<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO ___________
COMMISSION FILE NUMBER: O-17177
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BSB BANCORP, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 16-1327860
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER NUMBER)
INCORPORATION OR ORGANIZATION)
58-68 EXCHANGE STREET, BINGHAMTON, NEW YORK 13902
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (607) 779-2492
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N/A
--------------------------------
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES: [X] NO: [ ]
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE. AS OF MARCH 31, 1996:
6,145,504 SHARES OF COMMON STOCK, $0.01 PAR VALUE.
<PAGE>
INDEX
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PART I. FINANCIAL INFORMATION PAGE
- ------------------------------ ----
Item 1: Financial Statements
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Consolidated Statements of Condition
March 31, 1996 and December 31, 1995 1
Consolidated Statements of Income Three Months
Ended March 31, 1996 and March 31, 1995 2
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996
and March 31, 1995 3
Consolidated Statements of Changes in
Shareholders' Equity Three Months Ended
March 31, 1996 and March 31, 1995 4
Notes to Consolidated Financial Statements 5
Item 2: Management's Discussion and Analysis of Financial
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Condition and Results of Operations 6-14
PART II. OTHER INFORMATION
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Item 1-6 15
Signature Page 16
<PAGE>
Item 1 - Financial Statements
BSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
March 31, December 31,
1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 35,421 $ 43,826
Federal funds sold 0 0
- --------------------------------------------------------------------------------------------------
Total cash and cash equivalents 35,421 43,826
Investment securities (market value $125,230
and $103,611) 124,746 103,114
Mortgage-backed securities (market value
$130,075 and $144,272) 129,770 143,978
Mortgages held for sale 2,324 1,280
Loans:
Commercial 471,355 455,444
Consumer 193,261 200,546
Real estate 271,810 271,026
- --------------------------------------------------------------------------------------------------
Total Loans 936,426 927,016
Less: Unearned discounts 587 605
Allowance for possible credit losses 17,207 16,560
- --------------------------------------------------------------------------------------------------
Net Loans 918,632 909,851
Bank premises and equipment 7,469 7,288
Accrued interest receivable 8,562 8,486
Other real estate 2,286 2,468
Intangible assets 2,409 2,483
Other assets 15,349 13,767
- --------------------------------------------------------------------------------------------------
$1,246,968 $1,236,541
==================================================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
Due to depositors $1,033,974 $1,006,465
Borrowings 81,299 98,949
Other liabilities 16,910 14,353
Commitments
Shareholders' Equity:
Preferred Stock, par value $0.01 per share;
authorized 2,500,000 shares; none issued 0 0
Common Stock, par value $0.01 per share;
authorized 10,000,000 shares; 7,303,532
shares and 7,270,925 shares issued 73 73
Additional paid-in capital 27,101 26,861
Undivided profits 103,849 101,519
Unrealized appreciation (depreciation)
in securities available for sale, net (1,182) 169
Treasury stock, at cost: 1,158,028 and 1,027,528 shares (15,056) (11,848)
- --------------------------------------------------------------------------------------------------
Total Shareholders' Equity 114,785 116,774
- --------------------------------------------------------------------------------------------------
$1,246,968 $1,236,541
==================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
Item 1 - (continued)
<TABLE>
<CAPTION>
BSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (DOLLARS IN THOUSANDS-EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Three Months Ended March 31,
1996 1995
- --------------------------------------------------------------------------------------------
Interest income:
Interest and fees on loans $ 20,963 $ 19,986
Interest on mortgage-backed securities 2,572 2,504
Interest on mortgages held for sale 51 20
Interest on federal funds sold and interest-bearing deposits 0 30
Interest and dividends on investment securities:
U.S. Government obligations 922 652
State and municipal obligations 155 108
Other debt obligations 198 383
Corporate stocks 407 170
- ---------------------------------------------------------------------------------------------------------------
Total interest income 25,268 23,853
Interest expense:
Interest on savings deposits 1,010 1,136
Interest on time accounts 7,742 6,765
Interest on money market deposit accounts 2,445 2,550
Interest on NOW accounts 193 184
Interest on borrowed funds 1,292 1,453
- ---------------------------------------------------------------------------------------------------------------
Total interest expense 12,682 12,088
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Net interest income 12,586 11,765
Provision for credit losses 2,073 1,360
- ---------------------------------------------------------------------------------------------------------------
Net interest income after provision for credit losses 10,513 10,405
Gains (losses) on sale of securities 35 (17)
Gains (losses) on sale of mortgages 156 37
Non-interest income:
Service charges on deposit accounts 419 365
Credit card fees 801 442
Mortgage servicing fees 271 236
Fees and commissions-brokerage services 118 88
Trust fees 140 125
Other charges, commissions, and fees 185 203
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Total non-interest income 1,934 1,459
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Non-interest expense:
Salaries, pensions and other employee benefits 3,214 3,070
Building occupancy 594 616
Computer service fees 221 189
Services 571 600
FDIC insurance 18 538
Goodwill 74 74
Interchange fees 440 251
Other real estate 136 65
Other expenses 1,434 1,495
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Total non-interest expense 6,702 6,898
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Income before income taxes 5,936 4,986
Provision for income taxes 2,363 2,003
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NET INCOME $ 3,573 $ 2,983
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Earnings per share (a): $ 0.57 $ 0.46
- ---------------------------------------------------------------------------------------------------------------
Average shares outstanding 6,216,018 6,443,691
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
BSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
<S> <C> <C>
Operating activities:
Net income $ 3,573 $ 2,983
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 2,073 1,360
Realized losses (gains) on available for sale investment securities (35) 18
Realized gains on available for sale mortgage-backed securities 0 (1)
Gains (losses) on sale of mortgages (156) (37)
Depreciation and amortization 329 349
Net amortization of premiums and discounts on investment securities (32) 25
Net amortization of premiums and discounts on mortgage-backed securities 33 8
Net accretion of premiums and discounts on loans (18) (272)
Sales of loans originated for sale 6,055 5,067
Net increase in loans originated for sale (7,126) (4,446)
(Decrease) increase in other assets and liabilities 1,996 (1,139)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 6,692 3,915
- -----------------------------------------------------------------------------------------------------------------------
Investing activities:
Proceeds from calls of held to maturity investment securities 500 0
Principal collected on held to maturity investment securities 396 48
Purchases of held to maturity investment securities (10,620) 0
Principal collected on held to maturity mortgage-backed securities 689 305
Proceeds from sales of available for sale investment securities 31,344 4,475
Purchases of available for sale investment securities (44,392) (4,735)
Principal collected on available for sale investment securities 38 0
Proceeds from sales of available for sale mortgage-backed securities 10,019 585
Purchases of available for sale mortgage-backed securities (3,013) (884)
Principal collected on available for sale mortgage-backed securities 5,330 4,992
Net increase in longer-term loans (26,547) (30,671)
Proceeds from sales of loans 15,894 2,565
Other (436) (253)
- -----------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (20,798) (23,573)
- -----------------------------------------------------------------------------------------------------------------------
Financing activities:
Net decrease in demand deposits, NOW accounts, savings
accounts, and money market deposit accounts (net of deposits acquired) (164) (25,088)
Net increase in time deposits (net of deposits acquired) 27,726 6,132
Net increase in short-term borrowings (17,650) 29,613
Repayment of long-term borrowings 0 (100)
Proceeds from exercise of stock options 240 93
Purchases of treasury stock (3,208) 0
Dividends paid (1,243) (946)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 5,701 9,704
- -----------------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (8,405) (9,954)
Cash and cash equivalents at beginning of year 43,826 38,699
- -----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 35,421 $ 28,745
- -----------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest credited on deposits and paid on other borrowings $ 12,016 $ 12,426
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Income taxes $ 215 $ 568
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Non-cash investing activity:
Securitization of mortgage loans and transfers to/or sales of other real estate $ (181) $ (363)
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Unrealized appreciation (depreciation) in securities $ (2,318) $ 4,932
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE>
BSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unrealized
Depreciation
Three Months Ended Additional In Marketable
March 31, Common Paid-In Undivided Treasury Equity
1995 Stock Capital Profits Stock Securities Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ 48 $26,436 $ 92,986 $ (7,054) $(5,546) $106,870
Decrease in unrealized
depreciation in available
for sale securities 2,873 2,873
Net income 2,983 2,983
Stock options exercised 93 93
Cash dividend paid on common
stock ($0.15 per share) (946) (946)
- --------------------------------------------------------------------------------------------------
Balance at March 31, 1995 $ 48 $26,529 $ 95,023 $ (7,054) $(2,673) $111,873
- --------------------------------------------------------------------------------------------------
1996
- --------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $ 73 $26,861 $101,519 $(11,848) $ 169 $116,774
Increase in unrealized
appreciation in available
for sale securities (1,351) (1,351)
Net income 3,573 3,573
Stock options exercised 240 240
Cash dividend paid on common
stock ($0.20 per share) (1,243) (1,243)
Treasury stock purchased (3,208) (3,208)
- --------------------------------------------------------------------------------------------------
Balance at March 31, 1996 $ 73 $27,101 $103,849 $(15,056) $(1,182) $114,785
- --------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Item 1 - (continued)
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BSB BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
March 31, 1996
(1) In the opinion of management, the interim financial statements reflect all
adjustments which are of a normal recurring nature necessary to a fair
statement of the results for the interim periods presented. The December
31, 1995 data in the Consolidated Statements of Condition is derived from
the consolidated financial statements included in the Company's 1995 Annual
Report to Shareholders. The accompanying unaudited interim consolidated
financial statements and related notes should be read in conjunction with
the consolidated financial statements and related notes included in the
Company's 1995 Annual Report to Shareholders.
(2) Outstanding stock options were excluded from the weighted average number of
shares because their dilutive effect is not material. Fully diluted
earnings per common share have not been presented because it is not
significantly different from primary earnings per share.
(3) The Company adopted FAS 122, "Accounting for Mortgage Servicing Rights" on
January 1, 1996. The impact for the first quarter of 1996 was not material.
(4) Certain data for prior years has been reclassified to conform to the current
year's presentation. These reclassifications had no effect on net income.
5
<PAGE>
Item 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
General
- -------
BSB Bancorp, Inc. (the "Company"), the bank holding company for BSB Bank &
Trust Company (the "Bank"), earned net income of $3,573,000, or $0.57 per share,
for the quarter ended March 31, 1996, as compared to net income of $2,983,000,
or $0.46 per share, for the quarter ended March 31, 1995. All references to the
Company herein are intended to include the activities of the Bank, the Company's
wholly owned subsidiary.
On February 29, 1996, the Board of Directors authorized the Company to
repurchase up to 620,000 shares of its common stock, which represents
approximately 10% of the Company's currently issued and outstanding shares of
common stock. Shares may be repurchased from time to time during the next six
months in open market and unsolicited, negotiated transactions. Repurchases will
be subject to availability and prices which are acceptable to the Company.
On April 22, 1996, the Board of Directors announced a 10% increase in the
quarterly cash dividend. The new dividend is $0.22 per share and is payable
June 10, 1996 to shareholders of record at the close of business on May 23,
1996.
Financial Condition
- -------------------
During the first three months of 1996, the Bank originated $31.9 million of
commercial loans, which contributed to a net increase in the commercial loan
portfolio from $455.4 million at December 31, 1995 to $471.4 million at March
31, 1996. The interest rates on these loans are generally tied to the Company's
Prime Rate. Consumer loans decreased from $200.5 million to $193.3 million, and
during this period, the Bank originated $26.5 million in consumer loans and sold
$9.6 million in student loans. Real estate loans increased from $271.0 million
at December 31, 1995 to $271.8 million at March 31, 1996. During this period,
the Bank originated $20.4 million of real estate loans and sold $12.2 million.
Total assets increased from $1,236.5 million at December 31, 1995 to $1,247.0
million at March 31, 1996.
Total deposits increased from $1,006.5 million at December 31, 1995 to
$1,034.0 million at March 31, 1996. The Company's borrowings decreased from
$98.9 million at December 31, 1995 to $81.3 million at March 31, 1996, while
cash and cash equivalents decreased from $43.8 million to $35.4 million at March
31, 1996.
Shareholders' equity decreased from $116.8 million at December 31, 1995 to
$114.8 million at March 31, 1996. This decrease is the result of an increase of
and repurchases of outstanding Company stock totalling $3.2 million, $1.4
million of unrealized depreciation in investment securities available for sale,
as required under SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", and cash dividends paid to shareholders of $1.2 million.
This was offset by Company earnings of $3.6 million and $0.2 million of stock
options exercised during the period.
Results of Operations
- ---------------------
The operating results of the Company depend primarily on its net interest
income, which is the difference between interest income on interest-earning
assets, primarily loans and investments, and interest expense on interest-
bearing liabilities, primarily deposits and borrowings. The Company's operating
results also are affected by credit loss requirements, operating expenses, the
level of other income, including gains or losses on sale of mortgages and
securities, and other fees.
6
<PAGE>
Item 2 (continued)
The following tables set forth, for and at the periods indicated, information
regarding (i) the Company's average balance sheet, (ii) the total dollar amount
of interest income from interest-earning assets and the resulting yields, (iii)
the total dollar amount of interest expense on interest-bearing liabilities and
the resultant average cost, (iv) net interest income, (v) interest rate margin
and interest rate spread, (vi) net interest-earning assets, (vii) net yield on
interest-earning assets, and (viii) ratio of interest-earning assets to
interest-bearing liabilities. Average balances are based on daily or month-end
balances. No tax equivalent adjustments were made.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Three Months Ended March 31,
- -------------------------------------------------------------------------------------------------------------
1996 1995
- -------------------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
- -------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
Interest-earning assets:
Commercial loans $ 449,365 $10,767 9.58% $ 382,963 $ 9,644 10.07%
Consumer loans 198,578 4,671 9.41 200,479 4,428 8.83
Real estate loans 265,643 5,525 8.32 278,776 5,914 8.49
Investment securities 114,025 1,682 5.90 88,654 1,313 5.92
Mortgage-backed securities 134,165 2,572 7.67 147,673 2,504 6.78
Mortgages held for sale 1,184 51 17.23 1,231 20 6.50
Other interest-earning assets 0 0 0.00 1,768 30 6.79
- -------------------------------------------------------------------------------------------------------------
Total interest-earning assets 1,162,960 25,268 8.69 1,101,544 23,853 8.66
- -------------------------------------------------------------------------------------------------------------
Non-interest-earning assets 72,747 57,088
- -------------------------------------------------------------------------------------------------------------
Total assets $1,235,707 $1,158,632
- -------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Deposits and mortgage escrow funds $1,012,874 $11,390 4.50% $ 939,371 $10,635 4.53%
Borrowings 91,343 1,292 5.66 93,960 1,453 6.19
- -------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 1,104,217 $12,682 4.59 1,033,331 12,088 4.68
- -------------------------------------------------------------------------------------------------------------
Non-interest-bearing liabilities 14,191 11,652
- -------------------------------------------------------------------------------------------------------------
Total liabilities 1,118,408 1,044,983
- -------------------------------------------------------------------------------------------------------------
Shareholders' equity 117,299 113,649
- -------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,235,707 $1,158,632
- -------------------------------------------------------------------------------------------------------------
Net interest income/net interest rate spread $12,586 4.10% $11,765 3.98%
- -------------------------------------------------------------------------------------------------------------
Net earnings assets/net interest rate margin $58,743 4.33% $68,213 4.27%
- -------------------------------------------------------------------------------------------------------------
Ratio of interest-earning assets to
interest-bearing liabilities 1.05X 1.07X
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The following table presents changes in interest income and interest expense
attributable to (i) changes in volume (change in volume multiplied by old rate),
and (ii) changes in rate (change in rate multiplied by old volume). The net
change attributable to the combined impact of volume and rate has been allocated
proportionately to the change due to volume and the change due to rate.
7
<PAGE>
Item 2 (continued)
- --------------------------------------------------------------------------------
Three Months Ended March 31,
1996 Compared to 1995
Increase (Decrease)
Volume Rate Net
- --------------------------------------------------------------------------------
(Dollars in Thousands)
Interest income on interest-earning assets:
Commercial loans $ 3,000 $(1,877) $1,123
Consumer loans (263) 506 243
Real estate loans (273) (116) (389)
Investment securities 400 (31) 369
Mortgage-backed securities (1,535) 1,603 68
Other interest-earning assets (20) 21 1
- --------------------------------------------------------------------------------
Total $ 1,309 $ 106 $1,415
- --------------------------------------------------------------------------------
Interest expense on interest-bearing liabilities:
Deposits and mortgage escrow funds $ 1,216 $ (461) $ 755
Borrowings (40) (121) (161)
- --------------------------------------------------------------------------------
1,176 (582) 594
- --------------------------------------------------------------------------------
Total $ 133 $ 688 $ 821
- --------------------------------------------------------------------------------
Interest Income
- ---------------
The Company's interest income on earning assets increased from $23.9 million for
the three months ended March 31, 1995 to $25.3 million for the three months
ended March 31, 1996. This increase in interest income was the result of an
increase in the average balance of earning assets from $1,101.5 million for the
quarter ended March 31, 1995 to $1,163.0 million for the quarter ended March 31,
1996. The increase in the yield on earning assets from 8.66% to 8.69% for the
three months ended March 31, 1995 and 1996, respectively, also contributed to
the increase in interest income. The yield on commercial loans went from 10.07%
for the first quarter of 1995 to 9.58% for the first quarter of 1996. This
yield decrease primarily was due to a decrease in the Bank's Prime Rate from
8.50% at December 31, 1995 to 8.25% at March 31, 1996. Offsetting the decline
in Prime Rate, the commercial loan average balance increased $66.4 million from
the first quarter of 1995 to $449.4 million for the first quarter of 1996. This
volume change for the commercial loan portfolio was the largest contributor to
the increase in interest income. With high levels of competition in the local
lending market for indirect auto and mobile home loans, the Company intends to
continue to emphasize the origination of these loans, which add to the Company's
customer base for potential business. The continued softness in the local
economy has contributed to the average balance of consumer loans declining
slightly from $200.5 million for the first quarter of 1995 to $198.6 million for
the first quarter of 1996. This has been outweighed by increases in yields to
provide a measure of increase in interest income. Real estate loans average
balance decreased $13.1 million to $265.6 million for the quarter ended March
31, 1996 compared to quarter ended March 31, 1995. This is another example of
the effect the local economy has had on the real estate lending portfolio. This
period also reflected a decrease in yield from 8.49% to 8.32%. Due to
prepayments and sales, the average balance of mortgage-backed securities
decreased from $147.7 million to $134.2 million from the three months ended
March 31, 1995 to the three months ended March 31, 1996. This decrease in
average balance was entirely offset by an increase in yield from 6.78% for the
quarter ended March 31, 1995 to 7.67% for the quarter ended March 31, 1996.
The average balance of investment securities increased from $88.7 million to
$114.0 million. The amortization of mortgage-backed securities during this
quarter was mainly used to purchase bonds. Another factor in the increased
investment balance was the result of the Bank changing its' charter to a
commercial bank in the third quarter of 1995. This change required the Bank to
increase its holding of Federal Home Loan Bank of New York stock by
approximately $7.8 million. The yield decreased from 5.92% to 5.90% from the
three months ended March 31, 1995 to the three months ended March 31, 1996 for
these same assets.
8
<PAGE>
Item 2 (continued)
Interest Expense
- ----------------
Total interest expense increased by $0.6 million for the quarter ended March
31, 1996 as compared to the same period in 1995. The average balance of interest
bearing liabilities increased from $1,033.3 million for the quarter ended March
31, 1995 to $1,104.2 million for the quarter ended March 31, 1996. This increase
accompanies a decrease in the average rate paid on all interest-bearing
liabilities from 4.68% to 4.59% during the respective period. One component of
the change in interest-bearing liabilities is the average balance of borrowings
decreasing from $94.0 million for the three months ended March 31, 1995 to $91.3
million for the three months ended March 31, 1996. The borrowing balance
augments the growth in deposits to principally fund the growth in the commercial
loan areas when needed. This decrease was coupled with an decrease in the rate
paid on such borrowings from 6.19% to 5.66% during this period. The average
balance of deposits increased from $939.4 million during the three months ended
March 31, 1995 to $1,012.9 million during the same period in 1996. The increase
in the average balance of deposits resulted in an increase in interest paid on
deposits from $10.6 million for the first quarter of 1995 to $11.4 million for
the first quarter of 1996. The average cost of all interest-bearing liabilities
decreased, but the rise in interest expense was primarily the result of the
increase in the average balance of interest-bearing liabilities.
Provision for Credit Losses
- ---------------------------
The provision for credit losses increased from $1.4 million to $2.1 million
for the quarters ended March 31, 1995 and March 31, 1996, respectively. The
allowance for possible credit losses increased from $16.6 million at December
31, 1995 to $17.2 million at March 31, 1996. See "Non-performing Loans and Other
Real Estate Owned". Management considers this level of reserves adequate to
cover potential credit losses.
Non-interest Income
- -------------------
Non-interest income increased from $1.5 million for the three months ended
March 31, 1995 to $1.9 million for the three months ended March 31, 1996, an
increase of approximately 33%. This increase resulted primarily from growth in
the credit card merchant and consumer base resulting in an increase in fee
income of approximately $0.4 million or 81% for quarter ended March 31, 1996
compared with quarter ended March 31, 1995. Both service charges on deposit
accounts and mortgage servicing fees increased about 15% from the quarter ended
March 31, 1995 to the quarter ended March 31, 1996, and fees and commissions
increased 34% in for the same respective periods. Other non-interest income
items remained relatively stable.
Gains (Losses) On Sale of Mortgages
- ------------------------------------
The practice of the Bank has been to sell or securitize long-term, fixed-rate
residential mortgage loans. As a result of this practice, the Bank sold $12.2
million of mortgage loans for the first three months of 1996 as compared to
having securitized or sold $5.3 million for the first three months of 1995. Of
the $10.7 million of residential mortgage loans originated in the first three
months of 1996, $1.6 million were adjustable-rate loans which are maintained in
the portfolio of the Bank. The first quarter of 1996 resulted in a gain on sale
of mortgages of $156,000 compared to $37,000 for the first quarter of 1995.
9
<PAGE>
Item 2 (continue)
Non-interest Expense
- --------------------
Non-interest expense decreased from $6.9 million to $6.7 million for the
quarters ended March 31, 1995 and 1996, respectively. The Bank Insurance Fund
reached a predetermined adequate level of funding in the second quarter of 1995.
This resulted in a refund of insurance premium from the Federal Deposit
Insurance Corporation (the "FDIC") in the third quarter of 1995 and lower
premiums thereafter; consequently, there was a decrease of $520,000 in FDIC
insurance premiums for the first quarter of 1996 compared to the first quarter
of 1995.
During the quarter ended March 31, 1996, approximately $136,000 of other real
estate ("ORE") expense was recognized. This is in keeping with management's
policy to closely monitor and write down ORE properties as needed based on
management's estimate of their net realizable value (less costs to dispose).
See further discussion in "Non-Performing Loans and Other Real Estate Owned".
Income Taxes
- ------------
Based on the increased income achieved for the quarter, the income tax
expense was $2.0 million and $2.4 million for the quarters ended March 31, 1995
and March 31, 1996, respectively.
Non-Performing Loans and Other Real Estate Owned ("ORE")
- --------------------------------------------------------
When a borrower fails to make a scheduled payment on a loan, the Company
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made within five business days after the expiration of
the payment grace period, set forth in the loan contract. In most cases,
deficiencies are cured promptly. If a delinquency extends beyond 60 days, the
loan and payment histories are reviewed and legal proceedings may be instituted
to remedy the default. While the Company generally prefers to work with
borrowers to resolve such problems, the Company does initiate foreclosure
proceedings or pursues other legal collection procedures, as necessary, to
minimize any potential loss. Once the Company takes legal title to the
property, it is classified as other real estate owned on the Statement of
Condition.
Loans are placed on a non-accrual status when, in the judgment of management,
the probability of collection of interest is deemed to be insufficient to
warrant further accrual. Such loans include potential problem loans where known
information about possible credit problems of borrowers has caused management to
have serious doubts as to the ability of such borrowers to comply with the loan
repayment terms. When a loan is placed on non-accrual status, previously
accrued but unpaid, interest is deducted from interest income. The Company does
not accrue interest on loans greater than 90 days or more past due for the
payment of interest unless the value of the collateral and active collection
efforts ensure full recovery.
The following table sets forth information regarding non-performing loans which
are 90 days or more overdue and other real estate owned held by the Company at
the dates indicated.
10
<PAGE>
Item 2 (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
March 31, December 31,
1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
(Dollars in Thousands)
Commercial loans:
Non-accrual loans $ 7,360 $ 8,032
Consumer loans:
Accruing loans 90 days overdue 214 96
Residential real estate loans:
Non-accrual loans 2,034 1,920
Commercial real estate loans:
Non-accrual loans 3,950 2,764
- --------------------------------------------------------------------------------------------------
Total non-performing loans and accruing loans 90 days overdue $13,558 $12,812
- --------------------------------------------------------------------------------------------------
Total non-performing loans to total gross loans 1.45% 1.38%
Total real estate acquired in settlement of
loans at net realizable value $ 2,286 $ 2,468
Total non-performing loans and real estate acquired in settlement
of loans at net realizable value to total assets 1.27% 1.24%
</TABLE>
The Company has no troubled debt restructurings except as included in non-
accruing commercial loans. Total non-performing loans and other real estate
owned increased to $15.8 million, or 1.27% of total assets at March 31, 1996,
compared to $15.3 million, or 1.24% of total assets at December 31, 1995.
At December 31, 1995, 49 non-performing residential real estate loans
totalled $1.9 million. At March 31, 1996, non-performing residential real estate
loans totalled $2.0 million and included 48 loans.
At December 31, 1995, non-performing commercial real estate loans totalled
$2.8 million, and included 6 loans ranging in size from $62,000 to $1.6 million.
At March 31, 1996, non-performing commercial real estate loans increased to $4.0
million and consisted of 8 loans ranging in size from $47,000 to $1.6 million.
This increase reflects the balance of $1.1 million on a single commercial real
estate mortgage loan. The building loan matured in December 1995, and is in the
process of being modified and consolidated with another loan with the same
borrower.
Non-performing commercial loans at December 31, 1995 totalled $8.0 million
and included 35 individual loans ranging in size from $5,500 to $2.2 million. At
March 31, 1996, non-performing commercial loans decreased to $7.4 million and
consisted of 41 individual loans ranging in size from $500 to $2.0 million. This
decrease primarily reflects the remaining balance of $0.5 million on a local
residential property that is now current. The loan and all other non-performing
loans have been internally risk-rated and loan loss reserves established deemed
adequate by management.
The Company's policy is to charge-off all consumer loans before they become
non-accrual. At December 31, 1995, the Company had $96,000 of loans greater than
90 days past due on which it was accruing interest, as compared to $214,000 at
March 31, 1996. As of each date, the only such loans were consumer loans.
At March 31, 1996, the Bank had approximately $11.2 million of loans deemed
impaired under FAS 114. All of these loans have specific reserves of
approximately $3.4 million.
At December 31, 1995, ORE, which is defined to include property acquired by
foreclosure or by deed in lieu of foreclosure, totalled $2.5 million, which
consisted of 7 single-family residential properties with a book value totalling
$400,000 and 12 local commercial real estate properties with a book value
totalling $2.1 million. At March 31, 1996, ORE totalled $2.3 million, which
consisted of 7 single-family residential properties totalling $0.4 million and
12 local commercial real estate properties with a book value of $1.9 million.
See "-Provision for Credit Losses".
Management reviews the adequacy of the allowance for possible credit losses
at least quarterly, applying projected loss ratios to the risk-ratings of loans
both individually and by category. The projected loss ratios incorporate such
factors as recent loss experience, current economic conditions and trends,
trends in past due and non-accrual amounts, the risk of characteristics of
11
<PAGE>
Item 2 (continued)
various categories and concentrations of loans, transfer risks and other
pertinent factors.
The following table summarizes activity in the Company's allowance for possible
credit losses during the periods indicated:
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
1996 1995
- --------------------------------------------------------------------------------
(Dollars In Thousands)
Average gross loans outstanding $931,109 $879,628
- --------------------------------------------------------------------------------
Allowance at beginning of period $ 16,560 $ 15,847
- --------------------------------------------------------------------------------
Charge-offs:
Commercial loans 1,243 1,117
Consumer loans 348 246
Residential real estate loans 30 31
Commercial real estate loans 176 493
- --------------------------------------------------------------------------------
Total loan charge-offs 1,797 1,887
Recoveries:
Commercial loans 138 156
Consumer loans 111 55
Residential real estate loans 0 16
Commercial real estate loans 122 4
- --------------------------------------------------------------------------------
Total recoveries 371 231
Net charge-offs 1,426 1,656
- --------------------------------------------------------------------------------
Provision for credit losses charged to operating
expenses 2,073 1,360
- --------------------------------------------------------------------------------
Allowance at end of period $ 17,207 $ 15,551
- --------------------------------------------------------------------------------
Ratio of net charge-offs to:
Average gross loans outstanding (annualized) 0.61% 0.75 %
Ratio of allowance to:
Non-performing loans 126.91% 130.87 %
Period-end loans outstanding 1.84% 1.74 %
During the first quarter of 1996, the Bank charged-off $0.3 million of a local
commercial loan for rental property. Two additional properties within New York
state were also charged off totalling $0.5 million which kept the commercial
loan charge-offs similar to what was taken during the first quarter of 1995.
The allowance for possible credit losses increased to $17.2 million, or 1.84% of
gross loans outstanding at March 31, 1996, from $15.6 million, or 1.74% of total
gross loans outstanding at March 31, 1995. This increase in the allowance for
credit losses reflects the growth in the commercial loan portfolio. Management
considers the current level of loan loss reserves adequate to cover potential
credit losses.
12
<PAGE>
Item 2 (continued)
Sources of Funds
- ----------------
Funding for the Company's assets is derived primarily from demand and time
deposits and long and short-term borrowings. The average balance of all
interest-bearing liabilities increased from $1,033.3 million for the three-month
period ended March 31, 1995 to $1,104.2 million for the same period ended March
31, 1996, an increase of $70.9 million. In order to provide the Company with
alternative funding sources, the Board of Directors authorized the Company to
use up to $50.0 million of brokered deposits. The Company continued utilizing
this authorization in the three months of 1996 and held brokered deposits of
$40.0 million at March 31, 1996 compared to $29.9 million at March 31, 1995.
Liquidity and Capital Resources
- -------------------------------
A fundamental objective of the Company is to effectively manage its
liquidity. Prudent liquidity management insures that the Company can meet all of
its contractual obligations, meet its customers' loan demands, fund all of its
operations and minimize the effects of interest rate fluctuation on earnings.
The Company's primary sources of funds have consisted of deposits,
amortization and prepayments of outstanding loans, bond maturities, and such
other sources as long and short-term borrowings including institutional
repurchase agreements, sales of investment securities, loans, and mortgage-
backed securities. At March 31, 1996, the total of approved loan commitments
amounted to $84.3 million. Scheduled maturities of borrowings during the next
twelve months are $81.3 million. Savings certificates, which are scheduled to
mature during the next twelve months, totalled $380.4 million. Management
expects that a substantial portion of these maturing certificates will remain on
deposit with the Company. At March 31, 1996, the Company had no long-term
borrowings.
At March 31, 1996, the Company's Tier I leverage ratio, as defined in
guidelines, was 9.12%, which exceeds the current requirements for the Company.
On March 31, 1996, the Company's total capital-to-risk-weighted assets ratio,
calculated under the Federal Reserve Board's risk-based capital requirements,
was 12.69%.
The Company's book value per common share decreased from $18.70 at December
31, 1995 to $18.68 at March 31, 1996.
Impact of Inflation and Changing Prices
- ---------------------------------------
The financial statements and related data presented herein have been prepared
in accordance with generally accepted accounting principles which require the
measurement of financial position and operating results in terms of historical
dollars, without considering changes in the relative purchasing power of money
over time due to inflation.
Unlike most industrial companies, virtually all of the assets and liabilities
of a financial institution are monetary in nature. As a result, interest rates
have a more significant impact on a financial institution's performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or in the same magnitude as the price of goods and
services.
Other Matters
- -------------
The Bank is a stockholder of Nationar, a trust company jointly owned by over
60 savings banks throughout New York State. The Bank also used Nationar as its
primary depository, check processor, and trust depository. In February 1995, the
Superintendent of Banks of New York State took possession and assumed the
operations of Nationar due to financial instability. The Company has charged off
its equity and debenture investments in Nationar ($218,000), and the Bank has
received substantially all of the claim on its demand deposit account ($1.1
million) and has received a judgement to retrieve certain securities held by
Nationar in connection with an overdraft line of credit ($1.0 million).
Management does not believe the final resolution of the claims will have a
material impact upon the financial statements of the Company.
13
<PAGE>
Item 2 (continued)
Market Prices and Related Shareholder Matters
- ---------------------------------------------
The stock of the Company is listed on The Nasdaq Stock Market National Market
System under the symbol "BSBN". As of March 31, 1996, the Company had 1,652
shareholders of record and 6,145,504 shares of outstanding common stock. The
number of shareholders does not reflect persons or entities who hold their stock
in nominee or "street" name through various brokerage firms.
The following table sets forth the market price information as reported by
The Nasdaq Stock Market for the common stock.
- --------------------------------------------------------------------------------
Cash
Price Range Dividends
- --------------------------------------------------------------------------------
1995 High Low Per Share
- --------------------------------------------------------------------------------
First Quarter $19.83 $18.00 $0.15
Second Quarter 20.67 18.00 0.15
Third Quarter 21.33 20.00 0.15
Fourth Quarter 26.00 20.67 0.20
1996
First Quarter 26.50 21.75 0.20
14
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings
-----------------
Not applicable
Item 2 - Change in Securities
--------------------
Not applicable
Item 3 - Defaults upon Senior Securities
-------------------------------
Not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable
Item 5 - Other Information
-----------------
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
(3)(l) Articles of Incorporation
(27) Financial Data Schedule
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BSB Bancorp, Inc.
Date: 5/14/96 By: William H. Rincker
------------------------ ------------------------------------------
WILLIAM H. RINCKER
Chairman of the Board and
Chief Executive Officer
Date: 5/14/96 By: Edward R. Andrejko
-------------------------- ------------------------------------------
EDWARD R. ANDREJKO
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
BSB BANCORP, INC.
ARTICLE 1. NAME. The name of the Corporation is BSB Bancorp, Inc.
ARTICLE 2. REGISTERED OFFICE; REGISTERED AGENT. The address of the
Corporation's registered office is the Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, in the County of New Castle, in the State of
Delaware. The name of the Corporation's initial registered agent is The
Corporation Trust Company, which is authorized to transact business in the State
of Delaware and whose business address is the same as the registered office of
the Corporation.
ARTICLE 3. PERPETUAL EXISTENCE. The period of duration of the
Corporation shall be perpetual.
ARTICLE 4. PURPOSES. The purpose for which the Corporation is
organized is the transaction of any or all lawful business for which
corporations may be incorporated under the General Corporation Law of Delaware
("Act"). The Corporation shall have all the powers of a corporation organized
under the Act.
ARTICLE 5. AUTHORIZED STOCK. The total number of shares of all
classes of stock which the Company shall have the authority to issue is
32,500,000, consisting of 2,500,000 shares of preferred stock, par value $0.01
per share (hereinafter the "Preferred Stock"), and 30,000,000 shares of common
stock, par value $0.01 per share (hereinafter the "Common Stock"). Except to
the extent required by governing law, rule or regulation, the shares of capital
stock may be issued from time to time by the Board of Directors without further
approval of shareholders. The Corporation shall have the authority to purchase
its capital stock out of funds lawfully available therefor, which funds shall
include, without limitation, the Corporation's unreserved and unrestricted
capital surplus. The consideration for the issuance of the shares shall be paid
in full before their issuance and shall not be less than the par value per
share. Neither promissory notes nor future services shall constitute payment or
part payment for the issuance of shares of the Corporation. The consideration
for the shares shall be cash, tangible or intangible property, labor or services
actually performed for the Corporation or any combination of the foregoing. In
the absence of actual fraud in the transaction, the value of such property,
labor or services, as determined by the Board of Directors of the Corporation,
shall be conclusive. Upon payment of such consideration, such shares shall be
deemed to be fully paid and nonassessable.
A description of the different classes and series (if any) of the
Corporation's capital stock and a statement of the designations, and the
relative rights, preferences, and limitations of the shares of each class of and
series (if any) of capital stock are as follows:
5.1 PREFERRED STOCK. Shares of Preferred Stock may be issued from
time to time in one or more series as may from time to time be determined by the
Board of Directors, each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every particular, except
that there may be different dates from which dividends, if any, thereon shall be
cumulative, if made cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights of each such series,
and the qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding; and the Board of
Directors of the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any shares of a
particular series of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of such series, and the number of
shares of Preferred Stock which shall constitute such series, which number may
be increased or decreased (but not below the number of shares then outstanding)
from time to time by like action of the Board of Directors;
1
<PAGE>
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be paid, the
extent of the preference or relation, if any, of such dividends to the dividends
payable on any other class or classes or series of the same or other classes of
stock and whether such dividends shall be cumulative or noncumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into, or exchange the same for, shares of any
other class or classes or of any series of the same or any other class or
classes of stock of the Corporation and terms and conditions of such
conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at
which, and the terms and conditions on which, Preferred Stock of such
series may be redeemed;
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding up of
the Corporation;
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series;
(7) The price or other consideration for which the shares of such
series shall be issued; and
(8) The voting powers, if any, of the holders of such series of
Preferred Stock.
5.2 COMMON STOCK. Except as otherwise required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of Directors
pursuant to Section 5.1 hereof, each holder of Common Stock shall be entitled to
one vote for each share of Common Stock held in his or her name on the books of
the Corporation. Holders of Common Stock shall not be entitled to cumulate
their votes on any matter, including, but not limited to, an election of
directors. Subject to any rights and preferences of the Preferred Stock,
holders of Common Stock are entitled to such dividends as may be declared by the
Board of Directors out of funds lawfully available therefor. Upon any
liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, holders of Common Stock are entitled to
receive pro rata the remaining assets of the Corporation after the holders of
Preferred Stock have been paid in full any sums to which they may be entitled.
ARTICLE 6. NO PREEMPTIVE RIGHTS. No holder of any shares of capital stock
of the Corporation of any kind, class or series shall have, as a matter of
right, any preemptive or preferential right to subscribe for, purchase or
receive any shares of the capital stock of the Corporation of any kind, class or
series or any other securities or obligations of the Corporation, whether now or
hereafter authorized, or whether issued for cash or other consideration or by
way of a dividend.
ARTICLE 7. BOARD OF DIRECTORS.
7.1 The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. Except as otherwise fixed
pursuant to the provisions of Article 5.1 hereof relating to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation to elect additional directors, the
number of directors of the Corporation that shall constitute the Board of
Directors shall be 14, unless otherwise determined from time to time by
resolution adopted by the affirmative vote of at least a majority of the Board
of Directors.
2
<PAGE>
The names and terms of the persons who are to serve as the initial
directors of the Corporation, until the annual meeting of shareholders of the
Corporation at which such persons' class shall expire pursuant to Article 7.2(a)
hereof, or until their successors be elected and qualified, are as follows:
<TABLE>
<CAPTION>
Name Term
---- ----
<S> <C>
Ferris G. Akel 1989
John J. Consey 1989
William C. Craine 1989
Herbert R. Levine 1989
William H. Rincker 1989
Robert W. Allen 1990
Thomas F. Kelly 1990
Floyd H. Lawson, Jr. 1990
William L. Roberts 1990
James A. Ackerman 1991
Charles G. Brink 1991
Vincent J. Earley 1991
Helen A. Gamble 1991
John V. Smith 1991
</TABLE>
The business address of such directors shall be the same as the
Corporation: the Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
Any action required or which may be taken at a meeting of the Board of
Directors, or of a committee thereof, may be taken by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time.
7.2 (a) The Board of Directors, other than those who may be elected by the
holders of any class or series of stock having preference over the Common Stock
as to dividends or upon liquidation, shall be divided into three classes as
nearly equal in number as the then total number of directors constituting the
Board of Directors permits, with the term of office one class expiring each
year, the terms each being for three years.
(b) Except as otherwise fixed pursuant to the provisions of Article 5.1
hereof relating to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation to
elect directors, any vacancies in the Board of Directors for any reason and any
newly created directorships resulting from any increase in the number of
directors may be filled only by the Board of Directors, acting by vote of a
majority of the directors then in office, although less than a quorum. Any
director so chosen to fill a vacancy shall serve for the unexpired term of his
or her predecessor in office. Any director appointed to the Board of Directors
by reason of an increase in the number of directors shall serve until the term
of the class to which he or she was appointed shall expire. No decrease in the
number of directors shall shorten the term of any incumbent director.
Notwithstanding the foregoing, and except as otherwise required by law, whenever
the holders of any one or more series of Preferred Stock shall have the right,
voting separately as a class, to elect one or more directors of the Corporation,
the terms of the director or directors elected by such holders shall expire at
the next succeeding annual meeting of shareholders and vacancies created with
respect to any directorship of the directors so elected may be filled in the
manner specified by the terms of such Preferred Stock. Subject to the foregoing,
at each annual meeting of shareholders, the successors to the class of directors
whose term shall then expire shall be elected to hold office for a term expiring
at the third succeeding annual meeting and until their successors shall be
elected and qualified.
(c) Nominations of candidates for election as directors at any annual
meeting of shareholders may be made (a) by, or at the direction of, a majority
of the Board of Directors or (b) by any shareholder entitled to vote at such
annual meeting. Only persons nominated in accordance with the procedures set
forth in this Section 7.2(c) shall be eligible for election as directors at an
annual meeting. The election shall be either by written ballot or voice vote,
at the discretion of the presiding officer of the meeting.
3
<PAGE>
Ballots, bearing the names of all the persons who have been nominated for
election as directors at an annual meeting in accordance with the procedures set
forth in this Section 7.2(c), shall be provided for use at the annual meeting.
Nominations, other than those made by, or at the direction of, the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Section 7.2(c). To be timely, a
shareholder's notice shall be delivered to, or mailed and received at, the
principal executive offices of the Corporation not less than twenty (20) days
prior to the date of the scheduled annual meeting; provided, however, that if
less than thirty (30) days' notice of the date of the scheduled annual meeting
is given, notice by the shareholder must be so delivered or received not later
than the close of business on the tenth day following the day on which such
notice of the date on which the scheduled annual meeting was mailed, provided
further that the notice by the shareholder must be delivered or received no
later than the close of business on the fifth day preceding the date of the
meeting. Such shareholder's notice shall set forth (a) as to each person whom
the shareholder proposes to nominate for election or reelection as a director
and as to the shareholder giving the notice: (i) the name, age, business
address and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of Corporation
stock which are Beneficially Owned by such person on the date of such
shareholder notice, and (iv) any other information relating to such person that
is required to be disclosed in solicitations of proxies with respect to nominees
for election as directors, pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, including, but not limited to, information
required to be disclosed by Items 5(b) and 7 of Schedule 14A and information
which would be required to be filed on Schedule 14B with the Securities and
Exchange Commission (or any successors of such items or schedules); and (b) as
to the shareholder giving the notice: (i) the name and address, as they appear
on the Corporation's books, of such shareholder and any other shareholders known
by such shareholder to be supporting such nominees and (ii) the class and number
of shares of Corporation stock which are beneficially owned by such shareholder
on the date of such shareholder notice and by any other shareholders known by
such shareholder to be supporting such nominees on the date of such shareholder
notice. At the request of the Board of Directors, any person nominated by, or
at the direction of, the Board for election as a director at an annual meeting
shall furnish to the Secretary of the Corporation that information required to
be set forth in a shareholder's notice of nomination which pertains to the
nominee.
The Board of Directors may reject any nomination by a shareholder not
timely made in accordance with the requirements of this Section 7.2(c). If the
Board of Directors, or a designated committee thereof, determines that the
information provided in a shareholder's notice does not satisfy the
informational requirements of this Section 7.2(c) in any material respect, the
Secretary of the Corporation shall promptly notify such shareholder of the
deficiency in the notice. The shareholder shall have an opportunity to cure
the deficiency by providing additional information to the Secretary within such
period of time, not to exceed five (5) days from the date such deficiency notice
is given to the shareholder, as the Board of Directors or such committee shall
reasonably determine, provided that the period of time for curing the deficiency
shall not extend beyond the time for giving such shareholder's notice as set
forth in the preceding paragraph. If the deficiency is not cured within such
period, or if the Board of Directors of such committee reasonably determines
that the additional information provided by the shareholder, together with
information previously provided, does not satisfy the requirements of this
Section 7.2(c) in any material respect, then the Board of Directors may reject
such shareholder's nomination. The Secretary of the Corporation shall notify a
shareholder in writing whether his or her nomination has been made in accordance
with the time and informational requirements of this Section 7.2(c).
Notwithstanding the procedures set forth in this paragraph, if neither the Board
of Directors nor such committee makes a determination as to the validity of any
nominations by a shareholder, the presiding officer of the annual meeting shall
determine and declare at the annual meeting whether a nomination was made in
accordance with the terms of this Section 7.2(c). If the presiding officer
determines that a nomination was made in accordance with the terms of this
Section 7.2(c), he or she shall so declare at the annual meeting and ballots
shall be provided for use at the meeting with respect to such nominee. If the
presiding officer determines that a nomination was not made in accordance with
the terms of this Section 7.2(c), he or she shall so declare at the annual
meeting and the defective nomination shall be disregarded.
Notwithstanding the foregoing, and except as otherwise required by law,
whenever the holders of any one or more series of Preferred Stock shall have the
right, voting separately as a class, to elect one or more directors of the
4
<PAGE>
Corporation, the provisions of this Section 7.2(c) shall not apply with respect
to the director or directors elected by such holders of Preferred Stock.
7.3 Subject to the rights of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation to elect
directors, at a meeting of shareholders called expressly for the purpose, any
director (including persons elected by directors to fill vacancies in the Board
of Directors) may be removed for cause by a vote of the holders of a majority of
the shares then entitled to vote at an election of directors. At least 30 days
prior to such meeting of shareholders, written notice shall be sent to the
director whose removal will be considered at the meeting. Cause for removal
shall exist only if the director whose removal is proposed has been convicted of
a felony by a court of competent jurisdiction or has been adjudged by a court of
competent jurisdiction to be liable for gross negligence or misconduct in the
performance of such director's duty to the Corporation and such adjudication is
no longer subject to direct appeal.
7.4 In discharging the duties of their respective positions, the Board of
Directors, committees of the Board and individual directors shall, in
considering the best interests of the Corporation, consider the effects of any
action upon the employees of the Corporation and its subsidiaries, the
depositors and borrowers of any banking subsidiary, the communities in which
offices or other establishments of the Corporation or any subsidiary are located
and all other pertinent factors.
ARTICLE 8. SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of
shareholders shall be called only upon the affirmative vote of a majority of the
Board of Directors and may not be called by shareholders of the Corporation.
ARTICLE 9. ACTION WITHOUT A MEETING. Any action required or permitted to
be taken by the shareholders at a meeting may be taken without a meeting if
consent in writing setting forth the action so taken shall be signed by all of
the shareholders and filed with the Secretary of the Corporation as part of the
corporate records.
ARTICLE 10. SHAREHOLDER PROPOSALS. At an annual meeting of shareholders,
only such new business shall be conducted, and only such proposals shall be
acted upon, as shall have been brought before the annual meeting by, or at the
direction of, (a) the Board of Directors or (b) any shareholder of the
Corporation who complies with all the requirements set forth in this Article 10.
Proposals, other than those made by, or at the direction of, the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Article 10. To be timely, a shareholder
notice shall be delivered to, or mailed and received at, the principal executive
offices of the Corporation not less than twenty (20) days prior to any annual
meeting of shareholders; provided, that if fewer than thirty (30) days' notice
of the meeting is given to shareholders, such written notice shall be received
by the Corporation not later than the close of the tenth day following the day
on which notice of the meeting was mailed to shareholders, provided further that
the written notice must be received by the Corporation no later than the close
of business on the fifth day preceding the date of the meeting. Such
shareholder's notice shall set forth as to each matter the shareholder proposes
to bring before the annual meeting (a) a brief description of the proposal
desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (b) the name and address, as they appear on
the Corporation's books, of the shareholder proposing such business and any
other shareholders known by such shareholder to be supporting such proposal, (c)
the class and number of shares of the Corporation stock which are Beneficially
Owned by the shareholder on the date of such shareholder notice and by any other
shareholders known by such shareholder to be supporting such proposal on the
date of such shareholder notice, and (d) any financial interest of the
shareholder in such proposal.
The Board of Directors may reject any shareholder proposal not timely made
in accordance with the terms of this Article 10. If the Board of Directors, or
a designated committee thereof, determines that the information provided in a
shareholder's notice does not satisfy the information requirements of this
Article 10 in any material respect, the Secretary of the Corporation shall
promptly notify such shareholder of the deficiency in the notice. The
shareholder shall have an opportunity to cure the deficiency by providing
additional information to the Secretary within such period of time not to exceed
five (5) days from the date such deficiency notice is given to the shareholder,
as the Board of
5
<PAGE>
Directors or such committee shall reasonably determine, provided that
the period of time for curing the deficiency shall not extend beyond the
time for giving such shareholder's notice as set forth in the preceding
paragraph. If the deficiency is not cured within such period, or if the Board
of Directors or such committee determines that the additional information
provided by the shareholder, together with information previously provided, does
not satisfy the requirements of this Article 10 in any material respect, then
the Board of Directors may reject such shareholder's proposal. The Secretary of
the Corporation shall notify a shareholder in writing whether his or her
proposal has been made in accordance with the time and informational
requirements of this Article 10. Notwithstanding the procedures set forth in
this paragraph, if neither the Board of Directors nor such committee makes a
determination as to the validity of any shareholder proposal, the presiding
officer of the annual meeting shall determine and declare at the annual meeting
whether the shareholder proposal was made in accordance with the terms of this
Article 10. If the presiding officer determines that a shareholder proposal was
made in accordance with the terms of this Article 10, he or she shall so declare
at the annual meeting and ballots shall be provided for use at the meeting with
respect to any such proposal. If the presiding officer determines that a
shareholder proposal was not made in accordance with terms of this Article 10,
he or she shall so declare at the annual meeting and any such proposal shall not
be acted upon at the annual meeting.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
ARTICLE 11. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS.
11.1 INDEMNIFICATION. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation or any predecessor of the
Corporation, or is or was serving at the request of the Corporation or any
predecessor of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments, fines, excise taxes and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding to the full extent authorized by
law.
11.2 ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by an officer,
director, employee or agent of the Corporation, in defending a civil or criminal
action, suit or proceeding described in Article 11.1, shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors only upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that the person is not entitled to be indemnified by
the Corporation.
11.3 OTHER RIGHTS AND REMEDIES. The indemnification provided by this
Article 11 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under this
Certificate, any insurance or other agreement, vote of shareholders or
disinterested directors or otherwise, both as to actions in their official
capacity and as to actions in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such person, provided that no indemnification shall be made to
or on behalf of an individual if a judgment or other final adjudication
establishes that his or her act or omissions (i) were in breach of his or her
duty of loyalty to the Corporation or its shareholders, (ii) were not in good
faith or involved a knowing violation of law or (iii) resulted in the receipt of
an improper personal benefit.
11.4 LIMITATION OF LIABILITY. No director of the Corporation shall be
personally liable to the Corporation or its shareholders for monetary damages
for breach of the director's fiduciary duty, provided that this provision shall
not eliminate or limit the liability of a director (1) for any breach of the
director's duty of loyalty to the Corporation or its shareholders, (2) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the General Corporation Law
of Delaware (or any successor to such section) for any unlawful dividend, stock
purchase or stock payment, or (4) for any transaction from which the director
derived an improper personal benefit. No amendment to, or repeal of, this
Article 11 shall apply to, or have any effect on, the
6
<PAGE>
liability or alleged liability of any director of the Corporation for, or with
respect to, any acts or omissions of such director occurring prior to such
amendment.
11.5 INSURANCE. Upon resolution passed by the Board, the Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him or her or incurred by him or her in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such liability
under the provisions of this Certificate.
11.6 MODIFICATION. The duties of the Corporation to indemnify and to
advance expenses to a director or officer provided in this Article 11 shall be
in the nature of a contract between the Corporation and each such director or
officer, and no amendment or repeal of any provision of this Article 11 shall
alter, to the detriment of such director or officer, the right of such person to
the advance of expenses or indemnification related to a claim based on an act or
failure to act which took place prior to such amendment or repeal.
ARTICLE 12. LIMITATION OF ACQUISITION OF CONTROL. For a period of three
years from the effective date of Binghamton Savings Bank's conversion to the
stock form of ownership, no Person shall directly or indirectly acquire
beneficial ownership of more than 10% of any class of an equity security of the
Corporation. This limitation shall not apply to the purchase of shares by
underwriters in connection with a public offering.
For purposes of this Article 12, the following definitions apply:
(1) The term "Person" includes an individual, a group acting in concert, a
corporation, a partnership, an association, a joint stock company, a trust, an
incorporated organization or similar company, a syndicate or any other group
formed for the purpose of acquiring, holding or disposing of the equity
securities of the Corporation.
(2) The term "acquire" includes every type of acquisition, whether affected
by purchase, exchange, operation of law or otherwise.
ARTICLE 13. PROHIBITION OF CUMULATIVE VOTING. Shareholders shall not be
permitted to cumulate their votes for the election of directors.
ARTICLE 14. CERTAIN BUSINESS COMBINATIONS. A. Vote Required for Certain
Business Combinations. In addition to any affirmative vote of holders of a
class or series of capital stock of the Corporation required by law or this
Certificate of Incorporation and except as otherwise expressly provided in
Subsection B of this Article 14, a Business Combination (as hereinafter defined)
with or upon a proposal by a Related Person (as hereinafter defined) shall
require the affirmative vote of the holders of a majority (or such greater
proportion as may be required under applicable law) of the Voting Stock (as
hereinafter defined), voting together as a single class, including an
Independent Majority of Shareholders (as hereinafter defined).
B. Conditions Requiring Such Vote. The provisions of Subsection A of this
Article 14 shall not be applicable to any particular Business Combination, and
such Business Combination shall require only such affirmative vote as is
required by law, regulation and any other provision of this Certificate of
Incorporation of the Corporation, if all of the conditions specified in any one
of the following paragraphs (i), (ii) or (iii) are met:
(i) Approval by directors. The Business Combination has been approved
by a vote of majority by the Whole Board of Directors (as hereinafter
defined) of the Corporation at any time at which the Person involved who
theretofore was or thereafter became a Related Person was not such a
Related Person or by a majority of the Whole Board of Directors, including
a majority of the Continuing Directors (as hereinafter defined), after any
time at which the Person involved became a Related Person; or
7
<PAGE>
(ii) Combination with Subsidiary. The Business Combination is solely
between the Corporation and a Subsidiary of the Corporation and such
Business Combination does not have the direct or indirect effect set forth
in Subsection (C)(ii)(e) of this Article 14; or
(iii) Price and procedural conditions. All of the following
conditions shall have been met:
(a) The aggregate amount of cash and fair market value (as of the
date of the consummation of the Business Combination) of consideration
other than cash to be received per share of Common Stock in such
Business Combination by holders thereof shall be at least equal to the
highest of the following: (1) the highest per share price, including
any brokerage commissions, transfer taxes and soliciting dealers' fees
(with appropriate adjustments for recapitalizations,
reclassifications, stock splits, reverse stock splits and stock
dividends), paid by the Related Person for any shares of common stock
acquired by it, including those shares acquired by the Related Person
before the date on which the Related Person became a Related Person
(such date being market value of the common stock of the Corporation
(as determined by the Continuing Directors) on the date the Business
Combination is first proposed (the "Announcement Date").
(b) The aggregate amount of cash and fair market value (as of the
date of the consummation of the Business Combination) of consideration
other than cash to be received per share of any class or series of
preferred stock in such Business Combination by holders thereof shall
be at least equal to the highest of the following: (1) the highest
per share price, including any brokerage commissions, transfer taxes
and soliciting dealers' fees (with appropriate adjustments for
recapitalizations, reclassifications, stock splits, reverse stock
splits and stock dividends), paid by the Related Person for any shares
of such class or series of preferred stock acquired by it, including
those shares acquired by the Related Person before the Determination
Date; (2) the fair market value of such class or series of preferred
stock of the Corporation (as determined by the Continuing Directors)
on the Announcement Date; and (3) the highest preferential amount per
share of such class or series of preferred stock to which the holders
thereof would be entitled in the event of voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation (regardless of whether the Business Combination to be
consummated constitutes such an event).
(c) The consideration to be received by holders of a particular
class or series of outstanding common or preferred stock shall be in
cash in the same form as the Related Person has previously paid for
shares of such class or series of stock. If the Related Person has
paid for shares of any class or series of stock with varying forms of
consideration, the form of consideration given for such class or
series of stock in the Business Combination shall be either cash or
the form used to acquire the largest number of shares of such class or
series of stock previously acquired by it.
(d) No Extraordinary Event (as hereinafter defined) occurs after
the Related Person has become a Related Person and prior to the
consummation of the Business Combination.
(e) A proxy or information statement describing the proposed
Business Combination and complying with the disclosure requirements of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (or any subsequent provisions replacing such
Act, rules or regulations) is mailed to public shareholders of the
Corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required pursuant to such Act or subsequent provisions)
and shall contain at the front thereof in a prominent place a
recommendation, if any, of the Continuing Directors, of the
advisability or inadvisability of the Business Combination and of any
investment banking firm selected by a majority of the Continuing
Directors, as to the fairness of the Business Combination from the
point of view of the shareholders of the Corporation other than the
Related Person.
C. Certain Definitions. For purposes of this Article 14:
8
<PAGE>
(i) A "person" shall mean any individual, corporation, partnership,
bank, association, joint stock company, trust, unincorporated organization
or similar company, or a group of "persons" acting or agreeing to act
together in the manner set forth in Rule 13d-5 under the Securities
Exchange Act of 1934, as in effect on January 31, 1986.
(ii) "Business Combination" shall mean any of the following
transactions, when entered into by the Corporation or a Subsidiary of the
Corporation with, or upon a proposal by, a Related Person:
(a) the merger or consolidation of the Corporation or any
Subsidiary of the Corporation; or
(b) the sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one or a series of transactions) of any assets
of the Corporation or any Subsidiary of the Corporation having an
aggregate fair market value of more than 10% of the total consolidated
assets of the Corporation and its Subsidiaries as of the end of the
Corporation's most recent fiscal year prior to the time the
determination is being made; or
(c) the issuance or transfer by the Corporation or any Subsidiary
of the Corporation (in one or a series of transactions) of securities
of the Corporation or any Subsidiary in exchange for cash or property
(including stock or other securities) having an aggregate fair market
value of more than 10% of the total consolidated assets of the
Corporation and its Subsidiaries as of the end of the Corporation's
most recent fiscal year prior to the time the determination is being
made; or
(d) the adoption of a plan or proposal for the liquidation or
dissolution of the Corporation; or
(e) a reclassification of securities (including a reverse stock
split), recapitalization, consolidation or any other transaction,
whether or not involving a Related Person, which has the direct or
indirect effect of increasing the voting power, whether or not then
exercisable, of a Related Person in any class or series of capital
stock of the Corporation or any Subsidiary of the Corporation; or
(f) any agreement, contract or other arrangement providing
directly or indirectly for any of the foregoing.
(iii) "Related Person" shall mean any person (other than the
Corporation, a Subsidiary, or any profit sharing, employee stock ownership
or other employee benefit plan of the Corporation or a Subsidiary, or any
trustee of a fiduciary with respect to any such plan acting in such
capacity) that is the direct or indirect beneficial owner (as defined in
Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934, as in
effect on January 31, 1986) of more than ten percent (10%) of the
outstanding Voting Stock of the Corporation and any Affiliate or Associate
of any such person.
(iv) "Continuing Director" shall mean any member of the Board of
Directors of the Corporation who is not affiliated with a Related Person
and who was a member of the Board of Directors of the Corporation
immediately prior to the time that the Related Person became a Related
Person, and any successor to a Continuing Director who is not affiliated
with the Related Person and is recommended to succeed a Continuing Director
by a majority of Continuing Directors who are then members of the Board of
Directors of the Corporation.
(v) "Whole Board of Directors" shall mean the total number of
directors which the Corporation would have if there were no vacancies.
9
<PAGE>
(vi) "Independent Majority of Shareholders" means the holders of a
majority of the outstanding Voting Shares that are not Beneficially Owned
or controlled, directly or indirectly, by a Related Person.
(vii) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of
1934, as in effect on January 31, 1986.
(viii) "Extraordinary Event" shall mean, as to any Business
Combination and Related Person, any of the following events that are not
approved by a majority of all Continuing Directors:
(a) any failure to declare and pay at the regular date therefor
any full quarterly dividend (whether or not cumulative) on outstanding
preferred stock; or
(b) any reduction in the annual rate of dividends paid on the
common stock (except as necessary to reflect any subdivision of the
common stock); or
(c) any failure to increase the annual rate of dividends paid on
the common stock as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization
or any similar transaction that has the effect of reducing the number
of outstanding shares of the common stock; or
(d) the receipt by the Related Person, after the Determination
Date, of a direct or indirect benefit (except proportionately as a
shareholder) from any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by the Corporation or any Subsidiary, whether in anticipation
of or in connection with the Business Combination or otherwise.
(ix) "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Related Person set forth in Subsection C(iii) of this Article 14, the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(x) "Voting Stock" shall mean all outstanding shares of the common or
preferred stock of the Corporation entitled to vote generally in the
election of directors.
(xi) In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash" as used in Subsections
B(iii)(a) and B(iii)(b) of this Article 14 shall include the shares of
common stock and/or the shares of any other class or series of preferred
stock retained by the holders of such shares.
D. Certain Determinations. A majority of the Whole Board of Directors,
including a majority of all Continuing Directors shall have the power to make
all determinations with respect to this Article 14, including, without
limitation, the transactions that are Business Combinations, the persons who are
Related Persons, the time at which a Related Person became a Related Person, and
the fair market value of any assets, securities or other property, and any such
determinations shall be conclusive and binding.
E. No Effect on Fiduciary Obligations of Related Persons. Nothing
contained in this Article 14 shall be construed to relieve any Related Person
from any fiduciary obligations imposed by law.
ARTICLE 15. ELECTION NOT TO BE GOVERNED BY SECTION 203. Pursuant to
Section 203(b)(1) of the Act, the Corporation elects not to be governed by the
---
terms of Section 203 of the Act, entitled "Business Combinations With Interested
Stockholders."
10
<PAGE>
ARTICLE 16. AMENDMENT OF CERTIFICATE. For a period of three years from
the effective date of Binghamton Savings Bank's conversion to the stock form of
ownership, no amendment, addition, alteration, change, or repeal of this
Certificate of Incorporation shall be made, unless such is first proposed by a
majority of the Board of Directors of the Corporation, and thereafter approved
by the shareholders by two-thirds of the total votes eligible to be cast at a
legal meeting; provided, however, that any such amendment, addition, alteration,
change or repeal that is recommended to shareholders by the favorable vote of
75% of the Board of Directors shall only require approval by the shareholders by
a majority of the total votes eligible to be cast at a legal meeting.
Thereafter, any amendment, addition, alteration, change or repeal of this
Certificate of Incorporation shall require the approval by the shareholders by
two-thirds of the total votes eligible to be cast at a legal meeting; provided,
however, that any such amendment, addition, alteration, change, or repeal that
is either proposed or ratified by a vote of 75% of the Board of Directors shall
only require approval by the shareholders by a majority of the total votes
eligible to be cast at a legal meeting. Any amendment, addition, alteration,
change or repeal so acted upon shall be effective upon filing pursuant to the
Act.
ARTICLE 17. AMENDMENT OF BYLAWS. The Bylaws of the Corporation may be
altered, amended or repealed by the affirmative vote of a majority of the votes
cast by the Board of Directors, or by the affirmative vote of a majority of the
votes cast by shareholders of the Corporation at a regular or special meeting of
the shareholders.
ARTICLE 18. INCORPORATOR. The name and mailing address of the sole
incorporator of the Corporation is as follows:
NAME ADDRESS
---- -------
William H. Rincker 58-68 Exchange Street
Binghamton, New York 13902
Executed in duplicate by the incorporator this 25th day of February, 1988.
By: /s/ William H. Rincker
-----------------------
As amended by the Certificate of Amendment dated May 24, 1993 and the
Certificate of Amendment dated April 22, 1996.
11
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