<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NATIONAL CONSUMER COOPERATIVE BANK
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
UNITED STATES OF AMERICA 52-1157795
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>
1401 EYE STREET N.W., SUITE 700
WASHINGTON, DC 20005
(202) 336-7700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
CHARLES E. SNYDER
NATIONAL CONSUMER COOPERATIVE BANK
1401 EYE STREET N.W., SUITE 700
WASHINGTON, DC 20005
(202) 336-7700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MARTIN J. FLYNN, ESQ. DANIEL M. ROSSNER, ESQ.
SHEA & GARDNER BROWN & WOOD LLP
1800 MASSACHUSETTS AVE., N.W. ONE WORLD TRADE CENTER
WASHINGTON, DC 20036 NEW YORK, NEW YORK 10048
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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 statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE PER UNIT(1) REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Debt Securities; Preferred Stock(3)......................... $350,000,000 $97,300
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of computing the registration fee. The
proposed maximum offering price per unit will be determined from time to
time by the Registrant in connection with the issuance by the Registrant of
the securities registered hereunder.
(2) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933, as amended, and reflects the offering
price rather than the principal amount of any Debt Securities issued at a
discount.
(3) In addition to any Debt Securities or Preferred Stock that may be issued
directly under this registration statement, there are being registered
hereunder an indeterminate amount of Debt Securities, and an indeterminate
number of shares of Preferred Stock as may be issued upon conversion or
exchange of Preferred Stock or Debt Securities. No separate consideration
will be received for any Debt Securities or Preferred Stock so issued upon
such conversion or exchange.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 5, 1999
PROSPECTUS
NATIONAL CONSUMER COOPERATIVE BANK
(DOING BUSINESS AS NATIONAL COOPERATIVE BANK)
(LOGO)
MAY OFFER
$350,000,000
Debt Securities
Preferred Stock
- --------------------------------------------------------------------------------
NCB will provide the specific terms of these securities in supplements to this
prospectus. You should read this prospectus and the accompanying
prospectus supplement carefully before you invest.
- --------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT GUARANTEED BY THE UNITED STATES AND WILL NOT
CONSTITUTE A DEBT OR OBLIGATION OF THE UNITED STATES OR ANY AGENCY OR
INSTRUMENTALITY THEREOF.
This prospectus is dated , 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY............................... 3
NATIONAL CONSUMER COOPERATIVE BANK.... 6
General............................... 6
Loan Requirements, Restrictions and
Policies............................ 6
Lending Limits........................ 7
Interest Rates........................ 7
Competition........................... 10
Taxes................................. 10
Class A Notes......................... 10
Properties............................ 12
Regulation............................ 12
SELECTED CONSOLIDATED FINANCIAL DATA
OF NCB.............................. 13
USE OF PROCEEDS....................... 14
DESCRIPTION OF DEBT
SECURITIES.......................... 14
General............................... 14
Denominations......................... 16
Subordination......................... 16
Consolidation, Merger or Sale......... 18
Modification of Indentures............ 18
Events of Default..................... 18
Covenants............................. 19
Payment and Transfer.................. 19
Global Securities..................... 20
Defeasance............................ 20
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Trustee........................... 20
DESCRIPTION OF PREFERRED STOCK........ 20
General............................... 21
Rank.................................. 21
Dividends............................. 21
Conversion or Exchange................ 22
Redemption............................ 23
Liquidation Preference................ 23
Voting Rights......................... 23
DESCRIPTION OF CAPITAL STOCK.......... 24
Authorized Capital.................... 24
Outstanding Class B Common Stock...... 24
Outstanding Class C Common Stock...... 25
Outstanding Class D Common Stock...... 25
Voting Rights......................... 25
Trading Market........................ 26
Patronage Refunds..................... 26
PLAN OF DISTRIBUTION.................. 27
By Agents............................. 27
By Underwriters....................... 27
Direct Sales.......................... 28
General Information................... 28
WHERE YOU CAN FIND MORE INFORMATION... 28
LEGAL OPINIONS........................ 29
EXPERTS............................... 29
</TABLE>
2
<PAGE> 4
SUMMARY
This summary provides a brief overview of NCB and the most significant
terms of the offered securities. For a more complete understanding of the terms
of the offered securities, before making your investment decision, you should
carefully read:
- this prospectus, which explains the general terms of the securities that
NCB may offer;
- the accompanying prospectus supplement, which (1) explains the specific
terms of the securities being offered and (2) updates and changes
information in this prospectus; and
- the documents referred to in "Where You Can Find More Information" on page
28 for information on NCB, including its financial statements.
NCB
NCB, which does business as the National Cooperative Bank, is a financial
institution organized under the laws of the United States. NCB provides
financial and technical assistance to eligible cooperative enterprises or
enterprises controlled by eligible cooperatives. An eligible cooperative
enterprise is an organization which NCB determines is owned by its members and
which is engaged in producing or furnishing goods, services, or facilities for
the benefit of its members or voting stockholders who are the ultimate consumers
or primary producers of such goods, services, or facilities. NCB is structured
as a cooperative institution whose voting stock can be owned only by its patrons
or those eligible to become its patrons.
NCB's principal executive offices are located at 1401 Eye Street N.W.,
Suite 700, Washington, DC 20005, and its telephone number is (202) 336-7700.
THE SECURITIES NCB MAY OFFER
NCB may use this prospectus to offer up to $350,000,000 of:
- debt securities; and
- preferred stock.
A prospectus supplement will describe the specific types, amounts, prices, and
detailed terms of any of these offered securities.
DEBT SECURITIES
The debt securities are unsecured general obligations of NCB in the form
of senior or subordinated debt. The senior debt will have the same rank as all
of NCB's other unsecured and unsubordinated debt. The subordinated debt will be
subordinated to all Senior Indebtedness (as defined below under "Description of
Debt Securities -- Subordination").
The senior and subordinated debt will be issued under separate indentures
between NCB and BankOne, N.A., as trustee. Below are summaries of the general
features of the debt securities from these indentures. For a more detailed
description of these features, see "Description of Debt Securities" below. You
are also encouraged to read the indentures, which are filed as exhibits to the
registration statement of which this prospectus is a part. You can receive
copies of these documents by following the directions on page 28.
GENERAL INDENTURE PROVISIONS THAT APPLY TO THE DEBT SECURITIES
- Each indenture allows for different types of debt securities to be issued
in series.
- The indentures allow NCB to merge or to consolidate with another company,
or sell all or substantially all of its assets to another company. If any
of these events occur, the other company would be required to assume NCB's
responsibilities for the debt securities. Unless the transaction results
in an event of default, NCB will be released from all liabilities and
obligations under the debt securities when the successor company assumes
NCB's responsibilities.
- The indentures provide that holders of not less than 66 2/3% of the total
principal amount of the senior debt securities and holders of not less
than 66 2/3% of the total principal amount of the subordi-
3
<PAGE> 5
nated debt securities outstanding in any series may vote to change NCB's
obligations or your rights concerning those securities. However, some changes to
the financial terms of a security, including changes in the payment of principal
or interest on that security or the currency of payment, cannot be made
unless every holder of that security consents to the change.
- NCB may satisfy its obligations under the debt securities or be released
from its obligation to comply with the limitations discussed above at any
time by depositing sufficient amounts of cash or U.S. or other appropriate
government securities (depending on the currency of payment of the debt
securities) with the trustee to pay NCB's obligations under the particular
debt securities when due.
- The indentures govern the actions of the trustee with regard to the debt
securities, including when the trustee is required to give notices to
holders of the securities and when lost or stolen debt securities may be
replaced.
EVENTS OF DEFAULT THAT APPLY
TO DEBT SECURITIES
The events of default specified in each indenture include:
- failure to pay required interest for 30 days;
- failure to pay principal when due;
- failure to make a required sinking fund payment when due;
- failure to perform other covenants for 60 days after notice;
- failure to make any payment of any amount owing under the Class A Notes
when and as due;
- acceleration of the debt securities of any other series or any
indebtedness for borrowed money of NCB, in each case exceeding $10,000,000
in an aggregate principal amount;
- failure to pay, bond or discharge any uninsured judgment in excess of
$10,000,000 which is not challenged; and
- certain events of insolvency, bankruptcy or reorganization involving NCB,
whether voluntary or not.
See "National Consumer Cooperative Bank -- Class A Notes" on page 10 for a
description of the Class A Notes.
REMEDIES
If there were an event of default, the trustee or holders of 25% of the
principal amount of debt securities outstanding in a series could demand that
the principal be paid immediately. However, holders of a majority in principal
amount of the securities in that series could rescind that acceleration of the
debt securities.
PREFERRED STOCK
NCB may issue preferred stock with various terms to be established by its
board of directors. Each series of preferred stock will be more fully described
in the particular prospectus supplement that will accompany this prospectus,
including redemption provisions, rights in the event of liquidation, dissolution
or winding up of NCB, voting rights, if applicable in connection with any series
of preferred stock, and conversion rights.
Generally, each series of preferred stock will rank on an equal basis with
each other series of preferred stock and will rank prior to NCB's common stock,
including its Class B, Class C, and Class D stock. The prospectus supplement
will also describe how and when
4
<PAGE> 6
dividends will be paid on the series of preferred stock.
As more fully described in this prospectus under "National Consumer
Cooperative Bank -- Class A Notes," without the approval of the Secretary of the
Treasury of the United States, so long as any of NCB's Class A Notes are
outstanding, NCB may not pay a dividend on any class of its stock, including the
preferred stock, at a rate greater than the statutory interest rate payable on
the Class A Notes. Further, without the approval of the Secretary of the
Treasury, NCB may not pay any dividend or distribution on, or make any
repurchase of, any class of stock (including the preferred stock), at any time
when deferred interest payments on the Class A Notes have not been paid in full,
together with any unpaid interest on such notes. Upon any liquidation or
dissolution of NCB, the Class A Notes are entitled to receive out of the assets
of NCB available for distribution to its stockholders, prior to any to holders
of any class of stock (including the preferred stock), an amount not less than
the aggregate face value of all Class A Notes outstanding, plus all accrued and
unpaid interest payments accrued thereon to and including the date of payment
(together with unpaid interest thereon).
Preferred stock issued by NCB will be eligible for the dividends received
deduction to the extent set forth in the prospectus supplement relating to the
preferred stock.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table shows the ratio of earnings to fixed charges of NCB for
each of the five most recent fiscal years. The ratio of earnings to fixed
charges is a measure of NCB's ability to generate earnings to pay the fixed
expenses of its debt.
These computations include NCB and its subsidiaries. For purposes of
computing these ratios, earnings consist of pre-tax income from continuing
operations plus fixed charges and amortization of capitalized interest, less
interest capitalized. Fixed charges consist of interest expensed and
capitalized, amortization of debt issuance costs, and NCB's estimate of the
interest component of rental expense. Ratios are presented both including and
excluding interest on deposits.
NCB currently has no preferred stock outstanding and therefore pays no
dividends on preferred stock. Accordingly, the data in the following table also
represents NCB's combined ratio of earnings to fixed charges and preferred stock
dividends.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, TWELVE MONTHS ENDED DECEMBER 31,
-------------- ------------------------------------
1999 1998 1998 1997 1996 1995 1994
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
Including Interest on Deposits................... 1.35 1.31 1.31 1.33 1.34 1.32 1.45
Excluding Interest on Deposits................... 1.39 1.34 1.34 1.36 1.38 1.36 1.50
</TABLE>
5
<PAGE> 7
NATIONAL CONSUMER COOPERATIVE BANK
GENERAL
NCB, which does business as the National Cooperative Bank, is a financial
institution organized under the laws of the United States. NCB provides
financial and technical assistance to eligible cooperative enterprises or
enterprises controlled by eligible cooperatives. A cooperative enterprise is an
organization which is owned by its members and which is engaged in producing or
furnishing goods, services, or facilities for the benefit of its members or
voting stockholders who are the ultimate consumers or primary producers of such
goods, services, or facilities. NCB is structured as a cooperative institution
whose voting stock can be owned only by its patrons or those eligible to become
its patrons.
In the legislation chartering NCB, referred to as the National Consumer
Cooperative Bank Act or the NCCBA, Congress stated its finding that cooperatives
have proven to be an effective means of minimizing the impact of inflation and
economic hardship on members/owners by narrowing producer-to-consumer margins
and price spreads, broadening ownership and control of economic organizations to
a larger base of consumers, raising the quality of goods and services available
in the marketplace and strengthening the nation's economy as a whole. To further
the development of cooperative businesses, the Congress specifically directed
NCB
- to encourage the development of new and existing cooperatives eligible
for its assistance by providing specialized credit and technical
assistance;
- to maintain broad-based control of NCB by its voting shareholders;
- to encourage a broad-based ownership, control and active participation by
members in eligible cooperatives;
- to assist in improving the quality and availability of goods and services
to consumers; and
- to encourage ownership of its equity securities by cooperatives and
others.
NCB has attempted to fulfill its statutory obligations in two fashions.
First, NCB makes loans and offers other financing arrangements which afford
cooperative businesses substantially the same financing opportunities currently
available for traditional enterprises. Second, NCB provides financial and other
assistance to the NCB Development Corporation, a non-profit corporation without
capital stock organized in 1982 which makes loans and provides assistance to
developmental and low income cooperatives.
The NCCBA was passed on August 20, 1978, and NCB commenced lending
operations on March 21, 1980. In 1981, Congress amended the NCCBA to convert the
Class A Preferred Stock of NCB previously held by the United States to Class A
Notes of NCB (the "Class A Notes") as of December 31, 1981 (the "Final
Government Equity Redemption Date"). Since the Final Government Equity
Redemption Date, NCB's capital stock, except for three shares of non-voting
Class D stock, has been owned exclusively by cooperatives.
LOAN REQUIREMENTS, RESTRICTIONS AND POLICIES
Eligibility Requirements. Cooperatives and legally chartered entities
primarily owned and controlled by cooperatives are eligible to borrow from NCB
if NCB determines that they are operated on a cooperative basis and are engaged
in producing or furnishing goods, services or facilities primarily for the
benefit of their members or voting stockholders who are the ultimate consumers
of
6
<PAGE> 8
such goods, services or facilities. In addition, to be eligible to borrow from
NCB, the borrower must, among other things
- be controlled by its members or voting stockholders on a democratic
basis;
- agree not to pay dividends on voting stock or membership capital in
excess of such percentage per annum as may be approved by NCB;
- provide that its net savings shall be allocated or distributed to all
members or patrons, in proportion to their patronage, or retain such
savings for the actual or potential expansion of its services or the
reduction of its charges to the patrons; and
- make membership available on a voluntary basis, without any social,
political, racial or religious discrimination and without any
discrimination on the basis of age, sex, or marital status to all persons
who can make use of its services and are willing to accept the
responsibilities of membership.
NCB may also purchase obligations issued by members of eligible
cooperatives, and it maintains member finance programs for retailer members of
wholesaler cooperatives in the food and hardware industries. In addition,
organizations applying for loans must comply with other technical requirements
imposed by NCB.
Lending Authorities. The Board of Directors of NCB established its
policies governing its lending operations in compliance with the NCCBA. The
policies adopted by the Board are carried out by the management of NCB pursuant
to written loan policies adopted by the Board. The management in turn adopts and
implements guidelines and procedures consistent with stated Board directives.
Lending policies and guidelines are reviewed regularly by the Board of Directors
and management to make needed changes and amendments.
The management of NCB may approve individual loan amounts of up to 75% of
the single borrower lending limit which is equal to 15% of NCB's capital (using
the definition of capital for national banks as set forth by the Office of the
Comptroller of the Currency) without prior approval of the Board. The President
of NCB may delegate authorities up to this limit to such committees and
individual officers as he may deem appropriate.
LENDING LIMITS
Single Borrower
The total amount of loans, letters of credit, leases and other financing
that may be made available to any one borrower may not exceed 15% of NCB's
capital. The approval of any loan to a single borrower which has a combined
total of financing from NCB in excess of 75% of the 15% limit is subject to the
prior approval of the Loan and Business Development Committee of the Board.
Cooperatives of Primary Producers
The total dollar value of loans to cooperatives that produce, market and
furnish goods, services and facilities on behalf of their members as primary
producers may not exceed 10% of the gross assets of NCB. The total dollar volume
of loans NCB will allow to be outstanding to any producer cooperative may not
exceed 20% of the amount available for loans to all producer cooperatives.
INTEREST RATES
Generally
NCB charges interest rates approximately equal to the market rates charged
by other lending institutions for comparable types of loans. NCB seeks to price
its loans to yield a reasonable return
7
<PAGE> 9
on its portfolio in order to build and maintain the financial viability of NCB
and to encourage the development of new and existing cooperatives. In addition,
to ensure that NCB will have access to additional sources of capital in order to
sustain its growth, NCB seeks to maintain a portfolio that is competitively
priced and of sound quality.
Interest Rates for Real Estate Loans
Real estate loans are priced under rate guidelines issued by NCB's
Principal Transactions Group for specific types of loans with specific
maturities. NCB takes the following factors into consideration in pricing its
real estate loans: loan-to-value ratios, lien position, cooperative payment
history, reserves, occupancy level and cash flow. NCB fixes rates based on a
basis point spread over U.S. Treasury securities with yields adjusted to
constant maturity of one, three, five or ten years. Interest rate may be fixed
at the time of commitment for a period generally not exceeding 30 days.
Interest Rates on Commercial Loans
NCB makes commercial loans at fixed and variable interest rates. Loan
pricing is based on prevailing market conditions, income and portfolio
diversification objectives and the overall assessment of risk. Typically,
commercial loan repayment schedules are structured by NCB with flat monthly
principal reduction plus interest on the outstanding balance.
Fees
NCB typically assesses fees to cover the costs of NCB of its consideration
of and handling of loan transactions, and to compensate NCB for setting aside
funds for future draws under a commitment. The legal fees paid to outside legal
counsel retained by NCB for loan transactions are charged to the borrower.
Underwriting
When evaluating credit requests, NCB seeks to determine whether a
prospective borrower has and/or will have sound management, sufficient cash flow
to service debt, assets in excess of liabilities and a continuing demand for its
products, services or use of its facilities, so that the request will be repaid
in accordance with its terms.
NCB evaluates repayment ability based upon an analysis of a borrower's
historical cash flow and conservative projections of future cash flows from
operations. This analysis focuses on determining the predictability of future
cash flows as a primary source of repayment.
Security
Loans made by NCB are typically secured by specific collateral. If
collateral security is required, the value of the collateral must be reasonably
sufficient to protect NCB from loss, in the event that the primary sources of
repayment of financing from the normal operation of the cooperative, or
refinancing, prove to be inadequate for debt repayment. Collateral security
alone is not a sufficient basis for NCB to extend credit. Unsecured loans
normally are made only to borrowers with strong financial conditions, operating
results and demonstrated repayment ability.
8
<PAGE> 10
Loans Benefiting Low-Income Persons
Under the NCCBA, the Board of Directors must use its best efforts to insure
that at the end of each NCB fiscal year at least 35% of its outstanding loans
are to
- cooperatives whose members are predominantly low-income persons, as
defined by NCB, and
- other cooperatives that propose to undertake to provide specialized
goods, services, or facilities to serve the needs of predominantly
low-income persons.
NCB defines a "low-income person", for these purposes, as an individual
whose family's income does not exceed 80% of the median family income, adjusted
for family size for the area where the cooperative is located, as determined by
the Department of Housing and Urban Development.
Loans for Residential Purposes
Commencing on October 1, 1985, the NCCBA prohibited NCB from making loans
for financing, construction, ownership, acquisition or improvement of any
structure used primarily for residential purposes if, after giving effect to
such loan, the aggregate amount of all loans outstanding for such purposes will
exceed 30% of the gross assets of NCB.
To the date of this prospectus, the 30% cap on residential real estate
loans has not restricted NCB's ability to provide financial services to
residential borrowers. NCB has been able to maintain its position in the
residential real estate market without increased real estate portfolio exposure
by selling real estate loans to secondary market purchasers of such loans. Since
October 1, 1985, the preponderance of NCB's real estate volume has been
predicated upon sale to secondary market purchasers. There can, however, be no
assurance that NCB's future lending for residential purposes will not be
impaired by the statutory limit. As of September 30, 1999, approximately 8.8% of
NCB's total assets, excluding real estate loans held for sale, consisted of
loans made for residential purposes.
Operations of Subsidiaries
NCB also provides financing opportunities to cooperatives and undertakes
other programs designed to fulfill its statutory mission through several
subsidiaries.
NCB Financial Corporation is a Delaware chartered, wholly-owned, S&L
holding company whose sole subsidiary is NCB Savings Bank, FSB.
NCB Savings Bank, FSB is a federally chartered, federally insured savings
bank located in Hillsboro, Ohio.
NCB Capital Corporation, formerly named NCB Mortgage Corporation, is a
wholly-owned subsidiary of NCB that originates and services loans to
cooperatives. Where incidental to NCB financing programs for cooperatives, and
to the development of cooperatives, NCB Capital Corporation may make loans to
entities that are not operating on a cooperative basis.
NCB Insurance Brokers, Inc. is engaged in the business of brokering
housing-related insurance to cooperatives.
NCB I, Inc. ("NCB I") is a wholly-owned, special purpose corporation that
holds credit enhancement certificates related to the securitization and sale of
cooperative real estate loans. NCB and NCB I are parties to an agreement under
which each agrees not to commingle the assets of NCB I with those of NCB.
NCB Retail Finance Corporation ("NCBRFC") is a wholly-owned special purpose
corporation that participates in the securitization and sale of loans to
customers involved in the grocery business.
9
<PAGE> 11
NCBRFC is required by its certificate of incorporation to have at least two
directors independent of NCB and to avoid commingling its assets with those of
NCB.
Because NCB is a holding company with respect to its subsidiaries, the
claims of creditors of NCB's subsidiaries will have priority over NCB's equity
rights and the rights of NCB's creditors, including the holders of debt
securities, and preferred stockholders to participate in the assets of NCB's
subsidiaries upon the subsidiaries' liquidation.
COMPETITION
The Congress created and capitalized NCB because it found that existing
financial institutions were not making adequate financial services available to
cooperative, not-for-profit business enterprises. However, NCB experiences
considerable competition in lending to the most creditworthy cooperative
enterprises.
TAXES
The NCCBA provides that NCB shall be treated as a cooperative within the
meaning of Section 1381(a)(2) of the Internal Revenue Code. As such and pursuant
to the provisions of the NCCBA, NCB, in determining its taxable income for
federal income tax purposes, is allowed a deduction for an amount equal to any
patronage refunds in the form of cash, of Class B or Class C stock, or allocated
surplus that are distributed or set aside by NCB during the applicable tax
period. To date, NCB has followed the policy of distributing or setting aside
such patronage refunds during the applicable tax period, and this has
effectively reduced NCB's federal income tax liability.
Section 109 of the NCCBA, as amended, provides that NCB, including its
franchise, capital, reserves, surplus, mortgages or other security holding and
income, is exempt from taxation by any state, county, municipality or local
taxing authority, except that any real property held by NCB is subject to any
state, county, municipal or local taxation to the same extent according to its
value as other real property is taxed.
In 1995, it was determined that all income generated by NCB and its
subsidiaries, with the exception of the NCB Savings Bank, qualifies as patronage
income under the Internal Revenue Code, as modified only with respect to NCB by
the NCCBA, with the consequence that NCB is able to issue tax deductible
patronage refunds with respect to all such income.
NCB's subsidiaries are subject to state income taxes.
Neither interest income nor gains realized in respect of the debt
securities which may be offered by this prospectus and a related prospectus
supplement is exempt from taxation by the United States or any state, county,
municipality or local taxing authority therein.
CLASS A NOTES
The NCCBA, as initially passed in 1978, provided for Class A preferred
stock of NCB to be held by the United States. In 1981, Congress amended the
NCCBA to convert that Class A preferred stock to Class A Notes of NCB. These
original Class A Notes had a principal amount of $184.27 million and a maturity
date of December 31, 2020.
In 1989, following a passage of a technical amendment to the NCCBA, NCB
entered into a Financing Agreement with the U.S. Treasury that provided for
replacement of the original Class A Notes with four new Class A Notes. This
Financing Agreement is in place as of the date of this prospectus, and it
governs the Class A Notes.
Pursuant to the Financing Agreement, NCB issued to the U.S. Treasury four
Class A Notes. After an initial phase-in period through October 1, 1990, each of
the four Class A Notes provides a
10
<PAGE> 12
different "Maturity Date" -- Note 1 (3 months), Note 2 (36 months), Note 3 (60
months) and Note 4 (120 months). When each Class A Note matures, NCB has the
right to borrow again from the Treasury the maturing amount under the same terms
and conditions until the "Final Maturity Date" of October 31, 2020. NCB intends
generally to avail itself of this right until the Final Maturity Date (except
for planned retirements in the year 2010 of $25 million and in the year 2015 of
another $25 million as part of a repayment plan discussed below). That means
that until the Final Maturity Date, NCB will likely have outstanding to the U.S.
Treasury four traunches of Class A Notes. At each Maturity Date, the interest
rate to be paid upon that Class A Note for the succeeding period will be
calculated by the U.S. Treasury based upon the then-prevailing interest rates
for Treasury obligations of comparable maturities. Listed below are the
principal amounts and other information about the Class A Notes as of the date
of this prospectus.
<TABLE>
<CAPTION>
CLASS A PRINCIPAL CURRENT
NOTE AMOUNT TERM NEXT MATURITY DATE INTEREST RATE
- ------- ----------- ---------- ------------------ -------------
<S> <C> <C> <C> <C>
1 $53,553,328 3 months 1/1/2000 4.88%
2 $36,854,000 36 months 10/1/2002 5.70%
3 $55,281,000 60 months 10/1/2000 6.01%
4 $36,854,000 120 months 10/1/2000 8.82%
</TABLE>
The Class A Notes and all related payments are subordinated to any secured
and unsecured notes and debentures thereafter issued by NCB, including the
senior debt and subordinated debt securities which may be offered by this
prospectus and any related prospectus supplement. The Class A Notes, however,
have first preference with respect to NCB's assets over all classes of stock
issued by NCB, including the preferred stock which may be offered by this
prospectus and any related prospectus supplement.
The NCCBA provides that NCB may not pay any dividend on any class of stock,
including the preferred stock which may be offered by this prospectus and any
prospectus supplement, at a rate greater than the statutory interest rate
payable on the Class A Notes. Although there has been no court or agency
interpretation of that limitation, NCB has consistently interpreted that
limitation to be the weighted average of the then-current interest rates
applicable to the four outstanding Class A Notes (with the weighting based on
outstanding principal amount). As of the date of this prospectus, the statutory
interest rate payable on the Class A Notes (based on the weighted average) was
an annual rate of 6.18%. NCB is currently seeking an amendment to the NCCBA that
would eliminate this limitation on dividends. There is, of course, no assurance
that the NCCBA will be amended.
In February 1993 and November 1994, NCB adopted plans to maintain a
schedule to ensure accumulation of the funds needed to repay the Class A Notes
on the Final Maturity Date, October 31, 2020. These plans involve the creation
of a reserve fund and the issuance of subordinated debt and preferred stock. If
the subordinated debt or preferred stock being offered by this prospectus is
being offered for the express purpose of funding the reserve fund, we will state
that fact in a prospectus supplement. The plans currently contemplate that
contributions to the reserve fund will total approximately $100 million
($1,000,000 per year for the first 10 years beginning 1994, $2,000,000 in each
of years 11-15, $2,500,000 in each of years 16-20 and $3,000,000 in each of
years 21-26). NCB expects that most of the contributions to the reserve fund
will be funded by borrowings under then-existing NCB credit facilities. The
plans currently contemplate that the remaining $80 million needed to pay off the
Class A Notes will be obtained through the issuance of subordinated debt and
preferred stock. The reserve fund, which was in the amount of $6,950,000 at
September 30, 1999, is maintained as a separate account but will be subject to
claims of senior and subordinated creditors other than the U.S. Treasury, in
light of the subordinated status of the Class A Notes. The plans contemplate the
probable retirement of $25 million of Class A Notes in 2010 and an additional
$25 million of Class A Notes in 2015.
11
<PAGE> 13
Under the NCCBA, any interest payment on the Class A Notes may be deferred
by the Board of Directors of NCB with the approval of the Secretary of the
Treasury of the United States, except that any interest payment so deferred is
required to bear interest at a prescribed rate. Without the approval of the
Secretary of the Treasury, NCB may not pay any dividend or distribution on, or
make any repurchase of, any class of stock (including the preferred stock which
may be offered by this prospectus and any related prospectus supplement), at any
time when deferred interest payments on the Class A Notes have not been paid in
full, together with any unpaid interest on such notes. Upon any liquidation or
dissolution of NCB, the Class A Notes are entitled to receive out of the assets
of the NCB available for distribution to its stockholders, prior to any to
holders of any class of stock (including the preferred stock which may be
offered by this prospectus or any related prospectus supplement), an amount not
less than the aggregate face value of all Class A Notes outstanding, plus all
accrued and unpaid interest payments accrued thereon to and including the date
of payment (together with unpaid interest thereon).
PROPERTIES
NCB leases space for its Washington, D.C. headquarters and for three
regional offices located in Oakland, New York City, and Anchorage. NCB Financial
Corporation and NCB I maintain offices in Wilmington, Delaware. NCB's
headquarters is 34,464 square feet in size and regional offices average 1500
square feet. The rental expense for the fiscal year ended December 31, 1998 was
$1,318,000 for NCB's headquarters and regional offices. NCB considers the
regional offices suitable for its needs and the facilities are fully utilized in
its operations.
REGULATION
NCB is organized under the laws of the United States. NCB is examined
annually by the Farm Credit Administration but that agency has no regulatory or
enforcement powers over NCB, and the General Accounting Office is authorized to
audit NCB. Reports of such examinations and audits are to be forwarded to the
Congress, which has the sole authority to amend or revoke NCB's charter. NCB
Savings Bank, FSB, is regulated by the federal Office of Thrift Supervision. As
a savings and loan holding company, NCB is subject to limited regulatory and
enforcement powers of and examination by the Office of Thrift Supervision
pursuant to 12 U.S.C. sec. 1467a.
12
<PAGE> 14
SELECTED CONSOLIDATED FINANCIAL DATA OF NCB
The following table contains selected consolidated financial data for NCB
and its subsidiaries for the five years ended December 31, 1998 and the
six-month periods ended June 30, 1999 and 1998. The financial data for each of
the years ended December 31, 1994 through 1998 have been derived from audited
financial statements. The financial data for the six months ended June 30, 1999
and 1998 have been derived from unaudited financial statements and reflect, in
the opinion of management, all adjustments (consisting of normal recurring
accruals) necessary to present fairly the information for such interim periods.
Results for the interim periods are not necessarily indicative of results to be
expected for the full year. The summary below should be read in conjunction with
the Consolidated Financial Statements of NCB and the related Notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations which are contained in each of NCB's Annual Reports on Form 10-K for
the years ended December 31, 1994 through 1998 and NCB's Quarterly Report on
Form 10-Q for the quarters ended June 30, 1998 and 1999. See "Where You Can Find
More Information."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- -------- -------- -------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total interest income...................... $ 38,137 $ 35,272 $ 71,187 $ 68,787 $ 61,265 $ 52,498 $ 41,123
Net interest income........................ 14,798 13,290 25,627 26,843 25,966 21,745 20,514
Net income................................. 7,423 6,188 12,628 12,462 11,199 9,083 8,877
BALANCE SHEET DATA
(at period end)
Loans and leases outstanding............... $ 993,576 $865,289 $795,174 $773,768 $750,094 $ 597,190 $ 501,090
Total assets............................... 1,097,441 933,415 933,415 869,304 839,336 684,532 567,321
Total capital*............................. 328,290 317,936 322,838 314,376 307,714 300,995 295,749
Subordinated Class A Notes**............... 182,667 182,706 182,542 182,542 182,542 182,542 182,542
Long-term borrowings, including
Subordinated Class A Notes............... 438,826 401,157 413,735 387,335 384,679 337,230 287,899
Members' equity............................ 145,747 140,296 140,296 131,833 125,172 118,453 113,207
Other borrowed funds including deposits.... 742,299 634,865 575,265 531,740 515,257 365,288 256,315
OTHER DATA
Capital to assets**........................ 29.9% 32.4% 34.6% 36.2% 36.7% 44.0% 52.3%
Return on average assets................... 0.74% 0.71% 1.4% 1.5% 1.5% 1.5% 1.7%
Return on average members' equity.......... 5.19% 4.59% 9.3% 9.7% 9.2% 7.8% 7.9%
Net yield on interest earning assets....... 3.07% 3.12% 2.9% 3.3% 3.7% 3.7% 4.1%
Average members' equity as a percent of
average total assets..................... 14.3% 15.4% 14.8% 15.3% 16.5% 18.9% 21.5%
Average total loans and lease financing.... 16.3% 17.9% 17.5% 17.9% 19.2% 21.9% 25.0%
Net average loans and lease financing to
average total assets..................... 85.6% 83.8% 84.9% 85.5% 84.3% 86.2% 83.4%
Net average earning assets to average total
assets................................... 94.4% 95.2% 96.0% 95.9% 92.4% 94.9% 93.3%
Allowance for loan losses to loans
outstanding.............................. 1.9% 2.2% 2.2% 2.3% 2.1% 2.5% 2.6%
Provision for loan losses to average loans
outstanding.............................. 0.1% 0.1% 0.1% 0.5% 0.3% 0.4% 0.2%
</TABLE>
- ---------------
* Capital includes members' equity and subordinated Class A Notes.
** Net of deferred hedge gains.
13
<PAGE> 15
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the
proceeds from issuances of debt securities and preferred stock will be used for
general corporate purposes of NCB.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be direct unsecured general obligations of NCB and
will be either senior or subordinated debt. The debt securities will be issued
under separate indentures between NCB and BankOne, N.A. Senior debt securities
will be issued under a senior debt indenture and subordinated debt securities
will be issued under a subordinated debt indenture. The senior debt indenture
and the subordinated debt indenture are sometimes referred to in this prospectus
individually as an "indenture" and collectively as the "indentures." The forms
of the indentures have been filed with the SEC as exhibits to the registration
statement of which this prospectus forms a part.
The following briefly summarizes the material provisions of the indentures
and the debt securities, other than pricing and related terms disclosed in the
accompanying prospectus supplement. The summary is not complete. You should read
the more detailed provisions of the applicable indenture for provisions that may
be important to you. So that you can easily locate these provisions, the numbers
in parenthesis below refer to sections in the applicable indenture or, if no
indenture is specified, to sections in each of the indentures. Whenever
particular sections or defined terms of the applicable indenture are referred
to, such sections or defined terms are incorporated into this prospectus by
reference, and the statement in this prospectus is qualified by that reference.
GENERAL
The senior debt securities will be unsecured and rank equally with all of
NCB's other senior and unsubordinated debt. The subordinated debt securities
will be unsecured and will be subordinated to all of NCB's Senior Indebtedness
(as defined below under "-- Subordination"). As of September 30, 1999, NCB had
approximately $797 million of Senior Indebtedness outstanding.
Pursuant to the NCCBA, the amount of bonds, debentures, notes, and other
evidences of indebtedness of NCB that may be outstanding at any one time may not
exceed ten times the paid-in capital and surplus of NCB. Pursuant to the NCCBA,
for purposes of this limitation, Class A Notes are deemed to be paid-in capital
of NCB.
THE DEBT SECURITIES ARE NOT GUARANTEED BY THE UNITED STATES AND WILL NOT
CONSTITUTE A DEBT OR OBLIGATION OF THE UNITED STATES OR ANY AGENCY OR
INSTRUMENTALITY THEREOF.
A prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:
- the title of the debt securities, whether the debt securities will be
senior or subordinated debt and the series in which the debt securities
will be included;
- any limit on the aggregate principal amount of the debt securities;
- the price or prices (expressed as a percentage of their aggregate
principal amount) at which the debt securities will be issued;
- the date or dates, or the method or methods, if any, by which the date or
dates shall be determined, on which the debt securities will mature and,
if other than the principal amount of the debt securities, the portion of
the principal amount of the debt securities payable at maturity;
14
<PAGE> 16
- the rate or rates (which may be fixed or variable) at which the debt
securities will bear interest, if any, or the method or methods, if any,
by which the rate or rates are to be determined and the manner upon which
interest will be calculated if other than that of a 360- day year of
twelve 30-day months;
- the date or dates from which interest, if any, on the debt securities
will accrue or the method or methods, if any, by which the date or dates
are to be determined, the date or dates on which the interest, if any,
will be payable, the date on which payment of interest, if any, will
commence and the regular record dates for interest payment dates, if any;
- the date or dates, if any, on or after which, or the period or periods,
if any, within which, and the price or prices at which the debt
securities will, pursuant to any mandatory sinking fund provisions, or
may, pursuant to any optional sinking fund or to any purchase fund
provisions, be redeemed by NCB, and the other terms and provisions of the
sinking and/or purchase fund;
- the date or dates, if any, on or after which, or the period or periods,
if any, within which, and the price or prices at which the debt
securities may, pursuant to any optional redemption provisions, be
redeemed at the option of NCB or of the holder of the debt securities of
a series and the other terms and provisions of any optional redemption;
- the extent to which any of the debt securities will be issuable in
temporary or permanent global form and, if so, the identity of the
depositary for the global debt security, or the manner in which any
interest payable on a temporary or permanent global debt security will be
paid;
- the denomination or denominations in which the debt securities are
authorized to be issued if other than $1,000 (in the case of debt
securities issued in registered form) or $5,000 (in the case of debt
securities issued in bearer form) and integral multiples of the debt
securities;
- whether such debt securities will be issued in registered or bearer form
or both and, if in bearer form, the terms and conditions relating to
those bearer debt securities and any limitations on issuance of the
bearer debt securities (including exchange for registered debt securities
of the same series);
- information with respect to book-entry procedures relating to global debt
securities;
- the terms, if any, upon which debt securities may be convertible into
other securities of NCB and the terms and conditions upon which
conversion may be effected, including the initial conversion price or
rate and any other provision in addition to or in lieu of those described
in this prospectus;
- whether any of the debt securities will be issued as original issue
discount securities;
- each office or agency where, subject to the terms of the indenture, the
principal of, and premium and interest, if any, on, the debt securities
will be payable and where the debt securities may be presented for
registration of transfer or exchange;
- the currencies or currency units in which the debt securities are issued
and in which the principal of, and premium and interest, if any, on, and
additional amounts, if any, in respect of the debt securities will be
payable;
- whether the amount of payments of principal of, and interest on, and
additional amounts, if any, in respect of the debt securities may be
determined with reference to an index, formula or other method or methods
(which index, formula or method or methods may, but need not be, based on
one or more currencies or currency units, commodities, equity indices or
other indices) and the manner in which such amounts shall be determined;
15
<PAGE> 17
- whether NCB or a holder may elect payment of the principal of, or premium
or interest, if any, on, or additional amounts in respect of, the debt
securities in a currency, currencies or currency unit or units other than
that in which the debt securities are denominated or stated to be
payable, the period or periods within which, and the terms and conditions
upon which, such election may be made, and the time and manner of
determining the exchange rate between the currency, currencies or
currency unit or units in which the debt securities are denominated or
stated to be payable and the currency, currencies or currency unit or
units in which the debt securities are to be paid;
- if other than the trustee, the identity of each security registrar,
paying agent and authenticating agent;
- the applicability of defeasance provisions to the debt securities;
- the person to whom any interest on any registered debt securities of the
series shall be payable, if other than the person in whose name that debt
security (or one or more predecessor debt securities) is registered at
the close of business on the applicable regular record date for the
payment of interest, the manner in which, or the person to whom, any
interest on any bearer debt security of the series shall be payable, if
otherwise than upon presentation and surrender of coupons as they
severally mature, and the extent to which, or the manner in which, any
interest payable on a temporary global debt security on an interest
payment date will be paid if other than in the manner provided in the
indenture;
- whether and under what circumstances NCB will pay additional amounts as
contemplated by Section 1004 of the indenture (the term "interest", as
used in this prospectus, shall include such additional amounts) on the
debt securities to any holder who is a United States Alien (as defined in
the indenture) (including any modification to that definition as
contained in the indenture as originally executed) in respect of any tax,
assessment or governmental charge and, if so, whether NCB will have the
option to redeem those debt securities rather than pay the additional
amounts (and the terms of that option);
- any deletions from, modifications of or additions to the events of
default or covenants of NCB with respect to any of the debt securities;
- any special federal income tax considerations applicable to the debt
securities; and
- any other terms of the debt securities (which will not be inconsistent
with the provisions of the indenture).
The indentures do not limit the amount of debt securities that may be
issued. Each indenture allows debt securities to be issued up to the principal
amount that may be authorized by NCB and may be in any currency or currency unit
designated by NCB. (Sections 301 and 303)
DENOMINATIONS
Unless otherwise provided in the accompanying prospectus supplement,
registered debt securities will be issued in denominations of $1,000 each and
any multiples thereof and bearer debt securities will be issued in denominations
of $5,000 each and any multiple thereof. (Section 302)
SUBORDINATION
Under the subordinated indenture, payment of the principal, interest and
any premium on the subordinated debt securities will generally be subordinated
and junior in right of payment to the prior payment in full of all Senior
Indebtedness (as defined below). The subordinated indenture provides that no
payment of principal, interest or any premium on the subordinated debt
securities may be made unless NCB pays in full the principal, interest, any
premium or any other amounts on any
16
<PAGE> 18
Senior Indebtedness then due. Also, no payment of principal, interest or any
premium on the subordinated debt securities may be made if there shall have
occurred and be continuing an event of default with respect to any Senior
Indebtedness permitting the holders thereof to accelerate the maturity thereof,
or if any judicial proceeding shall be pending with respect to any such default.
If there is any insolvency, bankruptcy, liquidation or other similar
proceeding relating to NCB, then all Senior Indebtedness must be paid in full
before any payment may be made to any holders of subordinated debt securities.
Holders of subordinated debt securities must deliver any payments received by
them to the holders of Senior Indebtedness until all Senior Indebtedness is paid
in full. (Subordinated debt indenture, Section 1602)
The subordinated indenture will not limit the amount of Senior Indebtedness
that NCB may incur.
"Senior Indebtedness" means any of the following, whether incurred before
or after the execution of the subordinated debt indenture:
(1) all obligations of NCB for the repayment of borrowed money,
(2) all obligations of NCB for the deferred purchase price of property, but
excluding trade accounts payable in the ordinary course of business,
(3) all capital lease obligations of NCB, and
(4) all obligations of the type referred to in clauses (1) through (3) of
other persons that NCB has guaranteed or that are otherwise its legal
liability;
but Senior Indebtedness does not include:
(a) the subordinated debt securities; and
(b) indebtedness that by its terms is subordinated to, or ranks on an
equal basis with, the subordinated debt securities.
As of the date of this prospectus, NCB does not have outstanding any debt
that ranks equal to the subordinated debt securities and the Class A Notes
constitute the only indebtedness of NCB that by its terms is subordinated with
the subordinated debt securities.
Certain Limitations in Respect of Subordinated Debt Securities
Maturity Dates. The terms of a number of loan agreements to which NCB is a
party restrict NCB from issuing subordinated debt securities with maturity dates
earlier than 91 days after the latest maturity of any of the notes issued under
those agreements or from issuing subordinated debt securities with mandatory
sinking fund or similar provisions for the prepayment thereof prior to that
date. As a result of those provisions, at the date of this prospectus, NCB would
be restricted from issuing subordinated debt securities having a maturity date
or mandatory sinking fund payment date prior to May 5, 2004.
Voluntary Repayment. The loan agreements similarly prohibit NCB from
purchasing, redeeming or otherwise retiring subordinated debt securities prior
to the maturity date of such subordinated debt securities except
- out of proceeds of a substantially concurrent issue or sale of capital
stock or debt ranking equal or junior to the subordinated debt to be
repurchased, redeemed or otherwise retired, or
- out of funds that are at the time available for "restricted payments"
under those agreements.
The term "restricted payments" means all declarations and payments of
dividends, purchases, redemptions or retirements of stock, warrants, rights or
options and such other distributions, together with voluntary repayments in
respect of subordinated debt, which are subject to the restrictions set forth in
the loan agreements.
17
<PAGE> 19
The loan agreements permit restricted payments, if those restricted
payments, together with all patronage refunds payable in cash and all cash
dividends on Class B Stock and Class C Stock, declared or made during the period
from and after December 31, 1991 to and including the date of the declaration or
making of the restricted payment do not exceed the sum of
(A) $15,000,000; and
(B) 50% of consolidated adjusted net income (within the meaning of those
agreements) (or minus 100% of consolidated adjusted net income in the
case of a deficit) for the period commencing on January 1, 1992 and
ending on the last day of NCB's fiscal year most recently ended on such
date, all computed on a cumulative basis for that entire period.
CONSOLIDATION, MERGER OR SALE
Each indenture generally permits a consolidation or merger between NCB and
another corporation. They also permit NCB to sell all or substantially all of
its property and assets. If this happens, the remaining or acquiring corporation
shall assume all of NCB's responsibilities and liabilities under the indentures
including the payment of all amounts due on the debt securities and performance
of the covenants in the indentures.
However, NCB will only consolidate or merge with or into any other
corporation or sell all or substantially all of its assets according to the
terms and conditions of the indentures. The remaining or acquiring corporation
will be substituted for NCB in the indentures with the same effect as if it had
been an original party to the indenture. Thereafter, the successor corporation
may exercise NCB's rights and powers under any indenture, in NCB's name or in
its own name. Any act or proceeding required or permitted to be done by NCB's
board of directors or any of its officers may be done by the board or officers
of the successor corporation. If NCB merges with or into any other corporation
or sells all or substantially all of its assets, it shall be released from all
liabilities and obligations under the indentures and under the debt securities.
(Sections 801 and 802)
MODIFICATION OF INDENTURES
Under each indenture, NCB's rights and obligations and the rights of the
holders may be modified with the consent of the holders of 66 2/3% of the
aggregate principal amount of the outstanding Debt Securities of each series
affected by the modification. No modification of the principal or interest
payment terms, and no modification reducing the percentage required for
modifications, is effective against any holder without its consent. (Sections
901 and 902)
EVENTS OF DEFAULT
Each indenture provides that an "event of default" regarding any series of
debt securities will be any of the following:
- failure to pay interest or additional amounts on any debt security of
such series for 30 days;
- failure to pay the principal or any premium on any debt security of such
series when due;
- failure to deposit any sinking fund payment when due by the terms of a
debt security of such series;
- failure to perform any other covenant in the indenture that continues for
60 days after being given written notice;
- failure to make any payment of any amount owing under any of the Class A
Notes when and as due;
18
<PAGE> 20
- acceleration of the debt securities of any other series or any other
indebtedness for borrowed money of NCB exceeding $10,000,000 in an
aggregate principal amount and such acceleration shall not have been
rescinded or annulled or such indebtedness shall not have been discharged
within a period of 30 days after being given written notice;
- failure to pay, bond or discharge any uninsured judgment in excess of
$10,000,000 within 60 days which is not stayed, appealed or otherwise
challenged in good faith;
- certain events involving bankruptcy, insolvency or reorganization of NCB;
or
- any other event of default included in any indenture or supplemental
indenture. (Section 501)
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under an indenture. The trustee may withhold notice to the
holders of debt securities of any default (except in the payment of principal,
interest, additional amounts or a sinking fund installment) if it considers such
withholding of notice to be in the best interests of the holders. (Section 602)
If an event of default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% in aggregate principal
amount of the debt securities of the series may declare the entire principal of
all the debt securities of that series to be due and payable immediately. If
this happens, subject to certain conditions, the holders of a majority of the
aggregate principal amount of the debt securities of that series can void the
declaration. (Section 502)
Other than its duties in case of a default, a trustee is not obligated to
exercise any of its rights or powers under any indenture at the request, order
or direction of any holders, unless the holders offer the trustee reasonable
indemnity. (Section 601) If they provide this reasonable indemnification, the
holders of a majority in principal amount of any series of debt securities may
direct the time, method and place of conducting any proceeding or any remedy
available to the trustee, or exercising any power conferred upon the trustee,
for any series of debt securities. (Section 512)
COVENANTS
Under the indentures, NCB will agree to:
- pay the principal, interest, any premium and any additional amounts on
the debt securities when due;
- maintain a place of payment;
- deliver a report to the trustee within 120 days after the end of each
fiscal year certifying as to the absence of events of default and to
NCB's compliance with the terms of the indentures; and
- deposit sufficient funds with any paying agent on or before the due date
for any principal, interest, any premium or any additional amounts.
PAYMENT AND TRANSFER
Principal, interest and any premium on fully registered securities will be
paid at designated places. Payment will be made by check mailed to the persons
in whose names the debt securities are registered on days specified in the
indentures or any prospectus supplement. Debt securities payments in other forms
will be paid at a place designated by NCB and specified in a prospectus
supplement. (Section 307)
Fully registered securities may be transferred or exchanged at the
corporate trust office of the Trustee or at any other office or agency
maintained by NCB for such purposes, without the payment of any service charge
except for any tax or governmental charge. (Section 305)
19
<PAGE> 21
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates that will be deposited with a depositary
identified in a prospectus supplement. Unless it is exchanged in whole or in
part for debt securities in definitive form, a global certificate may generally
be transferred only as a whole unless it is being transferred to certain
nominees of the depositary. (Section 203)
Unless otherwise stated in any prospectus supplement, The Depository Trust
Company, New York, New York ("DTC") will act as depositary. Beneficial interests
in global certificates will be shown on, and transfers of global certificates
will be effected only through records maintained by DTC and its participants.
DEFEASANCE
NCB will be discharged from its obligations on the debt securities of any
series at any time if it deposits with the trustee sufficient cash or government
securities to pay the principal, interest, any premium and any other sums due to
the stated maturity date or a redemption date of the debt securities of the
series and any sinking fund payments applicable to the debt securities of that
series. NCB must also deliver to the trustee an opinion of counsel to the effect
that the holders of the debt securities of that series will have no federal
income tax consequences as a result of such deposit. If this happens, the
holders of the debt securities of the series will not be entitled to the
benefits of the applicable debt indenture except for the right to receive
additional amounts (if not already deposited with the trustee) and except for
registration of transfer and exchange of debt securities and replacement of
lost, stolen or mutilated debt securities. (Section 402)
THE TRUSTEE
BankOne, N.A. will be the trustee under the indentures. The trustee and its
affiliates may have other relations with NCB in the ordinary course of business.
The occurrence of any default under the senior debt indenture and the
subordinated debt indenture could create a conflicting interest for the trustee
under the Trust Indenture Act. If such default has not been cured or waived
within 90 days after the trustee has or acquired a conflicting interest, the
trustee would generally be required by the Trust Indenture Act to eliminate such
conflicting interest or resign as trustee with respect to the debt securities
issued under the senior indenture or with respect to the subordinated debt
securities issued under the subordinated indenture. In the event of the
trustee's resignation, NCB shall promptly appoint a successor trustee with
respect to the affected securities.
The Trust Indenture Act also imposes certain limitations on the right of
the trustee, as a creditor of NCB, to obtain payment of claims in certain cases,
or to realize on certain property received in respect to any such claim or
otherwise. The trustee will be permitted to engage in other transactions with
NCB, provided that if it acquires a conflicting interest within the meaning of
Section 310 of the Trust Indenture Act, it must generally either eliminate such
conflict or resign.
DESCRIPTION OF PREFERRED STOCK
The following briefly summarizes the material terms of NCB's preferred
stock, other than pricing and related terms, which will be disclosed in a
prospectus supplement together with any changes in any applicable law relating
to the preferred stock. You should read the particular terms of any series of
preferred stock offered by NCB, which will be described in more detail in any
prospectus supplement relating to such series, together with the NCCBA and the
more detailed provisions of NCB's bylaws and the certificate of designation
relating to each particular series of preferred stock
20
<PAGE> 22
for provisions that may be important to you. The NCCBA and NCB's bylaws are
filed as an exhibit to the registration statement of which this prospectus forms
a part. The certificate of designation with respect to any series of preferred
stock will be filed with the SEC as an exhibit to a document incorporated by
reference in this prospectus concurrently with the offering of such preferred
stock. The prospectus supplement will also state whether any of the terms
summarized below do not apply to the series of preferred stock being offered.
GENERAL
Under the NCCBA, NCB is authorized to issue classes of capital stock with
such rights, powers, privileges, and preferences of the separate classes as may
be specified, not inconsistent with law, in the bylaws of NCB. Prior to issuing
any preferred stock, the Board of Directors of NCB will amend NCB's bylaws to
expressly authorize the issuance of preferred stock. That amendment will require
the consent of some of NCB's lenders. After the bylaws are amended, the Board of
Directors of NCB will be authorized, except as otherwise stated in the NCCBA, to
issue shares of preferred stock in one or more series, and to establish from
time to time a series of preferred stock with the following terms specified:
- the number of shares to be included in the series;
- the designation, powers, preferences and rights of the shares of the
series; and
- the qualifications, limitations or restrictions of such series.
Prior to the issuance of any series of preferred stock, the Board of
Directors of NCB will adopt resolutions creating and designating the series as a
series of preferred stock and the resolutions will be filed in a certificate of
designation as an amendment to the bylaws.
The preferred stock will be, when issued, fully paid and nonassessable.
Holders of preferred stock will not have any preemptive or subscription rights
to acquire more stock of NCB.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to such series.
The rights of holders of the offered preferred stock may be adversely
affected by the rights of holders of any shares of preferred stock that may be
issued in the future. The board of directors may cause shares of preferred stock
to be issued in public or private transactions for any proper corporate purpose.
RANK
Unless otherwise specified in the prospectus supplement relating to the
shares of any series of preferred stock, such shares will rank on an equal basis
with each other series of preferred stock and prior to the common stock as to
dividends and distributions of assets.
So long as any Class A Notes are outstanding, the Class A Notes will rank
prior to the preferred stock as to dividends, interest payments and upon
liquidation or dissolution.
DIVIDENDS
Holders of each series of preferred stock will be entitled to receive cash
dividends, when, as and if declared by the board of directors of NCB out of
funds legally available for dividends. The rates and dates of payment of
dividends will be set forth in the prospectus supplement relating to each series
of preferred stock. Dividends will be payable to holders of record of preferred
stock as they appear on the books of NCB on the record dates fixed by the board
of directors. Dividends on any series of preferred stock may be cumulative or
noncumulative.
21
<PAGE> 23
Pursuant to certain loan agreements to which NCB is a party, NCB may not
declare or pay any dividends, either in cash or property, on any series of
preferred stock unless those payments are out of funds that are at the time
available for "restricted payments." See "Description of Debt Securities --
Subordination -- Certain Limitations in Respect of Subordinated Debt Securities"
for the definition of "restricted payments" as well as for a discussion relating
to limitations on NCB's ability to make such payments.
NCB may not declare, pay or set apart for payment dividends on the
preferred stock unless full dividends on any other series of preferred stock
that ranks on an equal or senior basis have been paid or sufficient funds have
been set apart for payment for
- all prior dividend periods of the other series of preferred stock that
pay dividends on a cumulative basis; or
- the immediately preceding dividend period of the other series of
preferred stock that pay dividends on a noncumulative basis.
Partial dividends declared on shares of preferred stock and any other
series of preferred stock ranking on an equal basis as to dividends will be
declared pro rata. A pro rata declaration means that the ratio of dividends
declared per share to accrued dividends per share will be the same for both
series of preferred stock.
Similarly, NCB may not declare, pay or set apart for payment non-stock
dividends or make other payments on the common stock or any other stock of NCB
ranking junior to the preferred stock until full dividends on the preferred
stock have been paid or set apart for payment for
- all prior dividend periods if the preferred stock pays dividends on a
cumulative basis; or
- the dividend period established in the certificate of designation for
each series of preferred stock if the preferred stock pays dividends on a
noncumulative basis.
Under the NCCBA, NCB may not pay any dividend on any class of stock,
including the preferred stock which may be offered by this prospectus and any
prospectus supplement, at a rate greater than the statutory interest rate
payable on the Class A Notes. Although there has been no court or agency
interpretation of that limitation, NCB has consistently interpreted that
limitation to be the weighted average of the then-current interest rates
applicable to the four outstanding Class A Notes (with the weighting based on
outstanding principal amount). As of the date of this prospectus, the statutory
interest rate payable on the Class A Notes (based on the weighted average) was
an annual rate of 6.18%. For more information, see "National Consumer
Cooperative Bank -- Class A Notes" on page 10. NCB is currently seeking an
amendment to the NCCBA that would eliminate this limitation on dividends. There
is, of course, no assurance that the NCCBA will be amended.
Pursuant to Section 3014(c) of the NCCBA, without the approval of the
Secretary of the Treasury, NCB may not pay any dividend or distribution on, or
make any redemption or repurchase of, any class of stock, including the
preferred stock, at any time when the deferred interest payments on Class A
Notes have not been paid in full, together with any unpaid interest on such
notes.
CONVERSION OR EXCHANGE
The prospectus supplement for any series of preferred stock will state the
terms, if any, on which shares of that series are convertible into shares of
another series of preferred stock of NCB. The preferred stock will not be
convertible into or exchangeable for shares of NCB's common stock.
If so determined by the board of directors of NCB, the holders of shares of
preferred stock of any series may be obligated at any time or at maturity to
exchange such shares for preferred stock or
22
<PAGE> 24
debt securities of NCB. The terms of any such exchange and any such preferred
stock or debt securities will be described in the prospectus supplement relating
to such series of preferred stock.
REDEMPTION
If so specified in the applicable prospectus supplement, a series of
preferred stock may be redeemable at any time, in whole or in part, at the
option of NCB or the holder thereof and may be mandatorily redeemed.
Any partial redemptions of preferred stock will be made in a way that the
Board of Directors decides is equitable.
Unless NCB defaults in the payment of the redemption price, dividends will
cease to accrue after the redemption date on shares of preferred stock called
for redemption and all rights of holders of such shares will terminate except
for the right to receive the redemption price.
Pursuant to certain loan agreements to which NCB is a party, NCB may not
purchase, redeem or retire preferred stock issued pursuant to this prospectus
except.
- in exchange for other capital stock of NCB;
- out of the proceeds of a substantially concurrent issue and sale of
capital stock; or
- out of funds that are at the time available for "restricted payments"
under those agreements.
See "Description of Debt Securities -- Subordination -- Certain Limitations in
Respect of Subordinated Debt Securities" for a definition of "restricted
payments" as well as for a discussion relating to limitations on NCB's ability
to make such payments.
In addition, as discussed above, without the approval of the Secretary of
the Treasury, NCB may not make any redemption or repurchase of, any class of
stock, including the preferred stock, at any time when the deferred interest
payments on Class A Notes shall not have been paid in full, together with any
unpaid interest on such notes.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
NCB, holders of each series of preferred stock will be entitled to receive
distributions upon liquidation in the amount set forth in the prospectus
supplement relating to such series of preferred stock. Such distributions will
be made before any distribution is made on any securities ranking junior
relating to liquidation, including common stock.
If the liquidation amounts payable relating to the preferred stock of any
series and any other securities ranking on a parity regarding liquidation rights
are not paid in full, the holders of the preferred stock of such series and such
other securities will share in any such distribution of available assets of NCB
on a ratable basis in proportion to the full liquidation preferences. Holders of
such series of preferred stock will not be entitled to any other amounts from
NCB after they have received their full liquidation preference.
Pursuant to the NCCBA, upon any liquidation or dissolution of NCB, the
holder of Class A Notes shall be entitled to receive out of the assets of NCB
available for distribution to its stockholders, prior to any payment to the
holders of any class of stock of NCB, including the preferred stock, an amount
not less than the aggregate face value of all Class A Notes outstanding, plus
all accrued and unpaid interest payments accrued thereon to and including the
date of payment (together with all unpaid interest thereon).
23
<PAGE> 25
VOTING RIGHTS
The holders of shares of preferred stock will have no voting rights,
except:
- as otherwise stated in the prospectus supplement;
- as otherwise stated in the certificate of designation establishing such
series; or
- as required by applicable law.
NCB is a savings and loan holding company within the meaning of the Home
Owners' Loan Act by virtue of its control of NCB Savings Bank, FSB. The Change
in Bank Control Act and the savings and loan holding company provisions of the
Home Owners' Loan Act, together with the regulations of the Office of Thrift
Supervision under such acts, require that the consent of the Office of Thrift
Supervision be obtained prior to any person or company acquiring control of a
savings association or a savings and loan holding company. Under regulations of
the Office of Thrift Supervision, "control" is conclusively presumed to exist if
an individual or company acquires more than 25% of any class of voting stock of
the savings association or savings and loan holding company. Control is
rebuttably presumed to exist if a person acquires more than 10% of any class of
voting stock (or more than 25% of any class of non-voting stock) and is subject
to any of several "control factors." If the holders of a series of preferred
stock become entitled to vote, the preferred stock of such series could be
deemed to be a class of voting stock. Holders and potential holders of the
preferred stock will be responsible for complying with the applicable provisions
of the Change in Bank Control Act and Home Owners' Loan Act.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL
As of the date of this prospectus, NCB is authorized to issue 1,000,000
shares of Class B common stock, 300,000 shares of Class C common stock and
100,000 shares of Class D common stock, $100 par value, and up to $50 million in
obligations, in addition to the Class A Notes, that would be subordinate to
NCB's senior debt. The Board of Directors of NCB will adopt resolutions
authorizing the issuance and sale of preferred stock prior to issuing any
preferred stock. In addition, in order to issue preferred stock, the Board of
Directors must also amend the bylaws of NCB to expressly authorize the issuance
of preferred stock. The following is a summary of certain rights and privileges
of the common stock. You should read the more detailed provisions of the NCCBA
and NCB's bylaws for provisions that may be important to you.
NCB's voting stock is not traded on any market. NCB is structured as a
cooperative institution whose voting stock can only be owned by its members or
those eligible to become its members.
NCB currently has three classes of stock outstanding whose rights are
summarized below:
OUTSTANDING CLASS B COMMON STOCK
At September 30, 1999, NCB had outstanding 1,000,004 shares of Class B
common stock, $100 par value. All shares of Class B common stock are held by
borrowers or entities eligible to borrow from NCB. A subsidiary of NCB, NCB
Capital Corporation, holds 2.74% of NCB's Class B common stock.
The NCCBA permits Class B stock to be held only by borrowers of NCB and
requires each borrower to hold Class B stock at the time the loan is made whose
par value is equal to 1% of its loan amount. The NCCBA prohibits NCB from paying
dividends on Class B stock. There are two series of Class B stock. Class B-1
stock is Class B stock purchased for cash at par value on or after June 29,
1984, while Class B-2 stock is all other Class B stock. Class B stock is
transferable to another eligible holder only with the approval of NCB. NCB does
not permit any transfers of
24
<PAGE> 26
Class B-2 stock and permits only such transfers, at the stock's $100 par value,
of Class B-1 stock as are required to permit new borrowers to obtain their
required holdings of Class B stock. In each instance, NCB specifies which
holder(s) are permitted to transfer their stock to the new borrower, based upon
which Class B stockholders with holdings of such stock beyond that required to
support their loans have held such stock for the longest time. NCB will also
repurchase, at par value, any shares of Class B stock that it is required to
repurchase from holders by the terms of the contracts under which such stock was
originally sold by NCB. At December 31, 1998, the stock required to be
repurchased was approximately $105,000.
OUTSTANDING CLASS C COMMON STOCK
At September 30, 1999, NCB had outstanding 223,807 shares of Class C common
stock, $100 par value. All shares of Class C common stock are held by borrowers
or entities eligible to borrow from NCB. No affiliates of NCB hold any of NCB's
Class C common stock.
The NCCBA permits Class C stock to be held only by cooperatives eligible to
borrow from NCB. The NCCBA allows NCB to pay dividends on Class C stock, but so
long as any Class A Notes are outstanding, limits dividends on Class C stock (or
any other NCB stock) to the interest rate payable on such notes, which was a
weighted average interest rate of 6.18% as of the date of this prospectus. In
1994, NCB adopted a policy under which annual cash dividends on Class C stock of
up to 2 percent of NCB's net income may be declared. The policy does not provide
any specific method to determine the amount, if any, of such dividend. Whether
any such dividends will be declared and if so, in what amount accordingly rests
within the discretion of NCB's Board of Directors. The Board declared an initial
cash dividend of 83 cents per share of Class C stock, payable on June 30, 1996
to holders of record as of March 31, 1996. On April 24, 1997, the Board declared
a cash dividend of $1.02 per share of Class C stock payable on or before June
30, 1997 to holders of record as of March 31, 1997. On April 23, 1998, the Board
declared a cash dividend of $1.13 per share of Class C stock payable on or
before June 30, 1998 to holders of record as of March 31, 1998. In November
1996, the Board approved a dividend de minimus provision which states that Class
C stock dividends shall not be distributed to a stockholder until such time as
the cumulative amount of the dividend payable to the stockholder is equal to, or
exceeds, twenty-five dollars ($25.00) unless specifically requested by the
stockholder. Class C stock is transferable to another eligible holder only with
the approval of NCB.
OUTSTANDING CLASS D COMMON STOCK
At September 30, 1999, NCB had outstanding 3 shares of Class D common
stock, $100 par value, which is non-voting. No affiliates of NCB hold any of
NCB's Class D common stock.
Class D stock is non-voting stock that may be held by any person. Only
three shares are outstanding and NCB has no present intention to issue any
additional shares of such stock. The NCCBA permits NCB to pay dividends on Class
D stock but NCB has no present intention to declare any such dividends. Class D
stock is transferable only with the approval of NCB. No requests for approval of
such transfers have been made to NCB.
VOTING RIGHTS
Only holders of NCB's Class B and Class C stock have voting rights, and
they vote as one class under the terms of the weighted voting system adopted by
NCB to comply with the NCBAA. The NCB bylaws and voting policy provide that (a)
each stockholder of record who is also a borrower from NCB, referred to as a
"borrower-stockholder," is entitled to five votes, (2) each borrower-
stockholder is entitled to additional votes, up to a total of 120, based on a
formula measuring the proportion that such borrower-stockholder's patronage with
NCB bears to the total patronage during a
25
<PAGE> 27
period of time fixed by the election rules, and (3) each stockholder who is not
a borrower from NCB shall receive one vote, and non-borrower stockholders as a
class shall receive at least 10% of the votes allocated.
The bylaws and voting policy further provide that, notwithstanding any
allocations of votes which would otherwise result from the foregoing rules (1)
no stockholder shall be entitled to more than 5% of the total voting control
held by all stockholders, (2) the total votes allocated to any class of
cooperatives shall not exceed 45% of the total, and (3) no stockholder which is
a "developing cooperative" shall be entitled to more than five votes. A
developing cooperative is defined as a cooperative that is in a developmental or
fledgling state of operation and that does not have members who are ultimate
consumers or primary producers.
NCB has reserved the right to alter its voting policy at any time to comply
with the requirement of the Act that its voting system should not result in: (1)
voting control of NCB becoming concentrated with larger, more affluent or
smaller, less affluent organizations, (2) a disproportionate concentration of
votes in any housing cooperatives or low-income cooperatives or consumer goods
and services cooperatives, or (3) the concentration of more than 5% of the
voting control in any one Class B or Class C stockholder.
NCB may refuse to honor any stockholder's voting rights, except to the
extent of one vote, if the stockholder is more than 90 days late on any payment
to NCB at the time such rights would otherwise be exercised.
TRADING MARKET
There is no established public trading market for any class of NCB's common
equity, and it is unlikely that any such market will develop in view of the
restrictions on transfer of NCB's stock discussed above. Holders of Class B
stock may use such stock to meet the Class B stock ownership requirements
established in the NCCBA for borrowers from NCB and may be permitted by NCB,
within the limits set forth above, to transfer Class B stock to another borrower
from NCB.
As of September 30, 1999, there were 1,471 holders of Class B stock, 399
holders of Class C stock, and 3 holders of Class D stock.
PATRONAGE REFUNDS
Under the NCCBA, NCB must make annual patronage refunds to its patrons,
which are those cooperatives from whose loans or other business NCB derived
interest or other income during the year with respect to which a patronage
refund is declared. NCB allocates its patronage refunds among its patrons
generally in proportion to the amount of income derived during the year from
each patron. NCB stockholders, as such, are not entitled to any patronage
refunds. They are entitled to patronage refunds only in the years when they have
patronized NCB, and the amount of their patronage does not depend on the amount
of their stockholding. Under the NCCBA, patronage refunds may be paid only from
taxable income and only in the form of cash, Class B or Class C stock, or
allocated surplus.
Under NCB's current patronage refund policy that became effective in 1995
and has been amended from time to time since it became effective, NCB makes the
non-cash portion of the refund in the form of Class B stock until a patron has
holdings of Class B or Class C stock of 16% of its loan amount and thereafter in
Class C stock. Under the current patronage refund policy, NCB intends to pay a
higher percentage of the patronage refund in cash to those patrons who have
greater holdings of Class B and Class C stock in proportion to their loan
amount. NCB generally intends to pay a minimum of 40% of the patronage refund in
cash to those patrons with stock holdings less than 5% of their loan amount and
up to 60% to those patrons with stock holdings of 10% or more of their
26
<PAGE> 28
loan amount. There can however, be no assurance that a cash patronage refund of
any amount will be declared for any year.
NCB declared a patronage refund for the year ended December 31, 1998 of
approximately $12.9 million of which approximately $4.9 million was distributed
in cash and $8.0 million in Class B or Class C stock in August 1999. The chart
below sets forth the details of this patronage refund.
<TABLE>
<S> <C>
Total Patronage...................................... $12,896,060.90
Cash:................................................ $ 4,896,285.65
Class B/Class C...................................... $ 7,999,775.25
</TABLE>
PLAN OF DISTRIBUTION
NCB may sell the offered securities (1) through agents; (2) to or through
underwriters or dealers; (3) directly to one or more purchasers; or (4) through
a combination of any of these methods of sale.
The prospectus supplement relating to an offering of offered securities
will set forth the terms of such offering, including:
- the name or names of any underwriters, dealers or agents;
- the purchase price of the offered securities and the proceeds to NCB from
such sale;
- any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation;
- the initial public offering price;
- any discounts or concessions to be allowed or reallowed or paid to
dealers; and
- any securities exchanges on which such offered securities may be listed.
Any initial public offering prices, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
BY AGENTS
Offered securities may be sold through agents designated by NCB. Any agent
involved in the offer or sale of the offered securities in respect of which this
prospectus is delivered will be named, and any commissions payable by NCB to
such agent will be set forth, in the prospectus supplement relating to that
offering. Unless otherwise indicated in such prospectus supplement, the agents
will agree to use their reasonable best efforts to solicit purchases for the
period of their appointment.
BY UNDERWRITERS
If underwriters are used in the offering, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The securities may be either offered to the
public through underwriting syndicates represented by one or more managing
underwriters or by one or more underwriters without a syndicate. The obligations
of the underwriters to purchase the securities will be subject to certain
conditions. The underwriters will be obligated to purchase all the securities of
the series offered if any of the securities are purchased. Any initial public
offering price and any discounts or concessions allowed or re-allowed or paid to
dealers may be changed from time to time.
In connection with underwritten offerings of the offered securities and in
accordance with applicable law and industry practice, underwriters may
over-allot or effect transactions that stabilize, maintain or otherwise affect
the market price of the offered securities at levels above those that might
otherwise prevail in the open market, including by entering stabilizing bids,
effecting syndicate covering transactions or imposing penalty bids, each of
which is described below.
27
<PAGE> 29
- A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of
a security.
- A syndicate covering transaction means the placing of any bid on behalf
of the underwriting syndicate or the effecting of any purchase to reduce
a short position created in connection with the offering.
- A penalty bid means an arrangement that permits the managing underwriter
to reclaim a selling concession from a syndicate member in connection
with the offering when offered securities originally sold by the
syndicate member are purchased in syndicate covering transactions.
These transactions may be effected in the over-the-counter market, or
otherwise. Underwriters are not required to engage in any of these activities,
or to continue such activities if commenced.
DIRECT SALES
Offered securities may also be sold directly by NCB. In this case, no
underwriters or agents would be involved.
GENERAL INFORMATION
NCB may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended, or to contribute with respect to
payments which the underwriters, dealers or agents may be required to make.
Each series of offered securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom offered
securities are sold for public offering and sale may make a market in such
offered securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given that there will be a market for the offered securities.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, NCB or its subsidiaries in the ordinary course of their
businesses.
WHERE YOU CAN FIND MORE INFORMATION
NCB files annual, quarterly and current reports, proxy statements and other
information with the SEC. NCB has also filed with the SEC a registration
statement on Form S-3, to register the securities being offered by this
prospectus. This prospectus, which forms part of the registration statement,
does not contain all of the information included in the registration statement.
For further information about NCB and the securities offered in this prospectus,
you should refer to the registration statement and its exhibits.
You may read and copy any document filed by NCB with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at
1-800-SEC-0330 for further information on the operation of the Public Reference
Room. NCB files its SEC materials electronically with the SEC, so you can also
review NCB's filings by accessing the web site maintained by the SEC at
http://www.sec.gov. This site contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC.
The SEC allows NCB to "incorporate by reference" the information it files
with them, which means that it can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus. Information that NCB files later
with the SEC will automatically update and supersede information in this
prospectus. In all cases, you should rely on the later information over
different information included in this
28
<PAGE> 30
prospectus or the prospectus supplement. NCB has previously filed the following
documents with the SEC and is incorporating them by reference into this
prospectus:
- Annual Report on Form 10-K for the year ended December 31, 1998; and
- Quarterly Reports on Form 10-Q, for the quarters ended March 31, 1999 and
June 30, 1999.
NCB also incorporates by reference, from the date of the initial filing of
the registration statement, all documents filed by it with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after
the date of this prospectus and until NCB sells all of the securities being
offered by this prospectus.
You may request a copy of these filings at no cost, by writing or
telephoning NCB at the following address:
National Cooperative Bank
Attn: Richard L. Reed or William E. Seas
1401 Eye Street N.W.
Suite 700
Washington, DC 20005
(202) 336-7700
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. NCB has not authorized
anyone else to provide you with different information. NCB is not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
LEGAL OPINIONS
Unless otherwise specified in the applicable prospectus supplement, Shea &
Gardner will issue an opinion about the legality of the offered securities for
NCB. Unless otherwise specified in the applicable prospectus supplement, any
underwriters will be advised about certain issues relating to any offering by
Brown & Wood LLP.
EXPERTS
The audited financial statements for the years ended December 31, 1998 and
December 31, 1997 incorporated by reference in this prospectus and elsewhere in
the registration statement, have been audited by Arthur Andersen LLP,
independent public accountants, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The financial statements for the year ended December 31, 1996, included in
this prospectus in the registration statement have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports appearing herein
and elsewhere in the registration statement, and are included in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
29
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following statement sets forth the estimated amounts of expenses to be
borne by NCB in connection with the distribution of the securities offered
hereby:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 97,300
Accounting fees and expenses................................ 40,000
Legal fees and expenses..................................... 150,000
Trustee's fees and expenses................................. 10,000
Printing and engraving expenses............................. 40,000
Rating Agency fees.......................................... 65,000
Miscellaneous expenses...................................... 25,000
--------
Total....................................................... $427,300
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article IX of the bylaws of the National Consumer Cooperative Bank provides
as follows:
INDEMNIFICATION/INSURANCE
SECTION 9.1 ACTION, ETC., OTHER THAN BY OR IN THE RIGHT OF THE BANK.
The Bank 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
proceeding or investigation, whether civil, criminal or administrative, and
whether external or internal to the Bank other than a judicial action or suit
brought by or in the right of the Bank, by reason of the fact that he or she is
or was a director, officer, employee, or trustee of the Bank or is or was
serving at the specific written request of the Bank as a director, officer,
employee or trustee of another corporation, partnership, joint venture, trust or
other enterprise (all such persons being referred to hereafter as an "Agent"),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the Bank, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
Bank, and, with respect to any criminal action or proceeding, that he or she had
reasonable cause to believe that his or her conduct was unlawful.
SECTION 9.2 ACTION, ETC., BY OR IN THE RIGHT OF THE BANK.
The Bank shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed judicial action or
suit brought by or in the right of the Bank to procure a judgment in its favor
by reason of the fact that he or she is or was an Agent (as defined above)
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection with the defense or settlement of such action or suit
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Bank,
II-1
<PAGE> 32
except that no indemnification shall be made with respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duty to the Bank
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
SECTION 9.3 DETERMINATION OF RIGHT OF INDEMNIFICATION.
Any indemnification under Section 9.1 or 9.2 (unless ordered by a court)
shall be made by the Bank unless a determination is reasonably and promptly made
(i) by the Board by a vote of two-thirds of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders, that such person acted in bad faith and in a manner that such
person did not believe to be in or not opposed to the best interests of the
Bank, or with respect to any criminal proceeding, that such person believed or
had reasonable cause to believe that his or her conduct was unlawful.
SECTION 9.4 INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Article, to the extent that an
Agent has been successful on the merits or otherwise, including the dismissal of
an action without prejudice or the settlement of an action without admission of
liability, in defense of any proceeding or in the defense of any claim, issue or
matter therein, such Agent shall be indemnified against all expenses incurred in
connection therewith.
SECTION 9.5 ADVANCES OF EXPENSES.
Except as limited by Section 6 of this Article, expenses incurred in any
action, suit, proceeding, or investigation shall be paid by the Bank in advance
of the final disposition of such matter, if the Agent shall undertake to repay
such amount in the event that it is ultimately determined, as provided herein,
that such person is not entitled to indemnification. Notwithstanding the
foregoing, no advance shall be made by the Bank if a determination is reasonably
and promptly made by the Board of directors by a vote of two-thirds of a quorum
of disinterested directors, or (if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors, so directs) by independent
legal counsel in a written opinion, that, based upon the facts known to the
Board or counsel at the time such determination is made, such person acted in
bad faith and in a manner that such person did not believe to be in or not
opposed to the best interest of the Bank, or with respect to any criminal
proceeding, that such person believed or had reasonable cause to believe his or
her conduct was unlawful. In no event shall any advance be made in instances
where the Board or independent legal counsel reasonably determined that such
person deliberately breached his or her duty to the Bank or its shareholders.
SECTION 9.6 RIGHT OF AGENT TO INDEMNIFICATION UPON APPLICATION:
Procedure Upon Application.
Any indemnification under Sections 9.2, 9.3 and 9.4, or advance under
Section 9.5 of this Article, shall be made promptly, and in any event within
ninety (90) days, upon the written request of the Agent, unless with respect to
applications under Section 9.2, 9.3, or 9.5, a determination is reasonably and
promptly made by the Board of Directors by a vote of two-thirds of a quorum of
disinterested directors that such Agent acted in a manner set forth in such
Sections as to justify the Bank's not indemnifying or making an advance to the
Agent. In the event no quorum of disinterested
II-2
<PAGE> 33
directors is obtainable, the Board of Directors shall promptly direct that
independent legal counsel shall decide whether the Agent acted in the manner set
forth in such Sections as to justify the Bank's not indemnifying or making an
advance to the Agent. The right to indemnification or advances as granted by
this Article shall be enforceable by the Agent in any court of competent
jurisdiction, if the Board or independent legal counsel denies the claim, in
whole or in part, or if no disposition of such claim is made within ninety (90)
days. The Agent's expense incurred in connection with successfully establishing
his or her right to indemnification, in whole or in part, in any such proceeding
shall also be indemnified by the Bank.
SECTION 9.7 OTHER RIGHTS AND REMEDIES.
The indemnification provided by this Article shall not be deemed exclusive
of any other rights to which an Agent seeking indemnification may be entitled
under any bylaws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be an Agent and shall inure to the benefit of the heirs,
executors and administrators of such person. All rights to indemnification under
this Article shall be deemed to be provided by a contract between the Bank and
the Agent who serves in such capacity at any time while these Bylaws and other
relevant provisions of the general corporation law and other applicable law, if
any, are in effect. Any repeal or modification thereof shall not affect any
rights or obligations then existing.
SECTION 9.8 INSURANCE.
Upon resolution passed by the Board, the Bank may purchase and maintain
insurance on behalf of any person who is or was Agent against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Bank would have the
power to indemnify him or her against such liability under the provisions of
this Article.
SECTION 9.9 OTHER ENTERPRISES, FINES, AND SERVING AT BANK'S REQUEST.
For purposes of this Article, references to "other enterprise" in Section
9.1 shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit plan;
and references to "serving at the specific written request of the Bank" shall
include any service as a director, officer, employee, or trustee of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or trustee, with respect to any employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interest of the Bank" as referred to in this
Article.
SECTION 9.10 SAVINGS CLAUSE.
If this Article or any portion thereof shall be invalidated on any ground
by any court of competent jurisdiction, then the Bank shall nevertheless
indemnify each Agent as to expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement with respect to any action, suit,
proceeding or investigation whether civil, criminal or administrative, and
whether internal or external, including a grand jury proceeding and an action or
suit brought by or in the right of the Bank, to the full extent permitted by any
application portion of this Article that shall not have been invalidated, or by
any other applicable law.
The Reliance Insurance Company has issued to NCB an officers and directors
insurance policy which provides insurance coverage to NCB's directors and
officers for specified liabilities and to NCB
II-3
<PAGE> 34
for amounts paid to the directors and officers as indemnification for specified
liabilities. The coverage afforded by the policy is subject to various standard
exclusions, including exclusions of claims arising from dishonest or fraudulent
acts, self-dealing by the directors and officers, and various intentional torts.
The maximum aggregate limits of liability under the policy are $10 million.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
1.1** Form of Underwriting Agreement relating to Debt Securities
1.2** Form of Underwriting Agreement relating to Preferred Stock
3.1 National Consumer Cooperative Bank Act, as amended through
1981 (Incorporated by reference to exhibit 3.1 filed as part
of Registration Statement No. 2-99779 (Filed August 20,
1985)
3.2 1989 Amendment to National Consumer Cooperative Bank Act
(Incorporated by reference to exhibit 3.2 filed as part of
the Registrant's annual report on form 10-K for the year
ended December 31, 1989 (File No. 2 -99779)
3.3 Bylaws of NCB (Incorporated by reference to exhibit 3.3
filed as part of Registration Statement No. 33-42403
(initially filed September 6, 1991))
4.1 Form of Senior Indenture (Incorporated by reference to
exhibit 4.1 filed as part of Registration Statement No.
333-17003 (initially filed November 27, 1996))
4.2* Form of Subordinated Indenture
4.3** Form of Senior Debt Security
4.4** Form of Subordinated Debt Security
4.5** Form of Certificate of Designations, Preferences and Rights
of Preferred Stock. For other instruments defining the
rights of holders of the Preferred Stock, see exhibits 3.1,
3.2 and 3.3
4.6** Specimen Preferred Stock Certificate
5* Opinion of Shea & Gardner
12 Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Deloitte & Touche LLP
23.3* Consent of Shea & Gardner (contained in exhibit 5)
25* Form T-1 Statement of Eligibility of Trustee
</TABLE>
- ---------------
* To be filed by Pre-effective amendment.
** To be filed by Post-effective amendment or by a Current Report on Form 8-K.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the Debt Securities registered hereby, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which,
II-4
<PAGE> 35
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under the
Act if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the Debt Securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration
Statement 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.
Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, NCB certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Washington, D.C. on the 5th day of November, 1999.
NATIONAL CONSUMER COOPERATIVE
BANK
By: /s/ CHARLES E. SNYDER
------------------------------------
Charles E. Snyder
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
------------------ ----- ----
<S> <C> <C>
/s/ JAMES L. BURNS, JR. Chairman of the Board and November 5, 1999
- --------------------------------------------------- Director
James L. Burns, Jr.
/s/ KIRBY J. ERICKSON Vice Chairman of the Board November 5, 1999
- --------------------------------------------------- and Director
Kirby J. Erickson
/s/ RICHARD L. REED Managing Director (Principal November 5, 1999
- --------------------------------------------------- Financial Officer)
Richard L. Reed
/s/ PATRICIA A. FERRICK Vice President (Principal November 5, 1999
- --------------------------------------------------- Accounting Officer)
Patricia A. Ferrick
/s/ HARRY J. BOWIE Director November 5, 1999
- ---------------------------------------------------
Harry J. Bowie
/s/ JOSEPH CABRAL Director November 5, 1999
- ---------------------------------------------------
Joseph Cabral
/s/ EBEN HOPSON, JR. Director November 5, 1999
- ---------------------------------------------------
Eben Hopson, Jr.
/s/ JACKIE JENKINS-SCOTT Director November 5, 1999
- ---------------------------------------------------
Jackie Jenkins-Scott
</TABLE>
II-6
<PAGE> 37
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
------------------ ----- ----
<S> <C> <C>
/s/ MARILYN J. MCQUAIDE Director November 5, 1999
- ---------------------------------------------------
Marilyn J. McQuaide
/s/ MICHAEL J. MERCER Director November 5, 1999
- ---------------------------------------------------
Michael J. Mercer
/s/ ALEX N. MILLER Director November 5, 1999
- ---------------------------------------------------
Alex N. Miller
/s/ ALFRED A. PLAMANN Director November 5, 1999
- ---------------------------------------------------
Alfred A. Plamann
/s/ STUART M. SAFT Director November 5, 1999
- ---------------------------------------------------
Stuart M. Saft
/s/ SHEILA A. SMITH Director November 5, 1999
- ---------------------------------------------------
Sheila A. Smith
/s/ PETER C. YOUNG Director November 5, 1999
- ---------------------------------------------------
Peter C. Young
/s/ THOMAS K. ZAUCHA Director November 5, 1999
- ---------------------------------------------------
Thomas K. Zaucha
</TABLE>
II-7
<PAGE> 38
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
1.1** Form of Underwriting Agreement relating to Debt Securities
1.2** Form of Underwriting Agreement relating to Preferred Stock
3.1 National Consumer Cooperative Bank Act, as amended through
1981 (Incorporated by reference to exhibit 3.1 filed as part
of Registration Statement No. 2-99779 (Filed August 20,
1985))
3.2 1989 Amendment to National Consumer Cooperative Bank Act
(Incorporated by reference to exhibit 3.2 filed as part of
the Registrant's annual report on Form 10-K for the year
ended December 31, 1989 (File No. 2-99779))
3.3 Bylaws of NCB (Incorporated by reference to exhibit 3.3
filed as part of Registration Statement No. 33-42403
(initially filed September 6, 1991))
4.1 Form of Senior Indenture (Incorporated by reference to
exhibit 4.1 filed as part of Registration Statement No.
333-17003 (initially filed November 27, 1996))
4.2* Form of Subordinated Indenture
4.3** Form of Senior Debt Security
4.4** Form of Subordinated Debt Security
4.5** Form of Certificate of Designations, Preferences and Rights
of Preferred Stock. For other instruments defining the
rights of holders of the Preferred Stock, see exhibits 3.1,
3.2 and 3.3
4.6** Specimen Preferred Stock Certificate
5* Opinion of Shea & Gardner
12 Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Deloitte & Touche LLP
23.3* Consent of Shea & Gardner (contained in exhibit 5)
25* Form T-1 Statement of Eligibility of Trustee
</TABLE>
- ---------------
* To be filed by Pre-effective amendment.
** To be filed by Post-effective amendment or by a Current Report on Form 8-K.
<PAGE> 1
EXHIBIT 12
NATIONAL CONSUMER COOPERATIVE BANK
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
6 MONTHS ENDED JUNE 30TH YEAR ENDING DECEMBER 31ST
--------------------------- -------------------------
1999 1998 1998 1997
---------- ---------- ---------- ----------
Earnings
<S> <C> <C> <C> <C> <C>
(1) Net Income 7,422,853 6,187,800 12,627,625 12,462,355
(2) Provision for Income Taxes 727,596 669,874 1,453,165 1,375,498
(6) Fixed Charges 23,576,128 22,233,392 46,000,035 42,374,891
(7)=(1)+(2)+(6) Total Earnings 31,726,577 29,091,066 60,080,825 56,212,744
---------- ---------- ---------- ----------
Fixed Charges
(3) Interest Expense, Debt 20,498,571 19,859,997 40,620,896 37,973,393
(4) Interest Expense, Deposits 2,840,310 2,122,364 4,939,806 3,970,498
(5) Rentals 237,247 251,031 439,333 431,000
(6)=(3)+(4)+(5) Total Fixed Charges 23,576,128 22,233,392 46,000,035 42,374,891
---------- ---------- ---------- ----------
(8)=(3)+(5) Fixed Charges w/o Deposits 20,735,818 20,111,028 41,060,229 38,404,393
---------- ---------- ---------- ----------
Ratio of Earnings to Fixed Charges
(7)/(6) Including interest on deposits 1.35 1.31 1.31 1.33
((1)+(2)+((8))/(8) Excluding interest on deposits 1.39 1.34 1.34 1.36
(1) Rentals is assumed to equal 1/3 of total rentals for the period as shown below:
Rentals 711,741 753,092 1,318,000 1,293,000
YEAR ENDING DECEMBER 31ST
--------------------------------------------
1996 1995 1994
---------- ---------- ----------
Earnings
(1) Net Income 11,199,198 9,083,236 8,876,862
(2) Provision for Income Taxes 796,914 777,683 584,530
(6) Fixed Charges 35,709,589 31,183,161 21,023,441
(7)=(1)+(2)+(6) Total Earnings 47,705,701 41,044,080 30,484,833
---------- ---------- ----------
Fixed Charges
(3) Interest Expense, Debt 31,190,158 27,295,259 18,529,148
(4) Interest Expense, Deposits 4,109,098 3,457,902 2,079,895
(5) Rentals 410,333 430,000 414,398
(6)=(3)+(4)+(5) Total Fixed Charges 35,709,589 31,183,161 21,023,441
---------- ---------- ----------
(8)=(3)+(5) Fixed Charges w/o Deposits 31,600,491 27,725,259 18,943,546
---------- ---------- ----------
Ratio of Earnings to Fixed Charges
(7)/(6) Including interest on deposits 1.34 1.32 1.45
((1)+(2)+((8))/(8) Excluding interest on deposits 1.38 1.36 1.50
(1)Rentals is assumed to equal 1/3 of total rentals for the period as shown below:
Rentals 1,231,000 1,290,000 1,243,195
</TABLE>
For purposes of computing the consolidated ratios, Earnings consist of net
income before income taxes plus fixed charges (excluding capitalized interest).
Fixed Charges consist of interest on short-term and long-term debt (including
interest related to capitalized leases and capitalized interest) and one-third
of rent expense, which approximates the interest component of such expense. In
addition, where indicated, fixed charges include interest on deposits.
<PAGE> 2
<TABLE>
<CAPTION>
6 MONTHS ENDED JUNE 30TH YEAR ENDING DECEMBER 31ST
------------------------ ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
Including interest on deposits 1.35 1.31 1.31 1.33 1.34 1.32 1.45
Excluding interest on deposits 1.39 1.34 1.34 1.36 1.38 1.36 1.50
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-3 of our report dated January 27, 1999 included in
National Consumer Cooperative Bank's Form 10-K for the year ended December 31,
1998.
Arthur Andersen LLP
Vienna, VA
November 5, 1999
<PAGE> 1
EXHIBIT 23.2
DELOITTE &
TOUCHE
- ---------- -------------------------------------------------
[LOGO] DELOITTE & TOUCHE LLP Telephone: (703) 251-1000
1750 Tysons Boulevard Facsimile: (703) 251-3400
McLean, Virginia 22102-4219
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
the National Consumer Cooperative Bank on Form S-3 of our report dated January
30, 1997 appearing in the Annual Report on Form 10-K of the National Consumer
Cooperative Bank and subsidiaries for the year ended December 31, 1996 and to
the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
DELOITTE & TOUCHE LLP
McLean, Virginia
November 4, 1999
[DELOITTE LOGO]
