<PAGE>
As filed with the Securities and Exchange Commission on
September , 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------------
GREAT FALLS BANCORP
(Exact name of registrant as specified in its charter)
-----------------------------
NEW JERSEY (State of incorporation)
22-2545165 (IRS Employer Identification No.)
6712 (Primary Standard Industrial Classification Code Number)
55 Union Boulevard, Totowa, New Jersey 07512, 201-942-1111
-----------------------------------------------------------
(Address, including ZIP Code, and telephone number, including area code, of
registrant's principal executive offices)
George E. Irwin, Vice President, Great Falls Bancorp
----------------------------------------------------
55 Union Blvd., Totowa, NJ 07512
--------------------------------
201-942-1111
------------
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
-----------------------------
Please send copies of all communications to:
WILLIAM S. ROBERTSON, III, ESQ.
Williams, Caliri, Miller & Otley,
A Professional Corporation
1428 Route 23
P.O. Box 995
Wayne, New Jersey 07474-0995
201-694-0800
and
ROBERT A. SCHWARTZ, ESQ.
McCarter & English
Four Gateway Center
100 Mulberry St.
P.O. Box 652
Newark, NJ 07101-0652
201-622-4444
-----------------------------
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: At the Effective Date of the Acquisition, as defined in the
Acquisition Agreement dated August 16, 1995, between the Registrant and Bergen
Commercial Bank (the "Agreement"). A copy of the Agreement is attached as
Appendix A to the Joint Proxy Statement/Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
-----------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================
PROPOSED
MAXIMUM PROPOSED AMOUNT OF
TITLE OF EACH AMOUNT TO OFFERING MAXIMUM REGISTRA-
CLASS OF BE PRICE PER AGGREGATE TION FEE
SECURITIES TO REGISTERED SECURITY OFFERING
BE REGISTERED (1) (2) PRICE (3)
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<S> <C> <C> <C> <C>
Common Stock,
par value 650,000 $10.69 $6,948,500 $2,396.04
$1.00 per
share
========================================================================
</TABLE>
(1) This Registration Statement covers the estimated maximum number of shares
of Registrant's Common Stock as may be issued in the Acquisition described
herein. The Agreement provides for 1.7 shares of the Registrant's common stock
to be issued for each outstanding share of common stock of Bergen Commercial
Bank ("BCB").
(2) The number included herein is the book value per share of common stock of
BCB on June 30, 1995, the most recent practicable date prior to the date of
filing this Registration Statement, divided by 1.7, the Exchange Ratio stated in
the Agreement.
(3) Estimated, solely for the purpose of calculating the registration fee in
accordance with Regulation (S)230.457(f)(2), based on the following: (i) there
is no market for the BCB common stock to be received by the Registrant in the
transaction; and (ii) the number of Registrant's shares registered herein is
multiplied by the proposed maximum offering price per security identified in
note (2) above.
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
ii
<PAGE>
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, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
iii
<PAGE>
______________, 1995
To Our Shareholders:
Great Falls Bancorp ("GFB") and Bergen Commercial Bank ("BCB") have entered
into an Acquisition Agreement and a Plan of Acquisition (collectively, the
"Agreement"), each dated August 16, 1995, pursuant to which GFB will acquire all
of the outstanding shares of common stock of BCB (the "Acquisition"). If the
Acquisition is approved and becomes effective, each outstanding share of common
stock of BCB (except for fractional shares and shares as to which appraisal
rights have been validly perfected) will be exchanged for 1.7 shares of GFB
common stock. After the Acquisition, BCB will continue as a wholly-owned
subsidiary of GFB.
The special meetings of the stockholders of GFB and BCB to consider and
vote upon the Acquisition will be held simultaneously on ____________________,
1995.
In the accompanying material, you will find the Joint Notice of Meeting of
Stockholders of GFB and BCB and a Joint Proxy Statement/Prospectus setting forth
actions to be taken at the meetings, the details of the proposed Acquisition,
the conditions to the completion of the Acquisition and information concerning
GFB and BCB.
The Boards of Directors of GFB and BCB have carefully considered this
transaction and believe that approval of the Acquisition will be in the best
interests of the shareholders of GFB and BCB. THE BOARDS OF DIRECTORS OF GFB
AND BCB HAVE EACH UNANIMOUSLY APPROVED THE ACQUISITION AND EACH BOARD RECOMMENDS
THAT ITS RESPECTIVE SHAREHOLDERS VOTE IN FAVOR OF THE ACQUISITION.
Because of the importance of the Acquisition to the shareholders of GFB and
BCB, we urge you to complete and sign the enclosed proxy form and return it as
soon as possible in the enclosed postage-prepaid return envelope so that your
shares will be represented. You may nevertheless attend the stockholders
meeting and vote in person if you wish to do so.
The enclosed Joint Proxy Statement also constitutes a Prospectus of GFB
with respect to the shares of GFB common stock to be issued to the shareholders
of BCB if the Acquisition is completed.
Sincerely,
John L. Soldoveri Anthony M. Bruno, Jr.
Chairman and Chief Executive Chairman of the Board
Officer Bergen Commercial Bank
Great Falls Bancorp
<PAGE>
GREAT FALLS BANCORP
BERGEN COMMERCIAL BANK
JOINT NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON ________________, 1995
___________________
To Our Shareholders:
NOTICE IS HEREBY GIVEN that Special Meetings of Shareholders of Great Falls
Bancorp ("GFB") (the "GFB Meeting") and Bergen Commercial Bank ("BCB") (the "BCB
Meeting"; together with the GFB Meeting, the "Meetings") will be held at the
main office of Great Falls Bank, 55 Union Boulevard, Totowa, New Jersey 07511
(for the GFB Meeting) and at the main office of BCB at Two Sears Drive, Paramus,
New Jersey (for the BCB Meeting), on ___________, ___________ 1995 at 4:00
p.m., for the purpose of considering and voting upon the following matters:
1. A proposal to approve an Acquisition Agreement and Plan of
Acquisition (collectively, the "Agreement"), each dated August 16, 1995,
between BCB and GFB pursuant to which GFB will acquire all of the
outstanding stock of BCB (the "Acquisition") and shareholders of BCB
(except for shareholders entitled to fractional shares and shares as to
which appraisal rights have been validly perfected) will receive 1.7 shares
of GFB common stock for each share of BCB common stock, as more fully set
forth in the Agreement.
2. Such other business as may properly come before either the GFB
Meeting or the BCB Meeting or any adjournment thereof.
Only those shareholders of record as of the close of business on
_____________, 1995 will be entitled to notice of, and to vote at, the Meetings.
A list of such shareholders will be available at each Meeting.
Under New Jersey banking law, a BCB shareholder who objects to the
Acquisition has the right to demand payment in cash of the fair value of the
holder's shares of BCB Common Stock. Certain procedures set forth in New Jersey
law and summarized in the accompanying Joint Proxy Statement/Prospectus must be
followed by shareholders of BCB in order to perfect these statutory rights.
Under the New Jersey Business Corporation Act, a GFB shareholder who
objects to the Acquisition has the right to demand payment of the fair value of
his or her shares. Certain
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<PAGE>
procedures set forth in the New Jersey Business Corporation Act and summarized
in the accompanying Joint Proxy Statement/Prospectus must be followed by
shareholders of GFB in order to perfect these statutory rights.
Approval of the Acquisition is subject to certain conditions, including the
affirmative vote at the Meetings of at least 2/3 of the issued and outstanding
shares of BCB Common Stock and the affirmative vote of at least a majority of
those shares of GFB Common Stock voting at the GFB meeting. Your vote is
important regardless of the number of shares that you own. Whether or not you
plan to attend the Meetings, please mark, date and sign the enclosed proxy and
return it as soon as possible in the enclosed stamped envelope. You may revoke
the proxy at any time prior to its exercise.
By Order of the Board of Directors,
John L. Soldoveri C. Mark Campbell
Chairman and Chief Executive President and Chief Executive
Officer Officer
Great Falls Bancorp Bergen Commercial Bank
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<PAGE>
BERGEN COMMERCIAL BANK
AND
GREAT FALLS BANCORP
JOINT PROXY STATEMENT
for
Special Meetings of Shareholders
to be held on
________________, 1995
___________________________________________________
GREAT FALLS BANCORP
PROSPECTUS
for
Up to 650,000 Shares of Common Stock of Great Falls Bancorp
to be issued in connection with
the Acquisition by Great Falls Bancorp
of all of the Outstanding Common Stock
of Bergen Commercial Bank
_________________________________________________
This Joint Proxy Statement/Prospectus is being furnished in connection
with the solicitation of proxies by the Boards of Directors of Bergen Commercial
Bank ("BCB") and Great Falls Bancorp ("GFB") to be used at special meetings of
the stockholders of GFB (the "GFB Meeting") and of BCB (the "BCB Meeting" and,
together with the GFB Meeting, the "Meetings") to be held on ____________, 1995.
The purpose of the Meetings is to consider and vote upon an Acquisition
Agreement and a Plan of Acquisition (collectively, the "Agreement"), each dated
August 16, 1995, between BCB and GFB, pursuant to which GFB will acquire all of
the outstanding common stock, par value $2.50 per share (the "BCB Common Stock")
of BCB (the "Acquisition") and the shareholders of BCB will receive 1.7 shares
of GFB common stock, par value $1.00 per share (the "GFB Common Stock") for each
outstanding share of BCB Common Stock. After completion of the Acquisition, BCB
will continue as a wholly-owned subsidiary of GFB. A copy of the Agreement is
attached to this Joint Proxy Statement/Prospectus as Appendix A.
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<PAGE>
GFB HAS FILED A REGISTRATION STATEMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") COVERING THE SHARES OF COMMON STOCK TO BE
ISSUED OR RESERVED FOR ISSUANCE BY GFB IN CONNECTION WITH THE ACQUISITION. THE
ATTACHED JOINT PROXY STATEMENT ALSO CONSTITUTES A PROSPECTUS OF GFB FILED AS
PART OF SUCH REGISTRATION STATEMENT. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION RELATING TO THE OFFER OF GFB COMMON STOCK OTHER THAN THOSE
CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS AT ANY TIME, NOR ANY DISTRIBUTION OF SHARES OF GFB COMMON
STOCK, SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
The date of this Joint Proxy Statement/Prospectus is ___________,
1995. This Joint Proxy Statement/Prospectus is being mailed to stockholders of
GFB and BCB on or about ___________, 1995.
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<PAGE>
AVAILABLE INFORMATION
GFB is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Information as of particular dates concerning GFB's directors and
officers, their remuneration, options granted to them and any material interests
of affiliated persons in transactions with GFB and its subsidiaries is set forth
in proxy statements for annual meetings of stockholders distributed to
stockholders of GFB and filed with the Commission. Such reports, proxy
statements and other information filed by GFB can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Suite 1300, Seven World Trade Center, New York, New York
10048. Copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
GFB has filed with the Commission a Registration Statement on Form S-4
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the GFB Common stock offered by this Joint Proxy
Statement/Prospectus. This Joint Proxy Statement/Prospectus does not contain
all the information set forth in the Registration Statement, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. For further information with respect to GFB and the securities
offered hereby, reference is made to the Registration Statement, including the
exhibits thereto.
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<PAGE>
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE
The following information and documents previously filed with the
Commission are hereby incorporated by reference:
1. GFB's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1994 including certain information in GFB's 1994 Annual Report to its
shareholders incorporated therein by reference and certain information
contained in GFB's Proxy Statement dated March 31, 1995 used in connection
with GFB's 1995 Annual Meeting of Shareholders and incorporated by
reference in the Form 10-KSB
2. GFB's Quarterly Reports on Form 10-QSB for the quarters ended March 31 and
June 30, 1995
3. GFB's Current Reports on Form 8-K dated December 20, 1994, March 20, 1995,
April 7, 1995 (as amended by report on Form 8-K/A filed July 13, 1995) and
August 16, 1995.
Copies of the following documents accompany this Joint Proxy
Statement/Prospectus:
1. GFB's 1994 Annual Report to Shareholders
2 GFB's Quarterly Report on Form 10-QSB for the six months ended June
30, 1995
All documents filed by GFB with the Commission pursuant to Sections
13(a) or 15(d) of the Exchange Act after the date hereof and prior to the date
of the Meetings shall be deemed to be incorporated herein by reference and to be
a part hereof from the respective dates of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Joint Proxy Statement/Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Joint Proxy
Statement/Prospectus.
This Joint Proxy Statement/Prospectus incorporates documents by
reference which are not presented herein or delivered herewith. These documents
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information incorporated herein) are
available without charge upon written or oral request by any person, including
any beneficial owner, to whom this Joint Proxy Statement/Prospectus is
delivered, directed to Mr. George E. Irwin, Great Falls Bancorp, 55 Union
Boulevard, Totowa, New
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<PAGE>
Jersey 07512, telephone number (201) 942-1111. In order to ensure timely
delivery of the documents, any request should be made by _______________, 1995.
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<PAGE>
JOINT PROXY STATEMENT/PROSPECTUS
GREAT FALLS BANCORP
AND
BERGEN COMMERCIAL BANK
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION......................................... 6
INFORMATION DELIVERED AND INCORPORATED BY REFERENCE........... 7
SUMMARY OF JOINT PROXY STATEMENT/PROSPECTUS................... 11
The Meetings............................................. 11
The Acquisition.......................................... 14
Summary Per Share Data................................... 20
Pro Forma Financial Summary and Selected Per Share Data.. 22
Principal Businesses..................................... 24
INTRODUCTORY STATEMENT........................................ 25
Purpose of the Meetings.................................. 25
Votes Required; Shares Entitled to Vote.................. 25
Solicitation, Voting and Revocation of Proxies........... 26
THE PROPOSED ACQUISITION...................................... 27
General Description...................................... 27
Consideration............................................ 27
Reasons for the Acquisition.............................. 28
Interests of Management in the Acquisition............... 29
Opinion of BCB's Financial Advisor....................... 29
Resale Considerations with Respect to GFB Common Stock... 35
Conditions to the Acquisition............................ 35
Failure to Comply with Accounting Rules Relating
to Pooling of Interests.................................. 36
Operations After the Acquisition......................... 36
Regulatory Matters....................................... 36
Appraisal Rights......................................... 37
Exchange of Certificates................................. 41
Effective Time; Amendments; Termination.................. 41
Accounting Treatment..................................... 43
Federal Income Tax Consequences.......................... 43
Description of GFB Capital Stock......................... 44
Comparison of Rights of Shareholders of
GFB and BCB......................................... 47
COMPARATIVE INFORMATION CONCERNING MARKET FOR BCB COMMON
STOCK AND GFB COMMON STOCK............................... 51
PRO FORMA FINANCIAL INFORMATION............................... 53
MATERIAL CONTACTS BETWEEN GFB AND BCB......................... 71
INDEMNIFICATION FOR SECURITIES ACT VIOLATIONS................. 71
BUSINESS OF BCB............................................... 73
General.................................................. 73
Competition.............................................. 74
Employees................................................ 74
Legal Proceedings........................................ 74
Property................................................. 74
Regulation............................................... 74
General - Recent Regulatory Enactments................... 74
</TABLE>
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<TABLE>
<S> <C>
Capital Adequacy Guidelines.............................. 76
Dividends................................................ 77
FINANCIAL SUMMARY AND SELECTED PER SHARE
DATA OF BCB.............................................. 78
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF BCB............... 80
Six Months Ended June 30, 1995........................... 80
Year Ended December 31, 1994............................. 83
MANAGEMENT OF BCB............................................. 93
Stock Ownership of Management and Principal
Shareholders of BCB...................................... 94
Executive Compensation................................... 95
Director Compensation Arrangements....................... 96
Benefit Plans............................................ 97
Stock Options............................................ 97
Certain Transactions with Management..................... 98
MANAGEMENT OF GFB............................................. 98
Stock Ownership of Management and Principal
Shareholders of GFB...................................... 101
Compensation of Directors and Executive Officers......... 104
Certain Relationships and Related Transactions........... 109
Directors' Committees - Directors' Meetings.............. 109
LEGAL MATTERS................................................. 111
EXPERTS....................................................... 111
INDEX TO FINANCIAL STATEMENTS OF BCB.......................... 112
FINANCIAL STATEMENTS OF BCB................................... F-1
</TABLE>
APPENDICES:
Appendix A Acquisition Agreement and
Plan of Acquisition between
Great Falls Bancorp and Bergen
Commercial Bank dated as of
August 16, 1995
Appendix B Fairness Opinion of Capital Consultants of
Princeton, Inc.
Appendix C Sections 360-369 of the New Jersey
Banking Act of 1948
Appendix D Chapter 11 of the New Jersey
Business Corporation Act
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<PAGE>
SUMMARY OF JOINT PROXY STATEMENT/PROSPECTUS
The following information is a brief summary, for the convenience of
the shareholders of BCB and GFB, of certain information with respect to the
matters to be considered at the Meetings. This summary is necessarily
incomplete and is qualified in its entirety by the more detailed information
contained in the Joint Proxy Statement/Prospectus. Shareholders should read
carefully the details of the Joint Proxy Statement/Prospectus. Certain
capitalized terms used in this Summary and in the Joint Notice of Meeting of
Shareholders are defined elsewhere in the Joint Proxy Statement/Prospectus.
THE MEETINGS
Date, Time and Place The Meetings will be held on
of Meetings _______________________, 1995, at 4:00 p.m.
The GFB Meeting will be held at the main office of
Great Falls Bank, 55 Union Boulevard, Totowa, New
Jersey, and the BCB Meeting will be held at the
main office of BCB, Two Sears Drive, Paramus, New
Jersey.
Record Dates BCB has fixed ___________, ________, 1995 as the
record date for determining shareholders entitled
to vote at the BCB Meeting. GFB has fixed ______,
_______, 1995 as the record date for determining
shareholders entitled to vote at the GFB Meeting.
Shares Outstanding on
Record Date and
Entitled to Vote GFB. 1,069,750
BCB. 369,733
Purposes of Meetings (1) To consider and vote upon a proposal to
approve the Acquisition Agreement and Plan of
Acquisition (collectively the "Agreement"), each
dated August 16, 1995, between BCB and GFB
pursuant to which GFB will acquire all of the
outstanding BCB Common Stock (the "Acquisition")
and each shareholder of BCB will receive 1.7
shares (the "Exchange Rate") of GFB Common
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Stock for each share of BCB Common Stock (other
than fractional shares and shares as to which
appraisal rights have been validly perfected) and
(2) to transact any other business that properly
may be brought before the Meetings.
Vote Required for Approval BCB. The affirmative vote, in person or by
of Acquisition proxy, of at least 2/3 of the issued and
outstanding shares of BCB Common Stock is required
to approve the Acquisition. Approximately 26.45%
of the outstanding shares of the BCB Common Stock
is beneficially owned by executive officers and
directors of BCB and their affiliates. The
executive officers and directors of BCB have
indicated that they intend to vote all of their
shares in favor of approval of the Acquisition. In
addition, certain members of the Boards of
Directors of GFB and/or its subsidiary, Great
Falls Bank, own approximately 6.15% of the issued
and outstanding shares of BCB Common Stock. Such
directors of GFB and Great Falls Bank have
indicated that they intend to vote all of their
shares of BCB Common Stock in favor of approval of
the Acquisition.
GFB. The affirmative vote, in person or by proxy,
of at least a majority of the shares of GFB Common
Stock present at the GFB Meeting is required to
approve the Acquisition. Approximately 42.67% of
the outstanding shares of GFB Common Stock is
beneficially owned by executive officers and
directors of GFB and directors of Great Falls
Bank. The executive officers and directors of GFB
and the directors of Great Falls Bank have
indicated that they intend to vote all of their
shares in favor of the Acquisition. In addition,
certain
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members of the Board of Directors of BCB own
approximately 1.53% of the issued and outstanding
shares of GFB Common Stock. Such directors of BCB
have indicated that they intend to vote all of
their shares of GFB Common Stock in favor of
approval of the Acquisition.
Recommendations of the
Boards of Directors of
BCB and GFB The Boards of Directors of BCB and GFB have
unanimously approved the Acquisition and recommend
that the shareholders of BCB and GFB,
respectively, vote "FOR" approval of the
Acquisition.
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<PAGE>
THE ACQUISITION
Description of the
Acquisition At the time the Acquisition becomes effective (the
"Effective Time"), shares of BCB Common Stock will
automatically be converted into the right to
receive shares of GFB Common Stock at the Exchange
Rate and BCB will become a wholly-owned subsidiary
of GFB.
Consideration BCB shareholders will receive for each share of
BCB Common Stock held (except for fractional
shares and shares as to which appraisal rights
have been validly perfected) 1.7 shares of GFB
Common Stock. In lieu of receiving fractional
shares of GFB Common Stock, BCB shareholders will
be entitled to receive, without interest, a cash
payment equal to the value of any fractional share
interest to which they would otherwise be
entitled. All shares of GFB Common Stock to be
issued to each BCB shareholder will be aggregated
to constitute as many whole shares as possible
before determining the BCB shareholder's
fractional share interest. The value of a
fractional share interest will be determined by
taking the average of the final bid prices for
shares of GFB Common Stock in each of the ten
business days preceding the Effective Time. See
"THE PROPOSED ACQUISITION--Consideration".
Certain Federal Income
Tax Consequences The Acquisition will constitute a tax-free
reorganization within the meaning of the Internal
Revenue Code of 1986, as amended; provided,
however, that any BCB shareholder who receives
cash, either in lieu of fractional shares or upon
the exercise of appraisal rights, may incur a gain
or loss for federal income tax purposes. Also, a
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shareholder of GFB who receives cash upon exercise
of appraisal rights may incur a gain or loss for
federal income tax purposes. See "THE PROPOSED
ACQUISITION--Federal Income Tax Consequences" for
a description of the federal income tax
consequences of the Acquisition for BCB's
shareholders and shareholders of GFB who exercise
appraisal rights.
Required Regulatory
Approvals Consummation of the Acquisition requires the
approvals of the New Jersey Department of Banking
(the "Department") and the Board of Governors of
the Federal Reserve System (the "FRB"). The
Acquisition was approved by the Department on
__________, 1995. An application for FRB approval
was filed and is pending. While GFB and BCB
anticipate receiving FRB approval, there can be no
assurance that it will be granted, or that it will
be granted on a timely basis without conditions
unacceptable to GFB or BCB. See "THE PROPOSED
ACQUISITION--Regulatory Matters".
Conditions to the
Acquisition The obligation of each party to consummate the
Acquisition is contingent upon a number of
conditions, each of which must be satisfied or
waived by that party. Conditions to consummation
of the Acquisition include the following: receipt
of all necessary regulatory approvals; the
approval of the Acquisition by the holders of at
least 2/3 of the issued and outstanding shares of
BCB Common Stock, and a majority of the shares of
GFB Common Stock present, in person or by proxy,
at the GFB Meeting; receipt of an opinion of
Williams Caliri Miller & Otley, counsel to GFB, to
the effect that the exchange of BCB Common Stock
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for GFB Common Stock pursuant to the Agreement is
a tax-free transaction, which opinion must be
reaffirmed as of the Closing Date; receipt of an
opinion of Capital Consultants of Princeton, Inc.
("Capital Consultants"), advisors to BCB, that the
Acquisition is fair to the shareholders of BCB
from a financial point of view, which opinion must
be reaffirmed as of the Closing Date; and receipt
of an opinion of Arthur Andersen LLP that the
Acquisition will be treated for accounting
purposes as a pooling of interests. See "THE
PROPOSED ACQUISITION--Conditions to the
Acquisition."
Termination Rights The Agreement may be terminated by either BCB or
GFB at any time prior to the Effective Time,
whether before or after shareholder approval, if
the other party has breached the Agreement or if
all conditions to such party's obligation to close
shall not have been satisfied by December 31,
1995, provided that the failure of the condition
shall not be caused by a breach by the terminating
party. In addition, BCB may terminate the
Agreement in the event that BCB receives an
unsolicited offer from a third party other than
GFB calling for such party to (i) purchase capital
stock of BCB or any of its subsidiaries, (ii) make
a tender or exchange offer for capital stock of
BCB or any of its subsidiaries, (iii) purchase,
lease or otherwise acquire all or a substantial
portion of the assets of BCB or any of its
subsidiaries, or (iv) merge, consolidate or
otherwise combine with BCB or any of its
subsidiaries (each of the forgoing, an
"Acquisition Transaction"), and the Board of
Directors of BCB determines, in the exercise of
its fiduciary duty, that BCB should
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<PAGE>
pursue such an Acquisition Transaction and
terminate the Agreement. In such latter case, BCB
is obligated to pay GFB a termination fee of
$500,000. See "THE PROPOSED ACQUISITION--
Effective Date; Amendments; Termination".
Appraisal Rights Under New Jersey law, shareholders of BCB or GFB
who object to the Acquisition have the right to
demand payment of the "fair value" of their shares
of BCB Common Stock or GFB Common Stock, as the
case may be. Certain procedures set forth in New
Jersey law must be followed by shareholders of BCB
and GFB in order to perfect their statutory rights
to appraisal, including the giving of a written
notice of dissent before the Acquisition is voted
upon, not voting in favor of the Acquisition and
subsequently filing a timely demand for payment.
See "THE PROPOSED ACQUISITION--Appraisal Rights--
BCB Shareholders" and the text of the statutory
provisions governing appraisal rights of BCB
shareholders attached as Appendix C, and "THE
PROPOSED ACQUISITION--Appraisal Rights--GFB
Shareholders" and the text of the statutory
provisions governing appraisal rights of GFB
shareholders attached hereto as Appendix D.
Effective Time The Acquisition will take place at the end of the
month in which all conditions precedent are met or
waived or any time thereafter as agreed to by the
parties.
Fairness Opinion The Board of Directors of BCB has retained Capital
Consultants to evaluate the terms of the
Acquisition. Capital Consultants has advised the
Board of Directors of BCB that, in its opinion,
the terms of the Acquisition are fair to the
shareholders of BCB from a
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<PAGE>
financial standpoint. A copy of this opinion is
set forth as Appendix B to this Joint Proxy
Statement/Prospectus and should be read in its
entirety. It is a condition of BCB's obligation
to consummate the Acquisition that Capital
Consultants reconfirm its opinion as of the
Closing Date (as defined below). See "THE
PROPOSED ACQUISITION--Opinion of BCB's Financial
Advisor".
Interests of Management
in the Transaction As of September 1, 1995, the directors and
executive officers of BCB beneficially owned an
aggregate of 97,816 shares of BCB Common Stock.
As of August 31, 1995, the directors of GFB and/or
its subsidiary, Great Falls Bank, and the
executive officers of GFB, beneficially owned an
aggregate of 508,704 shares of GFB Common Stock.
In addition, four BCB Directors own an aggregate
of 16,330 shares of GFB Common Stock, or 1.53% of
the issued and outstanding GFB Common Stock. Also,
four members of the Board of Directors of GFB
and/or its subsidiary, Great Falls Bank own, in
the aggregate, 22,740 shares of BCB Common Stock,
or approximately 6.15% of the issued and
outstanding BCB Common Stock. The directors of
BCB, GFB and Great Falls Bank and the executive
officers of BCB and GFB have indicated their
intention to vote all of their shares of BCB
Common Stock and GFB Common Stock in favor of the
Acquisition. Following effectiveness of the
Acquisition, Anthony M. Bruno, Jr., C. Mark
Campbell and Charles J. Volpe, members of the
Board of Directors of BCB, will be appointed to
the Board of Directors of GFB. It is also
anticipated that Mr. Bruno will be elected Vice
Chairman of GFB. As of September 1, 1995, C. Mark
Campbell, the President of
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<PAGE>
BCB, held options to purchase 1,464 shares of BCB
Common Stock. Pursuant to the Agreement, GFB will
assume these options and convert them into options
to purchase GFB Common Stock. See "THE PROPOSED
ACQUISITION--Interests of Management in the
Acquisition".
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<PAGE>
SUMMARY PER SHARE DATA(1)
The following table sets forth the net income, book value and cash
dividends per share of GFB Common Stock and BCB Common Stock for the six months
ended June 30, 1995 and for the years ended December 31, 1994, 1993 and 1992 on
an historical, pro forma and equivalent share basis. The historical per share
data has been derived from the financial statements of GFB and BCB which are
incorporated by reference or appear elsewhere herein. The pro forma combined
per share data have been derived after giving effect to the Acquisition using
the pooling of interests method of accounting.
<TABLE>
<CAPTION>
GFB BCB
--------------------------- -----------------------------
Pro Forma
Equivalent
GFB Pro Forma BCB per BCB
Historical/(1)/ Combined Historical/(1)/ Share/(2)/
--------------- --------- --------------- -----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Six Months Ended June 30, 1995
Net Income.................... $ 0.77 $ 0.64 $ 0.72 $ 1.09
Book Value.................... 10.41 10.51 18.19 17.87
Cash Dividends /(3)(4)/....... 0.10 0.10 0.20 0.17
Year Ended December 31, 1994
Net Income.................... 1.09 0.98 1.41 1.67
Book Value.................... 9.40 9.80 17.63 16.66
Cash Dividends/(3)(4)/........ 0.15 0.15 0.30 0.26
Year Ended December 31, 1993
Net Income.................... 0.96 0.87 1.26 1.48
Book Value.................... 10.02 8.34 16.53 14.18
Cash Dividends/(3)(4)/........ 0.12 0.12 0.30 0.20
Year Ended December 31, 1992
Net Income.................... 0.79 0.69 0.95 1.17
Cash Dividends/(3)(4)/........ 0.07 0.07 0.30 0.12
</TABLE>
- ---------------
(1) Restated to give retroactive effect to stock dividends.
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<PAGE>
(2) BCB pro forma equivalent per share data is computed by multiplying the pro
forma combined per share data (giving effect to the Acquisition) by the
Exchange Rate of 1.7.
(3) The amount of future dividends payable by GFB, if any, is subject to the
discretion of GFB's Board of Directors. The Directors normally consider
GFB's cash needs, general business conditions, and applicable governmental
regulations and policies.
(4) Pro forma amounts assume that GFB would have declared cash dividends per
share of GFB Common Stock equal to its historical cash dividends per share
of GFB Common Stock outstanding.
The following table sets forth the reported bid and ask prices per
share of GFB Common Stock and the pro forma equivalent price per share of BCB
Common Stock on (i) August 15, 1995, the last business day preceding the
announcement of the Acquisition, and (ii) __________, 1995, a date shortly prior
to the mailing of the Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
GFB Pro Forma Equivalent
------------ --------------------
Prices for BCB
--------------------
Common Stock (1)
--------------------
Bid Ask Bid Ask
------- --- --------- ---------
<S> <C> <C> <C> <C>
Market Value August 15, $12-7/8 14 $20.40 $23.80
1995
_________ ___, 1995 ____ __
</TABLE>
(1) The BCB Common Stock is not traded on any established securities market.
Therefore, BCB pro forma equivalent bid and ask information has been
provided. The BCB pro forma equivalent prices have been determined solely
by multiplying the GFB bid and ask by the Exchange Rate of 1.7.
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<PAGE>
GREAT FALLS BANCORP
PRO FORMA FINANCIAL SUMMARY AND SELECTED PER SHARE DATA
-------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Six Months
Ended June
30 Years Ended December 31
----------- -----------------------
(Unaudited)
1995 1994 1993 1992
------------ ------- ------ ------
<S> <C> <C> <C> <C>
SELECTED STATEMENT OF
INCOME DATA:
Total interest income $7,799 $11,402 $9,335 $9,234
Total interest expense 2,884 3,634 3,002 3,294
Net interest income 4,915 7,768 6,333 5,940
Provision for possible
loan losses 161 172 478 952
Net interest income
after provision for
possible loan losses 4,754 7,596 5,855 4,988
Other income 879 855 1,338 1,024
Other expenses 4,094 6,125 5,088 4,437
Income before income
taxes 1,539 2,326 2,105 1,575
Provision for income taxes 517 840 804 541
Net Income 1,022 1,486 1,301 1,034
PER SHARE DATA:
Net Income $ 0.64 $ 0.98 $ 0.87 $0.69
Book value 10.51 9.80 8.34 n.a.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
As of Year Ended
June 30 December 31
-------- ----------------
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
SELECTED STATEMENT OF
CONDITION DATA:
Total assets $235,224 $168,303 $150,632
Securities 80,533 58,961 43,468
Federal funds sold 6,650 1,625 6,125
Loans (net of unearned income) 129,958 96,374 83,691
Allowance for possible loan
losses 2,598 1,824 1,771
Deposits 206,920 144,289 129,852
Securities sold under
agreements to repurchase 3,313 2,700 750
Shareholders' equity 17,855 14,961 14,156
</TABLE>
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<PAGE>
PRINCIPAL BUSINESSES
GFB GFB is a bank holding company organized under the
laws of the State of New Jersey and registered
under the Bank Holding Company Act of 1956, as
amended. GFB, which has offices in Passaic
County, New Jersey, has one banking subsidiary,
Great Falls Bank (the "Bank") which operates five
offices located in Totowa (2 offices), Little
Falls and Clifton (2 offices), New Jersey. Great
Falls Investment Company, Inc., a wholly-owned
subsidiary of Great Falls Bank, owns and manages
the investment portfolio of Great Falls Bank. At
June 30, 1995, GFB had consolidated assets of
approximately $164.3 million. GFB's principal
executive office is located at 55 Union Boulevard,
P.O. Box 269, Totowa, New Jersey 07511 and the
telephone number is (201) 942-1111. See
"AVAILABLE INFORMATION"; "INFORMATION DELIVERED
AND INCORPORATED BY REFERENCE".
BCB BCB is a commercial bank organized under the laws
of the State of New Jersey which operates through
three offices located in Paramus, Wood-Ridge and
Hasbrouck Heights, New Jersey. At June 30, 1995,
BCB had total assets of approximately $71.0
million. BCB's main branch and principal
executive offices are located at Two Sears Drive,
Paramus, New Jersey 07652 and its telephone number
is (201) 599-9400.
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<PAGE>
INTRODUCTORY STATEMENT
All information contained in this Joint Proxy Statement/Prospectus with
respect to BCB was supplied by BCB for inclusion herein. All information
contained herein with respect to GFB and Great Falls Bank was supplied by GFB.
As used in this Joint Proxy Statement/Prospectus, the term "GFB" means GFB and
its subsidiaries, unless the context otherwise requires. The common stock of
GFB and the common stock of BCB, respectively, are referred to herein as the
"GFB Common Stock" and the "BCB Common Stock."
This Joint Proxy Statement/Prospectus does not cover any resales of shares
of GFB Common Stock to be received by shareholders of BCB upon consummation of
the transactions described herein. No person is authorized to make use of this
Joint Proxy Statement/Prospectus in connection with any such resales, although
such shares may be traded freely and without use of this Joint Proxy
Statement/Prospectus by those shareholders of BCB who are not deemed to be
affiliates of BCB or GFB.
PURPOSE OF THE MEETINGS
At the Meetings, the shareholders of BCB and GFB will consider and vote
upon a proposal to approve an Acquisition Agreement and a Plan of Acquisition
(collectively, the "Agreement"), each dated August 16, 1995, between BCB and GFB
pursuant to which GFB will acquire all of the outstanding BCB Common Stock (the
"Acquisition") on the terms and subject to the conditions set forth in the
Agreement. A copy of the Agreement is attached as Appendix A to this Joint
Proxy Statement/Prospectus and is incorporated herein by reference. The
Agreement provides for the exchange of 1.7 shares of GFB Common Stock for each
share of BCB Common Stock outstanding at the Effective Time, other than
fractional shares and shares as to which appraisal rights have been validly
perfected. See "THE PROPOSED ACQUISITION".
THE RESPECTIVE BOARDS OF DIRECTORS OF BCB AND GFB BOTH UNANIMOUSLY
RECOMMEND TO THE SHAREHOLDERS OF BCB AND GFB, RESPECTIVELY, THAT THEY VOTE IN
FAVOR OF THE ACQUISITION.
VOTES REQUIRED; SHARES ENTITLED TO VOTE
BCB. Only holders of record of BCB Common Stock at the close of business on
_________________, 1995 (the "BCB Record Date") are entitled to notice of and to
vote at the BCB Meeting. The number of shares of BCB Common Stock issued,
outstanding and entitled to vote at the close of business on the BCB Record Date
was 369,733. Each share of BCB Common Stock is entitled to one vote on each
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<PAGE>
matter to come before the BCB Meeting. The Acquisition must be approved by the
affirmative vote at the BCB Meeting, either in person or by proxy, of the
holders of at least 2/3 of the issued and outstanding shares of BCB Common
Stock.
GFB. Only holders of record of GFB Common Stock at the close of business on
_______________, 1995 (the "GFB Record Date") are entitled to notice of and to
vote at the GFB Meeting. The number of shares of GFB Common Stock issued,
outstanding and entitled to vote at the close of business on the GFB Record Date
was 1,069,750. Each share of GFB Common Stock is entitled to one vote on each
matter to come before the GFB Meeting. The Acquisition must be approved by the
affirmative vote at the GFB Meeting, either in person or by proxy, of the
holders of a majority of the GFB Common Stock present at the GFB meeting in
person or by proxy.
SOLICITATION, VOTING AND REVOCATION OF PROXIES
The enclosed proxy is designed to permit each shareholder of record of BCB
and GFB to vote on all matters to come before their respective Meetings. This
proxy is solicited by the Board of Directors of BCB with respect to the BCB
Meeting and by the Board of Directors of GFB with respect to the GFB Meeting.
Any proxy may be revoked at any time before its exercise by giving written
notice of revocation to C. Mark Campbell, President, at the main office of the
BCB at Two Sears Drive, Paramus, New Jersey 07652 with respect to the BCB
Meeting, and George E. Irwin at the offices of GFB, 55 Union Boulevard, P.O. Box
269, Totowa, New Jersey 07511 with respect to the GFB Meeting. A subsequently
dated and duly executed proxy will, if properly presented, revoke a prior proxy.
Any shareholder entitled to vote who has previously executed a proxy may attend
his respective Meeting and vote in person, provided he has filed a written
notice of revocation of such proxy with the Secretary of the Meeting prior to
the voting of such proxy. Where a shareholder specifies a choice on the form of
proxy with respect to a matter being voted upon, the shares represented by the
proxy will be voted in accordance with such specification. If no such
specification is made, the shares will be voted in favor of the Acquisition.
The costs of soliciting proxies for the Meetings will be borne by BCB with
respect to the BCB Meeting and by GFB with respect to the GFB Meeting, except
that filing, registration and printing fees in connection with this Joint Proxy
Statement/ Prospectus will be paid by GFB. In addition to the use of the mails,
proxies may be solicited personally, by telephone and telegram, and by
directors, officers and employees acting without additional compensation.
Arrangements may also be made with brokers, dealers, nominees and other
custodians for the forwarding of solicitation material to the beneficial owners
of
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<PAGE>
stock held of record by such persons, and such persons may be reimbursed for
reasonable out-of-pocket expenses.
THE PROPOSED ACQUISITION
GENERAL DESCRIPTION
The Agreement is attached as Appendix A to this Joint Proxy
Statement/Prospectus. Descriptions of the Acquisition and the Agreement are
qualified in their entirety by reference to the Agreement.
The Acquisition is to become effective at 11:59 P.M. on the last day of the
calendar month during which the Agreement, as approved by the shareholders of
BCB and GFB, respectively, is filed with the Department of Banking of the State
of New Jersey. The parties anticipate that the Effective Time will occur on
December 31, 1995.
In connection with the Acquisition, BCB has retained Capital Consultants to
provide an opinion to the effect that the consideration to be received by
shareholders of BCB is fair to them, from a financial point of view. Capital
Consultants has rendered such an opinion, which is attached as Exhibit B to this
Joint Proxy Statement/Prospectus. See "Opinion of BCB's Financial Advisor".
Pursuant to the terms of the Agreement, it is a condition of the obligations of
BCB and GFB to consummate the Acquisition that Capital Consultants confirm its
opinion as of the Closing Date.
CONSIDERATION
The Agreement provides that, on the Effective Time, GFB will acquire all of
the outstanding shares of BCB Common Stock and the shareholders of BCB will have
each of their shares of BCB Common Stock (other than fractional shares and
shares as to which appraisal rights have been validly perfected) converted into
1.7 shares (the "Exchange Rate") of newly issued GFB Common Stock. In addition,
GFB will assume all outstanding stock options granted to employees of BCB and
such options shall be converted into the right to purchase shares of GFB Common
Stock. Each option will entitle the holder thereof to purchase a number of
shares of GFB Common Stock equal to the number of shares of BCB Common Stock
covered by such option times the Exchange Rate. As of September 1, 1995, one
officer of BCB held options to purchase 1,464 shares of BCB Common Stock.
No holder of BCB Common Stock will be entitled to receive any fractional
shares of GFB Common Stock, but instead will be entitled to receive (without
interest) a cash payment in the amount of the value of such fractional share
interest, based
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<PAGE>
on the average of the final bid prices for shares of GFB Common Stock on each of
the ten business days preceding the Effective Time. All shares of GFB Common
Stock that individual shareholders of BCB are entitled to receive in the
exchange for shares of BCB Common Stock held will be aggregated to constitute as
many whole shares of GFB Common Stock as possible before determining the amount
of a cash payment for fractional shares.
Following the Effective Time, the Board of Directors of GFB is to be
expanded from seven to ten members, and Anthony M. Bruno, Jr., C. Mark Campbell
and Charles J. Volpe are to be elected to fill the vacancies. Messrs. Bruno,
Campbell and Volpe are members of the Board of Directors of BCB. It is
anticipated that Mr. Bruno will also be elected Vice Chairman of GFB.
REASONS FOR THE ACQUISITION
BCB
The Board of Directors of BCB has approved the Acquisition, believes it to
be in the best interests of the shareholders of BCB and unanimously recommends
that BCB shareholders vote "FOR" the Acquisition.
In making this recommendation to BCB shareholders, the Board of Directors
of BCB primarily considered information concerning the financial structures,
results of operations and prospects of BCB and GFB, the long-term outlook for
both organizations in a rapidly changing banking and financial services industry
and the financial terms of certain other recent business combinations in the New
Jersey banking industry. The Board considered the trend of consolidation of
financial institutions in the New Jersey marketplace, as well as the cost
savings which will be available to BCB after the Acquisition through the
consolidation of certain back office functions of BCB and Great Falls Bank. The
Board determined that although BCB could remain as a viable independent
institution, joining with GFB through the Acquisition will provide a greater
long-term return to BCB shareholders than would remaining as an independent
institution.
GFB
In making its recommendation to GFB shareholders, the Board of Directors of
GFB primarily considered information concerning the financial condition, results
of operations and prospects of GFB and BCB and the financial terms of certain
other recent business combinations involving New Jersey banks. The GFB Board of
Directors determined that GFB shareholders are likely to benefit from
anticipated savings as a result of combining certain administrative, office and
computer operations of BCB, GFB and Great Falls Bank. The GFB Board also
determined that the
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<PAGE>
Acquisition may benefit GFB shareholders by increasing the public float for
shares of GFB stock and thereby increasing the liquidity of GFB Common Stock.
INTERESTS OF MANAGEMENT IN THE ACQUISITION
The Agreement provides that, within ten days after the effective date of
the Acquisition, the Board of Directors of GFB, consistent with their fiduciary
duties, will appoint the following three members of BCB's Board of Directors to
the GFB Board of Directors: Anthony M. Bruno, C. Mark Campbell and Charles J.
Volpe. If any of Messrs. Bruno, Campbell or Volpe is unable to take office, the
Board of Directors of BCB will designate a substitute acceptable to GFB.
Following such appointments, the GFB Board shall consist of ten Directors. It
is anticipated that Mr. Bruno will also be elected Vice Chairman of GFB
following the effective date of the Acquisition.
As of September 1, 1995, members of the Board of Directors of BCB
beneficially owned in the aggregate 98,434 shares of BCB Common Stock, or
approximately 26.62% of the issued and outstanding BCB Common Stock. As of
August 31, 1995, members of the Board of Directors of GFB beneficially owned in
the aggregate 331,257 shares of GFB Common Stock, or 30.97% of the issued and
outstanding shares of GFB Common Stock. In addition, four members of the Board
of Directors of GFB and/or its subsidiary, Great Falls Bank, beneficially own
approximately 6.15% of the outstanding Stock of BCB and four members of the
Board of Directors of BCB beneficially own approximately 1.53% of the
outstanding stock of GFB. The members of the Board of Directors of BCB who own
GFB Common Stock, as well as the members of the Board of Directors of GFB who
own BCB Common Stock, have indicated their intention to vote in favor of the
Acquisition.
As of September 1, 1995, C. Mark Campbell, President of BCB, held options
to purchase 1,464 shares of BCB Common Stock. The Agreement provides that GFB
will assume the rights and obligations of BCB under these stock options and
convert such options into the right to purchase a number of shares of GFB Common
Stock determined by multiplying the number of shares covered by such options by
the Exchange Rate and rounded to the nearest whole share of GFB Common Stock.
OPINION OF BCB'S FINANCIAL ADVISOR
On August 10, 1995, the BCB Board retained Capital Consultants to act as
BCB's financial advisor and to render its opinion with respect to the fairness,
from a financial point of view, to the shareholders of BCB of the consideration
to be received in a potential merger or other acquisition.
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<PAGE>
Capital Consultants is regularly engaged in the valuation of banks, bank
holding companies, thrifts, and thrift holding companies in connection with
mergers, acquisitions and other securities transactions. Capital Consultants
has knowledge of, and experience with, the New Jersey banking and thrift market
and financial organizations operating in that market and was selected by BCB
because of its knowledge of, experience with, and reputation in the financial
services industry. Capital Consultants is not a market maker in either GFB
Common Stock or BCB Common Stock.
As of the date of this Joint Proxy Statement/Prospectus, Capital
Consultants delivered to the BCB Board of Directors its opinion that, based on
and subject to various items set forth in its written opinion, the consideration
to be received by BCB's shareholders pursuant to the Agreement is fair from a
financial point of view to BCB's shareholders. In requesting Capital
Consultants' advice and opinion, BCB's Board did not impose any limitations upon
Capital Consultants with respect to the investigations made or procedures
followed by it in rendering its opinion.
The full text of the written opinion of Capital Consultants, which sets
forth assumptions made and matters considered, is attached as Appendix B to this
Joint Proxy Statement/Prospectus. BCB shareholders are urged to read this
opinion in its entirety. Capital Consultants' opinion is directed only to the
financial terms of the Acquisition and does not constitute a recommendation to
any BCB shareholder as to how such shareholder should vote at the BCB Meeting.
The summary information regarding Capital Consultants' opinion and the
procedures followed in rendering such opinion set forth in this Joint Proxy
Statement/Prospectus is qualified in its entirety by reference to the full text
of such opinion.
In arriving at its opinion, Capital Consultants reviewed and analyzed,
among other things: (i) the Agreement; (ii) the GFB Registration Statement on
Form S-4 of which this Joint Proxy Statement/Prospectus is a part; (iii)
publicly available information relating to GFB and BCB including, for GFB,
annual reports to shareholders and Annual Reports on Form 10-K or 10-KSB filed
with the SEC for the years ended December 31, 1992 through 1994, the
Consolidated Statements of Financial Condition as of December 31, 1994, 1993 and
1992, and the related Consolidated Statements of Income, Changes in Shareholders
Equity and Cash Flows for the three-year period ended December 31, 1994 included
therein, and the quarterly reports to shareholders and Quarterly Reports on Form
10-QSB filed with the SEC for the periods ended March 31 and June 30, 1995, and
for BCB, annual reports to shareholders for the years ended December 31, 1992
through 1994, Consolidated Statements of Financial Condition as of December 31,
1994, 1993, and 1992 and related Consolidated
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<PAGE>
Statements of Income, Changes in Stockholders Equity and Cash Flows for the
three-year period ended December 31, 1994, together with the Reports of
Independent Public Accountants and quarterly Reports of Condition and Income as
filed with the Federal Deposit Insurance Corporation ("FDIC") for the periods
ended March 31 and June 30, 1995; (iv) certain historical operating and
financial information provided to Capital Consultants by the managements of BCB
and GFB; (v) historical and current market data for the BCB Common Stock and the
GFB Common Stock; (vi) the publicly available financial data and stock market
performance data of publicly traded banking and thrift institutions which
Capital Consultants deemed generally comparable to BCB and GFB; (vii) the nature
and terms of recent acquisitions and merger transactions involving banking
institutions and bank and thrift holding companies that Capital Consultants
considered reasonably similar to BCB and GFB in financial character, operating
character, historical performance, geographic market and economy; and (viii)
such other studies, analyses, inquiries and reports as Capital Consultants
deemed appropriate. In addition, Capital Consultants conducted meetings with
members of senior managements of BCB and GFB for purposes of reviewing the
future prospects of BCB and GFB. Capital Consultants evaluated the pro forma
ownership of GFB Common Stock by BCB's shareholders, relative to the pro forma
contribution of BCB's assets, deposits, equity and earnings to the pro forma
resulting company in the Acquisition. Capital Consultants also took into
account its experience in other transactions, as well as its knowledge of the
banking and thrift industries and its experience in securities valuations.
In rendering its opinion, Capital Consultants assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations provided to it by BCB and GFB. Capital
Consultants did not conduct a physical inspection of any of the properties or
assets of BCB or GFB and has not made any independent evaluations or appraisal
of any properties, assets or liabilities of BCB or GFB. Capital Consultants has
assumed and relied upon the accuracy and completeness of the publicly available
financial and other information provided to it, has relied upon the
representations and warranties of BCB and GFB made pursuant to the Agreement,
and has not independently attempted to verify any of such information.
In rendering its opinion, Capital Consultants assumed that in the course of
obtaining the necessary regulatory approvals for the Acquisition, no conditions
will be imposed that will have a material adverse effect on the contemplated
benefits of the Acquisition on a pro forma basis to BCB.
In arriving at its opinion, Capital Consultants performed a variety of
financial analyses. Capital Consultants believes that its analyses must be
considered as a whole and that
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<PAGE>
consideration of portions of such analyses and the factors considered therein,
without considering all factors and analyses, could create an incomplete view of
the analyses and the process underlying Capital Consultants' opinion. The
preparation of an opinion with respect to fairness, from a financial point of
view, of the consideration to be received by shareholders is a complex process
involving complex considerations and judgments and is not necessarily
susceptible to partial analyses and summary description.
In its analyses, Capital Consultants made numerous assumptions with respect
to BCB's and GFB's industry performance, business and economic conditions and
other matters, many of which are beyond the control of BCB and/or GFB. Any
estimates reflected in Capital Consultants' analyses are not necessarily
indicative of future results or values, which may be significantly more or less
favorable than such estimates.
ESTIMATES OF VALUES OF COMPANIES DO NOT PURPORT TO BE APPRAISALS OR NECESSARILY
REFLECT THE PRICES AT WHICH COMPANIES OR THEIR SECURITIES MAY ACTUALLY BE SOLD.
In connection with its opinion, Capital Consultants performed various
analyses with respect to BCB and GFB. The following is a brief summary of such
analyses, certain of which were presented to the BCB Board by Capital
Consultants.
Valuation Analysis
Using a valuation analysis, Capital Consultants estimated the present value
of theoretical values of BCB based on a range of price-to-earnings ("P/E")
multiples between 14.0x and 15.0x and a range of discount rates between 6% and
8%. The range of values was based on a range of estimated earnings for the next
three years assuming annual earnings growth rates between 5% and 8%. The
results of this analysis indicated a range of theoretical values for BCB between
$18.56 per share (5% earnings growth rate; P/E of 14.0x; 8% discount rate) and
$22.81 per share (8% earnings growth rate; P/E of 15.0x; 6% discount rate).
Capital Consultants prepared a net present value analysis that indicated
theoretical values for BCB based on range of terminal book value multiples
between 1.5x and 1.75x and a range of discount rates between 6% and 8%. Capital
Consultants determined the range of terminal multiples of selected comparable
companies. Such comparable companies are referred to in the Comparable Company
Analysis and Transaction Analysis set forth below. The terminal values were
discounted to present value using discount rates which reflect assumptions
regarding the required rates of return of the current and prospective
shareholders of BCB Common Stock in present economic times. The range of
present values per share of BCB resulting from the above-referenced assumptions
was $26.62 to $33.10.
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<PAGE>
Comparable Company Analysis
Capital Consultants compared the operating performance of BCB to publicly
traded commercial banks that Capital Consultants deemed to be similar to BCB.
The group consists of twenty-two publicly traded New Jersey based commercial
banks with total assets of between $65 million and $330 million. Capital
Consultants compared BCB with these institutions based on selected operating
fundamentals, including capital adequacy, profitability and asset quality.
Using pricing data as of September 1, 1995, the median price to stated book
value was 119% for the comparable commercial banks. The median equity to assets
ratio was 8.95% for the group of comparable commercial banks and 10.58% for BCB.
The median return on average assets for the twelve months ending December 31,
1994 was 0.98% for the comparable group of commercial banks and 0.88% for BCB.
The median return on average equity for the twelve months ending December 31,
1994 was 11.45% for the comparable group of commercial banks and 8.25% for BCB.
Finally, Capital Consultants compared the market price, market-to-book
value and price-to-earnings multiples of GFB Common Stock with individual market
multiples and medians of nineteen publicly traded New Jersey based banks and
bank holding companies having total assets between $62 million and $15.5
billion. The analysis also compared returns on average assets and average
equity of GFB to those of selected financial institutions and the medians of the
comparable group. The analysis indicated that the GFB common stock traded in
August 1995 at a price-to-earnings multiple of 11.3 times trailing twelve months
earnings for the period ended June 30, 1995 as compared to a comparative group
median of 12.4 times trailing twelve months earnings for the period ending June
30, 1995. While the GFB Common Stock traded at a price-to-book value of 161%,
the comparative group median was 164%. GFB's financial performance, as measured
by returns on average assets and average equity, was 1.14% and 16.43%,
respectively, as compared to the median of the selected comparable financial
institutions which was 0.94% and 13.96%, respectively. The Capital Consultants
analyses also include summary income statement and balance sheet data and
selected ratio analyses for GFB and various other potential acquirers of BCB.
Contribution Analysis
Capital Consultants prepared a contribution analysis showing the percentage
of assets, deposits, net common equity and 1995 net income BCB would contribute
to the combined company on a pro forma basis, and compared these percentages to
the pro forma ownership after the Acquisition. This analysis showed that BCB
would contribute 30.2% of pro forma consolidated total assets, 30.8% of pro
forma consolidated deposits, 37.7% of pro forma
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consolidated shareholders equity and 25.9% of pro forma consolidated net income
for 1995, while BCB shareholders would hold 34.8% of the pro forma ownership of
GFB.
Impact Analysis
Capital Consultants analyzed the financial implications of the Acquisition
on GFB's earnings per common share and book value per common share. This
analysis was based on June 30, 1995 financial data for GFB and BCB and indicated
that the acquisition of BCB by GFB would be (on a pro forma basis for the six
months ended June 30, 1995, assuming the acquisition was effective as of January
1, 1995) approximately 14.3% dilutive to the earnings per share of GFB Common
Stock and approximately 8.41% accretive to tangible book value per share of GFB
Common Stock on a fully diluted basis.
Comparable Transaction Analysis
Capital Consultants performed an analysis of prices and premiums offered in
recently announced commercial bank and bank holding company transactions in the
region. Multiples of earnings and fully diluted book value implied by the
consideration to be received by BCB's shareholders in the Acquisition were
compared with multiples offered in such regional transactions, which included
pending and completed acquisitions announced between January 1, 1994 and August
15, 1995. The median offer price to book value for this regional group of
comparable transactions was 165%. The equivalent offer price to book value for
BCB was 147% based on the assumed GFB offer price of $26.78 for each outstanding
share of BCB Common Stock and BCB's book value as of June 30, 1995. Capital
Consultants also reviewed the core capital ratio to total assets of the
comparative group and non-performing assets as a percentage of total assets and
in both analyses, BCB was equal to the median of the comparative group.
It is important to note that while Capital Consultants took into account
the values shown in the comparables used in connection with the rendering of its
opinion, no company or transaction used in these analyses was identical to BCB
or the Acquisition. Accordingly, an analysis of the results in the foregoing is
not mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies involved, the timing of the transactions and prospective buyer
interest, the earnings trends and prospects for the future, as well as other
factors that could affect the public trading values of the companies included in
the comparisons.
For Capital Consultants' services in connection with the Acquisition, BCB
has agreed to pay Capital Consultants a fee
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of approximately $17,500 plus reimbursement for reasonable out-of-pocket
expenses. BCB has also agreed to indemnify Capital Consultants against certain
liabilities, including liabilities under the federal securities laws. BCB paid
Capital Consultants $7,500 at the time the Agreement was signed and paid an
additional $10,000 on the mailing of this Joint Proxy Statement/Prospectus. The
amount of Capital Consultants' fee was determined by negotiation between BCB and
Capital Consultants.
RESALE CONSIDERATIONS WITH RESPECT TO GFB COMMON STOCK
The shares of GFB Common Stock that will be issued if the Acquisition is
completed have been registered under the Securities Act and will be freely
transferable, except for shares received by persons, including directors and
executive officers of BCB, who may be deemed to be "affiliates" of BCB under
Rule 145 promulgated under the Securities Act or who may be deemed to be
"affiliates" of GFB. An "affiliate" of an issuer is defined generally as a
person who "controls" the issuer. Directors, executive officers and 10%
stockholders are presumed by the Commission to control the issuer. Other
persons, such as executive officers of significant subsidiaries of an issuer,
may also be "affiliates" of the issuer. Affiliates of BCB or GFB may not sell
their shares of GFB Common Stock acquired pursuant to the Acquisition, except
pursuant to an effective registration statement under the Securities Act
covering GFB Common Stock or in compliance with Rule 145, Rule 144 or another
applicable exemption from the registration requirements of the Securities Act.
CONDITIONS TO THE ACQUISITION
Consummation of the Acquisition is conditioned on, among other things,
satisfaction or waiver by both BCB and GFB of the following conditions: (i)
approval by the affirmative vote of at least 2/3 of the issued and outstanding
shares of BCB Common Stock and a majority of the GFB Common Stock present in
person or by proxy at the GFB Meeting; (ii) the receipt of all consents,
approvals and authorizations of any federal or state governmental authority and
expiration of all required waiting periods necessary for the completion of the
Acquisition; and (iii) receipt of an opinion of Arthur Andersen LLP that the
Acquisition will qualify for pooling of interests accounting treatment. In
addition, Williams Caliri Miller & Otley, counsel to GFB, must as of the Closing
Date reaffirm its opinion to the effect that the exchange of shares contemplated
by the Agreement will be a tax-free reorganization within the meaning of Section
368 of the Internal Revenue Code (the "Code"). See "THE PROPOSED ACQUISITION--
Federal Income Tax Consequences".
Completion of the Acquisition is further conditioned on (i) the continued
accuracy in all material respects of the
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representations and warranties of BCB and GFB, respectively, contained in the
Agreement; (ii) the performance by BCB or GFB, as the case may be, in all
material respects, of all obligations under the Agreement; (iii) the absence of
any order, proceeding, inquiry or litigation that would restrain or prohibit the
completion of the Acquisition or which challenges the validity thereof; and (iv)
confirmation as of the Effective Time by Capital Consultants of its Fairness
Opinion. See "THE PROPOSED ACQUISITION--Opinion of BCB's Financial
Advisor".
FAILURE TO COMPLY WITH ACCOUNTING RULES RELATING TO POOLING OF INTERESTS
The rules governing the qualification for pooling of interest transactions
("Accounting Rules") require, among other things, that "substantially all" of
the voting common stock of an acquired company be exchanged for voting stock of
the acquiring company. "Substantially all" means 90% or more of such voting
stock. This requirement would not be met if the holders of more than 10% of BCB
Common Stock properly exercise and perfect their appraisal rights. See "--
Appraisal Rights--BCB Shareholders". This requirement would also not be met if
a combination of holders of BCB Common Stock and GFB Common Stock, or holders of
GFB Common Stock alone (see "--Appraisal Rights--GFB Shareholders)", having a
value which exceeds 10% of the value of BCB Common Stock exercise their
respective appraisal rights.
OPERATIONS AFTER THE ACQUISITION
On the Effective Time, as a result of the Acquisition, BCB will become a
wholly-owned subsidiary of GFB. Upon the consummation of the Acquisition, the
current directors and officers of BCB will continue to serve in their current
capacities, subject to GFB's right as the sole shareholder of BCB to remove
and/or replace any or all of the directors and officers of BCB thereafter.
Within ten days after the Effective Time of the Acquisition, the Board of
Directors of GFB, consistent with its fiduciary duty, will appoint the following
three members of the Board of Directors of BCB to the Board of Directors of GFB:
Anthony M. Bruno, Jr., C. Mark Campbell and Charles J. Volpe. Following such
appointments, the GFB Board will consist of ten directors. The seven remaining
members of the Board will be M.A. Bramante, Robert J. Conklin, William T.
Ferguson, George E. Irwin, Joseph A. Lobosco, John L. Soldoveri and Alfred R.
Urbano, the current members of the GFB Board of Directors. It is anticipated
that Mr. Bruno will also be elected Vice Chairman of GFB after the Effective
Time. See "MANAGEMENT OF GFB".
REGULATORY MATTERS
The Department approved the Agreement on _____________, 1995. On
_____________, 1995, GFB filed an application with
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the FRB for approval of the Acquisition. The approval of the FRB is required in
order for the Acquisition to be consummated. While both GFB and BCB anticipate
receiving the required approval, there can be no assurance that the approval
will be granted, or that it will be granted on a timely basis and without
conditions that GFB or BCB find unacceptable.
APPRAISAL RIGHTS
BCB Shareholders
Under the New Jersey Banking Act of 1948, as amended (the "Banking Act"),
shareholders of BCB may dissent from the Acquisition and be paid the fair value
of their shares if they comply with the applicable provisions of the Banking
Act. A shareholder may not dissent as to less than all of the shares owned
beneficially by him. Shareholders contemplating the exercise of their appraisal
rights should review the procedures set forth in Sections 360 through 369 of the
Banking Act, a copy of which is attached to this Joint Proxy
Statement/Prospectus as Appendix C. The following is a summary of the steps
which must be taken for the exercise of BCB dissenters' rights and is qualified
in its entirety by reference to the attached sections of the Banking Act.
Notice of Dissent
To be eligible to exercise his right of dissent, a shareholder must file
with BCB a written notice of dissent, stating that he intends to demand payment
for his shares if the Acquisition becomes effective. The notice of dissent must
be filed before the vote of the BCB shareholders on the Acquisition is taken. A
shareholder who votes in favor of the Acquisition waives his right to dissent.
The notice of dissent should be delivered to Bergen Commercial Bank, Two Sears
Drive, Paramus, New Jersey 07653-1129, Attn: C. Mark Campbell, President.
Written Demand
If the Acquisition is approved by the necessary vote of BCB shareholders,
BCB within 10 days of the approval will notify by certified mail BCB
shareholders who have filed a notice of dissent, except for any such shareholder
who voted for or consented in writing to the Acquisition, that the Acquisition
was approved. Within 20 days after BCB's notice is mailed, a shareholder who
wishes to dissent must file with BCB a written demand for the payment of the
fair value of his shares. Such written demand should be delivered to Bergen
Commercial Bank, Two Sears Drive, Paramus, New Jersey 07653-1129, Attn: C. Mark
Campbell, President.
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Delivery of Shares for Notation
Within 20 days after making his written demand for payment, the BCB
shareholder must submit his share certificates for BCB Common Stock to BCB. BCB
will make a notation thereon that the shareholder has made a demand to be paid
the fair value of his shares and thereafter the certificate will merely
represent the rights of a dissenting shareholder, and will not represent shares
of either BCB Common Stock or GFB Common Stock.
Demand that BCB Institute Lawsuit
Within 10 days of the later of (i) the expiration of the period within
which BCB shareholders may make a written demand or (ii) the Effective Time of
the Acquisition, BCB will mail to each dissenting BCB shareholder the latest
available 12-month profit and loss statement and a balance sheet and surplus
statement as of the close of the 12-month period. The close of the profit and
loss statement and the balance sheet will be as of a date within 12 months prior
to the mailing. BCB may accompany these financial statements with a written
offer to pay a specified price for such dissenting shareholder's shares deemed
by BCB to be the fair value thereof, but BCB is not obligated to do so. Each
dissenting BCB shareholder will have a 30-day period following BCB's mailing of
the financial statements to agree upon a price with BCB. If the BCB shareholder
and BCB are unable to agree upon a price within the 30-day period, the
shareholder may serve a written demand on BCB to commence an action in the
Superior Court of New Jersey for the determination of the fair value of his BCB
shares. The BCB shareholder's demand to commence an action must be served not
later than 30 days after the expiration of the 30-day period BCB shareholders
have in which to agree upon a price with BCB.
Commencement of Lawsuit by BCB Shareholder
BCB has 30 days after receipt of the BCB shareholder's demand to commence a
proceeding in the Superior Court. If BCB fails to institute the proceeding, the
shareholder may institute the proceeding in the name of BCB within 60 days after
expiration of BCB's 30-day period.
Determination and Payment of Fair Value
In the New Jersey Superior Court proceeding, the court has jurisdiction
over all BCB dissenting shareholders who have not agreed upon a price with BCB
and may proceed in a summary fashion to determine the fair value of the shares
of BCB Common Stock. The court's judgment must include interest from the date
of the BCB Meeting to the date of payment unless the court finds the refusal of
any dissenting shareholder to accept BCB's offered
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price was arbitrary, vexatious or otherwise not in good faith. The costs of the
action (excluding the fees and expenses of each party's attorneys and experts)
and of any court-appointed appraiser will be apportioned equitably by the court.
The court may in its discretion award a dissenting shareholder the reasonable
fees and expenses of his counsel and of any experts employed by the dissenting
shareholder if the court finds that the price offered by BCB was not offered in
good faith or if no such offer was made.
GFB Shareholders
Under the New Jersey Business Corporation Act, as amended (the "Business
Corporation Act"), shareholders of GFB may dissent from the Acquisition and be
paid the fair value of their shares if they comply with the applicable
provisions of the Business Corporation Act. Shareholders contemplating the
exercise of their appraisal rights should review the procedures set forth in
Chapter 11 of the Business Corporation Act, a copy of which is attached to this
Joint Proxy Statement/Prospectus as Appendix D. The following is a summary of
the steps which must be taken for the exercise of GFB dissenters' rights and is
qualified in its entirety by reference to the attached sections of the Business
Corporation Act.
Notice of Dissent
To be eligible to exercise his right of dissent, a GFB shareholder must
file with GFB a written notice of dissent, stating that he intends to demand
payment for his shares if the Acquisition becomes effective. The notice of
dissent must be filed before the vote of the GFB shareholders on the Acquisition
is taken. A shareholder who votes in favor of the Acquisition waives his right
to dissent. The notice of dissent should be delivered to Mr. George E. Irwin,
Vice President of Great Falls Bancorp, 55 Union Boulevard, Totowa, New Jersey
07512.
Written Demand
Within 10 days after the date the Acquisition becomes effective, GFB
shareholders who have filed a notice of dissent will be notified by GFB by
certified mail of the effective date of the Acquisition, except that such notice
need not be sent to any such GFB shareholder who voted for or consented in
writing to the Acquisition. Within 20 days after GFB's notice is mailed, a
shareholder entitled to receive such notice who wishes to dissent must file with
GFB a written demand for the payment of the fair value of his shares. Such
written demand should be delivered to Mr. George E. Irwin, Vice President of
Great Falls Bancorp, 55 Union Boulevard, Totowa, New Jersey 07512.
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Delivery of Shares for Notation
Within 20 days after making his written demand for payment, the GFB
shareholder must submit his share certificates for GFB Common Stock to GFB. GFB
will make a notation thereon that the shareholder has made a demand to be paid
the fair value of his shares and thereafter the certificate will merely
represent the rights of a dissenting shareholder, and will not represent shares
of GFB Common Stock.
Demand that GFB Institute Lawsuit
Within 10 days after the expiration of the period within which GFB
shareholders may make a written demand to be paid the fair value of their
shares, GFB will mail to each dissenting GFB shareholder the latest available
12-month profit and loss statement and a balance sheet and surplus statement as
of the close of the 12-month period. The close of the profit and loss statement
and the balance sheet will be as of a date within 12 months prior to the
mailing. GFB may accompany these financial statements with a written offer to
pay a specified price for such dissenting shareholder's shares deemed by GFB to
be the fair value thereof, but GFB is not obligated to do so. Each dissenting
GFB shareholder will have a 30-day period following GFB's mailing of the
financial statements to agree upon a price with GFB. If the GFB shareholder and
GFB are unable to agree upon a price within the 30-day period, the shareholder
may serve a written demand on GFB to commence an action in the Superior Court of
New Jersey for the determination of the fair value of his GFB shares. The GFB
shareholder's demand to commence an action must be served not later than 30 days
after the expiration of the 30-day period GFB shareholders have in which to
agree upon a price with GFB.
Commencement of Lawsuit by GFB Shareholder
GFB has 30 days after receipt of the GFB shareholder's demand to commence a
proceeding in the Superior Court. If GFB fails to institute the proceeding, the
shareholder may institute the proceeding in the name of GFB within 60 days after
expiration of GFB's 30-day period.
Determination and Payment of Fair Value
In the New Jersey Superior Court proceeding, the court has jurisdiction
over all GFB dissenting shareholders who have not agreed upon a price with GFB
and may proceed in a summary fashion to determine the fair value of the shares
of GFB Common Stock. The court's judgment must include interest from the date
of the dissenting shareholder's demand for payment to the date of payment unless
the court finds the refusal of any dissenting shareholder to accept GFB's
offered price was arbitrary,
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vexatious or otherwise not in good faith. The costs of the action (excluding
the fees and expenses of each party's attorneys and experts) and of any court-
appointed appraiser will be apportioned equitably by the court. The court may
in its discretion award a dissenting shareholder the reasonable fees and
expenses of his counsel and of any experts employed by the dissenting
shareholder if the court finds that the price offered by GFB was not offered in
good faith or if no such offer was made.
EXCHANGE OF CERTIFICATES
On the Effective Time, holders of certificates formerly representing shares
of BCB Common Stock (other than BCB shareholders who exercise appraisal rights
as described above) will cease to have any rights as BCB shareholders and their
certificates automatically will represent the shares of GFB Common Stock into
which their shares of BCB Common Stock have been converted by the Acquisition.
As soon as practicable after the Effective Time, GFB will send written notice to
each record holder of certificates formerly representing shares of BCB Common
Stock, indicating the number of shares of GFB Common Stock for which such
holder's shares of BCB Common Stock have been exchanged.
Holders of outstanding certificates for BCB Common Stock, upon proper
surrender of such certificates to GFB, will receive, promptly after the
Effective Time, a certificate representing the full number of shares of GFB
Common Stock into which the shares of BCB Common Stock previously represented by
the surrendered certificates have been converted. At the time of issuance of
the new stock certificate each shareholder so entitled will receive a check for
the amount of the fractional share interest, if any, to which he may be
entitled.
Each share of GFB Common Stock for which shares of BCB Common Stock are
exchanged will be deemed to have been issued at the Effective Time.
Accordingly, BCB shareholders who receive GFB Common Stock in the Acquisition
will be entitled to receive any dividend or other distribution which may be
payable to holders of record of GFB Common Stock as of dates on or after the
Effective Time. However, no dividend or other distribution will actually be
paid with respect to any shares of GFB Common Stock until the certificate or
certificates formerly representing shares of BCB Common Stock have been
surrendered, at which time any accrued dividends and other distributions on such
shares of GFB Common Stock will be paid without interest.
Holders of BCB Common Stock should not send in their BCB stock certificates
until they receive instructions from GFB.
EFFECTIVE TIME; AMENDMENTS; TERMINATION
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The Effective Time of the Acquisition will be 11:59 P.M. on the last day of
the calendar month during which all necessary approvals are received or waived
and all necessary waiting periods have expired and the Agreement, as approved by
the shareholders of BCB and GFB, respectively, has been filed with the
Department. A closing (the "Closing") will occur as soon as all the conditions
precedent to the Acquisition have been satisfied or waived. At the Closing,
documents required to satisfy the conditions to closing of the respective
parties will be exchanged. It is expected that the Closing will take place in
December, 1995 and that the Acquisition will be effective on the last day of
that month. However, no assurances can be given that the conditions precedent
will be met or waived by such date.
The Agreement may be amended, modified or supplemented with respect to any
of its terms by the mutual consent of GFB and BCB at any time prior to the
Effective Time.
The Agreement may be terminated at any time prior to the Closing by GFB if:
(a) any representation or warranty of BCB in the Agreement is not true and
correct in all material respects; (b) BCB breaches any covenant or agreement
made by it in the Agreement; or (c) any condition to GFB's obligation to
consummate the Acquisition is not satisfied by December 31, 1995 other than due
to a breach by GFB.
The Agreement may be terminated at any time prior to the Closing by BCB if:
(a) any representation or warranty of GFB in the Agreement is not true and
correct in all material respects; (b) GFB breaches any covenant or agreement
made by it in the Agreement; or (c) any condition to BCB's obligation to
consummate the Acquisition is not satisfied by December 31, 1995, other than due
to a breach by BCB.
In addition, BCB may terminate the Agreement in the event that, without
breaching the Agreement, BCB shall have received an unsolicited offer to enter
into an Acquisition Transaction and BCB's Board of Directors determines in the
exercise of its fiduciary duty that it must pursue the potential Acquisition
Transaction. In such event, BCB will be required to pay GFB a termination fee
of $500,000.
Upon a termination of the Agreement, the transactions contemplated thereby
will be abandoned without further action by either party and, except as
discussed above, each party will bear its own expenses, unless such termination
is due to a breach of the Agreement by a party. In that event, the breaching
party is required to pay the other party $500,000 as liquidated damages.
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ACCOUNTING TREATMENT
The Acquisition is expected to be accounted for by GFB under the pooling of
interests method of accounting in accordance with generally accepted accounting
principles. See "PRO FORMA FINANCIAL INFORMATION" and "--Conditions to the
Acquisition".
FEDERAL INCOME TAX CONSEQUENCES
Williams, Caliri, Miller & Otley, A Professional Corporation, counsel to
GFB, has delivered to GFB and BCB its opinion (the "Tax Opinion") that, with
respect to the acquisition of BCB Common Stock by GFB upon the terms and
conditions set forth in the Agreement and subject to the discussion below, for
federal income tax purposes (i) the Acquisition will be a tax-free
reorganization within the meaning of the Code, and (ii) GFB and BCB will each be
a party to a reorganization within the meaning of the Code. The Tax Opinion also
provides that neither GFB nor BCB will recognize gain or loss as a result of the
Acquisition.
The Tax Opinion also provides that a shareholder of BCB who receives only
shares of GFB Common Stock will not recognize gain or loss as a result of the
Acquisition. A shareholder of BCB who receives cash in lieu of fractional
shares of GFB Common Stock, and a shareholder of BCB who exercises dissenter's
rights and receives cash equal to the appraised value of such shareholder's BCB
Common Stock, will be treated as having received a distribution pursuant to the
Code in redemption of the recipient shareholder's BCB Common Stock, to the
extent cash has been received in exchange for shares of BCB Common Stock, giving
rise to the recognition of capital gain or loss measured by the difference
between the amount realized on the distribution and the recipient shareholder's
adjusted basis in his fractional share interest or the dissenting shareholder's
BCB Common Stock, as the case may be; provided, however, in the event that any
such cash payment is deemed as to any particular recipient shareholder to be
substantially equivalent to a dividend, such payment shall be treated as a
dividend, a return of capital and/or gain from the sale of property as provided
by the Code.
Each BCB shareholder's basis for shares of GFB Common Stock received in the
exchange will be the same as such shareholder's basis for the shares of BCB
Common Stock exchanged therefor, decreased by the amount of money received, and
increased by the amount treated as a dividend and by the amount of gain
recognized on the exchange. Each BCB shareholder's holding period for the GFB
Common Stock received will include the holding period for the BCB Common Stock
exchanged therefor, provided that the shares of BCB Common Stock were held as a
capital asset on the Effective Time.
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The income tax consequences for any particular shareholder of BCB may be
affected by matters not discussed herein. In rendering its legal opinion to GFB
and BCB, Williams, Caliri, Miller & Otley does not act as counsel to BCB
shareholders, who should therefore consult their own personal tax advisors as to
the consequences of the Acquisition to them, including the consequences of the
application of state and local taxes, if any.
This description of the tax consequences is based upon the facts existing
at the time of this Joint Proxy Statement/Prospectus and upon federal income tax
laws currently in effect.
It is a condition of closing that the tax opinion be reaffirmed as of the
Closing Date.
Although not to be included as a part of the Tax Opinion, a shareholder of
GFB who exercises dissenter's rights and receives cash equal to the appraised
value of such shareholder's GFB Common Stock, will be treated as having received
a distribution pursuant to the Code in redemption of the recipient shareholder's
GFB Common Stock, giving rise to the recognition of capital gain or loss
measured by the difference between the amount realized on the distribution and
the adjusted basis in his GFB Common Stock; provided, however, in the event that
any such cash payment is deemed as to any particular recipient GFB shareholder
to be substantially equivalent to a dividend, such payment shall be treated as a
dividend, a return of capital and/or gain from the sale of property as provided
by the Code.
DESCRIPTION OF GFB CAPITAL STOCK
Authorized Stock; Outstanding GFB Common Stock. GFB is authorized to issue
5,000,000 shares of capital stock, consisting of 4,000,000 shares of common
stock having a par value of $1.00 per share ("GFB Common Stock") and 1,000,000
shares of preferred stock without par value and otherwise with presently
unspecified rights ("GFB Preferred Stock"). As of August 31, 1995, 1,069,750
shares of GFB Common Stock were issued and outstanding (after giving effect to a
10% stock dividend paid during July, 1995). In addition to the shares reserved
for issuance upon consummation of the Acquisition, 154,308 shares (adjusted for
such stock dividend) are reserved for issuance under GFB's stock option plans
and 800,000 shares are reserved for issuance pursuant to GFB's outstanding
Cancellable Mandatory Stock Purchase Contracts ("Equity Contracts"), which
presently require the purchase not later than November 1, 1997 of approximately
465,549 shares of GFB Common Stock at a total price of $5,000,000 ($10.74/share
as adjusted for the 1995 stock dividend).
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No shares of GFB Preferred Stock have been issued. Under the terms of
GFB's Certificate of Incorporation, as amended (the "GFB Certificate"), GFB's
Board of Directors may determine, without further shareholder approval, the
relative rights, preferences and limitations of GFB Preferred Stock including,
without limitation, stated value, dividend rights, rights to convert such shares
into shares of another class or series (such as GFB Common Stock or another
class or series of GFB Preferred Stock), voting rights, liquidation preferences,
redemption rights, division into classes and into series within any class or
classes, sinking fund provisions and similar matters, and generally to determine
all the characteristics of such GFB Preferred Stock other than the total number
of such shares which the Board has authority to issue. The availability of
authorized but unissued GFB Preferred Stock with unspecified voting rights and
possibly other rights, such as a required approval of mergers or other
extraordinary corporate transactions, could be used by GFB's Board of Directors
to create voting impediments or to frustrate persons seeking to effect a merger
or otherwise to gain control of GFB (for another provision which could also have
an "anti-takeover" effect, see also "--Classification of Directors" below).
Dividend Rights. Subject to the rights of holders of shares, if any,
having preferences with respect to dividends, holders of GFB Common Stock are
entitled to dividends when, as and if declared by GFB's Board of Directors out
of funds legally available for the payment of dividends. Under New Jersey law,
dividends may not be paid if, after giving effect thereto, either GFB would be
unable to pay its debts as they become due in the usual course of its business,
or GFB's total assets would be less than its liabilities. GFB's ability to pay
dividends is also subject to regulation by the FRB (see below "--Comparison of
Rights of Shareholders of GFB and BCB--Dividends and Capital Adequacy"). At
June 30, 1995, in addition to its investment in the stock of Great Falls Bank
and other investments, including securities held for sale, GFB (on an
unconsolidated basis) had cash equivalent assets in the amount of $485,000,
substantially all of which would be available for the payment of dividends to
stockholders of GFB. To the extent that funds for the payment of dividends to
the holders of GFB Common Stock must come from the earnings of GFB's bank
subsidiaries, which will include BCB and Great Falls Bank if the Acquisition
becomes effective, GFB's ability to pay dividends to its stockholders will be
restricted by the ability of BCB and Great Falls Bank to pay dividends under
various Federal and state laws and regulations governing the payment of
dividends by insured financial institutions.
Voting Rights and Provisions Regarding Certain Business Combinations. At
meetings of GFB shareholders, holders of GFB Common Stock are entitled to one
vote per share. The quorum for
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<PAGE>
GFB shareholders' meetings is a majority of the outstanding shares entitled to
vote represented in person or by proxy.
Classification of Directors. The GFB Certificate provides for a classified
Board of Directors, with approximately 1/3 of the entire Board being elected
each year and with directors serving for terms of 3 years. Directors are
elected by a plurality of votes cast. Holders of GFB Common Stock do not have
cumulative voting rights. Possible effects of this provision, coupled with the
GFB Board's authority to issue GFB Preferred Stock, may be to deter hostile
takeovers, to enhance the ability of GFB's current management to remain in
control of GFB, and generally to make more difficult the acquisition of a
controlling interest in GFB.
Approval of Major Transactions. GFB is able to effect amendments to the
GFB Certificate, to merge or consolidate with other corporations, to make a bulk
sale of its assets not in the regular course of business, and to dissolve, if
the majority of the votes cast at a GFB shareholders meeting (at which a quorum
is present) called for the purpose of considering any such action are cast in
favor of the proposal.
Liquidation Rights. In the event of liquidation, dissolution or winding up
of GFB, holders of GFB Common Stock are entitled to receive, on a pro rata per
share basis, any assets distributable to GFB shareholders, after the payment of
debts and liabilities and after the distribution to holders of any outstanding
GFB Preferred Stock or any other outstanding shares hereafter issued which have
prior rights upon liquidation.
Assessment and Redemption. All shares of GFB Common Stock, including those
to be issued pursuant to the Acquisition, are or will be when issued and
delivered, fully paid and non-assessable. Such shares are not redeemable at the
option of either GFB or the holders thereof.
Other Matters. Holders of GFB Common Stock do not have preemptive rights
or conversion rights with respect to any securities of GFB. Except in
connection with certain business combinations, GFB can issue new shares of
authorized but unissued GFB Common Stock and/or GFB Preferred Stock without
shareholder approval.
Transfer Agent. Midlantic Bank, N.A. serves as the transfer agent of the
issued and outstanding GFB Common Stock.
The foregoing description of the provisions of GFB's capital stock is
merely a summary of such provisions, and is qualified in its entirety by
reference to the GFB Certificate, as amended. Copies of the GFB Certificate and
amendments thereto are on file with the Commission as exhibits to the
registration
-46-
<PAGE>
statement of which this Joint Proxy Statement/Prospectus is a part or
incorporated therein by reference to other filings with the Commission.
COMPARISON OF RIGHTS OF SHAREHOLDERS OF GFB AND BCB
The following discussion of the rights of securities holders under the
respective charters of GFB and BCB and the laws governing each does not purport
to be complete and is qualified in its entirety by reference to the GFB
Certificate and GFB's By-Laws, as amended, and BCB's Certificate of
Incorporation, as amended (the "BCB Certificate") and BCB's By-laws, all of
which have been filed as exhibits to the registration statement of which this
Joint Proxy Statement/Prospectus is a part. See "AVAILABLE INFORMATION".
General
As a result of the Acquisition, shareholders of BCB, whose rights are
presently governed by the Banking Act and whose primary bank regulators are the
Department and the FDIC, will become shareholders of GFB, whose rights are
governed by the Business Corporation Act and whose primary federal regulator is
the FRB. (Like BCB, Great Falls Bank's primary bank regulators are the
Department and the FDIC.) The laws with respect to the rights of shareholders of
New Jersey state banks and general business corporations present several points
of material difference which are briefly described below. The following
descriptions are merely summaries, however, and are qualified in their entirety
by reference to applicable banking and business corporation laws of New Jersey,
and related banking regulations, which laws and regulations may change from time
to time, and the GFB Certificate, as may hereafter be amended.
Voting Required for Certain Transactions
Under the Banking Act, acquisitions and mergers by a bank, amendments of a
bank's certificate of incorporation, certain exchanges of shares with bank
holding companies, and the voluntary dissolution of a bank, all require the
favorable vote of the holders of at least 2/3 of the capital stock of the bank
entitled to vote.
Under the Business Corporation Act, unless a greater vote is specified in
the certificate of incorporation, most amendments to a corporation's certificate
of incorporation, the voluntary dissolution of a corporation, the sale or other
disposition of all or substantially all of a corporation's assets otherwise than
in the ordinary course of business, or the merger or consolidation of a
corporation with another corporation, all require the affirmative vote of a
majority of the votes cast by stockholders of the corporation entitled to vote
thereon. The approval of the stockholders is not required to authorize certain
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<PAGE>
mergers in which the corporation is the surviving corporation. The foregoing
provisions describe voting requirements for corporations such as GFB which were
organized on or after January 1, 1969 and which have only one outstanding class
or series of stock. The GFB Certificate presently does not contain provisions
specifying any greater vote.
Dividends and Capital Adequacy
The payment of dividends by BCB is subject to various federal and state
laws and regulations governing the payment of dividends by banks. A discussion
of the applicable laws and regulations appears below under the caption "BUSINESS
OF BCB--Regulation--Dividends".
As a New Jersey general business corporation, GFB is not subject to the
same laws and regulations as BCB. However, as noted above, an important source
of funds for the payment of dividends to GFB stockholders is the earnings of its
bank subsidiaries which, if the Acquisition becomes effective, will include
Great Falls Bank and BCB. The ability of Great Falls Bank to pay dividends is
subject to the same regulatory limitations as are applicable to BCB, and will
continue to be subject to such restrictions following the Acquisition. In that
regard, the FDIC has issued regulations imposing capital adequacy requirements,
discussed below, which apply to both BCB and Great Falls Bank.
The Business Corporation Act permits general business corporations such as
GFB to pay dividends or make other distributions to stockholders unless, after
giving effect thereto, either (a) the corporation would be unable to pay its
debts as they become due in the usual course of business, or (b) the
corporation's total assets would be less than its total liabilities. Moreover,
the FRB has issued a policy statement to the effect that a bank holding company
should not pay cash dividends in excess of net income for the past year less any
amounts which should be retained in view of the company's capital needs, asset
quality, and overall financial condition.
In addition to its general policy statement, the FRB has established
guidelines with respect to the maintenance of appropriate levels of capital by
larger registered bank holding companies. These guidelines measure a bank
holding company's capital adequacy by a number of different standards. Following
GFB's completion, in April, 1995, of a merger with Family First Federal Savings
Bank of Clifton, New Jersey, GFB's consolidated assets exceed $150 million, as a
result of which the FRB capital guidelines became applicable to GFB. Compliance
with the standards set forth in these guidelines could limit the amount of
dividends which GFB may pay in the future, although GFB's management does not
expect any such limitation in the
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<PAGE>
foreseeable future because GFB's measures of regulatory capital presently exceed
those guidelines.
Both the FRB guidelines and the FDIC regulations referred to above impose
two sets of capital adequacy requirements (together called the "Capital
Regulations"): minimum leverage rules, which require bank holding companies and
banks to maintain a specified minimum ratio of capital to total assets, and
risk-based capital rules, which require the maintenance of specified minimum
ratios of capital based upon a weighting of their assets and off-balance sheet
obligations according to risk.
Pursuant to the minimum leverage Capital Regulations as applied to both GFB
and Great Falls Bank, they are required to maintain a minimum leverage ratio of
"Tier 1 capital" to total assets of not less than 3%, for the highest rated bank
holding companies. The minimum leverage ratio will be increased for banks and
bank holding companies with higher levels of risk or that are experiencing or
anticipating significant growth.
The risk-based Capital Regulations have two basic components: a Tier 1 or
core capital requirement and a Tier 2 or supplementary capital requirement.
Tier 1 capital as applied to GFB and Great Falls Bank consists primarily of
common stockholders' equity less most intangible assets such as goodwill. Tier
2 capital elements, as applied to GFB and Great Falls Bank, consist primarily of
the allowance for losses on loans and leases, so-called "hybrid capital
instruments" and certain subordinated debt. Both GFB and Great Falls Bank were
in compliance with applicable capital adequacy requirements of the FRB and the
FDIC, respectively, at June 30, 1995 and December 31, 1994. For specific
ratios, see GFB's 1994 Annual Report and its Form 10-QSB for June 30, 1995, the
terms of which are incorporated herein by reference and copies of which are
being furnished with this Joint Proxy Statement/Prospectus.
Dissenters' Rights
The Banking Act provides that dissenting shareholders of a bank have
appraisal rights with respect to mergers and certain exchanges of shares with
acquiring bank holding companies. (For a discussion of appraisal rights of BCB
stockholders in connection with the proposed Acquisition, see "THE PROPOSED
ACQUISITION--Appraisal Rights".)
The Business Corporation Act confers appraisal rights on dissenting
shareholders of a general business corporation such as GFB with respect to a
merger, consolidation, or sale or other disposition of substantially all the
assets of a corporation not in the usual course of business. However, unless
the corporation's certificate of incorporation provides otherwise, no
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<PAGE>
statutory right of appraisal exists where the stock of the corporation is (i)
listed on a national securities exchange, (ii) held of record by not less than
1,000 holders, or (iii) where the consideration to be received pursuant to the
merger, consolidation or sale consists of cash and/or securities or other
obligations which, after the transaction, will be listed on a national
securities exchange or held of record by not less than 1,000 holders. At this
time, GFB Common Stock is not listed on a national stock exchange. Upon
completion of the Acquisition, it is anticipated that there will be
approximately 920 record holders of GFB Common Stock. The GFB Certificate
presently does not contain provisions specifying appraisal rights beyond those
provided in the Business Corporation Act.
Preemptive Rights
A New Jersey state bank such as BCB may issue shares of its authorized and
unissued stock without providing its current shareholders preemptive rights
unless its certificate of incorporation provides otherwise; the BCB Certificate
does not provide for such rights. Shareholders of a general business corporation
organized after January 1, 1969 such as GFB do not have any such preemptive
rights unless its certificate of incorporation otherwise provides; the GFB
Certificate does not provide for such rights.
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<PAGE>
COMPARATIVE INFORMATION CONCERNING MARKET FOR
BCB COMMON STOCK AND GFB COMMON STOCK
On August 31, 1995, there were 369,733 shares of BCB Common Stock issued
and outstanding. Such shares were held by approximately 183 shareholders of
record. BCB Common Stock is not traded on any exchange or in the over-the-
counter market. There is no established public trading market for BCB Common
Stock. Except for certain options held by the President of BCB (see "THE
PROPOSED ACQUISITION--Interests of Management in the Acquisition"), there are no
outstanding convertible securities, warrants, options, rights, calls or other
commitments of any nature to issue or sell BCB Common Stock.
BCB commenced paying cash dividends in the second half of 1991, and has
paid regular cash dividends thereafter. In 1993 and 1994 BCB paid a cash
dividend of $0.30 per annum.
On August 31, 1995, there were 1,069,750 shares of GFB Common Stock issued
and outstanding. Such shares were held by approximately 742 shareholders of
record. GFB Common Stock is thinly traded on the over-the-counter market.
Ryan, Beck & Co., Inc. ("Ryan, Beck"), located at 80 Main Street, West Orange,
New Jersey 07052, and FIA Capital Group, Inc., 119 Littleton Road, Parsippany,
New Jersey 07054, are the principal market makers for GFB Common Stock. Ryan,
Beck periodically issues information about stocks of commercial banks, thrifts
and bank holding companies in New Jersey and acts as a market maker of
securities of such financial institutions. The following quotations represent
the high and low closing bid prices for GFB Common Stock for each of the periods
indicated, as provided by Ryan, Beck. Such quotations reflect interdealer
quotations without adjustment for retail markup, markdown or commission, and may
not necessarily represent actual transactions. The stock prices and cash
dividends have been adjusted to take into account the effect of stock dividends
paid in 1993, 1994 and 1995.
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<PAGE>
<TABLE>
<CAPTION>
BID PRICE CASH
-------------- DIVIDENDS
HIGH LOW DECLARED(1)
------ ------ -----------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
First Quarter.............................. $ 7.98 $ 7.14 $.023
Second Quarter............................. 8.26 7.89 .025
Third Quarter.............................. 9.09 8.68 .025
Fourth Quarter............................. 9.30 8.88 .033
YEAR ENDED DECEMBER 31, 1994:
First Quarter.............................. 9.50 9.09 .033
Second Quarter............................. 9.71 9.30 .036
Third Quarter.............................. 10.68 10.23 .036
Fourth Quarter............................. 12.50 11.14 .045
YEAR ENDED DECEMBER 31, 1995:
First Quarter.............................. 10.91 10.68 .045
Second Quarter............................. 12.73 11.36 .050
Third Quarter (through September 6, 1995).. 18.00 15.88
</TABLE>
- ---------------------
(1) GFB paid its first cash dividend, an annual dividend, during 1992.
Commencing in 1993 GFB declared and paid dividends on a quarterly basis.
On September 22, 1995, the bid and asked prices for GFB Common Stock as
quoted by Ryan, Beck were $16 and $18, respectively. On August 15, 1995, the day
prior to public announcement of the proposed exchange of BCB Common Stock for
GFB Common Stock, the bid and asked prices for GFB Common Stock quoted by Ryan,
Beck were $12-7/8 and $14, respectively.
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<PAGE>
GFB AND SUBSIDIARY
------------------
PRO FORMA FINANCIAL INFORMATION
-------------------------------
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The following unaudited pro forma consolidated statements of condition of
GFB and BCB as of June 30, 1995 and December 31, 1994 and 1993, and the
consolidated statements of income for the six months ending June 30, 1995 and
June 30, 1994 and for the years ended December 31, 1994, 1993 and 1992 give
effect to the Acquisition accounted for as a pooling of interests. The pro forma
information is based upon the historical financial statements of GFB and BCB and
gives effect to the proposed transaction.
The unaudited pro forma information has been prepared by GFB management
based upon the consolidated financial statements and related notes thereto of
GFB and BCB. The Pro Forma Combined Condensed Statements of Income are not
necessarily indicative of operating results which would have been achieved had
the Acquisition been consummated as of the respective dates indicated above and
should not be construed as being representative of future periods.
-53-
<PAGE>
GFB AND BCB
PRO FORMA COMBINED CONDENSED STATEMENT OF CONDITION
(UNAUDITED)
DOLLARS IN THOUSANDS
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- --------------- ---------------- --------
<S> <C> <C> <C> <C>
ASSETS
Cash and Due From Banks:
Non-interest bearing........ $ 5,901 $ 4,463 $ 10,364
Interest bearing............ 1,038 105 1,143
Total cash and due from
banks........................ 6,939 4,568 11,507
Federal funds sold............ 1,400 5,250 6,650
Securities
Available for sale, at fair
value...................... 38,770 7,145 45,915
Held to maturity, at
amortized cost............. 27,737 6,881 34,618
Loans......................... 84,315 45,643 129,958
Allowance for possible loan
losses....................... (2,056) (542) (2,598)
Total loans................... 82,259 45,101 127,360
Premises and equipment, net... 1,234 872 2,106
Other real estate............. 1,576 258 1,834
Accrued interest receivable... 1,430 462 1,721
Intangible assets............. 764 764
Other assets.................. 2,141 437 2,749
-------- ------- --------
Total Assets.................. $164,250 $70,974 $235,224
======== ======= ========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- -------------- ---------------- --------
<S> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand......................... $ 57,393 $ 38,266 $ 95,659
Savings........................ 23,681 3,078 26,759
Time........................... 62,193 22,309 84,502
---------- -------- ----------
143,267 63,653 206,920
Securities sold under agreements
to repurchase................. 3,313 - 3,313
Accrued expenses and other
liabilities................... 1,569 597 2,166
Subordinated debentures........ 4,970 4,970
---------- -------- ----------
Total Liabilities.............. 153,119 64,250 217,369
---------- -------- ----------
Shareholders' equity
- --------------------
Common stock................... 1,070 924 (297) 1,697
Additional paid-in capital..... 10,255 4,598 297 15,150
Retained earnings.............. 114 1,188 1,302
Net unrealized holding
(losses) gains securities
available for sale............ (308) 14 (294)
---------- -------- ----------
Total Shareholders' Equity..... 11,131 6,724 17,855
---------- -------- ----------
Total Liabilities and
Shareholders' Equity.......... $ 164,250 $ 70,974 $ 235,224
Shares outstanding at the end
of the period................. 1,069,750 369,733 1,698,296
Book value per share........... $ 10.41 $ 18.19 $ 10.51
</TABLE>
-55-
<PAGE>
_______________
(1) The pro forma adjustment represents the difference between the par value of
GFB Common Stock and BCB Common Stock multiplied by the number of GFB common
shares to be issued in the transaction.
-56-
<PAGE>
GFB AND BCB
PRO FORMA COMBINED CONDENSED STATEMENT OF CONDITION
(UNAUDITED)
DOLLARS IN THOUSANDS
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- -------------- ---------------- --------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks:
Non-interest bearing.......... $ 4,289 $ 2,138 $ 6,427
Interest bearing.............. 424 595 1,019
-------- -------- ----------
Total cash and due from
banks.......................... 4,713 2,733 7,446
Federal funds sold.............. - 1,625 1,625
Securities
Available for sale, at fair
value........................ 25,403 - 25,403
Held to maturity, at
amortized cost............... 20,297 13,261 33,558
Loans........................... 54,147 42,517 96,664
Allowance for possible loan
losses......................... 1,233 591 1,824
Unearned income................. 138 152 290
-------- -------- ----------
Total loans..................... 52,776 41,774 94,550
Premises and equipment, net..... 664 860 1,524
Other real estate............... 561 623 1,184
Accrued interest receivable..... 1,031 465 1,496
Intangible assets............... 336 - 336
Other assets.................... 901 280 1,181
-------- -------- ----------
Total Assets.................... $106,682 $ 61,621 $ 168,303
======== ======== ==========
</TABLE>
-57-
<PAGE>
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- -------------- ---------------- --------
<S> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand.......................... $ 40,489 $ 35,695 $ 76,184
Savings......................... 18,649 1,802 20,451
Time............................ 30,481 17,173 47,654
-------- -------- ----------
89,619 54,670 144,289
Securities sold under
agreements to repurchase........ 2,700 2,700
Accrued expenses and other
liabilities.................... 957 433 1,390
Subordinated debentures......... 4,963 4,963
-------- -------- ----------
Total Liabilities............... 98,239 55,103 153,342
-------- -------- ----------
Commitments and contingencies
Shareholders' equity
Common stock.................... 816 924 (297) 1,443
Additional paid-in capital...... 7,314 4,598 297 12,209
Retained earnings (deficit)..... 847 996 1,843
Net unrealized holding losses
securities available for sale.. (534) (534)
-------- -------- ----------
Total Shareholders' Equity 8,443 6,518 14,961
-------- -------- ----------
Total Liabilities and
Shareholders' Equity $106,682 $ 61,621 $ 168,303
Shares outstanding at the end
of the period.................. 897,809 369,733 1,526,355
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- -------------- ---------------- --------
<S> <C> <C> <C> <C>
Book value per share............ $9.40 $17.63 $9.80
</TABLE>
_________________
(1) The pro forma adjustment represents the difference between the par value of
GFB and BCB multiplied by the number of GFB common shares to be issued in the
transaction.
-59-
<PAGE>
GFB AND BCB
PRO FORMA COMBINED CONDENSED STATEMENT OF CONDITION
(UNAUDITED)
DOLLARS IN THOUSANDS
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- -------------- ---------------- --------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks:
Non-interest bearing......... $ 3,415 $ 1,476 $ 4,891
Interest bearing............. 3,641 3,088 6,729
-------- -------- ---------
Total cash and due from
banks......................... 7,056 4,564 11,620
Federal funds sold............. 2,375 3,750 6,125
Securities..................... 33,717 9,751 43,468
Loans.......................... 46,643 37,289 83,932
Allowance for possible loan 1,272 499 1,771
losses........................
Unearned income................ 122 119 241
-------- -------- ---------
Total loans.................... 45,249 36,671 81,920
Loans held for sale............ 2,926 2,926
Premises and equipment, net.... 712 370 1,082
Other real estate.............. 820 631 1,451
Accrued interest receivable.... 662 301 963
Intangible assets.............. 223 223
Other assets................... 614 240 854
-------- -------- ---------
Total Assets................... $ 94,354 $ 56,278 $ 150,632
</TABLE>
-60-
<PAGE>
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- -------------- ---------------- ---------
<S> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Demand......................... $ 35,745 $ 33,096 $ 68,841
Savings........................ 17,023 2,019 19,042
Time........................... 27,908 14,061 41,969
-------- -------- ----------
80,676 49,176 129,852
Securities sold under
agreements to repurchase....... 750 750
Accrued expenses and other
liabilities................... 667 257 924
Subordinated debentures........ 4,950 4,950
-------- -------- ----------
Total Liabilities.............. 86,293 50,183 136,476
-------- -------- ----------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock................... 732 922 (295) 1,359
Additional paid-in capital..... 6,473 4,586 295 11,354
Retained earnings (deficit).... 856 587 1,443
Total Shareholders' Equity 8,061 6,095 14,156
-------- -------- ----------
Total Liabilities and
Shareholders' Equity $ 94,354 $ 56,278 $ 150,632
Shares outstanding at the end
of the period................. 804,581 368,757 1,431,468
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- -------------- ---------------- ---------
<S> <C> <C> <C> <C>
Book value per share............ $10.02 $16.53 $8.34
</TABLE>
(1) The pro forma adjustment represents the difference between the par value of
GFB and BCB Common Stock multiplied by the number of GFB common shares to
be issued in the transaction.
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<PAGE>
GFB AND BCB
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
GFB AND
PRO FORMA BCB
HISTORICAL GFB HISTORICAL BCB ADJUSTMENTS/(1)/ COMBINED
-------------- -------------- ---------------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on loans........... $3,345 $2,163 $5,508
Interest on investments..... 1,822 469 2,291
------ ------ ------
Total interest income....... 5,167 2,632 7,799
INTEREST EXPENSE
Interest on deposits........ 1,688 881 2,569
Interest on borrowings...... 315 315
------ ------ ------
Total interest expense...... 2,003 881 2,884
TNET INTEREST INCOME 3,164 1,751 4,915
Provision for possible
loan losses................. 150 11 161
------ ------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,014 1,740 4,754
Other income................ 492 387 879
------ ------ ------
3,506 2,127 5,633
OTHER EXPENSES
Salaries and employee
benefits................... 959 702 1,661
Occupancy and equipment
expense.................... 337 146 483
Amortization of intangible
assets..................... 82 82
Other operating expenses.... 991 877 1,868
------ ------ ------
Total other expenses........ 2,369 1,725 4,094
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
INCOME BEFORE INCOME
TAXES 1,137 402 1,539
Provision for income taxes.. 380 137 517
------ ------ ------
NET INCOME $ 757 $ 265 $1,022
Weighted average shares
outstanding................ 978 370 1,607
Net income per share........ $0.77 $0.72 $0.64
</TABLE>
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<PAGE>
GFB AND BCB
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA GFB AND BCB
GFB BCB ADJUSTMENTS COMBINED
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on loans.................... $4,811 $3,597 $ 8,408
Interest on investments.............. 2,191 803 2,994
------ ------ -------
Total interest income................ 7,002 4,400 11,402
INTEREST EXPENSE
Interest on deposits................. 1,970 1,186 3,156
Interest on borrowings............... 478 478
------ ------ -------
Total interest expense............... 2,448 1,186 3,634
NET INTEREST INCOME 4,554 3,214 7,768
Provision for possible
loan losses.......................... 130 42 172
------ ------ -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,424 3,172 7,596
Other income......................... 398 457 855
------ ------ -------
4,822 3,629 8,451
OTHER EXPENSES
Salaries and employee benefits....... 1,456 1,289 2,745
Occupancy and equipment expense...... 527 224 751
Amortization of intangible assets.... 110 110
Other operating expenses............. 1,227 1,292 2,519
------ ------ -------
Total other expenses................. 3,320 2,805 6,125
INCOME BEFORE INCOME TAXES 1,502 824 2,326
Provision for income taxes........... 536 304 840
------ ------ -------
</TABLE>
-65-
<PAGE>
<TABLE>
<S> <C> <C> <C>
NET INCOME $ 966 $ 520 $ 1,486
Weighted average shares outstanding.. 886 369 1,513
Net income per share................. $ 1.09 $ 1.41 $ 0.98
</TABLE>
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<PAGE>
GFB AND BCB
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA GFB AND BCB
GFB BCB ADJUSTMENTS COMBINED
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on loans........... $4,301 $2,786 $7,087
Interest on investments..... 1,586 662 2,248
------ ------ ------
Total interest income....... 5,887 3,448 9,335
INTEREST EXPENSE
Interest on deposits........ 1,880 1,118 2,998
Interest on borrowings...... 4 4
------ ------ ------
Total interest expense...... 1,884 1,118 3,002
NET INTEREST INCOME 4,003 2,330 6,333
Provision for possible
loan losses................. 392 86 478
------ ------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,611 2,244 5,855
Other income................ 659 679 1,338
------ ------ ------
4,270 2,923 7,193
OTHER EXPENSES
Salaries and employee
benefits................... 1,283 1,054 2,337
Occupancy and equipment
expense.................... 438 161 599
Amortization of intangible
assets..................... 111 111
Other operating expenses.... 1,087 954 2,041
------ ------ ------
Total other expenses........ 2,919 2,169 5,088
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
INCOME BEFORE INCOME
TAXES 1,351 754 2,105
Provision for income taxes.. 516 288 804
------ ------ ------
NET INCOME $ 835 $ 466 $1,301
Weighted average shares
outstanding................ 873 369 1,501
Net income per share........ $ 0.96 $ 1.26 $ 0.87
</TABLE>
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<PAGE>
GFB AND BCB
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
DOLLARS IN THOUSANDS
FOR THE YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA GFB AND BCB
GFB BCB ADJUSTMENTS COMBINED
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on loans $4,725 $2,712 $7,437
Interest on investments 1,239 558 1,797
------ ------ ------
Total interest income 5,964 3,270 9,234
INTEREST EXPENSE
Interest on deposits 2,121 1,171 3,292
Interest on borrowings 2 2
------ ------ ------
Total interest expense 2,123 1,171 3,294
NET INTEREST INCOME 3,841 2,099 5,940
Provision for possible
loan losses 870 82 952
------ ------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,971 2,017 4,988
Other income 638 386 1,024
------ ------ ------
3,609 2,403 6,012
OTHER EXPENSES
Salaries and employee
benefits 1,052 770 1,822
Occupancy and equipment
expense 411 132 543
Amortization of intangible
assets 111 111
Other operating expenses 1,018 943 1,961
------ ------ ------
Total other expenses 2,592 1,845 4,437
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
INCOME BEFORE INCOME
TAXES 1,017 558 1,575
Provision for income taxes 333 208 541
------ ------ ------
NET INCOME $ 684 $ 350 $1,034
Weighted average shares
outstanding 868 369 1,495
Net income per share $ 0.79 $ 0.95 $ 0.69
</TABLE>
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<PAGE>
MATERIAL CONTACTS BETWEEN GFB AND BCB
Beginning in early 1991, BCB and GFB engaged in discussions regarding a
possible business combination. During September 1991, BCB and GFB entered into
an Acquisition Agreement (the "1991 Acquisition Agreement") which provided for
GFB to acquire all of the outstanding stock of BCB in exchange for shares of GFB
Common Stock based upon the relative book values per share of GFB and BCB,
respectively, subject in each case to certain adjustments. The 1991 Acquisition
Agreement was terminated by joint agreement of the parties, and an Agreement of
Merger (the "1992 Merger Agreement") was entered into among BCB, GFB and Great
Falls Bank in January 1992. The 1992 Merger Agreement provided for BCB to be
merged into Great Falls Bank, and for BCB shares to be converted into GFB shares
based upon the same exchange formula as was specified in the 1991 Acquisition
Agreement. The structure of the 1991 Acquisition Agreement was changed to
reflect the parties' view of what the various bank regulatory agencies having
jurisdiction over the transaction would find more acceptable at the time. The
1992 Merger Agreement was terminated during July, 1992 by joint agreement of the
parties.
GFB and BCB again began discussions in early 1995 regarding a business
combination. Those talks resulted in the execution of the Agreement and the
proposal for the Acquisition.
The following relationships exist among affiliates of GFB and BCB: John
Soldoveri, the Chairman and Chief Executive Officer of GFB and a principal
shareholder of both GFB and BCB, is the uncle of Anthony M. Bruno, Jr., the
Chairman of BCB. C. Mark Campbell, President of BCB, is Mr. Bruno's brother-in-
law. Mr. Bruno and David M. Corry, a director of Great Falls Bank, are both
partners in the certified public accounting firm Bruno, DiBello & Co., LLC.
INDEMNIFICATION FOR SECURITIES ACT VIOLATIONS
The Bylaws of GFB state that GFB shall indemnify any present or former
director or officer, or the legal representative of any such person, in
connection with any proceeding involving such director or officer by reason of
his being, or having been, a director or officer, other than a proceeding by or
in the right of GFB, if (i) he acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of GFB and (ii) with
respect to any criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. No indemnification shall be made by GFB unless a
determination that indemnification is proper is made by the Board of Directors
acting by a quorum of directors who are not parties to the proceeding,
independent legal counsel or the shareholders of GFB. The Bylaws of GFB also
state that GFB shall
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indemnify any present or former officer or director of GFB against his
reasonable costs, disbursements and counsel fees in connection with any
proceeding by or in the right of GFB involving such officer or director by
reason of his being or having been an officer or director, if he acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of GFB; however, in no such proceeding shall indemnification be
provided in respect of any claim, issue or matter as to which such director or
officer shall have been adjudged to be liable for negligence or misconduct,
unless and only to the extent that the court determines that despite the
adjudication of liability, such director or officer is fairly and reasonably
entitled to indemnification. No indemnification pertaining to a proceeding by
or in the right of GFB shall be made unless ordered by a court or unless a
determination that indemnification is proper is made by the Board of Directors
acting by a quorum of directors who are not parties to the proceeding,
independent legal counsel or the shareholders of GFB. The Bylaws further
provide that, notwithstanding the requirement of a determination that
indemnification is proper in a specific case, GFB shall indemnify any present or
former director or officer against reasonable costs, disbursements and counsel
fees in any proceeding described above to the extent that such director or
officer has been successful on the merits or otherwise in any such proceeding or
in defense of any claim, issue or matter therein. Payment of expenses by GFB in
advance of the final disposition of the proceeding is authorized upon receipt of
an undertaking by or on behalf of the indemnified person to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified.
Finally, the GFB Certificate provides that no director or officer of GFB shall
be personally liable to GFB or its stockholders for damages for breach of any
duty owed to GFB or its stockholders, except that no director or officer shall
be relieved from liability for any breach of duty based upon an act or omission
(i) in breach of the duty of loyalty, (ii) not in good faith or involving a
known violation of law or (iii) resulting in receipt by such person of an
improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling GFB pursuant to
the foregoing provisions, GFB has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore not enforceable.
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<PAGE>
BUSINESS OF BCB
GENERAL
BCB was incorporated as a New Jersey state chartered commercial bank in
August of 1987 and opened its doors for business in February 1988. BCB has one
business segment, banking. Until September of 1994, BCB's primary purpose was
to serve the commercial and personal loan, transaction and investments needs of
entrepreneurs, executives and professionals who own or work for small to medium
size enterprises which are located in BCB's market area of Bergen County in
northern New Jersey and BCB operated out of one office located in Paramus, New
Jersey.
In the fall of 1994, BCB made a strategic decision to expand its services
by the means of offering retail products and in conjunction with this decision
opened up two branches located in Wood-Ridge and Hasbrouck Heights, New Jersey.
BCB seeks to attract a select client base by offering products and
services, such as checking, savings, certificates of deposit, safe deposit
boxes, and secured and unsecured loans that are personalized for the needs of
the respective clients on both a business and individual basis.
It is BCB's intent to staff its branch offices whenever possible with
employees who are citizens of the town where the branches are located. In this
way BCB hopes to promote a comfortable home-town environment to the members of
the community.
In an effort to further determine and recognize the needs of professionals
and individuals in BCB's market area, BCB maintains a Medical Advisory Board and
has recently started a Regional Advisory Board in southern Bergen County. These
Boards help address the needs of the professionals and individuals in BCB's
market areas.
Over the course of the years, BCB has developed a number of specialized
deposit and loan products. BCB has introduced a High Yield Commercial
Investment Account designed exclusively for its commercial checking account
clients. The account pays a premium interest rate on balances over $50,000. In
addition, BCB offers a financing program for physicians malpractice insurance
premiums, has instituted an Affinity Card for the Bergen County Medical Society,
provides both secured and unsecured credit cards to the general public, and is
in the process of developing jointly with the Borough of Paramus a Visa Affinity
Card for the Borough of Paramus.
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<PAGE>
As of June 30, 1995, BCB had deposits of $63.7 million, total loans of
$45.8 million and total assets of $71.0 million.
COMPETITION
BCB faces significant competition in attracting depositors and credit-
worthy borrowers from commercial banks, thrifts and other financial and
investment institutions in its market area, many of which are substantially
larger than BCB. Although BCB is limited in making loans because of its size,
it has, on occasion, arranged for participation by other banks in larger credit
facilities.
BCB competes for depositors by offering custom deposit products and
services tailored to customers individual needs. BCB competes for credit-worthy
borrowers by targeting certain specific markets, such as the medical profession,
and by offering competitive rates and personal service.
EMPLOYEES
At June 30, 1995, BCB had 39 full-time employees. BCB believes its
relationship with its employees is good.
LEGAL PROCEEDINGS
BCB is not involved in any material litigation, other than legal
proceedings from time to time which are incident to the ordinary course of its
business.
PROPERTY
BCB operates its administrative offices and a retail branch from an office
located at Two Sears Drive, Paramus, New Jersey. BCB leases this space. In
addition, BCB maintains two branches in leased property located in Wood-Ridge
and Hasbrouck Heights, New Jersey.
REGULATION
BCB is subject to a variety of Federal and New Jersey statutes and
regulations applicable to commercial banks, all of which impact the operations
of BCB.
General - Recent Regulatory Enactments
- --------------------------------------
On September 29, 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act (the "Interstate Act") was enacted. The Interstate Act generally
enhances the ability of bank holding companies to conduct their banking business
across state borders. The Interstate Act has two main provisions. The first
provision generally provides that commencing on September
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29, 1995, bank holding companies may acquire banks located in any state
regardless of the provisions of state law. These acquisitions are subject to
certain restrictions, including caps on the total percentage of deposits that a
bank holding company may control both nationally and in any single state. New
Jersey law currently allows interstate acquisitions by bank holding companies
whose home state has "reciprocal" legislation which would allow acquisitions by
New Jersey based bank holding companies.
The second major provision of the Interstate Act permits, beginning on June
1, 1997, banks located in different states to merge and continue to operate as a
single institution in more than one state. States may, by legislation passed
before June 1, 1997, opt out of the interstate bank merger provisions of the
Interstate Act. In addition, states may elect to opt in and allow interstate
bank mergers prior to June 1, 1997.
A final provision of the Interstate Act permits banks located in one state
to establish new branches in another state without obtaining a separate bank
charter in that state, but only if the state in which the branch is located has
adopted legislation specifically allowing interstate de novo branching.
It is unclear at this time whether New Jersey will opt out of the
interstate bank merger provisions of the Interstate Act or opt in at a date
earlier than June 1, 1997, or whether New Jersey will permit interstate de novo
branching. Although it is impossible to predict the impact of the Interstate
Act at this time, it will most likely enhance competition in the New Jersey
marketplace as bank holding companies located outside of New Jersey become freer
to acquire institutions located in New Jersey. The ability to operate acquired
New Jersey banks as part of an existing bank charter rather than as a separately
chartered institution may make interstate banking more cost-efficient, and may
lead to additional acquisitions in New Jersey by out-of-state institutions.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was enacted in December 1991. FDICIA was primarily designed to
provide additional financing for the FDIC by increasing its borrowing ability.
The FDIC was given the authority to increase deposit insurance premiums to repay
any such borrowing. In addition, FDICIA identifies capital standard categories
for financial institutions: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions depending on the category in
which an institution is classified. Pursuant to FDICIA, undercapitalized
institutions must submit recapitalization plans, and a holding company
controlling a failing institution must
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guarantee such institution's compliance with its plan. As of December 31, 1994,
BCB was deemed "well capitalized" under the regulations of the FDIC implementing
FDICIA.
FDICIA also requires the various regulatory agencies to prescribe certain
non-capital standards for safety and soundness relating generally to operations
and management, asset quality and executive compensation and permits regulatory
action against a financial institution that does not meet such standards. The
federal bank regulatory agencies have proposed regulations implementing these
provisions, but have not yet formally adopted these standards.
The deposits of BCB are insured up to applicable limits by the FDIC.
Accordingly, BCB is subject to deposit insurance assessments to maintain the
Bank Insurance Fund ("BIF") of the FDIC. Pursuant to FDICIA, the FDIC was
required to establish a risk-based insurance assessment system by 1994. This
approach was designed to ensure that a banking institution's insurance
assessment is based on three factors: the probability that the applicable
insurance fund will incur a loss from the institution; the likely amount of the
loss; and the revenue needs of the insurance fund.
On October 1, 1992, the FDIC adopted final regulations implementing a
transitional risk-based assessment system and increasing the deposit insurance
rate for certain members of BIF. Under the risk-based assessment system, each
institution is assigned to one of nine assessment risk classifications based on
its capital ratios and supervisory evaluations. Under a proposal adopted by the
FDIC in August, 1995, the lowest risk institutions will pay deposit insurance at
a rate of .04% of domestic deposits while the highest risk institutions will be
assessed at the rate of .31% of domestic deposits. Each institution's
classification under the system is re-examined semiannually. In addition, the
FDIC is authorized to increase or decrease such rates on a semiannual basis.
Capital Adequacy Guidelines
- ---------------------------
BCB is subject to capital adequacy guidelines promulgated by the FDIC. The
FDIC has issued regulations to define the adequacy of capital based upon the
sensitivity of assets and off-balance sheet exposures to risk factors. Four
categories of risk weights (0%, 20%, 50% and 100%) were established to be
applied to different types of balance sheet assets and off-balance sheet
exposures. The aggregate of the risk weighted items (risk-based assets) is the
denominator of the ratio, the numerator of which is a newly defined risk-based
capital. Under the regulations, risk-based capital has been classified into two
categories. Tier 1 capital includes common and qualifying perpetual preferred
stockholders' equity, less
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goodwill. Tier 2 capital includes mandatory convertible debt, allowance for
loan losses, subject to certain limitations, and certain subordinated and term
debt securities. Total qualifying capital consists of Tier 1 capital and Tier 2
capital; however, the amount of Tier 2 capital may not exceed the amount of Tier
1 capital in the computation of total qualifying capital. The minimum capital
ratio required under the above formula was 4% for Tier 1 capital and 8% for
total qualifying capital. BCB at December 31, 1994 maintained a ratio of Tier 1
capital as a percentage of risk-adjusted assets of 10.30% and a ratio of total
qualifying capital as a percentage of risk-adjusted assets of 11.21%. At June
30, 1995, BCB's capital ratio as a percentage of risk-adjusted assets was 9.29%
and its ratio of total qualifying capital as a percentage of risk-adjusted
assets was 10.04%.
The FDIC has also issued leverage capital adequacy standards. Under these
standards, in addition to the risk-based capital ratios, a bank must also
maintain a ratio of Tier 1 capital (using the risk-based capital definition) to
total assets of at least 3%. Institutions which are not "top-rated" will be
expected to maintain a ratio 100 to 200 basis points above this ratio. BCB's
leverage ratio at December 31, 1994 was 10.06% and at June 30, 1995 was 9.43%.
Dividends
- ---------
As a New Jersey State commercial bank, BCB's ability to pay dividends is
regulated and limited under the Banking Act. The Banking Act provides that a
bank may not pay a dividend unless, following the payment of such dividend, the
capital stock of the bank will be unimpaired and the bank will have a surplus of
not less than 50% of its capital stock or the payment of the dividend will not
reduce the surplus of the bank.
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BERGEN COMMERCIAL BANK
FINANCIAL SUMMARY AND SELECTED PER SHARE DATA OF BCB
(IN THOUSANDS, EXCEPT PER SHARE DATA)
-------------------------------------
<TABLE>
<CAPTION>
Six Months Years Ended
Ended June 30 December 31
-------------- ----------------------
1995 1994 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF INCOME DATA:
Total interest income $2,632 $1,977 $4,400 $3,448 $3,270
Total interest expense 881 530 1,186 1,118 1,171
Provision for possible loan losses 11 20 42 86 82
Net interest income after
provision for possible loan
losses 1,740 1,427 3,172 2,244 2,017
Other income 387 253 457 679 386
Other expenses 1,725 1,269 2,805 2,169 1,845
Income before income taxes 402 411 824 754 558
Provision for income taxes 137 152 304 288 208
Net income 265 259 520 466 350
PER SHARE DATA:
Net income $ .72 $ .70 $ 1.41 $ 1.26 $ .95
Book value 18.19 17.23 17.63 16.53 15.55
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
As of
June 30 Year Ended December 31
-------- -------------------------
1995 1994 1993 1992
-------- ------- ------- -------
<S> <C> <C> <C> <C>
SELECTED STATEMENT OF CONDITION DATA:
Total assets $70,974 $61,621 $56,278 $49,171
Securities 14,026 13,261 9,751 3,530
Federal funds sold 5,250 1,625 3,750 6,350
Loans (net of unearned income) 45,643 42,365 37,170 33,331
Allowance for possible loan losses 542 591 499 582
Deposits 63,653 54,670 49,176 42,383
Securities sold under agreements to
repurchase 0 0 750 703
Shareholders' equity 6,724 6,518 6,095 5,733
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF BCB
Management's Disussion and Analysis is intended to assist in
understanding BCB by describing BCB's financial condition and results of
operations. It should be read in conjunction with the audited and unaudited
financial statements and the accompanying notes appearing elsewhere in this
Proxy Statement/Prospectus.
SIX MONTHS ENDED JUNE 30, 1995
------------------------------
PERFORMANCE SUMMARY AND MANAGEMENT STRATEGY
- -------------------------------------------
BCB's main market focus is the provision of loans and other services
to professionals such as physicians, attorneys and accountants and other small
to medium size businesses. BCB has continued its focus on providing
individualized service to health care and other professionals. However, BCB has
begun to diversify its operations by offering full services to all customers,
including the introduction of a retail product line for consumers. A
proliferation of alternative "deposit" vehicles, advances in technology and a
blurring distinction between banks, thrifts and brokerage houses have altered
BCB's pricing philosophy. Great emphasis is placed on individual customer and
product profitability, and the recovery of costs incurred exclusive of the net
interest margin. BCB expects all relationships to be profitable via either
balances or fees.
At June 30, 1995, BCB had assets of $71.0 million, an increase of $9.4
million, or 15.3%, from assets at December 31, 1994. Loans outstanding grew to
$45.8 million at June 30, 1995, an increase of $3.3 million, or 7.8%, from
December 31, 1994, and deposits increased by $9.0 million, or 16.4%, to $63.7
million. The current trend of deposit growth exceeding loan growth is unusual;
in prior years the growth rates have been relatively parallel. The growth in
deposits was primarily the result of new deposit relationships in the targeted
markets BCB has traditionally served, and the opening of two new branch offices
in late 1994 in Wood-Ridge and Hasbrouck Heights, New Jersey, both of which
generated new deposits faster than they generated new loan originations.
Shareholders' equity grew to $6.7 million, as a result of continued profitable
operations. BCB commenced paying cash dividends in 1992 and has consistently
paid dividends since.
Net income for the six months ended June 30, 1995 was $265 thousand,
or 72 cents per share, up 3.3% from the comparable period of 1994. Earnings for
the first half of 1995 were net of an $11 thousand provision for loan losses,
which resulted in a total allowance for loan losses of $542 thousand, or 1.18%
of
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total loans at quarter end, compared to $591 thousand, or 1.39% of total loans,
at December 31, 1994. The decline was a result of net charge-offs of $60
thousand during the first half of 1995.
Other real estate ("ORE") stood at $258 thousand at June 30, 1995, a
decrease of $365 thousand from December 31, 1994. ORE is carried at the lower
of fair market value of the property less estimated disposal and carrying costs
or the recorded investment in the related loan. BCB's non-performing loans at
June 30, 1995 increased to $794 thousand as a result of the reclassification of
an in-substance foreclosure of $359 thousand from ORE to impaired loans in
accordance with Financial Accounting Standards Board Statement No. 114 and the
transfer to non-accrual status of two loans in the process of collection.
RESULTS OF OPERATIONS
- ---------------------
For the six months ended June 1995, BCB reported earnings of $265
thousand, an increase of $6 thousand, or 3.3%, over the comparable period of
1994. The increase in earnings in 1995 is primarily attributable to greater net
interest income and non-interest income, partially offset by greater operating
expenses.
Total interest income increased by $655 thousand, or 33.1%, during the
first six months of 1995 compared to the comparable period of 1994. The
increase resulted from an increase in the volume of interest earning assets
combined with an increase in rates. BCB continued to experience loan growth in
the first half of 1995. The interest on newly originated loans exceeded the
yield on the assets they replaced, federal funds, resulting in an increase in
average rate.
The same rate/volume factors - increases in both volume and rate -
accounted for an increase in interest expenses of $351 thousand, or 66.2%, in
the first half of 1995 as compared to the first half of 1994. BCB's total
deposits increased by 16.5% to $63.7 million at June 30, 1995, from $54.7 at
December 31, 1994. In addition, BCB's average interest paid on deposits
increased to 3.11% at June 30, 1995 from 2.21% at December 31, 1994, reflecting
higher interest rates and promotional rates offered on time and savings deposits
to entice retail customers in the new branch locations. The combined impact on
net interest earnings was an increase of approximately 21.0%, or $304 thousand,
in the first half of 1995 over the comparable period of 1994.
Average non-interest bearing liabilities decreased by $1.5 million, or
11.4%, in the first half of 1995 compared to the first half of 1994. Average
interest bearing demand deposits grew by $7.5 million or 20.2% in the first half
of 1995 compared to the first half of 1994.
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In addition to increases in net interest income, BCB's earnings were
positively affected by increases in non-interest income. BCB's primary sources
of non-interest income are service charges on deposit accounts, letter of credit
fees, sales of money orders and travelers checks, safe deposit box rentals,
mortgage sales and servicing, and merchant credit card fees. During the first
half of 1995, income from these sources increased by $134 thousand, or 53.0%,
over the comparable period of 1994. The increase is attributable to increased
emphasis on generating additional service income along with a modest increase in
BCB's fee structure. Merchant credit card service fees represent a significant
part of BCB's non-interest income for the first half of 1995. BCB has begun a
program to increase merchant credit card servicing fee income by servicing
merchant credit card portfolios for other financial institutions. As of June
30, BCB serviced credit card portfolios for 3 institutions. This area has
contributed greatly to increases in both non-interest income and non-interest
expense for the periods ended June 30, 1995 and 1994, respectively.
Non-interest expense rose by $456 thousand, or 35.9%, during the first
half of 1995 compared to the first half of 1994. Salary and employee benefit
expense constituted over 40% of total operating expenses during the first half
of 1995. Salary and employee benefit expense increased by $88 thousand, or
14.3% during the first half of 1995 compared to the first half of 1994. The
increase was the result of greater staffing levels to service BCB's growing
customer base, the addition of branch offices in Wood-Ridge and Hasbrouck
Heights, New Jersey, and the growth of BCB's credit card servicing department.
In addition, the increase reflects increased benefit costs.
Occupancy expense increased by $50 thousand, or 52.1%, in the first
half of 1995 compared to the comparable period of 1994 due to the opening of
BCB's two new branch offices. Other operating expenses increased by $318
thousand, or 56.9%, in the first half of 1995. This category includes
equipment, marketing, computer services, insurance premiums, FDIC premiums,
communication, legal and professional fees, and other expenses, including credit
card servicing expenses. The increase during 1995 in other expenses is
primarily the result of the increase in credit card servicing costs of $216
thousand and increases in equipment, FDIC and other insurance premiums, legal
and professional fees, unreimbursed loan related expenses, data processing
costs, correspondent bank fees, supplies and ATM operations, partially offset by
decreases in marketing, director fees, and other miscellaneous expenses.
A provision for loan losses of $11 thousand was recorded during the
first half of 1995 compared with a provision of $20 thousand in the first half
of 1994. This reduced provision is based upon management's view of the risk
inherent in
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BCB's loan portfolio at June 30, 1995, as well as current economic conditions.
The provision for income taxes was $137,000 in the first half of 1995
versus $152,000 in the first half of 1994. The lower provision was due to lower
state income tax on BCB's investment subsidiary, which holds a substantial
portion of BCB's investments.
FINANCIAL CONDITION
- -------------------
BCB's assets increased $9.4 million, or 15.3%, at June 30, 1995
compared to December 31, 1994. An increase of $3.0 million in the average
balance of BCB's loan portfolio, to $43.3 million from $40.3 at December 31,
1994 was primarily responsible for this increase in assets. In addition, BCB's
securities portfolio, including federal funds sold, increased by $3.9 million to
$19.4 million at June 30, 1995 from $15.5 at December 31, 1994. The increase in
total assets was primarily caused by an increase in deposits from the Bank's
recently opened branches, as well as by the generation of new business
relationships from BCB's main office. Since deposits increased more rapidly than
loan originations, the excess funds were used to purchase additional securities.
At June 30, 1995, BCB maintained a total allowance for possible loan
losses, net of amounts charged against the allowance, and recoveries on loans
previously charged off, of $542 thousand, compared to $591 thousand at December
31, 1994. The allowance at June 30, 1995 represented 1.18% of total loans
outstanding, 68.3% of non-performing loans, and 51.5% of non-performing assets.
Management considers the allowance to be adequate at the present time. However,
future loan loss provisions will depend upon management's ongoing analysis of
the risks inherent in BCB's loan portfolio, economic conditions in BCB's
marketing areas and the credit quality of individual borrowers.
At June 30, 1995, BCB had ORE of $258 thousand. ORE includes
properties that have been acquired by BCB through foreclosure. Prior to January
1, 1995, ORE included items classified as in-substance foreclosures. BCB is
currently actively seeking to dispose of ORE as marketing opportunities arise.
YEAR ENDED DECEMBER 31, 1994
----------------------------
PERFORMANCE SUMMARY
- -------------------
BCB entered its eighth year of operations having achieved record
levels of assets, loans, deposits, equity and income. At December 31, 1994,
total assets were $61.6 million,
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<PAGE>
up more than 9.4% from assets at December 31, 1993. Loans grew to $42.5 million
during the same period, an increase of 13.9%, and deposits increased by 11.2% to
$49.2 million. Shareholders' equity grew to $6.5 million, an increase of 6.6%
during 1994.
Net income for the twelve months ended December 31, 1994 was $520
thousand, or $1.41 per share, compared to $466 thousand, or $1.26 per share, in
1993.
ORE totaled $623 thousand and $631 thousand as of December 31, 1994
and December 31, 1993, respectively. BCB's loan portfolio did not include any
non-accrual loans at December 31, 1994 and December 31, 1993. At December 31,
1994, BCB maintained an allowance for loan losses of $591 thousand, or 1.39% of
total loans and 94.9% of non-performing assets. The assets held in ORE are
carried at the lower of fair market value or book value.
The growth in assets, loans and deposits in 1994 was primarily the
result of new client relationships in the targeted markets served by BCB,
combined with new customer relationships in branch offices opened in Wood-Ridge
and Hasbrouck Heights during the fall of 1994.
RESULTS OF OPERATIONS
- ---------------------
For the year ended December 31, 1994, BCB had earnings of $520
thousand, an increase of $54 thousand, or 11.6%, over earnings for the year
ended December 31, 1993. The increase in earnings for 1994 is primarily
attributable to greater net interest income and a lower provision for possible
loan losses, partially offset by lower non-interest income and higher operating
expenses.
BCB's principal source of revenue is its net interest income, which is
the difference between the interest earned on assets and interest paid on the
funds acquired to support those assets. The principal interest earning assets
are loans made to businesses and individuals, securities, interest bearing
deposits at banks and federal funds sold in the inter-bank market. Interest
bearing liabilities include business, consumer and governmental deposits as well
as federal funds purchased and repurchase agreements. Interest income and
interest expense are impacted by changes in the volume of assets and liabilities
and changes in interest rates.
Net interest income increased by 37.9%, or $884 thousand, during the
year ended December 31, 1994 from the comparable period of 1993. This increase
was caused by increases in interest income, partially offset by increases in
interest expense.
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<PAGE>
Interest income increased by $952 thousand, or 27.6%, for the year
ended December 31, 1994 compared to the comparable period of 1993. The increase
is attributable to an increase in volume of interest earning assets and increase
in interest rates.
Interest expense on deposits rose from $1.1 million in 1993 to $1.2
million in 1994, an increase of 9.1%. This was a result of increased volume,
partially offset by a decease in rates. The decline in rates reflects both a
decline in market rates and a change in BCB's deposit mix toward lower priced
core and demand deposits and away from large denomination certificates of
deposit.
Interest on securities sold under agreement to repurchase and other
borrowings decreased to $13 thousand in 1994 from $36 thousand in 1993. The
decrease was principally due to reductions in volume.
During 1994, non-interest income decreased by $222 thousand, or 32.7%,
compared to the year ended December 31, 1993 principally due to a reduction in
mortgage sales and servicing income.
Non-interest expense rose by $63 thousand, or 29.3%, during the year
ended December 31, 1994 compared to the year ended December 31, 1993. Salary
and employee benefit expense constitute approximately 46% of total operating
expenses. Salary and employee benefit expense increased by $235 thousand, or
22.3%, for the year ended December 31, 1994 compared to the prior year. This
increase is related to BCB's offering of new banking services, including the
opening of two branch offices, and increased benefit costs.
Occupancy expense increased by $63 thousand, or 39.1%, in 1994 due to
the opening of the branch offices in WoodRidge and Hasbrouck Heights. Other
operating expenses increased by $335 thousand, or 35.3%, in 1994 compared to the
prior year. This category includes equipment, marketing, computer services,
insurance premiums, FDIC premiums, communication and office expenses, legal and
professional fees and other expenses. The increase in other expenses is
primarily the result of increases in FDIC insurance premiums, legal and
professional fees, computer services, marketing, equipment and offices expenses,
in part related to BCB's two new branches.
During the year ended December 31, 1994, BCB recorded a provision for
loan losses of $42 thousand, a decrease of $44 thousand from the comparable
period of 1993. The provision was based upon management's view of the risk
inherent in BCB's loan portfolio. In addition, BCB incurred ORE expense of $9
thousand during the year ended December 31, 1994.
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<PAGE>
The provision for income taxes was $304 thousand for the year ended
December 31, 1994, an increase of $16 thousand compared to the year ended
December 31, 1993. The higher provision was due to higher net operating income
before tax. However, BCB's effective tax rate decreased from 38.2% in 1993 to
36.9% in 1994. This was the result of a decrease in state income tax on BCB's
investment subsidiary.
FINANCIAL CONDITION
-------------------
Total assets at December 31, 1994 increased to $61.6 million from
$56.3 million, an increase of $5.3 million, or 9.4%. BCB's total loans
increased to $42.5 million at December 31, 1994, an increase of $5.2 million, or
13.9%, over total loans of $37.3 million at December 31, 1993. The largest
component of this increase was an increase of $4.2 million in non-residential
real estate loans. BCB's securities portfolio, excluding federal funds sold,
increased by $3.5 million, or 35.7%, during 1994 to $13.3 million at December
31, 1994 from $9.8 million at December 31, 1993. This increase primarily
reflects an increase in BCB's treasury and government agency obligations of $5.0
million partially offset by decrease in BCB's state and political subdivision
obligations of $1.5 million. The increase in deposits exceeded loan
originations during the period; the increase in the investment portfolio relates
to the investment of available liquid funds into higher-earning assets.
During the year ended December 31, 1994, average interest bearing
liabilities increased by $5 million, or 14.7%, compared to the average balance
for the year ended December 31, 1993. Average non-interest bearing demand
deposits also grew during this period by $1.6 million, or 12.9%, during the year
ended December 31, 1994.
BCB maintains an allowance for loan losses based upon management's
estimate of possible future loan losses. Despite stringent credit standards,
there is a risk of loss in every loan portfolio. Management analyzes the
portfolio periodically to assess the risk factors based upon an evaluation of
specific credit risks, diversity of the loan portfolio, and economic conditions
in BCB's market areas. At December 31, 1994, after deducting amounts charged
against the allowance, net of recoveries on loans previously charged off, the
allowance was $591 or $92 thousand more than the allowance at December 31, 1993.
The allowance at December 31, 1994 totalled 1.39% of total loans outstanding,
and 94.9% of total non-performing assets. Management considers the allowance
adequate at the present time. Future loan loss provisions will be dependent
upon management's ongoing analysis. Management will continue to aggressively
address the collection of charged-off, delinquent and non-performing loans.
-86-
<PAGE>
At December 31, 1994, ORE included properties that either have been
acquired by BCB through foreclosure or which qualify as in-substance
foreclosures. BCB adopted Financial Accounting Standards Board S.F.A.S. No. 114
as of January 1, 1995. Under S.F.A.S. No. 114, an in-substance foreclosure will
not be transferred to ORE until foreclosure of the property has been completed.
At December 31, 1994, BCB considered collateral for a loan to be in-substance
foreclosed if (1) the borrower had little or no equity in the collateral, (2)
proceeds for repayment of the loan could be expected to come only from the
collateral, and (3) the borrower had effectively abandoned control of the
collateral to BCB or it was doubtful that the borrower would be able to rebuild
equity in the collateral or otherwise repay the loan in the foreseeable future.
ORE is carried at the lower of the fair market value of the property or the
recorded investment in the related loan. Periodic net cash payments related to
ORE are charged to income while net cash receipts are applied to reduce the
carrying amount of the related property. BCB is actively seeking to dispose of
these properties as the opportunity arises. ORE values are reviewed at least
annually.
INTEREST RATE SENSITIVITY MANAGEMENT
- ------------------------------------
BCB's primary source of revenue is net interest income which is the
difference between interest earned on interest earning assets and interest paid
on interest bearing liabilities. The following tables show the effect of
interest rate changes on BCB's net interest income (based on the distribution of
assets and liabilities) for the periods indicated.
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<PAGE>
<TABLE>
<CAPTION>
June 30, 1995 Due Within Due Between Due After Non-Interest
(In Thousands) 3 Months 4 & 12 Months One Year Bearing Total
---------- ------------- --------- ------------ -----
<S> <C> <C> <C> <C> <C>
ASSETS:
Short-term investments $ 5,256 $ 99 $ 0 $ 0 $ 5,355
Securities 4,037 7,363 2,626 0 14,026
Total loans 28,241 3,687 13,859 0 45,787
Non interest-earning assets 0 0 0 5,806 5,606
------- -------- ------- --------- ---------
Total assets $37,534 $ 11,149 $16,485 $ 5,806 $ 70,974
======= ======== ======= ========= =========
Percent of total assets 52.88% 15.71% 23.23% 8.18% 100.00%
SOURCES OF FUNDS:
Interest-bearing deposits $38,207 $ 7,040 $ 5,070 $ 0 $ 50,317
Short-term borrowings 0 0 0 0 0
Demand deposits and other
liabilities 0 0 0 13,933
Stockholders' equity 0 0 0 6,724 6,724
------- -------- ------- --------- ---------
Total sources of funds $38,207 $ 7,040 $ 5,070 $ 20,657 $ 70,974
======= ======== ======= ========= =========
Percent of total sources of 53.83% 9.92% 7.14% 29.11% 100.00%
funds
Interest rate sensitivity Gap $ (673) $ 4,109 $11,415 ($14,851)
Cumulative interest rate
sensitivity gap $ (673) $ 3,436 $14,851 $ 0
</TABLE>
-88-
<PAGE>
<TABLE>
<CAPTION>
December 31, 1994 (In Due Within Due Between 4 Due After Non-Interest Total
Thousands) 3 Months and 12 Months One Year Bearing
<S> <C> <C> <C> <C> <C>
ASSETS:
Short-term investments $ 1,923 $ 297 $ 0 $ 0 $ 2,220
Securities 5,342 1,690 5,229 0 13,261
Total loans 31,846 1,962 8,709 0 42,517
Non interest-earning assets 0 0 0 3,623 3,623
------- -------- ------- --------- ---------
Total assets 40,111 $ 3,949 $13,938 $ 3,623 $ 61,621
======= ======== ======= ========= =========
Percent of total assets 65.09% 6.41% 22.62% 5.88% 100.00%
SOURCES OF FUNDS:
Interest-bearing deposits $34,278 $ 6,304 $ 2,744 $ 0 $ 43,326
Short-term borrowings 0 0 0 0 0
Demand deposits and other
liabilities 0 0 0 11,777 $ 11,777
Stockholders' equity 0 0 0 6,518 6,518
------- -------- ------- --------- ---------
Total sources of funds $34,278 $ 6,304 $ 2,744 $ 18,295 $ 61,621
======= ======== ======= ========= =========
Percent of total sources of 55.63% 10.23% 4.45% 26.69% 100.00%
funds
Interest rate sensitivity gap $ 5,833 ($2,355) $11,194 ($14,672)
Cumulative interest rate
sensitivity gap $ 5,833 $ 3,478 $14,672 $ 0
</TABLE>
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<PAGE>
Interest rate sensitivity is the relationship between market interest
rates and net interest income arising from the repricing frequency of assets and
liabilities. Interest earning assets, principally investments and loans, earn
fixed or variable rates of interest until maturity of the underlying instrument.
Variable rate instruments may reprice several times during the life cycle of the
instrument, for example, loans whose rates are determined by a published index
such as the prime rate or U.S. Treasury rate. Similarly, interest bearing
customer deposits, which are BCB's principal source of funds, are subject to the
same analysis. Certain of these deposits earn fixed rates of interest which do
not fluctuate with general market rates, while others are variable and change as
market conditions change. Other deposits, such as certificates of deposit,
reprice at each maturity. Therefore, both interest income and expenses are
subject to the volatility of market interest rates. Depending upon the amount
of interest sensitive assets and liabilities and their frequency of repricing,
market rate changes will have a positive or negative effect on net interest
margins and net interest income. If more liabilities than assets reprice in a
given period (a liability sensitive position), market interest rate changes will
have a greater impact on interest rates paid on liabilities. If rates are
declining, interest expense will decrease and net interest income and net
interest yield should increase. The opposite result will occur if market rates
increase. Conversely, when assets reprice more frequently than liabilities (an
asset sensitive position), a decline in market interest rates will have an
adverse effect on net interest income.
The difference between the volume of assets and liabilities that
reprice in a given period is the interest sensitivity gap. The smaller the gap,
the smaller the effect of market volatility on net interest income.
Asset/liability management is the utilization of this information to develop
strategies to allocate funds to certain types of assets and offer different
liability products to achieve a certain asset-liability sensitivity and to
produce the desired profit margins.
In certain instances where a trend in market interest rates is
established, it may be advantageous to selectively mismatch asset and liability
repricing to take advantage of short-term interest rate movements and the shape
of the yield curve. At June 30, 1995, BCB had a one-year interest rate
sensitivity gap of $13.4 million. BCB's assets are primarily adjustable rate
loans and investments. Although some of BCB's core deposits are interest rate
sensitive, most of BCB's time deposit liabilities are fixed rate. BCB's
interest rate sensitive assets therefore reprice faster than BCB's interest rate
sensitive liabilities.
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<PAGE>
LIQUIDITY/FUNDS MANAGEMENT
--------------------------
Liquidity is the ability to ensure the availability of funds to meet
commitments at a reasonable price at all times. Liquidity is primarily derived
from assets which may be liquidated to produce cash at short notice.
Liabilities may also provide liquidity, depending on the volatility of the
funds. Liquidity management has three parts. The first is daily liquidity
management which assures that funds are available for asset growth and that
excess funds are properly invested. The second, tactical liquidity management,
is the management of the liquidity position of BCB under normal operating
circumstances. Important aspects of this include the availability and cost of
purchased funds or volatile liabilities. The final aspect of liquidity is
strategic liquidity management which is the management of BCB's ability to meet
its financial obligations upon sustaining an exceptional shock. Market
confidence in BCB is the key to strategic liquidity. The basic factors in this
confidence are asset quality, earnings, capital ratios and reputation.
BCB has enacted strategies to ensure its liquidity needs are met.
These strategies include its position as a net seller of federal funds and its
maintenance of a significant portion of its investment portfolio in assets that
are short-term in maturity and available for sale. This means that liquidity
needs may be met by decreasing the amount of federal funds sold and/or the
disposition of liquid assets that are near maturity or available for sale. BCB
also maintains lines of credit with its upstream correspondent banks which may
be drawn upon if the need arises.
On the liability side, BCB has the ability to grow its core deposits
by its service-oriented customer approach. The success of this approach has
enabled BCB to attract and maintain a stable commercial deposit base. The
addition of a retail division, including the new WoodRidge and Hasbrouck Heights
branches, has given BCB an additional deposit base to attract and maintain core
deposit customers.
CAPITAL REQUIREMENTS
- --------------------
The FDIC, BCB's primary federal regulator, has classified and defined
bank capital into the following components: (1) Tier I capital which includes
tangible shareholders' equity for common stock and certain perpetual preferred
stock, less goodwill, and (2) Tier II capital which includes a portion of the
allowance for possible loan losses, certain qualifying long-term debt and
preferred stock which does not qualify for Tier I capital.
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<PAGE>
The FDIC has implemented risk-based capital guidelines which require a
bank to maintain certain minimum capital as a percent of such bank's assets and
certain off-balance sheet items adjusted for defined credit risk factors (risk-
adjusted assets). As of December 31 1994, a bank is required to maintain, at a
minimum, Tier I capital as a percent of risk-adjusted assets of 4.0% and
combined Tier I and Tier II capital as a percent of risk-adjusted assets of
8.0%. At June 30, 1995, BCB's Tier I and combined Tier I and II capital ratios
were 9.3% and 10.0%, respectively.
In addition to the risk-based guidelines discussed above, BCB's
regulators require that a bank which meets the regulators' highest performance
and operating standards, maintain a minimum leverage ratio (Tier I capital as a
percent of total average quarterly assets less intangibles) of 3%. For those
banks with higher levels of risk or that are experiencing or anticipating
significant growth, the minimum leverage ratio is 4-5% of total assets. Minimum
leverage ratios for each bank will be established and updated through the
ongoing regulatory examination process. At June 30, 1995, BCB had a leverage
ratio of 9.4%.
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<PAGE>
MANAGEMENT OF BCB
The BCB Certificate and the Bylaws of BCB authorize a minimum of five
and a maximum twenty-five directors, but leave the exact number to be fixed by
resolution of the Board of Directors. The Board has fixed the number of
directors at eight. Mr. Daniel S. Duva, a director of BCB since 1994 resigned
in 1995 for personal reasons. The Board of Directors and executive officers of
BCB immediately prior to the Effective Time shall continue to be the Board of
Directors of BCB immediately after the Effective Time. After the Effective
Time, GFB shall have the right as the sole shareholder of BCB to remove and/or
replace any or all of the Directors and executive officers of BCB. If the
Acquisition becomes effective Messrs. C. Mark Campbell, Anthony M. Bruno, Jr.,
and Charles J. Volpe, will become directors of GFB. In the event that one or
more of said persons is unable to take office, the Board of Directors of BCB
will designate a substitute acceptable to GFB. It is also anticipated that Mr.
Bruno will be elected Vice Chairman of GFB if the Acquisition becomes effective.
The following chart sets forth certain information concerning each director of
BCB:
<TABLE>
<CAPTION>
Name, Age and Any Position
with BCB in addition to Principal Occupation Director
Director During Past 5 Years Since
- ---------------------------- ----------------------- --------
<S> <C> <C>
Anthony M. Bruno, Jr. Senior Partner, Bruno, 1988
41, Chairman of the DiBello & Co., LLC,
Board Certified Public
Accountants
C. Mark Campbell President and Chief 1988
45, President and Executive Officer of
Chief Executive BCB
Officer
Frank A. Cosimano Owner of Several 1988
57 Insurance Brokerages
Stefano A. Masi Partner, Masi Boyle 1988
60 Associates (Commercial
Real Estate)
Barry G. Novin President, 1988
54 Montville Agency, Inc.
(Insurance and
Securities Brokers)
Michael R. Petriella, M.D. Partner, OB-GYN 1994
48
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Ralph W. Sifford President, Sifford 1988
57 Pontiac/GMC, Inc.
(Auto Dealer)
Charles J. Volpe Chief Executive Officer 1988
57 and Principal, J.P.
Patti Company (Roofing)
</TABLE>
No director of BCB is also a director of any company registered
pursuant to Section 12 of the Exchange Act or any company registered as an
investment company under the Investment Company Act of 1940.
STOCK OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS OF BCB
---------------------------------
The following table sets forth information concerning the beneficial
ownership of BCB Common Stock, as of September 1, 1995, by each director, by all
directors and executive officers as a group, and by other principal
shareholders. BCB knows of no person or group which beneficially owns 5% or
more of BCB Common Stock, except as set forth below.
<TABLE>
<CAPTION>
Name of Number of Shares Percent
Beneficial Owner Beneficially Owned/(1)/ of Class
- ------------------------ ----------------------- ---------
<S> <C> <C>
Directors:
Anthony M. Bruno, Jr. 20,250/(2)/ 5.48%
C. Mark Campbell 16,507/(3)/ 4.46%
Frank A. Cosimano 3,804 1.03%
Stefano A. Masi 16,609/(4)/ 4.49%
Barry G. Novin 8,022/(5)/ 2.17%
Michael R. Petriella 237/(6)/ 0.06%
Ralph W. Sifford 17,150/(7)/ 4.64%
Charles J. Volpe 15,123/(8)/ 4.09%
All Executive Officers
and Directors as a
Group (9 individuals) 97,816 26.45%
Shareholders:
John L. Soldoveri 19,625 5.31%
3 Battle Ridge Trail
Totowa, New Jersey 07512
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Keith Patti 29,210 7.90%
18 Charlden Drive
Saddle River, New Jersey 07458
</TABLE>
(1) Beneficially owned shares include shares over which the named person
exercises sole or shared voting power or sole or shared investment power.
It also includes shares owned (i) by a spouse, minor children or by
relatives sharing the same home, (ii) by entities owned or controlled by
the named person and (iii) by other persons if the named person has the
right to acquire such shares within 60 days by the exercise of any right or
option. Unless otherwise noted, all shares are owned of record and
beneficially by the named person.
(2) Includes 747 shares held by a trust of which Mr. Bruno is a trustee, 5,570
shares held in a self-directed IRA and 9,213 shares held by Mr. Bruno's
wife.
(3) Includes 760 shares held by Mr. Campbell as custodian for his minor
children, 1,038 shares held jointly by Mr. Campbell and a family member,
1,464 shares purchasable upon exercise of options held by Mr. Campbell,
3,801 shares held in a 401(k) Plan, 1,030 shares held in a self-directed
IRA, and 638 shares held by a trust of which Mr. Campbell is a trustee.
(4) Includes 1,797 shares held by a trust of which Mr. Masi is a trustee, 2,592
shares held by another trust of which Mr. Masi is a trustee, and 807 shares
held by Mr. Masi's wife.
(5) Includes 7,435 shares held by a profit sharing plan of which Mr. Novin and
his wife are trustees.
(6) Includes 36 shares held by Dr. Petriella's son in his own name.
(7) Includes 950 shares held by Mr. Sifford's wife and 4,598 shares held by a
trust of which Mr. Sifford is a trustee.
(8) Includes 1,159 shares held jointly in the name of Mr. Volpe and his wife,
and 978 shares held by Mr. Volpe's wife.
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid or accrued
in each of the three years ended December 31, 1994 for services performed in all
capacities for BCB with respect to the president and each executive officer
whose compensation exceeded $60,000 and with respect to all executive officers
as a group.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Annual Compensation Securities
Name and Salary Bonus Underlying All Other
Principal Position Year ($) ($) Options/SARS Compensation
------------------ ---- ------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
C. Mark Campbell 1994 120,193 --- --- ---
President and Chief 1993 110,115 --- --- ---
Executive Officer 1992 98,941 --- --- ---
---
Bradley P. Bloss, 1994 76,420 --- --- ---
Senior Vice President 1993 72,945 --- --- ---
1992 64,808 --- --- ---
All Executive Officers 1994 267,000 --- --- ---
as a Group (1994, 4 1993 263,549 --- --- ---
individuals; 1993, 5 1992 163,749 --- --- ---
individuals; 1992, 2
individuals)
</TABLE>
BCB maintains various medical, life and disability benefit plans
covering all its full-time employees. BCB provides automobiles for and/or pays
automobile expense allowances to certain of its officers. Such officers may
have derived some personal benefit from the use of the automobiles or the
expense allowances. BCB is unable to determine with reasonable effort and
expense the extent or value of the benefits, if any, which the officers may have
derived from the personal use of such automobiles. In any event, BCB believes
after reasonable inquiry that the value of the personal use of such automobiles
does not exceed the lesser of $25,000 or 10% of the amount shown in the cash
compensation table for any officer.
DIRECTOR COMPENSATION ARRANGEMENTS
Directors of BCB received compensation for service on the Board of
Directors of $300 per Board of Directors meeting attended, provided that such
Director attended at least seventy-five (75%) percent of such regular meetings.
Directors of BCB also receive compensation of $50 per committee meeting actually
attended.
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<PAGE>
BENEFIT PLANS
BCB maintains a 401(k) plan for all employees who complete one year of
service and who are at least 21 years of age. Under the plan, BCB matches 50%
of the employee's contribution up to a maximum of 6% of the employee's annual
compensation. BCB contributions vest over a five-year period, with no amounts
vesting the first year and 25% vesting each year thereafter. In 1994, BCB
contributed approximately $10,526 to the plan. Of this total, $3,750 was
attributable to Mr. Campbell, and $1,133 was attributable to Mr. Bloss.
STOCK OPTIONS
An Officer Stock Option Plan (the "Plan") is maintained by BCB and was
adopted by the Board of Directors and shareholders in 1989. No stock options
were granted by BCB during the year ended December 31, 1994. The following
table sets forth information with respect to officers of BCB concerning the
exercise of options during 1994 and unexercised options held on December 31,
1994. Mr. Campbell is the only officer of BCB currently covered by the Plan.
-97-
<PAGE>
AGGREGATED OPTION EXERCISES IN 1994
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Dollar Value of
Number of Shares Unexercised In-
Underlying the-Money
Unexercised Options at
Options at Fiscal Fiscal Year
Year End End(1)
----------------- ----------------
# of Shares Value
Acquired on Realized Exercisable(E)/ Exercisable(E)/
Name Exercise ($) Unexercisable(U) Unexercisable(U)
- ---- ------------ -------- ----------------- ----------------
<S> <C> <C> <C> <C>
C. Mark Campbell 976 $1,400 1464/0 E $0/0
</TABLE>
CERTAIN TRANSACTIONS WITH MANAGEMENT
BCB has made and, assuming continued compliance with generally
applicable credit standards, expects to continue to make, loans to its directors
and executive officers and their associates. All of such loans (i) were made in
the ordinary course of business, (ii) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and (iii) did not involve more than
the normal risk of collectibility or present other unfavorable features.
BCB has purchased automobiles for business use from Sifford
Pontiac/GMC Inc. Ralph W. Sifford, a Director of BCB, is the President of
Sifford Pontiac/GMC Inc. The total amount paid to Sifford Pontiac/GMC Inc. for
such purchases, as well as the maintenance of BCB-owned automobiles, during the
year ended December 31, 1994 was $15,751.
BCB has utilized Montville Agency, Inc., in its capacity as agent for
Guardian Life Insurance Company, to implement employee health benefits and
insurance policies. Barry G. Novin, a director of BCB is President of Montville
Agency, Inc.. The total remittance by BCB to Guardian Life Insurance Company
during the year ended December 31, 1994, totaled $82,907, from which
Montville Agency, Inc. may derive a fee.
MANAGEMENT OF GFB
The directors of GFB are elected on a staggered term basis, with each
class of directors consisting, as nearly as may be, of 1/3 of the number of
directors then constituting the whole Board. The term of one of the classes
expires each year, and each class is elected for a 3-year term.
-98-
<PAGE>
The Bylaws of GFB provide for a minimum of 5 directors and a maximum
of 15 directors. Following completion of the Acquisition, the number of
directors in the Board will be increased from 7 to 10 and Messrs. Bruno,
Campbell and Volpe will be elected to fill the 3 new positions. The Bylaws
permit the Board of Directors to increase the number of directors by not more
than 2 members, and to fill the vacancies created by such increase, between
Annual Meetings of Stockholders. In the event of any such increase in the
number of directors by the Board, the terms of the directors filling such
vacancies shall be fixed by the Board in such manner as to result in each class
consisting, as nearly as possible, of 1/3 of the number of directors then
constituting the whole Board as so increased. A Director elected by the Board
to fill a vacancy created in such manner will serve only until the next Annual
Meeting of Stockholders, at which time the stockholders will elect such
director's successor for the succeeding term, or if applicable, for the
remaining portion of the full term previously fixed by the Board.
DIRECTORS OF GFB
Information regarding the current and past 5 years' business
experience, age and directorships of GFB's directors and senior executive
officers, as well as certain information regarding directors and executive
officers of Great Falls Bank, is set forth below:
Marino A. Bramante, age 63, an orthodontist, has been the President of
M.A. Bramante, D.D.S., P.A. since 1960. Dr. Bramante has served as a Director
of GFB since 1985 and his present term will expire in 1997.
Robert J. Conklin, age 59, has been the President of The Conklin
Corporation, which is engaged in construction and engineering, since 1960. He
is also President of an electronics firm, Crystal Accel. Mr. Conklin has been a
Director of GFB since 1985 and his present term will expire in 1997.
William T. Ferguson, age 53, has been the Vice President of TedCar,
Inc., an auto wholesaler, since 1977. He is the Vice President of Riverview
Auto Parts. Mr. Ferguson has served as a Director of GFB since 1985 and his
present term will expire in 1997.
George E. Irwin, age 51, has served since 1987 as GFB's Vice President
and as President and Chief Executive Officer of Great Falls Bank. During 1986
Mr. Irwin was an Executive Vice President, Treasurer, and Senior Loan Officer of
Great Falls Bank. He has been a Director of GFB since 1987 and his present term
will expire in 1998.
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<PAGE>
Joseph A. Lobosco, age 60, recently retired as the Senior Partner of
Joseph Lobosco & Sons, an insurance agency, of which he had been a partner since
1961. He has served as a Director of GFB since 1990 and his present term will
expire in 1996.
John L. Soldoveri, age 71, is the Chairman of the Board of Directors
and President of GFB. He was President of Soldoveri Agency and Rhodes Agency
Inc., real estate brokerage and insurance agency firms for many years until
1991. He has served as Vice President of both companies since 1991. Mr.
Soldoveri has also been a controlling partner in Anjo Realty since 1980 and is
an active investor in real estate, directly and through various entities. Mr.
Soldoveri has been a Director of GFB since 1984, and his present term will
expire in 1996.
Alfred R. Urbano, age 49, has been the President of Rubicon Realty
Corp., a real estate investment firm, since 1980, and is active in the real
estate business as an investor and a manager, directly and through various
entities. Mr. Urbano has served as a Director of GFB since 1986, and his
present term will expire in 1998.
DIRECTORS OF GREAT FALLS BANK WHO ARE NOT DIRECTORS OF GFB
Great Falls Bank's board of directors is comprised of the 7 directors
of GFB named above plus the 4 other individuals named below. Those 4 directors
of Great Falls Bank have frequently attended meetings of GFB's Board of
Directors. Information regarding the current and past 5 years' business
experience, age and directorships of such directors, and the executive officers
of Great Falls Bank in addition to Mr. Irwin, is set forth below:
Annemarie Appleton, age 37, has been Vice President of Manufacturing
of Knickerbocker Machine Shop, Inc. (manufacturing) since February, 1991, where
she was quality control manager prior thereto. Mrs. Appleton has served as a
director of Great Falls Bank since May, 1993.
David M. Corry, age 37, has been a partner of the certified public
accounting firm Bruno, DiBello & Co., LLC, of Totowa, New Jersey, since 1987.
Mr. Corry has served as a director of Great Falls Bank since 1988.
Robert B. Coyle, age 65, was previously a Director of Product
Development for New Jersey Bell (communications utility), a position from which
he retired in 1989. Mr. Coyle has served as a director of Great Falls Bank
since January, 1993.
Richard Steuerwald, age 62, is President of ABD, Inc. (textile
bleaching). Mr. Steuerwald became a director of Great
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<PAGE>
Falls Bank in April, 1995. He previously served as a director of Family First
Federal Savings Bank, Clifton, New Jersey.
Naqi A. Naqvi, age 39, has been GFB's Treasurer since 1988, and he has
also served as Vice President and Treasurer of Great Falls Bank since 1987.
In addition to Mr. Irwin and Mr. Naqvi, Great Falls Bank's other
current senior officers are James W. DeBow, Senior Vice President, Donald W.
Walsh, Vice President, and Toby W. Giardiello, Vice President.
STOCK OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS OF GFB
---------------------------------
The following table sets forth information concerning the beneficial
ownership of GFB Stock, as of August 31, 1995, by each director of GFB and Great
Falls Bank, each executive officer of GFB, all Directors of GFB and Great Falls
Bank and GFB executive officers as a group, and other principal shareholders.
Although Mrs. Appleton and Messrs. Corry, Coyle and Steuerwald are directors of
Great Falls Bank they are not directors of GFB, and the inclusion of information
below concerning their beneficial ownership of GFB Stock shall not constitute an
admission that they are subject to the reporting or other provisions of Section
16 of the Exchange Act. GFB knows of no person or group which beneficially owns
more than 5% of GFB Stock, except as set forth below. All directors and
executive officers have an address c/o Great Falls Bancorp, 55 Union Boulevard,
Totowa, New Jersey 07512.
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<PAGE>
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP/(*)/ CLASS /(**)/
- ---------------- -------------------------- ------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Annemarie Appleton 49,813 (a) 4.65%
Marino A. Bramante 61,042 (b) 5.58%
Robert J. Conklin 57,187 (c) 5.22%
David M. Corry 4,276 (d) 0.40%
Robert B. Coyle 6,658 (e) 0.62%
William T. Ferguson 17,884 (f) 1.67%
George E. Irwin 35,800 (g) 3.34%
Joseph A. Lobosco 21,224 (h) 1.96%
John L. Soldoveri 144,237 (i) 13.06%
Richard Steuerwald 2,225 0.21%
Alfred R. Urbano 104,514 (j) 9.66%
Naqi A. Naqvi 2,332 (k) 0.22%
All directors and executive officers
as a group (13 in number including
individuals named above) 508,704 (a)-(l) 42.67%
OTHER PRINCIPAL BENEFICIAL OWNERS
Eleanor Bramante 57,341 (m) 5.25%
875 Huron Road
Franklin Lakes, NJ 07417
Yolanda Simonelli 60,013 (n) 5.61%
439 Parish Drive
Wayne, NJ 07470
</TABLE>
- -----------------
/(*)/ Unless otherwise noted, all shares are owned of record and beneficially by
the named person. Beneficially owned shares include shares over which the
named person exercises either sole or shared voting power or sole or
shared investment power. It also includes shares (i) owned by a spouse,
minor children or by relatives sharing the same home, (ii) owned by
entities owned or controlled by the named person and (iii) with respect to
which the named person has the right to acquire such shares within 60 days
by the exercise of any right or option. Such options include the right to
purchase
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<PAGE>
shares pursuant to Cancellable Mandatory Stock Purchase Contracts due
11/1/97 ("Equity Contracts"). In accordance with the Commission's rules
relating to the computation of beneficial ownership, the percentage of
common stock beneficially owned by a person or group assumes the exercise
of options held by such person or group but the nonexercise of options
held by all other persons. Unless otherwise noted, all shares are owned
of record and beneficially by the named person.
/(**)/ Based upon 1,069,750 shares outstanding on August 31, 1995.
(a) Consists primarily of 46,268 shares owned by a trust established under the
Will of Michael A. Simonelli (the "Simonelli Trust") of which Mrs. Appleton
acts as a co-trustee and in which she has a remainder interest. Mrs.
Appleton also has the right to acquire 1,117 shares pursuant to the
exercise of Equity Contracts and 1,100 shares pursuant to stock options.
Mrs. Appleton is a director of Great Falls Bank.
(b) Includes 10,474 shares held by Dr. Bramante's wife, Eleanor Bramante, and
24,335 shares held by Dr. Bramante's employer's retirement trust (the
"Bramante Trust"), of which Dr. Bramante is a beneficiary and a co-trustee,
with his wife. Also includes 24,963 shares which Dr. Bramante has the
right to acquire pursuant to Equity Contracts owned by the Bramante Trust
(22,532 shares) and stock options held by Dr. Bramante (2,431 shares).
(c) Includes 20,210 shares held by a corporation owned by Mr. Conklin and his
wife and 460 shares owned by his wife. Also includes 24,776 shares which
Mr. Conklin has the right to acquire pursuant to stock options (2,431
shares) and Equity Contracts (22,345 shares, of which 3,724 shares are held
by his wife alone).
(d) Includes 2,431 shares subject to stock options held by Mr. Corry, and 465
shares held subject to Equity Contracts which Mr. Corry owns as custodian
for his children.
(e) Includes 2,431 shares subject to stock options held by Mr. Coyle, and 1,862
shares held subject to Equity Contracts which Mr. Coyle owns jointly with
his wife.
(f) Includes 2,431 shares subject to stock options, 1,857 shares owned by Mr.
Ferguson's children, and 1,857 shares owned by a corporation of which Mr.
Ferguson is a shareholder. Mr. Ferguson disclaims beneficial ownership of
the shares held by such corporation except his pro rata interest therein,
consisting of 929 shares.
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<PAGE>
(g) Includes 1,298 shares owned by a corporation controlled by Mr. Irwin, 182
shares owned by his children, and the right to acquire 990 shares pursuant
to stock options.
(h) Includes 665 shares owned by Mr. Lobosco's wife. Also includes Mr.
Lobosco's right to acquire beneficial ownership of a total of 10,530
shares, pursuant to Equity Contracts (8,099 shares) and stock options
(2,431 shares).
(i) Includes 27,013 shares owned by Mr. Soldoveri's wife. Also includes 34,553
shares which Mr. Soldoveri has the right to acquire pursuant to stock
options (2,431 shares) and Equity Contracts (29,795 shares for Mr.
Soldoveri and 2,327 shares for his wife).
(j) Mr. Urbano's right to acquire beneficial ownership of a total of 12,388
shares, pursuant to Equity Contracts (as to 9,957 shares) and stock options
(2,431 shares), is included in this total.
(k) Includes Mr. Naqvi's right to acquire 994 shares pursuant to stock options.
(l) The total for all directors and executive officers includes the right to
acquire 122,543 shares pursuant to Equity Contracts and stock options.
(m) Includes 10,474 shares held by Mrs. Bramante directly and 24,335 shares
held by the Bramante Trust, of which Mrs. Bramante is a co-trustee. Also
includes 22,532 shares which the Bramante Trust has the right to acquire
pursuant to Equity Contracts.
(n) Includes 46,268 shares owned by the Simonelli Trust. Although Mrs.
Simonelli is an income beneficiary of the Simonelli Trust, she is not a
trustee and has no voting power or dispositive power over the GFB Stock
owned by such trust. She therefore disclaims beneficial ownership for
purposes of the Commission's Regulation 13D.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS' COMPENSATION
Prior to March, 1994 the directors of GFB were not compensated for
attending meetings of its Board of Directors. Beginning in March, 1994, the GFB
directors were compensated for services rendered in that capacity at the rate of
$200 per meeting attended. GFB paid a total of $13,000 to its directors for
1994 in that capacity. Prior to March, 1994, the directors of Great Falls Bank
were compensated $150 for each meeting of the
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<PAGE>
Board of Directors of Great Falls Bank they attended and $75 for each meeting
they attended of the Executive Committee, Loan Committee, Audit Committee and
Personnel Committee. During March, 1994, the fee structure for directors of
Great Falls Bank was changed to $250 for each meeting of the Board attended,
$150 for Executive Committee meetings, $100 for Loan Committee meetings and $75
for all other committee meetings attended. Great Falls Bank paid a total of
$55,150 in directors fees during 1994 to all directors of Great Falls Bank for
acting in those capacities, of which $41,050 was paid to those Bank directors
who are also directors of the Corporation.
In addition, during 1994 GFB's directors other than Mr. Irwin each
exercised options (which had been granted to such directors during 1993 under
the 1993 Stock Option Plan) to purchase 605 shares of GFB Common Stock at a
price of $8.26 per share. (Both the number of shares and the option price were
adjusted to reflect stock dividends paid in 1993 and 1994, but do not reflect
the 1995 stock dividend.) Mr. Lobosco exercised his options on November 1,
1994, realizing $2,184 upon his exercise of stock options. Each of Messrs.
Bramante, Conklin, Ferguson, Soldoveri and Urbano exercised his options at the
end of December, 1994, realizing $2,563 upon the exercise of his stock options
during 1994.
EXECUTIVE OFFICERS' COMPENSATION
The following table sets forth compensation with respect to the years ended
December 31, 1994, 1993 and 1992 for services rendered in all capacities to GFB
and its subsidiaries by (i) the only person who acted as GFB's Chief Executive
Officer during 1994 and (ii) the only other person who was an executive officer
at the end of 1994 whose total annual salary and bonus for 1994 exceeded
$100,000.
-105-
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
Name and Principal Other Annual Stock Options
Position Year Salary ($) Compensation Awarded (#)(1)
- ------------------ ---- ---------- ------------ --------------
<S> <C> <C> <C> <C>
JOHN L. SOLDOVERI 1994 0 $20,238(2) 0
President and Chief 1993 0 $13,638(2) 2,662
Executive Officer 1992 0 $ 4,575(2) 0
GEORGE E. IRWIN 1994 $127,530(3) $42,036(4) 12,870
Vice President 1993 $118,535(3) $34,566(4) 0
1992 $113,386(3) $27,085(4) 5,324
</TABLE>
- ----------
(1) The number of shares underlying stock options awarded in a given year have
been adjusted to reflect increases in such shares resulting from GFB's
payment of stock dividends after the awards.
(2) Primarily represents fees paid for attendance at meetings of the Board of
Directors of Great Falls Bank and committees of that Board. The 1994
amount also includes monthly stipends totalling $8,500 during that year.
The 1994 and 1993 amounts include compensation of $2,563 and $1,188,
respectively, realized upon Mr. Soldoveri's exercise of options to purchase
GFB Common Stock during those years.
(3) In December, 1987 GFB entered into an agreement to continue Mr. Irwin's
employment as Vice President of GFB and President and Chief Executive
Officer of the Great Falls Bank. The agreement was for an initial period
of one year commencing January 1, 1988, subject to provisions for earlier
termination and for annual extensions. The agreement has been extended for
1995 at an annual salary of $135,000, plus an auto allowance of $750 per
month and certain other benefits.
(4) These amounts consist primarily of employer contributions on behalf of Mr.
Irwin to GFB's 401-K Plan ($16,324 for 1994, $14,612 for 1993, and $12,392
for 1992). The amounts also include an auto allowance of $750 per month,
or $9,000 per year, for each of the three years indicated. Finally, these
amounts include compensation of $16,712, $10,954 and $5,693 realized during
1994, 1993 and 1992, respectively, by Mr. Irwin upon his exercise of stock
options.
-106-
<PAGE>
INFORMATION CONCERNING STOCK OPTIONS
GFB's 1988 Nonstatutory Stock Option Plan (the "1988 Plan") provides for
the grant of stock options to key employees, as determined by the Board of
Directors, to purchase shares of GFB Common Stock within prescribed periods at
prices not less than the GFB Common Stock's approximate fair market value on the
date of grant. During December 1994, pursuant to the 1988 Plan, the Board of
Directors granted options to a total of 15 employees to purchase a total of
19,900 shares at a price of $12.50 per share, which was equal to the mean
between the bid and asked prices per share of GFB Common Stock on the effective
date of grant. The following table contains information concerning the grant of
stock options during 1994 to the named executive officers of GFB.
GFB's 1993 Stock Option Plan (the "1993 Plan") was approved by GFB's
stockholders at the 1993 Annual Meeting held in April, 1993. The 1993 Plan
provides for the grant of stock options to each of the 10 non-employee directors
of Great Falls Bank on February 16, 1993, to purchase 2,000 shares of GFB Common
Stock at a price of $10.00 per share. (Such number of shares and the option
price are not adjusted for stock dividends.) The options so granted lapse at
the rate of 25% annually, commencing at the end of 1993. During 1993 and 1994
substantially all of the option holders under the 1993 Plan exercised options to
purchase an aggregate of one-half of the shares covered by such options. Each
such director presently holds options to purchase the remaining 1,331 shares at
a price of $7.51 per share (both the number of shares and the option price are
adjusted for stock dividends paid after the date of grant).
OPTIONS GRANTED IN 1994
<TABLE>
<CAPTION>
Individual Grants
% of Total
Number of Options Exercise
Securities Granted to or Base
Underlying Employees in Price Expiration
Name Options Granted Fiscal Year ($/share) Date
- ---- --------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
George E. Irwin 12,870(1) 58.8% $11.36 12/31/02
</TABLE>
- ------------
(1) All options were granted under the 1988 Plan. Mr. Irwin's options become
"vested" at the rate of 33-1/3% per year commencing January 1, 1995, and
each group of vested options will thereafter become exercisable at the rate
of 25% per year commencing one year after each vesting date. All such
options will lapse on December 31, 2002, subject to earlier lapsing in the
event of a termination of Mr. Irwin's employment (except in certain
circumstances). The exercisability of Mr. Irwin's options which are
otherwise exercisable during any calendar year
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<PAGE>
is subject to the further condition that Great Falls Bank shall have
achieved targeted return on equity ratios, ranging from 14% to 17%, during
the year preceding the year of exercise. The options granted to other
employees during 1994 do not contain return on equity conditions to
exercisability.
The following table sets forth information with respect to the named
executive officers of GFB concerning the exercise of options during 1994 and
unexercised options held on December 31, 1994. Mr. Soldovi's options had been
granted under the 1993 Plan. Mr. Irwin's options had been granted under the
1988 Plan.
AGGREGATED OPTION EXERCISES IN 1994
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares Dollar Value of
Underlying Unexercised In-
Unexercised the-Money
Options at Fiscal Options at
Year End Fiscal Year
End(1)
# of Shares Value
Acquired on Realized Exercisable(E)/ Exercisable(E)/
Name Exercise ($) Unexercisable (U) Unexercisable
- ---- ----------- -------- ----------------- ---------------
<S> <C> <C> <C> <C>
John L. Soldoveri 605 $ 2,563 1,331(E) $ 5,130(E)
George E. Irwin 2,536 $14,988 332(E) $ 1,280(E)
4,991(U) $19,241(U)
</TABLE>
- ----------
(1) All unexercised options held by the named individuals were "in-the-money"
at the end of 1994. The year-end values of such options have been
calculated as the difference between (a) the value of shares subject to
such options, using the mean between the bid and asked prices per share of
GFB Common Stock on December 31, 1994, as quoted by Ryan, Beck & Co., a
principal market maker in GFB Common Stock, and (b) the aggregate price
payable to GFB upon exercise of such options.
GFB's 1995 Stock Option Plan (the "1995 Plan") was approved by GFB's
stockholders at the 1995 Annual Meeting held in April, 1995. The 1995 Plan
provides for the grant of stock options to each of the 9 non-employee directors
of Great Falls Bank on December 20, 1994, to purchase 3,300 shares of GFB Common
Stock at a price of $11.36 per share, the mean between the bid and asked prices
for GFB Common Stock on December 20, 1994 as quoted by Ryan, Beck & Co. (Such
number of shares and the option price have been adjusted for the 1995 stock
dividend.)
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The building in which GFB's offices and the main branch of Great Falls Bank
are situated is owned by Anjo Realty, a partnership in which Mr. Soldoveri,
Chairman of the Board and President of GFB, has a controlling interest. The
leased premises are 10,354 square feet and are at an annual rental of $146,490.
Management believes the rental cost is at or below the fair rental value of
comparable office space.
GFB provides a liability insurance policy for all of its officers and
directors. Coverage is provided by a policy with a major insurance company in
the aggregate amount of $1,500,000, with a standard deductible amount per claim.
The policy also insures GFB against amounts paid by it to indemnify directors
and officers. The policy runs for a period of one year from January 1, 1995 to
January 1, 1996 at a cost to GFB of $11,538.
Directors and officers of GFB and their associates were customers of and
had transactions with Great Falls Bank during 1994, and it is expected that they
will continue to have such transactions in the future. All deposit accounts,
loans and commitments comprising such transactions were made in the ordinary
course of business of Great Falls Bank on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and in the opinion of management did
not involve more than normal risks of collectibility or present other
unfavorable features. At December 31, 1994, the total amount of loans made by
Great Falls Bank to its executive officers and directors was $1,939,000, which
represented 23% of stockholders' equity on that date. At that date, Great Falls
Bank also had a commitment to extend credit under revolving lines of credit
totalling $514,000 at various rates, to directors, executive officers and their
affiliates.
DIRECTORS' COMMITTEES--DIRECTORS' MEETING
The Board has a standing Audit Committee, consisting of Messrs. Soldoveri
(Chairman), Bramante, and Urbano. Such Committee met once during 1994. The
Audit Committee's functions include: (i) recommending to the Board of Directors
the appointment of GFB's independent public accountants; (ii) reviewing and
approving in advance for each year the audit and non-audit services and fees of
such auditors; (iii) meeting separately and privately with the independent
auditors and GFB's internal auditors, if any, to insure that the scope of their
activities has not been restricted, and to consider other matters generally
pertaining to their examinations; (iv) reviewing the adequacy of internal
financial and accounting controls and the results of the auditors' examinations
thereof; (v) reviewing matters relating to corporate financial reporting and
accounting
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<PAGE>
policies and procedures; and (vi) reporting its findings on any of the above to
the Board of Directors, as appropriate.
The Board also has a standing Stock Option Committee, comprised during 1994
of Messrs. Bramante, Conklin, and Soldoveri. The Stock Option Committee makes
recommendations to the Board concerning options to be granted under the GFB's
Stock Option Plans and generally to administer such Plans. Such Committee met
twice during 1994. Except for the Audit and Stock Option Committees, there were
no nominating, compensation, or other committees of the Board in existence
during 1994. The full Board thus in effect acted as such committees.
In addition, all of GFB's directors serve as directors of Great Falls Bank,
and in that capacity various Board members also serve on committees of the Board
of Directors of Great Falls Bank and through these committees coordinate the
functions of GFB and Great Falls Bank. During 1994, committees of Great Falls
Bank's Board included the Audit Committee, the Executive Committee, the Loan
Committee, the Personnel Committee, the Business Development and Marketing
Committee, the Investment Committee, and the Security and Insurance Committee.
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<PAGE>
LEGAL MATTERS
Certain legal matters relating to the shares of GFB Common Stock offered
hereby will be passed upon by Williams Caliri Miller & Otley, counsel to GFB.
Three attorneys employed by such firm who are participating in the preparation
of its opinions pertaining to the offering of GFB Common Stock in connection
with the Acquisition own securities of GFB. As of August 31, 1995, such
attorneys beneficially owned in the aggregate 9,759 shares (including 7,913
shares owned derivatively through Equity Contracts), or approximately 0.91% of
outstanding GFB Common Stock (including shares of GFB Common Stock which would
be owned upon exercise of the Equity Contracts).
EXPERTS
The financial statements of both BCB and GFB as of and for the years ended
December 31, 1994 and 1993 and for each of the years in the three-year period
ended December 31, 1994 included in or incorporated by reference in this Joint
Proxy Statement/Prospectus and elsewhere in the registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
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<PAGE>
INDEX TO FINANCIAL STATEMENTS OF BCB
------------------------------------
Report of Independent Public Accountants F-1
Consolidated Statements of Condition at December 31,
1994 and 1993 F-2
Consolidated Statements of Income for Each of the Years
in the Three-Year Period Ended December 31, 1994 F-3
Consolidated Statements of Changes in Shareholders' Equity
for Each of the Years in the Three-Year Period
December 31, 1994 F-5
Consolidated Statements of Cash Flows for Each of the Years
in the Three-Year Period Ended December 31, 1994 F-6
Notes to Consolidated Financial Statements F-8
Consolidated Statement of Condition at June 30, 1995
(Unaudited) F-16
Consolidated Statements of Income for the Six-Month Periods
Ended June 30, 1995 and 1994 (Unaudited) F-17
Consolidated Statement of Changes in Shareholders' Equity
for the Six Months Ended June 30, 1995 (Unaudited) F-18
Consolidated Statements of Cash Flows for the Six-Month
Periods Ended June 30, 1995 and 1994 (Unaudited) F-19
Notes to Consolidated Financial Statements - June 30, 1995
(Unaudited) F-21
All financial statement schedules are omitted because the required
information is either not applicable or not required, or the required
information is shown in the financial statements or in the notes thereto.
-112-
<PAGE>
[Letterhead of Arthur Andersen LLP]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Shareholders and Board of Directors of
Bergen Commercial Bank and Subsidiary:
We have audited the accompanying consolidated statements of condition of Bergen
Commercial Bank (a New Jersey Corporation) and Subsidiary as of December 31,
1994 and 1993 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Bank's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bergen Commercial Bank and
Subsidiary as of December 31, 1994 and 1993 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting principles.
/s/ Arthur Anderson LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
January 17, 1995
F-1
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF CONDITION -- DECEMBER 31, 1994 AND 1993
------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1994 1993
------ ----------- -----------
<S> <C> <C>
CASH AND DUE FROM BANKS -- NONINTEREST $ 2,138,000 $ 1,476,000
BEARING (Note 2)
FEDERAL FUNDS SOLD (Note 2) 1,625,000 3,750,000
------------ -----------
Total cash and cash
equivalents 3,763,000 5,226,000
------------ -----------
DUE FROM BANKS -- INTEREST BEARING 595,000 3,088,000
------------ ----------
INVESTMENT SECURITIES (aggregate market
value of $13,174,000 and $9,887,000
in 1994 and 1993, respectively)
(Notes 2 and 3) 13,261,000 9,751,000
------------ -----------
LOANS (Notes 2, 4 and 5) 42,517,000 37,289,000
Less-
Allowance for possible loan
losses 591,000 499,000
Unearned income 152,000 119,000
------------ ----------
Net loans 41,774,000 36,671,000
------------ -----------
PREMISES AND EQUIPMENT, net (Notes 2
and 6) 860,000 370,000
------------ ----------
ACCRUED INTEREST RECEIVABLE 465,000 301,000
------------ -----------
OTHER REAL ESTATE (Note 2) 623,000 631,000
------------ -----------
OTHER ASSETS 280,000 240,000
------------ -----------
Total assets $61,621,000 $56,278,000
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
LIABILITIES:
Deposits-
Demand-
Noninterest bearing $11,344,000 $12,211,000
Interest bearing 24,351,000 20,885,000
Savings 1,802,000 2,019,000
Time 17,173,000 14,061,000
----------- -----------
Total deposits 54,670,000 49,176,000
Securities sold under agreements to
repurchase 0 750,000
Accrued interest payable 192,000 132,000
Accrued expenses and other
liabilities 241,000 125,000
------------ -----------
Total liabilities 55,103,000 50,183,000
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY (Notes 2, 8 and 9):
Common stock $2.50 par value,
2,000,000 shares authorized;
369,733 and 368,757 shares issued and
outstanding in 1994 and
1993, respectively 924,000 922,000
Additional paid-in capital 4,598,000 4,586,000
Retained earnings 996,000 587,000
----------- -----------
Total shareholders' equity 6,518,000 6,095,000
----------- -----------
Total liabilities and
shareholders' equity $61,621,000 $56,278,000
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-2
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
----------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME (Note 2):
Interest on loans $3,597,000 $2,786,000 $2,712,000
Interest on investment
securities and interest
bearing deposits with banks 704,000 501,000 459,000
Interest on Federal funds sold 99,000 161,000 99,000
---------- ---------- ----------
Total interest income 4,400,000 3,448,000 3,270,000
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 1,173,000 1,082,000 1,130,000
Interest on securities sold under
agreements to repurchase 13,000 36,000 41,000
---------- ---------- ----------
Total interest expense 1,186,000 1,118,000 1,171,000
Net interest income 3,214,000 2,330,000 2,099,000
PROVISION FOR POSSIBLE LOAN LOSSES
(Notes 2 and 5) 42,000 86,000 82,000
---------- ---------- ----------
Net interest income after
provision for possible loan
losses 3,172,000 2,244,000 2,017,000
---------- ---------- ----------
OTHER INCOME:
Service charges on deposit 148,000 140,000 177,000
accounts
Other service charges,
commissions and fees 201,000 455,000 131,000
Other income 108,000 84,000 78,000
---------- ---------- ----------
Total other income 457,000 679,000 386,000
---------- ---------- ----------
OTHER EXPENSE:
Salaries and employee benefits 1,289,000 1,054,000 770,000
Net occupancy expense 224,000 161,000 132,000
Net cost to operate other real 9,000 6,000 26,000
estate
Other operating expenses
(Note 12) 1,283,000 948,000 917,000
---------- ---------- ----------
Total other expense 2,805,000 2,169,000 1,845,000
---------- ---------- ----------
Income before income taxes 824,000 754,000 558,000
PROVISION FOR INCOME TAXES (Note 7) 304,000 288,000 208,000
---------- ---------- ----------
Net income $ 520,000 $ 466,000 $ 350,000
========== ========== ==========
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
NET INCOME PER SHARE (Note 2) $ 1.41 $ 1.26 $ .95
========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 368,771 368,757 368,757
========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-4
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
----------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
----------------------------------------------------
<TABLE>
<CAPTION>
Additional Total
Common Common Paid-in Retained Shareholders'
Shares Stock Capital Earnings Equity
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1991 1,006,167 $2,515,000 $2,492,000 $ 476,000 $5,483,000
Net income -- 1992 0 0 0 350,000 350,000
Cash dividends
($.30 per share) 0 0 0 (100,000) (100,000)
---------- ---------- ---------- ---------- ----------
BALANCE, December 31, 1992 1,006,167 2,515,000 2,492,000 726,000 5,733,000
Reverse stock split
(Note 8) (670,778) (1,677,000) 1,677,000 0 0
10% stock dividend
(Note 8) 33,368 84,000 417,000 (504,000) (3,000)
Net income -- 1993 0 0 0 466,000 466,000
Cash dividends
($.30 per share) 0 0 0 (101,000) (101,000)
---------- ---------- ---------- ---------- ----------
BALANCE, December 31, 1993 368,757 922,000 4,586,000 587,000 6,095,000
Net income -- 1994 0 0 0 520,000 520,000
Cash dividends
($.30 per share) 0 0 0 (111,000) (111,000)
Stock options 976 2,000 12,000 0 14,000
exercised
(Note 8)
---------- ---------- ---------- ---------- ----------
BALANCE, December 31, 1994 369,733 $ 924,000 $4,598,000 $ 996,000 $6,518,000
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-5
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
----------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
----------- ------------ -----------
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 520,000 $ 466,000 $ 350,000
Adjustments to reconcile net
income to net cash provided
by (used for) operating
activities-
Provision for possible loan
losses 42,000 86,000 82,000
Provision for depreciation and
amortization 110,000 67,000 88,000
Accretion of securities
discount, net (7,000) (2,000) (19,000)
Cash received related to
discount on matured investment
securities 1,000 6,000 5,000
Provision for deferred taxes 18,000 9,000 27,000
(Increase) decrease in accrued
interest receivable (164,000) (57,000) 60,000
(Increase) decrease in other
assets (60,000) (33,000) 125,000
Increase (decrease) in
accrued interest payable 60,000 (78,000) (45,000)
Increase (decrease) in accrued
expenses and other liabilities 116,000 (17,000) 23,000
----------- ------------ -----------
Net cash provided by
operating activities 636,000 447,000 696,000
----------- ------------ -----------
INVESTING ACTIVITIES:
Net decrease in due from
banks -- interest bearing 2,493,000 713,000 996,000
Purchases of investment
securities (5,280,000) (10,624,000) (5,257,000)
Proceeds from maturities of
investment securities 1,776,000 4,390,000 7,702,000
Net increase in loans (5,145,000) (4,008,000) (5,334,000)
Decrease (increase) in other
real estate 8,000 (203,000) 426,000
Capital expenditures (598,000) (163,000) (56,000)
----------- ------------ -----------
Net cash used for investing
activities (6,746,000) (9,895,000) (1,523,000)
=========== ============ ===========
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- ----------
<S> <C> <C> <C>
FINANCING ACTIVITIES:
Net increase in demand deposits and
savings accounts $ 2,382,000 $ 8,742,000 $4,386,000
Net increase(decrease) in time
deposits 3,112,000 (1,949,000) 1,468,000
(Decrease) increase in
securities sold
under agreements to repurchase (750,000) 47,000 94,000
Proceeds from issuance of
common stock 14,000 0 0
Cash dividends and fractional
common shares (111,000) (104,000) (100,000)
----------- ----------- ----------
Net cash provided by financing
activities 4,647,000 6,736,000 5,848,000
----------- ----------- ----------
(Decrease) increase in cash
and cash equivalents (1,463,000) (2,712,000) 5,021,000
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 5,226,000 7,938,000 2,917,000
----------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 3,763,000 $ 5,226,000 $7,938,000
=========== =========== ==========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for-
Interest $ 1,126,000 $ 1,196,000 $1,216,000
Income taxes 286,000 226,000 22,000
=========== =========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-7
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
DECEMBER 31, 1994
-----------------
(1) ORGANIZATION:
-------------
Bergen Commercial Bank (the Bank) is a New Jersey state chartered bank that
was incorporated in August 1987 and commenced its banking operations in
February 1988. The Bank concentrates its operations in commercial lending
and loan originations secured by real estate involving nonresidential
properties, primarily servicing Bergen County, New Jersey. The Bank has
branch offices located in Hasbrouck Heights and Wood-Ridge. During 1993 the
Bank formed a wholly-owned investment subsidiary, BCB Investment Co., Inc.
incorporated in the State of New Jersey.
(2) SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
--------------------
Principles of Consolidation-
----------------------------
The consolidated financial statements include the accounts of the Bank and
its Subsidiary. All intercompany accounts and transactions have been
eliminated.
Investment Securities-
----------------------
Investment securities are carried at cost adjusted for amortization of
premiums and accretion of discounts on a straight-line basis which is not
materially different from the interest method. The adjusted cost of the
specific investment security sold is used to compute gains or losses on the
sale of investment securities. Investment securities are carried at
amortized cost because the Company has the ability and intent to hold the
securities to maturity.
During 1993, the Financial Accounting Standards Board issued Statement No.
115, (SFAS 115) "Accounting for Certain Investments in Debt and Equity
Securities." Under this standard, debt securities that the Bank has both
the positive intent and ability to hold to maturity are carried at
amortized cost. Debt securities that the Bank does not have the positive
intent and ability to hold to maturity and all marketable equity
securities, are classified as either trading or available for sale and
carried at fair value. Unrealized holding gains and losses on securities
classified as available for sale are carried as a separate component of
stockholders' equity, net of tax. Unrealized holding gains and losses
associated with trading securities are credited or charged to the statement
of operations.
The Bank currently classifies all of its debt securities as held to
maturity and carries them at amortized cost. Because this method of
accounting is consistent with the method followed by the Bank prior to the
adoption of SFAS 115, there was no cumulative effect of the adoption on
January 1, 1994.
F-8
<PAGE>
Allowance for Possible Loan Losses-
-----------------------------------
The allowance for possible loan losses is maintained at a level considered
adequate to provide for potential loan losses. The allowance is increased
by provisions charged to expense and reduced by net charge-offs (see Note
5). The level of the allowance is based on management's evaluation of
potential losses in the loan portfolio, after consideration of appraised
collateral values, financial condition of the borrowers, as well as
prevailing and anticipated economic conditions. Credit reviews of the loan
portfolio, designed to identify potential charges to the allowance, are
made on a periodic basis during the year by senior management.
In May 1993, Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," was issued. This
statement requires that impaired loans, within the scope of the statement,
be measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate or market price or the
fair value of the collateral if the loan is collateral dependent. The Bank
intends to adopt this statement during the first quarter of 1995. Adoption
is not expected to have a material effect on the Bank's financial
statements.
Premises and Equipment-
-----------------------
Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is computed primarily on the straight-line
method over the estimated useful lives of the assets.
Interest on Loans-
------------------
Interest on loans is credited to operations primarily based upon the
principal amount outstanding. When management believes there is sufficient
doubt as to the ultimate collectibility of interest on any loan, the
accrual of applicable interest is discontinued. Net loan origination fees
are deferred and amortized over the life of the related loan using the
level yield method.
Other Real Estate-
------------------
Other real estate includes properties that have either been acquired by the
Bank through foreclosure or which qualify as in-substance foreclosures.
The Bank considers collateral for a loan to be in-substance foreclosed if
(1) the borrower has little or no equity in the collateral, (2) proceeds
for repayment of the loan can be expected to come only from the collateral;
and (3) the borrower has effectively abandoned control of the collateral to
the Bank or it is doubtful that the borrower will be able to rebuild equity
in the collateral or otherwise repay the loan in the foreseeable future.
Other real estate is carried at the lower of the fair market value of the
property less estimated disposal costs or the recorded investment in the
related loan. Periodic net cash payments related to other real estate are
charged to income, while net cash receipts are applied to reduce the
carrying amount of the related property.
Income Taxes-
-------------
Income taxes are measured based upon current tax rates and regulations.
Changes in these rates and regulations are reflected in the provision for
income taxes in the period of enactment.
F-9
<PAGE>
Deferred income taxes are provided on all significant temporary differences
between income as determined for financial reporting and for income tax
purposes. Transactions creating deferred taxes primarily include discounts
on investment securities, depreciation and the provision for possible loan
losses.
Cash and Cash Equivalents-
--------------------------
Cash and cash equivalents includes cash on hand, noninterest bearing
amounts due from banks and Federal funds sold. Generally, Federal funds
are sold for a one-day period.
Per Share Data-
---------------
Net income and cash dividends per share are computed based on the weighted
average number of shares outstanding during the years as well as the
dilutive effect of stock options, if material. Net income per share has
been computed giving retroactive effect to the 1 for 3 reverse stock split
and the 10% stock dividend (see Note 8) that occurred prior to 1994.
(3) INVESTMENT SECURITIES:
----------------------
Information with regard to the Bank's investment portfolio is as follows-
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
1994 Cost Gains Losses Value
- ---- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
U. S. Treasury Securities and
obligations of U. S. Government
corporations and agencies $12,340,000 $ 13,000 $0 $ 12,353,000
Obligations of states and
political subdivisions 921,000 0 (100,000) 821,000
------------ ------------ ------------ ------------
Totals $13,261,000 $ 13,000 ($100,000) $13,174,000
============ ============ ============ ============
1993
- ----
U. S. Treasury Securities and
obligations of U. S. Government
corporations and agencies $ 7,349,000 $ 7,000 ($13,000) $ 7,343,000
Obligations of states and
political subdivisions 2,402,000 142,000 0 2,544,000
------------ ------------ ------------ ------------
Totals $ 9,751,000 $149,000 ($13,000) $ 9,887,000
============ ============ ============ ============
</TABLE>
The amortized cost and estimated market value of investment securities at
December 31, 1994, by contractual maturity, are shown below.
<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
Due in one year or less $ 1,991,000 $ 1,987,000
Due after one year through five years 11,270,000 11,187,000
----------- -----------
$13,261,000 $13,174,000
=========== ===========
</TABLE>
F-10
<PAGE>
As of December 31, 1994, investment securities having a book value of
$2,050,000 were pledged to secure public deposits, repurchase agreements and
for other purposes as required by law.
(4) LOANS:
------
Loans outstanding by classification at December 31 are as follows-
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Loans secured by real estate-
Nonresidential properties $20,779,000 $16,572,000
Residential properties 3,537,000 3,959,000
Construction and land
development 1,919,000 822,000
Commercial and industrial loans 13,799,000 14,678,000
Loans to individuals 1,679,000 1,142,000
All other loans 804,000 116,000
----------- -----------
$42,517,000 $37,289,000
=========== ===========
Activity related to loans to
directors, executive officers and
their affiliated interests is as
follows-
1994 1993
----------- -----------
<S> <C> <C>
Balance, beginning of year $ 1,528,000 $ 1,361,000
Loans granted 2,861,000 927,000
Repayments of loans (2,067,000) (691,000)
Resignation of Director 0 (69,000)
----------- -----------
Balance, end of year $ 2,322,000 $ 1,528,000
=========== ===========
</TABLE>
All such loans are current as to principal and interest payments as of
December 31, 1994.
(5) ALLOWANCE FOR
POSSIBLE LOAN LOSSES:
---------------------
The allowance for possible loan losses is based on estimates, and ultimate
losses may vary from the current estimates. These estimates are reviewed
periodically and, as adjustments become necessary, they are reflected in
operations in the periods in which they become known.
An analysis of the allowance for possible loan losses is as follows-
<TABLE>
<CAPTION>
1994 1993 1992
-------- --------- --------
<S> <C> <C> <C>
Balance, beginning of year $499,000 $ 582,000 $411,000
Provision charged to expense 42,000 86,000 82,000
Loans charged off (41,000) (169,000) (36,000)
Recoveries of loans previously
charged off 91,000 0 125,000
-------- ---------- --------
Balance, end of year $591,000 $ 499,000 $582,000
======== ========= ========
</TABLE>
F-11
<PAGE>
As of December 31, 1994 and 1993, there were no loans accounted for on a
nonaccrual basis. However, as of December 31, 1994, the loan portfolio
included a loan for approximately $10,000, on which interest or principal was
90 days or more past due but which was still accruing interest since the loan
was well secured and in the process of collection.
The Bank restructured a loan for $286,000 during 1993 and has classified it
as a troubled debt restructuring. As of December 31, 1994, the borrower has
continued to perform under the terms of the restructured agreement.
(6) PREMISES AND EQUIPMENT:
-----------------------
Premises and equipment consists of the following at December 31-
<TABLE>
<CAPTION>
1994 1993
----------- --------
<S> <C> <C>
Furniture and equipment $ 748,000 $482,000
Leasehold improvements 327,000 182,000
Land 124,000 0
Building 56,000 0
--------- --------
1,255,000 664,000
Less-Accumulated depreciation
and amortization 395,000 294,000
---------- --------
$ 860,000 $370,000
========== ========
</TABLE>
(7) INCOME TAXES:
-------------
The components of the provision for income taxes are as follows-
<TABLE>
1994 1993 1992
---------- -------- --------
<S> <C> <C> <C>
Federal income tax-
Current $ 248,000 $217,000 $128,000
Deferred 18,000 9,000 27,000
State income tax 38,000 62,000 53,000
---------- -------- --------
$ 304,000 $288,000 $208,000
========== ======== ========
</TABLE>
The difference between the statutory Federal income tax rate and the
effective income tax rate is primarily attributable to tax-exempt interest
income and the provision for state taxes.
Included in other assets in the accompanying consolidated statement of
condition as of December 31, 1994 is a deferred tax asset of approximately
$110,000. This amount represents the tax effect of the cumulative difference
in the basis of certain assets and liabilities for financial statement and
tax reporting purposes. The significant assets giving rise to this
difference are the Bank's allowance for possible loan losses and premises and
equipment.
F-12
<PAGE>
(8) SHAREHOLDERS' EQUITY:
---------------------
Reverse Stock Split-
--------------------
During 1993, the Board of Directors of the Bank authorized a 1 share for 3
reverse stock split on the Banks issued and outstanding common stock as of
July 1, 1993. All shareholders holding fractional shares as a result of
the reverse stock split were paid the net book value per share at the time
of the split.
Stock Dividend-
---------------
On December 20, 1993, the Bank paid a 10% stock dividend to shareholders of
record as of December 10, 1993.
Stock Options-
--------------
The Bank has granted 9,167 options for the purchase of its common stock to
certain executives. The options become exercisable over a eight-year
period at an initial price of $13.64 per share increasing 10% each year.
During 1994, 976 options became exercisable and were exercised.
Stock options have been adjusted retroactively for the effects of stock
dividends and splits.
(9) CAPITAL REQUIREMENTS:
---------------------
The Bank's regulators have classified and defined bank capital into the
following components: (1) Tier I capital which includes tangible
shareholders' equity for common stock and certain perpetual preferred stock
and (2) Tier II capital which includes a portion of the allowance for
possible loan losses, certain qualifying long-term debt and preferred stock
which does not qualify for Tier I capital.
The Bank's regulators have implemented risk-based capital guidelines which
require a bank to maintain certain minimum capital as a percent of such
bank's assets and certain off-balance sheet items adjusted for defined credit
risk factors (risk-adjusted assets). As of December 31, 1994, a bank is
required to maintain, at a minimum, Tier I capital as a percent of risk-
adjusted assets of 4.0% and combined Tier I and Tier II capital as a percent
of risk-adjusted assets of 8.0%. As of December 31, 1994, the Bank's Tier I
and combined Tier I and II capital ratios (unaudited) were 10.30% and 11.21%,
respectively.
In addition to the risk-based guidelines discussed above, the Bank's
regulators require that a bank which meets the regulator's highest
performance and operation standards, maintain a minimum leverage ratio (Tier
I capital as a percent of total average quarterly assets less tangibles) of
3%. For those banks with higher levels of risk or that are experiencing or
anticipating significant growth, the minimum leverage ratio will be
proportionately increased. Minimum leverage ratios for each bank will be
established and updated through the ongoing regulatory examination process.
As of December 31, 1994, the Bank has a leverage ratio of 10.06%, which meets
the regulators' required minimum ratio.
F-13
<PAGE>
(10) BENEFIT PLAN:
-------------
The Bank maintains a 401(k) plan for all employees who complete one year of
service and attain the age of 21. Under the plan, the Bank will match 50%
of the employee contributions up to a maximum of the first 6% deferred.
Bank contributions are vested based upon years of service. Bank
contributions were approximately $9,000 in 1994 and $8,000 in 1993 and
1992.
The Bank has not established any formal or informal plan that would provide
any postretirement benefits to its employees.
(11) COMMITMENTS AND CONTINGENCIES:
------------------------------
The Bank leases its main office facility at an annual rental of
approximately $130,000, subject to periodic adjustments to a current market
value rental. The lease agreement expires in November, 2007. During 1994,
the Bank entered into lease agreements for two branches, which expire in
1999.
As of December 31, 1994, future minimum rental payments under this lease
are as follows-
<TABLE>
<S> <C>
1995 $ 183,000
1996 184,000
1997 185,000
1998 168,000
1999 168,000
Thereafter 852,000
----------
Total $1,740,000
==========
</TABLE>
The above amounts represent minimum rentals adjusted for certain rent
concessions but not adjusted for possible future increases due to
escalation provisions.
The statement of condition does not reflect various commitments relating to
financial instruments which are used in the normal course of business.
Management does not anticipate that the settlement of those financial
instruments will have a material adverse effect on the Bank's financial
position or operating results. These instruments include commitments to
extend credit and letters of credit. These financial instruments carry
various degrees of credit risk, which is defined as the possibility that a
loss may occur from the failure of another party to perform according to
the terms of the contract.
Commitments to extend credit are legally binding loan commitments with set
expiration dates. They are intended to be disbursed, subject to certain
conditions, upon request of the borrower. The Bank was committed to
advance $9,949,000 to its borrowers as of December 31, 1994. Such
commitments generally expire within one year.
Standby letters of credit are provided to customers to guarantee their
performance, generally in the production of goods and services or under
contractual commitments in the financial markets. The Bank has entered
into standby letters of credit contracts with its customers totaling
$647,000 as of December 31, 1994, which generally expire within one year.
F-14
<PAGE>
The Bank may, in the ordinary course of business, become a party to
litigation involving collection matters, contract claims and other legal
proceedings relating to the conduct of its business. In management's
judgment, the financial position and results of operations will not be
affected materially by the final outcome of any present legal proceedings.
(12) OTHER OPERATING EXPENSES:
-------------------------
The components of other operating expenses are as follows-
<TABLE>
<CAPTION>
1994 1993 1992
---------- -------- --------
<S> <C> <C> <C>
Equipment $ 168,000 $109,000 $ 85,000
Marketing 142,000 55,000 67,000
Computer services 147,000 112,000 92,000
Deposit and other insurance 171,000 155,000 129,000
Regulatory, professional and
other fees 331,000 232,000 267,000
Office expense 209,000 132,000 105,000
All other 115,000 153,000 172,000
---------- -------- --------
$1,283,000 $948,000 $917,000
========== ======== ========
</TABLE>
F-15
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENT OF CONDITION -- JUNE 30, 1995
----------------------------------------------------
(Unaudited)
-----------
ASSETS
------
<TABLE>
<S> <C>
CASH AND DUE FROM BANKS -- NONINTEREST $ 4,463,000
BEARING (Note 2)
FEDERAL FUNDS SOLD 5,250,000
-------------
Total cash and cash equivalents 9,713,000
-------------
DUE FROM BANKS -- INTEREST BEARING 105,000
-------------
SECURITIES:
Available for sale at fair
market value 7,145,000
Held to maturity at amortized
cost 6,881,000
-------------
14,026,000
-------------
LOANS (Notes 2, 4 and 5) 45,787,000
Less-
Allowance for possible loan losses (542,000)
Unearned income (144,000)
-------------
Net loans 45,101,000
PREMISES AND EQUIPMENT, net 872,000
-------------
ACCRUED INTEREST RECEIVABLE 462,000
-------------
OTHER REAL ESTATE 258,000
-------------
OTHER ASSETS 437,000
-------------
Total assets $70,974,000
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Deposits-
Demand-
Noninterest bearing $13,336,000
Interest bearing 24,930,000
Savings 3,078,000
Time 22,309,000
-------------
Total deposits 63,653,000
Accrued interest payable 381,000
Accrued expenses and other
liabilities 216,000
-------------
64,250,000
-------------
SHAREHOLDERS' EQUITY (Notes 2, 8 and 9):
Common stock $2.50 par value, 2,000,000 shares
authorized; 369,733 shares issued and
outstanding 924,000
Additional paid-in capital 4,598,000
Retained earnings 1,188,000
Unrealized holding gains on securities
available for sale,
net of deferred tax benefit 14,000
-------------
Total shareholders' equity 6,724,000
-------------
Total liabilities and
shareholders' equity $70,974,000
=============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-16
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
-----------------------------------------------
(Unaudited)
-----------
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
INTEREST INCOME (Note 2):
Interest on loans $2,163,000 $1,608,000
Interest on securities and
interest bearing deposits with
banks 408,000 323,000
Interest on Federal funds sold 61,000 46,000
---------- ----------
Total interest income 2,632,000 1,977,000
---------- ----------
INTEREST EXPENSE:
Interest on deposits 880,000 528,000
Interest on securities sold
under agreements to repurchase 1,000 2,000
---------- ----------
Total interest expense 881,000 530,000
---------- ----------
Net interest income 1,751,000 1,447,000
PROVISION FOR POSSIBLE LOAN LOSSES
(Notes 2 and 5) 11,000 20,000
---------- ----------
Net interest income after
provision
for possible loan losses 1,740,000 1,427,000
---------- ----------
OTHER INCOME:
Service charges on deposit
accounts 112,000 69,000
Other income 275,000 184,000
---------- ----------
Total other income 387,000 253,000
---------- ----------
OTHER EXPENSE:
Salaries and employee benefits 702,000 614,000
Net occupancy expense 146,000 96,000
Other operating expenses 877,000 559,000
---------- ----------
Total other expense 1,725,000 1,269,000
---------- ----------
Income before income taxes 402,000 411,000
PROVISION FOR INCOME TAXES (Note 7) 137,000 152,000
---------- ----------
Net income $ 265,000 $ 259,000
========== ==========
NET INCOME PER SHARE (Note 2) $0.72 $0.70
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 369,733 368,757
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-17
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
---------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 1995
--------------------------------------
(Unaudited)
-----------
<TABLE>
<CAPTION>
Unrealized
Additional Holding Gains Total
Common Common Paid-in Retained on Securities Shareholders'
Shares Stock Capital Earnings Available for Sale Equity
-------- -------- ------------ -------------- -------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994 369,733 $924,000 $4,598,000 $ 996,000 $0 $6,518,000
Net income for the
six months ended June
30, 1995 0 0 0 265,000 0 265,000
Cash dividends
($.40 per share) 0 0 0 (73,000) 0 (73,000)
Unrealized holding
gains on securities
available for sale 0 0 0 0 14,000 14,000
---------- ---------- ---------- ---------- ---------- ----------
BALANCE, June 30, 1995 369,733 $924,000 $4,598,000 $1,188,000 $14,000 $6,724,000
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-18
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
-----------------------------------------------
(Unaudited)
-----------
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 265,000 $ 259,000
Adjustments to reconcile net
income to net cash provided by
(used for) operating
activities-
Provision for possible loan
losses 11,000 20,000
Provision for depreciation
and amortization 88,000 41,000
Accretion of securities
discount, net (9,000) (2,000)
Provision for deferred taxes 4,000 18,000
(Increase) decrease in
accrued interest receivable 3,000 (61,000)
(Increase) decrease in other
assets (157,000) (208,000)
Increase (decrease) in
accrued interest payable 189,000 0
Increase (decrease) in
accrued expenses and other
liabilities (29,000) 59,000
----------- -----------
Net cash provided by
operating activities 365,000 126,000
----------- -----------
INVESTING ACTIVITIES:
Net decrease in due from banks
-- interest bearing 490,000 1,696,000
Available for sale securities-
Purchases (1,198,000) 0
Maturities 390,000 0
Held to maturity securities-
Purchases (260,000) (3,685,000)
Maturities 326,000 1,321,000
Net increase in loans (3,338,000) (2,460,000)
Decrease (increase) in other
real estate 365,000 2,000
Capital expenditures (100,000) (8,000)
----------- -----------
Net cash used for investing
activities (3,325,000) (3,134,000)
----------- -----------
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
FINANCING ACTIVITIES:
Net increase in deposits $8,983,000 $ 2,416,000
(Decrease) increase in
securities sold under
agreements
to repurchase 0 (750,000)
Cash dividends (73,000) 0
---------- -----------
Net cash provided by
financing activities 8,910,000 1,666,000
---------- -----------
(Decrease) increase in cash
and cash equivalents 5,950,000 (1,342,000)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,763,000 5,226,000
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $9,713,000 $ 3,884,000
========== ===========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for-
Interest $ 692,000 $ 531,000
Income taxes 115,000 294,000
========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-20
<PAGE>
BERGEN COMMERCIAL BANK AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
JUNE 30, 1995
-------------
(Unaudited)
-----------
(1) INTRODUCTION:
-------------
In the opinion of management, these unaudited financial statements contain
all disclosures which are necessary to present fairly the Bank's financial
position at June 30, 1995 and the results of operations and cash flows for
the six months then ended. Certain information and footnote disclosures
required under generally accepted accounting principles have been condensed
or omitted pursuant to the Securities and Exchange Commission rules and
regulations. These financial statements should be read in conjunction with
the audited annual financial statements and notes thereto for the year ended
December 31, 1994.
(2) SECURITIES:
-----------
The Bank adopted No. SFAS 115 on January 1, 1994 and have subsequently
transferred investment securities from the held to maturity portfolio to the
securities available for sale portfolio. SFAS No. 115 requires that
securities available for sale be accounted for at fair value and the
difference between the amortized cost and the fair value be shown as an
adjustment to shareholders' equity.
Information with regard to the Bank's securities portfolio is as follows-
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Available for Sale-
- -------------------
U. S. Treasury Securities and
obligations of U. S. Government
corporations and agencies $7,023,000 $37,000 ($15,000) $7,045,000
Obligations of states and
political subdivisions 100,000 0 0 100,000
---------- --------- -------- ----------
Totals $7,123,000 $37,000 ($15,000) $7,145,000
========== ========= ======== ==========
Held to Maturity-
- -----------------
U. S. Treasury Securities and
obligations of U. S. Government
corporations and agencies $6,394,000 $ 4,000 ($375,000) $6,023,000
Obligations of states and
political subdivisions 487,000 0 (1,000) 486,000
---------- -------- --------- ----------
Totals $6,881,000 $ 4,000 ($376,000) $6,509,000
========== ======== ========= ==========
</TABLE>
F-21
<PAGE>
The amortized cost and estimated market value of securities at June 30, 1995,
by contractual maturity, are shown below.
<TABLE>
<CAPTION>
Amortized Estimated
Cost Market Value
--------- ------------
<S> <C> <C>
Available for Sale-
- -------------------
Due in one year or less $4,282,000 $4,279,000
Due after one year through five
years 2,841,000 2,866,000
---------- ----------
$7,123,000 $7,145,000
========== ==========
Held to Maturity-
- -----------------
Due in one year or less $ 436,000 $ 436,000
Due after one year through five
years 6,445,000 6,073,000
---------- ----------
$6,881,000 $6,509,000
========== ==========
</TABLE>
As of June 30, 1995, securities having a book value of $2,245,000 were
pledged to secure public deposits, repurchase agreements and for other
purposes as required by law.
(3) LOANS:
------
Loans outstanding by classification at June 30 are as follows-
<TABLE>
<S> <C>
Loans secured by real estate-
Nonresidential properties $20,283,000
Residential properties 3,930,000
Construction and land 3,121,000
development
Commercial and industrial loans 14,956,000
Loans to individuals 1,894,000
All other loans 1,603,000
-----------
$45,787,000
===========
</TABLE>
The Bank adopted SFAS 114 on January 1, 1995. This statement requires that
impaired loans within the scope of the statement be measured based on the
present value of expected future cash flows discounted at the loan's
effective interest rate or the fair market value of the collateral if the
loan is collateral dependent. The statement also effectively eliminates the
category of in-substance foreclosure, which required the Bank to account for
loans substantively foreclosed as other real estate. As of January 1, 1995,
in-substance foreclosed loans aggregating $359,000 were reclassified to
loans. Amounts for earlier periods presented herein have not been
reclassified since the applicable amounts would not be material.
F-22
<PAGE>
(4) ALLOWANCE FOR
POSSIBLE LOAN LOSSES:
---------------------
An analysis of the allowance for possible loan losses is as follows-
<TABLE>
<CAPTION>
For The Six Months
Ended June 30
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Balance, beginning of period $591,000 $499,000
Provision charged to expense 11,000 20,000
Loans charged off (60,000) (41,000)
Recoveries of loans previously charged
off 0 91,000
---------- -----------
Balance, end of period $542,000 $569,000
========== ===========
</TABLE>
There were four borrowers with loans aggregating $1,076,000 that are deemed
impaired (three loans on nonaccrual and one loan restructured) at June 30,
1995.
(5) PREMISES AND EQUIPMENT:
-----------------------
Premises and equipment consists of the following at June 30-
<TABLE>
<S> <C>
Furniture and equipment $ 792,000
Leasehold improvements 374,000
Land 124,000
Building 56,000
----------
1,346,000
Less-Accumulated depreciation and amortization 474,000
----------
$ 872,000
==========
</TABLE>
(6) INCOME TAXES:
-------------
The components of the provision for income taxes are as follows-
<TABLE>
<CAPTION>
For The Six Months
Ended June 30
----------------------
1995 1994
-------- --------
<S> <C> <C>
Federal income tax-
Current $119,000 $123,000
Deferred 4,000 9,000
State income tax 14,000 20,000
-------- --------
$137,000 $ 152,000
======== ==========
</TABLE>
F-23
<PAGE>
Included in other assets in the accompanying consolidated statement of
condition as of June 30, 1995 is a deferred tax asset of approximately
$212,000.
(7) COMMITMENTS AND CONTINGENCIES:
------------------------------
Beginning July 1, 1995, the Bank has leased additional office space in
Hasbrouck Heights, New Jersey under a lease expiring in 2000 with an annual
rental of approximately $30,000. In connection with a separate lease on the
Hasbrouck Heights branch location, the lessor has an option to sell the
building to the Bank for $700,000 until the expiration of the agreement in
2000.
As of June 30, 1995, future minimum rental payments for all the Bank's leases
are as follows-
<TABLE>
<S> <C>
1995 $ 105,000
1996 211,000
1997 215,000
1998 200,000
1999 201,000
Thereafter 869,000
----------
Total $1,801,000
==========
</TABLE>
The Bank was committed to advance $12,025,000 to its borrowers as of June
30, 1995. Such commitments generally expire within one year.
The Bank has entered into standby letters of credit contracts with its
customers totaling $476,000 as of June 30, 1995, which generally expire
within one year.
(8) OTHER OPERATING EXPENSES:
-------------------------
The components of other operating expenses are as follows-
<TABLE>
<CAPTION>
For The Six Months
Ended June 30
------------------------
1995 1994
-------- --------
<S> <C> <C>
Merchant credit card processing $216,000 $ 0
Equipment 97,000 76,000
Marketing 54,000 70,000
Computer services 82,000 72,000
Deposit and other insurance 95,000 81,000
Regulatory, professional and
other fees 155,000 103,000
Office expense 108,000 95,000
All other 70,000 62,000
-------- --------
$877,000 $559,000
======== ========
</TABLE>
F-24
<PAGE>
APPENDIX A
ACQUISITION AGREEMENT AND
PLAN OF ACQUISITION BETWEEN
GREAT FALLS BANCORP AND
BERGEN COMMERCIAL BANK
DATED AS OF AUGUST 16, 1995
<PAGE>
ACQUISITION AGREEMENT
By and Between
GREAT FALLS BANCORP
and
BERGEN COMMERCIAL BANK
August 16, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I--THE EXCHANGE...................................... 1
1.1. Terms of Exchange................................. 1
1.2. BCB Stock Options................................. 1
1.3. No Fractional Interests........................... 2
1.4. Plan of Acquisition............................... 2
1.5. Meetings of Stockholders of BCB and GFB........... 3
1.6. Certification and Filing of Plan of Acquisition... 3
1.7. Effective Time.................................... 3
1.8. Conflicts......................................... 3
1.9. Directors......................................... 4
1.10. BCB as Separate Subsidiary........................ 4
1.11. Issuance and Delivery of GFB Common Stock......... 4
1.12. Stock Transfer Books.............................. 5
1.13. BCB Dissenting Shares............................. 5
1.14 GFB Dissenting Shares............................. 6
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF BCB............ 6
2.1. Organization; Good Standing; Power; and
Qualification..................................... 6
2.2. Capitalization.................................... 6
2.3. BCB Stock Option Plan............................. 6
2.4. Authority; No Violation. etc...................... 7
2.5. Governmental Approvals and Filings................ 7
2.6. Equity Investments................................ 8
2.7. Financial Information............................. 8
2.8. Regulatory Filings................................ 8
2.9. Absence of Changes................................ 8
2.10. Agreements, etc................................... 8
2.11. Absence of Undisclosed Liabilities................ 9
2.12. Condition of Tangible Assets...................... 9
2.13. Litigation, etc................................... 9
2.14. Permits, Licenses, etc............................ 10
2.15. Compliance with Laws.............................. 10
2.16. Brokers' or Finders' Fees. etc.................... 10
2.17. Employees......................................... 10
2.18. Name.............................................. 10
2.19. Environmental Matters............................. 10
2.20. Benefit Plans; Employee Relations................. 11
2.21. Tax Matters....................................... 12
2.22. Insurance......................................... 13
2.23. Dealings with Officers and Directors.............. 13
2.24. Securities Exchange Act of 1934................... 13
2.25. Disclosure Schedule and Other Materials Furnished
by BCB............................................ 13
2.26. Survival.......................................... 14
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF GFB........... 14
3.1. Organization; Good Standing; Power; and
Qualification..................................... 14
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
3.2. Capitalization.................................... 14
3.3. GFB Stock Option Plans............................ 15
3.4. Authority; No Violation. etc...................... 15
3.5. Governmental Approvals and Filings................ 16
3.6. Equity Investments................................ 16
3.7. Financial Information............................. 17
3.8. Regulatory Filings................................ 17
3.9. Absence of Changes................................ 17
3.10. Agreements. etc................................... 17
3.11. Absence of Undisclosed Liabilities................ 18
3.12. Condition of Tangible Assets...................... 18
3.13. Litigation. etc................................... 18
3.14. Permits, Licenses, etc............................ 18
3.15. Compliance with Laws.............................. 19
3.16. Brokers' or Finders' Fees, etc.................... 19
3.17. Employees......................................... 19
3.18. Name.............................................. 19
3.19. Environmental Matters............................. 19
3.20. Benefit Plans; Employee Relations................. 20
3.21. Tax Matters....................................... 21
3.22. Insurance......................................... 22
3.23. Dealings with Officers and Directors.............. 22
3.24. SEC Filings....................................... 22
3.25. Disclosure Schedule and Other Materials Furnished
by GFB............................................ 22
3.26. Survival.......................................... 23
ARTICLE IV--COVENANTS OF BCB................................. 23
4.1. Regular Course of Business........................ 23
4.2. Restricted Activities and Transactions............ 23
4.3. Dividends and Distributions; Repurchases.......... 24
4.4. Advice of Changes................................. 25
4.5. Acquisition Proposals............................. 25
4.6. Affiliates........................................ 25
4.7. Consents, Approvals and Filings................... 25
4.8. Access to Records and Properties.................. 26
ARTICLE V--COVENANTS OF GFB.................................. 26
5.1. Regular Course of Business........................ 26
5.2. Restricted Activities and Transactions............ 26
5.3. Dividends and Distributions; Repurchases.......... 28
5.4. Advice of Changes................................. 28
5.5. Acquisition Proposals............................. 29
5.6. Consents, Approvals and Filings................... 29
5.7. Access to Records and Properties.................. 29
5.8. Affiliates........................................ 30
ARTICLE VI--MUTUAL COVENANTS AND AGREEMENTS.................. 30
6.1. Confidentiality................................... 30
6.2. Expenses.......................................... 31
6.3. Public Announcements.............................. 31
6.4. Further Assurances................................ 31
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
6.5. Post-Effective Time Operations.................... 31
6.6. GFB 401(k) Plan................................... 31
6.7. Investment Bankers' Fees.......................... 31
ARTICLE VII--PROXY AND REGISTRATION STATEMENTS............... 31
7.1. Preparation....................................... 31
7.2. Representations. Warranties and Covenants of BCB.. 32
7.3. Representations, Warranties and Covenants of GFB.. 32
7.4. Mailings to Stockholders.......................... 32
7.5. Blue Sky.......................................... 33
7.6. Tax Opinion....................................... 33
ARTICLE VIII--CONDITIONS TO OBLIGATIONS OF GFB............... 33
8.1. Representations and Warranties.................... 33
8.2. Covenants......................................... 33
8.3. Certificates...................................... 33
8.4. Opinion of Counsel................................ 34
8.5. Affiliates........................................ 34
8.6. Approval of Shareholders of GFB................... 34
8.7. Approval of Shareholders of BCB................... 34
8.8. No Governmental or Other Proceeding or
Litigation........................................ 34
8.9. Approvals and Consents............................ 34
8.10. Registration Statement Effective.................. 34
8.11. Accountants' Opinion.............................. 35
8.12. Tax Opinion....................................... 35
8.13. Fairness Opinions................................. 35
ARTICLE IX--CONDITIONS TO OBLIGATIONS OF BCB................. 35
9.1. Representations and Warranties.................... 35
9.2. Covenants......................................... 35
9.3. Certificates...................................... 35
9.4. Opinion of Counsel................................ 36
9.5. Tax Opinion....................................... 36
9.6. Approval of Shareholders of GFB and BCB........... 36
9.7. No Governmental or Other Proceeding or
Litigation........................................ 36
9.8. Approvals and Consents............................ 36
9.9. Registration Statement Effective.................. 37
9.10. Fairness Opinions................................. 37
9.11. Accountants' Opinion.............................. 37
9.12. Affiliates........................................ 37
ARTICLE X--CLOSING........................................... 37
ARTICLE XI--TERMINATION; LIQUIDATED DAMAGES.................. 37
11.1. Termination...................................... 37
11.2. Liquidated Damages............................... 38
ARTICLE XII--MISCELLANEOUS................................... 38
12.1. Parties in Interest.............................. 38
12.2. Entire Agreement; Amendments..................... 38
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
12.3. Headings......................................... 38
12.4. Notices.......................................... 39
12.5. Counterparts..................................... 39
12.6. Governing Law.................................... 40
12.7. Gender and Number; Person........................ 40
12.8. Waivers.......................................... 40
12.9. Assignments...................................... 40
Signatures................................................... 40
</TABLE>
Exhibit A - Plan of Acquisition
iv
<PAGE>
ACQUISITION AGREEMENT
THIS AGREEMENT, made this 16th day of August, 1995, by and between GREAT
FALLS BANCORP, a corporation duly organized and existing under the laws of the
State of New Jersey (hereinafter referred to as "GFB"), having an address for
purposes of this Agreement located at 55 Union Boulevard, Totowa, New Jersey
07512; and BERGEN COMMERCIAL BANK, a Banking Corporation organized and existing
under the laws of the State of New Jersey (hereinafter referred to as "BCB"),
having an address for purposes of this Agreement located at Two Sears Drive,
Paramus, New Jersey 07652;
W I T N E S S E T H
WHEREAS, GFB desires to acquire all of the outstanding shares of capital
stock of BCB by means of an exchange (the "Exchange") of said shares for shares
of the Common Stock of GFB on the terms and conditions hereinafter set forth;
and
WHEREAS, the Boards of Directors of GFB and BCB, deeming it advisable for
the mutual benefit of GFB, BCB and their respective stockholders, that GFB
acquire the outstanding shares of BCB by means of an exchange of shares under
the terms and conditions hereinafter set forth, have each by duly adopted
resolutions approved this Acquisition Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
THE EXCHANGE
1.1. Terms of Exchange. Upon performance in all material respects of all
------------------
covenants and obligations of the parties contained herein and upon fulfillment
in all material respects or waiver of all conditions to the obligations of the
parties contained herein, at the Effective Time (as defined in Section 1.7
hereof) and pursuant to N.J.S.A. 17:9A-355 through 17:9A-369, inclusive, the
--------
following will occur: Each share of Common Stock of BCB ("BCB Stock") issued
and outstanding at the Effective Time, except for perfected Dissenting Shares
(as defined in Section 1.12 hereof and subject to Section 1.3 hereof with
respect to fractional shares) shall, at said time and without any action on the
part of any holder thereof, be exchanged for 1.7 shares (the "Exchange Rate") of
Common Stock of GFB ("GFB Stock").
1.2. BCB Stock Options. As of the Effective Time, GFB shall assume the
------------------
rights and obligations of BCB under those stock options granted by BCB prior to
the date hereof with respect to BCB Stock pursuant to the Bergen Commercial Bank
Officers Stock Option Plan
1
<PAGE>
(the "BCB Stock Option Plan") which are outstanding at the Effective Time
("Assumed Options"), to the extent such options shall not theretofore have been
exercised. Pursuant to such assumption, the holder of each Assumed Option shall
be entitled, subject to the terms of his or her stock option and compliance with
applicable law, to purchase the number of shares (rounded to the nearest whole
number) of GFB Stock determined by multiplying the number of shares covered by
the Assumed Option by the Exchange Rate; the price per share of GFB Stock under
each Assumed Option shall be determined by dividing the price per share of BCB
Stock specified in the Assumed Option by the Exchange Rate, so that the
aggregate price for all shares covered by the Assumed Option shall remain
unchanged. Each Assumed Option shall constitute a continuation of the
corresponding stock option issued under the BCB Stock Option Plan substituting
GFB for BCB and GFB Stock for BCB Stock in accordance with the foregoing
conversion formula, substituting the price per share determined in accordance
with the foregoing formula, and substituting, for purposes of continuing
eligibility under the BCB Stock Option Plan, a relationship with GFB or any of
its subsidiaries for a relationship with BCB, effective as of the Effective
Time. Except as provided in this Section 1.2, all of the terms and provisions
of each Assumed Option shall remain the same, including, but not limited to, the
times when the Assumed Option may be exercised. As soon as practicable after
the Effective Time, GFB will send written notice of the assumption of the
Assumed Options to each holder thereof. As of the Effective Time, GFB will have
taken all corporate and other action necessary to reserve sufficient shares of
GFB Stock for issuance upon exercise of the Assumed Options. GFB will prepare
and file with the Securities and Exchange Commission (the "SEC") a registration
statement on the appropriate form relating to issuance upon exercise by the
holder thereof of the shares of GFB Stock underlying such Assumed Options and
will use its best efforts to have such registration statement declared effective
as soon as practicable after the Effective Time, but in no case later than 6
months after the Effective Date.
1.3. No Fractional Interests. Neither certificates nor scrip for
------------------------
fractional interests in shares of GFB Stock will be issued in connection with
the Exchange, but in lieu thereof each holder of BCB Stock who would otherwise
have been entitled to a fraction of a share of GFB Stock will be paid an amount
of cash equal to such fraction multiplied by the average of the final bid prices
for shares of GFB Stock on each of the ten (10) business days preceding the
Effective Time. All shares of BCB Stock held by each record holder shall be
aggregated before determining the need to pay cash in lieu of fractional shares.
1.4. Plan of Acquisition. A Plan of Acquisition prepared in accordance
--------------------
with N.J.S.A. 17:9A-357, in the form of Exhibit A hereto, describing the
--------
Exchange and related actions contemplated by this Article I, shall be executed
by the parties hereto and submitted to the Commissioner of Banking of the State
of New
2
<PAGE>
Jersey (the "Commissioner") in accordance with N.J.S.A. 17:9A-358.
--------
1.5. Meetings of Stockholders of BCB and GFB.
----------------------------------------
(a) The Board of Directors of BCB shall duly call, and cause to be
held, a special meeting of the stockholders of BCB and shall direct that the
Plan of Acquisition and this Acquisition Agreement be submitted to said
stockholders for the purpose of adopting and approving the same, subject to
prior approval of the Plan of Acquisition by the Commissioner and all other
required regulatory approvals. The Board of Directors of BCB shall, consistent
with their fiduciary duties, recommend that the stockholders of BCB vote to
adopt and approve the Plan of Acquisition and this Acquisition Agreement. GFB
and BCB shall cooperate in soliciting proxies from stockholders of BCB in favor
of approval of the Plan of Acquisition and this Acquisition Agreement.
(b) The Board of Directors of GFB shall duly call, and cause to be
held, a special meeting of the stockholders of GFB and shall direct that the
Plan of Acquisition and this Acquisition Agreement be submitted to said
stockholders for the purpose of adopting and approving the same, subject to
approval of the Plan of Acquisition by the Commissioner and all other required
regulatory approvals. The Board of Directors of GFB shall, consistent with
their fiduciary duties, recommend that the stockholders of GFB vote to adopt and
approve the Plan of Acquisition and this Acquisition Agreement. BCB and GFB
shall cooperate in soliciting proxies from stockholders of GFB in favor of
approval of the Plan of Acquisition and this Acquisition Agreement.
1.6. Certification and Filing of Plan of Acquisition. In the event that
------------------------------------------------
the Plan of Acquisition and this Acquisition Agreement are approved by 2/3 of
the capital stock of BCB entitled to vote, as required under N.J.S.A. 17:9A-359,
--------
such approval shall be promptly certified by the president or a vice president
of BCB and the certifications shall be attached to the Plan of Acquisition.
Thereafter, upon satisfaction or waiver of all conditions specified in Article
VIII and Article IX hereof, the Plan of Acquisition shall be filed in the
Department of Banking of the State of New Jersey, all as provided in N.J.S.A.
--------
17:9A-359.
1.7. Effective Time. The date and time at which the Exchange shall become
---------------
effective (the "Effective Time") shall be 11:59 p.m. on the last day of the
calendar month during which the Plan of Acquisition is filed with the Department
of Banking of the State of New Jersey in accordance with N.J.S.A. 17:9A-359
--------
following the Closing contemplated by Article X hereof.
1.8. Conflicts. The provisions of this Article I, and all other terms and
----------
conditions set forth in this Acquisition Agreement,
3
<PAGE>
are intended to be consistent with the Plan of Acquisition. In the event that
there is any inconsistency between the provisions of this Acquisition Agreement
and the provisions of the Plan of Acquisition, the latter shall govern.
1.9. Directors. Within ten (10) days following the Effective Time, the
----------
Board of Directors of GFB shall amend the By-Laws of GFB in order to increase
the number of directors of GFB from 7 to 10 and, consistent with their fiduciary
duties, shall elect Anthony M. Bruno, Jr., C. Mark Campbell and Charles J. Volpe
to fill the three new directorships. In the event that one or more of Anthony
M. Bruno, Jr., C. Mark Campbell and Charles J. Volpe is unable to take office,
the Board of Directors of BCB shall designate a substitute, acceptable to GFB,
to be elected in his place by the Board of Directors of GFB, consistent with
their fiduciary duties.
1.10. BCB as Separate Subsidiary. Upon the Effective Time, BCB,
---------------------------
pursuant to N.J.S.A. 17:9A-356 et. seq. shall become a wholly owned subsidiary
-- ---
of GFB. The Board of Directors of BCB immediately prior to the Effective Time
shall continue to be the Board of Directors of BCB immediately after the
Effective Time, the executive officers of BCB immediately prior to the Effective
Time shall continue to be the executive officers of BCB immediately after the
Effective Time, and the Certificate of Incorporation and Bylaws of BCB as in
existence immediately prior to the Effective Time shall continue to be the
Certificate of Incorporation and Bylaws of BCB immediately after the Effective
Time. It is the present intention of GFB to maintain the separate corporate
existence of BCB following the Effective Time. Provided, however, that nothing
herein shall be construed to limit the right of GFB to remove and/or replace any
or all of the directors and executive officers of BCB following the Effective
Time, to amend the Certificate of Incorporation and Bylaws of BCB following the
Effective Time, to terminate the separate corporate existence of BCB following
the Effective Time, or otherwise to limit the rights and prerogatives of GFB as
stockholder of BCB following the Effective Time.
1.11. Issuance and Delivery of GFB Common Stock.
------------------------------------------
(a) As soon as practicable after the Effective Time, GFB will send written
notice to each record holder of certificates representing shares of BCB Stock
immediately prior to the Effective Time ("Old Certificates"), which notice shall
state the number of shares of GFB Stock for which such holder's shares of BCB
Stock have been exchanged.
(b) Thereafter, upon surrender for cancellation to GFB of one or more Old
Certificates (or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or bond as may be reasonably required in each case by
GFB), GFB shall cause to be issued and delivered to the holder of each
surrendered Old Certificate a New Certificate representing the appropriate
number of shares of GFB Stock, together with checks for payment of cash in lieu
4
<PAGE>
of fractional interests to be issued in respect of the Old Certificates.
(c) Until an outstanding Old Certificate has been surrendered and exchanged
as herein provided for a New Certificate (or until such time as the record
holder of an outstanding Old Certificate shall have delivered an appropriate
affidavit of loss and indemnity agreement and/or bond as may be reasonably
required by GFB), such outstanding Old Certificate shall be deemed for all
corporate purposes of GFB, other than the payment of dividends or other
distributions, to evidence ownership of the number of shares of GFB Stock which
were exchanged for the shares of BCB Stock formerly evidenced by the Old
Certificate. No dividends (whether payable in cash, stock or otherwise) or
other distributions which are declared on GFB Stock will be paid to any person
otherwise entitled to receive the same until such person's Old Certificates have
been surrendered in exchange for New Certificates in the manner herein provided,
but upon such surrender, such dividends and other distributions, if any, payable
from and after the Effective Time will be paid to such person. In no event
shall any person entitled to receive such dividends or other distributions be
entitled to receive interest thereon.
1.12. Stock Transfer Books. At the Effective Time, the stock transfer
---------------------
books of BCB shall be closed and no transfer of BCB Stock shall thereafter be
made.
1.13. BCB Dissenting Shares.
----------------------
(a) Each outstanding share of BCB Stock, the holder of which has, prior to
the taking of the vote at the meeting of stockholders of BCB contemplated by
Section 1.5 hereof, filed with BCB a written notice pursuant to N.J.S.A. 17:9A-
--------
360 that he is dissenting and stating that he intends to demand payment for his
shares if the Plan of Acquisition becomes effective, is herein called a "BCB
Dissenting Share". BCB Dissenting Shares, the holders of which have made
written demand on BCB for the payment of the fair value of such shares within 20
days after the mailing of notice to them by BCB that the Plan of Acquisition has
been approved and thereafter have submitted their stock certificate or
certificates to BCB within 20 days after demanding payment of the fair value of
such shares, all as provided in N.J.S.A. 17:9A-360, are herein called "Perfected
--------
BCB Dissenting Shares." Perfected BCB Dissenting Shares shall not be converted
into GFB Stock pursuant to Section 1.1 hereof, but the
holders thereof shall be entitled only to such rights as are granted by N.J.S.A.
--------
17:9A-360 through 17:9A-369, inclusive.
(b) BCB will give GFB (i) prompt notice of any written objections, notices,
withdrawals of objections or notices and any other instruments served pursuant
to N.J.S.A. 17:9A-360 through 17:9A-369, inclusive, and received by BCB, and
--------
(ii) the opportunity to direct all negotiations with and proceedings with
respect to holders of BCB Dissenting Shares. BCB will not, except with the
5
<PAGE>
prior written consent of GFB, (i) voluntarily make any payment with respect to
any demands for payment for shares under N.J.S.A. 17:9A-360 or (ii) settle or
--------
offer to settle any such demands.
1.14 GFB Dissenting Shares. The shareholders of GFB shall have such
----------------------
rights to dissent from the Exchange as are provided in Chapter 11 of the New
Jersey Business Corporation Act.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BCB
BCB hereby represents and warrants to GFB as follows:
2.1. Organization; Good Standing; Power; and Qualification. BCB is a
------------------------------------------------------
commercial bank duly organized, validly existing and in good standing under the
laws of the State of New Jersey, has all requisite corporate power and authority
to own, lease and operate its properties, and to conduct its business as it is
now being conducted. Item 2.1(a) of the BCB Disclosure Schedule contains a list
of all of BCB's direct and indirect subsidiaries (the "BCB Subsidiaries"). Each
BCB Subsidiary is duly organized, validly existing and in good standing under
the laws of the State of New Jersey, has all requisite corporate power and
authority to own, lease and operate its properties, and to conduct its business
as it is now being conducted. BCB has heretofore delivered to GFB true and
complete copies of the Certificates of Incorporation and By-Laws, as amended to
the date hereof, of BCB and each BCB Subsidiary. Each of BCB and the BCB
Subsidiaries is duly qualified or licensed to do business and is in good
standing as a foreign corporation in each state or other jurisdiction in which
the nature of its business or operations requires such qualification or
licensing. Item 2.1(b) of the BCB Disclosure Schedule contains a list of all
foreign jurisdictions in which BCB and each BCB Subsidiary is qualified or
licensed to do business.
2.2. Capitalization. The authorized capital stock of BCB consists of
---------------
2,000,000 shares of Common Stock, of which 369,733 shares are issued and
outstanding and no shares are held by BCB as treasury stock. BCB has no
outstanding convertible securities, warrants, options, rights, calls or other
commitments of any nature to issue or sell its capital stock, other than stock
options granted under the BCB Stock Option Plan. All of the issued and
outstanding capital stock of each BCB Subsidiary is owned, directly or
indirectly, by BCB.
2.3. BCB Stock Option Plan. Stock options outstanding under the BCB Stock
----------------------
Option Plan entitle the holders thereof (subject to applicable vesting
provisions) to purchase an aggregate of 1,464 shares of BCB Stock at a weighted
average price of $18.23 per share. Item 2.3 of the BCB Disclosure Schedule
contains a true and complete list of each holder of stock options granted under
the BCB Stock Option Plan, the number of shares under options to each such
holder,
6
<PAGE>
the exercise price of each such option and the dates on which each such option
granted to such holder becomes exercisable and the date on which each such
option terminates. BCB has heretofore delivered to GFB a true and complete copy
of the BCB Stock Option Plan, as amended to the date hereof, together with a
specimen stock option.
2.4. Authority; No Violation. etc. Subject to the approval of this
-----------------------------
Acquisition Agreement and the Plan of Acquisition by the shareholders of BCB,
and subject to the parties obtaining all necessary regulatory approvals, BCB has
all requisite corporate power to execute, deliver and perform its obligations
under this Agreement. The execution and delivery of this Agreement and
performance by BCB of its obligations hereunder have been duly approved and
authorized by all requisite corporate action of BCB, subject to the shareholder
approval contemplated by Section 1.5(a) hereof and the parties obtaining all
necessary regulatory approvals. This Agreement has been duly executed and
delivered by BCB and, subject as aforesaid, constitutes the legal, valid and
binding agreement of BCB. Except for matters disclosed in Item 2.4 of the BCB
Disclosure Schedule, neither the execution and delivery of this Agreement by BCB
nor compliance by BCB with any of the provisions hereof will (a) conflict with
or result in a breach of any provision of BCB's Certificate of Incorporation,
(b) violate, or result with the passage of time in a violation of, or cause a
default or acceleration under, or give rise to any right to termination,
cancellation or acceleration (whether immediately, or after the giving of
notice, or after the passage of time, or a combination thereof) under, or result
in the creation of any lien, charge or encumbrance on any assets of BCB or any
BCB Subsidiary pursuant to, any of the terms, conditions or provisions of any
agreement, instrument or obligation to which BCB or any BCB Subsidiary is a
party, or by which it or any of its properties or assets may be bound, and which
would have or might reasonably be expected to have a material adverse effect on
the financial conditions or results of operations of BCB and the BCB
Subsidiaries, taken as a whole, or (c) violate any Federal or state statute,
rule or regulation or judgment, order, writ, injunction or decree of any Federal
or state court, administrative agency or governmental body, in each case
applicable to BCB or any BCB Subsidiary, or any of their properties or assets,
and which violation would have, or might reasonably be expected to have, a
material adverse effect on the financial condition or results of operations of
BCB and the BCB Subsidiaries, taken as a whole, or otherwise require any filing
with, or obtaining any permit, authorization, consent or approval of, any
Federal, State or local public body, commission or authority, including without
limitation the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et.
---
seq.), except those approvals and authorizations specified in Section 2.5
- ----
hereof.
2.5. Governmental Approvals and Filings. No approval, authorization,
-----------------------------------
consent, license, clearance or order of, declaration or notification to, or
filing, registration or compliance with, any governmental or regulatory
authority is required in order to (a) authorize the Exchange or (b) prevent the
termination of any material
7
<PAGE>
right, privilege, license or agreement of BCB or any BCB Subsidiary, or to
prevent any material loss to BCB or any BCB Subsidiary or their businesses,
taken as a whole, by reason of said Exchange, except (i) compliance with
N.J.S.A. 17:9A-355 through 17:9A-369, inclusive, including approval by the
- --------
Commissioner and filing of the Plan of Acquisition, certified as having been
approved by the stockholders of BCB, (ii) compliance with the Federal Bank
Holding Company Act, including approval by the Federal Reserve Bank of New York,
and the expiration of any required waiting period, and (iii) the requirements of
the Securities Act of 1933, the Securities Exchange Act of 1934 and any
applicable state securities laws.
2.6. Equity Investments. Except as set forth in Item 2.6 of the BCB
-------------------
Disclosure Schedule, BCB does not own, directly or indirectly, any voting shares
of any company.
2.7. Financial Information. BCB has delivered to GFB the audited
----------------------
consolidated statements of condition of BCB and its consolidated subsidiaries as
of December 31, 1994 and December 31, 1993, the related audited consolidated
statements of income and cash flows for each of the three years ended December
31, 1994 (including the notes thereto), the consolidated unaudited statement of
condition of BCB and its consolidated subsidiaries as at June 30, 1995, and the
related unaudited consolidated statements of income and cash flows for the six
months then ended. All of such financial statements, with the related notes
thereto (i) are in accordance with the books of BCB, (ii) have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except if and as otherwise indicated therein
and (iii) fairly present the financial position of BCB at such dates and the
results of its operations and the cash flows for the respective periods
indicated therein, except, in the case of the unaudited statements, for normal
year-end adjustments. The copies of the corporate income tax returns of BCB for
the 12 month periods ended December 31, 1994 and December 31, 1993 which have
been delivered to GFB are each true, correct and complete.
2.8. Regulatory Filings. BCB has delivered to GFB true and complete
-------------------
copies of all reports filed by BCB with the New Jersey Department of Banking and
the Federal Deposit Insurance Corporation during the past 36 months.
2.9. Absence of Changes. Except for matters described in Item 2.9 of the
-------------------
BCB Disclosure Schedule, since June 30, 1995, there has been no material adverse
change in the assets, properties, business or condition, financial or otherwise,
of BCB and the BCB Subsidiaries, taken as a whole.
2.10. Agreements, etc. Item 2.10(a) of the BCB Disclosure Schedule
----------------
contains a true and complete list of every agreement, to which BCB or a BCB
Subsidiary is a party or by which BCB or a BCB Subsidiary is bound, which is
performable in the future and which, together with all other contracts of the
same or similar nature,
8
<PAGE>
provides for the future obligation to pay or receive more than $25,000.00 or is
otherwise material to the business of BCB and the BCB Subsidiaries, taken as a
whole, including but not limited to (a) the leases of BCB's headquarters and
branches, (b) any agreements for the sale of any assets of BCB other than in the
ordinary course of business and (c) any agreements pursuant to which BCB or a
BCB Subsidiary has borrowed money or may in the future borrow money; provided,
however, that such Item need not list outstanding loans to unaffiliated persons
made by BCB or loan commitments and credit facilities pursuant to which BCB may
be obligated to lend money to unaffiliated persons. Except for matters listed
in Item 2.10(b) of the BCB Disclosure Schedule, BCB and the BCB Subsidiaries
have performed all obligations to be performed by it to date under all contracts
and other agreements listed in Item 2.10(a) of the BCB Disclosure Schedule and
is not in default thereunder; and, to the best knowledge of BCB, there exists no
default, or any event which upon the giving of notice or the passage of time
would give rise to any default, in the performance of any obligation to be
performed by any other party to any such contract or other agreement.
2.11. Absence of Undisclosed Liabilities. BCB and the BCB Subsidiaries do
-----------------------------------
not have any material liabilities (whether matured or unmatured, accrued,
absolute or contingent or otherwise) which were not reflected, reserved against,
accrued for or otherwise disclosed on BCB's balance sheet dated as at June 30,
1995, except for obligations to perform the contracts and the agreements listed
on Item 2.10(a) of the BCB Disclosure Schedule in accordance with their
respective terms.
2.12. Condition of Tangible Assets. Those assets of BCB and the BCB
-----------------------------
Subsidiaries that are tangible property are in generally good operating
condition and repair.
2.13. Litigation, etc. Except for matters listed on Item 2.13 of the BCB
----------------
Disclosure Schedule: (a) there are no actions, suits, claims, investigations or
proceedings (legal, administrative or arbitrative) pending or, to the best
knowledge of BCB threatened, against BCB or any of the BCB Subsidiaries, whether
at law or in equity, whether civil or criminal in nature or whether before or by
any Federal, state, municipal or other governmental court, department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to BCB or any of the BCB Subsidiaries, would
have, or could reasonably be expected to have, a material adverse effect on the
financial condition or results of operations of BCB and the BCB Subsidiaries,
taken as a whole; and (b) there are no existing unsatisfied judgments, decrees,
injunctions or orders of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against BCB or any of the BCB
Subsidiaries which could have, or could reasonably be expected to have, a
material adverse effect on the financial condition or results of operations of
BCB and the BCB Subsidiaries, taken as a whole. No petition for bankruptcy,
voluntary or involuntarily, has been filed by or against BCB or any of the BCB
Subsidiaries, neither BCB nor any
9
<PAGE>
of the BCB Subsidiaries has made any assignment for the benefit of its creditors
and no receiver has been appointed for BCB or any BCB Subsidiary or any of their
assets.
2.14. Permits, Licenses, etc. Item 2.14 of the BCB Disclosure Schedule
-----------------------
contains a list of all licenses, permits, orders and approvals issued by any
department, commission, agency or other instrumentality of any federal, state,
county or local government which pertains to the business conducted by BCB and
the BCB Subsidiaries, the absence, revocation or non-renewal of which would
have, or could reasonably be expected to have, a material adverse effect on the
financial condition or results of operations of BCB and the BCB Subsidiaries,
taken as a whole.
2.15. Compliance with Laws. Neither BCB nor any of the BCB Subsidiaries
---------------------
is in violation, in any respect material to the business or assets of BCB and
the BCB Subsidiaries, taken as a whole, of any federal, state, county or local
law, ordinance, regulation or order applicable to the business conducted by it.
BCB and each of the BCB Subsidiaries has all licenses, permits, orders and
approvals of any governmental or regulatory body which are required for the
conduct of the business conducted by it and which, if not held by it, could
reasonably be expected to have a material adverse effect upon the business or
assets of BCB and the BCB Subsidiaries, taken as a whole (collectively,
"Required Permits"). All such Required Permits are in full force and effect, no
violations are or have been reported in respect of any Required Permit and no
proceeding is pending, or to the knowledge of BCB threatened, to revoke or limit
any such Required Permit.
2.16. Brokers' or Finders' Fees. etc. No agent, broker, investment
-------------------------------
banker, person or firm acting on behalf of BCB or under the authority of BCB is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly from GFB in connection with any of the
transactions contemplated hereby, except for fees payable to Capital Consultants
of Princeton, Inc. in connection with their rendering of the fairness opinions
contemplated by Sections 8.13 and 9.10 hereof, which fees shall, in accordance
with Section 6.7 hereof, be the sole responsibility of BCB.
2.17. Employees. BCB has heretofore delivered to GFB a true and complete
----------
list of the names, positions and rates of compensation of all employees of BCB
and the BCB Subsidiaries.
2.18. Name. During the last 3 years BCB has used no business name other
-----
than the name Bergen Commercial Bank and the names of the BCB Subsidiaries.
2.19. Environmental Matters. BCB and the BCB Subsidiaries have never
----------------------
engaged in any use or operation involving the storage, manufacture, generation
or transportation of hazardous substances, and there are no hazardous substances
located on any properties owned
10
<PAGE>
or operated by BCB or the BCB Subsidiaries, including but not limited to the
premises in which the business of BCB is conducted. Each of BCB and the BCB
Subsidiaries is in compliance with all environmental laws, rules and regulations
applicable to it or its properties. Neither BCB nor any of the BCB Subsidiaries
has received notice of any violation of any such law, rule or regulation or of
any enforcement action by any governmental agency or authority pertaining to BCB
or any of the BCB Subsidiaries or any property now or heretofore owned or
operated by any of them. Neither BCB nor any of the BCB Subsidiaries has
received notice of, and is not otherwise aware of, any spills, releases or
discharges of hazardous substances on or from any property now or heretofore
owned or operated by BCB or any of the BCB Subsidiaries. For purposes of this
Agreement, the term "hazardous substances" includes all substances defined as
such under either the Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C.A. 9601 et. seq.) or the New Jersey Industrial Site
Recovery Act (N.J.S.A. 13:1K et. seq.).
2.20. Benefit Plans; Employee Relations.
----------------------------------
(a) Except as set forth in Item 2.20(a) of the BCB Disclosure Schedule, (i)
each of BCB and the BCB Subsidiaries is in material compliance with all
applicable Federal, state, local and foreign laws and regulations respecting
employment and employment practices, and terms and conditions of employment and
wages and hours, (ii) no collective bargaining agreement presently covers (nor
has any, in the past, covered) any employees of BCB or any of the BCB
Subsidiaries, nor is any currently being negotiated by BCB or any of the BCB
Subsidiaries, nor is BCB or any of the BCB Subsidiaries a party to any other
written contract with or material enforceable oral commitment to any labor
union, (iii) there is no unfair labor practice complaint against BCB or any of
the BCB Subsidiaries pending before the National Labor Relations Board or any
comparable state, local or foreign agency, and (iv) there is no labor strike,
dispute, slowdown, stoppage or organizational effort actually pending or, to the
best knowledge of BCB, threatened against or involving BCB or any of the BCB
Subsidiaries.
(b) Item 2.20(b) of the BCB Disclosure Schedule contains a true and
complete list of all written contracts with, or oral commitments for the
employment, retention or payment of any severance or other benefit to, any
employee, consultant or other person.
(c) Item 2.20(c) of the BCB Disclosure Schedule contains a true and
complete list of all Employee Pension Benefit Plans (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974 ("ERISA")), all Employee
Welfare Benefit Plans (as defined in Section 3(l) of ERISA), all incentive
compensation plans (including the BCB Stock Option Plan) and all other employee
benefit programs maintained by BCB and the BCB Subsidiaries in respect of their
employees (other than normal policies concerning vacations, holidays and salary
continuation during short absences for illness or other reasons) (all of the
foregoing appearing on such list being herein
11
<PAGE>
sometimes collectively referred to as "Employee Benefit Programs"). BCB has
heretofore delivered to GFB true and complete copies of all plan texts and other
agreements adopted in connection with the Employee Benefit Programs (including
separation policies). With respect to such plans, Item 2.20(c) of the BCB
Disclosure Schedule contains a true and complete list of (and BCB has heretofore
delivered to GFB true and complete copies of):
(i) the most recent Internal Revenue Service ("IRS") determination
letter relating to each of the Employee Pension Benefit Plans listed in such
Item 2.20(c) (the "BCB Retirement Plans");
(ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedules of each of the Employee Welfare Benefit Plans listed in such Item (the
"BCB Welfare Plans") and each of BCB's Retirement Plans, as filed pursuant to
applicable law;
(iii) the Summary Plan Description (as currently in effect)
distributed to employees for all of BCB's Retirement Plans and Welfare Plans;
and
(iv) the most recent actuarial report received with respect to each of
BCB's Retirement Plans that is a defined benefit plan.
(d) Except as disclosed in Item 2.20(d) of the BCB Disclosure Schedule, (i)
BCB's Retirement Plans are in substantial compliance with ERISA and will
constitute qualified plans under the Internal Revenue Code of 1986 immediately
prior to the Effective Time, (ii) no material violation of ERISA has occurred in
connection with the administration of any of BCB's Retirement Plans or any of
BCB's Welfare Plans, (iii) there are no actions, suits or claims pending or, to
the BCB's best knowledge, threatened against any of BCB's Retirement Plans or
Welfare Plans, or any administrator of fiduciary thereof, (iv) with respect to
each of BCB's Retirement Plans and Welfare Plans as to which an Annual Report is
required to be filed, no liabilities as of the date of the most recent Annual
Report relating to such Plan exist unless specifically referred to in such
Annual Report, and no materially adverse change has occurred with respect to the
financial materials covered by such Annual Report since the date thereof, (v) no
accumulated funding deficiency (within the meaning of Section 412 of the
Internal Revenue Code of 1986) exists with respect to any of BCB's Retirement
Plans and (vi) no "reportable event" (as defined in Section 4043 of ERISA) has
occurred with respect to any of BCB's Retirement Plans that are subject to Title
IV of ERISA. All of BCB's Welfare Plans are either self-funded, or are funded
through a contract with an insurance company.
2.21. Tax Matters. Each of BCB and the BCB Subsidiaries has filed all
------------
Federal, state, local and foreign income and other tax returns, required to be
filed by it, and each such return is complete and accurate in all material
respects. Each of BCB and
12
<PAGE>
the BCB Subsidiaries has paid all taxes of any nature whatsoever, with any
related penalties, interest and liabilities (any of the foregoing being referred
to herein as a "Tax") that are shown on such tax returns as due and payable on
or before the date hereof, other than such Taxes as are being contested in good
faith and which are listed in Item 2.21 of the BCB Disclosure Schedule. The
provisions for current and deferred Taxes reflected on the consolidated
statement of condition of BCB and its consolidated subsidiaries as at June 30,
1995 are sufficient in all material respects. Except as set forth in Item 2.21
of the BCB Disclosure Schedule, there are no claims or assessments pending
against BCB or any of the BCB Subsidiaries for any alleged deficiency in Tax,
and BCB does not know of any threatened Tax claims or assessments against it or
any of the BCB Subsidiaries, which, in either case, involve amounts either
singly or in the aggregate in excess of $25,000.00.
2.22. Insurance. Item 2.22 of the BCB Disclosure Schedule contains a true
----------
and complete list of all policies of liability, theft, fidelity, property damage
and other forms of insurance held by BCB and the BCB Subsidiaries (specifying
the insurer, amount of coverage, annual premium, type of insurance, policy
number and any pending material claims thereunder). The policies listed in such
Item 2.22 are outstanding and duly in force and all premiums with respect to
such policies are currently paid. Except as set forth in such Item 2.22,
neither BCB nor any of the BCB Subsidiaries has, during the past three fiscal
years, been denied or had revoked or rescinded any policy of insurance.
2.23. Dealings with Officers and Directors. Except as set forth in Item
-------------------------------------
2.23 of the BCB Disclosure Schedule, there is no present transaction, business
relationship or indebtedness involving BCB or any of the BCB Subsidiaries which
is of a type described in Item 404 of Regulation S-K (promulgated by the
Securities and Exchange Commission) or which is a "covered transaction" as that
term is defined in Section 23A of the Federal Reserve Act (12 U.S. Code 371c),
as amended, nor is BCB or any of the BCB Subsidiaries a party to any agreement
or understanding which provides for or contemplates such a transaction, business
relationship or indebtedness in the future. Except for the Employee Benefit
Programs referred to in Section 2.20, neither BCB nor any of the BCB
Subsidiaries is a party to any agreement involving payments to any person or
entity based on the profits or gross revenues of BCB or any of the BCB
Subsidiaries.
2.24. Securities Exchange Act of 1934. No securities issued by BCB,
--------------------------------
including but not limited to BCB Stock, are registered under the Securities
Exchange Act of 1934, and no such securities are required to be registered under
said Act.
2.25. Disclosure Schedule and Other Materials Furnished by BCB. The
---------------------------------------------------------
disclosure schedule delivered simultaneously with this Agreement by BCB to GFB
and identified and initialed as such by an
13
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officer of BCB (the "BCB Disclosure Schedule"), together with any materials
furnished to GFB by BCB and referred to in this Article II, are true and
complete in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact which is necessary to make the
statements contained therein not misleading. Any disclosure made in any Item of
the BCB Disclosure Schedule shall be deemed made for purposes of all other
applicable Items in the BCB Disclosure Schedule.
2.26. Survival. The representations and warranties of BCB contained in
---------
this Article II shall not survive the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GFB
GFB hereby represents and warrants to BCB as follows:
3.1. Organization; Good Standing; Power; and Qualification. GFB is a
------------------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey, has all requisite corporate power and authority to
own, lease and operate its properties, and to conduct its business as it is now
being conducted. Item 3.1(a) of the GFB Disclosure Schedule contains a list of
all of GFB's direct and indirect subsidiaries (the "GFB Subsidiaries"). Each
GFB Subsidiary is duly organized, validly existing and in good standing under
the laws of the State of New Jersey, has all requisite corporate power and
authority to own, lease and operate its properties, and to conduct its business
as it is now being conducted. GFB has heretofore delivered to BCB true and
complete copies of the Certificates of Incorporation and By-Laws, as amended to
the date hereof, of GFB and each GFB Subsidiary. Each of GFB and the GFB
Subsidiaries is duly qualified or licensed to do business and is in good
standing as a foreign corporation in each state or other jurisdiction in which
the nature of its business or operations requires such qualification or
licensing. Item 3.1(b) of the GFB Disclosure Schedule contains a list of all
foreign jurisdictions in which GFB and each GFB Subsidiary is qualified or
licensed to do business.
3.2. Capitalization. The authorized capital stock of GFB consists of
---------------
1,000,000 shares of Preferred Stock, without par value, of which no shares are
issued and outstanding and no shares are held by GFB as treasury stock, and
4,000,000 shares of Common Stock, of which 1,069,750 shares were issued and
outstanding as of August 9, 1995 and 0 shares are held by GFB as treasury stock.
GFB has no outstanding convertible securities, warrants, options, rights, calls
or other commitments of any nature to issue or sell its capital stock, other
than stock options granted under GFB's 1985 Incentive Stock Option Plan, GFB's
1988 Nonstatutory Stock Option Plan, GFB's 1993 Stock Option Plan and GFB's 1995
Stock Option Plan (collectively, the "GFB Stock Option Plans") and Cancellable
Mandatory Stock Purchase Contracts issued in December, 1993. All of the issued
and outstanding capital stock of each GFB
14
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Subsidiary is owned, directly or indirectly, by GFB.
3.3. GFB Stock Option Plans. Stock options outstanding under GFB's 1985
-----------------------
Incentive Stock Option Plan entitle the holders thereof (subject to applicable
vesting provisions) to purchase an aggregate of 0 shares of GFB Stock. Stock
options outstanding under GFB's 1988 Nonstatutory Stock Option Plan entitle the
holders thereof (subject to applicable vesting provisions) to purchase an
aggregate of 56,988 shares of GFB Stock at a weighted average price of $9.23 per
share. Item 3.3(a) of the GFB Disclosure Schedule contains a true and complete
list of each holder of stock options granted under GFB's 1988 Nonstatutory Stock
Option Plan, the number of shares under options to each such holder, the
exercise price of each such option and the dates on which each such option
granted to such holder becomes exercisable and the date on which each such
option terminates. Stock options outstanding under GFB's 1993 Stock Option Plan
entitle the holders thereof (subject to applicable vesting provisions) to
purchase an aggregate of 10,648 shares of GFB Stock at a weighted average price
of $7.51 per share. Item 3.3(b) of the GFB Disclosure Schedule contains a true
and complete list of each holder of stock options granted under GFB's 1993 Stock
Option Plan, the number of shares under options to each such holder, the
exercise price of each such option and the dates on which each such option
granted to such holder becomes exercisable and the date on which each such
option terminates. Stock options outstanding under GFB's 1995 Stock Option Plan
entitle the holders thereof (subject to applicable vesting provisions) to
purchase an aggregate of 29,700 shares of GFB Stock at a weighted average price
of $11.36 per share. Item 3.3(c) of the GFB Disclosure Schedule contains a true
and complete list of each holder of stock options granted under GFB's 1995 Stock
Option Plan, the number of shares under options to each such holder, the
exercise price of each such option and the dates on which each such option
granted to such holder becomes exercisable and the date on which each such
option terminates. GFB has heretofore delivered to BCB a true and complete copy
of each of the GFB Stock Option Plans, as amended to the date hereof, together
with a specimen of the stock options issued under each of said plans.
3.4. Authority; No Violation. etc. Subject to the approval of this
-----------------------------
Acquisition Agreement and the Plan of Acquisition by the shareholders of GFB,
and subject to the parties obtaining all necessary regulatory approvals, GFB has
all requisite corporate power to execute, deliver and perform its obligations
under this Agreement. The execution and delivery of this Agreement and
performance by GFB of its obligations hereunder have been duly approved and
authorized by all requisite corporate action of GFB, subject to obtaining
shareholder approval and the parties obtaining all necessary regulatory
approvals. This Agreement has been duly executed and delivered by GFB and,
subject as aforesaid, constitutes the legal, valid and binding agreement of GFB.
Neither the execution and delivery of this Agreement by GFB nor
15
<PAGE>
compliance by GFB with any of the provisions hereof will (a) conflict with or
result in a breach of any provision of GFB's Certificate of Incorporation, (b)
violate, or result with the passage of time in a violation of, or cause a
default or acceleration under, or give rise to any right to termination,
cancellation or acceleration (whether immediately, or after the giving of
notice, or after the passage of time, or a combination thereof) under, or result
in the creation of any lien, charge or encumbrance on any of assets of GFB or
any GFB Subsidiary pursuant to any of the terms, conditions or provisions of any
agreement, instrument or obligation to which GFB or any GFB Subsidiary is a
party, or by which it or any of its properties or assets may be bound, and which
would have or might reasonably be expected to have a material adverse effect on
the financial conditions or results of operations of GFB and the GFB
Subsidiaries, taken as a whole, or (c) violate any Federal or state statute,
rule or regulation or judgment, order, writ, injunction or decree of any Federal
or state court, administrative agency or governmental body, in each case
applicable to GFB or any GFB Subsidiary, or any of their properties or assets,
and which violation would have, or might reasonably be expected to have, a
material adverse effect on the financial condition or results of operations of
GFB and the GFB Subsidiaries, taken as a whole, or otherwise require any filing
with, or obtaining any permit, authorization, consent or approval of, any
Federal, State or local public body, commission or authority, including without
limitation the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et.
seq.), except those approvals and authorizations specified in Section 3.5
hereof.
3.5. Governmental Approvals and Filings. No approval, authorization,
-----------------------------------
consent, license, clearance or order of, declaration or notification to, or
filing, registration or compliance with, any governmental or regulatory
authority is required in order to (a) authorize the Exchange or (b) prevent the
termination of any material right, privilege, license or agreement of GFB or any
GFB Subsidiary, or to prevent any material loss to GFB or any GFB Subsidiary or
their businesses, taken as a whole, by reason of said Exchange, except (i)
compliance with N.J.S.A. 17:9A-355 through 17:9A-369, inclusive, including
--------
approval by the Commissioner and filing of the Plan of Acquisition, certified as
having been approved by the stockholders of BCB, (ii) compliance with the
Federal Bank Holding Company Act, including approval by the Federal Reserve Bank
of New York, and the expiration of any required waiting period, and (iii) the
requirements of the Securities Act of 1933, the Securities Exchange Act of 1934
and any applicable state securities laws.
3.6. Equity Investments. Except as set forth in Item 3.6 of the GFB
-------------------
Disclosure Schedule, GFB does not own, directly or indirectly, any voting shares
of any company other than the GFB Subsidiaries.
16
<PAGE>
3.7. Financial Information. GFB has delivered to BCB the audited
----------------------
consolidated statements of condition of GFB and its consolidated subsidiary as
of December 31, 1994 and December 31, 1993, the related audited consolidated
statements of income and cash flows for each of the three years ended December
31, 1994 (including the notes thereto), the unaudited consolidated statement of
condition of GFB and its consolidated subsidiary as at June 30, 1995, and the
related unaudited consolidated statements of income and cash flows for the six
months then ended. All of such financial statements, with the related notes
thereto (i) are in accordance with the books of GFB and its consolidated
subsidiaries, (ii) have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except if and as otherwise indicated therein and (iii) fairly present the
consolidated financial position of GFB and its consolidated subsidiaries at such
dates and the results of their operations and cash flows for the respective
periods indicated therein, except, in the case of the unaudited statements, for
normal year-end adjustments. The copies of the consolidated corporate income
tax returns of GFB and its consolidated subsidiaries for the 12 month periods
ended December 31, 1994 and December 31, 1993 which have been delivered to BCB
are each true, correct and complete.
3.8. Regulatory Filings. GFB has made available for inspection by BCB
-------------------
true and complete copies of all reports filed by GFB and Great Falls Bank with
the New Jersey Department of Banking and the Federal Reserve Board during the
past 36 months.
3.9. Absence of Changes. Except for matters described in Item 3.9 of the
-------------------
GFB Disclosure Schedule, since June 30, 1995, there has been no material adverse
change in the assets, properties, business or condition, financial or otherwise,
of GFB and the GFB Subsidiaries, taken as a whole.
3.10. Agreements. etc. Item 3.10(a) of the GFB Disclosure Schedule
----------------
contains a true and complete list of every agreement, to which GFB or a GFB
Subsidiary is a party or by which GFB or a GFB Subsidiary is bound, which is
performable in the future and which, together with all other contracts of the
same or similar nature, provides for the future obligation to pay or receive
more than $25,000.00 or is otherwise material to the business of GFB and the GFB
Subsidiaries, taken as a whole, including but not limited to (a) leases of bank
branches, (b) any agreements for the sale of assets other than in the ordinary
course of business and (c) any agreements pursuant to which GFB or a GFB
Subsidiary has borrowed money or may in the future borrow money; provided,
however, that such Item need not list outstanding loans to unaffiliated persons
made by Great Falls Bank or loan commitments and credit facilities pursuant to
which Great Falls Bank may be obligated to lend money to unaffiliated persons.
Except for matters listed in Item 3.10(b) of the GFB Disclosure Schedule, GFB
and the GFB Subsidiaries have performed all obligations to be performed by
17
<PAGE>
them to date under all contracts and other agreements listed in Item 3.10(a) of
the GFB Disclosure Schedule and is not in default thereunder; and, to the best
knowledge of GFB, there exists no default, or any event which upon the giving of
notice or the passage of time would give rise to any default, in the performance
of any obligation to be performed by any other party to any such contract or
other agreement.
3.11. Absence of Undisclosed Liabilities. GFB and the GFB Subsidiaries do
-----------------------------------
not have any liabilities (whether matured or unmatured, accrued, absolute or
contingent or otherwise), which are material to their businesses or assets,
taken as a whole, and which were not reflected, reserved against, accrued for or
otherwise disclosed on the consolidated balance sheet of GFB and its
consolidated subsidiaries dated as at June 30, 1995, except for obligations to
perform the contracts and the agreements listed on Item 3.10(a) of the GFB
Disclosure Schedule in accordance with their respective terms.
3.12. Condition of Tangible Assets. Those assets of GFB and the GFB
-----------------------------
Subsidiaries that are tangible property are in generally good operating
condition and repair.
3.13. Litigation. etc. Except for matters listed on Item 3.13 of the GFB
----------------
Disclosure Schedule: (a) there are no actions, suits, claims, investigations or
proceedings (legal, administrative or arbitrative) pending or, to the best
knowledge of GFB threatened, against GFB or any of the GFB Subsidiaries, whether
at law or in equity, whether civil or criminal in nature or whether before or by
any Federal, state, municipal or other governmental court, department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to GFB or any of the GFB Subsidiaries, would
have, or could reasonably be expected to have, a material adverse effect on the
financial condition or results of operations of GFB and the GFB Subsidiaries,
taken as a whole; and (b) there are no existing unsatisfied judgments, decrees,
injunctions or orders of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against GFB or any of the GFB
Subsidiaries which could have, or could reasonably be expected to have, a
material adverse effect on the financial condition or results of operations of
GFB and the GFB Subsidiaries, taken as a whole. No petition for bankruptcy,
voluntary or involuntarily, has been filed by or against GFB or any of the GFB
Subsidiaries, neither GFB nor any of the GFB Subsidiaries has made any
assignment for the benefit of its creditors and no receiver has been appointed
for GFB or any GFB Subsidiary or any of their assets.
3.14. Permits, Licenses, etc. Item 3.14 of the GFB Disclosure Schedule
-----------------------
contains a list of all licenses, permits, orders and approvals issued by any
department, commission, agency or other instrumentality of any federal, state,
county or local government
18
<PAGE>
which pertains to the businesses conducted by GFB and the GFB Subsidiaries, the
absence, revocation or non-renewal of which would have, or could reasonably be
expected to have, a material adverse effect on the financial condition or
results of operations of GFB and the GFB Subsidiaries, taken as a whole.
3.15. Compliance with Laws. Neither GFB nor any of the GFB Subsidiaries
---------------------
is in violation, in any respect material to the business or assets of GFB and
the GFB Subsidiaries taken as a whole, of any federal, state, county or local
law, ordinance, regulation or order applicable to the business conducted by it.
GFB and each of the GFB Subsidiaries has all licenses, permits, orders and
approvals of any governmental or regulatory body which are required for the
conduct of the business conducted by it, and which, if not held by it, could
reasonably be expected to have a material adverse effect upon the business or
assets of GFB and the GFB Subsidiaries taken as a whole (collectively, "Required
Permits"). All such Required Permits are in full force and effect, no
violations are or have been reported in respect of any Required Permit and no
proceeding is pending, or to the knowledge of GFB threatened, to revoke or limit
any such Required Permit.
3.16. Brokers' or Finders' Fees, etc. No agent, broker, investment
-------------------------------
banker, person or firm acting on behalf of GFB or under the authority of GFB is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly from BCB in connection with any of the
transactions contemplated hereby, except for fees payable to Capital Consultants
of Princeton, Inc. in connection with their rendering of the fairness opinions
contemplated by Sections 8.13 and 9.10 hereof, which fees shall, in accordance
with Section 6.7 hereof, be the sole responsibility of BCB. It is expressly
understood that Capital Consultants of Princeton, Inc. has been retained solely
by and is working solely for the benefit of BCB in connection with this matter.
3.17. Employees. GFB has heretofore delivered to BCB a true and complete
----------
list of the names, positions and rates of compensation of all employees of GFB
and the GFB Subsidiaries.
3.18. Name. During the last 3 years GFB has used no business name other
-----
than the name Great Falls Bancorp and the names of the GFB Subsidiaries.
3.19. Environmental Matters. GFB and the GFB Subsidiaries have never
----------------------
engaged in any use or operation involving the storage, manufacture, generation
or transportation of hazardous substances, and there are no hazardous substances
located on any properties owned or operated by GFB or the GFB Subsidiaries,
including but not limited to the premises in which the business of GFB or Great
Falls Bank is conducted. Each of GFB and the GFB Subsidiaries is in compliance
with all environmental laws, rules and regulations applicable to it or its
properties. Neither GFB nor any of the
19
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GFB Subsidiaries has received notice of any violation of any such law, rule or
regulation or of any enforcement action by any governmental agency or authority
pertaining to GFB or any of the GFB Subsidiaries or any property now or
heretofore owned or operated by any of them. Neither GFB nor any of the GFB
Subsidiaries has received notice of, or is otherwise aware of, any spills,
releases or discharges of hazardous substances on or from any property now or
heretofore owned or operated by GFB or any of the GFB Subsidiaries.
3.20. Benefit Plans; Employee Relations.
----------------------------------
(a) Except as set forth in Item 3.20(a) of the GFB Disclosure Schedule, (i)
each of GFB and the GFB Subsidiaries is in material compliance with all
applicable Federal, state, local and foreign laws and regulations respecting
employment and employment practices and terms and conditions of employment and
wages and hours, (ii) no collective bargaining agreement presently covers (nor
has any, in the past, covered) any employees of GFB or any of the GFB
Subsidiaries, nor is any currently being negotiated by GFB or any of the GFB
Subsidiaries, nor is GFB or any of the GFB Subsidiaries a party to any other
written contract with or material enforceable oral commitment to any labor
union, (iii) there is no unfair labor practice complaint against GFB or any of
the GFB Subsidiaries pending before the National Labor Relations Board or any
comparable state, local or foreign agency, and (iv) there is no labor strike,
dispute, slowdown, stoppage or organizational effort actually pending or, to the
best knowledge of GFB, threatened against or involving GFB or any of the GFB
Subsidiaries.
(b) Item 3.20(b) of the GFB Disclosure Schedule contains a true and
complete list of all written contracts with, or oral commitments for the
employment, retention or payment of any severance or other benefit to, any
employee, consultant or other person.
(c) Item 3.20(c) of the GFB Disclosure Schedule contains a true and
complete list of all Employee Pension Benefit Plans (as defined in Section 3(2)
of ERISA), all Employee Welfare Benefit Plans (as defined in Section 3(1) of
ERISA), all incentive compensation plans (including the GFB Stock Option Plans)
and all other employee benefit programs maintained by GFB and the GFB
Subsidiaries in respect of their employees (other than normal policies
concerning vacations, holidays and salary continuation during short absences for
illness or other reasons) (all of the foregoing appearing on such list being
herein sometimes collectively referred to as "Employee Benefit Programs"). GFB
has heretofore delivered to BCB true and complete copies of all plan texts and
other agreements adopted in connection with the Employee Benefit Programs
(including separation policies). With respect to such plans, Item 3.20(c) of
the GFB Disclosure Schedule contains a true and complete list of (and GFB has
heretofore delivered to BCB
20
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true and complete copies of):
(i) the most recent IRS determination letter relating to each of the
Employee Pension Benefit Plans listed in such Item 3.20(c) (the "GFB Retirement
Plans");
(ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedules of each of the Employee Welfare Benefit Plans listed in such Item (the
"GFB Welfare Plans") and each of the GFB Retirement Plans, as filed pursuant to
applicable law;
(iii) the Summary Plan Description (as currently in effect)
distributed to employees for each of the GFB Retirement Plans and Welfare Plans;
and
(iv) the most recent actuarial report received with respect to each of
the GFB Retirement Plans that is a defined benefit plan.
(d) Except as disclosed in Item 3.20(d) of the GFB Disclosure Schedule, (i)
the GFB Retirement Plans are in substantial compliance with ERISA and will
constitute qualified plans under the Internal Revenue Code of 1986 immediately
prior to the Effective Time, (ii) no material violation of ERISA has occurred in
connection with the administration of any of the GFB Retirement Plans or any of
the GFB Welfare Plans, (iii) there are no actions, suits or claims pending or,
to the BCB's best knowledge, threatened against any of the GFB Retirement Plans
or Welfare Plans, or any administrator or fiduciary thereof, (iv) with respect
to each of the GFB Retirement Plans and Welfare Plans as to which an Annual
Report is required to be filed, no liabilities as of the date of the most recent
Annual Report relating to such Plan exist unless specifically referred to in
such Annual Report, and no materially adverse change has occurred with respect
to the financial materials covered by such Annual Report since the date thereof,
(v) no accumulated funding deficiency (within the meaning of Section 412 of the
Internal Revenue Code of 1986) exists with respect to any of the GFB Retirement
Plans and (vi) no "reportable event" (as defined in Section 4043 of ERISA) has
occurred with respect to any of the GFB Retirement Plans that are subject to
Title IV of ERISA. All of the GFB Welfare Plans are either self-funded, or are
funded through a contract with an insurance company.
3.21. Tax Matters. Each of GFB and the GFB Subsidiaries has filed all
------------
Federal, state, local and foreign income and other tax returns, required to be
filed by it, and each such return is complete and accurate in all material
respects. Each of GFB and the GFB Subsidiaries has paid all taxes of any nature
whatsoever, with any related penalties, interest and liabilities (any of the
foregoing being referred to herein as a "Tax") that are shown on such tax
returns as due and payable on or before the date hereof, other than such Taxes
as are being contested in good faith and
21
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which are listed in Item 3.21 of the GFB Disclosure Schedule. The provisions for
current and deferred Taxes reflected on the consolidated statement of condition
of GFB and its consolidated subsidiaries as at June 30, 1995 are sufficient in
all material respects. Except as set forth in Item 3.21 of the GFB Disclosure
Schedule, there are no claims or assessments pending against GFB or any of the
GFB Subsidiaries for any alleged deficiency in Tax, and GFB does not know of any
threatened Tax claims or assessments against it or any of the GFB Subsidiaries,
which, in either case, involve amounts either singly or in the aggregate in
excess of $25,000.00.
3.22. Insurance. Item 3.22 of the GFB Disclosure Schedule contains a true
----------
and complete list of all policies of liability, theft, fidelity, property damage
and other forms of insurance held by GFB and the GFB Subsidiaries (specifying
the insurer, amount of coverage, annual premium, type of insurance, policy
number and any pending material claims thereunder). The policies listed in such
Item 3.22 are outstanding and duly in force and all premiums with respect to
such policies are currently paid. Except as set forth in such Item 3.22,
neither GFB nor any of the GFB Subsidiaries has, during the past three fiscal
years, been denied or had revoked or rescinded any policy of insurance.
3.23. Dealings with Officers and Directors. Except as set forth in Item
-------------------------------------
3.23 of the GFB Disclosure Schedule, there is no present transaction, business
relationship or indebtedness involving GFB or any of the GFB Subsidiaries which
is of a type described in Item 404 of Regulation S-K (promulgated by the
Securities and Exchange Commission), or which is a "covered transaction" as that
term is defined in Section 23A of the Federal Reserve Act (12 U.S. Code 371c),
as amended, nor is GFB or any of the GFB Subsidiaries a party to any agreement
or understanding which provides for or contemplates such a transaction, business
relationship or indebtedness in the future. Except for the Employee Benefit
Programs referred to in Section 3.20, neither GFB nor any of the GFB
Subsidiaries is a party to any agreement involving payments to any person or
entity based on the profits or gross revenues of GFB or any of the GFB
Subsidiaries.
3.24. SEC Filings. GFB has filed all reports required to be filed by it
------------
pursuant to the Securities Exchange Act of 1934, as amended, during the 36
months preceding the date of this Agreement.
3.25. Disclosure Schedule and Other Materials Furnished by GFB. The
---------------------------------------------------------
disclosure schedule delivered simultaneously with this Agreement by GFB to BCB
and identified and initialed as such by an officer of GFB (the "GFB Disclosure
Schedule"), together with any materials furnished to BCB by GFB and referred to
in this Article III, are true and complete in all material respects and do not
contain any untrue statement of a material fact or omit to state any material
fact which is necessary to make the statements
22
<PAGE>
contained therein not misleading. Any disclosure made in any Item of the GFB
Disclosure Schedule shall be deemed made for purposes of all other applicable
Items in the GFB Disclosure Schedule.
3.26. Survival. The representations and warranties of GFB contained in
---------
this Article III shall not survive the Closing.
ARTICLE IV
COVENANTS OF BCB
4.1. Regular Course of Business. Except as otherwise consented to in
---------------------------
writing by GFB, prior to the Effective Time, BCB will carry on its business
diligently and in the ordinary course only consistent with past practice through
the date hereof, and, without limiting the generality of the foregoing, BCB will
use its best efforts to preserve its present business organization (including
that of the BCB Subsidiaries) intact, keep available the services of the present
executive officers of BCB and the BCB Subsidiaries and preserve the present
relationships of BCB and the BCB Subsidiaries with persons having business
dealings with them; provided, that BCB shall not be required to take any
unreasonable or extraordinary act or any action which would conflict with any
other term of this Acquisition Agreement.
4.2. Restricted Activities and Transactions. Except as otherwise
---------------------------------------
consented to in writing by GFB, prior to the Effective Time, BCB will not, and
will not permit the BCB Subsidiaries, to:
(a) amend its Certificate of Incorporation or By-Laws;
(b) issue, sell or deliver, or agree to issue, sell or deliver, any
shares of any class of capital stock of BCB or any securities convertible into
any such shares, or any options, warrants, or other rights calling for the
issuance, sale or delivery of any such shares or convertible securities, except
that BCB may issue shares of BCB Stock upon exercise of stock options granted
under the BCB Stock Option Plan which are outstanding on the date hereof;
(c) issue any options under the BCB Stock Option Plan;
(d) except in the ordinary course of business (and consistent with
past practice) (i) borrow, or agree to borrow, any funds or voluntarily incur,
assume or become subject to, whether directly or by way of guarantee or
otherwise, any obligation or liability (absolute or contingent), (ii) cancel or
agree to cancel any debts or claims, (iii) lease, sell or transfer, agree to
lease, sell or transfer, or grant or agree to grant any preferential rights to
lease or acquire, any of its assets, property or rights, (iv) make or permit any
amendment to or termination of any material contract, agreement, license or
other right to which it is a party or (v) mortgage or pledge any of its assets,
tangible or intangible;
23
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(e) grant any increase in compensation, other than normal merit
increases and cost-of-living increases required by collective bargaining
agreements, if any, or pursuant to its general prevailing practices or existing
employment agreements, to any employee or group of employees or to all employees
generally;
(f) enter into or make any change in any Employee Benefit Program,
except as required by law;
(g) acquire voting securities or any other ownership interest in any
corporation, association, joint venture, mutual savings association,
partnership, business trust or other business entity, or acquire control or
ownership of all or a substantial portion of the assets of any of the foregoing,
or merge, consolidate or otherwise combine with any other entity, or acquire any
branch of any entity engaged in the business of banking, or enter into any
agreement providing for any of the foregoing;
(h) directly or indirectly solicit or authorize the solicitation of or
enter into any agreement or understanding or, except to the extent required by
law, engage in any discussions with, or furnish any non-public information
concerning BCB or the BCB Subsidiaries to, any person or entity other than GFB
or a representative thereof with respect to any offer or possible offer from a
third party (i) to purchase shares of any class of capital stock of BCB or any
of the BCB Subsidiaries or any securities convertible into any such shares, or
to acquire any option, warrant or other right to purchase or otherwise acquire
any such shares or convertible securities, (ii) to make a tender or exchange
offer for any shares of any class of capital stock of BCB or any of the BCB
Subsidiaries, (iii) to purchase, lease or otherwise acquire all or a substantial
portion of the assets of BCB or any of the BCB Subsidiaries, or (iv) to merge,
consolidate or otherwise combine with BCB or any of the BCB Subsidiaries (the
transactions described in (i), (ii), (iii) and (iv) above are hereinafter
sometimes referred to as "Acquisition Transactions"); notwithstanding the
foregoing, BCB may enter into discussions or negotiations in connection with a
possible Acquisition Transaction which was not solicited by BCB if the Board of
Directors of BCB, after consultation with counsel, determines that such
discussions or negotiations should be commenced in the exercise of the Board's
fiduciary responsibilities; or
(i) except in the ordinary course of business, enter into or agree to
enter into any agreement or transaction material to the business of BCB and the
BCB Subsidiaries, taken as a whole.
4.3. Dividends and Distributions; Repurchases. Except as otherwise
-----------------------------------------
consented to in writing by GFB, prior to the Effective Time, BCB will not
declare or pay any dividend on its capital stock in cash, stock or property, and
will not redeem, repurchase or otherwise acquire any shares of its capital
stock; provided, however, that BCB may continue to declare and pay its regular
24
<PAGE>
quarterly dividend of $0.10 per share in accordance with its current practices.
4.4. Advice of Changes. BCB will promptly advise GFB in writing of (i)
------------------
any event occurring subsequent to the date of this Agreement which would render
any representation or warranty of BCB contained in this Agreement, if made on or
as of the date of such event or on or as of the Closing, untrue or inaccurate in
any material respect, (ii) any material adverse change in the business of BCB
and the BCB Subsidiaries, taken as a whole, and (iii) any exercises of any
options outstanding under the BCB Stock Option Plan.
4.5. Acquisition Proposals. BCB will provide GFB with same-day notice of
----------------------
any offer BCB receives from or on behalf of any third party regarding a proposed
Acquisition Transaction, including in such notice the identity of the offeror
and the complete terms of any such offer, and will provide GFB with same day
notice of the receipt of any information that such an offer is likely to be made
and any available details with respect to such potential offer.
4.6. Affiliates. BCB will deliver to GFB as soon as practicable after
-----------
the execution of this Acquisition Agreement, but in no event later than twenty
(20) days hereafter, a letter identifying all persons who may be deemed to be
"affiliates" of BCB within the meaning of Rule 145 promulgated under the
Securities Act of 1933 or who may be deemed to be "affiliates" of BCB as that
term is used for purposes of qualifying for "pooling of interests" accounting
treatment (collectively, "BCB Affiliates"). BCB will furnish such information
and documents as GFB's counsel may request for the purpose of reviewing such
letter. BCB will cause each BCB Affiliate to issue and deliver to GFB within
three (3) weeks after the date hereof an agreement, in such form as GFB's
counsel shall reasonably require, to the effect that, among other things, no GFB
Securities to be acquired by such person in the Exchange will be disposed of by
such person except in compliance with Rule 145 under the Securities Act of 1933
or another exemption from the registration requirements of the Securities Act of
1933 or pursuant to an effective registration statement under the Securities Act
of 1933, and that such person agrees to be bound by the rules which will permit
the transaction contemplated by the Acquisition Agreement to be treated as a
pooling of interests for accounting purposes.
4.7. Consents, Approvals and Filings.
--------------------------------
(a) BCB will use its best efforts to (i) comply as promptly as
practicable with the governmental requirements specified in Section 2.5 and
obtain all necessary approvals, authorizations, consents, licenses, clearances
or orders of governmental and regulatory authorities referred to in such
Section; provided, however, that compliance with the Federal Bank
25
<PAGE>
Holding Company Act and state securities laws shall be GFB's responsibility and
responsibility for compliance with Federal securities laws shall be allocated in
accordance with Article VII hereof; further provided, that BCB shall not be
required to take any extraordinary action or enter into any agreement which in
the reasonable opinion of BCB is unduly burdensome to BCB in order to obtain any
such approvals, authorizations, etc.
(b) BCB shall provide GFB with copies of all filings made by BCB after
the date hereof to the New Jersey Department of Banking, the Federal Deposit
Insurance Corporation and any other regulatory agency which has authority to
regulate BCB within two business day of such filing.
(c) BCB shall prepare unaudited financial statements on a monthly
basis and shall furnish copies of such statements to GFB by the 10th day
following the end of each month.
4.8. Access to Records and Properties. BCB agrees to assist GFB in
---------------------------------
conducting such investigations and reviews of the business, financial condition,
properties, assets, books and records of BCB and the BCB Subsidiaries as GFB
deems necessary or desirable, and will provide, and will cause its independent
public accountants to provide, GFB and its employees, agents and representatives
full access to, and complete information concerning, all properties, books,
records (including tax returns filed or in preparation), personnel and premises,
and audit work papers and other records of its independent public accountants,
pertaining to the business of BCB and the BCB Subsidiaries. Neither any
investigation by GFB nor the receipt by GFB of any data or information from BCB
shall affect the right of GFB to rely on the representations, warranties or
covenants of BCB or the right of GFB to terminate this Agreement as provided in
Article XI hereof.
ARTICLE V
COVENANTS OF GFB
5.1. Regular Course of Business. Except as otherwise consented to in
---------------------------
writing by BCB, prior to the Effective Time, GFB will carry on its business
diligently and in the ordinary course only consistent with past practice through
the date hereof, and, without limiting the generality of the foregoing, GFB will
use its best efforts to preserve its present business organization (including
that of the GFB Subsidiaries) intact, keep available the services of the present
executive officers of GFB and the GFB Subsidiaries and preserve the present
relationships of GFB and the GFB Subsidiaries with persons having business
dealings with them; provided, that GFB shall not be required to take any
unreasonable or extraordinary act or any action which would conflict with any
other term of this Acquisition Agreement
.
5.2. Restricted Activities and Transactions. Except as otherwise
---------------------------------------
consented to in writing by BCB, prior to the Effective
26
<PAGE>
Time, GFB will not, and will not permit the GFB Subsidiaries, to:
(a) amend its Certificate of Incorporation or By-Laws;
(b) issue, sell or deliver, or agree to issue, sell or deliver, any
shares of any class of capital stock of GFB or any securities convertible into
any such shares, or any options, warrants, or other rights calling for the
issuance, sale or delivery of any such shares or convertible securities, except
that GFB may (i) issue shares of GFB Stock upon exercise of stock options
granted under the GFB Stock Option Plans which are outstanding on the date
hereof, (ii) issues shares of GFB Stock upon the exercise of purchase rights by
the holders of the Cancellable Mandatory Stock Purchase Contracts outstanding on
the date hereof, (iii) exercise its rights to cancel any or all of the
Cancellable Mandatory Stock Purchase Contracts outstanding on the date hereof
and (iv) issue and deliver certificates for GFB stock in exchange for
certificates representing stock of Family First Federal Savings Bank in
accordance with the Agreement and Plan of Merger dated August 31, 1994, between
GFB, Great Falls Bank and Family First Federal Savings Bank;
(c) issue any options under the GFB Stock Option Plans;
(d) except in the ordinary course of business (and consistent with
past practice), (i) borrow, or agree to borrow, any funds or voluntarily incur,
assume or become subject to, whether directly or by way of guarantee or
otherwise, any obligation or liability (absolute or contingent), (ii) cancel or
agree to cancel any debts or claims, (iii) lease, sell or transfer, agree to
lease, sell or transfer, or grant or agree to grant any preferential rights to
lease or acquire, any of its assets, property or rights, (iv) make or permit any
amendment to or termination of any material contract, agreement, license or
other right to which it is a party, except that GFB may exercise its rights to
redeem any or all of 8.5% Redeemable Subordinated Debentures issued by GFB and
due November 1, 1998 and except that GFB may exercise its rights to cancel any
or all of the Cancellable Mandatory Stock Purchase Contracts outstanding on the
date hereof, or (v) mortgage or pledge any of its assets, tangible or
intangible;
(e) grant any increase in compensation, other than normal merit
increases and cost-of-living increases required by collective bargaining
agreements, if any, or pursuant to its general prevailing practices or existing
employment agreements, to any employee or group of employees or to all employees
generally;
(f) enter into or make any change in any Employee Benefit Program,
except as required by law;
(g) acquire voting securities or any other ownership
27
<PAGE>
interest in any corporation, association, joint venture, mutual savings
association, partnership, business trust or other business entity, or acquire
control or ownership of all or a substantial portion of the assets of any of the
foregoing, or merge, consolidate or otherwise combine with any other entity, or
acquire any branch of any entity engaged in the business of banking, or enter
into any agreement providing for any of the foregoing;
(h) directly or indirectly solicit or authorize the solicitation of or
enter into any agreement or understanding or, except to the extent required by
law, engage in any discussions with, or furnish any non-public information
concerning GFB or the GFB Subsidiaries to, any person or entity other than BCB
or a representative thereof with respect to any offer or possible offer from a
third party (i) to purchase shares of any class of capital stock of GFB or any
of the GFB Subsidiaries or any securities convertible into any such shares, or
to acquire any option, warrant or other right to purchase or otherwise acquire
any such shares or convertible securities, (ii) to make a tender or exchange
offer for any shares of any class of capital stock of GFB or any of the GFB
Subsidiaries, (iii) to purchase, lease or otherwise acquire all or a substantial
portion of the assets of GFB or any of the GFB Subsidiaries, or (iv) to merge,
consolidate or otherwise combine with GFB or any of the GFB Subsidiaries;
notwithstanding the foregoing, GFB may enter into discussions or negotiations in
connection with a possible transaction of the type described in (i), (ii), (iii)
or (iv) above which was not solicited by GFB if the Board of Directors of GFB,
after consultation with counsel, determines that such discussions or
negotiations should be commenced in the exercise of the Board's fiduciary
responsibilities; or
(i) except in the ordinary course of business or as expressly
permitted pursuant to any of the foregoing provisions of this Section 5.2, enter
into or agree to enter into any agreement or transaction material to the
business of GFB and the GFB Subsidiaries, taken as a whole.
5.3. Dividends and Distributions; Repurchases. Except as otherwise
-----------------------------------------
consented to in writing by BCB, prior to the Effective Time, GFB will not
declare or pay any dividend on its capital stock in cash, stock or property, and
will not redeem, repurchase or otherwise acquire any shares of its capital
stock; provided, that GFB may continue to declare and pay periodic cash
dividends in accordance with its current practices.
5.4. Advice of Changes. GFB will promptly advise BCB in writing of (i)
------------------
any event occurring subsequent to the date of this Agreement which would render
any representation or warranty of GFB contained in this Agreement, if made on or
as of the date of such event or on or as of the Closing, untrue or inaccurate in
any material respect, (ii) any material adverse change in the business of GFB
and the GFB Subsidiaries, taken as a whole, and (iii) any
28
<PAGE>
exercises of any options outstanding under the GFB Stock Option Plans.
5.5. Acquisition Proposals. GFB will provide BCB with same-day notice of
----------------------
any offer GFB receives from or on behalf of any third party of the type referred
to in Section 5.2(h) hereof, including in such notice the identity of the
offeror and the complete terms of any such offer, and will provide BCB with same
day notice of the receipt of any information that such an offer is likely to be
made and any available details with respect to such potential offer.
5.6. Consents, Approvals and Filings.
--------------------------------
(a) GFB will use its best efforts to (i) comply as promptly as
practicable with the governmental requirements specified in Section 3.5 and
obtain all necessary approvals, authorizations, consents, licenses, clearances
or orders of governmental and regulatory authorities referred to in such
Section; provided, however, that responsibility for compliance with Federal
securities laws shall be allocated in accordance with Article VII hereof;
further provided, that GFB shall not be required to take any extraordinary
action or enter into any agreement which in the reasonable opinion of GFB is
unduly burdensome to GFB in order to obtain any such approvals, authorizations,
etc.
(b) GFB shall provide BCB with copies of all filings made by GFB or
Great Falls Bank after the date hereof to the New Jersey Department of Banking,
the Federal Deposit Insurance Corporation and any other regulatory agency which
has authority to regulate GFB or Great Falls Bank within two business day of
such filing.
(c) GFB shall prepare unaudited consolidated financial statements on a
monthly basis and shall furnish copies of such statements to BCB by the 10th day
following the end of each month.
5.7. Access to Records and Properties. GFB agrees to assist BCB in
---------------------------------
conducting such investigations and reviews of the business, financial condition,
properties, assets, books and records of GFB and the GFB Subsidiaries as BCB
deems necessary or desirable, and will provide, and will cause its independent
public accountants to provide, BCB and its employees, agents and representatives
full access to, and complete information concerning, all properties, books,
records (including tax returns filed or in preparation), personnel and premises,
and audit work papers and other records of its independent public accountants,
pertaining to the business of GFB and the GFB Subsidiaries. Neither any
investigation by BCB nor the receipt by BCB of any data or information from GFB
shall affect the right of BCB to rely on the representations, warranties or
covenants of GFB or the right of BCB to terminate this Agreement as provided in
Article XI hereof.
29
<PAGE>
5.8. Affiliates. GFB will deliver to BCB as soon as practicable after
-----------
the execution of this Acquisition Agreement, but in no event later than twenty
(20) days hereafter, a letter identifying all persons who may be deemed to be
"affiliates" of BCB as that term is used for purposes of qualifying for "pooling
of interests" accounting treatment (collectively, "GFB Affiliates"). GFB will
furnish such information and documents as BCB's counsel may request for the
purpose of reviewing such letter. GFB will cause each BCB Affiliate to issue
and deliver to BCB within three (3) weeks after the date hereof an agreement, in
such form as BCB's counsel shall reasonably require, to the effect that, among
other things, such person agrees to be bound by the rules which will permit the
transaction contemplated by the Acquisition Agreement to be treated as a pooling
of interests for accounting purposes.
ARTICLE VI
MUTUAL COVENANTS AND AGREEMENTS
6.1. Confidentiality. Personnel of GFB have received in the course of the
----------------
negotiation of this Acquisition Agreement, and in the course of prior
negotiations, and are expected to continue to receive, confidential information
concerning BCB's assets, methods of operation, loan and deposit pricing,
investment policies, and other trade secrets and confidential information
concerning BCB's business; and personnel of BCB have received in the course of
the negotiation of this Acquisition Agreement, and in the course of prior
negotiations, and are expected to continue to receive, confidential information
concerning the assets, methods of operation, loan and deposit pricing and
investment policies of GFB and the GFB Subsidiaries, and other trade secrets and
confidential information concerning the businesses of GFB and the GFB
Subsidiaries. Such information has been furnished by the respective parties in
good faith to the other party in confidence solely to enable the other party to
evaluate the party furnishing the information with a view to evaluating a
proposed acquisition or merger transaction, and with the agreement that the
party receiving such information will (1) treat all such information at all
times as being confidential and proprietary to the party furnishing the
information, (2) not improperly divulge or make any unauthorized disclosure of
such confidential information to any third parties, and (3) not make any use of
such confidential information except in connection with its evaluation of the
other party's business for purposes of a proposed acquisition or merger
transaction. Following termination or cancellation of this Agreement, each
party shall, if requested to do so by the other, return all materials furnished
to it by the other which contain such confidential materials, without retaining
any copy thereof. The provisions of this Section 6.1 will be specifically
enforceable, entitling each party to injunctive relief against the other. The
provisions of this Section 6.1 will survive any termination or cancellation of
this Agreement.
30
<PAGE>
6.2. Expenses. Subject to the provisions of Article XI hereof, in the
---------
event the Exchange is not consummated, GFB and BCB will each separately bear its
own expenses incurred in connection with this Agreement or any transaction
contemplated hereby.
6.3. Public Announcements. Recognizing that they each have independent
---------------------
obligations with respect to the dissemination of material information to the
public and to their respective shareholders, GFB and BCB will to the maximum
extent feasible advise and confer with each other prior to the issuance of any
reports, statements or releases (including reports, statements or releases to
their respective employees) pertaining to this Agreement.
6.4. Further Assurances. GFB and BCB agree to execute and deliver such
-------------------
instruments and take such other actions as either of them may reasonably
require, consistent with the fiduciary duties of their respective Boards of
Directors, in order to carry out the intent of this Agreement.
6.5. Post-Effective Time Operations. From and after the Effective Time,
-------------------------------
BCB shall not take any of the following actions without the prior approval of
the Board of Directors of GFB: Any action of the types described in Section 4.2
hereof, subject to such additions and deletions as the Board of Directors of GFB
may adopt from time to time.
6.6. GFB 401(k) Plan. The employer contribution to GFB's 401(k) Plan for
----------------
calendar year 1995 shall be determined as though the Exchange had not occurred.
6.7. Investment Bankers' Fees. All fees of Capital Consultants of
-------------------------
Princeton, Inc. for its services in connection with the transaction contemplated
by this Agreement, shall be the sole responsibility of BCB.
ARTICLE VII
PROXY AND REGISTRATION STATEMENTS
7.1. Preparation. GFB and BCB acknowledge that the transactions
------------
contemplated hereby are subject to the provisions of the Securities Act of 1933
and Rule 145 promulgated thereunder by the Securities and Exchange Commission
(the "SEC"). GFB and BCB will cooperate in the prompt preparation of a proxy
statement for submission to the stockholders of BCB in connection with the
meeting of such stockholders referred to in Section 1.5(a) and of a proxy
statement for submission to the stockholders of GFB in connection with the
meeting of such stockholders referred to in Section 1.5(b) (the "GFB Proxy
Statement"). The proxy statement to be submitted to the stockholders of BCB,
in its definitive form, together with any and all amendments and supplements
thereto and all information incorporated by reference therein (the "BCB Proxy
Statement") will also serve as the prospectus (the
31
<PAGE>
"Prospectus") to be included in the Registration Statement (as defined below).
GFB will file a registration statement on Form S-4 (which registration
statement, in the form it is declared effective by the SEC, together with any
and all amendments and supplements thereto and all information incorporated by
reference therein, is referred to herein as the "Registration Statement") under
and pursuant to the provisions of the Securities Act of 1933 for the purpose of
registering the GFB Stock to be distributed to holders of BCB Stock in
accordance with the provisions of this Agreement. Each of BCB and GFB agrees to
provide promptly to the other such information concerning its business and
financial statements and affairs as, in the reasonable judgment of the other
party or its counsel, may be required or appropriate for inclusion in the
Registration Statement, the BCB Proxy Statement or the GFB Proxy Statement, or
in any amendments or supplements thereto, and to cause its counsel and auditors
to cooperate with the other's counsel and auditors in the preparation of the
Registration Statement, the BCB Proxy Statement and the GFB Proxy Statement. GFB
agrees to use its best efforts to have the Registration Statement declared
effective under the Securities Act of 1933 as soon as may be practicable.
7.2. Representations. Warranties and Covenants of BCB. BCB represents and
-------------------------------------------------
warrants to GFB that the BCB Proxy Statement will not, at the time of its
issuance and at the time of the meeting of stockholders of BCB contemplated by
Section 1.5(a) hereof, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made, in
the light of the circumstances under which they are made, not misleading, except
that no representation is made with respect to information set forth in the BCB
Proxy Statement concerning GFB or the GFB Subsidiaries furnished or approved by
GFB. BCB will promptly advise GFB in writing if at any time prior to the
Effective Time it shall obtain knowledge of any facts that might make it
necessary or appropriate to amend or supplement the Registration Statement, the
BCB Proxy Statement or the GFB Proxy Statement in order to make the statements
contained or incorporated by reference therein not misleading or to comply with
applicable law.
7.3. Representations, Warranties and Covenants of GFB. GFB represents and
-------------------------------------------------
warrants to BCB that the Registration Statement (including the BCB Proxy
Statement), at the time it becomes effective and at the time of the meeting of
stockholders of BCB contemplated by Section 1.5(a) hereof, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made, in the light of the circumstances under
which they were made, not misleading, except that no representation is made with
respect to information set forth in the Registration Statement (including the
BCB Proxy Statement) concerning BCB furnished or approved by BCB.
7.4. Mailings to Stockholders. BCB shall cause the BCB
-------------------------
32
<PAGE>
Proxy Statement to be mailed to its stockholders as soon as practicable in
accordance with applicable Federal and state law; provided, however, that BCB
shall not mail or otherwise furnish the BCB Proxy Statement to its stockholders
unless and until GFB advises BCB that the Registration Statement is effective
under the Securities Act of 1933. Neither GFB or BCB will use any proxy
material other than the BCB Proxy Statement and the other proxy material filed
with the SEC prior to or concurrently with the filing of the BCB Proxy
Statement, and other than the GFB Proxy Statement, without giving prior notice
to the other.
7.5. Blue Sky. GFB will use its best efforts to obtain all necessary blue
---------
sky permits and approvals required to carry out the transactions contemplated by
this Agreement.
7.6. Tax Opinion. BCB shall obtain from Williams, Caliri, Miller & Otley,
------------
or other counsel reasonably satisfactory to GFB, an opinion regarding the
federal tax consequences of the Exchange to BCB stockholders.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF GFB
The obligations of GFB to consummate the transactions contemplated hereby
are subject to the satisfaction of the following conditions unless waived by
GFB:
8.1. Representations and Warranties. The representations and warranties
-------------------------------
of BCB set forth in Article II and Article VII hereof shall be true and correct
in all material respects as of the date of this Agreement and as of the date of
the Closing contemplated by Article X hereof (the "Closing Date") as though made
on and as of the Closing Date.
8.2. Covenants. BCB shall have performed and complied in all material
----------
respects with each and every covenant, agreement and condition required by this
Agreement to be performed or complied with by it prior to the Closing Date.
8.3. Certificates. BCB shall have furnished to GFB a certificate of its
-------------
President in form and substance reasonably satisfactory to GFB to the effect
that (i) the representations and warranties of BCB contained in Article II and
Article VII of this Agreement are true and correct in all material respects at
and as of the Closing Date as though such representations and warranties were
made on the date thereof, (ii) BCB has complied with all terms, covenants and
provisions of this Agreement required to be performed or complied with by BCB
prior to the Closing Date and (iii) the condition set forth in Section 8.6
hereof and, to the knowledge of BCB, the condition set forth in Section 8.8
hereof are each satisfied as of the Closing Date. BCB shall also have furnished
such other certificates as GFB's counsel shall have reasonably requested.
33
<PAGE>
8.4. Opinion of Counsel. GFB shall have received an opinion of McCarter &
-------------------
English, counsel to BCB, dated the date of the Closing and addressed to GFB, in
form and substance satisfactory to counsel to GFB, as to such matters as counsel
to GFB shall have reasonably requested. In rendering such opinion, such
counsel may rely upon certificates of officers of BCB as to matters of fact.
8.5. Affiliates. GFB shall have received the letter identifying the BCB
-----------
Affiliates and the Affiliate Agreements required by Section 4.6 hereof.
8.6. Approval of Shareholders of GFB. The Plan of Acquisition and this
--------------------------------
Acquisition Agreement shall have been approved at a meeting of the shareholders
of GFB by a majority of the votes cast by the shareholders of GFB, as required
by N.J.S.A. 14A:10-3.
8.7. Approval of Shareholders of BCB. The Plan of Acquisition and this
--------------------------------
Acquisition Agreement shall have been approved at a meeting of the shareholders
of BCB by 2/3 of the capital stock of BCB entitled to vote, as required by
N.J.S.A. 17:9A-359.
8.8. No Governmental or Other Proceeding or Litigation. No order of any
--------------------------------------------------
court or administrative agency (including, without limitations any banking
regulatory authority) shall be in effect which restrains or prohibits any
transaction contemplated hereby or which would limit or otherwise affect in a
material respect GFB's ownership of BCB; no suit, action, or proceeding by any
governmental body or other person or entity, or investigation or inquiry by any
governmental body, shall be pending or, in the case of a governmental body,
threatened against GFB or BCB, which challenges the validity or legality, or
seeks to restrain the consummation, of any transaction contemplated hereby or
which seeks to limit or otherwise affect GFB's ownership of BCB; and no written
advice shall have been received by GFB or BCB or their respective counsel from
any governmental body, and remain in effect, stating that an action or
proceeding will, if the exchange of shares contemplated hereby is consummated or
sought to be consummated, be filed seeking to invalidate or restrain said
transaction or limit or otherwise affect GFB's ownership of BCB.
8.9. Approvals and Consents. All approvals and authorizations of the
-----------------------
public authorities referred to in Sections 2.5 and 3.5 hereof, shall have been
obtained, and no such consents or approvals shall have imposed a condition to
such consent or approval which in the reasonable opinion of GFB is unduly
burdensome, and all waiting periods specified by law shall have passed.
8.10. Registration Statement Effective. The Registration Statement shall
---------------------------------
have become effective prior to the mailing of the
34
<PAGE>
Proxy Statement by BCB to its stockholders, no stop order suspending the
effectiveness of the Registration Statement shall have been issued, and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
8.11. Accountants' Opinion. GFB shall have received an opinion of Arthur
---------------------
Andersen LLP that the acquisition of BCB by GFB will qualify to be treated for
accounting purposes as a pooling of interests.
8.12. Tax Opinion. GFB shall have received an opinion of Williams,
------------
Caliri, Miller & Otley to the effect that the exchange of shares contemplated
hereby shall be a tax free transaction for federal income tax purposes. Said
opinion shall be reaffirmed as of the Closing Date.
8.13. Fairness Opinions. The Board of Directors of BCB shall have
------------------
received an opinion of Capital Consultants of Princeton, Inc. in form and
substance reasonably satisfactory to said Board of Directors, dated as of the
date of the BCB Proxy Statement and reaffirmed as of the Closing Date, that the
Exchange is fair to the stockholders of BCB. The opinion to be dated as of the
date of the BCB Proxy Statement shall be included in the BCB Proxy Statement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BCB
The obligations of BCB to consummate the transactions contemplated hereby
are subject to the satisfaction of the following conditions unless waived by
BCB:
9.1. Representations and Warranties. The representations and warranties
-------------------------------
of GFB set forth in Article III and Article VII hereof shall be true and correct
in all material respects as of the date of his Agreement and as of the Closing
Date as though made on and as of the Closing Date.
9.2. Covenants. GFB shall have performed and complied in all material
----------
respects with each and every covenant, agreement and condition required by this
Agreement to be performed or complied with by it prior to the Closing Date.
9.3. Certificates. GFB shall have furnished to BCB a certificate of its
-------------
President in form and substance reasonably satisfactory to BCB to the effect
that (i) the representations and warranties of GFB contained in Article III and
Article VII of this Agreement are true and correct in all material respects at
and as of the Closing Date as though such representations and warranties were
made on the date thereof (ii) GFB has complied with all terms, covenants and
provisions of this Agreement required to be performed or complied with by GFB
prior to the Closing Date and (iii) to the knowledge of GFB, the conditions set
forth in Section
35
<PAGE>
9.7 hereof are each satisfied as of the Closing Date. GFB shall also have
furnished such other certificates as BCB's counsel shall have reasonably
requested.
9.4. Opinion of Counsel. BCB shall have received an opinion of Williams,
-------------------
Caliri, Miller & Otley, counsel to GFB, dated the date of the Closing and
addressed to BCB, in form and substance satisfactory to counsel to BCB, as to
such matters as counsel to BCB shall have reasonably requested. In rendering
such opinion, such counsel may rely upon certificates of officers of GFB as to
matters of fact.
9.5. Tax Opinion. BCB shall have received an opinion of Williams, Caliri,
------------
Miller & Otley to the effect that the exchange of shares contemplated hereby
shall be a tax free transaction for federal income tax purposes. Said opinion
shall be reaffirmed as of the Closing Date.
9.6. Approval of Shareholders of GFB and BCB.
----------------------------------------
(a) The Plan of Acquisition and this Acquisition Agreement shall have been
approved at a meeting of the shareholders of GFB by a majority of the votes cast
by the shareholders of GFB, as required by N.J.S.A. 14A:10-3.
(b) The Plan of Acquisition and this Acquisition Agreement shall have been
approved at a meeting of the shareholders of BCB by 2/3 of the capital stock of
BCB entitled to vote, as required by N.J.S.A. 17:9A-359.
9.7. No Governmental or Other Proceeding or Litigation. No order of any
--------------------------------------------------
court or administrative agency (including, without limitations any banking
regulatory authority) shall be in effect which restrains or prohibits any
transaction contemplated hereby or which would limit or otherwise affect in a
material respect GFB's ownership of BCB; no suit, action, or proceeding by any
governmental body or other person or entity, or investigation or inquiry by any
governmental body, shall be pending or, in the case of a governmental body,
threatened against GFB or BCB, which challenges the validity or legality, or
seeks to restrain the consummation, of any transaction contemplated hereby or
which seeks to limit or otherwise affect GFB's ownership of BCB; and no written
advice shall have been received by GFB or BCB or their respective counsel from
any governmental body, and remain in effect, stating that an action or
proceeding will, if the exchange of shares contemplated hereby is consummated or
sought to be consummated, be filed seeking to invalidate or restrain said
transaction or limit or otherwise affect GFB's ownership of BCB.
9.8. Approvals and Consents. All approvals and authorizations of the
-----------------------
public authorities referred to in Sections 2.5 and 3.5 hereof, shall have been
obtained, and no such consents or approvals shall have imposed a condition to
such consent or
36
<PAGE>
approval which in the reasonable opinion of BCB is unduly burdensome, and all
waiting periods specified by law shall have passed.
9.9. Registration Statement Effective. The Registration Statement shall
---------------------------------
have become effective prior to the mailing of the Proxy Statement by BCB to its
stockholders, no stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
9.10. Fairness Opinions. The Board of Directors of BCB shall have
------------------
received an opinion of Capital Consultants of Princeton, Inc. in form and
substance reasonably satisfactory to said Board of Directors, dated as of the
date of the BCB Proxy Statement and reaffirmed as of the Closing Date, that the
Exchange is fair to the stockholders of BCB. The opinion to be dated as of the
date of the BCB Proxy Statement shall be included in the BCB Proxy Statement.
9.11. Accountants' Opinion. BCB shall have received an opinion of Arthur
---------------------
Andersen LLP that the acquisition of BCB by GFB will qualify to be treated for
accounting purposes as a pooling of interests.
9.12. Affiliates. BCB shall have received the letter identifying the GFB
-----------
Affiliates and the Affiliate Agreements required by Section 5.8 hereof.
ARTICLE X
CLOSING
Unless this Agreement shall have been terminated pursuant to a provision of
Article XI hereof, a closing (the "Closing") will be held, as soon as
practicable after the satisfaction or waiver of the conditions set forth in
Articles VIII and IX hereof, at the offices of Williams, Caliri, Miller & Otley,
1428 Route 23, Wayne, New Jersey. At the Closing, the documents referred to in
Articles VIII and IX hereof will be exchanged by the parties and, immediately
thereafter, the Plan of Acquisition will be filed by BCB and GFB with the
Department of Banking of the State of New Jersey.
ARTICLE XI
TERMINATION; LIQUIDATED DAMAGES
11.1. Termination. This Agreement may be terminated at any time prior to
------------
Closing:
(a) by GFB, by written notice to BCB, if (i) any representation or
warranty of BCB set forth in Article II or Article VII hereof shall not be true
and correct in all material respects, (ii) BCB shall breach any covenant or
agreement made by
37
<PAGE>
it herein or (iii) any other condition set forth in Article VIII hereof shall
not have been satisfied by December 31, 1995, provided that the failure of such
condition shall not be caused by a breach by GFB of any covenant or agreement
made by it herein; or
(b) by BCB, by written notice to GFB, if (i) any representation or
warranty of GFB set forth in Article III or Article VII hereof shall not be true
and correct in all material respects, (ii) GFB shall breach any covenant or
agreement made by it herein or (iii) any other condition set forth in Article IX
hereof shall not have been satisfied by December 31, 1995, provided that the
failure of such condition shall not be caused by a breach by BCB of any covenant
or agreement made by it herein; or
(c) by BCB, by written notice to GFB, if BCB, without violating any
of its covenants hereunder, shall have received an unsolicited offer to enter
into an Acquisition Transaction and the Board of Directors of BCB, after
consulting with counsel, shall have determined in the exercise of its fiduciary
duties that it should terminate this Agreement and pursue the potential
Acquisition Transaction. In the event BCB shall exercise its right of
termination under this paragraph (c), BCB shall pay to GFB a termination fee of
$500,000.00.
11.2. Liquidated Damages. In that any damages sustained by either party
-------------------
to this Agreement in case of a breach would be difficult if not impossible to
determine, it is mutually agreed that in case this Agreement is breached by
either party, Five Hundred Thousand Dollars ($500,000.00) is agreed upon as
fixed and liquidated damages and not as a penalty, which amount shall be due the
nonbreaching party from the breaching party without proof of loss or damage.
ARTICLE XII
MISCELLANEOUS
12.1. Parties in Interest. Nothing expressed or implied in this Agreement
--------------------
is intended or shall be construed to confer upon or give to any person, firm or
corporation other than the parties hereto any rights or remedies under or by
reason of this Agreement or any transaction contemplated hereby, except as
specifically provided in this Agreement.
12.2. Entire Agreement; Amendments. This Agreement contains the entire
-----------------------------
understanding of the parties with respect to its subject matter. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter, except as specifically provided to the contrary
herein. This Agreement may be amended only by a written instrument duly
executed by the parties, and any condition to a party's obligations hereunder
may only be waived in writing by such party.
12.3. Headings. The article and section and headings
---------
38
<PAGE>
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
12.4. Notices. All notices, claims, certificates, requests, demands and
--------
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or mailed (by registered or certified
mail, return receipt requested and postage prepaid) as follows:
If to GFB:
Great Falls Bancorp
55 Union Boulevard
Totowa, New Jersey 07512
Attention: Mr. George E. Irwin, Vice President
with copy to:
Richard S. Miller, Esq.
Williams, Caliri, Miller & Otley
1428 Route 23
Wayne, New Jersey 07470
If to BCB:
Bergen Commercial Bank
Two Sears Drive
Paramus, New Jersey 07652
Attention: Mr. C. Mark Campbell, President
with copy to:
Robert Schwartz, Esq.
McCarter & English
Gateway 4
Newark, NJ 07102
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. If mailed as
aforesaid, any such communication shall be deemed to have been given on the
third business day following that on which the piece of mail containing such
communication is posted; provided that any communication sent by telecopy or
telex and confirmed by mail (postage prepaid) shall be deemed to have been given
at the time of transmission.
12.5. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
39
<PAGE>
12.6. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the substantive laws of the State of New Jersey, without giving
effect to the choice of laws provisions thereof.
12.7. Gender and Number; Person. Any reference expressed in any gender
--------------------------
shall be deemed to include each of the other genders, and the singular shall be
deemed to include the plural and vice versa, unless the context otherwise
requires. The term "person" as used in this Agreement, unless the context
otherwise requires, shall include any individual and any corporation,
partnership, association, or other entity or group.
12.8. Waivers. Any party to this Agreement may, by written notice to the
--------
other parties hereto, waive any provision of this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
12.9. Assignments. This Agreement and all of the provisions hereof shall
------------
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
party hereto without the prior written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
GREAT FALLS BANCORP
By: /s/ George E. Irwin
_______________________________
Name: George E. Irwin
Title: Vice President
BERGEN COMMERCIAL BANK
By: /s/ C. Mark Campbell
_______________________________
Name: C. Mark Campbell
Title: President
40
<PAGE>
EXHIBIT A
---------
PLAN OF ACQUISITION
1. This Plan of Acquisition is to be approved and implemented pursuant to and
in accordance with N.J.S.A. 17:9A-355 through 17:9A-369, inclusive
--------
(hereinafter referred to as the "Act"). All capitalized terms used herein
which are not otherwise defined herein shall have the same meanings herein
as are ascribed to them in the Act.
2. The name and address of the Acquiring Corporation is: Great Falls Bancorp,
55 Union Boulevard, Totowa, New Jersey 07512.
3. The name and address of the sole Participating Bank is: Bergen Commercial
Bank, Two Sears Drive, Paramus, New Jersey 07652.
4. The names and addresses of the members of the board of directors of the
Acquiring Corporation are:
M. A. Bramante: 659 Valley Road
Wayne, New Jersey 07470
Robert J. Conklin: 3 Tice Road
Franklin Lakes, NJ 07417
William T. Ferguson: 515 Pelican Way
Delray Beach, Florida 33483
George E. Irwin: 17 Green Ridge Drive
Montville, New Jersey 07045
Joseph A. Lobosco: 56 Wigwam Avenue
North Haledon, New Jersey 07508
John L. Soldoveri: 3 Battle Ridge Trail
Totowa, New Jersey 07512
Alfred R. Urbano: 602 Mt. Lebanon Road
Wilmington, Delaware 19803
5. The name and address of the sole bank some or all of whose shares of
capital stock are owned by the Acquiring Corporation is Great Falls Bank.
The total number of shares of Great Falls Bank which are issued and
outstanding on the date hereof is 380,000; the total number of shares of
Great Falls Bank which are owned by the Acquiring Corporation is 380,000.
A-1
<PAGE>
6. The following are the terms and conditions upon which the acquisition shall
occur:
a. Terms of Exchange.
Each share of Common Stock of the Participating Bank issued and
outstanding at the Effective Time (as that term is defined in Section
7 hereof), except for Perfected Dissenting Shares (as defined in
Subsection 6(f) hereof and subject to Subsection 6(c) hereof with
respect to fractional shares) shall, at said time and without any
action on the part of any holder thereof, be exchanged for 1.7 shares
(the "Exchange Rate") of Common Stock of the Acquiring Corporation.
b. Options.
As of the Effective Time, the Acquiring Corporation shall assume the
rights and obligations of the Participating Bank under those stock
options granted by the Participating Bank prior to the date hereof
with respect to Common Stock of the Participating Bank pursuant to the
Bergen Commercial Bank Officers Stock Option Plan (the "Participating
Bank Stock Option Plan") which are outstanding at the Effective Time
("Assumed Options"), to the extent such options shall not theretofore
have been exercised. Pursuant to such assumption, the holder of each
Assumed Option shall be entitled, subject to the terms of his or her
stock option and compliance with applicable law, to purchase the
number of shares (rounded to the nearest whole number) of Common Stock
of the Acquiring Corporation determined by multiplying the number of
shares covered by the Assumed Option by the Exchange Rate. Each
Assumed Option shall constitute a continuation of the corresponding
stock option issued under the Participating Bank Stock Option Plan
substituting the Acquiring Corporation for the Participating Bank and
Common Stock of the Acquiring Corporation Stock for Common Stock of
the Participating Bank in accordance with the foregoing conversion
formula, and substituting, for purposes of continuing eligibility
under the Participating Bank Stock Option Plan, a relationship with
the Acquiring Corporation or any of its subsidiaries for a
relationship with the Participating Bank, effective as of the
Effective Time. Except as provided in this Subsection 6(b), all of
the terms and provisions of each Assumed Option shall remain the same,
including, but not limited to, the times when the Assumed Option may
be exercised. As soon as practicable after the Effective Time, the
Acquiring Corporation will send written notice of the assumption of
the Assumed Options to each holder thereof. As of the Effective
A-2
<PAGE>
Time, the Acquiring Corporation will have taken all corporate and
other action necessary to reserve sufficient shares of Common Stock of
the Acquiring Corporation for issuance upon exercise of the Assumed
Options. The Acquiring Corporation will prepare and file with the
Securities and Exchange Commission a registration statement on the
appropriate form relating to issuance upon exercise by the holder
thereof of the shares of Common Stock of the Acquiring Corporation
underlying such Assumed Options and will use its best efforts to have
such registration statement declared effective as soon as practicable
after the Effective Time, but in no case later than 6 months after the
Effective Date.
c. No Fractional Interests.
Neither certificates nor scrip for fractional interests in shares of
Common Stock of the Acquiring Corporation will be issued in connection
with the Exchange, but in lieu thereof each holder of Common Stock of
the Participating Bank who would otherwise have been entitled to a
fraction of a share of Common Stock of the Acquiring Corporation will
be paid an amount of cash equal to such fraction multiplied by the
average of the final bid prices for shares of Common Stock of the
Acquiring Corporation on each of the ten (10) business days preceding
the Effective Time. All shares of Common Stock of the Participating
Bank held by each record holder shall be aggregated before determining
the need to pay cash in lieu of fractional shares.
d. Directors.
Within ten (10) days following the Effective Time, the
Board of Directors of the Acquiring Corporation shall amend the By-
Laws of the Acquiring Corporation in order to increase the number of
directors of the Acquiring Corporation from 7 to 10 and, consistent
with their fiduciary duties, shall elect Anthony M. Bruno, Jr., C.
Mark Campbell and Charles J. Volpe to fill the three new
directorships. In the event that one or more of Anthony M. Bruno,
Jr., C. Mark Campbell or Charles J. Volpe is unable to take office,
the Board of Directors of the Participating Bank shall designate a
substitute, acceptable to the Acquiring Corporation, to be elected in
his place by the Board of Directors of the Acquiring Corporation,
consistent with their fiduciary duties.
e. Representations, Covenants, Conditions of Closing and other Matters.
A-3
<PAGE>
This Plan of Acquisition is being entered into in connection with and
in furtherance of an Acquisition Agreement, dated August 16, 1995,
between the Acquiring Corporation and the Participating Bank. The
Acquisition Agreement contains representations, covenants, conditions
of closing and agreements as to other matters pertaining to this Plan
of Acquisition. A copy of the Acquisition Agreement is attached
hereto. In the event that there is any inconsistency between the
provisions of the Acquisition Agreement and the provisions of this
Plan of Acquisition, the provisions of this Plan of Acquisition shall
govern.
f. Dissenting Shares.
Each shareholder of the Participating Bank who elects to dissent from
this Plan of Acquisition may do so by filing a written notice of
dissent with the Secretary of the Participating Bank at the address
set forth in paragraph 3 hereof, stating that he or she intends to
demand payment for his or her shares if this Plan of Acquisition
becomes effective; such notice must be filed prior to the taking of
the vote at the Special Meeting of Shareholders of the Participating
Bank which shall be held for the purpose of voting on this Plan of
Acquisition. Shares as to which a notice of dissent has been filed
pursuant to the preceding sentence are referred to herein as
"Dissenting Shares". Dissenting Shares, the holders of which have
made written demand on the Participating Bank for the payment of the
fair value of such shares within 20 days after the mailing of notice
by the Participating Bank that the Plan of Acquisition has been
approved and thereafter have submitted their stock certificate or
certificates to the Participating Bank within 20 days after demanding
payment of the fair value of such shares, all as provided in N.J.S.A.
--------
17:9A-360, are referred to herein as "Perfected Dissenting Shares".
Perfected Dissenting Shares shall not be converted into Common Stock
of the Acquiring Corporation pursuant to Paragraph 6(a) hereof, but
the holders thereof shall be entitled only to such rights as are
granted by N.J.S.A. 17:9A-360 through 17:9A-369, inclusive.
--------
The shareholders of Great Falls Bancorp shall have such rights of
dissent pursuant to the New Jersey Business Corporation Act as they
would have under that Act if they were shareholders of a surviving
corporation in a merger.
7. The date and time at which this Plan of Acquisition and the exchange of
securities provided for herein shall become effective (the "Effective
Time") shall be 11:59 p.m. on the
A-4
<PAGE>
last day of the calendar month during which this Plan of Acquisition is
filed with the Department of Banking of the State of New Jersey in
accordance with N.J.S.A. 17:9A-359.
--------
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Acquisition
to be duly executed this 16th day of August, 1995.
[Seal] GREAT FALLS BANCORP
Attest:
______________________________ By:________________________________
Secretary President
[Seal] BERGEN COMMERCIAL BANK
______________________________ By:________________________________
Secretary Chairman
A-5
<PAGE>
APPENDIX B
[LETTERHEAD OF CAPITAL CONSULTANTS, INC.]
September __, 1995
Board of Directors
Bergen Commercial Bank
2 Sears Drive
Paramus, NJ 07652-3525
Members of the Board:
Bergen Commercial Bank ("BCB") has entered into an Acquisition Agreement and a
Plan of Acquisition ("AGREEMENT") with Great Falls Bancorp, Inc. ("GFB") which
provides for GFB to acquire all of the outstanding BCB Common Stock
("ACQUISITION") on the terms and subject to the conditions set forth in the
AGREEMENT.
The ACQUISITION is subject to approval of shareholders and regulatory
authorities and the AGREEMENT provides for each share of BCB Common Stock issued
and outstanding (excluding shares held by GFB and any dissenting shares) to be
converted at the Effective Date into the right to receive 1.7 shares ("EXCHANGE
RATIO") of common stock, no par value, of GFB.
In lieu of the issuance of fractional shares, GFB will make a cash payment
therefore equal to the product determined by multiplying such fractional
interest by the average of the final bid prices as defined in AGREEMENT.
You have requested our opinion as to whether the consideration offered in the
ACQUISITION is fair, from a financial point of view, to the shareholders of BCB.
Capital Consultants of Princeton, Inc., as a customary part of its investment
banking business, is engaged in the valuation of commercial banking and thrift
institutions and their securities in connection with mergers and acquisitions,
private placements and valuations for estate, corporate and other purposes.
In arriving at our opinion we have reviewed and analyzed, among other things:
(i) the AGREEMENT; (ii) the GFB Registration Statement on Form S-4, filed with
respect to the securities to be issued in the ACQUISITION; (iii) publicly
available information relating to GFB and BCB including, for GFB, Annual Reports
to shareholders and Annual Reports on Form 10-K filed with the SEC for the years
ended December 31, 1992 through 1994, the Consolidated Financial Statements of
December 31, 1994, 1993 and 1992, and the quarterly reports to shareholders and
quarterly reports on Form 10-Q filed with the SEC for the periods ended March 31
and June 30, 1995, and for BCB annual reports to
<PAGE>
shareholders for the years ended December 31, 1992 through 1994, Consolidated
Financial Statements as of December 31, 1994, 1993 and 1992 together with the
Report of Independent Public Accountants and quarterly reports of Consolidated
Conditions and Income as filed with the Federal Deposit Insurance Corporation
for the periods ended March 31 and June 30, 1995; (iv) certain historical
operating and financial information provided to Capital Consultants by the
management of BCB and GFB; (v) historical and current market data for the BCB
Common Stock and the GFB Common Stock; (vi) the publicly available financial
data and stock market performance data of publicly traded banking and thrift
institutions which Capital Consultants deemed generally comparable to BCB and
GFB; (vii) the nature and terms of recent acquisitions and merger transactions
involving banking institutions and bank and thrift holding companies that
Capital Consultants considered reasonably similar to BCB and GFB in financial
character, operating character, historical performance, geographic market and
economy; and (viii) such other studies, analyses, inquiries and reports as
Capital Consultants deemed appropriate. In addition, Capital Consultants
conducted meetings with members of senior management of BCB and GFB for purposes
of reviewing the future prospects of BCB and GFB. Capital Consultants evaluated
the pro forma ownership of the GFB Common Stock by BCB shareholders, relative to
the pro forma contribution of BCB assets, deposits, equity and earnings to the
pro forma resulting company in the ACQUISITION. Capital Consultants also took
into account its experience in other transactions, as well as its knowledge of
the banking and thrift industries and its experience in securities valuations.
While we have taken care in our investigation and analysis, we have relied upon
and assumed the accuracy, completeness and fairness of the financial and other
information provided to us or publicly available, and have not attempted to
verify same. We have not made or obtained any independent evaluations or
appraisals of the assets or liabilities of BCB or GFB.
In conducting our analysis and arriving at our opinion, we have considered such
financial and other factors as we have deemed appropriate in the circumstances.
In rendering our opinion, we have assumed that in the course of obtaining the
necessary regulatory approvals for the ACQUISITION, no conditions were imposed
that would have a material adverse effect on the contemplated benefits of
ACQUISITION. Our opinion is necessarily based upon market, economic and other
conditions as they exist and can be evaluated as of the date of this letter.
Based upon and subject to the foregoing, it is our opinion as investment bankers
that the consideration to be paid in the ACQUISITION is fair, from a financial
point of view, to the shareholders of BCB.
-2-
<PAGE>
This opinion does not represent investment advice or a recommendation to the
current shareholders of BCB or GFB, or any other party regarding the valuation
of the common shares of BCB or GFB for potential purchase.
Very truly yours,
Capital Consultants of Princeton, Inc.
-3-
<PAGE>
APPENDIX C
17:9A-360. NOTICE OF DISSENT; DISSENTING STOCKHOLDER DEFINED
(1) Any stockholder of a participating bank electing to dissent from the
plan of acquisition may do so by filing with the participating bank of which he
is a stockholder, a written notice of such dissent, stating that he intends to
demand payment for his shares if the plan of acquisition becomes effective.
Such dissent shall be filed before the taking of the vote of the Stockholders on
the plan of acquisition pursuant to section 5.
(2) Within 10 days after the date on which the plan of acquisition is
approved by stockholders of a participating bank as provided in section 5
hereof, such bank shall give notice of such approval by certified mail to each
stockholder who has filed written notice of dissent pursuant to subsection (1)
of this section, except any who voted for or consented in writing to such plan
of acquisition.
(3) Within 20 days after the mailing of such notice, any stockholder to
whom the participating bank was required to give such notice, may make written
demand on the participating bank for the payment of the fair value of his
shares. A stockholder who makes a demand pursuant to this subsection (3) is
hereafter in this act referred to as a "dissenting stockholder." Upon making
such demand, the dissenting stockholder shall cease to have any rights of a
stockholder except the right to be paid the fair value of his shares and any
other rights of a dissenting stockholder under this act.
(4) Not later than 20 days after demanding payment for his shares pursuant
to this section, the stockholder shall submit the certificate or certificates
representing such shares to the participating bank of which he is a stockholder
for notation thereon that such demand has been made, whereupon such certificate
or certificates shall be returned to him. If shares represented by a
certificate on which such notation has been made shall be transferred, each new
certificate issued therefor shall bear similar notation, together with the name
of the original dissenting holder of such shares, and a transferee of such
shares shall acquire by such transfer no rights other than those which the
original dissenting stockholder had after making a demand for payment of the
fair value thereof.
(5) A stockholder may not dissent as to less than all of the shares owned
beneficially by him. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner.
17:9A-361. VALUATION DATE OF FAIR VALUE
For the purposes of this act, the fair value of the shares of a
participating bank shall be determined as of the day before the day on which the
vote of stockholders of such bank was taken
C-1
<PAGE>
as provided in Section 5. In determining fair value, there shall be excluded
any appreciation or depreciation in value resulting from the consummation of the
plan of acquisition.
17:9A-362. TERMINATION OF RIGHT OF STOCKHOLDER TO BE PAID THE FAIR VALUE OF
HIS SHARES
(1) The right of a dissenting stockholder to be paid the fair value of his
shares shall cease if
(a) He has failed to present his certificates for notation as
provided by subsection (4) of section 6, unless a court having jurisdiction, for
good and sufficient cause shown, shall otherwise direct;
(b) His demand for payment is withdrawn with the written consent of
the participating bank;
(c) The fair value of the shares is not agreed upon as provided in
this act, and no action for the determination of fair value by the Superior
Court is commenced within the time provided in this act;
(d) The Superior Court determines that the stockholder is not
entitled to payment for his shares;
(e) The plan of acquisition of shares is abandoned, rescinded, or
otherwise terminated in respect to the participating bank of which he is a
stockholder; or
(f) A court having jurisdiction permanently enjoins or sets aside the
acquisition of shares.
(2) In any case provided for in subsection (1) of this section the rights
of the dissenting stockholder as a stockholder shall be reinstated as of the
date of the making of a demand for payment pursuant to section 6 without
prejudice to any corporate action which has taken place during the interim
period. In such event, he shall be entitled to any intervening pre-emptive
rights and the right to payment of any intervening dividend or other
distribution, or if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the participating bank, the fair value thereof, at the election of
the participating bank, the fair value thereof in cash as of the time of such
expiration or completion.
17:9A-363. RIGHTS OF DISSENTING STOCKHOLDER
(1) A dissenting stockholder may not withdraw his demand for payment of
the fair value of his shares without the written consent of the participating
bank.
C-2
<PAGE>
(2) The enforcement by a dissenting stockholder of his right to receive
payment for his shares shall exclude the enforcement by such dissenting
stockholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in subsection (2) of section 8 and except
that this subsection shall not exclude the right of such dissenting stockholder
to bring or maintain an appropriate action to obtain relief on the ground that
consummation of the plan of acquisition will be or is ultra vires, unlawful or
fraudulent as to such dissenting stockholder.
17:9A-364. DETERMINATION OF FAIR VALUE BY AGREEMENT
(1) Within 10 days after the expiration of the period within which
stockholders may make written demand to be paid the fair value of their shares,
or within 10 days after the plan of acquisition becomes effective, whichever is
later, the participating bank shall mail to each dissenting stockholder the
balance sheet and the surplus statement of the participating bank as of the
latest available date, which shall not be earlier than 12 months prior to the
making of the offer of payment hereinafter referred to in this subsection, and a
profit and loss statement or statements for not less than a 12-month period
ended on the date of such balance sheet or, if the participating bank was not in
existence for such 12-month period, for the portion thereof during which it was
in existence. The participating bank may accompany such mailing with a written
offer to pay each dissenting stockholder for his shares at a specified price
deemed by such bank to be the fair value thereof. Such offer shall be made at
the same price per share to all dissenting stockholders of the same class, or,
if divided into series, of the same series.
(2) If, not later than 30 days after the expiration of the 10 day period
limited by subsection (1) of this section, the fair value of the shares is
agreed upon between any dissenting stockholder and the participating bank,
payment therefor shall be made upon surrender of the certificate or certificates
representing such shares.
17:9A-365. PROCEDURE ON FAILURE TO AGREE UPON FAIR VALUE; COMMENCEMENT OF
ACTION TO DETERMINE FAIR VALUE
(1) If the fair value of the shares is not agreed upon within the 30-day
period limited by subsection (2) of section 10, the dissenting stockholder may
serve upon the participating bank a written demand that it commence an action in
the Superior Court for the determination of such fair value. Such demand shall
be served not later than 30 days after the expiration of the 30-day period so
limited and such action shall be commenced by the participating bank not later
than 30 days after receipt by such
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bank of such demand, but nothing herein shall prevent such bank from commencing
such action at any earlier time.
(2) If a participating bank fails to commence the action as provided in
subsection (1) of this section a dissenting stockholder may do so in the name of
such bank, not later than 60 days after the expiration of the time limited by
subsection (1) of this section in which such bank may commence such an action.
17:9A-366. ACTION TO DETERMINE FAIR VALUE; JURISDICTION OF COURT;
APPOINTMENT OF APPRAISER
In any action to determine the fair value of shares pursuant to this act:
(a) The Superior Court shall have jurisdiction and may proceed in the
action in a summary manner or otherwise;
(b) All dissenting stockholders, wherever residing, except those who
have agreed with the participating bank upon the price to be paid for their
shares, shall be made parties thereto as an action against their shares quasi in
rem;
(c) The court in its discretion may appoint an appraiser to receive
evidence and report to the court on the question of fair value, who shall have
such power and authority as shall be specified in the order of his appointment;
and
(d) The court shall render judgment against the participating bank
and in favor of each stockholder who is a party to the action for the amount of
the fair value of his shares.
17:9A-367. JUDGMENT IN ACTION TO DETERMINE FAIR VALUE
(1) A judgment for the payment of the fair value of shares shall be
payable upon surrender to the participating bank of the certificate or
certificates representing such shares.
(2) The judgment shall include an allowance for interest at such rate as
the court finds to be equitable, from the day of the meeting of stockholders of
the participating bank at which the plan of acquisition was approved to the day
of payment. If the court finds that the refusal of any dissenting stockholder
to accept any offer of payment made by the participating bank under section 10
was arbitrary, vexatious or otherwise not in good faith, no interest shall be
allowed to him.
17:9A-368. COSTS AND EXPENSES OF ACTION
The costs and expenses of bringing an action pursuant to section 11 shall
be determined by the court and shall be
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apportioned and assessed as the court may find equitable upon the parties or any
of them. Such expenses shall include reasonable compensation for and reasonable
expenses of the appraiser, if any, but shall exclude the fees and expenses of
counsel for and experts employed by any party; but if the court finds that the
offer of payment made by the participating bank under section 10 was not made in
good faith, or if no such offer was made, the court in its discretion may award
to any dissenting stockholder who is a party to the action reasonable fees and
expenses of his counsel and of any experts employed by the dissenting
stockholder.
17:9A-369. DISPOSITION OF SHARES
Upon payment for shares pursuant to subsection (2) of section 10, or upon
payment of a judgment pursuant to subsection (1) of section 13, the
participating bank making such payment shall acquire all the right, title and
interest in and to such shares, notwithstanding any other provision of law.
Shares so acquired by the participating bank shall be disposed of as a stock
dividend as provided by section 212 of the Banking Act of 1948.
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APPENDIX D
CHAPTER 11 OF THE
NEW JERSEY
BUSINESS CORPORATION ACT
<PAGE>
Chapter 11. RIGHTS OF DISSENTING SHAREHOLDERS
14A:11-1. RIGHT OF SHAREHOLDERS TO DISSENT. (1) Any shareholder of a
domestic corporation shall have the right to dissent from any of the following
corporate actions:
(a) any plan of merger or consolidation to which the corporation is a
party, provided that, unless the certificate of incorporation otherwise
provides
(i) a shareholder shall not have the right to dissent from any
plan of merger or consolidation with respect to shares
(A) of a class or series which is listed on a national
securities exchange or is held of record by not less than 1,000
holders on the record date fixed to determine the shareholders
entitled to vote upon the plan of merger or consolidation; or
(B) for which, pursuant to the plan of merger or
consolidation, he will receive (x) cash, (y) shares, obligations
or other securities which, upon consummation of the merger or
consolidation, will either be listed on a national securities
exchange or held of record by not less than 1,000 holders, or (z)
cash and such securities;
(ii) a shareholder of a surviving corporation shall not have the
right to dissent from a plan of merger, if the merger did not require
for its approval the vote of such shareholders as provided in section
14A:10-5.1 or in subsections 14A:10-3(4), 14A:10-7(2) or 14A:10-7(4);
or
(b) any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation not in the usual or
regular course of business as conducted by such corporation, provided that,
unless the certificate of incorporation otherwise provides, the shareholder
shall not have the right to dissent
(i) with respect to shares of a class or series which, at the
record date fixed to determine the shareholders entitled to vote upon
such transaction, is listed on a national securities exchange or is
hold of record by not less than 1,000 holders; or
(ii) from a transaction pursuant to a plan of dissolution of the
corporation which provides for distribution of substantially all of
its net assets to shareholders in accordance with their respective
interests within 1 year after the date of such transaction, where such
transaction is wholly for
(A) cash; or
(B) shares, obligations or other securities which, upon
consummation or the plan of dissolution will either be listed on
a national securities exchange or held of record by not less than
1,000 holders; or
(C) cash and such securities; or
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(iii) from a sale pursuant to an order of a court having
jurisdiction.
(2) Any shareholder of a domestic corporation shall have the right to
dissent with respect to any shares owned by him which are to be acquired
pursuant to section 14A:10-9.
(3) A shareholder may not dissent as to less than all of the shares owned
beneficially by him and with respect to which a right of dissent exists. A
nominee or fiduciary may not dissent on behalf of any beneficial owner as to
less than all of the shares of such owner with respect to which the right of
dissent exists.
(4) A corporation may provide in its certificate of incorporation that
holders of all its shares, or of a particular class or series thereof, shall
have the right to dissent from specified corporate actions in addition to those
enumerated in subsection 14A:11-1(1), in which case the exercise of such right
of dissent shall be governed by the provisions of this Chapter.
14A:11-2. NOTICE OF DISSENT; DEMAND FOR PAYMENT; ENDORSEMENT OF
CERTIFICATES. (1) Whenever a vote is to be taken, either at a meeting of
shareholders or upon written consents in lieu of a meeting pursuant to section
14A:5-6, upon a proposed corporate action from which a shareholder may dissent
under section 14A:11-1, any shareholder electing to dissent from such action
shall file with the corporation before the taking of the vote of the
shareholders on such corporate action, or within the time specified in
paragraphs 14A:5-6(2)(b) or 14A:5-6(2)(c), as the case may be, if no meeting of
shareholders is to be held, a written notice of such dissent stating that he
intends to demand payment for his shares if the action is taken.
(2) Within 10 days after the date on which such corporation action takes
effect, the corporation, or, in the case of a merger or consolidation, the
surviving or new corporation, shall give written notice of the effective date of
such corporate action, by certified mail to each shareholder who filed written
notice of dissent pursuant to subsection 14A:11-2(1), except any who voted for
or consented in writing to the proposed action.
(3) Within 20 days after the mailing of such notice, any shareholder to
whom the corporation was required to give such notice and who has filed a
written notice of dissent pursuant to this section may make written demand on
the corporation, or, in the case of a merger or consolidation, on the surviving
or new corporation, for the payment of the fair value of his shares.
(4) Whenever a corporation is to be merged pursuant to section 14A:10-5.1
or subsection 14A:10-7(4) and shareholder approval is not required under
subsections 14A:10-5(5) and 14A:10-5.1(6), a shareholder who has the right to
dissent pursuant to section 14A:11-1 may, not later than 20 days after a copy or
summary of the plan of such merger and the statement required by subsection
14A:10-5.1(2) is mailed to such shareholder, make written demand on the
corporation or on the surviving corporation, for the payment of the fair value
of his shares.
(5) Whenever all the shares, or all the shares of a class or series, are
to be acquired by another corporation pursuant to section 14A:10-9, a
shareholder of the corporation whose shares are
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to be acquired may, not later than 20 days after the mailing of notice by the
acquiring corporation pursuant to paragraph 14A:10-9(3)(b), make written demand
on the acquiring corporation for the payment of the fair value of his shares.
(6) Not later than 20 days after demanding payment for his shares pursuant
to this section, the shareholder shall submit the certificate or certificates
representing his shares to the corporation upon which such demand has been made
for notation thereon that such demand has been made, whereupon such certificate
or certificates shall be returned to him. If shares represented by a
certificate on which notation has been made shall be transferred, each new
certificate issued therefor shall bear similar notation, together with the name
of the original dissenting holder of such shares, and a transferee of such
shares shall acquire by such transfer no rights in the corporation other than
those which the original dissenting shareholder had after making a demand for
payment of the fair value thereof.
(7) Every notice or other communication required to be given or made by a
corporation to any shareholder pursuant to this Chapter shall inform such
shareholder of all dates prior to which action must be taken by such shareholder
in order to perfect his rights as a dissenting shareholder under this Chapter.
14A:11-3. "DISSENTING SHAREHOLDER" DEFINED; DATE FOR DETERMINATION OF FAIR
VALUE. (1) A shareholder who has made demand for the payment of his shares in
the manner prescribed by subsections 14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) is
hereafter in this Chapter referred to as a "dissenting shareholder."
(2) Upon making such demand, the dissenting shareholder shall cease to
have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights of a dissenting shareholder under this
Chapter.
(3) "Fair value" as used in this Chapter shall be determined
(a) as of the day prior to the day of the meeting of shareholders at
which the proposed action was approved or as of the day prior to the day
specified by the corporation for the tabulation of consents to such action
if no meeting of shareholders was held; or
(b) in the case of a merger pursuant to section 14A:10-5.1 or
subsection 14A:10-7(4) in which shareholder approval is not required, as of
the day prior to the day on which the board of directors approved the plan
of merger; or
(c) in the case of an acquisition of all the shares or all the shares
of a class or series by another corporation pursuant to section 14A:10-9,
as of the day prior to the day on which the board of directors of the
acquiring corporation authorized the acquisition, or, if a shareholder vote
was taken pursuant to section 14A:10-12, as of the day provided in
paragraph 14A:11-3(3)(a).
In all cases, "fair value" shall exclude any appreciation or depreciation
resulting from the proposed action.
14A:11-4. TERMINATION OF RIGHT OF SHAREHOLDER TO BE PAID THE FAIR VALUE OF
HIS SHARES. (1) The right of a dissenting
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shareholder to be paid the fair value of his shares under this Chapter shall
cease if
(a) he has failed to present his certificates for notation as
provided by subsection 14A:11-2(6), unless a court having jurisdiction, for
good and sufficient cause shown, shall otherwise direct;
(b) his demand for payment is withdrawn with the written consent of
the corporation;
(c) the fair value of the shares is not agreed upon as provided in
this Chapter and no action for the determination of fair value by the
Superior Court is commenced within the time provided in this Chapter;
(d) the Superior Court determines that the shareholder is not
entitled to payment for his shares;
(e) the proposed corporate action is abandoned or rescinded; or
(f) a court having jurisdiction permanently enjoins or sets aside the
corporate action.
(2) In any case provided for in subsection 14A:11-4(1), the rights of the
dissenting shareholder as a shareholder shall be reinstated as of the date of
the making of a demand for payment pursuant to subsections 14A:11-2(3), 14A:11-
2(4) or 14A:11-2(5) without prejudice to any corporate action which has taken
place during the interim period. In such event, he shall be entitled to any
intervening preemptive rights and the right to payment of any intervening
dividend or other distribution, or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu thereof,
at the election of the board, the fair value thereof in cash as of the time of
such expiration or completion.
14A:11-5. RIGHTS OF DISSENTING SHAREHOLDER. (1) A dissenting shareholder
may not withdraw his demand for payment of the fair value of his shares without
the written consent of the corporation.
(2) The enforcement by a dissenting shareholder of his right to receive
payment for his shares shall exclude the enforcement by such dissenting
shareholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in subsection 14A:11-4(2) and except that
this subsection shall not exclude the right of such dissenting shareholder to
bring or maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is ultra vires, unlawful or fraudulent as to such
dissenting shareholder.
14A:11-6. DETERMINATION OF FAIR VALUE BY AGREEMENT. (1) Not later than 10
days after the expiration of the period within which shareholders may make
written demand to be paid the fair value of their shares, the corporation upon
which such demand has been made pursuant to subsections 14A:11-2(3), 14A:11-2(4)
or 14A:11-2(5) shall mail to each dissenting shareholder the balance sheet and
the surplus statement of the corporation whose shares he holds, as of the latest
available date which shall not be earlier than 12 months prior to the making of
such offer and a profit and loss statement or statements for not less than a 12-
month period ended on the date
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of such balance sheet or, if the corporation was not in existence for such 12-
month period, for the portion thereof during which it was in existence. The
corporation may accompany such mailing with a written offer to pay each
dissenting shareholder for his shares at a specified price deemed by such
corporation to be the fair value thereof. Such offer shall be made at the same
price per share to all dissenting shareholders of the same class, or, if divided
into series, of the same series.
(2) If, not later than 30 days after the expiration of the 10-day period
limited by subsection 14A:11-6(1), the fair value of the shares is agreed upon
between any dissenting shareholder and the corporation, payment therefor shall
be made upon surrender of the certificate or certificates representing such
shares.
14A:11-7. PROCEDURE ON FAILURE TO AGREE UPON FAIR VALUE; COMMENCEMENT OF
ACTION TO DETERMINE FAIR VALUE. (1) If the fair value of the shares is not
agreed upon within the 30-day period limited by subsection 14A:11-6(2), the
dissenting shareholder may serve upon the corporation upon which such demand has
been made pursuant to subsections 14A:11-2(3), 14A:11-3(4) or 14A:11-2(5) a
written demand that it commence an action in the Superior Court for the
determination of the fair value of the shares. Such demand shall be served not
later than 30 days after the expiration of the 30-day period so limited and such
action shall be commenced by the corporation not later than 30 days after
receipt by the corporation of such demand, but nothing herein shall prevent the
corporation from commencing such action at any earlier time.
(2) If a corporation fails to commence the action as provided in
subsection 14A:11-7(1), a dissenting shareholder may do so in the name of the
corporation, not later than 60 days after the expiration of the time limited by
subsection 14A:11-7(1) in which the corporation may commence such an action.
14A:11-8. ACTION TO DETERMINE FAIR VALUE; JURISDICTION OF COURT;
APPOINTMENT OF APPRAISER. In any action to determine the fair value of shares
pursuant to this Chapter:
(a) The Superior Court shall have jurisdiction and may proceed in the
action in a summary manner or otherwise;
(b) All dissenting shareholders, wherever residing, except those who
have agreed with the corporation upon the price to be paid for their
shares, shall be made parties thereto as an action against their shares
quasi in rem;
(c) The court in its discretion may appoint an appraiser to receive
evidence and report to the court on the question of fair value, who shall
have such power and authority as shall be specified in the order of his
appointment; and
(d) The court shall render judgment against the corporation and in
favor of each shareholder who is a party to the action for the amount of
the fair value of his shares.
14A:11-9. JUDGMENT IN ACTION TO DETERMINE FAIR VALUE. (1) A judgment for
the payment of the fair value of shares shall be payable upon surrender to the
corporation of the certificate or certificates representing such shares.
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(2) The judgment shall include an allowance for interest at such rate as
the court finds to be equitable, from the date of the dissenting shareholder's
demand for payment under subsections 14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) to
the day of payment. If the court finds that the refusal of any dissenting share
holder to accept any offer of payment, made by the corporation under section
14A:11-6, was arbitrary, vexatious or otherwise not in good faith, no interest
shall be allowed to him.
14A:11-10. COSTS AND EXPENSES OF ACTION. The costs and expenses of
bringing an action pursuant to section 14A:11-8 shall be determined by the court
and shall be apportioned and assessed as the court may find equitable upon the
parties or any of them. Such expenses shall include reasonable compensation for
and reasonable expenses of the appraiser, if any, but shall exclude the fees and
expenses of counsel for and experts employed by any party; but if the court
finds that the offer of payment made by the corporation under section 14A:11-6
was not made in good faith, or if no such offer was made, the court in its
discretion may award to any dissenting shareholder who is a party to the action
reasonable fees and expenses of his counsel and of any experts employed by the
dissenting shareholder.
14A:11-11. Disposition of share acquired by corporation. (1) The shares
of a dissenting shareholder in a transaction described in paragraph 14A:11-
1(1)(b) and the shares of a dissenting shareholder of the surviving corporation
in a merger shall become reacquired by the corporation which issued them upon
the payment of the fair value of shares. Such shares shall be cancelled if
reacquired out of stated capital or if the plan of merger so requires; otherwise
they shall become treasury shares.
(2) In a merger or consolidation, if the surviving or new corporation pays
out of surplus the fair value of the shares of dissenting shareholders of the
merged or constituent corporation, the shares of the surviving or new
corporation into which such shares would have been converted under the plan of
merger or consolidation shall become treasury shares of such corporation, unless
the plan shall provide otherwise.
(3) In an acquisition of shares pursuant to section 14A:10-9, the shares
of a dissenting shareholder shall become the property of the acquiring
corporation upon the payment by the acquiring corporation of the fair value of
such shares. Such payment may be made, with the consent of the acquiring
corporation, by the corporation which issued the shares, in which case the
shares so paid for shall become reacquired by the corporation which issued them
and shall be cancelled.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(1) Indemnification. Reference is made to Section 14A:3-5 of the New
---------------
Jersey Business Corporation Act, which sets forth the extent to which a
corporation may indemnify its Directors, officers and employees. More
specifically, such law empowers a corporation to indemnify a corporate agent
against his expenses and liabilities incurred in connection with any proceeding
(other than a derivative lawsuit) involving the corporate agent by reason of his
being or having been a corporate agent if (a) the agent acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and (b) with respect to any criminal proceeding, the
corporate agent had no reasonable cause to believe his conduct was unlawful.
For purposes of such law the term "corporate agent" includes any present or
former director, officer, employee or agent of the corporation, and a person
serving as a "corporate agent" at the request of the corporation for any other
enterprise.
With respect to any derivative action, the corporation is empowered to
indemnify a corporate agent against his expenses (but not his liabilities)
incurred in connection with any proceeding involving the corporate agent by
reason of his being or having been a corporate agent if the agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation. However, only the court in which the proceeding
was brought can empower a corporation to indemnify a corporate agent against
expenses with respect to any claim, issue or matter as to which the agent was
adjudged liable for negligence or misconduct.
The corporation may indemnify a corporate agent in a specific case if
a determination is made by any of the following that the applicable standard of
conduct was met: (i) the Board of Directors, or a committee thereof, acting by
a majority vote of a quorum consisting of disinterested directors; (ii) by
independent legal counsel, if there is not a quorum of disinterested directors
or if the disinterested quorum empowers counsel to make the determination; or
(iii) by the shareholders.
A corporate agent is entitled to mandatory indemnification to the
extent that the agent is successful on the merits or otherwise in any
proceeding, or in defense of any claim, issue or matter in the proceeding. If a
corporation fails or refuses to indemnify a corporate agent, whether the
indemnification is permissive or mandatory, the agent may apply to a court to
grant him the requested indemnification. In advance of the final
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<PAGE>
disposition of a proceeding, the corporation may pay an agent's expenses if the
agent agrees to repay the expenses unless it is ultimately determined he is
entitled to indemnification.
In accord with such statutory provision, Article VI of the Registrant's By-
Laws provides as follows:
"INDEMNIFICATION OF DIRECTORS AND OFFICERS"
"(a) Proceedings by Others. Provided a specific determination has
---------------------
been made as set forth below, the Corporation shall indemnify any person who is
or was a Director or officer of the Corporation, or the legal representative of
any such Director or officer, against reasonable costs, disbursements, and
expenses, reasonable counsel fees, and amounts paid or incurred in satisfaction
of settlements, judgments, fines and penalties, in connection with any
proceeding involving such Director or officer by reason of his being or having
been such a Director or officer, other than a proceeding by or in the right of
the Corporation, if
"(i) such Director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and
"(ii) with respect to any criminal proceeding, such Director or
officer had no reasonable cause to believe his conduct was unlawful.
The termination of any proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not of itself create a
presumption that such Director or officer did not meet the applicable standards
of conduct set forth in subparagraphs (i) and (ii) hereof. No indemnification
called for by this paragraph shall be made by the Corporation unless authorized
in the specific case upon a determination that indemnification is proper in the
circumstances because the Director or officer met the standard of conduct set
forth in subparagraph (i) and, if applicable (ii) of this paragraph (a). Such
determination shall be made
"(1) by the Board of Directors acting by a quorum of Directors who
were not parties to the proceeding; or
"(2) if such a quorum is not obtainable, or even if obtainable and a
quorum of the disinterested Directors so directs, by independent legal
counsel in a written opinion; or
"(3) by its Shareholders.
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<PAGE>
"(b) Proceedings by Corporation. Provided a specific determination
--------------------------
has been made, or court order entered, as set forth below, the corporation shall
indemnify any person who is or was a Director or officer of the Corporation
against his reasonable costs, disbursements and counsel fees in connection with
any proceeding by or in the right of the Corporation to procure a judgment in
its favor which involves such Director or officer by reason of his being or
having been such Director or officer, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation. However, in no such proceeding shall indemnification be provided
in respect of any claim, issue or matter as to which such Director or officer
shall have been adjudged to be liable for negligence or misconduct, unless and
only to the extent that the court in which such proceeding was brought shall
determine upon application that despite the adjudication of liability, in view
of all circumstances of the case such Director or officer is fairly and
reasonably entitled to indemnity for such reasonable costs, disbursements and
counsel fees as the court shall deem proper. No indemnification called for by
this paragraph shall be made by the Corporation unless ordered by a court, or
unless authorized in the specific case upon a determination that indemnification
is proper in the circumstances because the Director or officer met the standard
of conduct set forth above in this paragraph (b). Such determination shall be
made in one of three (3) manners referred to in the last sentence of paragraph
(a) of this Article.
"(c) Required Indemnification. Notwithstanding the requirements of
------------------------
paragraphs (a) and (b) for a determination that indemnification is proper in a
specific case, the Corporation shall in all cases indemnify any person who is or
was a Director or officer of the Corporation against reasonable costs,
disbursements and counsel fees to the extent that such Director or officer has
been successful on the merits or otherwise in any proceeding referred to in
paragraphs (a) and (b) of this Article or in defense of any claim, issue or
matter therein.
"(d) Advance Payment of Expenses Permitted. Reasonable costs,
-------------------------------------
disbursements and counsel fees incurred by a Director or officer of the
Corporation in connection with a proceeding may be paid by the Corporation in
advance of the final disposition of the proceeding upon receipt of any
undertaking by or on behalf of the Director or officer to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
as provided in this Article.
"(e) Proceeding Defined. As used in this Article VI, the term
------------------
"proceeding" means any pending, threatened or completed civil, criminal,
administrative or arbitrative action, suit or proceeding, and any appeal therein
and any inquiry or
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investigation which could lead to such action, suit or proceeding.
"(f) Provisions Not Exclusive. The indemnification provided by this
------------------------
Article shall be in addition to, and not exclusive of, any other rights to which
a Director or officer, or any rights to which an employee or agent, of the
Corporation may be entitled under the laws of the State of New Jersey or under
any agreement, vote of shareholders, or otherwise."
(2) Insurance Coverage. Effective January 1, 1995, the registrant
------------------
purchased from a major insurance company directors and officers liability
insurance coverage for a term of one year. The policy will indemnify the
registrant, its officers and directors and the officers and directors of its
subsidiaries against certain claims in the aggregate amount of $1,500,000 with a
standard deductible amount per claim. The coverage of such policy includes
liabilities arising under the Securities Act of 1933, as amended (the "Act").
(3) Exculpation. Paragraph 7 of the Certificate of Incorporation of Great
-----------
Falls Bancorp (as amended by Certificate of Amendment filed in 1987) provides as
follows:
"A director of officer of the Corporation shall not be personally
liable to the Corporation or its stockholders for damages for breach of any
duty owed to the Corporation or its stockholders, except that this
provision shall not relieve a director or officer from liability for any
breach of duty based upon an act or omission (a) in breach of such person's
duty of loyalty to the Corporation or its stockholders, (b) not in good
faith or involving a knowing violation of law, or (c) resulting in receipt
by such person of an improper personal benefit. Any repeal or modification
of this Article by the stockholders of the Corporation or otherwise shall
not adversely affect any right or protection of a director or officer of
the Corporation existing at the time of such repeal or modification."
(4) Commission Position Regarding Indemnification. Insofar as
---------------------------------------------
indemnification by the registrant for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
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by such director, officer or controlling person in connection with the
securities being registered hereby, 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.
ITEM 21(A). EXHIBITS
[Note: Registrant is a "small business issuer." The exhibits required to
be filed refer to Item 601 of Reg. S-B, (S)228.601.]
2.1* Acquisition Agreement dated August 16, 1995 between Great Falls
Bancorp and Bergen Commercial Bank (included in Appendix A to the
Joint Proxy Statement/Prospectus filed with this registration
statement)
3.1** Restated Certificate of Incorporation of Great Falls Bancorp filed
June 19, 1985 (incorporated by reference to Exhibit 3(a), Item 27,
Part II of Form SB-2, Registration No. 33-67292, effective September
9, 1993)
3.2** Certificate of Amendment of Certificate of Incorporation of Great
Falls Bancorp filed June 19, 1987 (incorporated by reference to
Exhibit 3(b), Item 27, Part II of Form SB-2, Registration No. 33-
67292)
3.3** Certificate of Amendment to Certificate of Incorporation of Great
Falls Bancorp filed April 29, 1991 (incorporated by reference to
Exhibit 3(c), Item 27, Part II of Form SB-2, Registration No. 33-
67292)
3.4** Certificate of Amendment of Certificate of Incorporation of Great
Falls Bancorp filed May 4, 1993 (incorporated by reference to Exhibit
3(d), Item 27, Part II of Form SB-2, Registration No. 33-67292)
3.5** Bylaws of Great Falls Bancorp, adopted June 13, 1985 (incorporated by
reference to Exhibit 3(b), Item 25, Part II of Form S-18, Registration
No. 2-99343-NY, effective September 30, 1985)
3.6 Amendment to Bylaws of Great Falls Bancorp amending Article III,
Section 8, increasing age qualification from 70 to 75 under certain
circumstances
II-5
<PAGE>
3.7 Amendment to Bylaws of Great Falls Bancorp amending Article III,
Section 1 to increase stated time period from 90 to 120 days
3.8 Amended Certificate of Incorporation of Bergen Commercial Bank dated
November 11, 1987
3.9*** Bylaws of Bergen Commercial Bank
4.1** Equity Contract Agency Agreement dated as of November 1, 1993, as
executed by Great Falls Bancorp and Great Falls Bank (incorporated by
reference to Exhibit 4.1 to Form 10-KSB of Great Falls Bancorp for
year ended December 31, 1993)
4.2** Specimen of certificate for Collateralized Equity Contract
(incorporated by reference to Exhibit 4.2 to Form 10-KSB of Great
Falls Bancorp for year ended December 31, 1993)
4.3** Specimen of certificate for Commonly Registered Equity Contract
(incorporated by reference to Exhibit 4.3 to Form 10-KSB of Great
Falls Bancorp for year ended December 31, 1993)
4.4** Specimen of certificate for Commonly Registered Debenture
(incorporated by reference to Exhibit 4.4 to Form 10-KSB of Great
Falls Bancorp for year ended December 31, 1993)
4.5** Specimen of certificate for Unrestricted Debenture (incorporated by
reference to Exhibit 4.5 to Form 10-KSB of Great Falls Bancorp for
year ended December 31, 1993)
5.1*** Form of opinion to be rendered by Williams, Caliri, Miller & Otley, a
Professional Corporation, as to the legality of the securities being
registered.
8.1*** Form of opinion to be rendered by Williams, Caliri, Miller & Otley, A
Professional Corporation, as to the Federal income tax consequences
described in the Joint Proxy Statement/Prospectus
10.1** Great Falls Bancorp 1988 Nonstatutory Stock Option Plan (incorporated
by reference to Form 8-K dated May 2, 1988)
10.2** Great Falls Bancorp 1993 Stock Option Plan (incorporated by reference
to Exhibit 10 to Form 10-Q for the quarter ended March 31, 1993)
II-6
<PAGE>
10.3** Amendment to Section 5 of Great Falls Bancorp 1988 Nonstatutory Stock
Option Plan (incorporated by reference to Exhibit 10.2 to Form 10-K/A
[Amendment No. 1] for the year ended December 31, 1992)
10.4** Great Falls Bancorp 1995 Stock Option Plan (incorporated by reference
to Exhibit 10 to Form 8-K dated December 20, 1994)
11.1 N/A - Earnings per share calculation is omitted because the
computation can be clearly determined from the material in the
financial statements included in Form 10-KSB for the year ended
December 31, 1994 (information from 1994 Annual Report to Stockholders
incorporated therein)
13.1** Annual Report on Form 10-KSB for year ending December 31, 1994
(including certain information in registrant's 1994 Annual Report to
its stockholders)
13.2** Quarterly Report of Great Falls Bancorp on Form 10-QSB for the three
months ended March 31, 1995
13.3** Quarterly Report of Great Falls Bancorp on Form 10-QSB for the six
months ended June 30, 1995
21.1** List of all subsidiaries of Great Falls Bancorp (incorporated by
reference to Exhibit 21 to Annual Report on Form 10-KSB for the year
ended December 31, 1994)
23.1 Consent of Arthur Andersen LLP dated September 25, 1995 to use of
Great Falls Bancorp financial statements
23.2 Consent of Arthur Andersen LLP dated September 25, 1995 to use of
Bergen Commercial Bank financial statements
23.3 Consent of KPMG Peat Marwick dated September __, 1995 to use of Family
First Federal Savings Bank financial statements
23.4*** Consent of Williams, Caliri, Miller & Otley, a Professional
Corporation (included in Exhibit 5.1 hereto)
23.5 Consent of Capital Consultants of Princeton, Inc. dated September 22,
1995
24.1* Powers of Attorney of certain officers and directors in favor of John
L. Soldoveri and/or George E. Irwin
II-7
<PAGE>
(included on signature page of the registration statement)
99.1*** Consent of Anthony M. Bruno, Jr. dated ____________, 1995, to become a
director of Great Falls Bancorp
99.2*** Consent of C. Mark Campbell dated ______________, 1995, to become a
director of Great Falls Bancorp
99.3*** Consent of Charles J. Volpe dated _____________, 1995, to become a
director of Great Falls Bancorp
- -------------------
* Included elsewhere in this registration statement.
** Incorporated by reference.
*** To be filed by amendment.
ITEM 21(B). FINANCIAL STATEMENT SCHEDULES
Financial statement schedules have been omitted because they are not
applicable or not required or because the required information is included in
the respective financial statements or notes thereto.
ITEM 21(C). REPORT OF CAPITAL CONSULTANTS OF PRINCETON, INC.
A copy of the Report of Capital Consultants of Princeton, Inc. is furnished
as Appendix B to the Joint Proxy Statement/Prospectus filed as part of this
Registration Statement.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows in accordance
with Reg. (S)228.512 and Items 22(b) and 22(c) of Form S-4:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) include any prospectus required by section 10(a)(3) of the
Act;
II-8
<PAGE>
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information
in the registration statement; and
(iii) include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Act, to treat each post-
effective amendment as a new registration statement of the securities offered,
and the offering of the securities at that time to be the initial bona fide
offering.
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(4) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
this registration statement through the date of responding to the request.
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Borough of Totowa, State of New Jersey, on September 25,
1995.
GREAT FALLS BANCORP
By: /s/ George E. Irwin
--------------------------------
George E. Irwin, Vice President
We, the undersigned Directors and officers of Great Falls Bancorp, do
hereby jointly and severally constitute and appoint John L. Soldoveri and George
E. Irwin, or either or them acting alone, our true and lawful attorney and
agent, to do any and all acts and things in our name and on our behalf in our
capacities as Directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which either said attorney
and agent may deem necessary or advisable to enable Great Falls Bancorp to
comply with the Securities Act of 1933, as amended, and any rules, regulations,
and requirements of the Securities and Exchange Commission, in connection with
this registration statement on Form S-4, including specifically but without
limitation, power and authority to sign for us or for any of us, in our names in
the capacities indicated below, any and all amendments (including post-effective
amendments) and supplements hereto, and we do each hereby ratify and confirm all
that either said attorney and agent shall do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ John L. Soldoveri September 25, 1995
- --------------------------------
John L. Soldoveri
Chairman of the Board,
Director and President
(Chief Executive Officer)
/s/ George E. Irwin September 25, 1995
- --------------------------------
George E. Irwin
Director and Vice President
(Chief Operating Officer)
II-10
<PAGE>
/s/ Naqi A. Naqvi September 25, 1995
- --------------------------------
Naqi A. Naqvi
Treasurer, Principal Financial Officer
and Principal Accounting Officer
/s/ Marino A. Bramante September 25, 1995
- --------------------------------
Marino A. Bramante, Director
/s/ Robert J. Conklin September 25, 1995
- --------------------------------
Robert J. Conklin, Director
II-11
<PAGE>
Registration No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
EXHIBITS
FILED WITH
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
GREAT FALLS BANCORP
(Exact name of registrant as specified in its charter)
================================================================================
<PAGE>
INDEX TO EXHIBITS
2.1* Acquisition Agreement dated August 16, 1995 between Great Falls
Bancorp and Bergen Commercial Bank (included in Appendix A to the
Joint Proxy Statement/Prospectus filed with this registration
statement)
3.1** Restated Certificate of Incorporation of Great Falls Bancorp filed
June 19, 1985 (incorporated by reference to Exhibit 3(a), Item 27,
Part II of Form SB-2, Registration No. 33-67292, effective September
9, 1993)
3.2** Certificate of Amendment of Certificate of Incorporation of Great
Falls Bancorp filed June 19, 1987 (incorporated by reference to
Exhibit 3(b), Item 27, Part II of Form SB-2, Registration No. 33-
67292)
3.3** Certificate of Amendment to Certificate of Incorporation of Great
Falls Bancorp filed April 29, 1991 (incorporated by reference to
Exhibit 3(c), Item 27, Part II of Form SB-2, Registration No. 33-
67292)
3.4** Certificate of Amendment of Certificate of Incorporation of Great
Falls Bancorp filed May 4, 1993 (incorporated by reference to Exhibit
3(d), Item 27, Part II of Form SB-2, Registration No. 33-67292)
3.5** Bylaws of Great Falls Bancorp, adopted June 13, 1985 (incorporated by
reference to Exhibit 3(b), Item 25, Part II of Form S-18, Registration
No. 2-99343-NY, effective September 30, 1985)
3.6 Amendment to Bylaws of Great Falls Bancorp amending Article III,
Section 8, increasing age qualification from 70 to 75 under certain
circumstances
3.7 Amendment to Bylaws of Great Falls Bancorp amending Article III,
Section 1 to increase stated time period from 90 to 120 days
3.8 Amended Certificate of Incorporation of Bergen Commercial Bank dated
November 11, 1987
3.9*** Bylaws of Bergen Commercial Bank
4.1** Equity Contract Agency Agreement dated as of November 1, 1993, as
executed by Great Falls Bancorp and Great Falls Bank (incorporated by
reference to Exhibit 4.1 to
Index to Exhibits -- Page i
<PAGE>
Form 10-KSB of Great Falls Bancorp for year ended December 31, 1993)
4.2** Specimen of certificate for Collateralized Equity Contract
(incorporated by reference to Exhibit 4.2 to Form 10-KSB of Great
Falls Bancorp for year ended December 31, 1993)
4.3** Specimen of certificate for Commonly Registered Equity Contract
(incorporated by reference to Exhibit 4.3 to Form 10-KSB of Great
Falls Bancorp for year ended December 31, 1993)
4.4** Specimen of certificate for Commonly Registered Debenture
(incorporated by reference to Exhibit 4.4 to Form 10-KSB of Great
Falls Bancorp for year ended December 31, 1993)
4.5** Specimen of certificate for Unrestricted Debenture (incorporated by
reference to Exhibit 4.5 to Form 10-KSB of Great Falls Bancorp for
year ended December 31, 1993)
5.1*** Form of opinion to be rendered by Williams, Caliri, Miller & Otley, a
Professional Corporation, as to the legality of the securities being
registered.
8.1*** Form of opinion to be rendered by Williams, Caliri, Miller & Otley, A
Professional Corporation, as to the Federal income tax consequences
described in the Joint Proxy Statement/Prospectus
10.1** Great Falls Bancorp 1988 Nonstatutory Stock Option Plan (incorporated
by reference to Form 8-K dated May 2, 1988)
10.2** Great Falls Bancorp 1993 Stock Option Plan (incorporated by reference
to Exhibit 10 to Form 10-Q for the quarter ended March 31, 1993)
10.3** Amendment to Section 5 of Great Falls Bancorp 1988 Nonstatutory Stock
Option Plan (incorporated by reference to Exhibit 10.2 to Form 10-K/A
[Amendment No. 1] for the year ended December 31, 1992)
10.4** Great Falls Bancorp 1995 Stock Option Plan (incorporated by reference
to Exhibit 10 to Form 8-K dated December 20, 1994)
11.1 N/A - Earnings per share calculation is omitted because the
computation can be clearly determined from the
Index to Exhibits -- Page ii
<PAGE>
material in the financial statements included in Form 10-KSB for the
year ended December 31, 1994 (information from 1994 Annual Report to
Stockholders incorporated therein)
13.1** Annual Report on Form 10-KSB for year ending December 31, 1994
(including certain information in registrant's 1994 Annual Report to
its stockholders)
13.2** Quarterly Report of Great Falls Bancorp on Form 10-QSB for the three
months ended March 31, 1995
13.3** Quarterly Report of Great Falls Bancorp on Form 10-QSB for the six
months ended June 30, 1995
21.1** List of all subsidiaries of Great Falls Bancorp (incorporated by
reference to Exhibit 21 to Annual Report on Form 10-KSB for the year
ended December 31, 1994)
23.1 Consent of Arthur Andersen LLP dated September 25, 1995 to use of
Great Falls Bancorp financial statements
23.2 Consent of Arthur Andersen LLP dated September 25, 1995 to use of
Bergen Commercial Bank financial statements
23.3 Consent of KPMG Peat Marwick dated September __, 1995 to use of Family
First Federal Savings Bank financial statements
23.4*** Consent of Williams, Caliri, Miller & Otley, a Professional
Corporation (included in Exhibit 5.1 hereto)
23.5 Consent of Capital Consultants of Princeton, Inc. dated September 22,
1995
24.1* Powers of Attorney of certain officers and directors in favor of John
L. Soldoveri and/or George E. Irwin (included on signature page of the
registration statement)
99.1*** Consent of Anthony M. Bruno, Jr. dated ____________, 1995, to become a
director of Great Falls Bancorp
99.2*** Consent of C. Mark Campbell dated ______________, 1995, to become a
director of Great Falls Bancorp
Index to Exhibits -- Page iii
<PAGE>
99.3*** Consent of Charles J. Volpe dated _____________, 1995, to become a
director of Great Falls Bancorp
- -------------------
* Included elsewhere in this registration statement.
** Incorporated by reference.
*** To be filed by amendment.
Index to Exhibits -- Page iv
<PAGE>
EXHIBIT 3.6
Great Falls Bancorp Bylaws Amendment
------------------------------------
Section 8 of Article III of the Bylaws of Great Falls Bancorp was amended
in its entirety to read as follows:
"8. Qualifications. No person who shall have attained the age of
--------------
seventy (70) shall be eligible to be elected or reelected as a director;
provided, that this restriction shall not apply to any person who shall not
have attained the age of seventy-five (75) and who shall have served as
Chairman of the Board for twelve (12) or more years."
<PAGE>
EXHIBIT 3.7
Great Falls Bancorp Bylaws Amendment
------------------------------------
Section 1 of Article III of the Bylaws of Great Falls Bancorp was amended
to substitute "one hundred twenty (120) days" for "ninety (90) days".
<PAGE>
EXHIBIT 3.8
AMENDED
CERTIFICATE OF INCORPORATION
OF
BERGEN COMMERCIAL BANK
THIS IS TO CERTIFY that we, the undersigned, do hereby make and subscribe
this Amended Certificate of Incorporation pursuant to N.J.S.A. 17:9A-12B, and do
associate ourselves into a bank pursuant to "The Banking Act of 1948", being
Chapter 67 of the laws of 1948, as amended, and each of us does severally agree
to take and pay for the number of shares of the capital stock of the bank as
hereinafter set forth after our respective names, together with our
proportionate share of the surplus and reserve fund for organization expense and
reserve for contingencies herein provided.
FIRST: The name by which the bank shall be known is Bergen Commercial
-----
Bank.
SECOND: The principal office of the bank is to be located at 2 Sears
------
Drive, in the Borough of Paramus, Bergen County, New Jersey.
THIRD: The bank shall have power to transact the business of banking in
-----
all its branches and, to that end, shall have and may exercise all those powers
authorized to be exercised by banks under the provisions of "The Banking Act of
1948" as presently enacted and as from time to time amended, and all those
powers which are presently, or in the future may be authorized by law to be
exercised by banks, but this bank shall not have power to exercise any
fiduciary power which may be law be exercised only by banks which are qualified
to act as fiduciaries.
FOURTH: The amount of authorized capital stock of the bank shall be
------
$5,000,000 divided into 2,000,000 shares of the par value of $2.50 each. The
amount of issued capital stock of the bank shall be $575,000 divided into
230,000 shares of par value of $2.50. Authorized but unissued capital stock of
the bank shall be $4,425,000 divided into 1,770,000 shares of the par value of
$2.50. Authorized but unissued capital stock may be issued by the Board of
Directors under the provisions of The Banking Act of 1948, as presently enacted,
and as from time to time amended and supplemented.
FIFTH: The amount of surplus with which the bank will commence business is
-----
$375,000.
SIXTH: The amount of the fund reserved for organization expense is
-----
$150,000 and the amount of the reserve for contingencies is $50,000.
SEVENTH: The names and residences of the incorporators, and the number of
-------
shares subscribed for by each, are as follows:
<PAGE>
<TABLE>
<CAPTION>
Name Address Shares
Subscribed
<S> <C> <C>
Anthony M. Bruno, Jr. 40 Voorhis Road 50,000
Lincoln Park P.O.
Kinnelon, N.J. 07035
Frank Cosimano 307 Lawrence Avenue 20,000
Hasbrouck Hgts, N.J. 07604
Stefano A. Masi 4 Squire Court 30,000
Mahwah, N.J. 07431
Barry Novin 41 Winfield Drive 30,000
Parsippany, N.J. 07054
Joseph A. Panepinto 106 Sherman Place 20,000
Jersey City, N.J. 07307
Paul C. Petrillo 26 Lower Cross Road 20,000
Saddle River, N.J. 07455
Ralph W. Sifford 18 Deerfield Drive 30,000
Hohokus, N.J. 07423
Charles J. Volpe 53 Hampshire Road 30,000
Washington Twp., N.J.
07675
</TABLE>
EIGHTH: The number of Directors of the bank shall be not less than five,
------
and not more than twenty-five, as shall from time to time be fixed by the By-
Laws.
NINTH: The persons who shall serve as Directors until the first annual
-----
meeting of the stockholders are as follows:
Anthony M. Bruno, Jr.
Frank Cosimano
Stefano A. Masi
Barry Novin
Joseph A. Panepinto
Paul C. Petrillo
Ralph W. Sifford
Charles J. Volpe
-2-
<PAGE>
TENTH: The Board of Directors of the bank shall have power to make, alter
-----
and repeal By-Laws, subject to alteration or repeal by the stockholders at any
meeting. The power conferred by this paragraph Tenth shall be subject to such
limitations as may from time to time be imposed by law.
ELEVENTH: The Board of Directors may, between annual meetings, increase
--------
the number of directors by not more than two, and may appoint persons to fill
the vacancies so created, subject to the limitation, however, that there shall
not at any time be more directors than authorized by Section 101 of The Banking
Act of 1948.
TWELFTH: The Board of Directors shall have power to pay dividends from
-------
time to time, in whole or in part in stock, without approval or ratification of
the stockholders, in the manner provided by and subject to the limitations
contained in Section 52 of The Banking Act of 1948, as amended, or as may be
further amended.
THIRTEENTH: The Board of Directors shall have power to appoint an
----------
executive committee, from time to time, from among its members, in accordance
with the statute in such case made and provided. Such committee shall have and
may exercise such powers as are authorized by law, subject to the time and
provisions of the By-Laws of this bank.
FOURTEENTH: A director of the bank shall not be personally liable to the
----------
bank or its stockholders for damages for breach of any duty owed to the bank or
its stockholders, except that this provision shall not relieve a director from
liability for any breach of duty based upon an act or omission (a) in breach of
such person's duty of loyalty to the bank or its stockholders, (b) not in good
faith or involving a knowing violation of law, or (c) resulting in receipt by
such person of an improper personal benefit.
FIFTEENTH: For the duration permitted by the New Jersey Banking Act, as
---------
amended from time to time, an officer shall not be personally liable to the bank
or its stockholders for damages for breach of any duty owed to the bank or its
stockholders, except that this provision shall not relieve an officer from
liability for any breach of duty based upon an act or omission (a) in breach of
such person's duty of loyalty to the bank or its stockholders, (b) not in good
faith or involving a knowing violation of law, or (c) resulting in receipt by
such person of an improper personal benefit.
SIXTEENTH: The bank shall have perpetual existence, subject to liquidation
---------
and dissolution as provided by law.
-3-
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands and seals the 11th day
of November, 1987.
/s/Anthony M. Bruno, Jr. L.S. /s/Frank Cosimano L.S.
- ------------------------- -------------------------
Anthony M. Bruno, Jr. Frank Cosimano
/s/Stefano A. Masi L.S. /s/Barry Novin L.S.
- ------------------------- ----------------------
Stefano A. Masi Barry Novin
/s/Joseph A. Panepinto L.S. /s/Paul C. Petrillo L.S.
- ------------------------- -------------------------
Joseph A. Panepinto Paul C. Petrillo
/s/Ralph W. Sifford L.S. /s/Charles J. Volpe L.S.
- ------------------------- -------------------------
Ralph W. Sifford Charles J. Volpe
-4-
<PAGE>
EXHIBIT 23.1
[Letterhead of Arthur Andersen LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To Great Falls Bancorp:
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated January 13, 1995 and to all references to our firm
included in or made a part of this Registration Statement on Form S-4.
/s/ Arthur Andersen LLP
Roseland, New Jersey
September 25, 1995
<PAGE>
EXHIBIT 23.2
[Letterhead of Arthur Andersen LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To Bergen Commercial Bank:
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated January 17, 1995 and to all references to our firm
included in or made a part of this Registration Statement on Form S-4.
/s/ Arthur Andersen LLP
Roseland, New Jersey
September 25, 1995
<PAGE>
EXHIBIT 23.3
Independent Auditors' Consent
-----------------------------
The Board of Directors
Great Falls Bancorp (The Successor to
Family First Federal Savings Bank):
We consent to the inclusion of our report dated September 20, 1994, with respect
to the statements of financial condition of Family First Federal Savings Bank as
of June 30, 1994 and 1993 and the related statements of operations, changes in
shareholders' equity, and cash flows for the years then ended, which report is
included in Great Falls Bancorp's current report on Form 8-KA filed or about
July 13, 1995, which is incorporated by reference in the Registration Statement
filed by Great Falls Bancorp on Form S-4 under the Securities Act of 1933 on or
about September 25, 1995.
Our report dated September 20, 1994 contains an explanatory paragraph that
states that Family First is "significantly undercapitalized," has failed to
comply with two of three regulatory capital requirements and has continued to
suffer recurring losses from operations. These matters raise substantial doubt
about the Bank's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
that uncertainty.
Our report dated September 20, 1994 refers to a change in the method of
accounting for investment securities to adopt the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities."
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Roseland, New Jersey
September 25, 1995
<PAGE>
EXHIBIT 23.5
[LETTERHEAD OF CAPITAL CONSULTANTS OF PRINCETON, INC.]
September 22, 1995
To Whom It May Concern:
We hereby consent to the use of our opinion letter attached as Appendix B and to
the reference to our firm under the heading "Opinion of BCB's Financial Advisor"
in the Registration Statement filed by Great Falls Bancorp, with the Securities
and Exchange Commission in connection with the proposed acquisition of Bergen
Commercial Bank by Great Falls Bancorp.
Very truly yours,
/s/ Capital Consultants of Princeton, Inc.
Capital Consultants of Princeton, Inc.
