 4.96 7.44 0.82 4.96 0.21 239.46 0.69
FSTC First Citizens Corp of GA(8) 9.56 7.94 1.39 13.96 4.80 1.20 12.10 0.62 147.74 1.32
FCME First Coastal Corp. of ME* 8.53 8.53 0.93 10.05 11.94 0.71 7.69 0.30 483.22 2.59
FDEF First Defiance Fin.Corp. of OH 11.93 10.23 0.47 3.04 3.95 0.23 1.48 1.83 68.71 2.15
FESX First Essex Bancorp of MA* 7.78 5.82 0.88 11.78 8.85 0.82 10.97 NA NA 1.55
FFES First Fed of E. Hartford CT 7.38 7.38 0.52 7.30 7.63 0.57 8.00 0.17 143.93 1.19
BDJI First Fed. Bancorp. of MN 10.21 10.21 0.69 6.58 6.92 0.69 6.58 0.55 62.20 0.80
FFBH First Fed. Bancshares of AR 13.17 13.17 1.04 7.28 8.44 1.01 7.12 0.93 13.45 0.17
FTFC First Fed. Capital Corp. of WI 6.87 6.12 1.18 16.59 7.74 0.81 11.42 0.13 321.01 0.64
FFKY First Fed. Fin. Corp. of KY 11.81 9.45 1.44 11.31 7.32 1.41 11.09 0.39 108.10 0.51
FFBZ First Federal Bancorp of OH 7.63 7.62 0.62 8.09 5.09 0.59 7.71 0.53 162.46 1.13
FFSXD First Federal Bankshares of IA 9.65 6.63 0.63 6.57 9.41 0.53 5.51 0.46 106.33 0.67
FFCH First Fin. Holdings Inc. of SC 6.51 6.51 0.93 14.30 7.09 0.92 14.08 0.70 99.87 0.85
FFHS First Franklin Corp. of OH 8.71 8.69 0.78 8.67 7.92 0.66 7.30 0.61 74.18 0.72
FGHC First Georgia Hold. Corp of GA 8.21 7.75 1.16 14.15 5.18 1.16 14.15 1.41 34.82 0.62
FFSL First Independence Corp. of KS 9.73 9.73 0.79 8.23 9.34 0.79 8.23 1.20 43.93 0.68
FISB First Indiana Corp. of IN 9.24 9.15 1.11 11.97 7.96 0.72 7.69 NA NA 1.79
FKAN First Kansas Financial of KS 20.00 19.77 0.62 3.12 4.24 0.57 2.83 0.07 271.05 0.50
FKFS First Keystone Fin. Corp of PA 6.05 6.05 0.69 10.76 8.71 0.62 9.61 1.19 34.62 0.83
FLKY First Lancaster Bncshrs of KY 23.37 23.37 0.48 1.86 2.47 0.48 1.86 1.07 105.83 1.28
FLFC First Liberty Fin. Corp. of GA 7.85 7.19 1.09 14.03 5.62 0.99 12.82 0.74 136.39 1.71
CASH First Midwest Fin., Inc. of IA 8.80 7.87 0.64 6.36 7.23 0.59 5.83 0.80 79.90 1.13
FMSB First Mutual SB of Bellevue WA* 7.08 7.08 1.10 15.52 8.84 0.91 12.87 0.07 NA 1.53
FNFI First Niles Financial of OH 30.74 30.74 0.64 2.08 2.93 0.64 2.08 1.10 82.09 2.12
FNGB First Northern Cap. Corp of WI 10.57 10.57 0.98 9.08 7.30 0.88 8.15 0.18 276.65 0.56
FPFC First Place Fin. Corp of OH 21.19 21.19 0.88 4.17 5.61 0.88 4.17 0.19 248.00 0.83
FWWB First Savings Bancorp of WA 11.63 9.68 0.92 7.87 5.79 0.84 7.21 0.40 181.75 1.10
FSFF First SecurityFed Fin of IL 25.03 24.96 1.62 5.96 7.95 1.62 5.96 0.30 204.45 0.94
FSLA First Sentinal Bancorp of NJ 16.17 15.73 1.17 7.47 5.08 1.07 6.85 0.31 166.23 1.10
SOPN First Svgs Bancorp of NC 24.14 24.14 1.77 7.62 7.40 1.77 7.62 NA NA 0.29
FBNW FirstBank Corp of ID 13.80 13.80 1.05 6.89 8.00 0.66 4.34 0.36 186.26 0.83
FFDB FirstFed Bancorp, Inc. of AL 9.78 9.08 0.81 8.27 7.01 0.81 8.27 NA NA 0.98
FSPT FirstSpartan Fin. Corp. of SC 20.34 20.34 1.37 5.71 6.58 1.23 5.16 NA NA 0.61
FLAG Flag Financial Corp of GA 8.69 8.69 0.50 5.75 4.15 0.37 4.25 1.83 55.13 1.45
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ESBK Elmira Svgs Bank (The) of NY* 13.29 116.22 7.17 116.22 14.02 0.61 2.65 35.26
EMLD Emerald Financial Corp. of OH(8) 25.67 NM 29.61 NM 29.17 0.20 1.04 26.67
EFBC Empire Federal Bancorp of MT 20.77 71.18 23.68 71.18 17.10 0.40 3.44 71.43
EFBI Enterprise Fed. Bancorp of OH(8) NM 265.41 18.90 NM NM 1.00 2.15 NM
EQSB Equitable FSB of Wheaton MD 7.21 115.10 6.00 115.10 12.25 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI(8) 18.72 167.42 24.47 167.42 21.34 0.88 2.63 49.16
FFDF FFD Financial Corp. of OH 29.31 150.98 22.92 150.98 NM 0.30 1.76 51.72
FFLC FFLC Bancorp of Leesburg FL 14.58 120.69 13.85 120.69 14.58 0.44 2.51 36.67
FFWC FFW Corporation of Wabash IN 10.77 107.43 9.92 115.87 12.29 0.42 2.85 30.66
FFYF FFY Financial Corp. of OH 16.83 159.77 19.56 159.77 17.17 0.23 1.35 22.77
FMCO FMS Financial Corp. of NJ 11.30 137.27 8.62 137.73 11.30 0.12 1.45 16.44
FFHH FSF Financial Corp. of MN 12.86 92.15 9.26 98.76 13.92 0.50 3.70 47.62
FDTR Federal Trust Corp of FL 25.67 87.17 6.54 87.17 28.88 0.00 0.00 0.00
FBCI Fidelity Bancorp of Chicago IL 13.75 117.77 9.45 117.90 13.75 0.44 2.00 27.50
FSBI Fidelity Bancorp, Inc. of PA 11.91 119.93 8.02 119.93 12.07 0.36 2.03 24.16
FFFL Fidelity Bcsh MHC of FL (47.9) 15.60 136.11 7.38 140.03 19.32 1.00 5.88 NM
FFED Fidelity Fed. Bancorp of IN NM 122.75 5.07 122.75 NM 0.00 0.00 NM
FFOH Fidelity Financial of OH 15.43 103.73 13.51 115.63 15.82 0.36 2.88 44.44
SBFL Fingr Lakes Fin.MHC OF NY(33.1 NM 186.99 14.54 186.99 NM 0.24 2.09 NM
FBEI First Bancorp of Indiana of IN 24.49 59.76 15.63 59.76 24.49 0.00 0.00 0.00
FBSI First Bancshares, Inc. of MO 15.19 105.26 14.63 109.59 14.81 0.12 1.00 15.19
FBBC First Bell Bancorp of PA 13.74 145.51 14.01 145.51 13.85 0.40 2.22 30.53
FCAP First Capital, Inc. of IN 13.43 66.67 11.05 66.67 13.43 0.28 3.11 41.79
FSTC First Citizens Corp of GA(8) 20.81 273.83 26.19 329.65 24.01 0.40 1.02 21.28
FCME First Coastal Corp. of ME* 8.37 80.32 6.85 80.32 10.94 0.00 0.00 0.00
FDEF First Defiance Fin.Corp. of OH 25.32 83.91 10.01 97.83 NM 0.40 3.85 NM
FESX First Essex Bancorp of MA* 11.30 128.57 10.00 171.70 12.13 0.64 3.91 44.14
FFES First Fed of E. Hartford CT 13.10 92.52 6.83 92.52 11.95 0.72 2.94 38.50
BDJI First Fed. Bancorp. of MN 14.44 91.07 9.30 91.07 14.44 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 11.85 88.47 11.65 88.47 12.12 0.32 2.02 23.88
FTFC First Fed. Capital Corp. of WI 12.92 204.94 14.07 230.08 18.75 0.28 2.05 26.42
FFKY First Fed. Fin. Corp. of KY 13.67 149.64 17.66 186.87 13.95 0.60 2.93 40.00
FFBZ First Federal Bancorp of OH 19.64 155.08 11.83 155.37 20.63 0.16 1.94 38.10
FFSXD First Federal Bankshares of IA 10.62 69.82 6.74 101.65 12.67 0.48 4.86 51.61
FFCH First Fin. Holdings Inc. of SC 14.11 197.81 12.87 197.81 14.33 0.48 2.66 37.50
FFHS First Franklin Corp. of OH 12.62 110.90 9.66 111.27 14.98 0.30 2.20 27.78
FGHC First Georgia Hold. Corp of GA 19.32 252.23 20.71 267.30 19.32 0.12 1.41 27.27
FFSL First Independence Corp. of KS 10.70 84.52 8.22 84.52 10.70 0.35 3.24 34.65
FISB First Indiana Corp. of IN 12.56 144.81 13.38 146.26 19.56 0.52 2.74 34.44
FKAN First Kansas Financial of KS 23.56 73.41 14.68 74.27 25.97 0.00 0.00 0.00
FKFS First Keystone Fin. Corp of PA 11.48 122.91 7.44 122.91 12.84 0.24 1.71 19.67
FLKY First Lancaster Bncshrs of KY NM 79.55 18.59 79.55 NM 0.60 5.11 NM
FLFC First Liberty Fin. Corp. of GA 17.78 224.24 17.61 245.01 19.46 0.38 1.84 32.76
CASH First Midwest Fin., Inc. of IA 13.83 90.22 7.94 100.88 15.09 0.52 3.48 48.15
FMSB First Mutual SB of Bellevue WA* 11.32 169.27 11.99 169.27 13.65 0.20 1.59 18.02
FNFI First Niles Financial of OH NM 71.13 21.86 71.13 NM 0.28 2.56 NM
FNGB First Northern Cap. Corp of WI 13.71 123.01 13.00 123.01 15.27 0.40 3.74 51.28
FPFC First Place Fin. Corp of OH 17.84 74.43 15.77 74.43 17.84 0.00 0.00 0.00
FWWB First Savings Bancorp of WA 17.28 135.98 15.81 163.30 18.86 0.48 2.33 40.34
FSFF First SecurityFed Fin of IL 12.57 79.17 19.81 79.39 12.57 0.32 2.80 35.16
FSLA First Sentinal Bancorp of NJ 19.69 100.85 16.31 103.65 21.48 0.20 2.82 55.56
SOPN First Svgs Bancorp of NC 13.51 102.72 24.80 102.72 13.51 1.00 5.00 67.57
FBNW FirstBank Corp of ID 12.50 90.17 12.44 90.17 19.86 0.36 2.48 31.03
FFDB FirstFed Bancorp, Inc. of AL 14.27 115.42 11.29 124.39 14.27 0.28 3.07 43.75
FSPT FirstSpartan Fin. Corp. of SC 15.19 99.12 20.16 99.12 16.82 0.80 2.83 43.01
FLAG Flag Financial Corp of GA 24.12 138.77 12.07 138.77 NM 0.24 2.37 57.14
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FLGS Flagstar Bancorp, Inc of MI 5.38 5.27 1.56 28.52 11.32 1.56 28.52 1.97 33.25 2.68
FFBK FloridaFirst MHC of FL (47.0) 12.26 12.26 0.55 4.46 4.53 0.55 4.46 NA NA NA
FFIC Flushing Fin. Corp. of NY* 11.57 11.12 0.92 7.50 6.83 0.92 7.50 0.31 196.56 0.89
FTSB Fort Thomas Fin. Corp. of KY 12.32 12.32 0.95 6.59 5.50 0.95 6.59 3.29 20.17 0.75
FKKY Frankfort First Bancorp of KY 16.08 16.08 1.24 7.43 7.25 1.24 7.43 0.25 28.74 0.08
FTNB Fulton Bancorp, Inc. of MO 21.67 21.67 0.96 4.19 4.73 0.81 3.54 1.07 82.96 1.04
GUPB GFSB Bancorp, Inc of Gallup NM 9.81 9.81 0.71 6.36 5.79 0.71 6.36 1.19 26.51 0.47
GSLA GS Financial Corp. of LA 30.79 30.79 0.96 2.62 4.43 0.85 2.33 0.17 174.06 0.72
GOSB GSB Financial Corp. of NY* 22.91 22.91 0.49 1.94 2.11 0.73 2.87 0.06 NA NA
GBNK Gaston Fed Bncp MHC of NC(47.0 18.86 18.86 0.94 6.12 3.83 0.87 5.72 0.21 307.76 0.97
GCFC Grand Central Fin Corp of OH 22.16 22.16 0.60 2.73 4.20 0.60 2.73 0.02 NA 0.60
GTPS Great American Bancorp of IL 14.73 14.73 0.57 3.28 4.27 0.57 3.28 NA NA 0.84
PEDE Great Pee Dee Bancorp of SC 44.82 44.82 1.21 2.70 3.39 1.21 2.70 0.57 113.20 0.73
GSFC Green Street Fin. Corp. of NC 35.28 35.28 1.59 4.50 5.67 1.59 4.50 0.10 155.49 0.20
GFED Guaranty Fed Bancshares of MO 23.04 23.04 1.27 4.87 5.06 1.27 4.87 0.35 224.73 0.98
HEMT HF Bancorp of Hemet CA(8) 8.26 7.19 -0.08 -0.99 -0.73 -0.04 -0.53 0.93 68.20 1.05
HFFC HF Financial Corp. of SD 8.82 8.82 0.96 10.08 10.72 0.82 8.57 0.60 222.64 1.75
HMNF HMN Financial, Inc. of MN 9.85 9.05 0.57 5.41 6.81 0.31 2.88 0.12 377.30 0.68
HALL Hallmark Capital Corp. of WI 7.15 7.15 0.66 8.84 10.07 0.58 7.80 0.76 71.70 0.91
HRBF Harbor Federal Bancorp of MD 12.76 12.76 0.79 6.24 6.38 0.79 6.24 0.37 64.36 0.35
HARB Harbor Florida Bancshrs of FL 18.09 17.90 1.39 7.96 4.97 1.37 7.83 0.40 210.79 1.20
HFSA Hardin Bancorp of Hardin MO 9.54 9.54 0.85 8.10 9.21 0.57 5.42 0.14 165.00 0.44
HARL Harleysville SB of PA 6.34 6.34 0.88 13.60 9.00 0.86 13.33 NA NA 0.80
HFGI Harrington Fin. Group of IN 3.49 3.49 -0.78 -19.12 -17.17 -0.34 -8.47 0.15 74.32 0.26
HARS Harris Fin. MHC of PA (24.9) 7.57 7.34 0.82 10.27 4.54 0.59 7.39 0.63 57.88 0.86
HFFB Harrodsburg 1st Fin Bcrp of KY 25.47 25.47 1.32 5.01 5.90 1.32 5.01 0.47 66.60 0.40
HHFC Harvest Home Fin. Corp. of OH 10.77 10.77 0.58 5.38 4.06 0.56 5.21 0.01 NA 0.27
HAVN Haven Bancorp of Woodhaven NY 5.00 4.75 0.37 6.94 7.63 0.34 6.33 0.36 162.63 1.07
HTHR Hawthorne Fin. Corp. of CA 5.77 5.77 0.92 18.73 14.69 0.92 18.73 6.09 19.89 1.27
HMLK Hemlock Fed. Fin. Corp. of IL 13.31 13.31 0.81 5.32 6.44 0.82 5.38 0.06 625.00 0.75
HBSC Heritage Bancorp, Inc of SC 30.70 30.70 1.30 5.62 4.52 1.30 5.62 0.51 53.91 0.41
HFWA Heritage Financial Corp of WA 23.18 21.13 1.14 5.30 5.18 0.77 3.61 0.10 887.50 1.26
HCBC High Country Bancorp of CO 16.41 16.41 0.83 4.52 5.70 0.83 4.52 0.35 216.41 0.90
HBNK Highland Bancorp of CA 7.18 7.18 1.49 19.98 10.58 1.35 18.09 0.89 188.08 2.02
HIFS Hingham Inst. for Sav. of MA* 9.10 9.10 1.25 13.30 9.56 1.22 12.96 0.19 351.42 0.84
HBFW Home Bancorp of Fort Wayne IN 10.46 10.46 0.83 7.21 5.02 0.84 7.27 0.12 306.84 0.42
HCFC Home City Fin. Corp. of OH 12.73 12.73 1.21 7.83 7.05 1.21 7.83 0.22 261.29 0.63
HOMF Home Fed Bancorp of Seymour IN 9.40 9.18 1.46 15.70 9.93 1.20 12.96 0.81 73.55 0.75
HWEN Home Financial Bancorp of IN 13.95 13.95 0.68 4.12 4.31 0.58 3.51 0.84 73.32 0.93
HLFC Home Loan Financial Corp of OH 35.60 35.60 1.58 4.58 4.11 1.58 4.58 0.11 290.53 0.42
HPBC Home Port Bancorp, Inc. of MA* 8.72 8.72 1.44 15.58 8.44 1.63 17.68 0.10 NA 1.46
HSTD Homestead Bancorp, Inc. of LA 17.96 17.96 0.56 4.33 3.74 0.47 3.59 0.43 78.85 0.57
HFBC HopFed Bancorp of KY 27.78 27.78 1.21 5.75 3.56 1.21 5.75 0.13 89.90 0.24
HZFS Horizon Fin'l. Services of IA 8.54 8.54 -0.63 -6.74 -8.00 0.83 8.84 1.44 32.44 0.72
HRZB Horizon Financial Corp. of WA* 15.13 15.13 1.53 9.94 8.77 1.53 9.94 0.05 NA 0.85
HRBT Hudson River Bancorp Inc of NY 27.26 27.24 0.24 0.87 1.06 0.36 1.34 1.73 87.83 2.35
ITLA ITLA Capital Corp of CA* 10.26 10.23 1.46 14.17 13.04 1.45 14.10 NA NA 1.98
ICBC Independence Comm Bnk Cp of NY 17.20 16.27 0.04 0.24 0.24 0.77 4.18 0.76 109.85 1.34
IFSB Independence FSB of DC 8.27 7.63 2.00 24.20 32.45 1.59 19.22 NA NA 0.72
INBI Industrial Bancorp of OH 15.65 15.65 1.50 9.30 6.21 1.50 9.30 0.38 129.27 0.59
ISFC Innes Street Financial of NC 17.11 17.11 0.71 5.44 5.14 0.67 5.18 0.04 NA 0.77
IWBK Interwest Bancorp of WA 6.74 6.19 1.17 17.07 8.49 0.97 14.18 0.76 68.27 0.99
IPSW Ipswich SB of Ipswich MA* 5.25 5.25 1.08 20.11 10.60 0.95 17.73 0.44 146.88 0.92
JXVL Jacksonville Bancorp of TX 13.76 13.76 1.38 9.69 9.36 1.38 9.69 0.68 66.57 0.60
JXSB Jcksnville SB,MHC of IL (45.6) 10.74 10.74 0.65 6.10 5.43 0.46 4.39 0.93 51.15 0.62
JSBA Jefferson Svgs Bancorp of MO 8.95 7.35 0.53 5.75 5.28 0.50 5.43 0.57 84.99 0.59
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FLGS Flagstar Bancorp, Inc of MI 8.83 221.02 11.89 225.53 8.83 0.32 1.21 10.67
FFBK FloridaFirst MHC of FL (47.0) 22.09 98.55 12.08 98.55 22.09 0.00 0.00 0.00
FFIC Flushing Fin. Corp. of NY* 14.65 113.55 13.14 118.08 14.65 0.32 2.21 32.32
FTSB Fort Thomas Fin. Corp. of KY 18.18 136.21 16.78 136.21 18.18 0.25 2.08 37.88
FKKY Frankfort First Bancorp of KY 13.79 104.39 16.79 104.39 13.79 0.88 5.97 NM
FTNB Fulton Bancorp, Inc. of MO 21.15 90.34 19.58 90.34 25.00 0.30 2.18 46.15
GUPB GFSB Bancorp, Inc of Gallup NM 17.26 116.28 11.40 116.28 17.26 0.30 2.07 35.71
GSLA GS Financial Corp. of LA 22.57 63.06 19.42 63.06 25.32 0.28 2.70 60.87
GOSB GSB Financial Corp. of NY* NM 94.50 21.65 94.50 NM 0.12 0.87 41.38
GBNK Gaston Fed Bncp MHC of NC(47.0 26.09 128.48 24.23 128.48 27.91 0.20 1.67 43.48
GCFC Grand Central Fin Corp of OH 23.84 65.04 14.41 65.04 23.84 0.00 0.00 0.00
GTPS Great American Bancorp of IL 23.44 85.57 12.61 85.57 23.44 0.44 2.93 68.75
PEDE Great Pee Dee Bancorp of SC 29.49 79.58 35.67 79.58 29.49 0.36 3.13 NM
GSFC Green Street Fin. Corp. of NC 17.65 80.86 28.53 80.86 17.65 0.48 4.00 70.59
GFED Guaranty Fed Bancshares of MO 19.75 98.49 22.69 98.49 19.75 0.36 3.25 64.29
HEMT HF Bancorp of Hemet CA(8) NM 134.12 11.08 154.09 NM 0.00 0.00 NM
HFFC HF Financial Corp. of SD 9.33 97.58 8.60 97.58 10.96 0.36 2.88 26.87
HMNF HMN Financial, Inc. of MN 14.69 87.47 8.62 95.28 27.59 0.32 2.83 41.56
HALL Hallmark Capital Corp. of WI 9.93 84.70 6.06 84.70 11.26 0.00 0.00 0.00
HRBF Harbor Federal Bancorp of MD 15.69 99.01 12.64 99.01 15.69 0.52 3.25 50.98
HARB Harbor Florida Bancshrs of FL 20.14 141.43 25.59 142.96 20.48 0.30 2.53 50.85
HFSA Hardin Bancorp of Hardin MO 10.86 93.81 8.95 93.81 16.24 0.72 4.57 49.66
HARL Harleysville SB of PA 11.11 143.22 9.08 143.22 11.33 0.36 2.12 23.53
HFGI Harrington Fin. Group of IN NM 127.59 4.45 127.59 NM 0.12 1.57 NM
HARS Harris Fin. MHC of PA (24.9) 22.04 223.09 16.90 230.04 NM 0.24 1.91 42.11
HFFB Harrodsburg 1st Fin Bcrp of KY 16.94 86.71 22.09 86.71 16.94 0.80 5.98 NM
HHFC Harvest Home Fin. Corp. of OH 24.60 131.47 14.16 131.47 25.41 0.44 2.84 69.84
HAVN Haven Bancorp of Woodhaven NY 13.11 89.14 4.46 94.00 14.36 0.30 2.49 32.61
HTHR Hawthorne Fin. Corp. of CA 6.81 92.42 5.33 92.42 6.81 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL 15.52 88.41 11.77 88.41 15.34 0.36 2.67 41.38
HBSC Heritage Bancorp, Inc of SC 22.13 91.75 28.17 91.75 22.13 0.60 3.12 68.97
HFWA Heritage Financial Corp of WA 19.32 87.18 20.20 95.61 28.33 0.22 2.59 50.00
HCBC High Country Bancorp of CO 17.55 79.82 13.10 79.82 17.55 0.40 3.68 64.52
HBNK Highland Bancorp of CA 9.45 187.17 13.44 187.17 10.44 0.50 1.35 12.76
HIFS Hingham Inst. for Sav. of MA* 10.46 132.78 12.08 132.78 10.74 0.44 2.75 28.76
HBFW Home Bancorp of Fort Wayne IN 19.93 150.27 15.72 150.27 19.78 0.40 1.45 28.99
HCFC Home City Fin. Corp. of OH 14.19 124.51 15.85 124.51 14.19 0.40 2.54 36.04
HOMF Home Fed Bancorp of Seymour IN 10.07 151.90 14.27 155.55 12.21 0.44 2.12 21.36
HWEN Home Financial Bancorp of IN 23.18 97.65 13.62 97.65 27.17 0.12 1.52 35.29
HLFC Home Loan Financial Corp of OH 24.34 98.55 35.08 98.55 24.34 0.24 1.76 42.86
HPBC Home Port Bancorp, Inc. of MA* 11.85 175.33 15.29 175.33 10.45 0.80 3.50 41.45
HSTD Homestead Bancorp, Inc. of LA 26.72 71.83 12.90 71.83 NM 0.22 2.84 NM
HFBC HopFed Bancorp of KY 28.08 135.31 37.59 135.31 28.08 0.30 1.46 41.10
HZFS Horizon Fin'l. Services of IA NM 96.04 8.21 96.04 9.52 0.18 2.25 NM
HRZB Horizon Financial Corp. of WA* 11.40 109.61 16.58 109.61 11.40 0.44 3.38 38.60
HRBT Hudson River Bancorp Inc of NY NM 81.54 22.23 81.60 NM 0.12 1.16 NM
ITLA ITLA Capital Corp of CA* 7.67 107.44 11.02 107.73 7.71 0.00 0.00 0.00
ICBC Independence Comm Bnk Cp of NY NM 100.89 17.35 106.69 23.47 0.12 0.96 NM
IFSB Independence FSB of DC 3.08 74.58 6.17 80.85 3.88 0.00 0.00 0.00
INBI Industrial Bancorp of OH 16.10 151.15 23.65 151.15 16.10 0.64 3.37 54.24
ISFC Innes Street Financial of NC 19.44 76.32 13.06 76.32 20.42 0.20 1.63 31.75
IWBK Interwest Bancorp of WA 11.77 199.02 13.41 216.44 14.17 0.56 2.52 29.63
IPSW Ipswich SB of Ipswich MA* 9.44 174.45 9.15 174.45 10.70 0.20 1.93 18.18
JXVL Jacksonville Bancorp of TX 10.68 101.59 13.98 101.59 10.68 0.50 3.25 34.72
JXSB Jcksnville SB,MHC of IL (45.6) 18.42 110.18 11.83 110.18 25.61 0.30 2.86 52.63
JSBA Jefferson Svgs Bancorp of MO 18.93 108.83 9.74 132.54 20.06 0.28 2.08 39.44
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
KSBK KSB Bancorp of Kingfield ME* 7.99 7.16 1.01 12.60 11.45 0.99 12.33 1.47 62.80 1.29
KFBI Klamath First Bancorp of OR 13.95 12.90 0.98 6.78 6.83 0.94 6.54 0.23 86.87 0.30
LSBI LSB Fin. Corp. of Lafayette IN 7.82 7.82 0.79 9.59 6.97 0.69 8.37 1.17 57.80 0.80
LVSB Lakeview Financial of NJ(8) 8.65 5.58 1.65 19.08 8.79 0.71 8.16 0.67 124.82 1.65
LARK Landmark Bancshares, Inc of KS 10.43 10.43 1.04 8.27 10.87 0.84 6.69 0.36 149.50 0.69
LARL Laurel Capital Group of PA 10.82 10.82 1.47 13.72 9.36 1.44 13.44 0.28 291.39 1.21
LSBX Lawrence Savings Bank of MA* 13.74 13.74 2.53 20.93 19.71 2.48 20.52 0.18 523.11 1.64
LFED Leeds Fed Bksr MHC of MD (36.5 15.96 15.96 1.05 6.57 5.53 1.05 6.57 0.80 29.93 0.39
LXMO Lexington B&L Fin. Corp. of MO 15.35 14.38 0.64 3.82 5.67 0.64 3.82 0.79 74.84 0.98
LIBB Liberty Bancorp MHC of NJ (47) 13.23 13.23 0.58 5.18 4.05 0.58 5.18 0.27 107.65 0.43
LFCO Life Financial Corp of CA(8) 16.18 16.18 3.00 20.55 34.30 3.15 21.59 2.27 20.25 9.82
LNCB Lincoln Bancorp of IN 26.35 26.35 0.95 3.59 5.30 0.95 3.59 0.38 108.39 0.77
LFBI Little Falls Bancorp of NJ(8) 10.68 9.97 0.51 4.73 3.46 0.50 4.59 0.39 98.01 0.88
LOGN Logansport Fin. Corp. of IN 17.16 17.16 1.37 7.51 9.04 1.37 7.51 0.33 90.48 0.39
MAFB MAF Bancorp, Inc. of IL 8.36 6.88 1.05 13.26 6.53 1.02 12.91 0.54 74.85 0.52
MBLF MBLA Financial Corp. of MO 13.63 13.63 0.89 6.64 8.11 0.89 6.64 0.72 48.26 0.50
MECH MECH Financial Inc of CT* 9.36 9.28 0.91 9.41 5.47 0.92 9.52 0.44 271.67 1.85
MFBC MFB Corp. of Mishawaka IN 9.34 9.34 0.81 7.36 7.72 0.83 7.59 0.08 180.14 0.20
MSBF MSB Financial, Inc of MI 15.97 15.97 1.47 8.88 7.50 1.29 7.79 0.91 54.16 0.56
MARN Marion Capital Holdings of IN 17.69 17.31 1.17 6.07 6.95 1.17 6.07 0.83 128.60 1.23
MRKF Market Fin. Corp. of OH 27.42 27.42 0.88 2.83 4.48 0.88 2.83 0.31 30.23 0.16
MASB MassBank Corp. of Reading MA* 11.67 11.53 1.17 10.09 8.49 0.96 8.31 0.12 224.77 0.80
MFLR Mayflower Co-Op. Bank of MA* 9.12 9.00 1.11 11.82 8.29 0.90 9.58 0.85 91.11 1.52
MDBK Medford Bancorp, Inc. of MA* 8.88 8.46 1.08 11.99 9.18 0.96 10.70 0.23 248.24 1.16
MBFC MegaBank Financial Corp of CO 11.87 11.87 1.87 20.07 5.91 1.87 20.07 1.47 77.04 1.38
MWBX MetroWest Bank of MA* 7.31 7.31 1.24 16.91 9.81 1.22 16.62 NA NA 2.29
METF Metropolitan Fin. Corp. of OH 3.13 2.93 0.62 17.22 11.00 0.49 13.50 1.34 37.91 0.67
MCBN Mid-Coast Bancorp of ME 7.50 7.50 0.45 5.68 5.69 0.37 4.60 0.76 72.57 0.70
MWBI Midwest Bancshares, Inc. of IA(8) 7.41 7.41 0.87 12.04 9.41 0.77 10.71 0.34 88.24 0.50
MFFC Milton Fed. Fin. Corp. of OH 10.43 10.43 0.65 5.85 5.31 0.52 4.66 0.33 85.99 0.38
MBBC Monterey Bay Bancorp of CA 9.21 8.42 0.33 3.14 3.43 0.32 3.07 0.39 156.44 0.92
MONT Montgomery Fin. Corp. of IN 16.20 16.20 0.92 5.28 7.33 0.92 5.28 0.93 18.64 0.20
MSBK Mutual SB, FSB of Bay City MI(8) 6.40 6.40 0.43 7.74 5.17 0.20 3.50 0.09 375.20 0.54
MYST Mystic Financial of MA* 16.83 16.83 0.90 5.76 6.34 0.85 5.43 NA NA 0.91
NHTB NH Thrift Bancshares of NH 8.59 7.60 0.96 11.71 10.12 0.88 10.68 0.87 111.12 1.32
NSLB NS&L Bancorp, Inc of Neosho MO 16.09 15.97 0.75 4.21 4.42 0.72 4.01 0.03 245.45 0.14
NMSB Newmil Bancorp, Inc. of CT* 9.74 9.74 0.75 8.04 6.47 0.56 6.03 0.50 284.60 2.41
NBCP Niagara Bancorp MHC of NY(45.4* 17.50 17.50 0.77 4.98 3.41 1.10 7.11 0.26 206.18 1.06
NBSI North Bancshares of Chicago IL 10.46 10.46 0.42 3.67 3.49 0.38 3.31 0.02 891.67 0.26
FFFD North Central Bancshares of IA 14.31 12.42 1.31 8.84 9.11 1.31 8.78 0.34 236.01 1.05
NEIB Northeast Indiana Bncrp of IN 11.77 11.77 1.17 9.21 10.74 1.17 9.21 NA NA 0.81
NWSB Northwest Bcrp MHC of PA (30.5 7.85 6.51 0.82 9.59 4.57 0.78 9.15 0.78 73.22 0.76
NWEQ Northwest Equity Corp. of WI(8) 12.10 12.10 1.12 9.40 6.07 1.02 8.56 0.73 51.94 0.49
NTMG Nutmeg FS&LA of CT 6.66 6.66 1.08 17.74 10.35 0.38 6.25 1.46 33.66 0.55
OHSL OHSL Financial Corp. of OH 10.12 10.12 0.85 8.05 6.21 0.78 7.31 NA NA 0.34
OCFC Ocean Fin. Corp. of NJ 12.66 12.60 0.85 6.28 6.14 0.88 6.49 0.35 136.46 0.79
ONFC Oneida Fincl MHC of NY (44.5) 18.00 18.00 0.52 2.91 3.72 0.52 2.91 0.52 120.36 1.17
OTFC Oregon Trail Fin. Corp. of OR 20.30 20.30 1.22 5.08 6.35 1.22 5.08 0.18 201.50 0.59
OFCP Ottawa Financial Corp. of MI 7.82 6.44 0.94 11.51 7.59 0.83 10.14 0.43 94.89 0.49
PBOC PBOC Holdings of CA 5.41 5.41 0.39 7.59 6.38 -0.03 -0.54 0.44 127.63 0.87
PFFB PFF Bancorp of Pomona CA 7.98 7.90 0.60 7.15 6.61 0.59 6.96 1.05 83.89 1.33
PHSB PHS Bancorp MHC of PA (45.0) 11.94 11.94 0.65 5.16 5.08 0.61 4.88 0.22 244.21 1.27
PSFI PS Financial of Chicago IL 20.46 20.46 1.62 6.63 8.05 1.58 6.46 1.12 22.45 0.45
PSBI PSB Bancorp Inc. of PA* 18.53 18.53 0.62 4.23 4.77 0.36 2.48 1.36 13.58 0.42
PVFC PVF Capital Corp. of OH 7.77 7.77 1.19 16.05 10.72 1.12 15.16 0.75 82.14 0.69
PBCI Pamrapo Bancorp, Inc. of NJ 12.04 11.99 1.12 8.96 6.81 1.12 8.96 1.40 39.72 0.95
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
KSBK KSB Bancorp of Kingfield ME* 8.74 110.10 8.80 122.85 8.93 0.16 1.35 11.76
KFBI Klamath First Bancorp of OR 14.64 98.96 13.80 107.05 15.19 0.48 2.95 43.24
LSBI LSB Fin. Corp. of Lafayette IN 14.35 137.16 10.72 137.16 16.44 0.48 1.77 25.40
LVSB Lakeview Financial of NJ(8) 11.37 216.91 18.76 336.28 26.58 0.25 1.13 12.89
LARK Landmark Bancshares, Inc of KS 9.20 93.77 9.78 93.77 11.38 0.60 3.38 31.09
LARL Laurel Capital Group of PA 10.68 141.54 15.32 141.54 10.90 0.60 3.80 40.54
LSBX Lawrence Savings Bank of MA* 5.07 95.53 13.12 95.53 5.18 0.00 0.00 0.00
LFED Leeds Fed Bksr MHC of MD (36.5 18.08 118.81 18.97 118.81 18.08 0.56 4.77 NM
LXMO Lexington B&L Fin. Corp. of MO 17.62 69.31 10.64 73.98 17.62 0.30 2.79 49.18
LIBB Liberty Bancorp MHC of NJ (47) 24.67 100.57 13.30 100.57 24.67 0.08 0.90 22.22
LFCO Life Financial Corp of CA(8) 2.92 55.33 8.95 55.33 2.78 0.00 0.00 0.00
LNCB Lincoln Bancorp of IN 18.87 67.75 17.85 67.75 18.87 0.24 2.45 46.15
LFBI Little Falls Bancorp of NJ(8) 28.87 135.67 14.49 145.39 29.71 0.24 1.17 33.80
LOGN Logansport Fin. Corp. of IN 11.06 83.64 14.35 83.64 11.06 0.44 3.83 42.31
MAFB MAF Bancorp, Inc. of IL 15.32 169.86 14.20 206.52 15.73 0.28 1.19 18.30
MBLF MBLA Financial Corp. of MO 12.33 81.35 11.09 81.35 12.33 0.60 3.24 40.00
MECH MECH Financial Inc of CT* 18.29 166.67 15.59 167.97 18.07 0.60 2.00 36.59
MFBC MFB Corp. of Mishawaka IN 12.96 99.49 9.30 99.49 12.57 0.36 1.69 21.95
MSBF MSB Financial, Inc of MI 13.33 117.07 18.70 117.07 15.19 0.32 2.67 35.56
MARN Marion Capital Holdings of IN 14.38 94.89 16.79 97.00 14.38 0.88 4.19 60.27
MRKF Market Fin. Corp. of OH 22.30 71.31 19.55 71.31 22.30 0.28 3.39 NM
MASB MassBank Corp. of Reading MA* 11.78 116.37 13.58 117.86 14.30 1.08 2.94 34.62
MFLR Mayflower Co-Op. Bank of MA* 12.07 138.20 12.60 140.00 14.89 0.36 2.57 31.03
MDBK Medford Bancorp, Inc. of MA* 10.90 130.82 11.62 137.28 12.22 0.44 2.73 29.73
MBFC MegaBank Financial Corp of CO 16.93 258.61 30.69 258.61 16.93 0.00 0.00 0.00
MWBX MetroWest Bank of MA* 10.19 164.12 12.00 164.12 10.38 0.20 3.44 35.09
METF Metropolitan Fin. Corp. of OH 9.09 145.45 4.55 155.34 11.59 0.00 0.00 0.00
MCBN Mid-Coast Bancorp of ME 17.57 99.19 7.44 99.19 21.71 0.20 2.71 47.62
MWBI Midwest Bancshares, Inc. of IA(8) 10.63 120.97 8.97 120.97 11.95 0.40 2.96 31.50
MFFC Milton Fed. Fin. Corp. of OH 18.84 110.36 11.51 110.36 23.64 0.60 4.62 NM
MBBC Monterey Bay Bancorp of CA 29.12 99.92 9.20 109.34 29.85 0.14 1.17 34.15
MONT Montgomery Fin. Corp. of IN 13.64 72.70 11.78 72.70 13.64 0.22 2.44 33.33
MSBK Mutual SB, FSB of Bay City MI(8) 19.35 142.52 9.12 142.52 NM 0.00 0.00 0.00
MYST Mystic Financial of MA* 15.77 79.42 13.37 79.42 16.74 0.24 2.21 34.78
NHTB NH Thrift Bancshares of NH 9.89 110.83 9.52 125.26 10.84 0.64 4.37 43.24
NSLB NS&L Bancorp, Inc of Neosho MO 22.62 100.92 16.24 101.71 23.75 0.53 3.72 NM
NMSB Newmil Bancorp, Inc. of CT* 15.46 120.59 11.75 120.59 20.61 0.36 3.23 50.00
NBCP Niagara Bancorp MHC of NY(45.4* 29.29 115.56 20.22 115.56 20.50 0.16 1.56 45.71
NBSI North Bancshares of Chicago IL 28.66 111.80 11.69 111.80 NM 0.44 3.74 NM
FFFD North Central Bancshares of IA 10.98 99.94 14.31 115.17 11.05 0.40 2.46 27.03
NEIB Northeast Indiana Bncrp of IN 9.31 89.23 10.51 89.23 9.31 0.36 2.67 24.83
NWSB Northwest Bcrp MHC of PA (30.5 21.89 201.04 15.78 242.57 22.93 0.16 1.66 36.36
NWEQ Northwest Equity Corp. of WI(8) 16.46 151.62 18.35 151.62 18.08 0.68 3.08 50.75
NTMG Nutmeg FS&LA of CT 9.66 160.38 10.67 160.38 27.42 0.20 2.35 22.73
OHSL OHSL Financial Corp. of OH 16.09 127.97 12.95 127.97 17.72 0.50 3.57 57.47
OCFC Ocean Fin. Corp. of NJ 16.29 107.25 13.58 107.81 15.76 0.48 3.31 53.93
ONFC Oneida Fincl MHC of NY (44.5) 26.85 78.03 14.05 78.03 26.85 0.00 0.00 0.00
OTFC Oregon Trail Fin. Corp. of OR 15.75 84.68 17.19 84.68 15.75 0.24 1.93 30.38
OFCP Ottawa Financial Corp. of MI 13.17 155.46 12.16 188.99 14.96 0.44 2.10 27.67
PBOC PBOC Holdings of CA 15.68 102.33 5.54 102.33 NM 0.00 0.00 0.00
PFFB PFF Bancorp of Pomona CA 15.13 112.89 9.01 114.01 15.54 0.00 0.00 0.00
PHSB PHS Bancorp MHC of PA (45.0) 19.69 100.57 12.01 100.57 20.84 0.28 2.63 51.85
PSFI PS Financial of Chicago IL 12.42 88.17 18.04 88.17 12.73 0.52 5.17 64.20
PSBI PSB Bancorp Inc. of PA* 20.97 62.04 11.50 62.04 NM 0.00 0.00 0.00
PVFC PVF Capital Corp. of OH 9.33 138.40 10.76 138.40 9.87 0.00 0.00 0.00
PBCI Pamrapo Bancorp, Inc. of NJ 14.68 129.93 15.64 130.45 14.68 1.25 5.49 NM
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PFED Park Bancorp of Chicago IL 18.17 18.17 1.10 5.57 7.13 1.10 5.57 0.09 265.96 0.66
PVSA Parkvale Financial Corp of PA 7.39 7.36 1.07 13.98 9.65 1.03 13.53 0.37 298.87 1.33
PBHC Pathfinder BC MHC of NY (46.0)* 10.96 9.34 0.61 5.24 4.34 0.40 3.46 1.27 36.48 0.74
PEEK Peekskill Fin. Corp. of NY 20.10 20.10 0.90 4.06 4.85 0.93 4.19 0.67 49.51 1.33
PFSB PennFed Fin. Services of NJ 6.54 5.74 0.75 11.05 8.52 0.72 10.54 0.45 42.06 0.27
PBKB People's Bancshares of MA* 3.67 3.62 0.58 15.90 8.74 0.22 6.03 0.19 273.22 1.13
TSBS Peoples Bancorp Inc of NJ(8)* 23.20 22.55 1.28 4.87 3.02 1.24 4.73 0.29 96.28 0.82
PFDC Peoples Bancorp of Auburn IN 14.23 14.23 1.41 9.50 6.81 1.41 9.50 NA NA 0.35
PBCT Peoples Bank, MHC of CT (43.2)* 8.59 7.22 1.00 11.11 5.01 0.52 5.78 0.56 186.50 1.63
PFFC Peoples Fin. Corp. of OH 16.48 16.48 1.23 6.89 8.76 0.52 2.89 0.13 176.52 0.30
PHBK Peoples Heritage Fin Grp of ME* 7.54 6.31 1.07 14.64 5.63 1.30 17.78 0.88 98.33 1.42
PSFC Peoples Sidney Fin. Corp of OH 17.04 17.04 0.74 3.58 3.61 0.74 3.58 0.93 45.11 0.47
PERM Permanent Bancorp, Inc. of IN 8.13 6.15 0.60 6.77 6.45 0.55 6.29 0.26 217.48 0.88
PCBC Perry Co. Fin. Corp. of MO 16.95 16.95 0.86 4.74 4.51 0.85 4.69 NA NA 0.16
PHFC Pittsburgh Home Fin Corp of PA 6.23 6.17 0.51 7.32 7.23 0.56 7.91 1.51 29.49 0.76
PFSL Pocahontas Bancorp of AR 13.84 13.19 0.67 4.85 6.25 0.67 4.85 0.59 71.27 0.85
PTRS Potters Financial Corp of OH 8.29 8.29 0.86 10.02 8.82 0.77 9.00 0.17 987.05 2.30
PRBC Prestige Bancorp of PA 8.32 8.32 0.46 4.83 6.67 0.45 4.70 0.51 63.23 0.46
PFNC Progress Financial Corp. of PA 6.42 5.62 0.88 14.08 5.76 0.81 13.07 1.19 58.21 1.13
PBCP Provident Bncp MHC of NY (46.7 11.64 11.64 0.67 5.80 5.76 0.67 5.80 0.93 76.06 1.06
PROV Provident Fin. Holdings of CA 9.83 9.83 0.70 6.58 7.39 0.37 3.53 0.68 109.81 1.00
PULB Pulaski Financial Corp of MO 23.83 23.83 0.83 4.44 4.65 0.60 3.20 0.71 51.42 0.53
PLSK Pulaski SB, MHC of NJ (47.0) 11.42 11.42 0.54 4.64 5.52 0.56 4.83 0.53 96.32 1.00
QCFB QCF Bancorp of Virginia MN 13.56 13.56 1.64 10.09 8.56 1.59 9.81 0.38 219.18 1.82
QCBC Quaker City Bancorp of CA 8.44 8.44 0.92 10.55 9.10 0.84 9.72 0.88 99.88 1.05
QCSB Queens County Bancorp of NY* 8.55 8.55 1.61 16.73 3.98 1.59 16.60 0.38 142.63 0.63
RELY Reliance Bancorp, Inc. of NY 7.17 4.88 0.80 10.11 7.79 0.80 10.11 0.33 113.09 0.95
RCBK Richmond County Fin Corp of NY 17.24 17.19 0.67 3.66 2.67 1.42 7.78 0.19 250.77 0.96
RSBI Ridgewood Fin. MHC of NJ (47.0 10.11 10.11 0.45 4.50 4.85 0.45 4.50 0.25 118.27 0.76
RIVR River Valley Bancorp of IN 13.45 13.29 0.92 6.84 8.56 0.79 5.88 2.14 49.80 1.34
RVSB Riverview Bancorp of WA 19.56 18.96 1.70 7.91 6.96 1.64 7.62 0.34 110.58 0.64
RSLN Roslyn Bancorp, Inc. of NY* 16.04 15.97 1.41 8.66 7.28 1.25 7.64 0.18 372.95 2.04
SCCB S. Carolina Comm. Bnshrs of SC 20.89 20.89 0.94 4.59 5.36 0.94 4.59 1.99 32.23 0.77
SFED SFS Bancorp of Schenectady NY 13.25 13.25 1.20 9.54 9.52 1.94 15.49 0.63 84.26 0.68
SGVB SGV Bancorp of W. Covina CA 6.74 6.66 0.50 6.75 8.52 0.49 6.68 0.71 47.87 0.45
SCFS Seacoast Fin Serv Corp of MA* 14.23 14.23 1.12 7.90 8.05 1.08 7.60 0.43 202.47 1.15
SKAN Skaneateles Bancorp Inc of NY(8)* 6.91 6.78 0.62 9.00 4.68 0.58 8.37 1.48 70.16 1.34
SKBO Skibo Fin Corp MHC of PA(45.0) 16.58 16.58 0.52 3.06 3.38 0.57 3.34 0.46 81.78 0.90
SOBI Sobieski Bancorp of S. Bend IN 12.23 12.23 0.62 4.64 5.59 0.61 4.53 0.18 151.35 0.32
SFFS Sound Fed Bp MHC of NY (46.1) 19.05 19.05 1.20 6.29 6.86 1.20 6.29 0.52 76.31 0.81
SJFC South Jersey Fin. Corp of NJ 19.49 19.49 1.02 5.22 6.90 1.02 5.22 NA NA NA
SSFC South Street Fin. Corp. of NC* 16.75 16.75 0.47 2.93 3.04 0.41 2.55 0.24 98.39 0.39
SBAN SouthBanc Shares Inc. of SC 16.39 16.39 0.63 4.10 3.00 1.38 8.99 0.37 178.35 1.03
SCBS Southern Commun. Bncshrs of AL 12.53 12.53 1.11 6.72 6.45 1.11 6.72 0.21 546.21 1.70
SMBC Southern Missouri Bncrp of MO 13.81 13.81 0.71 4.58 5.93 0.76 4.91 2.47 31.38 1.06
SVRN Sovereign Bancorp, Inc. of PA 5.50 3.55 0.69 13.22 5.61 0.74 14.05 0.54 112.58 1.19
STFR St. Francis Cap. Corp. of WI 5.62 4.97 0.83 11.70 7.92 0.73 10.27 0.17 225.55 0.90
SPBC St. Paul Bancorp, Inc. of IL 8.45 8.44 0.51 5.68 2.72 0.90 10.03 0.33 200.46 0.89
SFFC StateFed Financial Corp. of IA 17.67 17.67 1.12 6.28 6.67 1.12 6.28 1.43 17.02 0.32
SFIN Statewide Fin. Corp. of NJ 8.43 8.42 0.52 5.58 3.79 0.52 5.58 0.42 101.43 0.83
STSA Sterling Financial Corp. of WA 5.14 2.50 0.29 5.39 5.03 0.41 7.75 0.40 156.08 0.99
THRD TF Financial Corp. of PA 7.91 6.80 0.61 7.81 7.73 0.54 6.89 0.29 100.37 0.79
THTL Thistle Group Holdings of PA 20.38 20.38 0.55 2.59 3.49 0.57 2.68 0.10 218.11 0.77
TSBK Timberland Bancorp of WA 29.28 29.28 2.07 7.89 7.91 2.01 7.64 2.54 25.87 0.91
TRIC Tri-County Bancorp of WY 12.81 12.81 1.08 7.02 9.26 0.98 6.36 NA NA 0.96
TRYF Troy Financial Corp of NY 20.94 20.94 0.42 1.99 2.85 0.42 1.99 NA NA NA
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PFED Park Bancorp of Chicago IL 14.03 81.22 14.76 81.22 14.03 0.48 3.49 48.98
PVSA Parkvale Financial Corp of PA 10.36 140.84 10.41 141.46 10.71 0.60 3.10 32.09
PBHC Pathfinder BC MHC of NY (46.0)* 23.02 124.45 13.64 145.97 NM 0.24 2.37 54.55
PEEK Peekskill Fin. Corp. of NY 20.63 86.09 17.31 86.09 20.00 0.36 2.77 57.14
PFSB PennFed Fin. Services of NJ 11.73 132.96 8.69 151.44 12.30 0.16 1.05 12.31
PBKB People's Bancshares of MA* 11.45 181.99 6.68 184.65 NM 0.80 4.21 48.19
TSBS Peoples Bancorp Inc of NJ(8)* NM 117.80 27.33 121.23 NM 0.10 0.89 29.41
PFDC Peoples Bancorp of Auburn IN 14.68 139.83 19.89 139.83 14.68 0.48 2.48 36.36
PBCT Peoples Bank, MHC of CT (43.2)* 19.95 214.35 18.42 255.08 NM 0.92 3.16 63.01
PFFC Peoples Fin. Corp. of OH 11.42 82.59 13.61 82.59 27.21 0.60 6.49 74.07
PHBK Peoples Heritage Fin Grp of ME* 17.76 218.39 16.46 260.99 14.62 0.46 2.42 42.99
PSFC Peoples Sidney Fin. Corp of OH 27.72 118.16 20.14 118.16 27.72 0.28 2.20 60.87
PERM Permanent Bancorp, Inc. of IN 15.49 108.16 8.79 142.86 16.67 0.24 2.18 33.80
PCBC Perry Co. Fin. Corp. of MO 22.16 104.32 17.68 104.32 22.40 0.00 0.00 0.00
PHFC Pittsburgh Home Fin Corp of PA 13.83 104.58 6.52 105.71 12.79 0.28 2.05 28.28
PFSL Pocahontas Bancorp of AR 16.00 77.56 10.74 81.42 16.00 0.24 3.49 55.81
PTRS Potters Financial Corp of OH 11.34 112.70 9.35 112.70 12.63 0.23 1.88 21.30
PRBC Prestige Bancorp of PA 15.00 76.01 6.32 76.01 15.41 0.22 1.96 29.33
PFNC Progress Financial Corp. of PA 17.35 208.08 13.36 237.43 18.68 0.16 0.94 16.33
PBCP Provident Bncp MHC of NY (46.7 17.37 100.69 11.73 100.69 17.37 0.00 0.00 0.00
PROV Provident Fin. Holdings of CA 13.54 88.40 8.69 88.40 25.20 0.00 0.00 0.00
PULB Pulaski Financial Corp of MO 21.51 71.10 16.94 71.10 29.84 0.36 3.89 NM
PLSK Pulaski SB, MHC of NJ (47.0) 18.12 82.07 9.37 82.07 17.41 0.32 3.60 65.31
QCFB QCF Bancorp of Virginia MN 11.68 146.03 19.80 146.03 12.02 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA 10.99 114.39 9.65 114.39 11.92 0.00 0.00 0.00
QCSB Queens County Bancorp of NY* 25.10 NM 38.78 NM 25.30 1.00 3.14 NM
RELY Reliance Bancorp, Inc. of NY 12.84 138.16 9.91 203.10 12.84 0.84 2.99 38.36
RCBK Richmond County Fin Corp of NY NM 126.26 21.77 126.69 17.65 0.32 2.13 NM
RSBI Ridgewood Fin. MHC of NJ (47.0 20.62 92.71 9.37 92.71 20.62 0.00 0.00 0.00
RIVR River Valley Bancorp of IN 11.68 78.76 10.60 79.72 13.59 0.24 1.92 22.43
RVSB Riverview Bancorp of WA 14.38 116.75 22.83 120.42 14.94 0.24 2.09 30.00
RSLN Roslyn Bancorp, Inc. of NY* 13.73 120.53 19.33 121.03 15.57 0.46 2.64 36.22
SCCB S. Carolina Comm. Bnshrs of SC 18.67 85.16 17.79 85.16 18.67 0.68 4.86 NM
SFED SFS Bancorp of Schenectady NY 10.50 94.06 12.46 94.06 6.47 0.36 1.96 20.57
SGVB SGV Bancorp of W. Covina CA 11.73 79.80 5.38 80.71 11.85 0.00 0.00 0.00
SCFS Seacoast Fin Serv Corp of MA* 12.42 98.18 13.97 98.18 12.92 0.00 0.00 0.00
SKAN Skaneateles Bancorp Inc of NY(8)* 21.39 185.26 12.81 188.99 23.00 0.28 1.15 24.56
SKBO Skibo Fin Corp MHC of PA(45.0) 29.55 90.03 14.93 90.03 27.08 0.30 4.62 NM
SOBI Sobieski Bancorp of S. Bend IN 17.90 84.11 10.29 84.11 18.35 0.32 2.21 39.51
SFFS Sound Fed Bp MHC of NY (46.1) 14.59 91.72 17.47 91.72 14.59 0.00 0.00 0.00
SJFC South Jersey Fin. Corp of NJ 14.50 75.65 14.74 75.65 14.50 0.00 0.00 0.00
SSFC South Street Fin. Corp. of NC* NM 104.42 17.49 104.42 NM 0.40 5.29 NM
SBAN SouthBanc Shares Inc. of SC NM 122.88 20.14 122.88 15.22 0.48 2.29 NM
SCBS Southern Commun. Bncshrs of AL 15.49 138.71 17.37 138.71 15.49 0.33 3.00 46.48
SMBC Southern Missouri Bncrp of MO 16.87 85.94 11.87 85.94 15.73 0.50 3.57 60.24
SVRN Sovereign Bancorp, Inc. of PA 17.81 194.14 10.67 300.63 16.76 0.10 0.70 12.50
STFR St. Francis Cap. Corp. of WI 12.62 163.61 9.20 185.23 14.37 0.64 1.58 20.00
SPBC St. Paul Bancorp, Inc. of IL NM 187.70 15.86 187.85 20.80 0.80 3.40 NM
SFFC StateFed Financial Corp. of IA 15.00 92.86 16.41 92.86 15.00 0.30 3.08 46.15
SFIN Statewide Fin. Corp. of NJ 26.40 154.02 12.99 154.23 26.40 0.52 2.32 61.18
STSA Sterling Financial Corp. of WA 19.86 98.17 5.05 201.95 13.81 0.00 0.00 0.00
THRD TF Financial Corp. of PA 12.94 98.98 7.83 115.08 14.65 0.48 2.90 37.50
THTL Thistle Group Holdings of PA 28.66 74.60 15.20 74.60 27.70 0.20 2.41 68.97
TSBK Timberland Bancorp of WA 12.64 89.86 26.31 89.86 13.05 0.24 2.02 25.53
TRIC Tri-County Bancorp of WY 10.80 97.55 12.49 97.55 11.92 0.44 3.81 41.12
TRYF Troy Financial Corp of NY NM 69.57 14.57 69.57 NM 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
<TABLE>
<CAPTION>
Exhibit 1-B (continued)
Weekly Thrift Market Line - Part Two
Prices As Of April 16, 1999
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------ ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TWIN Twin City Bancorp, Inc. of TN 12.49 12.49 1.14 8.97 7.92 1.00 7.86 0.21 83.26 0.24
USAB USABancshares, Inc of PA* 8.23 8.19 1.16 12.76 6.80 0.97 10.69 NA NA NA
UCBC Union Community Bancorp of IN 37.46 37.46 1.71 4.56 5.95 1.71 4.56 0.32 104.30 0.40
UFBS Union Fincl. Bancshares of SC 8.11 7.15 0.83 10.45 8.59 0.73 9.19 0.44 98.80 0.82
UCFC United Community Fin. of OH 36.94 36.94 0.69 3.19 2.04 0.69 3.19 0.54 93.99 0.96
UBMT United Fin. Corp. of MT 13.13 12.27 1.04 7.74 6.18 1.02 7.62 0.55 115.56 1.03
UPFC United PanAm Fin. Corp of CA 19.47 18.94 1.77 14.18 8.42 -5.82 -46.55 4.82 49.65 7.08
UTBI United Tenn. Bancshares of TN 20.57 19.35 1.34 6.33 6.67 1.36 6.41 0.45 146.35 1.19
VCAP Virginia Capital Bcshrs of VA 31.01 31.01 1.54 4.98 5.92 1.54 4.98 1.54 64.19 1.36
WHGB WHG Bancshares of MD 11.61 11.61 0.55 3.73 5.33 0.55 3.73 0.05 465.15 0.39
WSFS WSFS Financial Corp. of DE* 5.24 5.22 1.06 18.23 9.21 1.11 19.11 0.86 168.37 3.02
WVFC WVS Financial Corp. of PA 10.17 10.17 1.15 10.75 7.13 1.23 11.46 NA NA 1.14
WRNB Warren Bancorp of Peabody MA* 10.05 10.05 1.54 14.56 8.51 1.48 13.98 0.89 113.87 1.51
WSBI Warwick Community Bncrp of NY* 18.93 18.93 0.28 1.49 1.48 0.95 5.02 0.86 45.27 0.69
WFSL Washington Federal, Inc. of WA 13.35 12.44 2.00 14.87 9.18 1.95 14.51 0.42 92.06 0.54
WAYN Wayne Svgs Bks MHC of OH (48.2 9.32 9.32 0.67 7.06 4.12 0.61 6.46 0.42 67.78 0.37
WCFB Wbstr Cty FSB MHC of IA (45.6) 24.52 24.52 1.39 5.77 4.20 1.39 5.77 0.04 NA 0.67
WBST Webster Financial Corp. of CT 6.14 5.28 0.79 13.56 5.62 0.79 13.48 0.32 190.66 1.09
WEFC Wells Fin. Corp. of Wells MN 13.49 13.49 1.27 8.85 9.52 1.17 8.21 0.19 236.94 0.55
WEBK West Essex MHC of NJ (42.2) 13.43 13.43 0.34 2.51 2.92 0.34 2.51 0.84 62.21 1.21
WSTR WesterFed Fin. Corp. of MT 9.34 7.33 0.69 6.58 8.96 0.68 6.49 0.47 105.78 0.76
WOFC Western Ohio Fin. Corp. of OH 14.52 14.52 0.36 2.51 2.74 0.27 1.89 1.40 71.76 1.39
WEHO Westwood Hmstd Fin Corp of OH 18.45 18.45 1.02 4.92 5.96 1.06 5.09 0.37 60.49 0.25
WGBC Willow Grv Bcp MHC of PA (45.3 12.93 12.93 0.72 5.53 6.18 0.81 6.30 0.35 188.97 0.86
FFWD Wood Bancorp of OH(8) 14.03 14.03 1.49 11.03 4.81 1.23 9.11 0.18 217.72 0.50
YFCB Yonkers Fin. Corp. of NY 10.95 10.95 0.75 6.39 6.73 0.68 5.82 0.24 152.38 0.70
YFED York Financial Corp. of PA 8.96 8.96 0.72 8.07 6.30 0.55 6.21 2.05 38.59 1.12
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TWIN Twin City Bancorp, Inc. of TN 12.62 112.57 14.06 112.57 14.40 0.40 3.02 38.10
USAB USABancshares, Inc of PA* 14.70 160.71 13.22 161.42 17.55 0.00 0.00 0.00
UCBC Union Community Bancorp of IN 16.80 76.68 28.72 76.68 16.80 0.42 3.91 65.63
UFBS Union Fincl. Bancshares of SC 11.64 118.21 9.59 134.06 13.24 0.35 2.59 30.17
UCFC United Community Fin. of OH NM 91.55 33.82 91.55 NM 0.30 2.45 NM
UBMT United Fin. Corp. of MT 16.19 125.14 16.43 133.93 16.42 1.04 4.62 74.82
UPFC United PanAm Fin. Corp of CA 11.87 97.89 19.06 100.65 NM 0.00 0.00 0.00
UTBI United Tenn. Bancshares of TN 15.00 83.04 17.08 88.30 14.81 1.20 10.00 NM
VCAP Virginia Capital Bcshrs of VA 16.88 84.03 26.06 84.03 16.88 0.40 3.08 51.95
WHGB WHG Bancshares of MD 18.76 80.31 9.33 80.31 18.76 0.36 3.84 72.00
WSFS WSFS Financial Corp. of DE* 10.85 209.80 10.99 210.65 10.35 0.12 0.77 8.33
WVFC WVS Financial Corp. of PA 14.02 150.30 15.29 150.30 13.16 0.64 4.27 59.81
WRNB Warren Bancorp of Peabody MA* 11.75 172.75 17.37 172.75 12.24 0.36 4.09 48.00
WSBI Warwick Community Bncrp of NY* NM 101.02 19.12 101.02 20.13 0.18 1.40 NM
WFSL Washington Federal, Inc. of WA 10.89 160.94 21.49 172.68 11.17 0.88 4.00 43.56
WAYN Wayne Svgs Bks MHC of OH (48.2 24.29 168.99 15.76 168.99 26.56 0.62 3.65 NM
WCFB Wbstr Cty FSB MHC of IA (45.6) 23.79 135.20 33.15 135.20 23.79 0.80 5.42 NM
WBST Webster Financial Corp. of CT 17.80 213.11 13.09 248.16 17.90 0.44 1.39 24.72
WEFC Wells Fin. Corp. of Wells MN 10.50 100.51 13.56 100.51 11.33 0.60 3.81 40.00
WEBK West Essex MHC of NJ (42.2) NM 85.97 11.54 85.97 NM 0.30 3.24 NM
WSTR WesterFed Fin. Corp. of MT 11.16 85.56 7.99 109.07 11.31 0.56 3.26 36.36
WOFC Western Ohio Fin. Corp. of OH NM 99.20 14.41 99.20 NM 1.00 4.49 NM
WEHO Westwood Hmstd Fin Corp of OH 16.77 92.91 17.14 92.91 16.20 0.40 4.18 70.18
WGBC Willow Grv Bcp MHC of PA (45.3 16.17 89.50 11.57 89.50 14.21 0.00 0.00 0.00
FFWD Wood Bancorp of OH(8) 20.79 214.70 30.12 214.70 25.17 0.40 2.09 43.48
YFCB Yonkers Fin. Corp. of NY 14.85 97.53 10.68 97.53 16.30 0.32 2.13 31.68
YFED York Financial Corp. of PA 15.87 123.84 11.09 123.84 20.63 0.52 3.60 57.14
</TABLE>
<PAGE>
EXHIBIT 2
Calculation of Implied Per Share Data for MHC on Fully Converted Basis
<PAGE>
RP Financial, LC.
Exhibit 2
Calculation of Implied Per Share Data --
Incorporating MHC Second Step Conversion
Comparable Institution Analysis
For the Twelve Months Ended December 31, 1998
<TABLE>
<CAPTION>
Current Ownership Current Per Share Data (MHC Ratios)
------------------------- -----------------------------------------
Total Public MHC Core Book Tang.
Shares Shares Shares EPS EPS Value Book Assets
------ ------ ------ --- --- ----- ---- ------
(000) (000) (000) ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Publicly-Traded MHC Institutions
- --------------------------------
ALLB Alliance Bank MHC of PA (19.9) 3,274 650 2,624 0.62 0.62 9.09 9.09 86.12
BRKL Brookline Bncp. MHC of MA (47.0) 28,578 13,675 14,903 0.61 0.58 9.65 9.65 29.34
FFFL Fidelity Bcsh. MHC of FL (47.9) 6,803 3,260 3,543 1.17 1.00 13.42 13.05 220.26
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 4,461 2,113 2,348 0.46 0.43 9.34 9.34 49.52
HARS Harris Fin. MHC of PA (24.9) 33,584 8,442 25,142 0.57 0.38 5.63 5.46 74.34
JXSB Jacksonville SB, MHC of IL (45.6) 1,908 869 1,039 0.57 0.34 9.53 9.53 88.72
LFED Leeds Fed. Bksr. MHC of MD (36.5) 5,067 1,896 3,171 0.65 0.65 9.89 9.89 61.95
NBCP Niagara Bancorp of NY MHC (45.4) 29,756 13,502 16,254 0.30 0.45 8.76 8.76 48.09
NWSB Northwest Bcrp. MHC of PA (30.5) 47,349 14,438 32,911 0.44 0.42 4.79 3.97 61.02
PBCT Peoples Bank, MHC of CT (43.2) 62,715 27,683 35,032 1.46 0.76 13.59 11.42 158.16
PBHC Pathfinder BC MHC of NY (46.0) 2,738 1,184 1,554 0.44 0.38 8.14 6.94 74.29
PHSB PHS Bancorp MHC of PA (45.0) 2,760 1,242 1,518 0.54 0.51 10.57 10.57 88.50
PLSK Pulaski SB, MHC of NJ (47.0) 2,108 990 1,118 0.49 0.51 10.82 10.82 94.78
SBFL Finger Lakes Fin. MHC of NY (33.1) 3,570 1,180 2,390 0.20 0.25 6.15 6.15 79.10
SKBO Skibo Fin. Corp. MHC of PA (45.0) 3,445 1,035 2,410 0.22 0.24 7.22 7.22 43.55
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 2,484 1,197 1,287 0.70 0.62 10.06 10.06 107.90
WCFB Webster City FSB MHC of IA (45.6) 2,116 962 1,154 0.62 0.62 10.91 10.91 44.50
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Per Share Data
Impact of Second Step Conversion(4) (Fully-Converted)(4)
------------------------------------------ ----------------------------
Share Gross Net Incr. Net Incr. Core Book
Price Proceeds(1) Capital(2) Income(3) EPS EPS Value
----- ----------- ---------- --------- --- --- -----
($) ($000) ($000) ($000) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Publicly-Traded MHC Institutions
- --------------------------------
ALLB Alliance Bank MHC of PA (19.9) 10.00 28,817 27,172 861 0.82 0.82 16.12
BRKL Brookline Bncp. MHC of MA (47.0) 11.75 177,693 155,379 4,789 0.77 0.74 14.97
FFFL Fidelity Bcsh. MHC of FL (47.9) 17.00 69,577 60,526 1,862 1.34 1.18 20.65
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 12.00 28,516 24,862 765 0.63 0.60 14.82
HARS Harris Fin. MHC of PA (24.9) 12.56 377,804 325,937 9,993 0.76 0.59 13.37
JXSB Jacksonville SB, MHC of IL (45.6) 10.50 12,047 11,436 363 0.72 0.50 14.69
LFED Leeds Fed. Bksr. MHC of MD (36.5) 11.75 41,888 36,121 1,107 0.81 0.81 15.79
NBCP Niagara Bancorp of NY MHC (45.4) 10.25 167,658 145,237 4,460 0.45 0.60 13.59
NWSB Northwest Bcrp. MHC of PA (30.5) 9.63 336,278 307,757 9,652 0.62 0.60 10.83
PBCT Peoples Bank, MHC of CT (43.2) 29.13 1,408,998 1,215,863 37,282 1.69 1.12 27.19
PBHC Pathfinder BC MHC of NY (46.0) 10.13 16,415 14,774 460 0.59 0.54 13.22
PHSB PHS Bancorp MHC of PA (45.0) 10.63 17,601 16,532 523 0.69 0.67 15.77
PLSK Pulaski SB, MHC of NJ (47.0) 8.88 10,605 9,218 283 0.60 0.62 14.66
SBFL Finger Lakes Fin. MHC of NY (33.1) 11.50 27,765 24,091 740 0.40 0.45 12.81
SKBO Skibo Fin. Corp. MHC of PA (45.0) 6.50 16,428 14,228 437 0.34 0.35 10.98
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 17.00 22,817 19,713 605 0.92 0.84 17.60
WCFB Webster City FSB MHC of IA (45.6) 14.75 19,900 17,495 540 0.80 0.80 17.56
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Per Share Data
(Fully-Converted)(4) Pro Forma(5)
--------------------- ------------------
Tang. Public
Book Assets Pct. Dilution
---- ------ ---- --------
($) ($) (%) (%)
<S> <C> <C> <C> <C>
Publicly-Traded MHC Institutions
- --------------------------------
ALLB Alliance Bank MHC of PA (19.9) 16.12 87.53 18.4% -1.4%
BRKL Brookline Bncp. MHC of MA (47.0) 14.97 34.51 47.5% -0.4%
FFFL Fidelity Bcsh. MHC of FL (47.9) 20.31 212.02 44.3% -3.6%
GBNK Gaston Fed. Bncp. MHC of NC (47.0) 14.82 54.75 47.1% -0.3%
HARS Harris Fin. MHC of PA (24.9) 13.22 73.27 21.9% -3.2%
JXSB Jacksonville SB, MHC of IL (45.6) 14.69 89.63 43.1% -2.4%
LFED Leeds Fed. Bksr. MHC of MD (36.5) 15.79 64.10 34.7% -2.7%
NBCP Niagara Bancorp of NY MHC (45.4) 13.59 52.79 45.2% -0.2%
NWSB Northwest Bcrp. MHC of PA (30.5) 10.04 64.77 29.3% -1.2%
PBCT Peoples Bank, MHC of CT (43.2) 25.40 146.41 36.4% -7.7%
PBHC Pathfinder BC MHC of NY (46.0) 12.04 77.80 42.2% -1.0%
PHSB PHS Bancorp MHC of PA (45.0) 15.77 90.00 42.9% -2.1%
PLSK Pulaski SB, MHC of NJ (47.0) 14.66 95.69 45.3% -1.6%
SBFL Finger Lakes Fin. MHC of NY (33.1) 12.81 85.27 32.8% -0.2%
SKBO Skibo Fin. Corp. MHC of PA (45.0) 10.98 46.11 29.1% -1.0%
WAYN Wayne Svgs. Bks. MHC of OH (48.2) 17.60 113.32 47.1% -1.0%
WCFB Webster City FSB MHC of IA (45.6) 17.56 48.31 41.6% -3.8%
</TABLE>
(1) Gross proceeds calculated as stock price multiplied by the number of
shares owned by the mutual holding company (i.e., non-public shares).
(2) Net increase in capital reflects gross proceeds less offering expenses,
contra-equity account for leveraged ESOP and deferred compensation
account for restricted stock plan. For institutions with assets at the
MHC level, the net increase in capital also includes consolidation of MHC
assets with the capital of the institution concurrent with hypothetical
second step.
Offering expense percent 2.00%
ESOP percent purchase 8.00%
Recognition plan percent 4.00%
(3) Net increase in earnings reflects after-tax reinvestment income (assumes
ESOP and recognition plan do not generate reinvestment income), less
after-tax ESOP amortization and recognition plan vesting:
After-tax reinvestment 4.29%
ESOP loan term (years) 10
Recognition plan vesting (years) 5
Effective tax rate 34.00%
(4) Figures reflect adjustments to "non-grandfathered" companies to reflect
dilutive impact of cumulative dividends waived by the MHC (reflect FDIC
policy regarding waived dividends).
(5) Reflects pro forma ownership position of minority stockholders after
taking into account the OTS and FDIC policies regarding waived dividends
assuming a hypothetical second step.
For OTS "grandfathered" companies, dilution reflects excess waived
dividends and MHC assets. For all other companies, dilution reflects all
waived dividends and MHC assets.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1999 by RP Financial, LC.
<PAGE>
EXHIBIT 3
Pro Forma Analysis Sheet
Full Conversion Value
<PAGE>
EXHIBIT 3
PRO FORMA ANALYSIS SHEET
Oswego County Savings Bank
Prices as of April 16, 1999
<TABLE>
<CAPTION>
Peer Group New York All Public
---------------------- ----------------------- --------------------
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Median
-------------- ------ ----------- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio P/E 21.05 x 17.21x 16.53x 15.92x 14.85x 15.78x 14.52x
Price-book ratio = P/B 52.40% 79.37% 78.49% 112.20% 100.89% 115.97% 104.39%
Price-assets ratio = P/A 8.93% 16.71% 14.87% 16.60% 14.74% 14.22% 13.10%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
--------------------
<S> <C> <C> <C> <C>
Pre-Conversion Earnings (Y) $357,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $11,680,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $11,680,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $110,748,000 RRP Amount (M) 3.00%
Reinvestment Rate (2)(R) 2.80% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 6.00% Foundation (F) 4.00%
Tax rate (TAX) 38.00% Tax Benefit (Z) 155,800
Tax rate on Foundation Contribution 38.00% Percentage Sold (PCT) 100.00%
</TABLE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Value After Conversion
<S> <C> <C> <C>
1. V= P/E * (Y) V= $10,660,000
--------------------------------------------------------------
1 - P/E * PCT * ((1-X-E-M-F)*R - (1-TAX)*E/T - (1-TAX)*M/N)
2. V= P/B * (B+Z) V= $10,660,000
---------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $10,660,000
---------------------------
1 - P/A * PCT * (1-X-E-M-F)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Issued To Total Shares Market Value
Conclusion Public Share Proceeds Foundation Issued of Stock Issued
----------- ------ ----- -------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Minimum 871,250 10.00 $8,712,500 34,850 906,100 9,061,000
Midpoint 1,025,000 10.00 10,250,000 41,000 1,066,000 10,660,000
Maximum 1,178,750 10.00 11,787,500 47,150 1,225,900 12,259,000
Supermaximum 1,355,563 10.00 13,555,625 54,223 1,409,786 14,097,855
</TABLE>
- ---------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 4.52 percent, and a tax rate of
38.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) No cost is applicable since holding company will fund the ESOP loan.
(5) ESOP and MRP amortize over 10 years and 5 years, respectively; amortization
expenses tax effected at 38.00 percent.
<PAGE>
Exhibit 4
Pro Forma Effect
Full Conversion Value
<PAGE>
Exhibit 4
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Oswego County Savings Bank
At the Minimum
<TABLE>
<S> <C> <C>
1. Offering Proceeds $8,712,500
Less: Estimated Offering Expenses 522,750
-------
Net Conversion Proceeds $8,189,750
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $8,189,750
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 958,375
-------
Net Proceeds Reinvested $7,231,375
Estimated net incremental rate of return 2.80%
-----
Earnings Increase $202,652
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 43,214
Less: Recognition Plan Vesting (4) 32,411
------
Net Earnings Increase $127,028
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $357,000 $127,028 $484,028
12 Months ended March 31, 1999 (core) $409,000 $127,028 $536,028
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit(5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $11,680,000 $7,231,375 $132,430 $19,043,805
March 31, 1999 (Tangible) $11,680,000 $7,231,375 $132,430 $19,043,805
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit(5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $110,748,000 $7,231,375 $132,430 $118,111,805
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 3.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 38.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
38.00 percent.
(5) Reflects tax benefit of contribution to the Foundation.
<PAGE>
Exhibit 4
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Oswego County Savings Bank
At the Midpoint
<TABLE>
<S> <C> <C>
1. Offering Proceeds $10,250,000
Less: Estimated Offering Expenses 615,000
-------
Net Conversion Proceeds $9,635,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $9,635,000
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 1,127,500
---------
Net Proceeds Reinvested $8,507,500
Estimated net incremental rate of return 2.80%
-----
Earnings Increase $238,414
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 50,840
Less: Recognition Plan Vesting (4) 38,130
------
Net Earnings Increase $149,444
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $357,000 $149,444 $506,444
12 Months ended March 31, 1999 (core) $409,000 $149,444 $558,444
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit(5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $11,680,000 $8,507,500 $155,800 $20,343,300
March 31, 1999 (Tangible) $11,680,000 $8,507,500 $155,800 $20,343,300
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit(5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $110,748,000 $8,507,500 $155,800 $119,411,300
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 3.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 38.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
38.00 percent.
(5) Reflects tax benefit of contribution to the Foundation.
<PAGE>
Exhibit 4
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Oswego County Savings Bank
At the Maximum
<TABLE>
<S> <C> <C>
1. Offering Proceeds $11,787,500
Less: Estimated Offering Expenses 707,250
-------
Net Conversion Proceeds $11,080,250
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $11,080,250
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 1,296,625
---------
Net Proceeds Reinvested $9,783,625
Estimated net incremental rate of return 2.80%
-----
Earnings Increase $274,176
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 58,466
Less: Recognition Plan Vesting (4) 43,850
------
Net Earnings Increase $171,861
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $357,000 $171,861 $528,861
12 Months ended March 31, 1999 (core) $409,000 $171,861 $580,861
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit(5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $11,680,000 $9,783,625 $179,170 $21,642,795
March 31, 1999 (Tangible) $11,680,000 $9,783,625 $179,170 $21,642,795
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit(5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $110,748,000 $9,783,625 $179,170 $120,710,795
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 3.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 38.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
38.00 percent.
(5) Reflects tax benefit of contribution to the Foundation.
<PAGE>
Exhibit 4
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Oswego County Savings Bank
At the Supermaximum Value
<TABLE>
<S> <C> <C>
1. Offering Proceeds $13,555,625
Less: Estimated Offering Expenses 813,338
-------
Net Conversion Proceeds $12,742,288
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $12,742,288
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 1,491,119
---------
Net Proceeds Reinvested $11,251,169
Estimated net incremental rate of return 2.80%
-----
Earnings Increase $315,303
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 67,236
Less: Recognition Plan Vesting (4) 50,427
------
Net Earnings Increase $197,640
</TABLE>
<TABLE>
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $357,000 $197,640 $554,640
12 Months ended March 31, 1999 (core) $409,000 $197,640 $606,640
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit(5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $11,680,000 $11,251,169 $206,046 $23,137,214
March 31, 1999 (Tangible) $11,680,000 $11,251,169 $206,046 $23,137,214
</TABLE>
<TABLE>
<CAPTION>
Before Net Cash Tax Benefit(5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $110,748,000 $11,251,169 $206,046 $122,205,214
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 3.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 38.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
38.00 percent.
(5) Reflects tax benefit of contribution to the Foundation.
<PAGE>
EXHIBIT 5
Pro Forma Analysis Sheet
MHC Offering
<PAGE>
EXHIBIT 5
PRO FORMA ANALYSIS SHEET
Oswego County Savings Bank
Prices as of April 16, 1999
<TABLE>
<CAPTION>
Peer Group New York All Public
------------------- ------------------- -------------------
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean Median
- -------------- ------ ----------- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio P/E 25.04x 20.99x 19.95x 15.92x 14.85x 15.78x 14.52x
Price-book ratio = P/B 68.03% 138.81% 124.45% 112.20% 100.89% 115.97% 104.39%
Price-assets ratio = P/A 9.12% 17.66% 15.76% 16.60% 14.74% 14.22% 13.10%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $357,000 ESOP Stock Purchases (E) 8.00% (5)
Pre-Conversion Book Value (B) $11,680,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $11,680,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $110,748,000 RRP Amount (M) 3.00%
Reinvestment Rate (2)(R) 2.80% RRP Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 12.60% Foundation (F) 4.00%
Tax rate (TAX) 38.00% Tax Benefit (Z) 71,440
Tax rate on Foundation Contribution 38.00% Percentage Sold (PCT) 45.85%
</TABLE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
<S> <C> <C> <C>
1. V= P/E * (Y) V= $10,419,874
--------------------------------------------------------------
1 - P/E * PCT * ((1-X-E-M-F)*R - (1-TAX)*E/T - (1-TAX)*M/N)
2. V= P/B * (B+Z) V= $10,391,595
---------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $10,433,060
---------------------------
1 - P/A * PCT * (1-X-E-M-F)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Issued To Total Shares Market Value
Conclusion MHC Shares Public Share Proceeds Foundation Issued of Stock Issued
- ----------- ---------- ------ ----- -------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 471,750 399,500 10.00 $3,995,000 15,980 415,480 4,154,800
Midpoint 555,000 470,000 10.00 4,700,000 18,800 488,800 4,888,000
Maximum 638,250 540,500 10.00 5,405,000 21,620 562,120 5,621,200
Supermaximum 733,988 621,575 10.00 6,215,750 24,863 646,438 6,464,380
</TABLE>
- --------------------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 4.52 percent, and a tax rate of
38.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) No cost is applicable since holding company will fund the ESOP loan.
(5) ESOP and MRP amortize over 10 years and 5 years, respectively; amortization
expenses tax effected at 38.00 percent.
<PAGE>
EXHIBIT 6
Pro Forma Effects
MHC Offering
<PAGE>
<TABLE>
<CAPTION>
Exhibit 6
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Oswego County Savings Bank
At the Minimum
<S> <C> <C>
1. Offering Proceeds $3,995,000
Less: Estimated Offering Expenses 592,200
----------
Net Conversion Proceeds $3,402,800
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $3,402,800
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 439,450
----------
Net Proceeds Reinvested $2,963,350
Estimated net incremental rate of return 2.80%
----------
Earnings Increase $83,045
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 19,815
Less: Recognition Plan Vesting (4) 14,861
----------
Net Earnings Increase $48,368
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $357,000 $48,368 $405,368
12 Months ended March 31, 1999 (core) $409,000 $48,368 $457,368
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $11,680,000 $2,963,350 $60,724 $14,704,074
March 31, 1999 (Tangible) $11,680,000 $2,963,350 $60,724 $14,704,074
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
March 31, 1999 $110,748,000 $2,963,350 $60,724 $113,772,074
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 3.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 38.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
38.00 percent.
(5) Reflects tax benefit of contribution to the Foundation.
<PAGE>
<TABLE>
<CAPTION>
Exhibit 6
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Oswego County Savings Bank
At the Midpoint
<S> <C> <C>
1. Offering Proceeds $4,700,000
Less: Estimated Offering Expenses 592,200
----------
Net Conversion Proceeds $4,107,800
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $4,107,800
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 517,000
----------
Net Proceeds Reinvested $3,590,800
Estimated net incremental rate of return 2.80%
----------
Earnings Increase $100,629
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 23,312
Less: Recognition Plan Vesting (4) 17,484
----------
Net Earnings Increase $59,833
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $357,000 $59,833 $416,833
12 Months ended March 31, 1999 (core) $409,000 $59,833 $468,833
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
March 31, 1999 $11,680,000 $3,590,800 $71,440 $15,342,240
March 31, 1999 (Tangible) $11,680,000 $3,590,800 $71,440 $15,342,240
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
March 31, 1999 $110,748,000 $3,590,800 $71,440 $114,410,240
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 3.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 38.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
38.00 percent.
(5) Reflects tax benefit of contribution to the Foundation.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 6
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Oswego County Savings Bank
At the Maximum
<S> <C> <C>
1. Offering Proceeds $5,405,000
Less: Estimated Offering Expenses 592,200
----------
Net Conversion Proceeds $4,812,800
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $4,812,800
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 594,550
----------
Net Proceeds Reinvested $4,218,250
Estimated net incremental rate of return 2.80%
----------
Earnings Increase $118,212
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 26,809
Less: Recognition Plan Vesting (4) 20,107
----------
Net Earnings Increase $71,297
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $357,000 $71,297 $428,297
12 Months ended March 31, 1999 (core) $409,000 $71,297 $480,297
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
<S> <C> <C> <C> <C> <C>
---------- -------- --------------- ----------
March 31, 1999 $11,680,000 $4,218,250 $82,156 $15,980,406
March 31, 1999 (Tangible) $11,680,000 $4,218,250 $82,156 $15,980,406
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
March 31, 1999 $110,748,000 $4,218,250 $82,156 $115,048,406
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 3.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 38.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
38.00 percent.
(5) Reflects tax benefit of contribution to the Foundation.
<PAGE>
<TABLE>
<CAPTION>
Exhibit 6
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Oswego County Savings Bank
At the Supermaximum Value
<S> <C>
1. Offering Proceeds $6,215,750
Less: Estimated Offering Expenses 592,200
----------
Net Conversion Proceeds $5,623,550
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $5,623,550
Less: Cash Contribution to Foundation 0
Less: Non-Cash Stock Purchases (1) 683,733
----------
Net Proceeds Reinvested $4,939,818
Estimated net incremental rate of return 2.80%
----------
Earnings Increase $138,433
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 30,830
Less: Recognition Plan Vesting (4) 23,123
----------
Net Earnings Increase $84,481
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $357,000 $84,481 $441,481
12 Months ended March 31, 1999 (core) $409,000 $84,481 $493,481
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
March 31, 1999 $11,680,000 $4,939,818 $94,479 $16,714,297
March 31, 1999 (Tangible) $11,680,000 $4,939,818 $94,479 $16,714,297
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
March 31, 1999 $110,748,000 $4,939,818 $94,479 $115,782,297
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 3.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is
tax-effected at a 38.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected at
38.00 percent.
(5) Reflects tax benefit of contribution to the Foundation.
<PAGE>
EXHIBIT 7
Firm Qualifications Statement
<PAGE>
RP FINANCIAL, LC.
- -------------------------------------------- FIRM QUALIFICATION STATEMENT
Financial Services Industry Consultants
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide. RP Financial establishes
long-term client relationships through its wide array of services, emphasis on
quality and timeliness, hands-on involvement by our principals and senior
consulting staff, careful structuring of strategic plans and transactions and
providing sophisticated valuation analyses consistent with accepted valuation
practices. RP Financial's staff draws from backgrounds in consulting, regulatory
agencies and investment banking, thereby providing our clients with considerable
resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, thrift mutual-to-stock conversions,
insurance company demutualizations, ESOPs, subsidiary companies, mark-to-market
transactions and various other corporation valuation requirements. Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching and/or
diversification strategies, feasibility studies and special research studies,
which are complemented by our quantitative and computer skills. RP Financial's
consulting services are aided by its in-house data base resources and
proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial services companies which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (19)
William E. Pommerening, Managing Director (15)
Gregory E. Dunn, Senior Vice President (17)
James P. Hennessey, Senior Vice President (14)
James J. Oren, Senior Vice President (12)
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
Oswego County Bancorp, Inc. Stock Center
LOGO Oswego County Savings Bank
44 East Bridge Street
(Proposed Holding Company for Oswego, New York 13126
Oswego County Savings Bank) (315) 343-3181
Stock Order Form & Certification Form Note: Please read the Stock Order Form
Instructions and Guide before completing this form. Deadline: The Subscription
Offering expires at 12:00 noon, New York Time, on XXXday, June xx, 1999. Your
Stock Order and Certification Form ("Order Form"), properly executed and with
the correct payment, must be received at the Stock Center or a branch of Oswego
County Savings Bank by this deadline, or it will be considered void. No
photocopied or faxed Order Forms will be accepted.
- --------------------------------------------------------------------------------
Number of Shares / Amount of Payment
- --------------------------------------------------------------------------------
(1) Number of Shares to Purchase Price Per Share (2) Total Amount Due
---------------------------- ----------------
X $10.00 = $
---------------------------- ----------------
(minimum 25)
Purchase Limitations The minimum number of shares for which you may subscribe is
25. The maximum purchase limitation for any person or persons ordering through a
single account in the Subscription Offering is 15,000 shares. In certain
instances, your order may be grouped together with orders by other persons who
are associated with you, or with whom you are acting in concert, and, in that
event, the aggregate order may not exceed 5% of the shares of Common Stock
available for sale in the Offering.
Method of Payment
(3) / / Enclosed is a check, bank draft, or money order made payable to
Oswego County Bancorp, Inc. for $________________.
(4) / / I authorize Oswego County Bancorp, Inc. to make the withdrawals from
my Oswego County Savings Bank account(s) shown below, and understand
that the amounts will not otherwise be available for withdrawal:
Account Number(s) Amount(s)
----------------------------------------------------------------------
$
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Total Withdrawal $
------------------------------------
There is no penalty for early withdrawals used for this payment. To withdraw
from an account with checking privileges, please write a check.
- --------------------------------------------------------------------------------
Purchaser Information
(5) / / Check here if you were a depositor with at least $100.00 on deposit at
September 30, 1997 and/or March 31, 1999. List all the names on the
account(s) and all the account number(s) of those accounts you had at
these dates to ensure proper identification of your purchase rights.
Confirm account(s) by initialing here ________.
Account Title (Names on Accounts) Account Number
----------------------------------------------------------------------
---------------------------------
----------------------------------------------------------------------
---------------------------------
----------------------------------------------------------------------
/ / Check here if you are a trustee, officer or employee of Oswego County
Savings Bank or a member of such person's immediate family.
- --------------------------------------------------------------------------------
(6) Stock Registration Form of stock ownership
/ / Individual / / Uniform Transfer to Minors
/ / Joint Tenants (WROS) / / Uniform Gift to Minors
/ / Tenants in Common / / Corporation
/ / Partnership
/ / Individual Retirement Account
/ / Fiduciary/Trust (Under Agreement Dated __________)
- --------------------------------------------------------------------------------
(7) Name Social Security or Tax I.D.
- --------------------------------------------------------------------------------
Name Daytime Telephone
- --------------------------------------------------------------------------------
Street Address Evening Telephone
- --------------------------------------------------------------------------------
City State Zip Code County of Residence
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
/ / (8) NASD Affiliation (This section applies to those individuals who meet the
delineated criteria) Check here if you are a member of the National Association
of Securities Dealers, Inc. ("NASD"), a person associated with an NASD member, a
member of the immediate family of any such person to whose support such person
contributes, directly or indirectly, or the holder of an account in which an
NASD member or person associated with an NASD member has a beneficial interest.
To comply with conditions under which an exemption from the NASD's
Interpretation With Respect to Free Riding and Withholding is available, you
agree, if you have checked the NASD affiliation box, (i) not to sell, transfer
or hypothecate the stock for a period of three months following the issuance,
and (ii) to report this subscription in writing to the applicable NASD member
within one day of the payment therefor.
(9) / / Associate - Acting in concert Check here and complete the reverse side
of this Order Form, if you or any associates (as defined on the reverse side of
this form) or persons acting in concert with you have submitted other orders for
shares in the Offerings.
- --------------------------------------------------------------------------------
Acknowledgement By signing below, I acknowledge receipt of the Prospectus dated
xxxxx xx, 1999 and the provisions therein and understand that I may not change
or revoke my order once it is received by Oswego County Bancorp, Inc. I also
certify that this stock order is for my account only and there is no agreement
or understanding regarding any further sale or transfer of these shares. Federal
regulations prohibit any persons from transferring, or entering into any
agreement directly or indirectly to transfer, the legal or beneficial ownership
of conversion subscription rights or the underlying securities to the account of
another person. Oswego County Bancorp, Inc. will pursue any and all legal and
equitable remedies in the event it becomes aware of the transfer of subscription
rights and will not honor orders known by it to involve such transfer.
Under penalties of perjury, I further certify that: (1) the social security
number or taxpayer identification number given above is correct; and (2) I am
not subject to backup withholding. You must cross out this item, (2) above, if
you have been notified by the Internal Revenue Service that you are subject to
backup withholding because of underreporting interest or dividends on your tax
return.
(10) Signature Sign and date the Order Form. When purchasing as a custodian,
corporate officer, etc., include your full title. An additional signature is
required only when payment is by withdrawal from an account that requires more
than one signature to withdraw funds.
(11) Certification Form Be sure to sign the Certification Form on the reverse
side. Authorized Signature Title (is applicable) Date
- --------------------------------------------------------------------------------
Authorized Signature Title (if applicable) Date
- --------------------------------------------------------------------------------
Authorized Signature Title (if applicable) Date
- --------------------------------------------------------------------------------
YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH THE PROVISIONS OF
THE PROSPECTUS. THIS ORDER IS NOT VALID IF NOT SIGNED. If you need help
completing this Order Form, you may call the Stock Center at (315) 343-3181.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND, BANK
INSURANCE FUND, OR ANY OTHER CORPORATION, FUND OR GOVERNMENTAL AGENCY.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR OFFICE USE ONLY
Date Rec'd ___/___/___ Check # ________ Amount $ ________ Category ________
Batch #________ Order #________ Initials ___________
- --------------------------------------------------------------------------------
BE SURE TO SIGN THE CERTIFICATION FORM ON THE REVERSE SIDE ------------
<PAGE>
(Oswego County Logo)
Item (5) - (continued)
Account Title (Names on Account) Account Number
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
Account Title (Names on Account) Account Number
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
Item (9) - (continued)
List below all other orders submitted by you or your Associates (as defined) or
by persons acting in concert with you.
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- --------------------------------------------------------------------------------
The term "associate," when used to indicate a relationship with any person, is
defined to mean (i) a corporation or organization (other than Oswego County
Bancorp, Inc., Oswego County MHC or Oswego County Savings Bank) of which such
person is a director, officer, or partner or is, directly or indirectly, the
beneficial owner of 10% or more of any class of equity securities, (ii) any
trust or other estate in which such person has a substantial beneficial interest
or as to which such person serves as director or in a similar capacity,
provided, however, that such term shall not include any tax qualified employee
stock benefit plan of Oswego County Bancorp, Inc. Oswego County MHC or Oswego
County Savings Bank in which such person has a substantial beneficial interest
or serves as a director or in a similar fiduciary capacity, and (iii) any
relative or spouse of such person, or any relative of such spouse, who has the
same home as such person or who is a director or officer of Oswego County
Bancorp, Inc., Oswego County MHC or Oswego County Savings Bank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTIFICATION FORM
(This form must be dated and signed along with your dated and signed
Stock Order Form on the reverse side.)
I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE (THE
"COMMON STOCK") OF OSWEGO COUNTY BANCORP, INC. (THE "COMPANY"), THE PROPOSED
HOLDING COMPANY FOR OSWEGO COUNTY SAVINGS BANK (THE "BANK"), ARE NOT FEDERALLY
INSURED AND ARE NOT GUARANTEED BY THE COMPANY, THE BANK, OR THE FEDERAL
GOVERNMENT.
If anyone asserts that the shares of Common Stock are federally insured or
guaranteed, or are as safe as an insured deposit, I should call the Federal
Deposit Insurance Corporation's New York Regional Director, Mr. Daryl P. Stum,
at (212) 704-1200.
I further certify that, before purchasing shares of Common Stock of the Company,
I received a copy of the Prospectus dated xxxxxxxx XX, 1999 which discloses the
nature of the shares of Common Stock being offered thereby and describes the
following risks involved in an investment in the Common Stock under the heading
"Risk Factors" beginning on page xx of the Prospectus:
1. Rising interest rates may hurt our profits. (page xx)
2. Oswego County MHC will own 51% or more of the stock of (page xx)
Oswego County Bancorp. This means that Oswego County
MHC will have enough votes to control what happens on
most matters put to vote of stockholders.
3. After the change in structure and stock offering, our (page xx)
net income-to-equity ratio will be low compared to
other companies and our compensation expense will
increase. This could negatively impact the price of our
stock.
4. You could have difficulty selling your stock if an (page xx)
active trading market does not develop.
5. The slow recovery of local economy may hurt our (page xx)
profits.
6. The establishment of the Oswego County Foundation will (page xx)
reduce our earnings.
7. The contribution to the Oswego County Charitable (page xx)
Foundation means that your total ownership will be 0.8%
less after we make the contribution.
8. We intend to grant stock options and restricted stock (page xx)
to the board and management following the change in
structure and stock offering which could further reduce
your voting interest.
9. If computer systems do not properly work on January 1, (page xx)
2000, our business operations will be disrupted.
- ------------------------------------ ---------------------------------------
Signature Date Signature Date
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
Name (please print) Name (please print)
- ------------------------------------ ---------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
STOCK
OFFERING
QUESTIONS
and
ANSWERS
(Oswego County Bancorp, Inc.)
LOGO
<PAGE>
REORGANIZATION AND STOCK OFFERING QUESTIONS & ANSWERS
Facts about the Plan of Reorganization
The Board of Trustees of Oswego County Savings Bank (the "Bank") unanimously
adopted a Plan of Reorganization to change from the mutual form of ownership to
the mutual holding company structure (the "Reorganization"). The Bank will
convert to stock form and will become a wholly owned subsidiary of Oswego County
Bancorp, Inc., a newly formed Delaware stock corporation (the "Company"). The
Company, in turn, will become a majority owned subsidiary of the newly created,
New York chartered mutual holding company called Oswego County MHC (the "Mutual
Company").
This brochure answers some of the most frequently asked questions about the
Reorganization and about your opportunity to invest in the newly formed Company
through the subscription and the community offerings (collectively, the
"Offering").
Investment in the common stock of the Company involves certain risks. For a
discussion of these risks and other factors, investors are urged to read the
accompanying Prospectus, especially the discussion under the heading "Risk
Factors."
Why is the Bank converting to stock form and reorganizing into the mutual
holding company structure?
The stock form of organization is used by most business corporations and an
increasing number of banks and savings institutions. The mutual holding company
structure provides the ability to offer common stock on an incremental basis as
market conditions permit. The Reorganization and Stock Offering have the
following benefits:
|X| Increase the Bank's capital in a controlled manner to maximize its return
on equity;
|X| Allow the Company to use a portion of the proceeds raised from the sale of
its common stock in the Offering to purchase all the capital stock of the
Bank. The Bank, in turn, will utilize these funds to support and broaden
the range of its products and services offered;
|X| Allow the Bank to consider future expansion of its operations as well as
possible diversification into other banking related businesses; and
|X| Allow the Bank's eligible depositors, employees, officers and trustees to
purchase stock and share in the Company's and the Bank's future.
Furthermore, the Bank will be more able to protect itself from costly and
disruptive unfriendly takeover attempts because the Mutual Company will own a
majority of the Company's voting stock.
Will the Reorganization affect any of my deposit account(s) or loan(s)?
No. The Reorganization will have no effect on the balance or terms of any
deposit account or loan, and your deposits will
<PAGE>
continue to be federally insured by the Federal Deposit Insurance Corporation
("FDIC") to the maximum legal limit. Your deposit account will not be converted
to stock. The common stock purchased from the Company, however, cannot and will
not be insured by the FDIC or any other governmental agency.
Who is eligible to purchase stock in the Offering?
Depositors of the Bank as of specified record dates, the Bank's tax-qualified
employee benefit plans, and the employees, officers and trustees of the Bank may
purchase stock in the subscription offering. For detailed information on
preference categories, refer to the section entitled "Our Corporate Change and
Stock Offering" in the Prospectus. The Company may offer and sell any remaining
shares to the general public in a community offering with preference given to
natural persons residing in the Bank's community of Oswego County, New York.
How many shares of stock are being offered and at what price?
The Company is offering between 399,500 shares and 540,500 shares (subject to
adjustment up to 621,575 shares) of common stock at a price of $10.00 per share
through the Offering.
How much stock may I purchase in the Reorganization?
The minimum order is 25 shares. The maximum purchase limitation for any person
or persons ordering through a single account in the subscription offering is
15,000 shares. In certain instances, your order may be grouped together with
orders by other persons who are associated with you, or with whom you are acting
in concert, and, in that event, the aggregate order may not exceed 5% of the
shares of common stock available for sale in the Offering.
Do I have to buy stock?
No, you do not have to buy stock. The Reorganization, however, will allow the
Bank's eligible depositors, employees, officers and trustees an opportunity to
buy stock. These individuals have an opportunity to become shareholders of the
Company and to share in the Company's and the Bank's future.
How do I order stock in the Offering?
You must complete the stock order form and certification form (the "Order Form")
by following the instructions included in your packet of information. Your
completed Order Form and payment in full must be received at the Stock Center or
one of the branches of the Bank by 12:00 noon, New York Time on xx, xxxx xx,
1999.
If I place an order for stock, am I guaranteed to receive that stock?
No. Placing an order for stock does not guarantee that you will receive any or
all of your order for shares. Orders are filled on a priority basis. For
detailed information on the preference categories, refer to the section entitled
"Our Corporate Change and Stock Offering" in the Prospectus.
How may I pay for my shares of stock?
You MUST include payment with your Order Form. Please make all checks payable to
Oswego County Bancorp, Inc. Cash will be accepted only if delivered in
<PAGE>
person to a branch of the Bank where it will be converted into a check. The Bank
will pay interest on these funds at the passbook rate.
You may also authorize us to withdraw funds from your deposit account or
certificate of deposit at the Bank for the amount of funds you specify for
payment. The Bank is waiving all of its early withdrawal penalties on
certificates of deposit where the funds are used to subscribe for stock.
Note: You will not have access to these funds from the day we receive your order
until the completion or termination of the Reorganization.
May I purchase shares using funds in my IRA account at the Bank?
Federal regulations do not permit the purchase of stock in your existing IRA
account at the Bank. However, stock may be purchased in a self-directed IRA. To
accommodate our IRA depositors, we have made arrangements to have funds
transferred into self-directed IRA accounts to allow for such purchases. Please
call our Stock Center as soon as possible at (315) 343-3181 for additional
information.
Will the stock be insured?
No. Like any other common stock, the Company's common stock will not be insured
by the FDIC, the Bank Insurance Fund, the Savings Association Insurance Fund or
any other governmental agency.
Will dividends be paid on the stock?
The Company does not initially plan to pay a dividend, although it may consider
payment of such dividend in the future.
What will happen to my subscription funds if the Offering is not completed?
If the minimum number of shares to be sold in the Offering (399,500 shares) is
not sold by xxxx__, 1999, the Bank may: (i) terminate the Offering and promptly
refund all payments for common stock, including interest on such payments at the
Bank's passbook rate of __%; or (ii) extend the Offering for an additional 45
days (to xxxx__,1999) or, if approved by the regulators, for an additional
period after such 45-day extension. The Bank is not required to give purchasers
notice of any extension unless the expiration date is later than xxxxx __, 1999,
in which event purchasers will be "re-solicited" (i.e., given the right to
increase, decrease, confirm or rescind their orders). Purchasers who fail to
respond to the re-solicitation within 20 days will have their orders rescinded
and their subscription funds returned promptly.
How will the stock be traded?
The Company Common stock will trade on The OTC "Electronic Bulletin Board" under
the symbol "_____". However, no assurances can be given that an active and
liquid market will develop.
Do I pay a commission?
No. You will not be charged a commission or fee on the purchase of shares of
Company common stock in the Offering.
<PAGE>
What is the Charitable Foundation?
To further its commitment to the local community, the Bank intends to establish
the Oswego County Charitable Foundation as part of the Reorganization. The
Charitable Foundation will be dedicated exclusively to supporting charitable
causes and community development activities in the Bank's market area. The
Company will contribute to the Charitable Foundation 4% of the shares sold in
the Offering.
Should I vote in favor of the Plan of Reorganization?
The Board of Trustees of the Bank recommends that you vote in favor of the Plan
of Reorganization. Your vote is very important!
Why did I get several proxy cards?
If you have more than one account, you could receive more than one proxy card,
depending on the ownership structure of your accounts. PLEASE VOTE, SIGN AND
RETURN ALL PROXY CARDS TODAY!
How many votes do I have?
Every depositor entitled to vote may cast one vote for each $100, or fraction
thereof, on deposit as of the voting record date (xx, xx 1999). The maximum is
1,000 votes. We must receive affirmative votes from a majority of depositors of
the Bank and 75% in the amount of deposit liabilities present in order to
approve the Reorganization.
May I vote in person at the Special Meeting?
Yes, but we would still like you to sign and mail your proxy card today. If you
decide to revoke your proxy, you may do so by voting at the Special Meeting of
Depositors to be held at xx:xx p.m. on xxxx xx, 1999.
FOR ADDITIONAL INFORMATION YOU MAY CALL OUR STOCK CENTER AT (315) 343-3181
BETWEEN 9:00 A.M. AND 5:00 P.M., NEW YORK TIME, MONDAY THROUGH FRIDAY.
The shares of common stock offered in the Reorganization are not savings
accounts or deposits and are not insured by the FDIC, the Bank Insurance Fund,
the Savings Association Insurance Fund or any other governmental agency.
This is not an offer to sell or a solicitation of an offer to buy stock. The
offer will be made only by the Prospectus accompanied by a stock order form and
certification form.
<PAGE>
[Member Letter - Oswego County Savings Bank Letterhead]
_____________, 1999
Dear Depositor:
I am pleased to inform you that Oswego County Savings Bank (the "Bank") is
reorganizing from the mutual form of ownership to the mutual holding company
form of organization (the "Reorganization"). As part of the Reorganization, the
Bank will convert to stock form and become a wholly owned subsidiary of a newly
formed Delaware stock corporation called Oswego County Bancorp, Inc. (the
"Company"). The Company will become the majority owned subsidiary of Oswego
County MHC, a New York chartered mutual holding company. Concurrent with the
Reorganization, the Company is offering for sale up to 540,500 shares of common
stock to depositors (pursuant to subscription rights), the Bank's tax-qualified
employee benefit plans and employees, officers and trustees of the Bank in a
subscription offering. Any unsubscribed shares may be offered to the general
public in a community offering (the subscription and community offerings are
referred to collectively as the "Offering"). Consummation of the Reorganization
is subject to (i) the approval of the depositors of the Bank, and (ii) various
regulatory approvals.
Your deposits and loans with the Bank will not change due to the
Reorganization. There will be no change in the balance, interest rate or
maturity of deposits or loans because of the Reorganization. Your deposits will
continue to be insured by the Federal Deposit Insurance Corporation to the
maximum amount permitted by law to the same extent as prior to the
Reorganization.
We are asking depositors of the Bank as of XXX XX, 1999, the Voting Record
Date, who continue to be depositors as of the Special Meeting of Depositors, to
vote "FOR" the Reorganization. If you and/or members of your family have
multiple accounts with the Bank, you may receive more than one proxy card.
Please vote all proxy cards found in the front of the mailing envelopes and
return them today in the enclosed postage-paid envelope, even if you plan to
attend the Special Meeting of Depositors to be held on xxxx, xxxx xx, 1999 at
xxx p.m. Your vote "FOR" the Reorganization will not require you to buy any
stock. A Proxy Statement and Prospectus relating to the Reorganization is
enclosed.
As part of this process, the Company is offering shares of its common stock
to the public in accordance with applicable regulations. You may take advantage
of your nontransferable subscription right to purchase shares of common stock
directly from the Company, without commission or fee. We have enclosed a package
of information, including a stock order form and certification form (the "Order
Form") and a Prospectus, which will help you learn more about investing in
Company common stock. Please read and review the materials carefully before
making an investment decision. A properly executed Order Form and payment in
full must be received at the Stock Center or at one of the branches of the Bank
by 12:00 noon, Eastern Time, on xx, xxxx xx, 1999.
If you have any questions about the Reorganization, please call (315)
343-3181 or visit the Stock Center located at the main office of the Bank (44
East Bridge Street in Oswego) between 9:00 a.m. and 5:00 p.m., New York Time,
Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Gregory J. Kreis
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is neither an offer to sell nor a solicitation of an offer to buy
stock. The offer may only be made by the Prospectus accompanied by the Order
Form.
<PAGE>
[Closed Account Letter - Oswego County Savings Bank Letterhead]
______________, 1999
Dear Friend:
I am pleased to inform you that Oswego County Savings Bank (the "Bank") is
reorganizing from the mutual form of ownership to the mutual holding company
form of organization (the "Reorganization"). As part of the Reorganization, the
Bank will convert to stock form and will become a wholly owned subsidiary of a
newly formed Delaware stock corporation called Oswego County Bancorp, Inc. (the
"Company"). The Company will become the majority owned subsidiary of Oswego
County MHC, a New York chartered mutual holding. Concurrent with the
Reorganization, the Company is offering for sale up to 540,500 shares of common
stock to depositors (pursuant to subscription rights), the Bank's tax-qualified
employee benefit plans and employees, officers and trustees of the Bank in a
subscription offering. Any unsubscribed shares may be offered to the general
public in a community offering (the subscription and community offerings are
referred to collectively as the "Offering"). Consummation of the Reorganization
is subject to (i) the approval of the depositors of the Bank, and (ii) various
regulatory approvals.
As part of the Reorganization, the Company is offering shares of its common
stock to the public in accordance with applicable regulations. Because you had a
deposit account with the Bank as of either September 30, 1997 or March 31, 1999,
but closed the account prior to xxxx xx, 1999, you are entitled to purchase the
common stock being offered but may not vote on the Reorganization. You may take
advantage of your nontransferable right to purchase shares of common stock
directly from the Company, without paying a commission or fee. We have enclosed
a package of information, including a stock order form and certification form
(the "Order Form") and a Prospectus, which will help you learn more about
investing in the Company's common stock. Please read and review the materials
carefully before making an investment decision. A properly executed Order Form
and payment in full must be received at the Stock Center or at one of the
branches of the Bank by 12:00 noon, Eastern Time, on xx, xxxx xx, 1999.
If you have any questions about the Reorganization, please call (315)
343-3181 or visit the Stock Center located at the main office of the Bank (44
East Bridge Street in Oswego) between 9:00 a.m. and 5:00 p.m., New York Time,
Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Gregory J. Kreis
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is neither an offer to sell nor a solicitation of an offer to buy
stock. The offer may only be made by the Prospectus accompanied by the Order
Form.
<PAGE>
(Prospective Investor Letter - Oswego County Bancorp, Inc. Letterhead)
_______, 1999
Dear Prospective Investor:
I am pleased to announce that Oswego County Savings Bank (the "Bank") is
reorganizing from the mutual form of ownership to the mutual holding company
form of organization (the "Reorganization"). As part of the Reorganization, the
Bank will convert to stock form and will become a wholly owned subsidiary of a
newly formed Delaware stock corporation called Oswego County Bancorp, Inc. (the
"Company"). The Company will become the majority owned subsidiary of Oswego
County MHC, a New York chartered mutual holding company. Concurrent with the
Reorganization, the Company is offering shares of its common stock for purchase
by the public in a stock offering.
We have enclosed the following materials that will help you learn more
about investing in the common stock of the Company. Please read and review the
materials carefully before making an investment decision.
PROSPECTUS: This document provides detailed information about the proposed
stock offering and about the Bank's operations.
QUESTIONS AND ANSWERS: Key questions and answers about the stock offering
are found in this pamphlet.
INVITATION: We are hosting informational community meetings where you can
learn more about the Reorganization and stock offerings. Please call the
Stock Center to reserve a seat.
STOCK ORDER FORM AND CERTIFICATION FORM (the "Order Form"): This form is
used to purchase stock by properly executing and returning it with your
payment to the Stock Center in the enclosed business reply envelope. A
properly executed Order Form and payment in full must be received at the
Stock Center or at one of the branches of the Bank by 12:00 noon, New York
Time, on xx, xxxx xx, 1999.
We invite you to place an order for stock of the Company. You have the
opportunity to buy stock directly from the Company without paying a commission
or fee.
If you have any questions about the Reorganization, please call (315)
343-3181 or visit the Stock Center located at the main office of the Bank (44
East Bridge Street in Oswego) between 9:00 a.m. and 5:00 p.m., New York Time,
Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Gregory J. Kreis
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation,
the Bank Insurance Fund, the Savings Association Insurance Fund or any
other governmental agency. This is neither an offer to sell nor a
solicitation of an offer to buy stock. The offer may only be made by the
Prospectus accompanied by the Order Form.
<PAGE>
[Broker Dealer Letter - FBR Letterhead]
_____, 1999
To Depositors and Friends of Oswego County Savings Bank:
Friedman, Billings, Ramsey & Co. Inc., a member of the National Association
of Securities Dealers, Inc. is assisting Oswego County Savings Bank (the
"Bank"), with their reorganization from the mutual form of ownership into the
mutual holding company structure ("Reorganization"). In connection with the
Reorganization, Oswego County Bancorp, Inc. (the "Company"), a newly formed
Delaware corporation and proposed holding company for the Bank, is offering
shares of common stock to be sold in a stock offering.
At the request of the Company, we are enclosing materials explaining this
process and your opportunity to invest in shares of the Company's common stock
being offered to certain depositors, and, subject to availability, the general
public through xxxx xx, 1999. Please read the enclosed offering materials
carefully. The Company has asked us to forward these documents to you in view of
certain requirements of the securities laws in your state.
If you have any questions about the Reorganization, please call (315)
343-3181 or visit the Stock Center located at the main office of the Bank (44
East Bridge Street in Oswego) between 9:00 a.m. and 5:00 p.m., New York Time,
Monday through Friday.
Very truly yours,
Friedman, Billings, Ramsey & Co., Inc.
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is neither an offer to sell nor a solicitation of an offer to buy
stock. The offer may only be made by the Prospectus accompanied by the Order
Form.
<PAGE>
(Dear Member "Dark Blue Sky" & Foreign Accounts - Letterhead)
___________, 1999
Dear Depositor:
I am pleased to inform you that Oswego County Savings Bank (the "Bank") is
reorganizing from the mutual form of ownership to the mutual holding company
form of organization (the "Reorganization"). As part of the Reorganization, the
Bank will convert to stock form and will become a wholly owned subsidiary of a
newly formed Delaware stock corporation called Oswego County Bancorp, Inc. (the
"Company"). The Company will become the majority owned subsidiary of Oswego
County MHC, a New York chartered mutual holding company. Concurrent with the
Reorganization, the Company is offering up to 540,500 shares of common stock to
depositors, the Bank's tax-qualified employee benefit plans, and employees,
officers, and trustees of the Bank in a subscription offering. Any unsubscribed
shares may be offered to the general public in a community offering (the
subscription and community offerings referred to collectively as the
"Offering"). Consummation of the Reorganization is subject to (i) the approval
of the depositors of the Bank, and (ii) various regulatory approvals.
Unfortunately, the Company is unable either to offer or sell its common
stock to you because the small number of eligible subscribers in your
jurisdiction makes registration or qualification of the common stock under the
securities laws of your jurisdiction impractical, for reasons of cost or
otherwise. Accordingly, this letter should be considered neither an offer to
sell nor a solicitation of an offer to buy the common stock of the Company.
However, as a depositor of the Bank, you have the right to vote on the
Reorganization at the Special Meeting of Depositors to be held on xxxx xx, 1999
at xx:xx p.m. Therefore, enclosed is a proxy card, a Proxy Statement (which
includes the Notice of the Special Meeting), a Prospectus (which contains
information incorporated into the Proxy Statement) and a return envelope for
your proxy card.
If you have any questions about the Reorganization, please call (315)
343-3181 or visit the Stock Center located at the Main office of the Bank
(44 East Bridge Street in Oswego) between 9:00 a.m. and 5:00 p.m., Eastern Time,
Monday through Friday.
Thank you for giving these matters your attention and timely consideration.
Sincerely,
Gregory J. Kreis
President and Chief Executive Officer
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund, the Savings Association Insurance Fund or any other governmental
agency. This is neither an offer to sell nor a solicitation of an offer to buy
stock. The offer may only be made by the Prospectus accompanied by the Order
Form.
<PAGE>
Oswego County Bancorp, Inc.
Stock Center - Oswego County Savings Bank -
44 East Bridge St. - Oswego, New York 13126
(315) 343-3181
STOCK ORDER FORM INSTRUCTIONS AND OWNERSHIP GUIDE
- --------------------------------------------------------------------------------
Order Form Instructions
- --------------------------------------------------------------------------------
Item 1 and 2 - Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares by the subscription price of $10.00 per share. The minimum order is 25
shares. The maximum purchase limitation for any person or persons ordering
through a single account is 15,000 shares. In certain instances, your order may
be grouped together with orders by other persons who are associated with you, or
with whom you are acting in concert, and, in that event, the aggregate order may
not exceed 5% of the shares of Common Stock available for sale in the Offering.
Oswego County Bancorp, Inc. has reserved the right to reject any order received
in the Community Offering, in whole or in part.
Item 3 - Payment for shares may be made by check, bank draft, or money order
payable to Oswego County Bancorp, Inc. DO NOT MAIL CASH. If you choose to make a
cash payment, take your completed stock order form and certification form, and
payment in person to a branch of Oswego County Savings Bank to turn into a
check. Your funds will earn interest at Oswego County Savings Bank's passbook
rate until the stock is issued.
Item 4 - To pay by withdrawal from a savings account or certificate of deposit
from Oswego County Savings Bank, write in the account number(s) and the
amount(s) you wish to withdraw from each account. If more than one signature is
required to withdraw, each person must sign in the Signature box on the front of
the Order Form. To withdraw from an account with checking privileges, please
write a check. No early withdrawal penalty will be charged on funds used to
purchase our stock. A hold will be placed on the account(s) for the amount(s)
indicated. Payments will remain in certificate of deposit account(s) until the
stock offering closes and will continue to earn interest at the current account
rate. However, if a partial withdrawal reduces the balance of a certificate of
deposit account to less than the applicable minimum, the remaining balance will
thereafter earn interest at the passbook rate.
Item 5 - Please check this box if you were a depositor with at least $100.00 on
deposit as of September 30, 1997 and/or March 31, 1999 and list all the names on
the account(s) and all account number(s) of those accounts you had at these
dates to ensure proper identification of your purchase rights.
Items 6 and 7 - The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of Oswego County
Bancorp, Inc. common stock. Print the name(s) in which you want the stock
registered and the mailing address of the registration. Include the first name,
middle initial, and last name of the shareholder. Avoid the use of two initials.
Please omit words that do not affect ownership rights, such as "Mrs.", "Mr.",
"Dr.", "special account", etc.
Enter the Social Security or Tax I.D. number of one registered owner. This
registered owner must be listed on the first "Name" line. Be sure to include
your telephone number because we will need to contact you if we cannot execute
your order as given. Review the Stock Ownership Guide on the back of this page
and refer to the instructions for Uniform Gift to Minors/Uniform Transfer to
Minors and Fiduciaries.
Subscription rights are not transferable. If you are a qualified depositor, to
protect your priority over other purchasers as described in the Prospectus, you
must take ownership as your account relationship is established. If you, as a
qualified depositor, include a non-qualified depositor or a depositor in a lower
priority category on your stock order, your priority will be eliminated or
lowered.
Items 8 and 9 - See instructions on the form.
Item 10 - Be sure all required persons sign the front of the stock order form as
well as the certification form on the back.
Item 11- Be sure to sign the certification form on the back of the stock order
form.
Be sure to read and sign the certification form on the back of the stock order
form.
<PAGE>
- --------------------------------------------------------------------------------
Stock Ownership Guide
- --------------------------------------------------------------------------------
Individual
The stock is to be registered in an individual's name only. You may not list
beneficiaries for this ownership.
Joint Tenants (WROS)
Joint tenants with rights of survivorship identifies two or more owners. When
stock is held by joint tenants with rights of survivorship, ownership
automatically passes to the surviving joint tenant(s) upon the death of any
joint tenant. You may not list beneficiaries for this ownership.
Tenants in Common
Tenants in common may also identify two or more owners. When stock is held by
tenants in common, upon the death of one co-tenant, ownership of the stock will
be held by the surviving co-tenant(s) and by the heirs of the deceased
co-tenant. All parties must agree to the transfer or sale of shares held by
tenants in common. You may not list beneficiaries for this ownership.
Individual Retirement Account
Individual retirement account ("IRA") holders may make stock purchases from
their deposits through a pre-arranged "trustee-to-trustee" transfer. Stock may
only be held in a self-directed IRA. Please contact the Stock Center if you have
any questions about your IRA account. There will be no early withdrawal or IRS
penalties incurred by properly executed transactions.
Uniform Gift to Minors/Uniform Transfer to Minors
For residents of many states, stock may be held in the name of a custodian for
the benefit of a minor under the Uniform Transfer to Minors Act. For residents
in other states, stock may be held in a similar type of ownership under the
Uniform Gift to Minors Act of the individual states. For either ownership, the
minor is the actual owner of the stock with the adult custodian being
responsible for the investment until the minor reaches legal age.
Instructions: See your legal advisor if you are unsure about the correct
registration of your stock.
On the first "Name" line, print the first name, middle initial, and last name of
the custodian, with the abbreviation "CUST" after the name. Print the first
name, middle initial, and last name of the minor on the second "Name" line. Only
one custodian and one minor may be designated.
Corporation/Partnership
Corporations/Partnerships may purchase stock. Please provide the
Corporation/Partnership's legal name and Tax I.D. To have depositor rights, the
Corporation/Partnership must have an account in the legal name. Please contact
the Stock Center to verify depositor rights and purchase limitations.
Fiduciary/Trust
Generally, fiduciary relationships (such as Trusts, Estates, Guardianships,
etc.) are established under a form of trust agreement or are pursuant to a court
order. Without a legal document establishing a fiduciary relationship, your
stock may not be registered in a fiduciary capacity.
Instructions: On the first "Name" line, print the first name, middle initial,
and last name of the fiduciary if the fiduciary is an individual. If the
fiduciary is a corporation, list the corporate title on the first "Name" line.
Following the name, print the fiduciary "title" such as trustee, executor,
personal representative, etc.
On the second "Name" line, print either the name of the maker, donor or testator
OR the name of the beneficiary. Following the name, indicate the type of legal
document establishing the fiduciary relationship (agreement, court order, etc.).
In the blank after "Under Agreement Dated", fill in the date of the document
governing the relationship. The date of the document need not be provided for a
trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: John D.
Smith, Trustee for Thomas A. Smith Under Agreement Dated 06/09/87.
<PAGE>
-------------------------------------------------------------
Plan of Reorganization Request
If you are interested in receiving a copy of the Plan of
Reorganization for Oswego County Savings Bank, please fill
out the form below and return it to a branch of the Bank or
in the blue Proxy Return Envelope.
Name:
---------------------------------------------
Address:
------------------------------------------
City: State: Zip:
-------------------- -------- -----
-------------------------------------------------------------
The above card should be approximately 3-1/2" by 5" and will be delivered to
individuals instead of the Plan of Reorganization.
<PAGE>
================================================================================
Proxy Gram
We recently forwarded to you information advising that Oswego County Savings
Bank and Oswego County Bancorp, Inc. have received regulatory approval to
reorganize into the mutual holding company form of organization.
Your vote on our Plan of Reorganization has not yet been received. Failure to
vote has the same effect as voting against the Reorganization. All votes MUST be
received by xx, xxxx xx, 1999.
Your vote is important to us, and we, therefore, are requesting that you sign
the enclosed proxy card and return it promptly in the enclosed postage-paid
envelope.
Voting for the Reorganization does not obligate you to purchase stock.
Additionally, approval of the Reorganization will not affect the terms or
insurance of your accounts or loans at Oswego County Savings Bank.
The Board of Trustees unanimously recommends that you vote "FOR" the
Reorganization.
OSWEGO COUNTY SAVINGS BANK, OSWEGO COUNTY BANCORP, INC., OSWEGO COUNTY MHC
Gregory J. Kreis
Trustee, President and Chief Executive Officer
If you have already returned your proxy cards, please accept our thanks and
disregard this request. For further information call our Stock Center at (315)
343-3181 or visit us at the main office of the Bank (44 East Bridge Street in
Oswego) between 9:00 a.m. and 5:00 p.m., New York time, Monday through Friday.
The common stock is not a deposit or savings account and is not federally
insured or guaranteed. This is neither an offer to sell nor a solicitation of an
offer to buy stock. The offer is made only by the Prospectus accompanied by a
stock order form and certification form.
================================================================================
<PAGE>
Oswego County
Bancorp, Inc.
- --------------------------------------------------------------------------------
Oswego County Bancorp, Inc., a newly formed Delaware corporation and the
proposed holding company for Oswego County Savings Bank, is offering up to
540,500 shares of common stock.
- --------------------------------------------------------------------------------
You Are Cordially Invited To a Community Investor Meeting & Reception to Learn
About the Plan of Reorganization and Related Offering of
Oswego County Bancorp, Inc. Common Stock.
Date TBD
Place TBD
Oswego, New York
7:00 P.M.
Senior executives of Oswego County Savings Bank will present information and
answer your questions about Oswego County Savings Bank's Plan of
Reorganization and related stock offering. You will also be presented with
information regarding Oswego County Savings Bank's business focus and
results of operations.
Seating is Limited
Please call the Stock Center to make your reservation.
(315) 343-3181
This invitation is neither an offer to sell nor a solicitation of an offer to
buy these securities. The offer is made only by the Prospectus accompanied by a
stock order form and certification form. The shares of Common Stock are not
savings accounts or deposits and are not insured by the Federal Deposit
Insurance Corporation, the Bank Insurance Fund, the Savings Association
Insurance Fund or any other governmental agency.
<PAGE>
Advertisement
- --------------------------------------------------------------------------------
Oswego County
Bancorp, Inc.
-------------
Oswego County Bancorp, Inc., a newly formed Delaware corporation and
the proposed holding company for Oswego County Savings Bank, is
offering up to 540,500 shares of common stock.
You are invited...
to a Community Investor Meeting and Reception
Senior executives of Oswego County Savings Bank are hosting a Community Investor
Meeting. In addition to learning details about the stock offering, you will be
presented with information about Oswego County Savings Bank's business focus and
results of operations.
Date TBD
Place TBD
Oswego, New York
7:00 P.M.
To receive a copy of the Prospectus or to make a reservation to attend the
meeting, please call the Stock Center at (315) 343-3181 between 9:00 a.m. and
5:00 p.m., Monday through Friday.
This invitation is neither an offer to sell nor a solicitation of an offer to
buy these securities. The offer is made only by the Prospectus accompanied by a
stock order form and certification form. The shares of common stock are not
savings accounts or deposits and are not insured by the Federal Deposit
Insurance Corporation, the Bank Insurance Fund, the Savings Association
Insurance Fund or any other governmental agency.
- --------------------------------------------------------------------------------
<PAGE>
Oswego County
Bancorp, Inc. [LOGO]
Community Meeting
June XX, 1999
<PAGE>
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Dave Neiswander
Ryan Kelley
Friedman, Billings, Ramsey & Co., Inc.
<PAGE>
Oswego County Bancorp, Inc. [LOGO}______________________________________________
The following presentation concerns an offering of common stock. As part of the
presentation, comparisons have been made with that of other financial
institutions. This information is from public sources that we believe to be the
most accurate and reliable but can make no representations or warranties as
such.
The shares of common stock being offered are not savings accounts or
deposits and are not insured by the FDIC, the Bank Insurance Fund, the Savings
Association Insurance Fund or any other governmental agency. This is not an
offer to sell nor a solicitation of an offer to buy stock. The offer will be
made only by the Prospectus accompanied by the Stock Order Form and
Certification Form.
Prospective investors are urged not to rely solely on this presentation but to
examine the Prospectus carefully.
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Purpose: To provide information on the
Reorganization of Oswego County
Savings Bank and explain the stock
offering of Oswego County Bancorp,
Inc., the newly formed stock holding
company of Oswego County Savings
Bank.
Agenda: Overview
Oswego County Savings Bank
The Stock Offering
Investment Highlights
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Overview
<PAGE>
Overview
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Timeline
1870 Oswego County was established in Oswego, New York
1998 Board adopted Plan of Reorganization
Mar 1999 Plan filed with the FDIC and SEC
xx 1999 FDIC and SEC approved the Plan
Mailed offering materials
Commenced Offering
xx 1999 Special Meeting of Members
Offering ends
Close and trade*
Establish a Charitable Foundation
- --------------------------------------------------------------------------------
* Anticipated; no guarantee on timing.
<PAGE>
Overview
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Before the Mutual Holding Company
(MHC) Reorganization
Depositors Mutual Ownership Oswego County
Savings Bank
- --------------------------------------------------------------------------------
<PAGE>
Overview
Oswego County Bancorp, Inc. [LOGO}______________________________________________
After MHC Reorganization
Oswego County
MHC
53.2%
Mutual
Ownership
Oswego County
Bancorp, Inc.
100% Ownership
Oswego County
Savings Bank
Depositors
45.0%
Minority
Stockholders
1.8%
Charitable
Foundation
<PAGE>
Overview
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Why is Oswego County Savings Bank
converting to the MHC structure?
o Raise capital without loss of control
o Provide additional capital for further internal growth
o Follow industry trends
o Begin trading at a lower equity/assets ratio than in a full conversion
o Allow depositors the ability to share in the bank's future
o Donate stock to the Charitable Foundation
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Bancorp, Inc. [LOGO}______________________________________________
What is the Charitable Foundation?
o The Oswego County Charitable Foundation will be a not-for-profit organization
dedicated exclusively to supporting charitable causes and community
development activities in the Bank's market area.
o The Bank will donate to the Charitable Foundation 1.8% of the total shares
issued in the Reorganization.
o At the least, the Charitable Foundation will be required to grant or donate
5% of the average fair market value of its net investments to the community.
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Oswego County
Savings Bank
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Savings Bank
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Financial Highlights
o Attractive Loan Composition
o Emphasis on Core Deposits
o Strong Interest Margin
o Capital Strength
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Savings Bank
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Oswego County Savings Bank
As of December 31, 1998
Total Assets $110.9 million
Total Liabilities $ 99.2 million
Existing Capital $ 11.7 million
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Savings Bank
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Composition of Assets
As of December 31, 1998
In the printed version of the document, a pie chart
appears which depicts the following plot points:
3.6% Cash and Equivalents
2.3% Securities held to maturity
4.3% Other
13.3% Securities available for sale
12.4% Federal funds sold
64.1% Loans, Net
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Savings Bank
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Loan Portfolio
as of December 31, 1998
In the printed version of the document, a pie chart
appears which depicts the following plot points:
84.4% Residential mortgages and home equity loans
12.4% Commercial Mortgages
0.4% Commercial Loans
2.8% Consumer Loans
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Savings Bank
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Total Deposits
As of December 30, 1998
In the printed version of the document, a pie chart
appears which depicts the following plot points:
Percent
"Core"
Deposits:
60.3%
39.6% Total Time deposits
0.3% Money Market deposits
48.0% Savings deposits
12.0% Demand deposits
- --------------------------------------------------------------------------------
<PAGE>
Oswego County Savings Bank
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Net Income
For the Twelve Months Ended December 31
(Dollars in thousands)
In the printed version of the document, a line graph
appears which depicts the following plot points:
1996................... -$61
1997................... $189
1998................... $309
63.5%
Increase
<PAGE>
Oswego County Savings Bank
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Strong Net Interest Margin
For the Twelve Months Ended December 31, 1998
(Net interest income as a percentage of average interest-earning assets)
In the printed version of the document, a line graph
appears which depicts the following plot points:
Oswego County..................... 4.37%
Middle Atlantic*.................. 3.12%
National Average*................. 2.93%
- --------------------------------------------------------------------------------
*Averages from The SNL Quarterly Thrift Digest, March 1999.
<PAGE>
Oswego County Savings Bank
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Strong Capitalization
As of December 31, 1998
(Dollars in millions)
In the printed version of the document, a line graph appears
which depicts the following plot points
Capital
Current after
Requirement Capital Reorganization*
---------- ------- ---------------
Leverage.................. $4.4 $11.7 $13.0
Risk-Based............... $3.0 $11.7 $13.0
Total.................... $6.0 $12.6 $14.0
- --------------------------------------------------------------------------------
* Capital after Reorganization assumes issuance of 450,500 shares, the minimum
of the Offering Range.
<PAGE>
Oswego County Bancorp, Inc. [LOGO}______________________________________________
The Stock Offering
- --------------------------------------------------------------------------------
<PAGE>
The Stock Offering
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Oswego County Bancorp, Inc.
New Shares Offered: Between 399,500 and 621,575 shares
Price of New Shares: $10.00 per share
Maximum Purchase: $150,000 for any individual person or persons ordering
through a single account
Your order may be grouped with other
orders by other persons with whom you are
associated or acting in concert. In this case,
your aggregate orders may not exceed 5% of the
shares of Common Stock offered for sale in the
Offering
Minimum Purchase: 25 shares
- --------------------------------------------------------------------------------
<PAGE>
The Stock Offering
Oswego County Bancorp, Inc. [LOGO}______________________________________________
Oswego County Savings Bank is
valued by an Independent Appraiser
Appraisal = $10,444,444
- --------------------------------------------------------------------------------
<PAGE>
The Stock Offering
Oswego County Bancorp, Inc. [LOGO}______________________________________________
After MHC Reorganization
Oswego County
MHC
53.2%
Mutual
Ownership
Depositors
45.0%
Minority
Stockholders
Oswego County
Bancorp, Inc.
1.8%
Charitable
Foundation
100% Ownership
Oswego County
Savings Bank
- --------------------------------------------------------------------------------
<PAGE>
The Stock Offering
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
The Shareholders will be purchasing
45.0% of Oswego County Bancorp, Inc.
Valuation $10,444,444
New Shareholders 45.0%
Midpoint of Offering $4,700,000
Additionally, the Charitable Foundation
will receive 1.8% of Oswego County
Bancorp, Inc. Common Stock.
<PAGE>
The Stock Offering
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
Oswego County Bancorp, Inc. will offer
between a minimum and a maximum number
of shares. This Offering Range is established
15% below and 15% above the Appraisal.
Minimum $3,995,000
Midpoint $4,700,000
Maximum $5,405,000
Maximum, as adjusted $6,215,750
<PAGE>
The Stock Offering
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
Subscription Offering
o Eligible Account Holders: Depositors with $100.00 or
more on account as of
September 30, 1997
o ESOP
o Supplemental Eligible Depositors with $100.00 or more on account
Account Holders: as of March 31, 1999
o Employees, Officers, and Trustees
Community Offering
o Preference given to residents of Oswego County, New York
<PAGE>
The Stock Offering
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
The stock center is located at the main office of the Bank and is staffed with
FBR Professionals
[GRAPHICS OMITTED]
Stock Center
44 East Bridge Street
Oswego, NY 13126
(315) 343-3181
<PAGE>
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
Investment Highlights
<PAGE>
Investment Highlights
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
Some risks involved with the stock include:
o Rising interest rates may hurt our profits.
o Oswego County will own 51% or more of the stock of Oswego County
Bancorp. This means that Oswego County MHC will have enough votes to
control what happens on most matters put to a vote of stockholders.
o After the change in the structure and the stock offering, our net
income-to-equity ratio will be low compared to other companies and our
compensation expenses will increase. This could negatively impact the
price of our stock.
o You could have difficulty selling your stock if an active trading
market does not develop.
o The slow recovery of local economy may hurt our profits.
Additional risk factors are outlined in the Prospectus.
Shares of Common Stock are not insured!
<PAGE>
Investment Highlights
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
Some investment highlights include:
o Existing capital base
o Earnings
o Market comparisons and timing
o No commissions
<PAGE>
Investment Highlights
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
Pro Forma Equity
As of December 31, 1998
Historical Equity: $ 11,694
Net Proceeds*: 4,708
Less Capitalization of the MHC (100)
Less After tax cost of Charitable Foundation: 81
Less ESOP & RRP funding*: (636)
-----------
Pro Forma Stockholders' Equity*: $ 15,747
Number of Shares*: 1,043,800
Equity Per Share (Book Value per Share)*: $ 14.57
Offering Price Per Share: $ 10.00
Offering Price as Percent of Book Value*: 68.6%
Dollars in thousands except per share data.
*Assumed at the Midpoint of the Offering Range
<PAGE>
Investment Highlights
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
Oswego County Bancorp, Inc. is priced at a
discount with respect to book value per share
when compared with the market:
Price/Book
----------
Oswego County Bancorp, Inc.(1) 69%
MHC Current Trading Medians(2) 128%
1998 MHC Conversion Medians(2) 113%
(1) Assumed at the Midpoint of the Offering Range
(2) Averages from SNL as of March 22, 1999.
<PAGE>
Investment Highlights
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
When you purchase Oswego County
Bancorp, Inc. common stock in the
Conversion, you pay
NO COMMISSIONS.
<PAGE>
Investment Highlights
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
OTC "Electronic Bulletin Board"
Symbol
"OCSB"
<PAGE>
Investment Highlights
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
To submit an order for stock:
o Complete the Stock Order Form
o Sign the Certification Form
o Include payment with the Stock Order Form / Certification Form
1. Check (payable to Oswego County Bancorp, Inc.)
2. Withdrawal (waiving early withdrawal penalties)
3. IRA (coordinate with Stock Center as soon as possible)
o All orders MUST be received at the Stock Center or a branch of Oswego
County Savings Bank by 12:00 noon, Eastern Time, on March xx, 1999
o Everyone may order now but depositors receive priority
<PAGE>
Investment Highlights
Oswego County Bancorp, Inc. [LOGO] _____________________________________________
Tentative Schedule
xxx Offering materials mailed
xxx Stock Center opens
xxx Community Meeting
xxx Offering expires at noon
xxx Special Meeting of Depositors
xxx Tentative target for closing of
offering and trading
<PAGE>
Oswego County Bancorp, Inc. [LOGO]
Oswego County
Bancorp, Inc. [LOGO]
Community Meeting
June x, 1999
Exhibit 99.4
OSWEGO COUNTY SAVINGS BANK
44 East Bridge Street
Oswego, New York 13126-2547
(315) 343-4100
--------------------
NOTICE OF SPECIAL MEETING OF DEPOSITORS
TO BE HELD ON ____________________, 1999
Notice is hereby given that a special meeting of depositors (the
"Special Meeting") of Oswego County Savings Bank ("Oswego County Savings") will
be held at Oswego County Savings' main office located at 44 East Bridge Street,
Oswego, New York, on ___________, 1999 at ________p.m., local time, to consider
and vote upon:
1. The Amended and Restated Plan of Reorganization from Mutual Savings
Bank to Mutual Holding Company and Plan of Stock Issuance (the "Plan")
under which (1) we will form Oswego County MHC, as a New York mutual
holding company ("Oswego County MHC"); (2) we will form Oswego County
Bancorp, Inc., as a Delaware Corporation ("Oswego County Bancorp"); (3)
we will reorganize Oswego County Savings into a capital stock savings
bank (the "Stock Bank") and issue 100% of the Stock Bank's to-be
outstanding common stock to Oswego County Bancorp; (4) we will
establish the Oswego County Charitable Foundation (the "Foundation"), a
Delaware non-stock corporation dedicated to the promotion of charitable
purposes within the communities served by Oswego County Savings; and
(5) Oswego County Bancorp will offer 45.0%; of its common stock for
sale to depositors and the public in a subscription and community
offering and issue 53.2% of it shares to Oswego County MHC and 1.8% of
its shares to the Foundation; and
2. Such other business as may properly come before the meeting and any
adjournment(s) thereof. Management is not aware of any other matters
that may come before the Special Meeting.
The record date for determining Oswego County Savings' depositors
entitled to notice of, and to vote at, the Special Meeting, and at any
adjournment(s) thereof, is April 30, 1999 (the "Voting Record Date"). Only
holders of one or more Oswego County Savings deposit accounts as of the Voting
Record Date ("Voting Depositors") will be entitled to vote at the Special
Meetings or at any adjournment(s) of the Special Meeting. A deposit account
creates a single depositor relationship for voting purposes, even though more
than one person has an interest in such deposit account. Each Voting Depositor
has one vote for each $100, or fraction thereof, on deposit in such account as
of the Voting Record Date. No Voting Depositor will be entitled to cast more
than 1,000 votes. If there are insufficient votes for approval of the Plan at
the time of the Special Meeting, Oswego County Savings may postpone or adjourn
the Special Meeting to permit further solicitation of proxies. The following
Proxy and the Prospectus attached to it contain a more detailed description of
Oswego County Savings and the proposed reorganization and stock offering.
Please complete, date, sign and return the accompanying proxy card(s)
in the enclosed postage-paid envelope as soon as possible, whether or not you
plan to attend the Special Meeting. This will assure your representation at the
Special Meeting and may avoid the cost of additional communications. This will
not prevent you from voting in person if you attend the Special Meeting. You may
revoke your written proxy by a written instrument delivered to the secretary of
Oswego County Savings at any time prior to or at the Special Meeting. Properly
completed proxies will be voted in accordance with the instructions on the
proxy, or if we receive a proxy with no instructions we will vote the proxy for
approval of the Plan.
<PAGE>
Your proxy is solicited by the Board of Trustees of Oswego County
Savings. The Board of Trustees unanimously recommends that Voting Depositors
vote "FOR" approval of the Plan. Failure to return a proxy or to vote in person
will have the same effect as a vote against the Plan. You may revoke a proxy by
submitting a later-dated proxy or by voting in person at the special meeting.
Voting in favor of the Plan will not obligate any person to purchase
common stock and voting against the Plan or failure to vote will not prevent any
person from purchasing common stock.
BY ORDER OF THE BOARD OF TRUSTEES
Oswego, New York
____________________, 1999 ________________________________
Secretary
<PAGE>
OSWEGO COUNTY SAVINGS BANK
44 East Bridge Street
Oswego, New York 13126-2547
(315) 343-4100
PROXY STATEMENT
SPECIAL MEETING OF DEPOSITORS
TO BE HELD ON ___________, 1999
- -------------------------------------------------------------------------------
INTRODUCTION
- -------------------------------------------------------------------------------
Purpose of the Special Meeting
This proxy statement, together with the prospectus of Oswego County
Bancorp, Inc. attached to it, constitutes the proxy statement for, and is being
furnished to eligible depositors ("Voting Depositors") of Oswego County Savings
Bank ("Oswego County Savings") as of _______________,1999 (the "Voting Record
Date,") in connection with the solicitation by the Board of Trustees of Oswego
County Savings of proxies to be voted at a special meeting of depositors (the
"Special Meeting"). The Special Meeting will be held on __________, 1999
at________ local time, at Oswego County Savings' main office located at 44 East
Bridge Street, Oswego, New York.
At the Special Meeting, Voting Depositors will be asked to consider and
vote upon the Amended and Restated Plan of Reorganization from Mutual Savings
Bank to Mutual Holding Company and Plan of Stock Issuance (the "Plan") under
which (1) we will form Oswego County MHC, as a New York mutual holding company
("Oswego County MHC"); (2) we will form Oswego County Bancorp, Inc., as a
Delaware corporation ("Oswego County Bancorp"); (3) we will reorganize Oswego
County Savings into a capital stock savings bank (the "Stock Bank") and issue
100% of the Stock Bank's to-be outstanding common stock to Oswego County
Bancorp; (4) we will establish the Oswego County Charitable Foundation (the
"Foundation"), a Delaware non-stock corporation dedicated to the promotion of
charitable purposes within the communities served by Oswego County Savings; and
(5) Oswego County Bancorp will offer 45.0% of its common stock for sale to
depositors and the public in a subscription and community offering and issue
53.2% of its shares to Oswego County MHC and 1.8% of its shares to the
Foundation;
Copies of the Plan are available without charge from Oswego County
Savings upon written request to the Secretary of Oswego County Savings Bank, 44
East Bridge Street, Oswego, New York 13126-2547.
Only Voting Depositors will be entitled to vote at the Special Meeting
and any adjournment(s) of the Special Meeting. Voting Depositors who execute
proxies for the Special Meeting retain the right to revoke them at any time.
Proxies may be revoked by sending written notice of revocation to the Secretary
of Oswego County Savings at the address of Oswego County Savings shown above or
sending a later-dated proxy which is received by Oswego County Savings no later
than _________, 1999. The presence of any Voting Depositor at the Special
Meeting who has given a proxy shall not revoke the proxy unless the Voting
Depositor delivers his or her ballot in person at the Special Meeting or
delivers a written revocation to the Secretary of Oswego County Savings prior to
the voting of such proxy. Proxies solicited and received by the Board of
Trustees of Oswego County Savings will be voted in accordance with the
directions given on the proxy. Where no instructions are included on the proxy,
the proxy will be voted FOR the proposals set forth in this proxy statement. If
any other matters are properly presented at the Special Meeting, proxies will be
voted on those matters in accordance with the directions of a majority of the
Board of Trustees. Management is not aware of any other matters to be presented
at the Special Meeting.
<PAGE>
YOUR PROXY, IN THE FORM ENCLOSED, IS SOLICITED BY THE BOARD OF TRUSTEES
OF OSWEGO COUNTY SAVINGS FOR USE AT THE SPECIAL MEETING OF DEPOSITORS, AND ANY
ADJOURNMENT(S) OF THAT MEETING, FOR THE PURPOSES SET FORTH IN THE NOTICE OF
SPECIAL MEETING. THIS PROXY WILL NOT BE USED AT ANY OTHER MEETING.
THE SUPERINTENDENT OF BANKS OF THE STATE OF NEW YORK ("SUPERINTENDENT")
HAS APPROVED THE PLAN SUBJECT TO THE APPROVAL OF THE VOTING DEPOSITORS OF OSWEGO
COUNTY SAVINGS AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS. IN ADDITION,
THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") HAS ISSUED A LETTER OF INTENT
TO ISSUE A NOTICE OF NONOBJECTION TO THE PLAN, SUBJECT TO THE SATISFACTION OF
CERTAIN CONDITIONS. HOWEVER, THE APPROVAL AND THE INTENT TO ISSUE A NOTICE OF
NONOBJECTION DO NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE PLAN.
OSWEGO COUNTY SAVINGS' BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
YOU VOTE "FOR" THE PLAN. FAILURE TO RETURN YOUR PROXY OR TO VOTE IN PERSON AT
THE MEETING WILL HAVE THE SAME EFFECT AS A NEGATIVE VOTE.
Voting Rights, Voting of Proxies and Vote Required for Approval
The Board of Trustees of Oswego County Savings has fixed the close of
business on ______________, 1999 as the Voting Record Date for the purpose of
determining the Voting Depositors entitled to notice of, and to vote at, the
Special Meeting. All holders of withdrawable accounts at Oswego County Savings
as of the Voting Record Date are considered Voting Depositors and are entitled
to notice of, and to vote at, the Special Meeting. Each Voting Depositor will be
entitled to one vote for each $100, or fraction thereof, on deposit in the
Voting Depositor's account on the Voting Record Date. However, no Voting
Depositor may cast more than 1,000 votes. An account will create a single
depositor relationship for voting purposes. Only one proxy may be cast for any
of these accounts, even though more than one person has an interest in an
account.
The Plan must be approved by the affirmative vote of (i) 75% in the
amount of deposit liabilities present in person or by proxy at the Special
Meeting, and (ii) more than 50% of the total votes eligible to be cast by Voting
Depositors at the Special Meeting. The Voting Depositors also may be asked to
consider other business as may properly come before the Special Meeting.
Management knows of no other business to be presented.
Any questions as to the eligibility of a Voting Depositor to vote or
the number of votes allocated to each Voting Depositor, or on any other matters
relating to the voting, will be resolved in final by the Secretary of Oswego
County Savings at or prior to the Special Meeting, and the records of Oswego
County Savings will control the resolution.
Our Board and Management Will Receive Benefits Following the Offering
Oswego County Savings intends to adopt an employee stock ownership plan
as part of the stock offering. This plan intends to purchase up to 8% of the
shares sold in the offering. The plan will provide a retirement benefit to all
eligible employees.
Oswego County Savings also intends to adopt a stock option plan and a
restricted stock plan following the offering. These plans will benefit
directors, officers and employees of Oswego County Savings. A majority of Oswego
County Bancorp's shareholders, other than Oswego County MHC, must approve these
plans at a shareholders meeting held at least six months following the
completion of the offering.
2
<PAGE>
Both the employee stock ownership plan and the restricted stock plan
will increase the voting control of management without the payment of cash by
the recipients of the shares. An optionholder may purchase the shares subject to
the options at any time if he pays the fair market price of the shares as of the
date the option is granted. See _________ of the attached prospectus for more
information about the potential benefits.
Proposed Management Purchases
<TABLE>
<CAPTION>
At the Minimum of the Estimated At the Maximum of the
Offering Range Estimated Offering Range
------------------------------- -------------------------
As a Percent
Number of As a Percent of Number of of Shares
Name Amount Shares Shares Offered(1) Shares Offered1
---- ------ ------ ----------------- ------ --------
<S> <C> <C> <C> <C> <C>
Michael R. Brower $50,000 5,000 1.3 5,000 *
Bruce P. Frassinelli 7,500 750 * 750 *
Paul J. Heins 5,000 500 * 500 *
Gregory J. Kreis 150,000 15,000 3.8 15,000 2.8
Paul W. Schneible 50,000 5,000 * 5,000 *
Bernard Shapiro 25,000 2,500 * 2,500 *
Carl K. Walrath 25,000 2,500 * 2,500 *
All directors and executive $375,000 37,500 9.4 37,500 6.9
officers as a group (twelve
persons)
</TABLE>
- ----------------
(1) An asterisk indicates a percentage of shares offered of less than one
percent.
Persons Making the Solicitation
Management expects to use the services of Oswego County Savings
trustees, officers, and other employees to solicit proxies personally or by
telephone, telegraph or mail. The trustees, officers and employees will not
receive additional compensation for solicitation, but may be reimbursed for
out-of-pocket expenses incurred in connection with the proxy solicitation.
Proxies may also be solicited by representatives of Friedman, Billings, Ramsey &
Co., Inc., who will be compensated by Oswego County Savings in connection with
its services as financial advisor in the stock offering.
3
<PAGE>
- -------------------------------------------------------------------------------
APPROVAL OF THE AMENDED AND RESTATED PLAN OF REORGANIZATION FROM
MUTUAL SAVINGS BANK TO MUTUAL HOLDING COMPANY AND PLAN OF STOCK ISSUANCE
- -------------------------------------------------------------------------------
The Superintendent has approved the Plan subject to the approval of
Oswego County Savings' Voting Depositors and the satisfaction of certain
conditions imposed by the Superintendent. The FDIC has issued a letter of intent
to issue a notice of nonobjection to the Plan, subject to the satisfaction of
certain conditions. However, such regulatory approval and the intent to issue a
letter of nonobjection do not constitute a recommendation or endorsement of the
Plan.
General
Pursuant to the Plan, Oswego County Savings will reorganize into a
two-tier mutual holding company structure. Under the Plan, Oswego County Savings
will form Oswego County MHC as its mutual holding company parent and Oswego
County Bancorp as its subsidiary. Oswego County Savings will then reorganize
into the Stock Bank and the Stock Bank will issue its stock to Oswego County
MHC. Oswego County MHC will contribute the Stock Bank's common stock to Oswego
County Bancorp. Oswego County Bancorp will issue shares of its common stock to
the public, Oswego County MHC and the Foundation. As a result, Oswego County
Bancorp will own all of the common stock of the Stock Bank. The Stock Bank will
succeed to the operations of Oswego County Savings in its mutual form. Oswego
County MHC and Oswego County Bancorp will be regulated by the New York State
Banking Department (the "Department") and the Federal Reserve Board. As long as
the mutual holding company is in existence, the applicable federal and New York
laws require it to own at least 51% of the voting stock of Oswego County
Bancorp. Oswego County Bancorp will own 100% of the voting stock of the Oswego
County Savings. Oswego County Bancorp may issue any amount of non-voting stock
or debt to persons other than the mutual holding company.
Background of Our Corporate Change
Originally, we planned to change our structure to a mutual holding
company as part of our proposed plan to merge with Pathfinder Bancorp, Inc. and
its local savings bank subsidiary, Oswego City Savings Bank. In January 1999,
Pathfinder and we jointly decided to terminate our merger plans because of the
difficulty in obtaining approvals from bank regulators. Even though we are not
now planning to merge with Oswego City Savings, we continue to think that we
should change our corporate structure. Forming a mutual holding company and
selling stock may help us in the future if we want to enter into other
acquisition transactions. Although we currently exceed all regulatory capital
requirements, the proceeds from the offering will increase our capital. We may
use the additional capital for those purposes as well as other corporate
purposes. We expect to explore all of our options to improve our bank including
acquisitions of other companies that we think could help us. We may look at
areas outside of traditional banking services. We may also consider trying to
form another deal with Pathfinder and Oswego City Savings. But, for now, we have
no plans to enter into another deal with anyone and we are not discussing any
transaction with anyone else. We may or may not enter into a combination in the
future. However, the mutual holding company structure permits us to consider
more options in the future.
4
<PAGE>
Effect on Deposits
Upon completion of the reorganization, each deposit account in Oswego
County Savings at the date the reorganization is completed will become a deposit
account in the Stock Bank in the same amount and upon the same terms (including
interest rate) and conditions (including withdrawal rights). All depositors who
had voting and liquidation rights with respect to Oswego County Savings will
continue to have such rights solely with respect to Oswego County MHC. All
insured deposit accounts of Oswego County Savings that become deposit accounts
of the Stock Bank will continue to be federally insured up to the legal maximum
limit by the FDIC in the same manner as deposit accounts existing in Oswego
County Savings immediately prior to the reorganization.
Effect on Borrowings and Other Customer Relationships
The reorganization will not affect any borrower or other customer
relationships with Oswego County Savings, as each borrowing, contract or other
customer relationship will automatically continue with the Stock Bank on the
same terms (including interest rate) and conditions as existed with Oswego
County Savings immediately prior to the reorganization. Upon completion of the
reorganization, the Stock Bank may exercise any and all powers, rights and
privileges of, and shall be subject to all limitations applicable to, stock
savings banks under New York law.
The management, board of directors and branch locations of the Stock
Bank will be the same as the management, board of trustees and branch locations
of Oswego County Savings prior to the reorganization.
Conversion of the Mutual Holding Company to the Stock Form
The reorganization does not preclude the conversion of the mutual
holding company from the mutual to stock from of organization through a merger
of the mutual holding company into Oswego County Bancorp or Oswego County
Savings and the concurrent sale of the shares held by the mutual holding company
in a subscription offering. A decision to convert the mutual holding company to
stock form is subject to the approval of the Oswego County Savings' depositors.
A conversion of the mutual holding company from the mutual to stock form of
organization is not anticipated for the foreseeable future.
Depositor Rights If We Liquidate
Following the completion of the reorganization, all depositors who had
liquidation rights with respect to Oswego County Savings as of the effective
date of the reorganization will continue to have such rights solely with respect
to the mutual holding company so long as they continue to hold deposit accounts
with Oswego County Savings. In addition, all persons who become depositors of
Oswego County Savings subsequent to the reorganization will have such
liquidation rights with respect to the mutual holding company. Borrowers
currently do not have ownership or voting rights in Oswego County Savings and
will not receive ownership or voting rights with respect to the mutual holding
company.
If the mutual holding company converts from a mutual to stock-form
holding company, the amount available to the depositor of the mutual holding
company's subsidiary savings bank becomes fixed as of the date of the statement
of financial condition contained in the final offering circular used in the
mutual-to-stock conversion. Each subsidiary savings bank at that time
establishes a liquidation account equal to the net worth of the subsidiary
savings bank as set forth in its latest statement of financial condition
contained in the offering circular utilized in the mutual-to-stock conversion.
Establishment of the Charitable Foundation
To continue the Oswego County Savings' long-standing commitment to our
local community, the Oswego County Savings intends to establish a charitable
foundation in connection with the reorganization. The Plan provides that Oswego
County Savings and Oswego County Bancorp may establish the charitable foundation
and incorporate it under Delaware law as a non-stock corporation. Oswego County
Bancorp will fund the charitable foundation with shares of its common stock.
Oswego County Bancorp will contribute to the charitable foundation 15,980,
18,800, 21,620 and 24,863 shares at the minimum, midpoint, maximum and adjusted
maximum of the offering range, respectively.
Federal and State Tax Consequences of the Reorganization
Oswego County Savings has received a legal opinion from the law firm of
Elias, Matz, Tiernan & Herrick L.L.P. that the reorganization will constitute a
non-taxable reorganization under the Internal Revenue Code (the "Code"). Oswego
County Savings has received an opinion from KPMG LLP that the Reorganization
will constitute a non-taxable reorganization under New York law. Unlike private
letter rulings, an opinion is not binding on the Internal Revenue Service
("IRS") or the New York Department of Taxation and either agency could disagree
with the conclusions reached therein. In the event of a disagreement, there can
be no assurance that the IRS or the New York Department of Taxation would not
prevail in a judicial or administrative proceeding.
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Accounting Treatment of Reorganization
The reorganization will result in no change to the accounting of Oswego
County Savings' assets, liabilities, and equity.
Regulatory Approvals
To complete the reorganization, the approval of the Federal Reserve
Board must be obtained for Oswego County Bancorp to acquire all of the issued
and outstanding stock of the Stock Bank and for Oswego County MHC to acquire a
majority of the issued and outstanding shares of Oswego County Bancorp. As a
result of the respective acquisitions, each of Oswego County MHC and Oswego
County Bancorp will become a bank holding company. The Department must approve
the formation of Oswego County MHC and the conversion of Oswego County Savings
to the Stock Bank, and the FDIC must issue its nonobjection to Oswego County
Savings' conversion to the Stock Bank.
Interpretation and Amendment of the Plan
If necessary or desirable, the terms of the Plan may be amended by a
majority vote of Oswego County Savings' Board of Trustees at any time prior to
submission of the Plan to a vote of depositors. At any time after submission of
the Plan to a vote of depositors, the terms of the Plan may be amended by a
majority vote of the Board of Trustees in response to comments received from the
Department or the FDIC, and may be amended for any other reason only with the
concurrence of the Department and the FDIC. The Plan may be terminated at any
time by a majority vote of the Board of Trustees prior to the depositor vote and
subsequent to the depositor vote with the concurrence of the Superintendent and
the FDIC.
Additional Information
A copy of the Plan, the proposed Certificate of Incorporation and
Bylaws of Oswego County Bancorp, the proposed Restated Organization Certificate
and Bylaws of the Stock Bank and the proposed Restated Organization Certificate
and Bylaws of Oswego County MHC are available without charge from Oswego County
Savings. Also, a copy of the Certificate of Incorporation and Bylaws of the
Foundation are available without charge from Oswego County Savings. Requests for
copies of any such documents should be directed to: Secretary, Oswego County
Savings Bank, 44 East Bridge Street, Oswego, New York 13126-2547.
THE ATTACHED PROSPECTUS IS AN INTEGRAL PART OF THIS PROXY STATEMENT AND
CONTAINS DETAILED INFORMATION ABOUT OSWEGO COUNTY SAVINGS, OSWEGO COUNTY
BANCORP, OSWEGO COUNTY MHC, THE FOUNDATION, THE REORGANIZATION AND STOCK
OFFERING, INCLUDING, THE RIGHTS OF ELIGIBLE ACCOUNT HOLDERS, SUPPLEMENTAL
ELIGIBLE ACCOUNT HOLDERS AND TRUSTEES, OFFICERS AND EMPLOYEES TO SUBSCRIBE FOR
SHARES OF OSWEGO COUNTY BANCORP'S COMMON STOCK. DEPOSITORS AS OF THE VOTING
RECORD DATE ARE URGED TO CONSIDER SUCH INFORMATION CAREFULLY PRIOR TO SUBMITTING
THEIR PROXIES OR SUBSCRIBING FOR SHARES OF OSWEGO COUNTY BANCORP COMMON STOCK.
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OSWEGO COUNTY SAVINGS BANK
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF TRUSTEES OF OSWEGO COUNTY SAVINGS BANK
The undersigned depositor of Oswego County Savings Bank ("Oswego County
Savings") hereby appoints the Board of Trustees of Oswego County Savings as
proxy to cast all votes which the undersigned depositor is entitled to cast at a
special meeting of depositors to be held at Oswego County Savings' main office
located at 44 East Bridge Street, Oswego, New York at _______, New York time,
________, 1999 and at any and all adjournments and postponements of the special
meeting, and to act with respect to all votes that the undersigned would be
entitled to cast, if then personally present, in accordance with the
instructions on the reverse side hereof:
This proxy will be voted as directed by the undersigned depositor.
UNLESS CONTRARY DIRECTION IS GIVEN, A SIGNED PROXY WILL BE VOTED FOR ADOPTION OF
THE AMENDED AND RESTATED PLAN OF REORGANIZATION FROM MUTUAL SAVINGS BANK TO
MUTUAL HOLDING COMPANY AND PLAN OF STOCK ISSUANCE. In addition, this proxy will
be voted at the discretion of the Board of Trustees upon any other matter as may
properly come before the special meeting.
The undersigned depositor may revoke this proxy at any time before it
is voted by delivering to the Secretary of Oswego County Savings either a
written revocation of the proxy or a duly executed proxy bearing a later date,
or by appearing at the special meeting, filing a written revocation and voting
in person. The undersigned depositor hereby acknowledges receipt of the Notice
of Special Meeting Proxy Statement and accompanying Prospectus.
IMPORTANT: PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE.
<PAGE>
OSWEGO COUNTY SAVINGS BANK
IMPORTANT: Please sign your name exactly as it appears on this proxy. Joint
accounts need only one signature. When signing as an attorney, administrator,
agent, officer, executor, trustee, guardian, etc., please add your full title to
your signature.
FOR AGAINST
o o The Amended and Restated Plan of
Reorganization from Mutual Savings Bank
to Mutual Holding Company and Plan of
Stock Issuance (the "Plan") under which
(1) we will form Oswego County MHC, as a
New York mutual holding company ("Oswego
County MHC"); (2) we will form Oswego
County Bancorp, Inc., as a Delaware
corporation ("Oswego County Bancorp");
(3) we will reorganize Oswego County
Savings Bank into a capital stock
savings bank (the "Stock Bank") and
issue 100% of the Stock Bank's to-be
outstanding common stock to Oswego
County Bancorp; (4) we will establish
the Oswego County Charitable Foundation
(the "Foundation"), a Delaware non-stock
corporation dedicated to the promotion
of charitable purposes within the
communities served by Oswego County
Savings Bank; and (5) Oswego County
Bancorp will offer 45.0% of its common
stock for sale to depositors and the
public in a subscription and community
offering and issue 53.2% of its shares
to Oswego County Savings MHC and 1.8% of
its shares to the Foundation.
Signature________________________________________ Date____________________, 1999
NOTE: IF YOU RECEIVE MORE THAN ONE PROXY CARD. PLEASE SIGN AND RETURN ALL CARDS
IN THE ACCOMPANYING ENVELOPE.
