-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PbYhNOhv2e5l6eJWf7FKMsf08b1pZUl8PiezEXuDFXET9tWH387ArD1tbocV9sm9 aW7Fvqk0dpfpnu/ccYuNwA== 0000950164-97-000324.txt : 19971107 0000950164-97-000324.hdr.sgml : 19971107 ACCESSION NUMBER: 0000950164-97-000324 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 19971106 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WYMAN PARK BANCORPORATION INC CENTRAL INDEX KEY: 0001046354 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: SEC FILE NUMBER: 333-36119 FILM NUMBER: 97708610 BUSINESS ADDRESS: STREET 1: 11 WEST RIDGELY RD CITY: LUTHERVILLE STATE: MD ZIP: 21903-5172 BUSINESS PHONE: 4102526450 MAIL ADDRESS: STREET 1: 11 WEST RIDGELY RD CITY: LUTHERVILLE STATE: MD ZIP: 21903-5172 SB-2/A 1 FORM SB2/A As filed with the Securities and Exchange Commission on November 5, 1997 Registration No. 333-36119 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- AMENDMENT NO. 1 TO FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------- WYMAN PARK BANCORPORATION, INC. (Exact name of registrant as specified in its charter)
Delaware 6035 Applied For (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.) incorporation or organization) Classification Code Number)
11 West Ridgely Road, Lutherville, Maryland 21094 (410) 252-6450 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ---------- Ernest A. Moretti, President Wyman Park Bancorporation, Inc. 11 West Ridgely Road Lutherville, Maryland 21094 (410) 252-6450 (Name, address, including zip code, and telephone number, including area code, of agent for service) ---------- Please send copies of all communications to: Jeffrey M. Werthan, P.C. Gary A. Lax, P.C. SILVER, FREEDMAN & TAFF, L.L.P. (a limited liability partnership including professional corporations) 1100 New York Avenue, NW Washington, DC 20005-3934 (202) 414-6100 ---------- Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [X] CALCULATION OF REGISTRATION FEE
==================================================================================================================================== Proposed Maximum Proposed Maximum Title of Each Class of Amount to be Offering Price Aggregate Amount of Securities to be Registered Registered(1) Per Share (1) Offering Price(1) Registration Fee - ------------------------------------------------------------------------------------------------------------------------------------ Common Stock, par value $.01 per share 1,011,713 shares $10.00 $10,117,130 $3,067(1) ====================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee. Of the $3,067 Registration fee, $2,806 was previously paid to register 925,750 shares. Accordingly, the increase of $261.00 in the Registration fee is to register an additional 85,963 shares at $10.00 per share. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. PROSPECTUS SUPPLEMENT - --------------------- WYMAN PARK BANCORPORATION, INC. WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION 401(K) RETIREMENT EMPLOYEES' SAVINGS PLAN This Prospectus Supplement relates to the offer and sale to participants (the "Participants") in the Wyman Park Federal Savings and Loan Association 401(K) Retirement Employees' Savings Plan (the "Plan") of up to 879,750 shares of Wyman Park Bancorporation, Inc.'s (the "Holding Company") common stock, par value $.01 per share (the "Holding Company Stock") and related participation interests in the Plan, as set forth herein. In connection with the proposed conversion of Wyman Park Federal Savings and Loan Association ("Wyman Park") from mutual to stock form (the "Conversion") and the formation of the Holding Company as the holding company of Wyman Park, the Plan has been amended to provide for an investment fund (the "Employer Stock Fund") consisting of Holding Company Stock as an investment option for the Participants in the Plan. The Plan as it will be amended on December 1, 1997, permits Participants in the Plan to direct the trustee (the "Trustee") of the Employer Stock Fund to purchase Holding Company Stock with amounts in the Plan attributable to the accounts of such Participants. This Prospectus Supplement relates solely to the initial election of a Participant to direct the purchase of Holding Company Stock in the Conversion and not to any future purchases under the Plan or otherwise. The Prospectus dated November __, 1997 of the Holding Company (the "Prospectus"), which is being delivered with this Prospectus Supplement, includes detailed information with respect to the Holding Company, the Conversion, the Holding Company Stock and the financial condition, results of operations and business of Wyman Park. This Prospectus Supplement, which provides detailed information with respect to the Plan, should be read only in conjunction with the Prospectus. Capitalized terms not defined in this Prospectus Supplement have the meanings ascribed to them in the Prospectus. ---------------------- FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY EACH PARTICIPANT, SEE "RISK FACTORS" IN THE PROSPECTUS. ---------------------- THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT FEDERALLY INSURED OR GUARANTEED. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT SUPERVISION, OR THE FEDERAL DEPOSIT INSURANCE CORPORATION, NOR HAS SUCH COMMISSION, OFFICE, OR CORPORATION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus Supplement is November__, 1997. No person has been authorized to give any information or to make any representation other than as contained in the Prospectus or this Prospectus Supplement in connection with the offering made hereby, and, if given or made, any such other information or representation must not be relied upon as having been authorized by the Holding Company, Wyman Park or the Plan. This Prospectus Supplement does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this Prospectus Supplement and the Prospectus nor any sale made hereunder shall under any circumstance create any implication that there has been no change in the affairs of the Holding Company, Wyman Park or the Plan since the date hereof or that the information herein contained or incorporated herein by reference is correct as of any time subsequent to the date hereof. This Prospectus Supplement should be read only in conjunction with the Prospectus that is delivered herewith and should be retained for future reference. TABLE OF CONTENTS Page ---- The Offering................................................................. 1 Securities Offered.................................................. 1 Election to Purchase Holding Company Stock in the Conversion........ 1 Method of Directing Transfer........................................ 1 Time for Directing Transfer......................................... 2 Irrevocability of Transfer Direction................................ 2 Subsequent Elections................................................ 2 Purchase Price of Holding Company Stock............................. 2 Nature of a Participant's Interest in the Holding Company Stock..... 2 Voting and Tender Rights of Holding Company Stock................... 2 Description of the Plan...................................................... 3 Introduction........................................................ 3 Eligibility and Participation....................................... 4 Investment of Contributions......................................... 4 Financial Data...................................................... 6 Administration of the Plan.......................................... 7 Reports to Plan Participants........................................ 8 Amendment and Termination........................................... 8 Merger, Consolidation or Transfer................................... 8 Federal Tax Aspects of the Plan..................................... 8 Restrictions on Resale.............................................. 10 Legal Opinions............................................................... 10 Financial Statements......................................................... 10 Form of Prototype Plan and Adoption Agreement............................... A-1 Financial Statements........................................................ B-1 Election Form............................................................... C-1 i THE OFFERING Securities Offered Up to 879,750 shares of Holding Company Stock which may be acquired by the Plan for the accounts of employees participating in the Plan, and related participation interests, are offered hereby. The Holding Company is the issuer of such securities. Only employees of Wyman Park may participate in the Plan. Information relating to the Plan is contained in this Prospectus Supplement and information relating to the Holding Company, the Conversion and the financial condition, results of operations and business of Wyman Park is contained in the Prospectus delivered herewith. The address of the principal executive office of the Holding Company is 11 West Ridgely Road, Lutherville, MD 21903-5172 and its telephone number is (410) 252-6450. The address and telephone number of Wyman Park's principal office are the same as the Holding Company's address and telephone number. Election to Purchase Holding Company Stock in the Conversion In connection with Wyman Park's Conversion, the Plan has been amended to permit each Participant to direct that all or part of the funds in his or her accounts under the Plan (hereinafter referred to in the aggregate as a Participant's "Accounts") be transferred to the Employer Stock Fund and used to purchase Holding Company Stock in the Conversion. The Trustee of the Employer Stock Fund will follow the Participants' directions and exercise Subscription Rights to purchase Holding Company Stock in the Conversion to the extent provided in Wyman Park's Plan of Conversion. See "The Conversion - Offering of Holding Company Stock" in the Prospectus. Funds not allocated to the purchase of Holding Company Stock will remain invested in accordance with the investment instructions of Participants in effect at such time. Respective purchases by the Plan in the Conversion will be counted as purchases by the individual Participants at whose election they are made to the extent of the funds directed by such Participants to purchase Holding Company Stock, and will be subject to the purchase limitations applicable to such individuals, rather than being counted in determining the maximum amount that the Holding Company's or Wyman Park's Tax-Qualified Employee Plans (as defined in the Prospectus) may purchase in the aggregate. See "The Conversion - Subscription Offering" in the Prospectus. Method of Directing Transfer Included with this Prospectus Supplement is an election and investment form (the "Election Form"). If a Participant wishes to direct some or all the funds in his or her Accounts into the Employer Stock Fund to purchase Holding Company Stock in the Conversion, he or she should indicate that decision by checking the appropriate box of the Election Form and completing this Part of the Election Form. If a Participant does not wish to make such an election, he or she should so indicate by checking the appropriate box of the Election Form. See also "Investment of Contributions - Holding Company Stock Investment Election Procedures" below. 1 Time for Directing Transfer The deadline for submitting a direction to transfer amounts to the Employer Stock Fund in order to purchase Holding Company Stock in the Conversion is _______, 1997, unless extended (the "Election Deadline"). A Participant's completed Election Form must be returned to the Stock Information Center at Wyman Park by 12:00 Noon, Lutherville, Maryland time on such date. Irrevocability of Transfer Direction Once received in proper form, an executed Election Form may not be modified, amended or revoked without the consent of Wyman Park unless the Conversion has not been completed within 45 days after the end of the Subscription and Community Offering. See also "Investment of Contributions - Holding Company Stock Investment Election Procedures" below. Subsequent Elections After the Election Deadline, Participants initially will not be permitted to direct or redirect any portion of their Accounts into Holding Company Stock; however, Wyman Park intends to provide for such future investment. Participants will be notified when and to what extent future investments in the Employer Stock Fund may be permitted. Participants may direct the Trustee to sell their shares of Holding Company Stock purchased in the Conversion through the Plan pursuant to the procedures outlined in the Plan by filing a request form with the Plan Administrator. See "Investment of Contributions - Adjusting Your Investment Strategy" below. Purchase Price of Holding Company Stock The funds transferred to the Employer Stock Fund for the purchase of the Holding Company Stock in the Conversion will be used to purchase Holding Company Stock through the exercise of Subscription Rights granted to the Plan under Wyman Park's Plan of Conversion. The price paid for such shares of Holding Company Stock will be $10.00 per share, the same price as is paid by all other persons who purchase Holding Company Stock in the Conversion. Nature of a Participant's Interest in the Holding Company Stock The Holding Company Stock will be held in the name of the Trustee of the Employer Stock Fund, in its capacity as trustee. The Trustee will maintain individual accounts reflecting each Participants individual interest in the Employer Stock Fund. Voting and Tender Rights of Holding Company Stock The Trustee as instructed by the Plan Administrator, will exercise voting and tender rights attributable to all Holding Company Stock held by the Plan Trust (the "Trust") as directed by Participants with interests in the Employer Stock Fund. Shares with respect to which no 2 instructions have been received by the Trustee. Plan Administrator will be voted as the Plan Administrator in its discretion determines and directs the Trustee. DESCRIPTION OF THE PLAN Introduction The Plan, created in 1970, was adopted by Wyman Park on January 1, 1994 as a profit sharing plan with a cash-or-deferred feature described at Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code"), to encourage employee savings and to allow eligible employees to supplement their income upon retirement. As of December 1, 1997, the Plan will be amended as reflected above and below into the Wyman Park Federal Savings & Loan Association Employees' Savings & Profit Sharing Plan and Trust. Reference to Full Text of Plan. The following statements are summaries of certain provisions of the Plan. They are not a complete description of such provisions and are qualified in their entirety by the full text of the Plan and Declaration of Trust (the "Plan") which is filed as an exhibit to the registration statement of which this Prospectus Supplement is a part and which is incorporated by reference herein. Copies of the Plan are available to all employees upon request to the Plan Administrator. Each employee is urged to read carefully the full text of the Plan. Reference to Summary Plan Description. Certain information regarding the Plan is contained in the Summary Plan Description (including Summaries of Material Modifications thereto (the "Summary Plan Description")), a copy of which is attached to, and made a part of, this Prospectus Supplement. Tax and Securities Laws. Participants should consult with legal counsel regarding the tax and securities laws implications of participation in the Plan. Any directors, officers or beneficial owners of more than 10% of the outstanding shares of Common Stock should consider the applicability of Sections 16(a) and 16(b) of the Securities Exchange Act of 1934, as amended, to his or her participation in the Plan. Eligibility and Participation All employees of Wyman Park, who have met the eligibility requirements of the Plan may participate in the Plan. See Employee "Eligibility" in the Summary Plan Description attached hereto. As of September 30, 1997, there were approximately 14 employees eligible to participate in the Plan, and 14 employees had elected to participate in the Plan. 3 Investment of Contributions Investment Options. All amounts credited to Participants' Accounts under the Plan are held in the Trust, which is administered by the Trustees appointed by Wyman Park's Board of Directors. Each Participant must instruct the Trustee as to how funds held in his or her Accounts are to be invested. In addition to the Employer Stock Fund, Participants may elect to instruct the Trustee to invest such funds in any or all of the following investment options ("Investment Options"): (i) a fund designed to simulate the performing of Standard & Poor's Composite Index of 500 stocks ("S&P 500 Index Fund"); (ii) a fund designed to approximate the performance of the Morgan Stanley Capital International Eastern, Australia, Far East Index (with a 25% investment limit in Japanese stocks) (the "International Fund"); (iii) a fund designed to match the performance of the S&P Midcap 400 Index (the "S&P Midcap Fund"); (iv) a fund designed to invest in stable value securities to reduce short-term risk and to offer some potential for growth (the "Income Plus Fund"); (v) a fund designed to maximize income at minimum risk with underlying investments in U.S. Treasury bonds with a maturity of 20 years or more (the "Long-Term Government Bond Fund"); (vi) a fund that invests primarily in Guaranteed Investment Contracts and Synthetic Guaranteed Investment Contracts (the "Stable Value Fund"); (vii) a fund that invests in a range of high-quality, short-term instruments issued by banks, corporations, and the U.S. Government and its agencies (the "Money Market Fund"); (viii) a fund that one invests in U.S. and international stocks, U.S. bonds and other stable value investments to pursue long-term appreciation and short-term stability and has a small flexible component to take advantage of market opportunities (the "Growth & Income Fund"); or (ix) a fund that invests in a broad range of domestic and international stocks with a large flexible component to take advantage of market opportunities (the "Growth Fund"). A brief description of the Employer Stock Fund is set forth below. For descriptions of the other Investment Options available to Plan Participants, Participants may request a prospectus for each of the investment options pursuant to the instructions in "Participant Direction of Investment" in the Summary Plan Description attached hereto. The Bank of New York is the Trustee for all funds except for the Employer Stock Fund, and Wyman Park will be the Plan Administrator. Employer Stock Fund. Effective until ________, 1997 or such later date as elected by the Holding Company, Participants in the Plan may elect to direct the Trustee to transfer some or all of the funds in their Accounts to the Employer Stock Fund to purchase Holding Company Stock in the Conversion. The price paid for shares of Holding Company Stock will be the same price as is paid by all other persons who purchase Holding Company Stock in the Conversion. The number of shares, if any, subject to purchase for the Accounts of each Participant who may elect to invest in Holding Company Stock is not currently determinable. Any cash dividends received on Holding Company Stock held by the Plan will be reinvested in accordance with the Participant's investment instructions then in effect. The investment in Holding Company Stock involves certain risks. No assurance can be given that shares of Holding Company Stock purchased pursuant to the Plan will thereafter be 4 able to be sold at a price equal to or in excess of the purchase price. See also "Risk Factors" in the Prospectus. Holding Company Stock Investment Election Procedures. Participants may instruct the Trustee to purchase Holding Company Stock by redirecting funds from their existing Accounts into the Employer Stock Fund by filing an Election Form with the Plan Administrator on or prior to the Election Deadline. Total funds redirected by each Participant into the Employer Stock Fund must represent whole share amounts (i.e., must be divisible by the $10.00 per share purchase price) and must be allocated in increments from Investment Options containing the Participant's Plan funds. When a Participant instructs the Trustee to redirect the funds in his or her existing Accounts into the Employer Stock Fund in order to purchase Holding Company Stock, the Trustee will liquidate funds from the appropriate Investment Option(s) and apply such redirected funds as requested, in order to effect the new allocation. For example, a Participant may fund an election to purchase 100 shares of Holding Company Stock by redirecting the aggregate purchase price of $1,000 for such shares from the following Investment Options (provided the necessary funds are available in such Investment Options): (i) 10% from the S&P 500 Index Fund, (ii) 30% from the International Fund, and (iii) 60% from the S&P MidCap Fund. In such case, the Trustee would liquidate $100 of the Participant's funds from the S&P 500 Index Fund, $300 from funds in the Income Fund and $600 from funds in the S&P 500 Index Fund to raise the $1,000 aggregate purchase price. If a Participant's instructions cannot be fulfilled because the Participant does not have the required funds in one or more of the Investment Options to purchase the shares of Holding Company Stock subscribed for, the Participant will be required to file a revised Election Form with the Plan Administrator by the Election Deadline. Once received in proper form, an executed Election Form may not be modified, amended or rescinded without the consent of Wyman Park unless the Conversion has not been completed within [45] days after the end of the Subscription and Community Offering. Adjusting Your Investment Strategy. Until changed in accordance with the terms of the Plan, future allocations of a Participant's contributions would remain unaffected by the election to purchase Holding Company Stock through the Plan in the Conversion. A Participant may modify a prior investment allocation election or request the transfer of funds to another investment vehicle by filing a written notice, with such modification or request taking effect after the valuation of accounts, which occurs daily. However, modifications and fund transfers relating to the Employer Stock Fund are permitted only during an "Investment Change Period." An "Investment Change Period" opens at the beginning of the third day after the Holding Company issues a "Quarterly Earnings Release" and closes at the end of the twelfth business day after such release. The term "Quarterly Earnings Release" means any press release issued by the Holding Company for general distribution which announces, for the first time, the Holding Company's Results of operations for a particular fiscal quarter. Wyman Park anticipates these opportunities will occur four times per year. Wyman Park will attempt to notify Participants of the commencement of each Investment Change Period but will not assume responsibility for doing so. 5 Valuation of Accounts. The net gain (or loss) of the Trust from investments (including interest payments, dividends, realized and unrealized gains and losses on securities, and any expenses paid from the Trust) are determined daily and are allocated among the accounts of Participants according to the balance of each such accounts as of the end of each day. For purposes of such allocations, all assets of the Trust are valued at their fair market value pursuant to the method described in the Plan. Financial Data Employer Contributions. For the Plan Year ended June 30, 1997, Wyman Park made matching contributions totaling approximately $________. Wyman Park made discretionary contributions to the Plan for the fiscal year ended ___________, 1997 of approximately $______. See generally "Employer's Contributions" in the Summary Plan Description attached hereto. Due to the additional expenses related to the establishment and operation of the ESOP and, if adopted, the RRP, Wyman Park may determine to reduce its matching contribution under the Plan in the future. Performance of Holding Company Stock. As of the date of this Prospectus Supplement, no shares of Holding Company Stock have been issued or are outstanding and there is no established market for the Holding Company Stock. Accordingly, there is no record of the historical performance of the Holding Company Stock. Performance of Investment Options. The following table provides performance data with respect to the Investment Options available under the Plan, based on information provided to the Company by The Pentegra Group ("Pentegra"). The information set forth below with respect to the Investment Options has been reproduced from materials supplied by Pentegra; Wyman Park and the Holding Company take no responsibility for the accuracy of such information. 6 Additional information regarding the Investment Options may be available from Pentegra or Wyman Park. Participants should review any available additional information regarding these investments before making an investment decision under the Plan. Net Investment Performance -------------------------- For Twelve- Month Period June 30, 1997 Ended June 30, Annualized -------------- ------------- 1997 5 Years ---- ------- The S&P 500 Index Fund................ 34.0% 14.7% The International Fund................ 17.6 12.2 The Income Plus Fund.................. 10.9 8.3 The Growth & Income Fund.............. 16.9 10.9 The Growth Fund....................... 25.2 14.0 The S&P MidCap Fund................... 23.3 13.9 The Long-Term Government Bond Fund................. 7.1 6.0 The Stable Value Fund................. 6.3 7.2 The Money Market Fund................. 5.2 4.3 Each Participant should note that past performance is not necessarily an indicator of future results. Administration of the Plan Trustees. The trustees are appointed by the Board of Directors of Wyman Park to serve at its pleasure (the "Trustees"). The Trustee for all funds except the Employer Stock Fund is The Bank of New York; the Trustee of the Employer Stock Fund is ______________________. The Trustees receive and hold the contributions to the Plan in trust and distribute them to Participants and beneficiaries in accordance with the provisions of the Plan. The Trustees are responsible, following Participant direction, for effectuating the investment of the assets of the Trust in the Holding Company Stock and the other Investment Options. Reports to Plan Participants As soon as practicable after the end of each calendar quarter, the Plan Administrator will furnish to each Participant a statement showing (i) balances in the Participant's accounts as of the end of that period, (ii) the amount of contributions allocated to his or her accounts for that period, and (iii) the number of units in each of the funds. Amendment and Termination It is the intention of Wyman Park to continue its participation in the Plan. Nevertheless, Wyman Park may terminate the Plan at any time. If the Plan is terminated in whole or in part, 7 then, regardless of other provisions in the Plan, each Participant affected by such termination shall become fully vested in all of his Accounts. Federal Tax Aspects of the Plan The Plan will be administered to comply in operation with the requirements of Section 401(a) of the Code and the requirements which are applicable to a qualified cash-or-deferred arrangement under Section 401(k) of the Code. Assuming that the Plan is administered in accordance with such Sections of the Code, participation in the Plan should have the following implications for federal income tax purposes: (a) Amounts contributed to Participants' Accounts, and the investment earnings on these Accounts, are not includable in Participants' federal taxable income until such contributions or earnings are actually distributed or withdrawn from the Plan. Special tax treatment may apply to the taxable portion of any distribution that includes Holding Company Stock or qualifies as a Lump Sum Distribution (as described below). (b) Income earned on assets by the Trust will not be taxable to the Trust. Lump Sum Distributions. A distribution from the Plan to a Participant or the beneficiary of a Participant will qualify as a Lump Sum Distribution if it is made: (i) within one taxable year to the Participant or beneficiary; (ii) on account of the Participant's death or separation from service, or after the Participant attains age 59-1/2; and (iii) consists of the balance to the credit of the Participant under this Plan and all other profit sharing plans, if any, maintained by Wyman Park or the Holding Company. The portion of any Lump Sum Distribution that is required to be included in the Participant's or beneficiary's taxable income for federal income tax purposes (the "total taxable amount") consists of the entire amount of such Lump Sum Distribution made by the Participant to this Plan and the amount of after-tax contributions, if any, made by the Participant to any other profit sharing plans maintained by Wyman Park which is included in such distribution. Averaging Rules. Except as described below with respect to distributions of Holding Company Stock, the portion of the total taxable amount of a Lump Sum Distribution that is attributable to participation after 1973 in this Plan or in any other profit-sharing plan maintained by Wyman Park (the "ordinary income portion") will be taxable generally as ordinary income for federal income tax purposes. However, a Participant who has completed five years of participation in this Plan and each other profit-sharing plan making the Lump Sum Distribution prior to the taxable year in which the distribution is made, or a beneficiary who receives a Lump Sum Distribution on account of the Participant's death (regardless of the period of the Participant's participation in this Plan or any other profit-sharing plan maintained by the Employer), may elect to have the ordinary income portion of such Lump Sum Distribution taxed according to special averaging rules. The election of the special averaging rules must apply to all Lump Sum Distributions received by the Participant or beneficiary from this Plan and all other qualified plans during the taxable year. Furthermore, if a Lump Sum Distribution includes employer securities, the recipient is not currently taxable on the net unrealized appreciation of 8 such securities at the time of the distribution, unless the recipient otherwise elects to pay the tax on the net unrealized appreciation at the time of the distribution. Rollover to Another Qualified Plan or to an IRA. A Participant may defer federal income taxation of all or any portion of the total taxable amount of a Lump Sum Distribution (including the proceeds from the sale of any Holding Company Stock included in the Lump Sum Distribution) to the extent that such amount, or a portion thereof, is contributed, within 60 days after the date of its receipt by the Participant, to another qualified plan or to an individual retirement account ("IRA"). The beneficiary of a Participant who is the Participant's surviving spouse also may defer federal income taxation of all or any portion of the total taxable amount of a Lump Sum Distribution to the extent that such amount, or a portion thereof, is contributed, within 60 days after the date of its receipt by the surviving spouse, to an IRA. If less than the total taxable amount of a Lump Sum Distribution is contributed to another qualified plan or to an IRA within the applicable 60-day period, the amount not so contributed must be included in the Participant's or beneficiary's taxable ordinary income for federal income tax purposes and will not be eligible for the special averaging rules or capital gain treatment. If all or any portion of the total taxable amount of a Lump Sum Distribution is contributed by a Participant or beneficiary to an IRA within the applicable 60-day period, any subsequent distribution from the IRA will not be eligible for the special averaging rules or capital gain treatment. Additional Tax on Early Distributions. For taxable years beginning after December 31, 1986, a Participant who receives a distribution from the Plan prior to attaining age 55 will be subject to an additional income tax equal to 10% of the amount of the distribution. The 10% additional income tax will not apply, however, to the extent the distribution is rolled over into an IRA or another qualified plan or the distribution is (i) made to a beneficiary (or to the estate of a Participant) on or after the death of the Participant, (ii) attributable to the Participant's being disabled within the meaning of Section 72(m)(7) of the Code, (iii) part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Participant or the joint lives (or joint life expectancies) of the Participant and his beneficiary, (iv) made to the Participant after separation from service under the Plan after attainment of age 55, (v) made to pay medical expenses to the extent deductible for federal income tax purposes, (vi) pursuant to a qualified domestic relations order, or (vii) made to effect the distribution of excess contributions or excess deferrals. The foregoing is only a brief summary of certain federal income tax aspects of the Plan which are of general application under the Code and is not intended to be a complete or definitive description of the federal income tax consequences of participating in or receiving distributions from the Plan. Accordingly, each Participant may wish to consult a tax advisor concerning the Federal, state and local tax consequences of participating in and receiving distributions from the Plan. Participants subject to taxes imposed by state, local and other taxing authorities, including foreign governments, should also consult with their own attorneys or tax advisers regarding the tax consequences thereunder. 9 Restrictions on Resale Any person receiving shares of Holding Company Stock under the Plan who is an "affiliate" of Wyman Park or the Holding Company as the term "affiliate" is used in Rules 144 and 405 under the Securities Act of 1933 (e.g., directors, officers and substantial shareholders of the Holding Company and Wyman Park) may re-offer or resell such shares only pursuant to a registration statement or, assuming the availability thereof, pursuant to Rule 144 or some other exemption of the registration requirements of the Securities Act of 1933. Any person who may be an "affiliate" of Wyman Park or the Holding Company may wish to consult with counsel before transferring any Holding Company Stock owned by him or her. In addition, Participants are advised to consult with counsel as to the applicability of Section 16 of the Securities Exchange Act of 1934 which may restrict the sale of Holding Company Stock acquired under the Plan, or other sales of Holding Company Stock. LEGAL OPINIONS The validity of the issuance of the Holding Company Stock will be passed upon by Silver, Freedman & Taff, L.L.P., 1100 New York Avenue, N.W., Washington, D.C. 20005, which firm acted as special counsel for the Holding Company and Wyman Park in connection with Wyman Park's Conversion. FINANCIAL STATEMENTS The financial statements and schedules of the Plan have been prepared by management in accordance with the applicable provisions of ERISA and are included in this Prospectus Supplement. 10 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN AND TRUST PARTICIPANT ELECTION TO INVEST IN HOLDING COMPANY STOCK 1. PARTICIPANT DATA - -------------------------------------------------------------------------------- Print your full name above (Last, first, middle initial) Social Security Number - -------------------------------------------------------------------------------- Street Address City State Zip $ - ------------------------------------------------------------ ------- -------- Balance of Participant's Plan Accounts at September 30, 1997 Date of Date of Birth Hire 2. INVESTMENT DIRECTION The Plan is giving participants a special opportunity to invest their account balances in common stock ("Holding Company Stock") issued by Wyman Park Bancorporation, Inc. (the "Holding Company") in connection with the conversion of Wyman Park Federal Savings and Loan Association ("Wyman Park") from the mutual to the stock form. This election may be made during the Subscription and Community Offering, with respect to the balance in your accounts under the Plan (hereinafter referred to as your "Accounts") as of April 30, 1997. Please review the Subscription and Community Prospectus dated ______, 1997 (the "Prospectus") and the Prospectus Supplement (the "Supplement") dated _______, 1997 before making any decision. Investing in Holding Company Stock entails some risks, and we encourage you to discuss this investment decision with your spouse and your investment advisor. The Plan's Trustee and the Plan Administrator are not authorized to make any representations about this investment other than what appears in the Prospectus and Supplement, and you should not rely on any information other than what is contained in the Prospectus and Supplement. Any shares purchased by the Plan pursuant to your election will be subject to the conditions or restrictions otherwise applicable to Holding Company Stock, as discussed in the Prospectus and Supplement. In addition, once you have elected to have your account invested in Holding Company Stock, you may have limited opportunities to change this investment decision. Any part of your Account invested in Holding Company Stock may be changed to an alternative authorized investment under the Plan only during an "Investment Change Period." An "Investment Change Period" opens at the beginning of the third day after the Holding Company issues a "Quarterly Earnings Release" and closes at the end of the twelfth business day after such release. The term "Quarterly Earnings Release" means any press release issued by the Holding Company for general distribution which announces, for the first time, the Holding Company's results of operations for a particular fiscal quarter. Wyman Park anticipates these opportunities will occur four times per year. Wyman Park will attempt to notify Participants of the commencement of each Investment Change Period but will not assume responsibility for doing so. _ |_| I choose to invest in _______ shares (25 share minimum) of Holding Company Stock at $10.00 per share, with the aggregate purchase price to be obtained by the Trustee's use of assets currently held in my Accounts. I hereby direct the Trustee to obtain the funds necessary to purchase such shares of Holding Company Stock by using funds in my current Accounts from among the following Investment Options in the following percentages (in not less than 10% increments): _ |_| The S&P 500 Index Fund % --------- _ |_| The Income Plus Fund % --------- _ |_| The Growth & Income Fund % --------- _ |_| The Growth Fund % --------- _ |_| The International Fund Income Fund % --------- _ |_| The S&P MidCap Fund % --------- _ |_| The Long-Term Government Bond Fund % --------- _ |_| The Stable Value Fund % --------- _ |_| The Money Market Fund % --------- _ |_| I choose not to invest any of my Accounts in Holding Company Stock. 3. PARTICIPANT SIGNATURE AND ACKNOWLEDGMENT - REQUIRED By signing this PARTICIPANT INVESTMENT ELECTION, I authorize and direct the Plan Administrator and Trustee to carry out my instructions. I acknowledge that I have been provided with and read a copy of the Prospectus and Supplement relating to the issuance of Holding Company Stock, and I have read the explanation provided in Part 2 of this form. I am aware of the risks involved in the investment in Holding Company Stock, and understand that the Trustee and Plan Administrator are not responsible for my choice of investment. - -------------------------------------------------------------------------------- Participant's Signature Date Signed Signed before me this day of , 1997 ----------- ----------- ------------------------ Notary Public My Commission Expires ------------------------------------------------- PLEASE COMPLETE AND RETURN BY 12:00 NOON ON _______, 1997 PENTEGRA SERVICES, INC. EMPLOYEES' SAVINGS & PROFIT SHARING PLAN BASIC PLAN DOCUMENT 7/16/97 TABLE OF CONTENTS ARTICLE I PURPOSE AND DEFINITIONS ARTICLE II PARTICIPATION AND MEMBERSHIP ARTICLE III CONTRIBUTIONS ARTICLE IV INVESTMENT OF CONTRIBUTIONS ARTICLE V MEMBERS' ACCOUNTS, UNITS AND VALUATION ARTICLE VI VESTING OF UNITS ARTICLE VII WITHDRAWALS AND DISTRIBUTIONS ARTICLE VIII LOAN PROGRAM ARTICLE IX ADMINISTRATION OF PLAN AND ALLOCATION OF RESPONSIBILITIES ARTICLE X MISCELLANEOUS PROVISIONS ARTICLE XI AMENDMENT AND TERMINATION TRUSTS ESTABLISHED UNDER THE PLAN ARTICLE I PURPOSE AND DEFINITIONS Section 1.1 This Plan and Trust, as evidenced hereby, and the applicable Adoption Agreement and Trust Agreement(s), are designed and intended to qualify in form as a qualified profit sharing plan and trust under the applicable provisions of the Internal Revenue Code of 1986, as now in effect or hereafter amended, or any other applicable provisions of law including, without limitation, the Employee Retirement Income Security Act of 1974, as amended. Section 1.2 The following words and phrases as used in this Plan shall have the following meanings: (A) "Account" means the Plan account established and maintained in respect of each Member pursuant to Article V, including the Member's after-tax amounts, 401(k) amounts, Employer matching, basic, supplemental and qualified nonelective contribution amounts, rollover amounts and profit sharing amounts, as elected by the Employer. (B) "Adoption Agreement" means the separate document by which the Employer has adopted the Plan and specified certain of the terms and provisions hereof. If any term, provision or definition contained in the Adoption Agreement is inconsistent with any term, provision or definition contained herein, the one set forth in the Adoption Agreement shall govern. The Adoption Agreement shall be incorporated into and form an integral part of the Plan. (C) "Beneficiary" means the person or persons designated to receive any amount payable under the Plan upon the death of a Member. Such designation may be made or changed only by the Member on a form provided by, and filed with, the Third Party Adminstrator prior to his death. If the Member is not survived by a Spouse and if no Beneficiary is designated, or if the designated Beneficiary predeceases the Member, then any such amount payable shall be paid to such Member's estate upon his death. (D) "Board" means the Board of Directors of the Employer adopting the Plan. (E) "Break in Service" means a Plan Year during which an individual has not completed more than 500 Hours of Employment, as determined by the Plan Administrator in accordance with the IRS Regulations. Solely for purposes of determining whether a Break in Service has occurred, an individual shall be credited with the Hours of Employment which such individual would have completed but for a maternity or paternity absence, as determined 1 by the Plan Administrator in accordance with this Paragraph, the Code and the applicable regulations issued by the DOL and the IRS; provided, however, that the total Hours of Employment so credited shall not exceed 501 and the individual timely provides the Plan Administrator with such information as it may require. Hours of Employment credited for a maternity or paternity absence shall be credited entirely (i) in the Plan Year in which the absence began if such Hours of Employment are necessary to prevent a Break in Service in such year, or (ii) in the following Plan Year. For purposes of this Paragraph, maternity or paternity absence shall mean an absence from work by reason of the individual's pregnancy, the birth of the individual's child or the placement of a child with the individual in connection with the adoption of the child by such individual, or for purposes of caring for a child for the period immediately following such birth or placement. (F) "Code" means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. All citations to sections of the Code are to such sections as they may from time to time be amended or renumbered. (G) "Commencement Date" means the date on which an Employer begins to participate in the Plan. (H) "Contribution Determination Period" means the Plan Year, fiscal year, or calendar or fiscal quarter, as elected by an Employer, upon which eligibility for and the maximum permissible amount of any Profit Sharing contribution, as defined in Article III, is determined. Notwithstanding the foregoing, for purposes of Article VI, Contribution Determination Period means the Plan Year. (I) "Disability" means a Member's disability as defined in Article VII, Section 7.4. (J) "DOL" means the United States Department of Labor. (K) "Employee" means any person in the Employment of, and who receives compensation from, the Employer, and any leased employee within the meaning of Section 414(n)(2) of the Code. Notwithstanding the foregoing, if such leased employees constitute less than twenty percent (20%) of the Employer's nonhighly compensated work force within the meaning of Section 414(n)(5)(C)(ii) of the Code, such leased employees are not Employees if they are covered by a plan meeting the requirements of Section 414(n)(5)(B) of the Code. (L) "Employer" means the proprietorship, partnership or corporation named in the Adoption Agreement and any corporation which, together therewith, constitutes an affiliated service group, any corporation which, together therewith, constitutes a controlled group of corporations as defined in Section 1563 of the Code, and any other trade or business 2 (whether incorporated or not) which, together therewith, are under common control as defined in Section 414(c) of the Code, which have adopted the Plan. (M) "Employment" means service with an Employer or with any domestic subsidiary affiliated or associated with an Employer which is a member of the same controlled group of corporations (within the meaning of Section 1563(a) of the Code). In accordance with DOL Regulations (Sections 2530.200-2(b) and (c)), service includes (a) periods of vacation, (b) periods of layoff, (c) periods of absence authorized by an Employer for sickness, temporary disability or personal reasons and (d) if and to the extent required by the Military Selective Service Act as amended, or any other federal law, service in the Armed Forces of the United States. (N) "Enrollment Date" means the date on which an Employee becomes a Member as provided under Article II. (O) "ERISA" means the Employee Retirement Income Security Act of 1974, as now in effect or as hereafter amended. (P) "Fiduciary" means any person who (i) exercises any discretionary authority or control with respect to the management of the Plan or control with respect to the management or disposition of the assets thereof, (ii) renders any investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the Plan, or has any discretionary authority or responsibility to do so, or (iii) has any discretionary authority or responsibility in the administration of the Plan, including any other persons (other than trustees) designated by any Named Fiduciary to carry out fiduciary responsibilities, except to the extent otherwise provided by ERISA. (Q) "Highly Compensated Employee" or "Highly Compensated Member" means an Employee or Member who is employed during the determination year and who during the look-back year: (i) received compensation from the Employer in excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code); (ii) received compensation from the Employer in excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a member of the top-paid group for such year as defined in Section 414(q) of the Code; or (iii) was an officer of the Employer and received compensation during such year that is greater than 50 percent of the dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term Highly Compensated Employee also includes: (i) employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and are among the 100 employees who received the most compensation from the Employer during the determination year; and (ii) employees who 3 are 5 percent owners at any time during the look-back year or determination year. If no officer has satisfied the compensation requirement of (iii) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. For this purpose, the determination year shall be the Plan Year. The look-back year shall be the twelve-month period immediately preceding the determination year. If an Employee is, during a determination year or look-back year, a family member of either a 5 percent owner who is an active or former Employee or a Highly Compensated Employee who is one of the 10 most highly compensated Employees ranked on the basis of compensation paid by the Employer during such year, then the family member and the 5 percent owner or top-ten Highly Compensated Employee shall be aggregated. In such case, the family member and 5 percent owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving compensation and plan contributions or benefits equal to the sum of such compensation and contributions or benefits of the family member and 5 percent owner or top-ten Highly Compensated Employee. For purposes of this Paragraph, family member includes the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and the IRS Regulations thereunder. (R) "Hour of Employment" means each hour during which an Employee performs service (or is treated as performing service as required by law) for the Employer and, except in the case of military service, for which he is directly or indirectly paid, or entitled to payment, by the Employer (including any back pay irrespective of mitigation of damages), all as determined in accordance with applicable DOL Regulations. (S) "Investment Manager" means any Fiduciary other than a Trustee or Named Fiduciary who (i) has the power to manage, acquire or dispose of any asset of the Plan; (ii) is (a) registered as an investment advisor under the Investment Advisors Act of 1940; (b) is a bank, as defined in such Act, or (c) is an insurance company qualified to perform the services described in clause (i) hereof under the laws of more than one state of the United States; and (iii) has acknowledged in writing that he is a Fiduciary with respect to the Plan. 4 (T) "IRS" means the United States Internal Revenue Service. (U) "Leave of Absence" means an absence authorized by an Employee's Employer and approved by the Plan Administrator, on a uniform basis, in accordance with Article X. (V) "Member" means an Employee enrolled in the membership of the Plan under Article II. (W) "Month" means any calendar month. (X) "Named Fiduciary" means the Fiduciary or Fiduciaries named herein or in the Adoption Agreement who jointly or severally have the authority to control and manage the operation and administration of the Plan. (Y) "Normal Retirement Age" means the Member's sixty-fifth (65th) birthday unless otherwise specified in the Adoption Agreement. (Z) "Plan" means the Employees' Savings & Profit Sharing Plan as evidenced by this document, the applicable Adoption Agreement and all subsequent amendments thereto. (AA) "Plan Administrator" means the Named Fiduciary or, as designated by such Named Fiduciary and approved by the Board in accordance with Article IX, any officer or Employee of the Employer. (BB) "Plan Year" means a consecutive 12-month period ending December 31 unless otherwise specified in the Adoption Agreement. (CC) "Regulations" means the applicable regulations issued under the Code, ERISA or other applicable law, by the IRS, the DOL or any other governmental authority and any proposed or temporary regulations or rules promulgated by such authorities pending the issuance of such regulations. (DD) "Salary" means regular basic monthly salary or wages, exclusive of special payments such as overtime, bonuses, fees, deferred compensation (other than pre-tax elective deferrals pursuant to a Member's election under Article III), severance payments, and contributions by the Employer under this or any other plan (other than before-tax contributions made on behalf of a Member under a Code Section 125 cafeteria plan, unless the Employer specifically elects to exclude such contributions). Commissions shall be included at the Employer's option within such limits, if any, as may be set by the Employer in the Adoption Agreement and applied uniformly to all its commissioned Employees. In addition, Salary may also include, at the Employer's option, special payments such as (i) overtime or (ii) overtime plus bonuses. As an alternative to the foregoing definition, at the Employer's 5 option, Salary may be defined to include total taxable compensation reported on the Member's IRS Form W-2, plus deferrals, if any, pursuant to Section 401(k) of the Code and pursuant to Section 125 of the Code (unless the Employer specifically elects to exclude such Section 125 deferrals), but excluding compensation deferred from previous years. In no event may a Member's Salary for any Plan Year exceed for purposes of the Plan $150,000 (adjusted for cost of living to the extent permitted by the Code and the IRS Regulations). (EE) "Social Security Taxable Wage Base" means the contribution and benefit base attributable to the OASDI portion of Social Security employment taxes under Section 230 of the Social Security Act (42 U.S.C. ss.430) in effect on the first day of each Plan Year. (FF) "Spouse" or "Surviving Spouse" means the individual to whom a Member or former Member was married on the date such Member withdraws his Account, or if such Member has not withdrawn his Account, the individual to whom the Member or former Member was married on the date of his death. (GG) "Third Party Administrator" or "TPA" means Pentegra Services, Inc., a non-fiduciary provider of administrative services appointed and directed by the Plan Administrator or the Named Fiduciary either jointly or severally. (HH) "Trust" means the Trust or Trusts established and maintained pursuant to the terms and provisions of this document and any separately maintained Trust Agreement or Agreements. (II) "Trustee" generally means the person, persons or other entities designated by the Employer or its Board as the Trustee or Trustees hereof and specified as such in the Adoption Agreement and any separately maintained Trust Agreement or Agreements. (JJ) "Trust Agreement" means the separate document by which the Employer or its Board has appointed a Trustee of the Plan, specified the terms and conditions of such appointment and any fees associated therewith. (KK) "Trust Fund" means the Trust Fund or Funds established by the Trust Agreement or Agreements. (LL) "Unit" means the unit of measure described in Article V of a Member's proportionate interest in the available Investment Funds (as defined in Article IV). (MM) "Valuation Date" means any business day of any month for the Trustee, except that in the 6 event the underlying portfolio(s) of any Investment Fund cannot be valued on such date, the Valuation Date for such Investment Fund shall be the next subsequent date on which the underlying portfolio(s) can be valued. Valuations shall be made as of the close of business on such Valuation Date(s). (NN) "Year of Employment" means a 12-month period of Employment. (OO) "Year of Service" means any Plan Year during which an individual completed at least 1,000 Hours of Employment, or satisfied any alternative requirement, as determined by the Plan Administrator in accordance with any applicable Regulations issued by the DOL and the IRS. Section 1.3 The masculine pronoun wherever used shall include the feminine pronoun. 7 ARTICLE II PARTICIPATION AND MEMBERSHIP Section 2.1 Eligibility Requirements The Employer may establish as a requirement for eligibility in the Plan (i) the completion of any number of months not to exceed 12 consecutive months, or (ii) the completion of one or two 12- consecutive-month periods, and/or (iii) if the Employer so elects, it may adopt a minimum age requirement of age 21. Such election shall be made and reflected on the Adoption Agreement. Notwithstanding the foregoing, in the case of an Employer that adopts the 401(k) feature under Section 3.9, the eligibility requirements under such feature shall not exceed the period described in clause (i) above, and, at the election of the Employer, attainment of age 21 as described in clause (iii) above. Where an Employer designates a one or two 12-consecutive-month eligibility waiting period, an Employee must complete at least 1,000 Hours of Employment during each 12-consecutive-month period (measured from his date of Employment and each anniversary thereafter). Where an Employer designates an eligibility waiting period of less than 12 months, an Employee must, for purposes of eligibility, complete a required number of hours (measured from his date of Employment and each anniversary thereafter) which is arrived at by multiplying the number of months of the eligibility waiting period requirement by 83 1/3. Section 2.2 Exclusion of Certain Employees To the extent provided in the Adoption Agreement, the following Employees may be excluded from participation in the Plan: (i) Employees not meeting the age and service requirements; (ii) Employees who are included in a unit of Employees covered by a collective bargaining agreement between the Employee representatives and one or more Employers if there is evidence that retirement benefits were the subject of good faith bargaining between such Employee representatives and such Employer(s). For this purpose, the term "Employee representative" does not include any organization where more than one-half of the membership is comprised of owners, officers and executives of the Employer; (iii) Employees who are nonresident aliens and who receive no earned income from the Employer which constitutes income from sources within the United States; and 8 (iv) Employees described in Section 2.4 or included in any other ineligible job classifications set forth in the Adoption Agreement. Section 2.3 Waiver of Eligibility Requirements The Employer, at its election, may waive the eligibility requirement(s) for participation specified above for (i) all Employees, or (ii) all those employed on or up to 12 months after its Commencement Date under the Plan. Subject to the requirements of the Code, the eligibility waiting period shall be deemed to have been satisfied for an Employee who was previously a Member of the Plan. All Employees whose Employment commences after the expiration date of the Employer's waiver of the eligibility requirement(s), if any, shall be enrolled in the Plan in accordance with the eligibility requirement(s) specified in the Adoption Agreement. Section 2.4 Exclusion of Non-salaried Employees The Employer, at its election, may exclude non-salaried (hourly paid) Employees from participation in the Plan, regardless of the number of Hours of Employment such Employees complete in any Plan Year. Notwithstanding the foregoing, for purposes of this Section and all purposes under the Plan, a non-salaried Employee that is hired following the adoption date of the Plan by the Employer, but prior to the adoption of this exclusion by the Employer, shall continue to be deemed to be an Employee and will continue to receive benefits on the same basis as a salaried Member, despite classification as a non-salaried Employee. Section 2.5 Commencement of Participation Every eligible Employee (other than non-salaried or such other Employees who, at the election of the Employer, are excluded from participation) shall commence participation in the Plan on the later of: (1) The Employer's Commencement Date, or (2) The first day of the month or calendar quarter (as designated by the Employer in the Adoption Agreement) coinciding with or next following his satisfaction of the eligibility requirements as specified in the Adoption Agreement. The date that participation commences shall be hereinafter referred to as his Enrollment Date. Notwithstanding the above, no Employee shall under any circumstances become a Member unless and until his enrollment application is filed with, and accepted by, the Plan Administrator. The Plan 9 Administrator shall notify each Employee of his eligibility for membership in the Plan and shall furnish him with an enrollment application in order that he may elect to make or receive contributions on his behalf under Article III at the earliest possible date consonant with this Article. If an Employee fails to complete the enrollment form furnished to him, the Plan Administrator shall do so on his behalf. In the event the Plan Administrator processes the enrollment form on behalf of the Employee, the Employee shall be deemed to have elected not to make any contributions and/or elective deferrals under the Plan, if applicable. Section 2.6 Termination of Participation Membership under all features and provisions of the Plan shall terminate upon the earlier of (a) a Member's termination of Employment and payment to him of his entire vested interest, or (b) his death. 10 ARTICLE III CONTRIBUTIONS Section 3.1 Contributions by Members If the Adoption Agreement so provides, each Member may elect to make non-deductible, after-tax contributions under the Plan, based on increments of 1% of his Salary, provided the amount thereof, when aggregated with the amount of any pre-tax effective deferrals, does not exceed the limit established by the Employer in the Adoption Agreement. All such after-tax contributions shall be separately accounted for, nonforfeitable and distributed with and in addition to any other benefit to which the Member is entitled hereunder. A Member may change his contribution rate as designated in the Adoption Agreement, but reduced or suspended contributions may not subsequently be made up. Section 3.2 Elective Deferrals by Members If the Adoption Agreement so provides, each Member may elect to make pre-tax elective deferrals (401(k) deferrals) under the Plan, based on increments of 1% of his Salary, provided the amount thereof, when aggregated with the amount of any after-tax contributions, does not exceed the limit established by the Employer in the Adoption Agreement. All such 401(k) deferrals shall be separately accounted for, nonforfeitable and distributed under the terms and conditions described under Article VII with and in addition to any other benefit to which the Member is entitled hereunder. A Member may change his 401(k) deferral rate or suspend his 401(k) deferrals as designated in the Adoption Agreement, but reduced or suspended deferrals may not subsequently be made up. Notwithstanding any other provision of the Plan, no Member may make 401(k) deferrals during any Plan Year in excess of $7,000 multiplied by the adjustment factor as provided by the Secretary of the Treasury. The adjustment factor shall mean the cost of living adjustment factor prescribed by the Secretary of the Treasury under Section 402(g)(5) of the Code for years beginning after December 31, 1987, as applied to such items and in such manner as the Secretary shall provide. In the event that the aggregate amount of such 401(k) deferrals for a Member exceeds the limitation in the previous sentence, the amount of such excess, increased by any income and decreased by any losses attributable thereto, shall be refunded to such Member no later than the April 15 of the Plan Year following the Plan Year for which the 401(k) deferrals were made. If Member also participates, in any Plan Year, in any other plans subject to the limitations set forth in Section 402(g) of the Code and has made excess 401(k) deferrals under this Plan when combined with the other plans subject to such limits, to the extent the Member, in writing submitted to the TPA no later than the March 1 of the Plan Year following the Plan Year for which the 401(k) deferrals were 11 made, designates any 401(k) deferrals under this Plan as excess deferrals, the amount of such designated excess, increased by any income and decreased by any losses attributable thereto, shall be refunded to the Member no later than the April 15 of the Plan Year following the Plan Year for which the 401(k) deferrals were made. Section 3.3 Transfer of Funds and Rollover Contributions by Members Each Member may elect to make, directly or indirectly, a rollover contribution to the Plan of amounts held on his behalf in (i) an employee benefit plan qualified under Section 401(a) of the Code, or (ii) an individual retirement account or annuity as described in Section 408(d)(3) of the Code. All such amounts shall be certified in form and substance satisfactory to the Plan Administrator by the Member as being all or part of an "eligible rollover distribution" or a "rollover contribution" within the meaning of Section 402(c)(4) or Section 408(d)(3), respectively, of the Code. Such rollover amounts, along with the earnings related thereto, will be accounted for separately from any other amounts in the Member's Account. A Member shall have a nonforfeitable vested interest in all such rollover amounts. The Employer may, at its option, permit Employees who have not satisfied the eligibility requirements designated in the Adoption Agreement to make a rollover contribution to the Plan. The Trustee of the Plan may also accept a direct transfer of funds, which meets the requirements of Section 1.411(d)-4 of the IRS Regulations, from a plan which the Trustee reasonably believes to be qualified under Section 401(a) of the Code in which an Employee was, is, or will become, as the case may be, a participant. If the funds so directly transferred are transferred from a retirement plan subject to Code Section 401(a)(11), then such funds shall be accounted for separately and any subsequent distribution of those funds, and earnings thereon, shall be subject to the provisions of Section 7.3 which are applicable when an Employer elects to provide an annuity option under the Plan. Section 3.4 Employer Contributions - General The Employer may elect to make regular or discretionary contributions under the Plan. Such Employer contributions may be in the form of (i) matching contributions, (ii) basic contributions, and/or (iii) profit sharing contributions as designated by the Employer in the Adoption Agreement and/or (i) supplemental contributions and/or (ii) qualified nonelective contributions as permitted under the Plan. Each such contribution type shall be separately accounted for by the TPA. 12 Section 3.5 Employer Matching Contributions The Employer may elect to make regular matching contributions under the Plan. Such matching contributions on behalf of any Member shall be conditioned upon the Member making after-tax contributions under Section 3.1 and/or 401(k) deferrals under Sections 3.2 and 3.9. If so adopted, the Employer shall contribute under the Plan on behalf of each of its Members an amount equal to a percentage (as specified by the Employer in the Adoption Agreement) of the Member's after-tax contributions and/or 401(k) deferrals not in excess of a maximum percentage as specified by the Employer in the Adoption Agreement (in increments of 1%) of his Salary. The percentage elected by the Employer shall be based on 1% increments not to exceed 200% or in accordance with one of the schedules of matching contribution formulas listed below, and must be uniformly applicable to all Members. Years of Employment Matching % ------------------- ---------- Formula Step 1 Less than 3 50% At least 3 but less than 5 75% 5 or more 100% Formula Step 2 Less than 3 100% At least 3 but less than 5 150% 5 or more 200% Section 3.6 Employer Basic Contributions The Employer may elect to make regular basic contributions under the Plan. Such basic contribu tions on behalf of any Member shall not be conditioned upon the Member making after-tax contributions and/or (401(k) deferrals under this Article III. If so adopted, the Employer shall contribute monthly under the Plan on behalf of each Member (as specified by the Employer in the Adoption Agreement) an amount equal to a percentage not to exceed 15% (as specified by the Employer in the Adoption Agreement) in increments of 1% of the Member's Salary for such month. The percentage elected by the Employer shall be uniformly applicable to all Members. The Employer may elect to restrict the allocation of such basic contribution to those Members who were employed with the Employer on the last day of the month for which the basic contribution is made. Section 3.7 Supplemental Contributions by Employer An Employer may, at its option, make a supplemental contribution under Formula (1) or (2) below: Formula (1) A uniform percentage (as specified by the Employer) of each Member's contributions 13 which were received by the Plan during the Plan Year with respect to which the supplemental contribution relates. If the Employer elects to make such a supplemental contribution, it shall be made on or before the last day of the second month in the Plan Year following the Plan Year described in the preceding sentence on behalf of all those Members who were employed with the Employer on the last working day of the Plan Year with respect to which the supplemental contribution relates. Formula (2) A uniform dollar amount per Member or a uniform percentage of each Member's Salary for the Plan Year (or, at the election of the Employer, the Employer's fiscal year) to which the supplemental contribution relates. If the Employer elects to make such a supplemental contribution, it shall be made on or before the last day of the second month in the Plan Year (or the fiscal year) following the Plan Year (or the fiscal year) described in the preceding sentence on behalf of all those Members who were employed with the Employer on the last working day of the Plan Year (or the fiscal year) to which the supplemental contribution relates. The percentage contributed under this Formula (2) shall be limited in accordance with the Employer's matching formula and basic contribution rate, if any, under this Article such that the sum of the Employer's Formula (2) supplemental contribution plus all other Employer contributions under this Article shall not exceed 15% of Salary for such year. Section 3.8 The Profit Sharing Feature An Employer may, at its option, adopt the Profit Sharing Feature as described herein, subject to any other provisions of the Plan, where applicable. This Feature may be adopted either in lieu of, or in addition to, any other Plan Feature contained in this Article III. The Profit Sharing Feature is designed to provide the Employer a means by which to provide discretionary contributions on behalf of Employees eligible under the Plan. If this Profit Sharing Feature is adopted, the Employer may contribute on behalf of each of its eligible Members, on an annual (or at the election of the Employer, quarterly) basis for any Plan Year or fiscal year of the Employer (as the Employer shall elect), a discretionary amount not to exceed the maximum amount allowable as a deduction to the Employer under the provisions of Section 404 of the Code, and further subject to the provisions of Article X. Any such profit sharing contribution must be received by the Trustee on or before the last business day of the second month following the close of the Contribution Determination Period on behalf of all those Members who are entitled to an allocation of such profit sharing contribution as set forth in the Adoption Agreement. For purposes of making the allocations described in this paragraph, a 14 Member who is on a Type 1 non-military Leave of Absence (as defined in Sections 1.2(U) and 10.8(B)(1)) or a Type 4 military Leave of Absence (as defined in Sections 1.2(U) and 10.8(B)(4)) shall be treated as if he were a Member who was an Employee in Employment on the last day of such Contribution Determination Period. Profit sharing contributions shall be allocated to each Member's Account for the Contribution Determination Period at the election of the Employer, in accordance with one of the following options: Profit Sharing Formula 1 - In the same ratio as each Member's Salary during such Contribution Determination Period bears to the total of such Salary of all Members. Profit Sharing Formula 2 - In the same ratio as each Member's Salary for the portion of the Contribution Determination Period during which the Member satisfied the Employer's eligibility requirement(s) bears to the total of such Salary of all Members. The Employer may integrate the Profit Sharing Feature with Social Security in accordance with the following provision. The annual (or quarterly, if applicable) profit sharing contributions for any Contribution Determination Period (which period shall include, for the purposes of the following maximum integration levels provided hereunder where the Employer has elected quarterly allocations of contributions, the four quarters of a Plan Year or fiscal year) shall be allocated to each Member's Account at the election of the Employer, in accordance with one of the following options: Profit Sharing Formula 3 - In a uniform percentage (as specified by the Employer in the Adoption Agreement) of each Member's Salary during the Contribution Determination Period up to the Social Security Taxable Wage Base for such Contribution Determination Period (the "Base Contribution Percentage"), plus a uniform percentage (as specified by the Employer in the Adoption Agreement) of each Member's Salary for the Contribution Determination Period in excess of the Social Security Taxable Wage Base for such Contribution Determination Period (the "Excess Contribution Percentage"). Profit Sharing Formula 4 - In a uniform percentage (as specified by the Employer in the Adoption Agreement) of each Member's Salary for the portion of the Contribution Determination Period during which the Member satisfied the Employer's eligibility requirement(s), if any, up to the Base Contribution Percentage for such Contribution Determination Period, 15 plus a uniform percentage (as specified by the Employer in the Adoption Agreement) of each Member's Salary for the portion of the Contribution Determination Period during which the Member satisfied the Employer's eligibility requirement(s), equal to the Excess Contribution Percentage. The Excess Contribution Percentage described in Profit Sharing Formulas 3 and 4 above may not exceed the lesser of (i) the Base Contribution Percentage, or (ii) the greater of (1) 5.7% or (2) the percentage equal to the portion of the Code Section 3111(a) tax imposed on employers under the Federal Insurance Contributions Act (as in effect as of the beginning of the Plan Year) which is attributable to old-age insurance. For purposes of this Subparagraph, "compensation" as defined in Section 414(s) of the Code shall be substituted for "Salary" in determining the Excess Contribution Percentage and the Base Contribution Percentage. Notwithstanding the foregoing, the Employer may not adopt the Social Security integration options provided above if any other integrated defined contribution or defined benefit plan is maintained by the Employer during any Contribution Determination Period. Section 3.9 The 401(k) Feature The Employer may, at its option, adopt the 401(k) Feature described hereunder and in Section 3.2 above for the exclusive purpose of permitting its Members to make 401(k) deferrals to the Plan. The Employer may make, apart from any matching contributions it may elect to make, Employer qualified nonelective contributions as defined in Section 1.401(k)-1(g)(13) of the Regulations. The amount of such contributions shall not exceed 15% of the Salary of all Members eligible to share in the allocation when combined with all Employer contributions (including 401(k) elective deferrals) to the Plan for such Plan Year. Allocation of such contributions shall be made, at the election of the Employer, to the accounts of (i) all Members, or (ii) only Members who are not Highly Compensated Employees. Allocation of such contributions shall be made, at the election of the Employer, in the ratio (i) which each eligible Member's Salary for the Plan Year bears to the total Salary of all eligible Members for such Plan Year, or (ii) which each eligible Member's Salary not in excess of a fixed dollar amount specified by the Employer for the Plan Year bears to the total Salary of all eligible Members taking into account Salary for each such Member not in excess of the specified dollar amount. Notwithstanding any provision of the Plan to the contrary, such contributions shall be subject to the same vesting requirements and distribution restrictions as Members' 401(k) deferrals and shall not be conditioned on any election or contribution of the Member under the 401(k) feature. Any such contributions must be made on or before the last day of the second month after the Plan Year to which the contribution relates. Further, for purposes 16 of the actual deferral percentage or actual contribution percentage tests described below, the Employer may apply (in accordance with applicable Regulations) all or any portion of the Employer qualified nonelective contributions for the Plan Year toward the satisfaction of the actual deferral percentage test. Any remaining Employer qualified nonelective contributions not utilized to satisfy the actual deferral percentage test may be applied (in accordance with applicable Regulations) to satisfy the actual contribution percentage test. Notwithstanding any other provision of this 401(k) Feature, the actual deferral percentages for the Plan Year for Highly Compensated Employees shall not exceed the greater of the following actual deferral percentages: (a) the actual deferral percentage for such Plan Year of those Employees who are not Highly Compensated Employees multiplied by 1.25; or (b) the actual deferral percentage for the Plan Year of those Employees who are not Highly Compensated Employees multiplied by 2.0, provided that the actual deferral percentage for the Highly Compensated Employees does not exceed the actual deferral percentage for such other Employees by more than 2 percentage points. This determination shall be made in accordance with the procedure described in Section 3.10 below. Section 3.10 Determining the Actual Deferral Percentages For purposes of this 401(k) Feature, the "actual deferral percentage" for a Plan Year means, for each specified group of Employees, the average of the ratios (calculated separately for each Employee in such group) of (a) the amount of 401(k) deferrals (including, as provided in Section 3.9, any Employer qualified nonelective contributions) made to the Member's account for the Plan Year, to (b) the amount of the Member's compensation (as defined in Section 414(s) of the Code) for the Plan Year or, alternatively, where specifically elected by the Employer, for only that part of the Plan Year during which the Member was eligible to participate in the Plan. An Employee's actual deferral percentage shall be zero if no 401(k) deferral (or, as provided in Section 3.9, Em-ployer qualified nonelective contribution) is made on his behalf for such Plan Year. If the Plan and one or more other plans which include cash or deferred arrangements are considered as one plan for purposes of Sections 401(a)(4) and 410(b) of the Code, the cash or deferred arrangements included in such plans shall be treated as one arrangement for purposes of this 401(k) Feature. For purposes of determining the actual deferral percentage of a Member who is a Highly Compensated Employee subject to the family aggregation rules of Section 414(q)(6) of the Code because such Employee is either a five-percent owner or one of the ten most Highly Compensated Employees as described in Section 414(q)(6) of the Code, the 401(k) deferrals, contributions and compensation (as defined in Section 414(s) of the Code) of such Member shall include 401(k) deferrals, contributions and compensation (as defined in Section 414(s) of the Code) of "family members", within the meaning of Section 414(q)(6) of the Code, and such "family members" shall not be considered as separate Employees in determining actual deferral percentages. 17 The TPA shall determine as of the end of the Plan Year whether one of the actual deferral percentage tests specified in Section 3.9 above is satisfied for such Plan Year. This determination shall be made after first determining the treatment of excess deferrals within the meaning of Section 402(g) of the Code under Section 3.2 above. In the event that neither of such actual deferral percentage tests is satisfied, the TPA shall, to the extent permissible under the Code and the IRS Regulations, refund the excess contributions for the Plan Year in the following order of priority: by (i) refunding such amounts deferred by the Member which were not matched by his Employer (and any earnings and losses allocable thereto), and (ii) refunding amounts deferred for such Plan Year by the Member (and any earnings and losses allocable thereto), and, solely to the extent permitted under the Code and applicable IRS Regulations, distributing to the Member amounts contributed for such Plan Year by the Employer with respect to the Member's 401(k) deferrals that are returned pursuant to this Paragraph (and any earnings and losses allocable thereto). The distribution of such excess contributions shall be made to Highly Compensated Members to the extent practicable before the 15th day of the third month immediately following the Plan Year for which such excess contributions were made, but in no event later than the end of the Plan Year following such Plan Year or, in the case of the termination of the Plan in accordance with Article XI, no later than the end of the twelve-month period immediately following the date of such termination. For purposes of this 401(k) Feature, "excess contributions" means, with respect to any Plan Year, the excess of the aggregate amount of 401(k) deferrals (and any earnings and losses allocable thereto) made to the accounts of Highly Compensated Members for such Plan Year, over the maximum amount of such deferrals that could be made by such Members without violating the requirements described above, determined by reducing 401(k) deferrals made by or on behalf of Highly Compensated Members in order of the actual deferral percentages beginning with the highest of such percentages. Section 3.11 Determining the Actual Contribution Percentages Notwithstanding any other provision of this Section 3.11, the actual contribution percentage for the Plan Year for Highly Compensated Employees shall not exceed the greater of the following actual contribution percentages: (a) the actual contribution percentage for such Plan Year of those Employees who are not Highly Compensated Employees multiplied by 1.25, or (b) the actual contribution percentage for the Plan Year of those Employees who are not Highly Compensated Employees multiplied by 2.0, provided that the actual contribution percentage for the Highly Compensated Employees does not exceed the actual contribution percentage for such other Employees by more than 2 percentage points. For purposes of this Article III, the "actual contribution percentage" for a Plan Year means, for each specified group of Employees, the average 18 of the ratios (calculated separately for each Employee in such group) of (A) the sum of (i) Member after-tax contributions credited to his Account for the Plan Year, (ii) Employer matching contributions and/or supplemental contributions under Formula 1 credited to his Account as described in this Article for the Plan Year, and (iii) in accordance with and to the extent permitted by the IRS Regulations, 401(k) deferrals (and, as provided in Section 3.9, any Employer qualified nonelective contributions) credited to his Account, to (B) the amount of the Member's compensation (as defined in Section 414(s) of the Code) for the Plan Year or, alternatively, where specifically elected by the Employer, for only that part of the Plan Year during which the Member was eligible to participate in the Plan. An Employee's actual contribution percentage shall be zero if no such contributions are made on his behalf for such Plan Year. The actual contribution percentage taken into account for any Highly Compensated Employee who is eligible to make Member contributions or receive Employer matching contributions under two or more plans described in Section 401(a) of the Code or arrangements described in Section 401(k) of the Code that are maintained by the Employer shall be determined as if all such contributions were made under a single plan. For purposes of determining the actual contribution percentage of a Member who is a Highly Compensated Employee subject to the family aggregation rules of Section 414(q)(6) of the Code because such Member is either a five-percent owner or one of the ten most Highly Compensated Employees as described in Section 414(q)(6) of the Code, the Employer matching contributions and Member contributions and compensation (as defined in Section 414(s) of the Code) of such Member shall include the Employer matching and Member contributions and compensation (as defined in Section 414(s) of the Code) of "family members," within the meaning of Section 414(q)(6) of the Code, and such "family members" shall not be considered as separate Employees in determining actual contribution percentages. The TPA shall determine as of the end of the Plan Year whether one of the actual contribution percentage tests specified above is satisfied for such Plan Year. This determination shall be made after first determining the treatment of excess deferrals within the meaning of Section 402(g) of the Code under Section 3.2 above and then determining the treatment of excess contributions under Section 3.10 above. In the event that neither of the actual contribution percentage tests is satisfied, the TPA shall refund the excess aggregate contributions in the manner described below. For purposes of this Article III, "excess aggregate contributions" means, with respect to any Plan Year and with respect to any Member, the excess of the aggregate amount of contributions (and any earnings and losses allocable thereto) made as (i) Member after-tax contributions credited to his Account for the Plan Year, (ii) Employer matching contributions and/or supplemental contributions under Formula 1 credited to his Account as described in this Article for the Plan Year, and (iii) in accordance with and to the extent permitted by the IRS Regulations, 401(k) deferrals (and, as provided in Section 3.9, any Employer qualified nonelective contributions) credited to his 19 Account (if the Plan Administrator elects to take into account such deferrals and contributions when calculating the actual contribution percentage) of Highly Compensated Members for such Plan Year, over the maximum amount of such contributions that could be made as Employer contributions, Member contributions and 401(k) deferrals of such Members without violating the requirements of any Subparagraph of this Section 3.11. If the TPA is required to refund excess aggregate contributions for any Highly Compensated Member for a Plan Year in order to satisfy the requirements of any Subparagraph above, then the refund of such excess aggregate contributions shall be made with respect to such Highly Compensated Members to the extent practicable before the 15th day of the third month immediately following the Plan Year for which such excess aggregate contributions were made, but in no event later than the end of the Plan Year following such Plan Year or, in the case of the termination of the Plan in accordance with Article XI, no later than the end of the twelve-month period immediately following the date of such termination. For each such Member, the amounts so refunded shall be made in the following order of priority: (i) to the extent that the amounts contributed by the Member on an after-tax basis for such Plan Year exceed the highest rate of such contributions with respect to which amounts were contributed by the Employer, by refunding such amounts contributed by the Member which were not matched by his Employer (and any earnings and losses allocable thereto) and (ii) by refunding amounts contributed for such Plan Year by the Member which were matched by his Employer (and any earnings and losses allocable thereto) and, solely to the extent permitted under the Code and applicable IRS Regulations, distributing to the Member amounts contributed for such Plan Year by the Employer with respect to the amounts so returned (and any earnings and losses allocable thereto). All such distributions shall be made to, or shall be with respect to, Highly Compensated Members on the basis of the respective portions of such amounts attributable to each such Highly Compensated Member. Section 3.12 The Aggregate Limit Test Notwithstanding any other provision of the Plan, the sum of the actual deferral percentage and the actual contribution percentage determined in accordance with the procedures described above of those Employees who are Highly Compensated Employees may not exceed the aggregate limit as determined below. For purposes of this Article III, the "aggregate limit" for a Plan Year is the greater of: (1) The sum of: 20 (a) 1.25 times the greater of the relevant actual deferral percentage or the relevant actual contribution percentage, and (b) Two percentage points plus the lesser of the relevant actual deferral percentage or the relevant actual contribution percentage. In no event, however, shall this amount exceed twice the lesser of the relevant actual deferral percentage or the relevant actual contribution percentage; or (2) The sum of: (a) 1.25 times the lesser of the relevant actual deferral percentage or the relevant actual contribution percentage, and (b) Two percentage points plus the greater of the relevant actual deferral percentage or the relevant actual contribution percentage. In no event, however, shall this amount exceed twice the greater of the relevant actual deferral percentage or the relevant actual contribution percentage; provided, however, that if a less restrictive limitation is prescribed by the IRS, such limitation shall be used in lieu of the foregoing. The relevant actual deferral percentage and relevant actual contribution percentage are defined in accordance with the Code and the IRS Regulations. The TPA shall determine as of the end of the Plan Year whether the aggregate limit has been exceeded. This determination shall be made after first determining the treatment of excess deferrals within the meaning of Section 402(g) of the Code under Section 3.2 above, then determining the treatment of excess contributions under Section 3.10 above, and then determining the treatment of excess aggregate contributions under this Article III. In the event that the aggregate limit is exceeded, the actual contribution percentage of those Employees who are Highly Compensated Employees shall be reduced in the same manner as described in Section 3.11 of this Article until the aggregate limit is no longer exceeded, unless the TPA designates, in lieu of the reduction of the actual contribution percentage a reduction in the actual deferral percentage of those Employees who are Highly Compensated Employees, which reduction shall occur in the same manner as described in Section 3.10 of this Article until the aggregate limit is no longer exceeded. Notwithstanding the provisions of Sections 3.2 and 3.10 above, the amount of excess contributions to be distributed, with respect to a Member for a Plan Year, shall be reduced by any excess deferrals distributed to such Member for such Plan Year. 21 Section 3.13 Remittance of Contributions The contributions of both the Employer and the Plan Members shall be recorded by the Employer and remitted to the TPA for transmittal to the Trustee or custodian or directly to the Trustee or custodian so that the Trustee or custodian shall be in receipt thereof by the 15th day of the month next following the month in respect of which such contributions are payable. Such amounts shall be used to provide additional Units pursuant to Article V. 22 ARTICLE IV INVESTMENT OF CONTRIBUTIONS Section 4.1 Investment by Trustee or Custodian All contributions to the Plan shall, upon receipt by the TPA, be delivered to the Trustee or custodian to be held in the Trust Fund and invested and distributed by the Trustee or custodian in accordance with the provisions of the Plan and Trust Agreement. The Trust Fund shall consist of one or more of the Investment Funds designated by the Employer in the Adoption Agreement. With the exception of the Employer Stock Fund or, if applicable, the Employer Certificate of Deposit Fund, the Trustee may in its discretion invest any amounts held by it in any Investment Fund in any commingled or group trust fund described in Section 401(a) of the Code and exempt under Section 501(a) of the Code or in any common trust fund exempt under Section 584 of the Code, provided that such trust fund satisfies any requirements of the Plan applicable to such Investment Funds. To the extent that the Investment Funds are at any time invested in any commingled, group or common trust fund, the declaration of trust or other instrument pertaining to such fund and any amendments thereto are hereby adopted as part of the Plan. The Employer will designate in the Adoption Agreement which of the Investment Funds described therein will be made available to Members and the terms and conditions under which such Funds will operate with respect to employee direction of allocations to and among such designated Funds and the types of contributions and/or deferrals eligible for investment therein. Section 4.2 Member Directed Investments To the extent permitted by the Employer as set forth in the Adoption Agreement, each Member shall direct in writing that his contributions and deferrals, if any, and the contributions made by the Employer on his behalf shall be invested (a) entirely in any one of the Investment Funds made available by the Employer, or (b) among the available Investment Funds in any combination of multiples of 1%. If a Member has made any Rollover contributions in accordance with Article III, Section 3.3, such Member may elect to apply separate investment directions to such rollover amounts. Any such investment direction shall be followed by the TPA until changed. Subject to the provisions of the following paragraphs of this Section, as designated in the Adoption Agreement, a Member may change his investment direction as to future contributions and also as to the value of his accumulated Units in each of the available Investment Funds by filing written notice with the TPA. Such directed change(s) will become effective upon the Valuation Date coinciding with or next following the date which his notice was received by the TPA or as soon as administratively practicable thereafter. If the Adoption Agreement provides for Member directed 23 investments, and if a Member does not make a written designation of an Investment Fund or Funds, the Employer or its designee shall direct the Trustee to invest all amounts held or received on account of the such Member in the Investment Fund which in the opinion of the Employer best protects principal. Except as otherwise provided below, a Member may not direct a transfer from the Stable Value Fund to the Government Money Market Fund. A Member may direct a transfer from the 500 Stock Index Fund, the Midcap 400 Stock Index Fund, and/or the Employer Stock Fund to the Government Money Market Fund provided that amounts previously transferred from the Stable Value Fund to the 500 Stock Index Fund, the Midcap 400 Stock Index Fund or the Employer Stock Fund remain in such Funds for a period of three months prior to being transferred to the Government Money Market Fund. Section 4.3 Employer Securities If the Employer so elects in the Adoption Agreement, the Employer and/or Members may direct that contributions will be invested in Qualifying Employer Securities (within the meaning of Section 407(d)(5) of ERISA) through the Employer Stock Fund. 24 ARTICLE V MEMBERS' ACCOUNTS, UNITS AND VALUATION The TPA shall establish and maintain an Account for each Member showing his interests in the available Investment Funds, as designated by the Employer in the Adoption Agreement. The interest in each Investment Fund shall be represented by Units. As of each Valuation Date, the value of a Unit in each Investment Fund shall be determined by dividing (a) the sum of the net assets at market value determined by the Trustee by (b) the total number of outstanding Units. The number of additional Units to be credited to a Member's interest in each available Investment Fund, as of any Valuation Date, shall be determined by dividing (a) that portion of the aggregate contributions and/or deferrals by and on behalf of the Member which was directed to be invested in such Investment Fund and received by the Trustee by (b) the Unit value of such Investment Fund. The value of a Member's Account may be determined as of any Valuation Date by multiplying the number of Units to his credit in each available Investment Fund by that Investment Fund's Unit Value on such date and aggregating the results. 25 ARTICLE VI VESTING OF UNITS Section 6.1 Vesting of Member Contributions and/or Deferrals All Units credited to a Member's Account based on after-tax contributions and/or 401(k) deferrals made by the Member and any earnings related thereto (including any rollover contributions allocated to a Member's Account under the Plan and any earnings thereon) and, as provided in Section 3.9, Employer qualified nonelective contributions made on behalf of such Member shall be immediately and fully vested in him at all times. Section 6.2 Vesting of Employer Contributions The Employer may, at its option, elect one of the available vesting schedules described herein for each of the employer contribution types applicable to the Plan as designated in the Adoption Agreement. Schedule 1: All applicable Units shall immediately and fully vest. If the eligibility requirement(s) selected by the Employer under Article II require(s) that an Employee complete a period of Employment which is longer than 12 consecutive months, this vesting Schedule 1 shall be automatically applicable. Schedule 2: All applicable Units shall become nonforfeitable and fully vested in accordance with the schedule set forth below: Completed Vested Years of Employment Percentage ------------------- ---------- Less than 2 0% 2 but less than 3 20% 3 but less than 4 40% 4 but less than 5 60% 5 but less than 6 80% 6 or more 100% Schedule 3: All applicable Units shall become nonforfeitable and fully vested in accordance with the schedule set forth below: 26 Completed Vested Years of Employment Percentage ------------------- ---------- Less than 5 0% 5 or more 100% Schedule 4: All applicable Units shall become nonforfeitable and fully vested in accordance with the schedule set forth below: Completed Vested Years of Employment Percentage ------------------- ---------- Less than 3 0% 3 or more 100% Schedule 5: All applicable Units shall become nonforfeitable and fully vested in accordance with the schedule set forth below: Completed Vested Years of Employment Percentage ------------------- ---------- Less than 1 0% 1 but less than 2 25% 2 but less than 3 50% 3 but less than 4 75% 4 or more 100% Schedule 6: All applicable Units shall become nonforfeitable and fully vested in accordance with the schedule set forth below: Completed Vested Years of Employment Percentage ------------------- ---------- Less than 3 0% 3 but less than 4 20% 4 but less than 5 40% 5 but less than 6 60% 6 but less than 7 80% 7 or more 100% Schedule 7: All applicable Units shall become nonforfeitable and fully vested in accordance with the schedule set forth in the Adoption Agreement created by the Employer in accordance with applicable law. 27 Notwithstanding the vesting schedules above, a Member's interest in his Account shall become 100% vested in the event that (i) the Member dies while in active Employment and the TPA has received notification of death, (ii) the Member has been approved for Disability, pursuant to the provisions of Article VII, and the TPA has received notification of Disability, or (iii) the Member has attained Normal Retirement Age. Except as otherwise provided hereunder, in the event that the Employer adopts the Plan as a successor plan to another defined contribution plan qualified under Sections 401(a) and 501(a) of the Code, or in the event that the Employer changes or amends a vesting schedule adopted under this Article, any Member who was covered under such predecessor plan or, in the case of a change or amendment to the vesting schedule, any Member who has completed at least 3 Years of Employment with the Employer may elect to have the nonforfeitable percentage of the portion of his Account which is subject to such vesting schedule computed under such predecessor plan's vesting provisions, or computed without regard to such change or amendment (a "Vesting Election"). Any Vesting Election made under this Subparagraph shall be made by notifying the TPA in writing within the election period hereinafter described. The election period shall begin on the date such amendment is adopted or the date such change is effective, or the date the Plan which serves as a successor plan is adopted or effective, as the case may be, and shall end no earlier than the latest of the following dates: (i) the date which is 60 days after the day such amendment is adopted; (ii) the date which is 60 days after the day such amendment or change becomes effective; (iii) the date which is 60 days after the day the Member is given written notice of such amendment or change by the TPA; (iv) the date which is 60 days after the day the Plan is adopted by the Employer or becomes effective; or (v) the date which is 60 days after the day the Member is given written notice that the Plan has been designated as a successor plan. Any election made pursuant to this Subparagraph shall be irrevocable. To the extent permitted under the Code and Regulations, the Employer may, at its option, elect to treat all Members who are eligible to make a Vesting Election as having made such Vesting Election. Furthermore, subject to the requirements of the applicable Regulations, the Employer may elect to treat all Members, who were employed by the Employer on or before the effective date of the change or amendment, as subject to the prior vesting schedule, provided such prior schedule is more favorable. Section 6.3 Forfeitures If a Member who was partially vested in his Account on the date of his termination of Employment returns to Employment, his Years of Employment prior to the Break(s) in Service shall be included in determining future vesting and, if he returns before incurring 5 consecutive one year Breaks in Service, any Units forfeited from his Account shall be restored to his Account, including all interest 28 accrued during the intervening period; provided, however, that if such a Member has received a distribution pursuant to Article VII, his Account Units shall not be restored unless he repays the full amount distributed to him to the Plan before the earlier of (i) 5 years after the first date on which the Member is subsequently reemployed by the Employer, or (ii) the close of the first period of 5 consecutive one-year Breaks in Service commencing after the withdrawal. The Units restored to the Member's Account will be valued on the Valuation Date coinciding with or next following the later of (i) the date the Employee is rehired, or (ii) the date a new enrollment application is received by the TPA. If a Member terminates Employment without any vested interest in his Account, he shall (i) immediately be deemed to have received a total distribution of his Account and (ii) thereupon forfeit his entire Account; provided that if such Member returns to Employment before the number of consecutive one-year Breaks in Service equals or exceeds the greater of (i) 5, or (ii) the aggregate number of the Member's Years of Service prior to such Break in Service, his Account shall be restored in the same manner as if such Member had been partially vested at the time of his termination of Employment, and his Years of Employment prior to incurring the first Break in Service shall be included in any subsequent determination of his vesting service. Forfeited amounts, as defined in the preceding paragraph, shall be made available to the Employer, through transfer from the Member's Account to the Employer Credit Account, upon: (1) if the Member had a vested interest in his Account at his termination of Employment, the earlier of (i) the date as of which the Member receives a distribution of his entire vested interest in his Account or (ii) the date upon which the Member incurs 5 consecutive one-year Breaks in Service, or (2) the date of the Member's termination of Employment, if the Member then has no vested interest in his Account. Once so transferred, such amounts shall be used at the option of the Employer to (i) reduce administrative expenses for that Contribution Determination Period, (ii) offset any contributions to be made by the Employer for that Contribution Determination Period or (iii) be allocated to all eligible Members deemed to be employed as of the last day of the Contribution Determination Period. The Employer Credit Account, referenced in this Subparagraph, shall be maintained to receive, in addition to the forfeitures described above, (i) contributions in excess of the limitations contained in Section 415 of the Code and (ii) Employer contributions made in advance of the date allocable to Members, if any. 29 ARTICLE VII WITHDRAWALS AND DISTRIBUTIONS Section 7.1 General Provisions The Employer will define in the Adoption Agreement the terms and conditions under which withdrawals and distributions will be permitted under the Plan. All payments in respect of a Member's Account shall be made in cash from the Trust Fund and in accordance with the provisions of this Article or Article XI. The amount of payment will be determined in accordance with the Unit values on the Valuation Date coinciding with or next following the date proper notice is filed with the TPA, unless following such Valuation Date a decrease in the Unit values of the Member's in vestment in any of the available Investment Funds occurs prior to the date such Units of the Member are redeemed in which case that part of the payment which must be provided through the sale of existing Units shall equal the value of such Units determined on the date of redemption which date shall occur as soon as administratively practicable on or following the Valuation Date such proper notice is filed with the TPA. The redemption date Unit value with respect to a Member's investment in any of the available Investment Funds shall equal the value of a Unit in such Investment Fund, as determined in accordance with the valuation method applicable to Unit investments in such Investment Fund on the date the Member's investment is redeemed. Except where otherwise specified, payments provided under this Article will be made in a lump sum as soon as practicable after such Valuation Date or date of redemption, as may be applicable, subject to any applicable restriction on redemption imposed on amounts invested in any of the available Investment Funds. Any partial withdrawal shall be deemed to come: o First from the Member's after-tax contributions made prior to January 1, 1987. o Next from the Member's after-tax contributions made after December 31, 1986 plus earnings on all of the Member's after-tax contributions. o Next from the Member's rollover contributions plus earnings thereon. o Next from the Employer matching contributions plus earnings thereon. o Next from the Employer supplemental contributions plus earnings thereon. o Next from the Employer basic contributions plus earnings thereon. 30 o Next from the Member's 401(k) deferrals plus earnings thereon. o Next from the Employer qualified nonelective contributions plus earnings thereon. o Next from the Employer profit sharing contributions plus earnings thereon. Section 7.2 Withdrawals While Employed The Employer may, at its option, permit Members to make withdrawals from one or more of the portions of their Accounts while employed by the Employer, as designated in the Adoption Agreement, under the terms and provisions described herein. Voluntary Withdrawals - To the extent permitted by the Employer as specified in the Adoption Agreement, a Member may voluntarily withdraw some or all of his Account (other than his 401(k) deferrals and Employer qualified nonelective contributions treated as 401(k) deferrals except as hereinafter permitted) while in Employment by filing a notice of withdrawal with the TPA; provided, however, that in the event his Employer has elected to provide annuity options under Section 7.3, no withdrawals may be made from a married Member's Account without the written consent of such Member's Spouse (which consent shall be subject to the procedures set forth in Section 7.3). Only one in-service withdrawal may be made in any Plan Year from each of the rollover amount of the Member's Account and the remainder of the Member's Account. This restriction shall not, however, apply to a withdrawal under this Section in conjunction with a hardship withdrawal. Notwithstanding the foregoing paragraph, a Member may not withdraw any matching, basic, supplemental, profit sharing or qualified nonelective contributions made by the Employer under Article III unless (i) the Member has completed 60 months of participation in the Plan; (ii) the withdrawal occurs at least 24 months after such contributions were made by the Employer; (iii) the Employer terminates the Plan without establishing a qualified successor plan; or (iv) the Member dies, is disabled, retires, attains age 59 1/2 or terminates Employment. For purposes of the preceding requirements, if the Member's Account includes amounts which have been transferred from a defined contribution plan established prior to the adoption of the Plan by the Employer, the period of time during which amounts were held on behalf of such Member and the periods of participation of such Member under such defined contribution plan shall be taken into account. Hardship Withdrawals - If designated by the Employer in the Adoption Agreement, a Member may make a withdrawal of his 401(k) deferrals, Employer qualified nonelective contributions which are treated as elective deferrals, and any earnings credited thereto prior to January 1, 1989, prior to attaining age 59 1/2, provided that the withdrawal is solely on account of an immediate and heavy financial need and is necessary to satisfy such financial need. For the purposes of this Article, the term "immediate and heavy financial need" shall be limited to the need of funds for (i) the payment 31 of medical expenses (described in Section 213(d) of the Code) incurred by the Member, the Member's Spouse, or any of the Member's dependents (as defined in Section 152 of the Code), (ii) the payment of tuition and room and board for the next 12 months of post-secondary education of the Member, the Member's Spouse, the Member's children, or any of the Member's dependents (as defined in Section 152 of the Code), (iii) the purchase (excluding mortgage payments) of a principal residence for the Member, or (iv) the prevention of eviction of the Member from his principal residence or the prevention of foreclosure on the mortgage of the Member's principal residence. For purposes of this Article, a distribution generally may be treated as "necessary to satisfy a financial need" if the Plan Administrator reasonably relies upon the Member's written representation that the need cannot be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by reasonable liquidation of the Member's available assets, to the extent such liquidation would not itself cause an immediate and heavy financial need, (iii) by cessation of Member contributions and/or deferrals pursuant to Article III of the Plan, to the extent such contributions and/or deferrals are permitted by the Employer, or (iv) by other distributions or nontaxable (at the time of the loan) loans from plans maintained by the Employer or by any other employer, or by borrowing from commercial sources on reasonable commercial terms. The amount of any withdrawal pursuant to this Article shall not exceed the amount required to meet the demonstrated financial hardship, including any amounts necessary to pay any federal income taxes and penalties reasonably anticipated to result from the distribution as certified to the Plan Administrator by the Member. Notwithstanding the foregoing, no amounts may be withdrawn on account of hardship pursuant to this Article prior to a Member's withdrawal of his other available Plan assets without regard to any other withdrawal restrictions adopted by the Employer. Section 7.3 Distributions Upon Termination of Employment In accordance with the provisions for distributions designated by the Employer in the Adoption Agreement, a Member who terminates Employment with the Employer may request a distribution of his Account at any time thereafter up to attainment of age 70 1/2. Except as otherwise provided, only one distribution under this Section 7.3 may be made in any Plan Year and any amounts paid under this Article may not be returned to the Plan. Any distribution made under this Section 7.3 requires that a Request for Distribution be filed with the TPA. If a Member does not file such a Request, the value of his Account will be paid to him as soon as practicable after his attainment of age 70 1/2, but in no event shall payment commence later than April 1 of the calendar year following the calendar year in which the Member attains age 70 1/2 unless otherwise provided by law. 32 Lump Sum Payments - A Member may request a distribution of all or a part of his Account no more frequently than once per calendar year by filing the proper Request for Distribution with the TPA. In the event the Employer has elected to provide an annuity option under the Plan, no distributions may be made from a married Member's Account without the written consent of such married Member's spouse (which consent shall be subject to the procedures set forth below). Installment Payments - To the extent designated by the Employer in the Adoption Agreement and in lieu of any lump sum payment of his total Account, a Member who has terminated his Employment may elect in his Request for Distribution to be paid in up to 20 annual installments, provided that a Member shall not be permitted to elect an installment period in excess of his remaining life expectancy and if a Member attempts such an election, the TPA shall deem him to have elected the installment period with the next lowest multiple within the Member's remaining life expectancy. The amount of each installment will be equal to the value of the total Units in the Member's Account, multiplied by a fraction, the numerator of which is one and the denominator of which is the number of remaining annual installments including the one then being paid, so that at the end of the installment period so elected, the total Account will be liquidated. The value of the Units will be determined in accordance with the Unit values on the Valuation Date on or next following the TPA's receipt of his Request for Distribution and on each anniversary thereafter subject to applicable Regulations under Code Section 401(a)(9). Payment will be made as soon as practicable after each such Valuation Date, but in no event shall payment commence later than April 1 of the calendar year following the calendar year in which the Member attains age 70 1/2 subject to the procedure for making such distributions described below. The election of installments hereunder may not be subsequently changed by the Member, except that upon written notice to the TPA, the Member may withdraw the balance of the Units in his Account in a lump sum at any time, notwithstanding the fact that the Member previously received a distribution in the same calendar year. Annuity Payments - The Employer may, at its option, elect to provide an annuity option under the Plan. To the extent so designated by the Employer in the Adoption Agreement and in lieu of any lump sum payment of his total Account, a Member who has terminated his Employment may elect in his Request for Distribution to have the value of his total Account be paid as an annuity secured for the Member by the Plan Administrator through a Group Annuity Contract adopted by the Plan. In the event the Employer elects to provide the annuity option, the following provisions shall apply: Unmarried Members -Any unmarried Member who has terminated his Employment may elect, in lieu of any other available payment option, to receive a benefit payable by purchase of a single premium contract providing for (i) a single life annuity for the life of the Member or (ii) an annuity for the life of the Member and, if the Member dies leaving a designated Beneficiary, a 50% survivor annuity for the life of such designated Beneficiary. 33 Married Members - Except as otherwise provided below, (i) any married Member who has terminated his Employment shall receive a benefit payable by purchase of a single premium contract providing for a Qualified Joint and Survivor Annuity, as defined below, and (ii) the Surviving Spouse of any married Member who dies prior to the date payment of his benefit commences shall be entitled to a Preretirement Survivor Annuity, as defined below. Notwithstanding the foregoing, any such married Member may elect to receive his benefit in any other available form, and may waive the Preretirement Survivor Annuity, in accordance with the spousal consent requirements described herein. For purposes of this Section 7.3, the term "Qualified Joint and Survivor Annuity" means a benefit providing an annuity for the life of the Member, ending with the payment due on the last day of the month coinciding with or preceding the date of his death, and, if the Member dies leaving a Surviving Spouse, a survivor annuity for the life of such Surviving Spouse equal to one-half of the annuity payable for the life of the Member under his Qualified Joint and Survivor Annuity, commencing on the last day of the month following the date of the Member's death and ending with the payment due on the first day of the month coinciding with or preceding the date of such Surviving Spouse's death. For purposes of this Section 7.3, the term "Preretirement Survivor Annuity" means a benefit providing for payment of 50% of the Member's Account balance as of the Valuation Date coinciding with or preceding the date of his death. Payment of a Preretirement Survivor Annuity shall commence in the month following the month in which the Member dies or as soon as practicable thereafter; provided, however, that to the extent required by law, if the value of the amount used to purchase a Preretirement Survivor Annuity exceeds $3,500, then payment of the Preretirement Survivor Annuity shall not commence prior to the date the Member reached (or would have reached, had he lived) Normal Retirement Age without the written consent of the Member's Surviving Spouse. Absence of any required consent will result in a deferral of payment of the Preretirement Survivor Annuity to the month following the month in which occurs the earlier of (i) the date the required consent is received by the TPA or (ii) the date the Member would have reached Normal Retirement Age had he lived. The TPA shall furnish or cause to be furnished, to each married Member with an Account subject to this Section 7.3, explanations of the Qualified Joint and Survivor Annuity and Preretirement Survivor Annuity. A Member may, with the written consent of his Spouse (unless the TPA makes a written determination in accordance with the Code and the Regulations that no such consent is required), elect in writing (i) to receive his benefit in a single lump sum payment within the 90-day period ending on the date payment of his benefit commences; and (ii) to waive the Preretirement Survivor Annuity within the period beginning on the first day of the Plan Year in which the Member attains age 35 and ending on the date of his death. Any election made pursuant to this 34 Subparagraph may be revoked by a Member, without spousal consent, at any time within which such election could have been made. Such an election or revocation must be made in accordance with procedures developed by the TPA and shall be notarized. Notwithstanding the preceding provisions of this Section 7.3, any benefit of $3,500, subject to the limits of Article X, or less, shall be paid in cash in a lump sum in full settlement of the Plan's liability therefor; provided, however, that in the case of a married Member, no such lump sum payment shall be made after benefits have commenced without the consent of the Member and his Spouse or, if the Member has died, the Member's Surviving Spouse. Furthermore, if the value of the benefit payable to a Member or his Surviving Spouse is greater than $3,500 and the Member has or had not reached his Normal Retirement Age, then to the extent required by law, unless the Member (and, if the Member is married and his benefit is to be paid in a form other than a Qualified Joint and Survivor Annuity, his Spouse, or, if the Member was married, his Surviving Spouse) consents in writing to an immediate distribution of such benefit, his benefit shall continue to be held in the Trust until a date following the earlier of (i) the date of the TPA's receipt of all required consents or (ii) the date the Member reaches his earliest possible Normal Retirement Age under the Plan (or would have reached such date had he lived), and thereafter shall be paid in accordance with this Section 7.3. Solely to the extent required under applicable law and regulations, and notwithstanding any provisions of the Plan to the contrary that would otherwise limit a Distributee's election under this Subparagraph, a Distributee may elect, at the time and in the manner prescribed by the TPA, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. For purposes of this Subparagraph, the following terms shall have the following meanings: Eligible Rollover Distribution - Any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). Eligible Retirement Plan - An individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the 35 Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to a Surviving Spouse, an Eligible Retirement Plan is an individual retirement account or an individual retirement annuity. Distributee - A Distributee may be (i) an Employee, (ii) a former Employee, (iii) an Employee's Surviving Spouse, (iv) a former Employee's Surviving Spouse, (v) an Employee's Spouse or former Spouse who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, or (vi) a former Employee's Spouse or former Spouse who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, with respect to the interest of the Spouse or former Spouse. Direct Rollover - A payment by the Plan to the Eligible Retirement Plan specified by the Distributee. Section 7.4 Distributions Due to Disability A Member who is separated from Employment by reason of a disability which is expected to last in excess of 12 consecutive months and who is either (i) eligible for, or is receiving, disability insurance benefits under the Federal Social Security Act or (ii) approved for disability under the provisions of any other benefit program or policy maintained by the Employer, which policy or program is applied on a uniform and nondiscriminatory basis to all Employees of the Employer, shall be deemed to be disabled for all purposes under the Plan. The Plan Administrator shall determine whether a Member is disabled in accordance with the terms of the immediately preceding paragraph; provided, however, approval of Disability is conditioned upon notice to the Plan Administrator of such Member's Disability within 13 months of the Member's separation from Employment. The notice of Disability shall include a certification that the Member meets one or more of the criteria listed above. Upon determination of Disability, a Member may withdraw his total Account balance under the Plan and have such amounts paid to him in accordance with the applicable provisions of this Article VII, as designated by the Employer. If a disabled Member becomes reemployed subsequent to withdrawal of some or all of his Account balance, such Member may not repay to the Plan any such withdrawn amounts. Section 7.5 Distributions Due to Death Subject to the provisions of Section 7.3 above, if a married Member dies, his Spouse, as Beneficiary, will receive a death benefit equal to the value of the Member's Account determined on the Valuation Date on or next following the TPA's receipt of notice that such Member died; 36 provided, however, that if such Member's Spouse had consented in writing to the designation of a different Beneficiary, the Member's Account will be paid to such designated Beneficiary. Such nonspousal designation may be revoked by the Member without spousal consent at any time prior to the Member's death. If a Member is not married at the time of his death, his Account will be paid to his designated Beneficiary. A Member may elect that upon his death, his Beneficiary, pursuant to this Section 7.5, may receive, in lieu of any lump sum payment, payment in 5 annual installments (10 if the Spouse is the Beneficiary, provided that the Spouse's remaining life expectancy is at least 10 years) whereby the value of 1/5th of such Member's Units (or 1/10th in the case of a spousal Beneficiary, provided that the Spouse's remaining life expectancy is at least 10 years) in each available Investment Fund will be determined in accordance with the Unit values on the Valuation Date on or next following the TPA's receipt of notice of the Member's death and on each anniversary of such Valuation Date. Payment will be made as soon as practicable after each Valuation Date until the Member's Account is exhausted. Such election may be filed at any time with the Plan Administrator prior to the Member's death and may not be changed or revoked after such Member's death. If such an election is not in effect at the time of the Member's death, his Beneficiary (including any spousal Beneficiary) may elect to receive distributions in accordance with this Article, except that any balance remaining in the deceased Member's Account must be distributed on or before the December 31 of the calendar year which contains the 5th anniversary (the 10th anniversary in the case of a spousal Beneficiary, provided that the Spouse's remaining life expectancy is at least 10 years) of the Member's death. Notwithstanding the foregoing, payment of a Member's Account shall commence not later than the December 31 of the calendar year immediately following the calendar year in which the Member died or, in the event such Beneficiary is the Member's Surviving Spouse, on or before the December 31 of the calendar year in which such Member would have attained age 70 1/2, if later (or, in either case, on any later date prescribed by the IRS Regulations). If, upon the Spouse's or Beneficiary's death, there is still a balance in the Account, the value of the remaining Units will be paid in a lump sum to such Spouse's or Beneficiary's estate. Section 7.6 Minimum Required Distributions In no event may payment of a Member's Account begin later than April 1 of the year following the calendar year in which a Member attains age 70 1/2; provided, however, if a Member attained age 70 1/2 prior to January 1, 1988, except as otherwise provided below, any benefit payable to such Member shall commence no later than the April 1 of the calendar year following the later of (i) the calendar year in which the Member attains age 70 1/2 or (ii) the calendar year in which the Member retires. Such benefit shall be paid, in accordance with the Regulations, over a period not extending beyond the life expectancy of such Member. Life expectancy for purposes of this Section shall not be recalculated annualy in accordance with the Regulations. 37 If a Member who is a 5% owner attained age 70 1/2 before January 1, 1988, any benefit payable to such Member shall commence no later than the April 1 of the calendar year following the later of (i) the calendar year in which the Member attains age 70 1/2 or (ii) the earlier of (a) the calendar year within which the Member becomes a 5% owner or (b) the calendar year in which the Member retires. For purposes of the preceding sentence, 5% owner shall mean a 5% owner of such Member's Employer as defined in Section 416(i) of the Code at any time during the Plan Year in which such owner attains age 66 1/2 or any subsequent Plan Year. Distributions must continue to such Member even if such Member ceases to own more than 5% of the Employer in a subsequent year. 38 ARTICLE VIII LOAN PROGRAM Section 8.1 General Provisions An Employer may, at its option, make available the loan program described herein for any Member (and, if applicable under Section 8.8 of this Article, any Beneficiary), subject to applicable law. The Employer shall so designate its adoption of the loan program and the terms and provisions of its operation in the Adoption Agreement. In the event that the Employer has elected to provide an annuity option under Article VII or amounts are transferred to the Plan from a retirement plan subject to Section 401(a)(11) of the Code, no loans may be made from a married Member's Account without the written consent of such Member's Spouse (in accordance with the spousal consent rules set forth under Section 7.3). In the event the Employer elects to permit loans to be made from rollover contributions and earnings thereon, as designated in the Adoption Agreement, loans shall be available from the Accounts of any Employees of the Employer who have not yet become Members. Only one loan may be made to a Member in the Plan Year. Section 8.2 Loan Application Subject to the restrictions described in the paragraph immediately following, a Member in Employment may borrow from his Account in each of the available Investment Funds by filing a loan application with the TPA. Such application (hereinafter referred to as a "completed application") shall (i) specify the terms pursuant to which the loan is requested to be made and (ii) provide such information and documentation as the TPA shall require, including a note, duly executed by the Member, granting a security interest of an amount not greater than 50% of his vested Account, to secure the loan. With respect to such Member, the completed application shall authorize the repay ment of the loan through payroll deductions. Such loan will become effective upon the Valuation Date coinciding with or next following the date on which his completed application and other required documents were submitted, subject to the same conditions with respect to the amount to be transferred under this Section which are specified in the Plan procedures for determining the amount of payments made under Article VII of the Plan. The Employer shall establish standards in accordance with the Code and ERISA which shall be uniformly applicable to all Members eligible to borrow from their interests in the Trust Fund similarly situated and shall govern the TPA's approval or disapproval of completed applications. The terms for each loan shall be set solely in accordance with such standards. 39 The TPA shall, in accordance with the established standards, review and approve or disapprove a completed application as soon as practicable after its receipt thereof, and shall promptly notify the applying Member of such approval or disapproval. Notwithstanding the foregoing, the TPA may defer its review of a completed application, or defer payment of the proceeds of an approved loan, if the proceeds of the loan would otherwise be paid during the period commencing on December 1 and ending on the following January 31. Subject to the preceding paragraph and Section 8.6, upon approval of a completed application, the TPA shall cause payment of the loan to be made from the available Investment Fund(s) in the same proportion that the designated portion of the Member's Account is invested at the time of the loan, and the relevant portion of the Member's interest in such Investment Fund(s) shall be cancelled and shall be transferred in cash to the Member. The TPA shall maintain sufficient records regarding such amounts to permit an accurate crediting of repayments of the loan. Section 8.3 Permitted Loan Amount The amount of each loan may not be less than $1,000 nor more than the maximum amount as described below. The maximum amount available for loan under the Plan (when added to the outstanding balance of all other loans from the Plan to the borrowing Member) shall not exceed the lesser of: (a) $50,000 reduced by the excess (if any) of (i) the highest outstanding loan balance attributable to the Account of the Member requesting the loan from the Plan during the one-year period ending on the day preceding the date of the loan, over (ii) the outstanding balance of all other loans from the Plan to the Member on the date of the loan, or (b) 50% of the value of the Member's vested portion of his Account available for borrowing as of the Valuation Date on or next following the date on which the TPA receives the completed application for the loan and all other required documents. The maximum amount available for a loan for purposes of item (b) of the preceding sentence shall be determined by valuing the Member's interest in that portion of his Account from which the loan will be deducted as of the applicable Valuation Date. In determining the maximum amount that a Member may borrow, all vested assets of his Account, regardless of whether any particular portion of his Account is actually available for the loan, will be taken into consideration, provided that, where the Employer has not elected to make a Member's entire Account available for loans, in no event shall the amount of the loan exceed the value of such portion of the Member's Account from which loans are permissible. Section 8.4 Source of Funds for Loan The amount of the loan will be deducted from the Member's Account in the available Investment Funds in accordance with Section 8.2 of this Article and the Plan procedures for determining the amount of payments made under Article VII. Loans shall be deemed to come (to the extent the 40 Employer permits Members to take loans from one or more of the portions of their Accounts, as designated in the Adoption Agreement): o First from the Employer profit sharing contributions plus earnings thereon. o Next from the Employer qualified nonelective contributions plus earnings thereon. o Next from the Member's 401(k) deferrals plus earnings thereon. o Next from the Employer basic contributions plus earnings thereon. o Next from the Employer supplemental contributions plus earnings thereon. o Next from the Employer matching contributions plus earnings thereon. o Next from the Member's rollover contributions plus earnings thereon. o Next from the Member's after-tax contributions made after December 31, 1986 plus earnings on all of the Member's after-tax contributions. o Next from the Member's after-tax contributions made prior to January 1, 1987. Section 8.5 Conditions of Loan Each loan to a Member under the Plan shall be repaid in level monthly amounts through regular payroll deductions after the effective date of the loan, and continuing thereafter with each payroll. Except as otherwise required by the Code and the IRS Regulations, each loan shall have a repayment period of not less than 12 months and not in excess of 60 months, unless the purpose of the loan is for the purchase of a primary residence, in which case the loan may be for not more than 180 months. The rate of interest for the term of the loan will be established as of the loan date, and will be the Barron's Prime Rate (base rate) plus 1% as published on the last Saturday of the preceding month, or such other rate as may be required by applicable law and determined by reference to the prevailing interest rate charged by commercial lenders under similar circumstances. The applicable rate would then be in effect through the last business day of the month. Repayment of all loans under the Plan shall be secured by 50% of the Member's vested interest in his Account, determined as of the origination of such loan. 41 Section 8.6 Crediting of Repayment Upon lending any amount to a Member, the TPA shall establish and maintain a loan receivable account with respect to, and for the term of, the loan. The allocations described in this Section shall be made from the loan receivable account. Upon receipt of each monthly installment payment and the crediting thereof to the Member's loan receivable account, there shall be allocated to the Member's Account in the available Investment Funds, in accordance with his most recent investment instructions, the principal portion of the installment payment plus that portion of the interest equal to the rate determined in Section 8.5 of this Article, less 2%. The unpaid balance owed by a Member on a loan under the Plan shall not reduce the amount credited to his Account. However, from the time of payment of the proceeds of the loan to the Member, such Account shall be deemed invested, to the extent of such unpaid balance, in such loan until the complete repayment thereof or distribution from such Account. Any loan repayment shall first be deemed allocable to the portions of the Member's Account on the basis of a reverse ordering of the manner in which the loan was originally distributed to the Member. Section 8.7 Cessation of Payments on Loan If a Member, while employed, fails to make a monthly installment payment when due, as specified in the completed application, subject to applicable law, he will be deemed to have received a distribution of the outstanding balance of the loan. If such default occurs after the first 12 monthly payments of the loan have been satisfied, the Member may pay the outstanding balance, including accrued interest from the due date, by the last day of the calendar quarter following the calendar quarter which contains the due date of the last monthly installment payment, in which case no such distribution will be deemed to have occurred. Subject to applicable law, notwithstanding the foregoing, a Member that borrows any of his 401(k) deferrals and any of the earnings attributable thereto may not cease to make monthly installment payments while employed and receiving a Salary from the Employer. Except as provided below, upon a Member's termination of Employment, death or Disability, or the Employer's termination of the Plan, no further monthly installment payments may be made. Unless the outstanding balance, including accrued interest from the due date, is paid by the last day of the calendar quarter following the calendar quarter which contains the date of such occurrence, the Member will be deemed to have received a distribution of the outstanding balance of the loan including accrued interest from the due date. Section 8.8 Loans to Former Members Notwithstanding any other provisions of this Article VIII, a member who terminates Employment for any reason shall be permitted to continue making scheduled repayments with respect to any loan 42 balance outstanding at the time he becomes a terminated Member. In addition, a terminated Member may elect to initiate a new loan from his Account, subject to the conditions otherwise described in this Article VIII. If any terminated Member who continues to make repayments or who borrows from his Account pursuant to this Section 8.8 fails to make a scheduled monthly installment payment by the last day of the calendar quarter following the calendar quarter which contains the scheduled payment date, he will be deemed to have received a distribution of the outstanding balance of the loan. 43 ARTICLE IX ADMINISTRATION OF PLAN AND ALLOCATION OF RESPONSIBILITIES Section 9.1 Fiduciaries The following persons are Fiduciaries under the Plan. a) The Trustee, b) The Employer, c) The Plan Administrator or committee, appointed by the Employer pursuant to this Article IX of the Plan and designated as the "Named Fiduciary" of the Plan and the Plan Administrator, and d) Any Investment Manager appointed by the Employer as provided in Section 9.4. Each of said Fiduciaries shall be bonded to the extent required by ERISA. The TPA is not intended to have the authority or responsibilities which would cause it to be considered a Fiduciary with respect to the Plan unless the TPA otherwise agrees to accept such authority or responsibilities in a service agreement or otherwise in writing. Section 9.2 Allocation of Responsibilities Among the Fiduciaries a) The Trustee The Employer shall enter into one or more Trust Agreements with a Trustee or Trustees selected by the Employer. The Trust established under any such agreement shall be a part of the Plan and shall provide that all funds received by the Trustee as contributions under the Plan and the income therefrom (other than such part as is necessary to pay the expenses and charges referred to in Paragraph (b) of this Section) shall be held in the Trust Fund for the exclusive benefit of the Members or their Beneficiaries, and managed, invested and reinvested and distributed by the Trustee in accordance with the Plan. Sums received for investment may be invested (i) wholly or partly through the medium of any common, collective or commingled trust fund maintained by a bank or other financial institution and which is qualified under Sections 401(a) and 501(a) of the Code and constitutes a part of the Plan; (ii) wholly or partly through the medium of a group annuity or other type of contract issued by an insurance company and constituting a part of the Plan, and utilizing, under any such contract, 44 general, commingled or individual investment accounts; or (iii) wholly or partly in securities issued by an investment company registered under the Investment Company Act of 1940. Subject to the provisions of Article XI, the Employer may from time to time and without the consent of any Member or Beneficiary (a) amend the Trust Agreement or any such insurance contract in such manner as the Employer may deem necessary or desirable to carry out the Plan, (b) remove the Trustee and designate a successor Trustee upon such removal or upon the resignation of the Trustee, and (c) provide for an alternate funding agency under the Plan. The Trustee shall make payments under the Plan only to the extent, in the amounts, in the manner, at the time, and to the persons as shall from time to time be set forth and designated in written authorizations from the Plan Administrator or TPA. The Trustee shall from time to time charge against and pay out of the Trust Fund taxes of any and all kinds whatsoever which are levied or assessed upon or become payable in respect of such Fund, the income or any property forming a part thereof, or any security transaction pertaining thereto. To the extent not paid by the Employer, the Trustee shall also charge against and pay out of the Trust Fund other expenses incurred by the Trustee in the performance of its duties under the Trust, the expenses incurred by the TPA in the performance of its duties under the Plan (including reasonable compensation for agents and cost of services rendered in respect of the Plan), such compensation of the Trustee as may be agreed upon from time to time between the Employer and the Trustee, and all other proper charges and disbursements of the Trustee or the Employer. b) The Employer The Employer shall be responsible for all functions assigned or reserved to it under the Plan and any related Trust Agreement. Any authority so assigned or reserved to the Employer, other than responsibilities assigned to the Plan Administrator, shall be exercised by resolution of the Employer's Board of Directors and shall become effective with respect to the Trustee upon written notice to the Trustee signed by the duly authorized officer of the Board advising the Trustee of such exercise. By way of illustration and not by limitation, the Employer shall have authority and responsibility: (1) to amend the Plan; (2) to merge and consolidate the Plan with all or part of the assets or liabilities of any other plan; (3) to appoint, remove and replace the Trustee and the Plan Administrator and to monitor their performances; 45 (4) to appoint, remove and replace one or more Investment Managers, or to refrain from such appointments, and to monitor their performances; (5) to communicate such information to the Plan Administrator, TPA, Trustee and Investment Managers as they may need for the proper performance of their duties; and (6) to perform such additional duties as are imposed by law. Whenever, under the terms of this Plan, the Employer is permitted or required to do or perform any act, it shall be done and performed by an officer thereunto duly authorized by its Board of Directors. c) The Plan Administrator The Plan Administrator shall have responsibility and discretionary authority to control the operation and administration of the Plan in accordance with the provisions of Article IX of the Plan, including, without limiting, the generality of the foregoing: (1) the determination of eligibility for benefits and the amount and certification thereof to the Trustee; (2) the hiring of persons to provide necessary services to the Plan; (3) the issuance of directions to the Trustee to pay any fees, taxes, charges or other costs incidental to the operation and management of the Plan; (4) the preparation and filing of all reports required to be filed with respect to the Plan with any governmental agency; and (5) the compliance with all disclosure requirements imposed by state or federal law. d) The Investment Manager Any Investment Manager appointed pursuant to Section 9.4 shall have sole responsibility for the investment of the portion of the assets of the Trust Fund to be managed and controlled by such Investment Manager. An Investment Manager may place orders for the purchase and sale of securities directly with brokers and dealers. Section 9.3 No Joint Fiduciary Responsibilities This Article IX is intended to allocate to each Fiduciary the individual responsibility for the prudent execution of the functions assigned to him, and none of such responsibilities or any other 46 responsibilities shall be shared by two or more of such Fiduciaries unless such sharing is provided by a specific provision of the Plan or any related Trust Agreement. Whenever one Fiduciary is required to follow the directions of another Fiduciary, the two Fiduciaries shall not be deemed to have been assigned a shared responsibility, but the responsibility of the Fiduciary giving the directions shall be deemed his sole responsibility, and the responsibility of the Fiduciary receiving those directions shall be to follow them insofar as such instructions are on their face proper under applicable law. To the extent that fiduciary responsibilities are allocated to an Investment Manager, such responsibilities are so allocated solely to such Investment Manager alone, to be exercised by such Investment Manager alone and not in conjunction with any other Fiduciary, and the Trustee shall be under no obligation to manage any asset of the Trust Fund which is subject to the management of such Investment Manager. Section 9.4 Investment Manager The Employer may appoint a qualified Investment Manager or Managers to manage any portion or all of the assets of the Trust Fund. For the purpose of this Plan and the related Trust, a "qualified Investment Manager" means an individual, firm or corporation who has been so appointed by the Employer to serve as Investment Manager hereunder, and who is and has acknowledged in writing that he is (a) a Fiduciary with respect to the Plan, (b) bonded as required by ERISA, and (c) either (i) registered as an investment advisor under the Investment Advisors Act of 1940, (ii) a bank as defined in said Act, or (iii) an insurance company qualified to perform investment management services under the laws of more than one state of the United States. Any such appointment shall be by a vote of the Board of Directors of the Employer naming the Investment Manager so appointed and designating the portion of the assets of the Trust Fund to be managed and controlled by such Investment Manager. Said vote shall be evidenced by a certificate in writing signed by the duly authorized officer of the Board and shall become effective on the date specified in such certificate but not before delivery to the Trustee of a copy of such certificate, together with a written acknowledgement by such Investment Manager of the facts specified in the second sentence of this Section. Section 9.5 Advisor to Fiduciary A Fiduciary may employ one or more persons to render advice concerning any responsibility such Fiduciary has under the Plan and related Trust Agreement. Section 9.6 Service in Multiple Capacities Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan, specifically including service both as Plan Administrator and as a Trustee of the Trust; 47 provided, however, that no person may serve in a fiduciary capacity who is precluded from so serving pursuant to Section 411 of ERISA. Section 9.7 Appointment of Plan Administrator The Employer shall designate the Plan Administrator in the Adoption Agreement. The Plan Administrator may be an individual, a committee of two or more individuals, whether or not, in either such case, the individual or any of such individuals are Employees of the Employer, a consulting firm or other independent agent, the Trustee (with its consent), the Board of the Employer, or the Employer itself. Except as the Employer shall otherwise expressly determine, the Plan Administrator shall be charged with the full power and responsibility for administering the Plan in all its details. If no Plan Administrator has been appointed by the Employer, or if the person designated as Plan Administrator is not serving as such for any reason, the Employer shall be deemed to be the Plan Administrator. The Plan Administrator may be removed by the Employer or may resign by giving written notice to the Employer, and, in the event of the removal, resignation, death or other termination of service of the Plan Administrator, the Employer shall, as soon as is practicable, appoint a successor Plan Administrator, such successor thereafter to have all of the rights, privileges, duties and obligations of the predecessor Plan Administrator. Section 9.8 Powers of the Plan Administrator The Plan Administrator is hereby vested with all powers and authority necessary in order to carry out its duties and responsibilities in connection with the administration of the Plan as herein provided, and is authorized to make such rules and regulations as it may deem necessary to carry out the provisions of the Plan and the Trust Agreement. The Plan Administrator may from time to time appoint agents to perform such functions involved in the administration of the Plan as it may deem advisable. The Plan Administrator shall have the discretionary authority to determine any questions arising in the administration, interpretation and application of the Plan, including any questions submitted by the Trustee on a matter necessary for it to properly discharge its duties; and the decision of the Plan Administrator shall be conclusive and binding on all persons. Section 9.9 Duties of the Plan Administrator The Plan Administrator shall keep on file a copy of the Plan and the Trust Agreement(s), including any subsequent amendments, and all annual reports of the Trustee(s), and such annual reports or registration statements as may be required by the laws of the United States, or other jurisdiction, for examination by Members in the Plan during reasonable business hours. Upon request by any Member, the Plan Administrator shall furnish him with a statement of his interest in the Plan as determined by the Plan Administrator as of the close of the preceding Plan Year. 48 Section 9.10 Action by the Plan Administrator In the event that there shall at any time be two or more persons who constitute the Plan Administrator, such persons shall act by concurrence of a majority thereof. Section 9.11 Discretionary Action Wherever, under the provisions of this Plan, the Plan Administrator is given any discretionary power or powers, such power or powers shall not be exercised in such manner as to cause any discrimination prohibited by the Code in favor of or against any Member, Employee or class of Employees. Any discretionary action taken by the Plan Administrator hereunder shall be consistent with any prior discretionary action taken by it under similar circumstances and to this end the Plan Administrator shall keep a record of all discretionary action taken by it under any provision hereof. Section 9.12 Compensation and Expenses of Plan Administrator Employees of the Employer shall serve without compensation for services as Plan Administrator, but all expenses of the Plan Administrator shall be paid by the Employer. Such expenses shall include any expenses incidental to the functioning of the Plan, including, but not limited to, attorney's fees, accounting and clerical charges, and other costs of administering the Plan. Non-Employee Plan Administrators shall receive such compensation as the Employer shall determine. Section 9.13 Reliance on Others The Plan Administrator and the Employer shall be entitled to rely upon all valuations, certificates and reports furnished by the Trustee(s), upon all certificates and reports made by an accountant or actuary selected by the Plan Administrator and approved by the Employer and upon all opinions given by any legal counsel selected by the Plan Administrator and approved by the Employer, and the Plan Administrator and the Employer shall be fully protected in respect of any action taken or suffered by them in good faith in reliance upon such Trustee(s), accountant, actuary or counsel and all action so taken or suffered shall be conclusive upon each of them and upon all Members, retired Members, and Former Members and their Beneficiaries, and all other persons. Section 9.14 Self Interest No person who is the Plan Administrator shall have any right to decide upon any matter relating solely to himself or to any of his rights or benefits under the Plan. Any such decision shall be made by another Plan Administrator or the Employer. 49 Section 9.15 Personal Liability - Indemnification The Plan Administrator shall not be personally liable by virtue of any instrument executed by him or on his behalf. Neither the Plan Administrator, the Employer, nor any of its officers or directors shall be personally liable for any action or inaction with respect to any duty or responsibility imposed upon such person by the terms of the Plan unless such action or inaction is judicially determined to be a breach of that person's fiduciary responsibility with respect to the Plan under any applicable law. The limitation contained in the preceding sentence shall not, however, prevent or preclude a compromise settlement of any controversy involving the Plan, the Plan Administrator, the Employer, or any of its officers and directors. The Employer may advance money in connection with questions of liability prior to any final determination of a question of liability. Any settlement made under this Article IX shall not be determinative of any breach of fiduciary duty hereunder. The Employer will indemnify every person who is or was a Plan Administrator, officer or member of the Board or a person who provides services without compensation to the Plan for any liability (including reasonable costs of defense and settlement) arising by reason of any act or omission affecting the Plan or affecting the Member or Beneficiaries thereof, including, without limitation, any damages, civil penalty or excise tax imposed pursuant to ERISA; provided (1) that the act or omission shall have occurred in the course of the person's service as Plan Administrator, officer of the Employer or member of the Board or was within the scope of the Employment of any Employee of the Employer or in connection with a service provided without compensation to the Plan, (2) that the act or omission be in good faith as determined by the Employer, whose determination, made in good faith and not arbitrarily or capriciously, shall be conclusive, and (3) that the Employer's obligation hereunder shall be offset to the extent of any otherwise applicable insurance coverage, under a policy maintained by the Employer, or any other person, or other source of indemnification. Section 9.16 Insurance The Plan Administrator shall have the right to purchase such insurance as it deems necessary to protect the Plan and the Trustee from loss due to any breach of fiduciary responsibility by any person. Any premiums due on such insurance may be paid from Plan assets provided that, if such premiums are so paid, such policy of insurance must permit recourse by the insurer against the person who breaches his fiduciary responsibility. Nothing in this Article IX shall prevent the Plan Administrator or the Employer, at its, or his, own expense, from providing insurance to any person to cover potential liability of that person as a result of a breach of fiduciary responsibility, nor shall any provisions of the Plan preclude the Employer from purchasing from any insurance company the right of recourse under any policy by such insurance company. 50 Section 9.17 Claims Procedures Claims for benefits under the Plan shall be filed with the Plan Administrator on forms supplied by the Employer. Written notice of the disposition of a claim shall be furnished to the claimant within 90 days after the application thereof is filed unless special circumstances require an extension of time for processing the claim. If such an extension of time is required, written notice of the extension shall be furnished to the claimant prior to the termination of said 90-day period, and such notice shall indicate the special circumstances which make the postponement appropriate. Section 9.18 Claims Review Procedures In the event a claim is denied, the reasons for the denial shall be specifically set forth in the notice described in this Section 9.18 in language calculated to be understood by the claimant. Pertinent provisions of the Plan shall be cited, and, where appropriate, an explanation as to how the claimant can request further consideration and review of the claim will be provided. In addition, the claimant shall be furnished with an explanation of the Plan's claims review procedures. Any Employee, former Employee, or Beneficiary of either, who has been denied a benefit by a decision of the Plan Administrator pursuant to Section 9.17 shall be entitled to request the Plan Administrator to give further consideration to his claim by filing with the Plan Administrator (on a form which may be obtained from the Plan Administrator) a request for a hearing. Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than 60 days after receipt of the written notification provided for in Section 9.17. The Plan Administrator shall then conduct a hearing within the next 60 days, at which the claimant may be represented by an attorney or any other representative of his choosing and at which the claimant shall have an opportunity to submit written and oral evidence and arguments in support of his claim. At the hearing (or prior thereto upon 5 business days' written notice to the Plan Administrator), the claimant or his representative shall have an opportunity to review all documents in the possession of the Plan Administrator which are pertinent to the claim at issue and its disallowance. A final disposition of the claim shall be made by the Plan Administrator within 60 days of receipt of the appeal unless there has been an extension of 60 days and shall be communicated in writing to the claimant. Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the disposition and specific references to the pertinent Plan provisions on which the disposition is based. For all purposes under the Plan, such decision on claims (where no review is requested) and decision on review (where review is requested) shall be final, binding and conclusive on all interested persons as to participation and benefits eligibility, the amount of benefits and as to any other matter of fact or interpretation relating to the Plan. 51 ARTICLE X MISCELLANEOUS PROVISIONS Section 10.1 General Limitations (A) In order that the Plan be maintained as a qualified plan and trust under the Code, contributions in respect of a Member shall be subject to the limitations set forth in this Section, notwithstanding any other provision of the Plan. The contributions in respect of a Member to which this Section is applicable are his own contributions and/or deferrals and the Employer's contributions. For purposes of this Section 10.1, a Member's contributions shall be determined without regard to any rollover contributions as provided in Section 402(a)(5) of the Code. (B) Annual additions to a Member's Account in respect of any Plan Year may not exceed the limitations set forth in Section 415 of the Code, which are incorporated herein by reference. For these purposes, "annual additions" shall have the meaning set forth in Section 415(c)(2) of the Code, as modified elsewhere in the Code and the Regulations, and the limitation year shall mean the Plan Year unless any other twelve-consecutive-month period is designated pursuant to a resolution adopted by the Employer and designated in the Adoption Agreement. If a Member in the Plan also participates in any defined benefit plan (as defined in Sections 414(j) and 415(k) of the Code) maintained by the Employer or any of its Affiliates, in the event that in any Plan Year the sum of the Member's "defined benefit fraction" (as defined in Section 415(e)(2) of the Code) and the Member's "defined contribution fraction" (as defined in Section 415(e)(3) of the Code) exceeds 1.0, the benefit under such defined benefit plan or plans shall be reduced in accordance with the provisions of that plan or those plans, so that the sum of such fractions in respect of the Member will not exceed 1.0. If this reduction does not ensure that the limitation set forth in this Paragraph (B) is not exceeded, then the annual addition to any defined contribution plan, other than the Plan, shall be reduced in accordance with the provisions of that plan but only to the extent necessary to ensure that such limitation is not exceeded. (C) In the event that, due to forfeitures, reasonable error in estimating a Member's compensation, or other limited facts and circumstances, total contributions and/or deferrals to a Member's Account are found to exceed the limitations of this Section, the TPA, at the direction of the Plan Administrator, shall cause contributions made under Article III in excess of such limitations to be refunded to the affected Member, with earnings thereon, and shall take appropriate steps to reduce, if necessary, the Employer contributions made with respect to those returned contributions. Such refunds shall not be deemed to be withdrawals, loans, or 52 distributions from the Plan. If a Member's annual contributions exceed the limitations contained in Paragraph (B) of this Section after the Member's Article III contributions, with earnings thereon, if any, have been refunded to such Member, any Employer supplemental and/or profit sharing contribution to be allocated to such Member in respect of any Contribution Determination Period (including allocations as provided in this Paragraph) shall instead be allocated to or for the benefit of all other Members who are Employees in Employment as of the last day of the Contribution Determination Period as determined under the Adoption Agreement and allocated in the same proportion that each such Member's Salary for such Contribution Determination Period bears to the total Salary for such Contribution Determination Period of all such Members or, the TPA may, at the election of the Employer, utilize such excess to reduce the contributions which would otherwise be made for the succeeding Contribution Determination Period by the Employer. If, with respect to any Contribution Determination Period, there is an excess profit sharing contribution, and such excess cannot be fully allocated in accordance with the preceding sentence because of the limitations prescribed in Paragraph (B) of this Section, the amount of such excess which cannot be so allocated shall be allocated to the Employer Credit Account and made available to the Employer pursuant to the terms of Article VI. The TPA, at the direction of the Plan Administrator, in accordance with Paragraph (D) of this Section, shall take whatever additional action may be necessary to assure that contributions to Members' Accounts meet the requirements of this Section. (D) In addition to the steps set forth in Paragraph (C) of this Section, the Employer may from time to time adjust or modify the maximum limitations applicable to contributions made in respect of a Member under this Section 10.1 as may be required or permitted by the Code or ERISA prior to or following the date that allocation of any such contributions commences and shall take appropriate action to reallocate the annual contributions which would otherwise have been made but for the application of this Section. (E) Membership in the Plan shall not give any Employee the right to be retained in the Employment of the Employer and shall not affect the right of the Employer to discharge any Employee. (F) Each Member, Spouse and Beneficiary assumes all risk in connection with any decrease in the market value of the assets of the Trust Fund. Neither the Employer nor the Trustee guarantees that upon withdrawal, the value of a Member's Account will be equal to or greater than the amount of the Member's own deferrals or contributions, or those credited on his behalf in which the Member has a vested interest, under the Plan. 53 (G) The establishment, maintenance or crediting of a Member's Account pursuant to the Plan shall not vest in such Member any right, title or interest in the Trust Fund except at the times and upon the terms and conditions and to the extent expressly set forth in the Plan and the Trust Agreement. (H) The Trust Fund shall be the sole source of payments under the Plan and the Employer, Plan Administrator and TPA assume no liability or responsibility for such payments, and each Member, Spouse or Beneficiary who shall claim the right to any payment under the Plan shall be entitled to look only to the Trust Fund for such payment. Section 10.2 Top Heavy Provisions The Plan will be considered a Top Heavy Plan for any Plan Year if it is determined to be a Top Heavy Plan as of the last day of the preceding Plan Year. The provisions of this Section 10.2 shall apply and supersede all other provisions in the Plan during each Plan Year with respect to which the Plan is determined to be a Top Heavy Plan. (A) For purposes of this Section 10.2, the following terms shall have the meanings set forth below: (1) "Affiliate" shall mean any entity affiliated with the Employer within the meaning of Section 414(b), 414(c) or 414(m) of the Code, or pursuant to the IRS Regulations under Section 414(o) of the Code, except that for purposes of applying the provisions hereof with respect to the limitation on contributions, Section 415(h) of the Code shall apply. (2) "Aggregation Group" shall mean the group composed of each qualified retirement plan of the Employer or an Affiliate in which a Key Employee is a member and each other qualified retirement plan of the Employer or an Affiliate which enables a plan of the Employer or an Affiliate in which a Key Employee is a member to satisfy Sections 401(a)(4) or 410 of the Code. In addition, the TPA, at the direction of the Plan Administrator, may choose to treat any other qualified retirement plan as a member of the Aggregation Group if such Aggregation Group will continue to satisfy Sections 401(a)(4) and 410 of the Code with such plan being taken into account. (3) "Key Employee" shall mean a "Key Employee" as defined in Sections 416(i)(1) and (5) of the Code and the IRS Regulations thereunder. For purposes of Section 416 of the Code and for purposes of determining who is a Key Employee, an Employer which is not a corporation may have "officers" only for Plan Years beginning after December 31, 1985. For purposes of determining who is a Key Employee pursuant to this Subparagraph (3), compensation shall have the meaning prescribed in Section 414(s) of the Code, or to the 54 extent required by the Code or the IRS Regulations, Section 1.415-2(d) of the IRS Regulations. (4) "Non-Key Employee" shall mean a "Non-Key Employee" as defined in Section 416(i)(2) of the Code and the IRS Regulations thereunder. (5) "Top Heavy Plan" shall mean a "Top Heavy Plan" as defined in Section 416(g) of the Code and the IRS Regulations thereunder. (B) Subject to the provisions of Paragraph (D) below, for each Plan Year that the Plan is a Top Heavy Plan, the Employer's contribution (including contributions attributable to salary reduction or similar arrangements) allocable to each Employee (other than a Key Employee) who has satisfied the eligibility requirement(s) of Article II, Section 2, and who is in service at the end of the Plan Year, shall not be less than the lesser of (i) 3% of such eligible Employee's compensation (as defined in Section 414(s) of the Code or to the extent required by the Code or the IRS Regulations, Section 1.415-2(d) of the Regulations), or (ii) the percentage at which Employer contributions for such Plan Year are made and allocated on behalf of the Key Employee for whom such percentage is the highest. For the purpose of determining the appropriate percentage under clause (ii), all defined contribution plans required to be included in an Aggregation Group shall be treated as one plan. Clause (ii) shall not apply if the Plan is required to be included in an Aggregation Group which enables a defined benefit plan also required to be included in said Aggregation Group to satisfy Sections 401(a)(4) or 410 of the Code. (C) If the Plan is a Top Heavy Plan for any Plan Year, and the Employer has elected vesting Schedule 3 or 6 under Article VI, the vested interest of each Member, who is credited with at least one Hour of Employment on or after the Plan becomes a Top Heavy Plan, in the Units allocated to his Account shall not be less than the percentage determined in accordance with the following schedule: Completed Vested Years of Employment Percentage ------------------- ---------- Less than 2 0% 2 but less than 3 20% 3 but less than 4 40% 4 but less than 5 60% 5 or more 100% 55 (D) (1) For each Plan Year that the Plan is a Top Heavy Plan, 1.0 shall be substituted for 1.25 as the multiplicand of the dollar limitation in determining the denominator of the defined benefit plan fraction and of the defined contribution plan fraction for purposes of Section 415(e) of the Code. (2) If, after substituting "90%" for "60%" wherever the latter appears in Section 416(g) of the Code, the Plan is not determined to be a Top Heavy Plan, the provisions of Subparagraph (1) of this Paragraph (D) shall not be applicable if the minimum Employer contribution allocable to any Member who is a Non-Key Employee as specified in Paragraph (B) of this Section is determined by substituting "4%" for 3%. (E) The TPA shall, to the maximum extent permitted by the Code and in accordance with the IRS Regulations, apply the provisions of this Section 10.2 by taking into account the benefits payable and the contributions made under any other qualified plan maintained by the Employer, to prevent inappropriate omissions or required duplication of minimum contributions. Section 10.3 Information and Communications Each Employer, Member, Spouse and Beneficiary shall be required to furnish the TPA with such information and data as may be considered necessary by the TPA. All notices, instructions and other communications with respect to the Plan shall be in such form as is prescribed from time to time by the TPA, shall be mailed by first class mail or delivered personally, and shall be deemed to have been duly given and delivered only upon actual receipt thereof by the TPA. All information and data submitted by an Employer or a Member, including a Member's birth date, marital status, salary and circumstances of his Employment and termination thereof, may be accepted and relied upon by the TPA. All communications from the Employer or the Trustee to a Member, Spouse or Beneficiary shall be deemed to have been duly given if mailed by first class mail to the address of such person as last shown on the records of the Plan. Section 10.4 Small Account Balances Notwithstanding the foregoing provisions of the Plan, if the value of all portions of a Member's Account under the Plan, when aggregated, is equal to or exceeds $3,500, then the Account will not be distributed without the consent of the Member prior to age 65 (at the earliest), but if the aggregate value of all portions of his Account is less than $3,500, then his Account will be distributed as soon as practicable following the termination of Employment by the Member. 56 Section 10.5 Amounts Payable to Incompetents, Minors or Estates If the Plan Administrator shall find that any person to whom any amount is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due him or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may be paid to his Spouse, relative or any other person deemed by the Plan Administrator to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Trust Fund therefor. Section 10.6 Non-alienation of Amounts Payable Except insofar as may otherwise be required by applicable law, or Article VIII, or pursuant to the terms of a Qualified Domestic Relations Order, no amount payable under the Plan shall be subject in any manner to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind, and any attempt to so alienate shall be void; nor shall the Trust Fund in any manner be liable for or subject to the debts or liabilities of any person entitled to any such amount payable; and further, if for any reason any amount payable under the Plan would not devolve upon such person entitled thereto, then the Employer, in its discretion, may terminate his interest and hold or apply such amount for the benefit of such person or his dependents as it may deem proper. For the purposes of the Plan, a "Qualified Domestic Relations Order" means any judgment, decree or order (including approval of a property settlement agreement) which has been determined by the Plan Administrator, in accordance with procedures established under the Plan, to constitute a Qualified Domestic Relations Order within the meaning of Section 414(p)(1) of the Code. No amounts may be withdrawn under Article VII, and no loans granted under Article VIII, if the TPA has received a document which may be determined following its receipt to be a Qualified Domestic Relations Order prior to completion of review of such order by the Plan Administrator within the time period prescribed for such review by the IRS Regulations. Section 10.7 Unclaimed Amounts Payable If the TPA cannot ascertain the whereabouts of any person to whom an amount is payable under the Plan, and if, after 5 years from the date such payment is due, a notice of such payment due is mailed to the address of such person, as last shown on the records of the Plan, and within 3 months after such mailing such person has not filed with the TPA or Plan Administrator written claim therefor, the Plan Administrator may direct in accordance with ERISA that the payment (including the amount allocable to the Member's contributions) be cancelled, and used in abatement of the Plan's administrative expenses, provided that appropriate provision is made for recrediting the payment if such person subsequently makes a claim therefor. 57 Section 10.8 Leaves of Absence (A) If the Employer's personnel policies allow leaves of absence for all similarly situated Employees on a uniformly available basis under the circumstances described in Paragraphs (B)(1)-(4) below, then contribution allocations and vesting service will continue to the extent provided in Paragraphs (B)(1)-(4). (B) For purposes of the Plan, there are only four types of approved Leaves of Absence: (1) Non-military leave granted to a Member for a period not in excess of one year during which service is recognized for vesting purposes and the Member is entitled to share in any supplemental contributions under Article III or forfeitures under Article VI, if any, on a pro-rata basis, determined by the Salary earned during the Plan Year or Contribution Determination Period; or (2) Non-military leave or layoff granted to a Member for a period not in excess of one year during which service is recognized for vesting purposes, but the Member is not entitled to share in any contributions or forfeitures as defined under (1) above, if any, during the period of the leave; or (3) To the extent not otherwise required by applicable law, military or other governmental service leave granted to a Member from which he returns directly to the service of the Employer. Under this leave, a Member may not share in any contributions or forfeitures as defined under (1) above, if any, during the period of the leave, but vesting service will continue to accrue; or (4) To the extent not otherwise required by applicable law, a military leave granted at the option of the Employer to a Member who is subject to military service pursuant to an involuntary call-up in the Reserves of the U.S. Armed Services from which he returns to the service of the Employer within 90 days of his discharge from such military service. Under this leave, a Member is entitled to share in any contributions or forfeitures as defined under (1) above, if any, and vesting service will continue to accrue. Notwithstanding any provision of the Plan to the contrary, if a Member has one or more loans outstanding at the time of this leave, repayments on such loan(s) may be suspended, if the Member so elects, until such time as the Member returns to the service of the Employer or the end of the leave, if earlier. 58 Section 10.9 Return of Contributions to Employer (A) In the case of a contribution that is made by an Employer by reason of a mistake of fact, the Employer may request the return to it of such contribution within one year after the payment of the contribution, provided such refund is made within one year after the payment of the contribution. (B) In the case of a contribution made by an Employer or a contribution otherwise deemed to be an Employer contribution under the Code, such contribution shall be conditioned upon the deductibility of the contribution by the Employer under Section 404 of the Code. To the extent the deduction for such contribution is disallowed, in accordance with IRS Regulations, the Employer may request the return to it of such contribution within one year after the disallowance of the deduction. (C) In the event that the IRS determines that the Plan is not initially qualified under the Code, any contribution made incident to that initial qualification by the Employer must be returned to the Employer within one year after the date the initial qualification is denied, but only if the application for the qualification is made by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. The contributions returned under (A), (B) or (C) above may not include any gains on such excess contributions, but must be reduced by any losses. Section 10.10 Controlling Law The Plan and all rights thereunder shall be governed by and construed in accordance with ERISA and the laws of the State of New York. 59 ARTICLE XI AMENDMENT & TERMINATION Section 11.1 General While the Plan is intended to be permanent, the Plan may be amended or terminated completely by the Employer at any time at the discretion of its Board of Directors. Except where necessary to qualify the Plan or to maintain qualification of the Plan, no amendment shall reduce any interest of a Member existing prior to such amendment. Subject to the terms of the Adoption Agreement, written notice of such amendment or termination as resolved by the Board shall be given to the Trustee, the Plan Administrator and the TPA. Such notice shall set forth the effective date of the amendment or termination or cessation of contributions. Section 11.2 Termination of Plan and Trust This Plan and any related Trust Agreement shall in any event terminate whenever all property held by the Trustee shall have been distributed in accordance with the terms hereof. Section 11.3 Liquidation of Trust Assets in the Event of Termination In the event that the Employer's Board of Directors shall decide to terminate the Plan, or, in the event of complete cessation of Employer contributions, the rights of Members to the amounts standing to their credit in their Accounts shall be deemed fully vested and the Plan Administrator shall direct the Trustee to either continue the Trust in full force and effect and continue so much of the Plan in full force and effect as is necessary to carry out the orderly distribution of benefits to Members and their Beneficiaries upon retirement, Disability, death or termination of Employment; or (a) reduce to cash such part or all of the Plan assets as the Plan Administrator may deem appropriate; (b) pay the liabilities, if any, of the Plan; (c) value the remaining assets of the Plan as of the date of notification of termination and proportionately adjust Members' Account balances; (d) distribute such assets in cash to the credit of their respective Accounts as of the notification of the termination date; and (e) distribute all balances which have been segregated into a separate fund to the persons entitled thereto; provided that no person in the event of termination shall be required to accept distribution in any form other than cash. Section 11.4 Partial Termination The Employer may terminate the Plan in part without causing a complete termination of the Plan. In the event a partial termination occurs, the Plan Administrator shall determine the portion of the Plan assets attributable to the Members affected by such partial termination and the provisions of Section 11.3 shall apply with respect to such portion as if it were a separate fund. 60 Section 11.5 Power to Amend (A) Subject to Section 11.6, the Employer, through its Board of Directors, shall have the power to amend the Plan in any manner which it deems desirable, including, but not by way of limitation, the right to change or modify the method of allocation of such contributions, to change any provision relating to the distribution of payment, or both, of any of the assets of the Trust Fund. Further, the Employer may (i) change the choice of options in the Adoption Agreement; (ii) add overriding language in the Adoption Agreement when such language is necessary to satisfy Section 415 or Section 416 of the Code because of the required aggregation of multiple plans; and (iii) add certain model amendments published by the IRS which specifically provide that their adoption will not cause the Plan to be treated as individually designed. An Employer that amends the Plan for any other reason, including a waiver of the minimum funding requirement under Section 412(d) of the Code, will be considered to have an individually designed plan. Any amendment shall become effective upon the vote of the Board of Directors of the Employer, unless such vote of the Board of Directors of the Employer specifies the effective date of the amendment. Such effective date of the amendment may be made retroactive to the vote of the Board of Directors, to the extent permitted by law. (B) The Employer expressly recognizes the authority of the Sponsor, Pentegra Services, Inc., to amend the Plan from time to time, except with respect to elections of the Employer in the Adoption Agreement, and the Employer shall be deemed to have consented to any such amendment. The Employer shall receive a written instrument indicating the amendment of the Plan and such amendment shall become effective as of the date of such instrument. No such amendment shall in any way impair, reduce or affect any Member's vested and nonforfeitable rights in the Plan and Trust. Section 11.6 Solely for Benefit of Members, Terminated Members and their Beneficiaries No changes may be made in the Plan which shall vest in the Employer, directly or indirectly, any interest, ownership or control in any of the present or subsequent assets of the Trust Fund. No part of the funds of the Trust other than such part as may be required to pay taxes, administration expenses and fees, shall be reduced by any amendment or be otherwise used for or diverted to purposes other than the exclusive benefit of Members, retired Members, Former Members, and their Beneficiaries, except as otherwise provided in Section 10.9 and under applicable law. 61 No amendment shall become effective which reduces the nonforfeitable percentage of benefit that would be payable to any Member if his Employment were to terminate and no amendment which modifies the method of determining that percentage shall be made effective with respect to any Member with at least three Years of Service unless such member is permitted to elect, within a reasonable period after the adoption of such amendment, to have that percentage determined without regard to such amendment. Section 11.7 Successor to Business of the Employer Unless this Plan and the related Trust Agreement be sooner terminated, a successor to the business of the Employer by whatever form or manner resulting may continue the Plan and the related Trust Agreement by executing appropriate supplementary agreements and such successor shall thereupon succeed to all the rights, powers and duties of the Employer hereunder. The Employment of any Employee who has continued in the employ of such successor shall not be deemed to have terminated or severed for any purpose hereunder if such supplemental agreement so provides. Section 11.8 Merger, Consolidation and Transfer The Plan shall not be merged or consolidated, in whole or in part, with any other plan, nor shall any assets or liabilities of the Plan be transferred to any other plan unless the benefit that would be payable to any affected Member under such plan if it terminated immediately after the merger, consolidation or transfer, is equal to or greater than the benefit that would be payable to the affected Member under this Plan if it terminated immediately before the merger, consolidation or transfer. Section 11.9 Revocability This Plan is based upon the condition precedent that it shall be approved by the Internal Revenue Service as qualified under Section 401(a) of the Code and exempt from taxation under Section 501(a) of the Code. Accordingly, notwithstanding anything herein to the contrary, if a final ruling shall be received in writing from the IRS that the Plan does not initially qualify under the terms of Sections 401(a) and 501(a) of the Code, there shall be no vesting in any Member of assets contributed by the Employer and held by the Trustee under the Plan. Upon receipt of notification from the IRS that the Plan fails to qualify as aforesaid, the Employer reserves the right, at its option, to either amend the Plan in such manner as may be necessary or advisable so that the Plan may so qualify, or to withdraw and terminate the Plan. 62 Upon the event of withdrawal and termination, the Employer shall notify the Trustee and provide the Trustee with a copy of such ruling and the Trustee shall transfer and pay over to the Employer all of the net assets contributed by the Employer pursuant to the Plan which remain after deducting the proper expense of termination and the Trust Agreement shall thereupon terminate. For purposes of this Article XI, "final ruling" shall mean either (1) the initial letter ruling from the District Director in response to the Employer's original application for such a ruling, or (2) if such letter ruling is unfavorable and a written appeal is taken or protest filed within 60 days of the date of such letter ruling, it shall mean the ruling received in response to such appeal or protest. If the Plan is terminated, the Plan Administrator shall promptly notify the IRS and such other appropriate governmental authority as applicable law may require. Neither the Employer nor its Employees shall make any further contributions under the Plan after the termination date, except that the Employer shall remit to the TPA a reasonable administrative fee to be determined by the TPA for each Member with a balance in his Account to defray the cost of implementing its termination. Where the Employer has terminated the Plan pursuant to this Article, the Employer may elect to transfer assets from the Plan to a successor plan qualified under Section 401(a) of the Code in which event the Employer shall remit to the TPA an additional administrative fee to be determined by the TPA to defray the cost of such transfer transaction. 63 TRUSTS ESTABLISHED UNDER THE PLAN Assets of the Plan are held in trust under separate Trust Agreements with the Trustee or Trustees. Any Eligible Employee or Member may obtain a copy of these Trust Agreements from the Plan Administrator. IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the Plan by the Employer, the Employer has caused these presents to be executed on its behalf and its corporate seal to be hereunder affixed as of the day of , 19 . ATTEST: By Clerk 64 ADOPTION AGREEMENT FOR [ NAME OF EMPLOYER ] EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST Name of Employer: --------------------------------------------------------------- Address: --------------------------------------------------------------- Telephone Number: --------------------------------------------------------------- Contact Person: --------------------------------------------------------------- Name of Plan: [ Name of Employer ] Employees' Savings & Profit Sharing Plan --------------------------------------------------------------- and Trust --------------------------------------------------------------- THIS ADOPTION AGREEMENT, upon execution by the Employer and the Trustee, and subsequent approval by a duly authorized representative of Pentegra Services, Inc. (the "Sponsor"), together with the Sponsor's Employees' Savings & Profit Sharing Plan and Trust Agreement (the "Agreement"), shall constitute the [ Name of Employer ] Employees' Savings & Profit Sharing Plan and Trust (the "Plan"). The terms and provisions of the Agreement are hereby incorporated herein by this reference; provided, however, that if there is any conflict between the Adoption Agreement and the Agreement, this Adoption Agreement shall control. The elections hereinafter made by the Employer in this Adoption Agreement may be changed by the Employer from time to time by written instrument executed by a duly authorized representative thereof; but if any other provision hereof or any provision of the Agreement is changed by the Employer other than to satisfy the requirements of Section 415 or 416 of the Internal Revenue Code of 1986, as amended (the "Code"), because of the required aggregation of multiple plans, or if as a result of any change by the Employer the Plan fails to obtain or retain its tax-qualified status under Section 401(a) of the Code, the Employer shall be deemed to have amended the Plan evidenced hereby and by the Agreement into an individually designed plan, in which event the Sponsor shall thereafter have no further responsibility for the tax-qualified status of the Plan. However, the Sponsor may amend any term, provision or definition of this Adoption Agreement or the Agreement in such manner as the Sponsor may deem necessary or advisable from time to time and the Employer and the Trustee, by execution hereof, acknowledge and consent thereto. Notwithstanding the foregoing, no amendment of this Adoption Agreement or of the Agreement shall increase the duties or responsibilities of the Trustee without the written consent thereof. 1 I. Effect of Execution of Adoption Agreement The Employer, upon execution of this Adoption Agreement by a duly authorized representative thereof, (choose 1 or 2): 1. ___ Establishes as a new plan the [ Name of Employer ] Employees' Savings & Profit Sharing Plan and Trust, effective ___________, 19__ (the "Effective Date"). 2. ___ Amends its existing defined contribution plan and trust (____________[ Name of Plan ]____________) dated _______, 19__, in its entirety into the [ Name of Employer ] Employees' Savings & Profit Sharing Plan and Trust, effective ___________, 19__, except as otherwise provided herein or in the Agreement (the "Effective Date"). II. Definitions A. Employer 1. "Employer," for purposes of the Plan, shall mean: [ Name of Employer ] ------------------------------------------------------------------ 2. The Employer is (choose whichever may apply): (a) ___ A member of a controlled group of corporations under Section 414(b) of the Code. (b) ___ A member of a group of entities under common control under Section 414(c) of the Code. (c) ___ A member of an affiliated service group under Section 414(m) of the Code. (d) ___ A corporation. (e) ___ A sole proprietorship or partnership. (f) ___ A Subchapter S corporation. 3. Employer's Taxable Year Ends on ____________________. 4. Employer's Federal Taxpayer Identification Number is ____-_______. 5. Employer's Plan Number is (enter 3-digit number) . B. "Entry Date" means the first day of the (choose 1 or 2): 1. ___ Calendar month coinciding with or next following the date the Employee satisfies the Eligibility requirements described in Section III. 2. ___ Calendar quarter (January 1, April 1, July 1, October 1) coinciding with or next following the date the Employee satisfies the Eligibility requirements described in Section III. 2 C. "Member" means an Employee enrolled in the membership of the Plan. D. "Normal Retirement Age" means (choose 1 or 2): 1. ___ Attainment of age ___ (select an age not less than 55 and not greater than 65). 2. ___ Later of: (i)attainment of age 65 or (ii)the fifth anniversary of the date the Member commenced participation in the Plan. E. "Normal Retirement Date" means the first day of the first calendar month coincident with or next following the date upon which a Member attains his or her Normal Retirement Age. F. "Plan Year" means the twelve (12) consecutive month period ending on (month/day). G. "Salary" for benefit purposes under the Plan means (choose 1, 2 or 3): 1. ___ Total taxable compensation as reported on Form W-2 (exclusive of any compensation deferred from a prior year). 2. ___ Basic Salary only. 3. ___ Basic Salary plus one or more of the following (if 3 is chosen, then choose (a), (b), (c) or (d), whichever shall apply): (a) ___ Commissions not in excess of $______________ (b) ___ Commissions to the extent that Basic Salary plus Commissions do not exceed $_______________ (c) ___ Overtime (d) ___ Overtime and bonuses Note: Member pre-tax contributions to a Section 401(k) plan are always included in Plan Salary. Member pre-tax contributions to a Section 125 cafeteria plan are also to be included in Plan Salary, unless the Employer elects to exclude such amounts by checking this line . III. Eligibility Requirements A. All Employees shall be eligible to participate in the Plan in accordance with the provisions of Article II of the Plan, except the following Employees shall be excluded (choose whichever shall apply): 1. ___ Employees who have not attained age 21. 3 2. ___ Employees who have not, during the __ consecutive month period (1-11, 12 or 24) beginning with an Employee's Date of Employment, Date of __________ Reemployment or any anniversary thereof, completed ____ number of Hours of Service (determined by multiplying the number of months above by 831/3). Note: Employers which permit Members to make pre-tax elective deferrals to the Plan (see V.A.3.) may not elect a 24 month eligibility period. 3. ___ Employees included in a unit of Employees covered by a collective bargaining agreement, if retirement benefits were the subject of good faith bargaining between the Employer and Employee representatives. 4. ___ Employees who are nonresident aliens and who receive no earned income from the Employer which constitutes income from sources within the United States. 5. ___ Employees included in the following job classifications: (a) ___ Hourly Employees (b) ___ Salaried Employees 6. ___ Employees of the following employers which are aggregated under Section 414(b), 414(c) or 414(m) of the Code: ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ Note: If no entries are made above, all Employees shall be eligible to participate in the Plan on the later of: (i) the Effective Date or (ii) the first day of the calendar month or calendar quarter (as designated by the Employer in Section II.D.) coinciding with or immediately following the Employee's Date of Employment or, as applicable, Date of Reemployment. B. Such Eligibility Computation Period established above shall be applicable to (choose 1 or 2): 1. ___ Both present and future Employees. 2. ___ Future Employees only. C. Such Eligibility requirements established above shall be (choose 1 or 2): 1. ___ Applied to the designated Employee group on and after the Effective Date of the Plan. 2. ___ Waived for the ____ consecutive monthly period (may not exceed 12) beginning on the Effective Date of the Plan. 4 IV. Hours of Employment and Prior Employment Credit A. The number of Hours of Employment with which an Employee or Member is credited shall be (choose 1 or 2): 1. ___ The actual number of Hours of Employment. (Hour of Service Method) 2. ___ 83 1/3 Hours of Employment for every month of Employment. (Elapsed Time Method) Note: This election is relevant if you selected an eligibility requirement under III.A.2. or a vesting schedule under VIII.A. other than immediate vesting. B. Prior Employment Credit: ___ Employment with the following entity or entities shall be included for eligibility and vesting purposes: Note: If this Plan is a continuation of a Predecessor Plan, service under the Predecessor Plan shall be counted as Employment under this Plan. _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ V. Contributions Note: Annual Member pre-tax elective deferrals, Employer matching contributions, Employer basic contributions, Employer supplemental contributions, Employer profit sharing contributions and Employer Qualified Non-Elective contributions, in the aggregate, may not exceed 15% of all Members' Salary (excluding from Salary Member pre-tax elective deferrals). A. Employee Contributions (fill in 1 and/or 6 if applicable; choose 2 or 3; 4 or 5): 1. ___ The maximum amount of monthly contributions a Member may make to the Plan is ___% (1-20) of the Member's monthly Salary. 2. ___A Member may make pre-tax elective deferrals to the Plan, based on multiples of 1% of monthly Salary. 3. ___ A Member may not make pre-tax elective deferrals to the Plan. 4. ___ A Member may make after-tax contributions to the Plan, based on multiples of 1% of monthly Salary. 5. ___ A Member may not make after-tax contributions to the Plan. 6. ___ An Employee may allocate a rollover contribution to the Plan prior to satisfying the Eligibility requirements described above. 5 B. A Member may change his or her contribution rate (choose 1, 2 or 3): 1. ___ 1 time per pay period. 2. ___ 1 time per calendar month 3. ___ 1 time per calendar quarter. C. Employer Matching Contributions (fill in 1 if applicable; and choose 2, 3, 4 or 5): 1. ___ The Employer matching contributions under 2, 3 or 4 below shall based on the Member's contributions not in excess of__% (1-20 but not in excess of the percentage specified in A.1. above) of the Member's Salary. 2. ___ The Employer shall allocate to each contributing Member's Account an amount equal to ____% (based on 1% increments not to exceed 200%) of the Member's contributions for that month. 3. ___ The Employer shall allocate to each contributing Member's Account an amount determined in accordance with the following schedule: Years of Employment Matching % ------------------- ---------- Less than 3 50% At least 3, but less than 5 75% 5 or more 100% 4. ___ The Employer shall allocate to each contributing Member's Account an amount determined in accordance with the following schedule: Years of Employment Matching % ------------------- ---------- Less than 3 100% At least 3, but less than 5 150% 5 or more 200% 5. ___ No Employer matching contributions will be made to the Plan. D. Employer Basic Contributions (choose 1 or 2): 1. ___ The Employer shall allocate an amount equal to ____% (based on 1% increments not to exceed 15%) of Member's Salary for the month to (choose (a) or (b)): (a) ___ The Accounts of all Members (b) ___ The Accounts of all Members who were employed with the Employer on the last day of such month. 2. ___ No Employer basic contributions will be made to the Plan. 6 E. Employer Supplemental Contributions: The Employer may make supplemental contributions for any Plan Year in accordance with Section 3.7 of the Plan. F. Employer Profit Sharing Contributions (Choose 1, 2, 3, 4, or 5): 1. ___ No Employer Profit Sharing Contributions will be made to the Plan. Non-Integrated Formula ---------------------- 2. ___ Profit sharing contributions shall be allocated to each Member in the same ratio as each Member's Salary during such Contribution Determination Period bears to the total of such Salary of all Members. 3. ___ Profit sharing contributions shall be allocated to each Member in the same ratio as each Member's Salary for the portion of the Contribution Determination Period during which the Member satisfied the Employer's eligibility requirement(s) bears to the total of such Salary of all Members. Integrated Formula ------------------ 4. ___ Profit sharing contributions shall be allocated to each Member's Account in a uniform percentage (specified by the Employer as _____%) of each Member's Salary during the Contribution Determination Period up to the Social Security Taxable Wage Base as defined in Section ___ of the Plan ("Base Salary") for the Plan Year that includes such Contribution Determination Period, plus a uniform percentage(specified by the Employer as _____%) of each Member's Salary for the Contribution Determination Period in excess of the Social Security Taxable Wage Base ("Excess Salary") for the Plan Year that includes such Contribution Determination Period, in accordance with Article III of the Plan. 5. ___ Profit sharing contributions shall be allocated to each Member's Account in a uniform percentage (specified by the Employer as _____%) of each Member's Salary for the portion of the Contribution Determination Period during which the Member satisfied the Employer's eligibility requirement(s), if any, up to the Base Salary for the Plan Year that includes such Contribution Determination Period, plus a uniform percentage (specified by the Employer as ____%) of each Member's Excess Salary for the portion of the Contribution Determination Period during which the Member satisfied the Employer's eligibility requirement(s) in accordance with Article III of the Plan. G. Allocation of Employer Profit Sharing Contributions: In accordance with Section V, G above, a Member shall be eligible to share in Employer Profit Sharing Contributions, if any, as follows (choose 1 or 2): 1. ___ A Member shall be eligible for an allocation of Employer Profit Sharing Contributions for a Contribution Determination Period in all events. 7 2. ___ A Member shall be eligible for an allocation of Employer Profit Sharing Contributions for a Contribution Determination Period only if he or she (choose (a), (b) or (c) whichever shall apply): (a) ___ is employed on the last day of the Contribution Determination Period or retired, died or became totally and permanently disabled prior to the last day of the Contribution Determination Period. (b) ___completed 1,000 Hours of Employment if the Contribution Determination Period is a period of 12 months (250 Hours of Employment if the Contribution Determination Period is a period of 3 months) or retired, died or became totally and permanently disabled prior to the last day of the Contribution Determination Period. (c) ___ is employed on the last day of the Contribution Determination Period and, if such period is 12 months, completed 1,000 Hours of Employment (250 Hours of Employment if the Contribution Determination Period is a period of 3 months) or retired, died or became totally and permanently disabled prior to the last day of the Contribution Determination Period. H. "Contribution Determination Period" for purposes of determining and allocating Employer profit sharing contributions means (choose 1,2, 3 or 4): 1. ___ The Plan Year. 2. ___ The Employer's Fiscal Year (defined as the Plan's "limitation year") being the twelve (12) consecutive month period commencing _______ (month/day) and ending _______ (month/day). 3. ___ The three (3) consecutive monthly periods that comprise each of the Plan Year quarters. 4. ___ The three (3) consecutive monthly periods that comprise each of the Employer's Fiscal Year quarters.(Employer's Fiscal Year is the twelve (12) consecutive month period commencing _______ (month/day) and ending _______ (month/day).) I. Employer Qualified Nonelective Contributions: The Employer may make qualified nonelective contributions for any Plan Year in accordance with Section 3.9 of the Plan. VI. Investment Funds The Employer hereby appoints Barclays Global Investors, N.A. to serve as Investment Manager under the Plan. 8 The Employer hereby selects the following Investment Funds to be made available under the Plan (choose whichever shall apply) and consent to the lending of securities by such funds to brokers and other borrowers. The Employer agrees and acknowledges that the selection of Investment Funds made in this Section VI is solely its responsibility, and no other person, including the Sponsor or Investment Manager, has any discretionary authority or control with respect to such selection process. The Employer hereby holds Investment Manager harmless from, and indemnifies it against, any liability Investment Manager may incur with respect to such Investment Funds so long as Investment Manager is not negligent and has not breached its fiduciary duties. 1. S&P 500 Stock Fund ----- 2. Stable Value Fund ----- 3. S&P MidCap Stock Fund ----- 4. Money Market Fund ----- 5. Government Bond Fund ----- 6. International Stock Fund ----- 7. Asset Allocation Funds (3) ----- o Income Plus o Growth & Income o Growth 8. (Name of Employer) Stock Fund (the "Employer Stock Fund") ----- 9. (Name of Employer) Certificate of Deposit Fund ----- VII. Employer Securities A. If the Employer makes available an Employer Stock Fund pursuant to Section VI of this Adoption Agreement, then voting and tender offer rights with respect to Employer Stock shall be delegated and exercised as follows (choose 1 or 2): 1. ___ Each Member shall be entitled to direct the Plan Administrator as to the voting and tender offer rights involving Employer Stock held in such Member's Account, and the Plan Administrator shall follow or cause the Trustee to follow such directions. If a Member fails to provide the Plan Administrator with directions as to voting or tender offer rights, the Plan Administrator shall exercise those rights as it determines in its discretion and shall direct the Trustee accordingly. 2. ___ The Plan Administrator shall direct the Trustee as to the voting of all Employer Stock and as to all rights in the event of a tender offer involving such Employer Stock. 9 VIII. Investment Direction A. Members shall be entitled to designate what percentage of employee contributions and employer contributions made on their behalf will be invested in the various Investment Funds offered by the Employer as specified in Section VI of this Adoption Agreement; provided, however, that the following portions of a Member's Account must be invested in the Employer Stock Fund or, if applicable, the Employer Certificate of Deposit Fund (choose whichever shall apply): 1. ___ Employer Profit Sharing Contributions 2. ___ Employer Matching Contributions 3. ___ Employer Basic Contributions 4. ___ Employer Supplemental Contributions 5. ___ Employer Qualified Nonelective Contributions B. Amounts invested in the Employer Stock Fund or, if applicable, the Employer Certificate of Deposit Fund may not be transferred to any other Investment Fund. 1. ___ Notwithstanding this election in B, a Member may transfer such amounts upon (choose whichever may apply): (a) ___ the attainment of age ____ (insert 45 or greater) (b) ___ the completion of ____ (insert 10 or greater) years of employment (c) ___ the attainment of age plus years of employment equal to _____ (insert 55 or greater) C. A Member may change his or her investment direction (choose 1, 2, or 3): 1. 1 time per business day. ----- 2. 1 time per calendar month. ----- 3. 1 time per calendar quarter. ----- D. If a Member fails to make an effective investment direction, the Member's contributions and employer contributions made on the Member's behalf shall be invested in ________________________________ (insert one of the Investment Funds selected in Section VI of this Adoption Agreement). IX. Vesting Schedules; Years of Employment for Vesting Purposes A. (Choose 1, 2, 3, 4, 5, 6 or 7) Schedule Years of Employment Vested % -------- ------------------- -------- 1. ___ Immediate Upon Enrollment 100% 10 Schedule Years of Employment Vested % -------- ------------------- -------- 2. ___ 2-6 Year Graded Less than 2 0% 2 but less than 3 20% 3 but less than 4 40% 4 but less than 5 60% 5 but less than 6 80% 6 or more 100% 3. ___ 5-Year Cliff Less than 5 0% 5 or more 100% 4. ___ 3-Year Cliff Less than 3 0% 3 or more 100% 5. ___ 4-Year Graded Less than 1 0% 1 but less than 2 25% 2 but less than 3 50% 3 but less than 4 75% 4 or more 100% 6. ___ 3-7 Year Graded Less than 3 0% 3 but less than 4 20% 4 but less than 5 40% 5 but less than 6 60% 6 but less than 7 80% 7 or more 100% 7. ___ Other Less than______ 0% ___ but less than ____ ___% ___ but less than ____ ___% ___ but less than ____ ___% ___ but less than ____ ___% ___ or more 100% B. With respect to the schedules listed above, the Employer elects (choose 1, 2, 3 and 4; or 5): 1. Schedule ___ solely with respect to Employer matching contributions. 2. Schedule ___ solely with respect to Employer basic contributions. 3. Schedule ___ solely with respect to Employer supplemental contributions. 4. Schedule ___ solely with respect to Employer profit sharing contributions. 5. Schedule ___ with respect to all Employer contributions. 11 NOTE: Notwithstanding any election by the Employer to the contrary, each Member shall acquire a 100% vested interest in his Account attributable to all Employer contributions made to the Plan upon the earlier of (i) attainment of Normal Retirement Age, (ii) approval for disability or (iii) death. In addition, a Member shall at all times have a 100% vested interest in the Employer Qualified Non-Elective Contributions, if any, and in the pre-tax elective deferrals and nondeductible after-tax Member Contributions. C. Years of Employment Excluded for Vesting Purposes The following Years of Employment shall be disregarded for vesting purposes (choose whichever shall apply): 1. ___ Years of Employment during any period in which neither the Plan nor any predecessor plan was maintained by the Employer. 2. ___ Years of Employment of a Member prior to attaining age 18. X. Withdrawal Provisions A. The following portions of a Member's Account will be eligible for in-service withdrawals, subject to the provisions of Article VII of the Plan (choose whichever shall apply): 1. ___ Employee after-tax contributions and the earnings thereon. In-service withdrawals permitted only in the event of (choose whichever shall apply): (a) ___ Hardship. (b) ___ Attainment of age 59 1/2. 2. ___ Employee pre-tax elective deferrals and the earnings thereon. Note: In-service withdrawals of all employee pre-tax elective deferrals and earnings thereon as of December 31, 1988 are permitted only in the event of hardship or attainment of age 59 1/2. In-service withdrawals of earnings after December 31, 1988 are permitted only in the event of attainment of age 59 1/2. 3. ___ Employee rollover contributions and the earnings thereon. In-service withdrawals permitted only in the event of (choose whichever shall apply): (a) ___ Hardship. (b) ___ Attainment of age 59 1/2. 12 4. ___ Employer matching contributions and the earnings thereon. In-service withdrawals permitted only in the event of (choose whichever shall apply): (a) ___ Hardship. (b) ___ Attainment of age 59 1/2. 5. ___ Employer basic contributions and the earnings thereon. In-service withdrawals permitted only in the event of (choose whichever shall apply): (a) ___ Hardship. (b) ___ Attainment of age 59 1/2. 6. ___ Employer supplemental contributions and the earnings thereon. In-service withdrawals permitted only in the event of (choose whichever shall apply): (a) ___ Hardship. (b) ___ Attainment of age 59 1/2. 7. ___ Employer profit sharing contributions and the earnings thereon. In-service withdrawals permitted only in the event of (choose whichever shall apply): (a) ___ Hardship. (b) ___ Attainment of age 59 1/2. 8. ___ Employer qualified nonelective contributions and earnings thereon. Note: In-service withdrawals of all employer qualified nonelective contributions and earnings thereon are permitted only in the event of attainment of age 59 1/2 9. ___ No in-service withdrawals shall be allowed. B. Notwithstanding any elections made in Subsection A of this Section X above, the following portions of a Member's Account shall be excluded from eligibility for in-service withdrawals (choose whichever shall apply): 1. ___ Employer contributions, and the earnings thereon, credited to the Employer Stock Fund or, if applicable, the Employer Certificate of Deposit Fund. 2. ___ All contributions and/or deferrals, and the earnings thereon, credited to the Employer Stock Fund or, if applicable, the Employer Certificate of Deposit Fund. 3. ___ Other: _______________________________________________________ 13 XI. Distribution Option (choose whichever shall apply) 1. ___ Lump Sum and partial lump sum payments only. 2. ___ Lump Sum and partial lump sum payments plus one or more of the following (choose (a) and /or (b)): (a) ___ Installment payments. (b) ___ Annuity payments. 3. ___ Distributions in kind of Employer Stock. XII. Loan Program (choose 1, 2 or 3) 1. ___ No loans will be permitted from the Plan. 2. ___ Loans will be permitted from the Member's Account. 3. ___ Loans will be permitted from the Member's Account, excluding (choose whichever shall apply): (a) Employer Profit sharing contributions and the earnings thereon. (b) Employer matching contributions and the earnings thereon. (c) Employer basic contributions and the earnings thereon. (d) Employer supplemental contributions and the earnings thereon. (e) Employee after-tax contributions and the earnings thereon. (f) Employee pre-tax elective deferrals and the earnings thereon. (g) Employee rollover contributions and the earnings thereon. (h) Employer qualified nonelective contributions and the earnings thereon. (i) Any amounts to the extent invested in the Employer stock fund. XIII. Additional Information If additional space is needed to select or describe an elective feature of the Plan, the Employer should attach additional pages and use the following format: The following is hereby made a part of Section --- of the Adoption Agreement and is thus incorporated into and made a part of the [Plan Name] Signature of Employer's Authorized Representative_________________________ Signature of Trustee______________________________________________________ Supplementary Page _____ of [total number of pages]. 14 XIV. Plan Administrator The Named Plan Administrator under the Plan shall be the (choose 1, 2, 3 or 4): Note: Pentegra Services, Inc. may not be appointed Plan Administrator. 1. ___ Employer 2. ___ Employer's Board of Directors 3. ___ Plan's Administrative Committee 4. ___ Other (if chosen, then provide the following information) Name:________________________________________________ Address:_____________________________________________ Tel No:______________________________________________ Contact:_____________________________________________ Note: If no Named Plan Administrator is designated above, the Employer shall be deemed the Named Plan Administrator. XV. Trustee The Employer hereby appoints The Bank of New York to serve as Trustee for all Investment Funds under the Plan except the Employer Stock Fund. The Employer hereby appoints the following person or entity to serve as Trustee under the Plan for the Employer Stock Fund.* Name:_____________________________________________________________________ Address:__________________________________________________________________ Telephone No:__________________ Contact:__________________________________ ____________________________________________________________ Signature of Trustee (Required only if the Employer is serving as its own Trustee) * Subject to approval by The Bank of New York, if The Bank of New York is appointed as Trustee for the Employer Stock Fund. The Employer hereby appoints The Bank of New York to serve as Custodian under the Plan for the Employer Stock Fund in the event The Bank of New York does not serve as Trustee for such Fund. 15 EXECUTION OF ADOPTION AGREEMENT By execution of this Adoption Agreement by a duly authorized representative of the Employer, the Employer acknowledges that it has established or, as the case may be, amended a tax-qualified retirement plan into the [ Name of Employer ] Employees' Savings & Profit Sharing Plan and Trust (the "Plan"). The Employer hereby represents and agrees that it will assume full fiduciary responsibility for the operation of the Plan and for complying with all duties and requirements imposed under applicable law, including, but not limited to, the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended. In addition, the Employer represents and agrees that it will accept full responsibility of complying with any applicable requirements of federal or state securities law as such laws may apply to the Plan and to any investments thereunder. The Employer further acknowledges that any opinion letter issued with respect to the Adoption Agreement and the Agreement by the Internal Revenue Service ("IRS") to Pentegra Services, Inc., as sponsor of the Employees' Savings & Profit Sharing Plan, does not constitute a ruling or a determination with respect to the tax-qualified status of the Plan and that the appropriate application must be submitted to the IRS in order to obtain such a ruling or determination with respect to the Plan. The failure to properly complete the Adoption Agreement may result in disqualification of the Plan and Trust evidenced thereby. The Sponsor will inform the Employer of any amendments to the Plan or Trust Agreement or of the discontinuance or abandonment of the Plan or Trust. Any inquiries regarding the adoption of the Plan should be directed to the Sponsor as follows: Pentegra Services, Inc. 108 Corporate Park Drive White Plains, New York 10604 (914) 694-1300 IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed by its duly authorized officer this ___ day of ________________, 19___. [ Name of Employer ] By:_________________________ Name:_______________________ Title:______________________ 8/27/97 16 Exhibit B Annual Return/Report of Employee Benefit Plan (With 100 or more participants) This form is required to be filed under sections 104 and 4065 of the Employee Retirement Income Security Act of 1974 and sections, 6039D, 6047(e), 6057(b), and 6058(a) of the Internal Revenue Code, referred to as the Code. -- See separate instructions. Form 5500 OMB Nos. 1210-0016 Department of the Treasury 1210-0089 Internal Revenue Service -------------------- -------------- Department of Labor 1996 Pension and Welfare Benefits Administration -------------------- -------------- This Form Is Open to Pension Benefit Guaranty Corporation Public Inspection. - -------------------------------------------------------------------------------- For the calendar plan year 1996 or fiscal plan year beginning , 1996, and ending , 19 - -------------------------------------------------------------------------------- If A(l) through A(4), B, C, and/or D, do not apply to For IRS Use Only this year's return/report, leave the boxes unmarked. EP-ID ---------------------- A This return/report is: (1) [ ] the first return/report filed for the plan; (2) [ ] an amended raturn/report; (3) [ ] the final return/report filed for the plan; or (4) [ ] a short plan year return/report (less than 12 months). IF ANY INFORMATION ON A PREPRINTED PAGE 1 IS INCORRECT, CORRECT IT. IF ANY INFORMATION IS MISSING, ADD IT. PLEASE USE RFD INK WHEN MAKING THESE CHANGES AND INCLUDE THE PREPRINTED PAGE 1 WITH YOUR COMPLETED RETURN/REPORT. B Check here if any information reported in 1a, 2a, 2b, or 5a changed since the last return/report for this plan . . . . . . . . . . . . . . -- [ ] C If your plan year changed since the last return/report check here. . . -- [ ] D If you filed for an extension of time to file this return/report, check here and attach a copy of the approved extension . . . . . . . . -- [ ] - -------------------------------------------------------------------------------- la Name and address of plan sponsor (employer, 1b Employer Identification if for a single-employer plan) number (EIN) (Address should include room or suite no.) 13 632-1489 ------------------------------ 1c Sponsor's telephone number (914) 694-1300 Board of Directors Financial Institutions ------------------------------ Thrift Plan 1d Business code (see 108 Corporate Park Drive instructions, page 20) White Plains, New York 10604 9319 ------------------------------ 1e CUSIP issuer number N/A - -------------------------------------------------------------------------------- 2a Name and address of plan administrator 2b Administrator's EIN (if same as plan sponsor, enter "Same") 13 338-1592 Mr. Michael J. Reynolds, President of ------------------------------ The Financial Institutions Thrift Plan 2c Administrattor's telephone 108 Corporate Park Drive number White Plains, New York 10604 (914) 694-1300 - -------------------------------------------------------------------------------- 3 If you are filing this page without the preprinted historical plan information and the name, address, and EIN of the plan sponsor or plan administrator has changed since the last return/report filed for this plan, enter the information from the last return/report in line 3a and/or line 3b and complete line 3c. a Sponsor .................................EIN...........Plan number........... b Administrator............................EIN................................. c If line 3a indicates a change in the sponsor's name, address, and EIN, is this a change in sponsorship only? (See line 3c on page 8 of the Instructions for the definition of sponsorship.) Enter "Yes" or "No." -- - -------------------------------------------------------------------------------- 4 ENTITY CODE (if not shown, enter the applicable code from Page 8 of the instructions) -- E - -------------------------------------------------------------------------------- 5a Name of plan -- Financial Institutions ..... 5b Effective date of plan ............... Thrift Plan ................ (mo., day, yr.) ............................................ July 1, 1970 - -------------------------------------------------------------------------------- All filers must complete 6a through 6d, as 5c Three-digit applicable. plan number -- 333 6a [ ] Welfare benefit plan ------------------------------ 6b [X] Pension benefit plan 6 | | | | | | | (If the correct codes are not preprinted ------------------------------ below, enter the applicable codes from page 8 | | | | | | | of the instructions in the boxes.) ------------------------------ Multiple Employer Plan -- Other Defined Contribution 6c Pension plan features. (If the correct codes are not preprinted below, enter the applicable ------------------------------ pension plan feature codes from page 8 of the C | G | | | | | | Instructions In the boxes.) ------------------------------ 6d [ ] Fringe benefit plan. Attach Schedule F (Form 5500). See Instructions. - -------------------------------------------------------------------------------- Caution: A penalty for the late or incomplete filing of this return/report will be assessed unless reasonable cause is established. - -------------------------------------------------------------------------------- Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Signature of employer/plan sponsor -- ....................... Date -- .......... Type or print name of individual signing above ................................. Signature of plan administrator -- /s/ Michael J. Reynolds... Date -- ..7/29/97. Type or print name of individual signing above ...Michael J. Reynolds .......... - -------------------------------------------------------------------------------- For Paperwork Reduction Act Notice, see page 1 of the Instructions. MGA Form 5500 (1996) Form 5500 (1996) Page 2 - -------------------------------------------------------------------------------- 6e Check all applicable investment arrangements below (see Instructions on page 9): (1) [ ] Master trust (2) [ ] 103-12 investment entity (3) [X] Common/collective trust (4) [ ] Pooled separate account ............................................................................. ............................................................................. ............................................................................. ............................................................................. f Single-employer plans enter the tax year end of the employer in which this plan year ends -- Month .... Day .... Year .... g Is any part of this plan funded by an insurance contract described in Code section 412(i)? .................. [ ] Yes [X] No h If line 6g is "Yes," was the part subject to the minimum funding standards for either of the prior 2 plan years? ..... [ ] Yes [ ] No - -------------------------------------------------------------------------------- 7 Number of participants as of the end of the plan year (welfare plans complete only lines 7a(4), 7b, 7c, and 7d): a Active participants: (1) Number fully vested ........ a(1) 11,364 ----------- (2) Number partially vested .... a(2) 647 ----------- (3) Number nonvested ........... a(3) 950 ----------------------- (4) Total ................................. a(4) 12,961 ------------ b Retired or separated participants receiving benefits ........... b 74 ------------ c Retired or separated participants entitled to future benefits .. c 5,445 ------------ d Subtotal. Add lines 7a(4), 7b, and 7c .......................... d 18,480 e Deceased participants whose beneficiaries are receiving ------------ or are entitled to receive benefits ............................ e 12 ------------ f Total. Add lines 7d and 7c ..................................... f 18,492 g Number of participants with account balances. (Defined ------------ benefit plans do not complete this line item.) ................. g 15,563 h Number of participants that terminated employment during the ------------ plan year with accrued benefits that were less than 100% vested h 0 ------------ i (1) Was any participant(s) separated from service with a deferred Yes No vested benefit for which a Schedule SSA (Form 5500) ------------ is required to be attached? (See instructions.) ............ i(1) X (2) If "Yes," enter the number of separated participants ------------ required to be reported -- - -------------------------------------------------------------------------------- 8a Was this plan ever amended since its effective date? If "Yes," complete line 8b ..................................... 8a X If the amendment was adopted in this plan year, ------------ complete lines 8c through 8e. b If line 8a is "Yes," enter the date the most recent amendment was adopted -- Month ....1... Day ...20... Year ...97... ------------ c Did any amendment during the current plan year result in the retroactive reduction of accrued benefits for any participants? c X d During this plan year did any amendment change the information ------------ contained in the latest summary plan descriptions or summary description of modifications available at the time of amendment? d X e If line 8d is "Yes," has a summary plan description or summary ------------ description of modifications that reflects the plan amendments referred to on line 8d been both furnished to participants and filed with the Department of Labor? ........................ e X - -------------------------------------------------------------------------------- 9a Was this plan terminated during this plan year or any prior plan year? If "Yes," enter the year -- 9a X b Were all the plan assets either distributed to participants or ------------ beneficiaries, transferred to another plan, or brought under the control of PBGC? ........................................... b X c Was a resolution to terminate this plan adopted during this ------------ plan year at any prior plan year? .............................. c X d If line 9a or line 9c is "Yes," have you received a favorable ------------ determination letter from the IRS for the termination? ......... d e If line 9d is "No," has a determination letter been requested ------------ from the IRS? .................................................. e f If line 9a or line 9c is "Yes," have participants and ------------ beneficiaries been notified of the termination or the proposed termination? ................................................... f g If line 9a is "Yes" and the plan is covered by PBGC, is the plan ------------ continuing to file a PBGC Form 1 and pay premiums until the end of the plan year in which assets are distributed or brought under the control at PBGC? ..................................... g h During this plan year, did any trust assets revert to the ------------ employer for which the Code section 4980 excise tax is due? .... h X i If line 9h is "Yes," enter the amount of tax paid with ------------ Form 5330 -- $ - -------------------------------------------------------------------------------- 10a In this plan year, was this plan merged or consolidated into another plan(s), or were assets or liabilities transferred to another plan(s)? If "Yes," complete lines 10b through 10e ................ -- [ ] Yes [X] No If "Yes," identify other plan(s) c Employer Identification number(s) d Plan number(s) b Name of plan(s) -- ......................................................... ............................................................................ e If required, has a Form 5310-A been filed? .............. -- [ ] Yes [ ] No - -------------------------------------------------------------------------------- 11 Enter the plan funding arrangement 12 Enter the plan benefit arrangement code from page 10 of the code from page 10 of the instructions ................ -- 1 instructions ................ -- 1 - -------------------------------------------------------------------------------- Yes No 13a Is this a plan established or maintained pursuant to one ------------ or more collective bargaining agreements? ..................... 13a X b If line 13a is "Yes," enter the appropriate six-digit ------------ LM number(s) of the sponsoring labor organization(s) (see instructions): (1) (2) (3) - -------------------------------------------------------------------------------- 14 If any benefits are provided by an insurance company, insurance service, or similiar organization, enter the number of Schedules A (Form 5500), Insurance Information, attached. If none, enter "-0-." Form 5500 (1996) Page 3 - -------------------------------------------------------------------------------- Welfare Plans Do Not Complete Lines 15 Through 24. Go To Line 25 On Page 4. - -------------------------------------------------------------------------------- 15a If this is a defined benefft plan subject to the Minimum Yes No funding standards for this plan year, is Schedule B (Form 5500) ------------ required to be attached? (If this is a defined contribution 15a plan, leave blank.) ........................................... ------------ b If this is a defined contribution plan (i.e., money purchase or target benefit), is it subject to the minimum funding standards? (If a waiver was granted, see instructions.) (If ------------ this is a defined benefit plan, leave blank.) ................. b X If "Yes," complete (1), (2), and (3) below: ------------ (1) Amount of employer contribution required for ------------ the plan year under Code section 412 ......... b(l) $ (2) Amount of contribution paid by the employer ------------ for the plan year ............................ b(2) $ Enter date of last payment by employer -- ------------ Month ...... Day ...... Year ...... (3) If (1) is greater than (2), subtract (2) from (1) and enter the funding deficiency here; otherwise, enter -0-. (If you have a funding ------------ deficiency, file Form 5330.) b(3) $ - -------------------------------------------------------------------------------- 16 Has the annual compensation of each participant taken into account under the current plan year been limited as required by section 401(a)(17)? (See instructions.) .................... 16 X - -------------------------------------------------------------------------------- 17a (1) Did the plan distribute any annuity contracts this year? (See instructions.) ....................................... a(1) X (2) If (1) is "Yes," did these contracts contain a requirement that the spouse consent before any distributions under the ------------ contract are made in a form other than a qualified joint and survivor annuity? ..................................... a(2) b Did the plan make distributions or loans to married participants and beneficiaries without the required consent ------------ of the participant's spouse? .................................. b X c Upon plan amendment or termination, do the accrued benefits of every participant include the subsidized benefits that the ------------ participant may become entitled to receive subsequent to the plan amendment or termination? ................................ c X - -------------------------------------------------------------------------------- 18 Is the plan administrator making an election under section 412(c)(8) for an amendment adopted after the end of the plan year? (See instructions.) ..................................... 18 X 19 If a change in the actuarial funding method was made for the plan year pursuant to a Revenue Procedure providing automatic ------------ approval for the change, indicate whether the plan sponsor agrees to the change .......................................... 19 N 20 Is the employer electing to compute minimum funding for the ------------ plan year using the Transition rule of Code section 412(1)(11)? 20 N - -------------------------------------------------------------------------------- 21 Check it you are applying the substantiation guidelines from Revenue Procedure 93-42, in completing lines 21a through 21o (see instructions) ......................................... [ ] If you checked the box, enter the first day of the plan year for which date is being submitted -- Month ... Day ... Year ... a Does the employer apply the separate line of business rules of Code section 414(r) when testing this plan for the coverage ------------ and discrimination tests of Code sections 410(b) and 401(a)(4)? 21a b If line 21a is "Yes," enter the total number of separate lines ------------ of business claimed by the employer -- ........................ If more than one separate line of business, see instructions for additional information to attach. c Does the employer apply the mandatory disaggregation rules ------------ under Income Tax Regulations section 1.41(b)-7(c)? ............ c If "Yes," see instructions for additional information to attach.------------ d In testing whether this plan satisfies the coverage and discrimination tests of Code sections 410(b) and 401(a), does the employer aggregate plans? ................................. d e Does the employer restructure the plan into component plans to ------------ satisfy the coverage and discrimination teats of Code sections 410(b) and 401(a)(4)? ......................................... e f If you meet either of the following exceptions, check the ------------ applicable box to tell us which exception you meet and do NOT complete the rest of question 21: (1) [ ] No highly compensated employee benefited under the plan at any time during the plan year; (2) [ ] This is a collectively bargained plan that benefits only collectively bargained employees, no more than 2% of whom are professional employees. ------------ g Did any leased employee perform services for the employer at any time during the plan year? ................................ g h Enter the total number of employees of the employer. Employer ------------ includes entities aggregated with the employer under Code Number section 414(b), (c), or (m). Include leased employees and ------------ self-employed individuals ..................................... h i Enter the total number of employees excludable because of: ------------ (1) failure to meet requirements for minimum age and years of service; (2) cotectively bargained employees; (3) nonresident aliens who receive no earned income from U.S. sources; and (4) 500 hours of service/last day rule ........................ i j Enter the number of nonexcludable employees. Subtract line 21i ------------ from line 21h ................................................. j k Do 100% of the nonexcludable employees entered on line 21j ------------ benefit under the plan? ....................... [ ] Yes [ ] No If line 21k is "Yes," do NOT complete lines 211 through 21o. ------------ l Enter the number of nonexcludable employees (line 21j) who are highly compensated employees .................................. l m Enter the number of nonexcludable employees (line 21j) who ------------ benefit under the plan ........................................ m n Enter the number of employees entered on line 21m who are ------------ highly compensated employees .................................. n o This plan satisfies the coverage requirements on the basis of ------------ (check one): (1) [ ] The average benefits test (2) [ ] The ratio percentage test--Enter percentage--| | | |.|% - -------------------------------------------------------------------------------- Form 5500 (1996) Page 4 - -------------------------------------------------------------------------------- Welfare Plans Go To Line 25 On This Page. Yes No - -------------------------------------------------------------------------------- 22a Is it or was it ever intended that this plan qualify under Code section 401(a)? If "Yes," complete lines 22b and 22c ..... 22a X b Enter the date of the most recent IRS determination letter ------------ -- Month ...August... Year ...1995... c Is a determination letter request pending with the IRS? ....... c X - -------------------------------------------------------------------------------- 23a Does the plan hold any assets that have a fair market value that is not readily determinable on an established market? (If "Yes," complete line 23b) (See instructions) .............. 23a X b Were all the assets referred to in line 23a valued for the 1996 ------------ plan year by an independent third-party appraiser? ............ b c If line 23b is "No," enter the value of the assets that were ------------ not valued by an independent third-party appraiser for the 1996 plan year. -- .................. d Enter the most recent date the assets on line 23c were valued by an independent third-party appraiser. (If more than one asset, see instructions.) -- Month ...... Day ...... Year ...... (If this plan does not have ESOP features leave line 23e blank and go to line 24.) e If dividends paid on employer securities held by the ESOP were used to make payments on ESOP loans, enter the amount of the dividends used to make the payments ...... | 23e | - -------------------------------------------------------------------------------- 24 Does the employer/sponsor listed on line 1a of this form maintain other qualified pension benefit plans? ............... 24 X If "Yes," enter the total number of plans, including this plan -- - -------------------------------------------------------------------------------- 25a Did any person who rendered services to the plan receive directly or indirectly $5,000 or more in compensation from the plan during the plan year (except for employees of the plan who were paid less than $1,000 in each month)? ........... 25a X If "Yes," complete Part I of Schedule C (Form 5500). ------------ b Did the plan have any trustees who must be listed in Part II of Schedule C (Form 5500)? .................................... b X c Has there been a termination in the appointment of any person ------------ listed on line 25d below? ..................................... c X d If line 25c is "Yes," check the appropriate box(es), answer ------------ lines 25e and 25f, and complete Part III of Schedule C (Form 5500): (1) [ ] Accountant (2) [ ] Enrolled actuary (3) [ ] Insurance carrier (4) [ ] Custodian (5) [ ] Adminisitator (6) [X] Investment manager (7) [ ] Trustee e Have there been any outstanding material disputes or matters ----------- of disagreement concerning the above termimation? ............. e X f If an accountant or enrolled actuary has been terminated ----------- during the plan year, has the terminated accountant/actuary, been provided a copy of the explanation required by Part III of Schedule C (Form 5500) with a notice advising them of their opportunity to submit comments on the explanation directly to the DOL? ................................................... f g Enter the number of Schedules C (Form 5500) that are attached. ----------- If none, enter -0- -- 1 - -------------------------------------------------------------------------------- 26a Is this plan exempt from the requirement to engage an independent qualified public accountant? (see instructions) ... 26a X b If line 26a is "No," attach the accountant's opinion to this ----------- return/report and check the appropriate box. This opinion is: (1) [X] Unqualified (2) [ ] Qualified/disclaimer per Department of LaborRegulations 29 CFR 2520, 103-8 and/or 2520, 103-12(d) (3) [ ] Qualified/disclaimer other (4) Adverse (5) [ ] Other (explain) ....................................... ....................................................... ....................................................... c If line 26a in "No," does the accountant's report, including the financial statements and/or notes required to be atached to this return/report disclose (1) errors or irregularities; (2) illegal acts; (3) material internal control weaknesses; (4) a los contingency indicating that assets are impaired or a liability incurred; (5) significant real estate or other transactions in which the plan and (A) the sponsor, (B) the plan administrator, (C) the employer(s), or (D) the employee organization(s) are jointly involved; (6) that the plan has participated in any related party transactions; or (7) any unusual or infrequent events or transactions occurring subsequent to the plan year end that might significantly affect the usefulness of the financial statements in assessing ----------- the plan's present or future ability to pay benefits? ......... c X d If line 26c, is "Yes," provide the total amount involved in ----------- such disclosure -- - -------------------------------------------------------------------------------- 27 If line 26a is "No," complete the following questions. (You may NOT use "N/A" in response to lines 27a through 27i): If line 27a, 27b, 27c, 27d, 27e, or 27f is checked "Yes," schedules of these items in the format set forth in the instructions are required to be attached to this return/report. Schedule G (Form 5500) may be used as specified in the instructions. During the plan year: a Did the plan have assets held for invement? ...See Rider "A"... 27a X b Were any loans by the plan or fixed income obligations due ----------- the plan in default as of the close of the plan year or classified during the year as uncollectible? .................. b X c Were any leases to which the plan was a party in default or ----------- classified during the year as uncollectible? .................. c X d Were any plan transactions or series of transactions in excess ----------- of 5% of the content value of plan assets? .................... d X e Do the notes to the financial statements accompanying the ----------- accountant's opinion disclose any nonexempt transactions with parties-in-interest? ..................................... e X f Did the plan engage in any nonexempt transactions with ----------- parties-in-interest not reported on line 27e? ................. f X g Did the plan hold qualifying employer securities that are not ----------- publicly traded? .............................................. g X h Did the plan purchase or receive any nonpublicly traded ----------- securities that ware not appraised in writing by an unrelated third party within 3 months prior to their receipt? ........... h X i Did any person manage plan assets who had a financial interest ----------- worth more than 10% in any party providing services to the plan or receive anything of value from any party providing services to the plan? .................................................. i X - -------------------------------------------------------------------------------- Form 5500 (1996) Page 5 - -------------------------------------------------------------------------------- Yes No 28 Did the Plan acquire individual whole life insurance contracts ------------ during the plan year? ......................................... 28 X - -------------------------------------------------------------------------------- 29 During the plan year: a (1) Was this plan covered by a fidelity bond? If "Yes," complete lines 29a(2) and 29a(3) .......................... 29a(1) X (2) Enter amount of bond -- $...500,000........................ ------------ (3) Enter the name of the surety company -- ...Chubb Group of.. ........................................Insurance Companies b (1) Was there any loss to the plan, whether or not reimbursed, caused by fraud or dishonesty? ............................ 29b(1) X (2) If line 29b(l) Is "Yes," enter amount of loss-- $ - -------------------------------------------------------------------------------- 30a Is the plan covered under the Pension Benefit Guaranty Corporation termination insurance program? [ ] Yes [X] No [ ] Not determined b If line 30a is "Yes" or "Not determined," enter the employer identification number and the plan number used to identify it. Employer identification number -- Plan number -- - -------------------------------------------------------------------------------- 31 Current value of plan assets and liabilities at the beginning and end of the plan year. Combine the value of plan assets held in more than one trust. Allocate the value of the plan's interest in a commingled trust containing the assets of more than one plan on a line-by-line basis unless the trust meets one of the specific exceptions described in the instructions. Do not enter the value of that portion of an insurance contract that guarantees, during this plan year, to pay a specific dollar benefit, at a future date. Round off amounts to the nearest dollar; any other amounts are subject to rejection. Plans with no assets at the beginning and the end of the plan year, enter -0- on line 31f. - -------------------------------------------------------------------------------- (a) Beginning (b) End Assets of Year of Year --------------------------------- a Total noninterest-bearing cash ........... a (1,754,122) (1,019,556) --------------------------------- b Receivables: (1) Employer contributions .. b(1) 829,062 --------------------------------- (2) Participant contributions ............ (2) --------------------------------- (3) Income ............................... (3) --------------------------------- (4) Other ................................ (4) (14,274) 197,555 --------------------------------- (5) Less allowance for doubtful accounts . (5) --------------------------------- (6) Total. Add lines 31b(1) through 31b(4) and subtract line 31b(5) ...........-- (6) 14,788 197,555 --------------------------------- c General Investments: (1) Interest-bearing cash (including money market funds) ...... c(1) 39,388,366 3,001,485 --------------------------------- (2) Certificates of deposit .............. (2) 108,577 0 --------------------------------- (3) U.S. Government securities ........... (3) --------------------------------- (4) Corporate debt instruments: (A) Preferred ........................ (4)(A) --------------------------------- (B) All other ........................ (4)(B) --------------------------------- (5) Corporate stocks: (A) Preferned ...... (5)(A) --------------------------------- (B) Common ........................... (5)(B) --------------------------------- (6) Partnership/joint venture interests .. (6) --------------------------------- (7) Real estate: (A) Income-producing .... (7)(A) --------------------------------- (B) Nonincome-producing .............. (7)(B) --------------------------------- (8) Loans (other than to participants) secured by mongages: (A) Residential . (8)(A) --------------------------------- (B) Commercial ....................... (8)(B) --------------------------------- (9) Loans to participants: (A) Mortgages . (9)(A) --------------------------------- (B) Other ............................ (9)(B) 13,653,138 15,474,844 --------------------------------- (10) Other loans .......................... (10) --------------------------------- (11) Value of interest in common/collective trusts ............................... (11) 187,669,766 466,060,713 --------------------------------- (12) Value of interest in pooled separate accounts ............................. (12) --------------------------------- (13) Value of interest in master trusts ... (13) --------------------------------- (14) Value of interest in 103-12 investment entities .................. (14) --------------------------------- (15) Value of interest in registered investment companies ................. (15) --------------------------------- (16) Value of funds held in insurance company general account (unallocated contracts) ........................... (16) 188,749,269 0 --------------------------------- (17) Other ................................ (17) --------------------------------- (18) Total. Add lines 31c(1) through 31c(17) ............................-- (18) 429,569,116 484,537,042 --------------------------------- d Employer-related investments: (1) Employer securities .................. d(1) --------------------------------- (2) Employer real property ............... (2) --------------------------------- e Buildings and other property used in plan operation ................................ e --------------------------------- f Total assets. Add lines 31a, 3lb(6), 31c(18), 31d(1), 31d(2), and 31e .......-- f 428,629,782 483,715,041 --------------------------------- Liabilities --------------------------------- g Benefit claims payable ................... g 2,187,141 4,787,020 --------------------------------- h Operating payables ....................... h 300,146 305,855 --------------------------------- i Acquisition indebtedness ................. i --------------------------------- j Other liabilities ........................ j 560,624 1,286,136 --------------------------------- k Total liabilities. Add lines 31g through 31j ....................................-- k 3,047,911 6,379,011 --------------------------------- Net Assets --------------------------------- l Subtract line 31k from line 31f ........-- l 425,581,871 477,336,030 - -------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS Form 5500 (1996) Page 5 - -------------------------------------------------------------------------------- 32 Plan income, expenses, and changes in net assets for the plan year. Include all income and expenses of the plan, including any trust(s) or separately maintained fund(s), and any payments/receipts to/from insurance carriers. Round off amounts to the nearest dollar; any other amounts are subject to rejection. - -------------------------------------------------------------------------------- Income (a) Amount (b) Total --------------------------------- a Contributions: (1) Received or receivable from: (A) Employers ........................ a(1)(A) 14,593,024 (B) Participants . ................... (B) 30,139,779 (C) Others ........................... (C) 2,964,554 (2) Noncash contributions ................ (2) (3) Total contributions. Add lines 32a(l)(A), (B), (C) and line 32a(2) -- (3) 47,697,357 b Earnings on Investments: (1) Interest (A) Interest-bearing cash (including money market funds) .............. b(1)(A) 1,514,922 (B) Certificates of deposit .......... (B) (C) U.S. Government securities ....... (C) (D) Corporate debt instruments ....... (D) (E) Mortgage loans ................... (E) (F) Other loans ...................... (F) (G) Other interest ................... (G) (H) Total interest. Add lines 32b(1)(A) through (G) ...................... (H) 1,514,922 (2) Dividends: (A) Preferred stock ....... b(2)(A) (B) Common stock ..................... (B) 4,600,412 (C) Total dividends. Add lines 32b(2)(A) and (B) ..............-- (C) 4,600,412 (3) Rents ................................ (3) (4) Net gain (loss) on sale of assets: (A) Aggregate proceeds ............... (4)(A) (B) Aggregate carrying amount (see Instructions) .................... (B) (C) Subtract (B) from (A) and enter result ............................ (C) (5) Unrealized appreciation (depreciation) of assets ............................ (5) (6) Net Investment gain (loss) from common/collective trusts ............. (6) 47,981,345 (7) Net investment gain (loss) from pooled separate accounts .................... (7) (8) Net investment gain (loss) from master trusts ............................... (8) (9) Net investment gain(lost) from 103-12 investment entities .................. (9) (10) Net investment gain(loss) from registered investment companies ...... (10) c Other income ............................. c d Total income. Add all amounts in column (b) and enter total .............-- d 101,794,036 Expenses e Benefit payment and payments to provide benefits: (1) Directly to participants or beneficiaries ........................ e(1) 31,106,792 (2) To Insurance carriers for the provision of benefft ................. (2) (3) Other ................................ (3) (4) Toted payments. Add lines 32e(l) through 32e(3) .....................-- (4) 31,106,792 f Interest expense ......................... f 11' g Administrative expenses: (1) Salaries and allowances ........................... g(1) (2) Accounting fees ...................... (2) 34,579 (3) Actuarial fees ....................... (3) (4) Contract administrator fees .......... (4) (5) Investment advisory and management fees ................................. (5) 1,983,714 (6) Legal fees ........................... (6) 18,538 (7) Valuation/appraltal fees ............. (7) (8) Trustees fees/expenses (Including travel, serninats, meetings, etc.) ... (8) 11,772 (9) Other (See Rider B) .................. (9) (10) Total admInistrative expenses, Add lines 329(1) through 329(9) . . . . . h Total expenses. Add lines 32e(4). 32f, and 329(10) . . . . . . . . . fi~ h 6 0 5 5 0 6 0 i Not Income Iloss). Sul;tram line 32h from line 32d . . . . . . . . . . 1, 1 5 73 8 '9 7 (; j Transfers to (from) the plan (see inaltuctions) . . . . . . . . . . . . 1 3 9 8 4 8 7 1 k Net assets at beginning of year (Ene 311, column (a)) . 4 2 5, 5 8 871 l Net assets at end of year (line 311, column (b)) . . . . 477 336,030 No 'J~ no X 33 Did any employer sponsoring the plan pay any of the administrative expenses of the plan that were not roporied on line 329? SEE NOTES TO FINANCIAL STATEMENTS Prospectus [LOGO] WYMAN PARK BANCORPORATION, INC. (Proposed Holding Company for Wyman Park Federal Savings & Loan Association) $10.00 Per Share 879,750 Shares of Common Stock (Anticipated Maximum) Wyman Park Bancorporation, Inc. (the "Holding Company") is offering up to 879,750 shares of common stock, par value $0.01 per share (the "Common Stock"), in connection with the conversion of Wyman Park Federal Savings & Loan Association, Lutherville, Maryland ("Wyman Park" or the "Association") from a federally chartered mutual savings and loan association to a federally chartered stock savings and loan association and the issuance of all of Wyman Park's outstanding stock to the Holding Company (the "Conversion"). Pursuant to the Association's plan of conversion (the "Plan of Conversion" or the "Plan"), non-transferable rights to subscribe for the Common Stock ("Subscription Rights") have been given, in order or priority, to (i) Wyman Park's depositors with a qualifying minimum deposit of at least $50.00, as of March 31, 1996 ("Eligible Account Holders"), (ii) tax-qualified employee plans of Wyman Park and the Holding Company ("Tax-Qualified Employee Plans") including the Holding Company's Employee Stock Ownership Plan (the "ESOP"), provided, however, that the Tax-Qualified Employee Plans shall have first priority Subscription Rights to the extent that the total number of shares of Common Stock sold in the Conversion exceeds the maximum of the Estimated Valuation Range as defined below, (iii) Wyman Park's depositors as of September 30, 1997 ("Supplemental Eligible Account Holders"), (iv) depositors as of ________, 1997 and certain borrowers ("Other Members"), and (v) its employees, officers and directors (the "Subscription Offering"). (continued on next page) ---------- FOR INFORMATION ON HOW TO SUBSCRIBE, CALL THE STOCK INFORMATION CENTER AT (410) ___-____. ---------- FOR A DISCUSSION OF CERTAIN FACTORS TO BE CONSIDERED, SEE "RISK FACTORS" BEGINNING ON PAGE __. ---------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES REGULATOR, THE OFFICE OF THRIFT SUPERVISION OR THE FEDERAL DEPOSIT INSURANCE CORPORATION, NOR HAS SUCH COMMISSION, REGULATOR, OFFICE OR CORPORATION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ================================================================================ Estimated Underwriting Fees Commissions and Estimated Net Purchase Other Conversion Price(1) Expenses(2) Proceeds(3) -------- ----------- ----------- Per Share(4) ................. $10.00 $.55 $9.45 Minimum Total ................ $6,502,500.00 $405,000.00 $6,097,500.00 Midpoint Total ............... $7,650,000.00 $425,000.00 $7,225,500.00 Maximum Total ................ $8,797,500.00 $445,000.00 $8,352,500.00 Maximum Total, As Adjusted(5) $10,117,130.00 $465,000.00 $9,652,130.00 ================================================================================ - ---------- (1) Determined on the basis of an appraisal prepared by Ferguson & Company, Inc. ("Ferguson") dated as of August 22, 1997 and updated as of October 28, 1997, which states that the estimated pro forma market value of the Common Stock ranged from $6,502,500 to $8,797,500 or between 650,250 shares and 879,750 shares, of Common Stock at $10.00 per share. See "The Conversion - Stock Pricing and Number of Shares to be Issued." (2) Consists of estimated costs to the Association and the Holding Company in the Conversion, including commissions payable to Trident Securities, Inc. ("Trident Securities") estimated to be $405,000 and $445,000, respectively, based on the minimum and the maximum of the Estimated Valuation Range, in connection with the Subscription and Community Offering. Trident Securities has no obligation to purchase the Common Stock. Such fees and commissions to selected dealers, if any, may be deemed to be underwriting fees. See "Pro Forma Data" and "The Conversion - Stock Price and Number of Shares to be Issued" for information regarding such fees and expenses. The Holding Company has agreed to indemnify Trident Securities against certain liabilities, including liabilities arising under the Securities Act of 1933, as amended (the "Act"). Actual expenses and thus net proceeds, may be more or less than estimated amounts. (3) Net Conversion proceeds may vary from the estimated amounts, depending on the number of shares issued and the number of shares sold subject to commissions. The actual number of shares of Common Stock to be issued in the Conversion will not be determined until after the close of the offering. (4) Assumes the sale of the midpoint number of shares. If the minimum, maximum or 15% above the maximum number of shares are sold, estimated expenses per share would be $.62, $.50 or $.45, respectively, resulting in estimated net Conversion proceeds per share of $9.38, $9.50 or $9.55, respectively. (5) As adjusted to give effect to the sale of up to an additional 131,963 shares (15% above the maximum of the Estimated Valuation Range) which may be offered in the Conversion without the resolicitation of subscribers or any right of cancellation, to reflect changes in market and financial conditions following the commencement of the Offering. See "Pro Forma Data," and "The Conversion - Stock Pricing and Number of Shares to be Issued." TRIDENT SECURITIES, INC. The date of this Prospectus is ________, 1997 (continued from prior page) Subject to the prior rights of holders of Subscription Rights, the Holding Company may offer the Common Stock for sale in a direct community offering to members of the general public, with a first preference to natural persons residing in Baltimore and Anne Arundel Counties, Maryland (the "Community Offering" and when combined with the Subscription Offering are referred collectively as the "Subscription and Community Offering"). The Association and the Holding Company reserve the right, in their absolute discretion, to accept or reject, in whole or in part, any or all orders in the Community Offering. Subscription Rights are non- transferrable. Persons found to be selling or otherwise transferring their right to purchase stock in the Subscription Offering or purchasing Common Stock on behalf of another person will be subject to forfeiture of such rights and possible further sanctions and penalties imposed by the Office of Thrift Supervision (the "OTS"), an agency of the United States Government. The total number of shares to be issued in the Conversion will be based upon an appraised valuation of the estimated aggregate pro forma market value of the Holding Company and the Association as converted. The purchase price per share ("Purchase Price") has been fixed at $10.00. Based on the current aggregate valuation range of $6.50 million to $8.79 million (the "Estimated Valuation Range"), the Holding Company is offering for sale up to 879,750 shares. Depending upon the market and financial conditions at the time of the completion of the offering, if any, the total number of shares to be issued in the Conversion may be increased or decreased from the 879,750 shares offered hereby, provided that the product of the total number of shares multiplied by the price per share remains within, or does not exceed by more than 15% the maximum of the Estimated Valuation Range. If the aggregate Purchase Price of the Common Stock sold in the Conversion is below $6,502,500 or above $10,117,130, or if the offering is extended beyond __________, 1997, subscribers will be permitted to modify or cancel their subscriptions and to have their subscription funds returned promptly with interest. Under such circumstances, if subscribers take no action, their subscription funds will be promptly returned to them with interest. In all other circumstances, subscriptions are irrevocable by subscribers. See "The Conversion - Offering of Holding Company Common Stock." With the exception of the Tax-Qualified Employee Plans and certain large depositors, no Eligible Account Holder, Supplemental Eligible Account Holder or Other Member may purchase in their capacity as such in the Subscription Offering more than $100,000 of Common Stock. In the aggregate, no person, together with associates of and persons acting in concert with such person or persons on a single account, may purchase more than $100,000 of Common Stock offered in the Conversion based on the Estimated Valuation Range. Under certain circumstances, the maximum purchase limitations may be increased or decreased at the sole discretion of the Association and the Holding Company up to 9.99% of the total number of shares of Common Stock sold in the Conversion or to one percent of shares of Common Stock offered in the Conversion. The minimum purchase is 25 shares. See "The Conversion - Additional Purchase Restrictions." The Holding Company must receive an order form and certification form (together referred to as the "Order Form"), together with full payment at $10.00 per share (or appropriate instructions authorizing a withdrawal from a deposit account at the Association) for all shares for which subscription is made, at any office of the Association, by 12:00 noon, Lutherville, Maryland time, on ________, 1997, unless the Subscription and Community Offering is extended, at the discretion of the Board of Directors, up to an additional 45 days with the approval of the OTS, if necessary, but without additional notice to subscribers (the "Expiration Date"). See "The Conver sion - Offering of Holding Company Common Stock." Subscriptions paid by check, bank draft or money order will be placed in a segregated account at the Association and will earn interest at the Association's passbook rate from the date of receipt until completion or termination of the Conversion. Payments authorized by withdrawal from deposit accounts at the Association will continue to earn interest at the contractual rate until the Conversion is completed or terminated; these funds will be otherwise unavailable to the depositor until such time. Authorized withdrawals from certificate accounts for the purchase of Common Stock will be permitted without the imposition of early withdrawal penalties or loss of interest. Following the completion of the offering, it is anticipated that the common stock will be traded on the over-the-counter market with quotations available through the OTC Electronic Bulletin Board ("OTC Bulletin Board"). If the common stock cannot be quoted and traded on the Bulletin Board it is expected that the transactions in the common stock will be reported in the pink sheets published by the National Quotation Bureau, Inc. Prior to this offering there has not been a public market for the Common Stock, and there can be no assurance that an active and liquid trading market for the Common Stock will develop or that resales of the Common Stock can be made at or above the Purchase Price. See "Market for Common Stock" and "The Conversion - Stock Pricing and Number of Shares to be Issued." 2 [MAP TO COME] 3 PROSPECTUS SUMMARY The following summary does not purport to be complete and is qualified in its entirety by the detailed information and financial statements appearing elsewhere herein. Wyman Park Bancorporation, Inc. The Holding Company, Wyman Park Bancorporation, Inc., was formed in 1997 by Wyman Park under the laws of Delaware for the purpose of becoming a savings and loan holding company which will own all of the outstanding capital stock that Wyman Park will issue in connection with the Conversion. Immediately following the Conversion, the only significant assets of the Holding Company will be the capital stock of Wyman Park and up to approximately 50% of the net proceeds from the Conversion, a portion of which is expected to be used to fund the Holding Company's loan to its Employee Stock Ownership Plan ("ESOP"). See "Use of Proceeds." Upon completion of the Conversion, the Holding Company's business initially will consist only of the business of Wyman Park. The executive office of the Holding Company is located at 11 West Ridgely Road, Lutherville, Maryland 21093 and its telephone number at that address is (410) 252-6450. See "Wyman Park Bancorporation, Inc." Wyman Park Wyman Park was founded in 1914 as an Maryland-chartered mutual association and converted to a federally chartered association in 1937. Wyman Park serves the financial needs of families and local businesses in its primary market area through its main office located in central Baltimore County and through its branch office located in northern Anne Arundel County, Maryland. Its deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation ("FDIC"). At June 30, 1997, Wyman Park had total assets of $62.2 million, deposits of $56.1 million and retained earnings of $4.8 million (or 7.6% of total assets). Wyman Park's business involves attracting deposits from the general public and using such deposits to originate one- to four-family permanent and construction residential mortgage and, to a lesser extent, commercial real estate, multi-family, consumer (secured and unsecured), land and second mortgage loans in its market area. The Association also invests in investment securities consisting primarily of U.S. government obligations and various types of short-term liquid assets. See "Business." The Association's basic mission is to maintain its focus as an independent, community- oriented financial institution serving customers in its primary market area. The Board of Directors has sought to accomplish this mission through the adoption of a strategy designed to improve its capital position and maintain its high asset quality, manage the Association's sensitivity to changes in interest rates and improve the Association's net interest margin. The Association has attempted to effect its strategy by (i) continuing to emphasize one- to four-family permanent and construction 4 residential mortgage lending, (ii) supplementing residential lending with investments in commercial real estate, consumer and other loans, (iii) emphasizing the origination of adjustable rate and short-and medium-term (up to 15 years) loans and investments; and (iv) maintaining a low overhead. Financial highlights of the Association include the following: o Capital Position. - At June 30, 1997, the Association had retained earnings of $4.8 million (7.6 of total assets). Wyman Park's regulatory capital exceeds all regulatory capital requirements. At June 30, 1997, Wyman Park's risk-based capital totaled $5.0 million which was approximately $2.3 million above the Association's capital requirement at such date. Assuming on a pro forma basis that $8.05 million of shares, the maximum of the Estimated Valuation Range, were sold in the Conversion and approximately 50% of the net Conversion proceeds were contributed to Wyman Park by the Holding Company, as of June 30, 1997, the Association's risk-based capital would have been $7.9 million (22.5% of risk adjusted total assets). See "Regulation - Regulatory Capital Requirements." o Asset Quality. - The Association's ratio of non-performing assets to total assets was .28% at June 30, 1997. The Association's non-performing assets primarily consist of one- to four-family mortgage loans. See "Business - Delinquencies and Non- Performing Assets." The information set forth above should be considered in light of the factors described under the caption "Risk Factors." For additional information regarding the implementation of the Association's business strategy, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Asset/Liability Management." Forward-Looking Statements In connection with this initial public offering, when used in this Prospectus, in the Company's press releases or other public or shareholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project" or similar expressions are intended to identify "forward-looking statements." Such statements are subject to risks and uncertainties, including but not limited to changes in economic conditions in the Holding Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Holding Company's market area and competition, all or some of which could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Holding Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and are subject to the above-stated qualifications in any event. The Holding Company wishes to advise readers that the factors listed above could affect the Holding Company's financial performance and could cause the Holding Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. 5 The Holding Company does not undertake--and specifically declines any obligation--to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. The Conversion Plan of Conversion. Under the Plan of Conversion, the Conversion is subject to certain conditions, including the prior approval of the Plan by the Association's members at a Special Meeting to be held on __________, 1997. After the Conversion, the Association's current voting members (who include certain deposit account holders and certain borrowers) will have no voting rights in Wyman Park and will have no voting rights in the Holding Company unless they become Holding Company stockholders. Eligible Account Holders and Supplemental Eligible Account Holders, however, will have certain liquidation rights in the Association. See "The Conversion Effects of Conversion to Stock Form on Depositors and Borrowers of the Association - Liquidation Rights." The Subscription and Community Offering. The shares of Common Stock to be issued in the Conversion are being offered at a Purchase Price of $10.00 per share in the Subscription Offering pursuant to nontransferable Subscription Rights in the following order of priority: (i) Eligible Account Holders (i.e., depositors in the Association on March 31, 1996); (ii) Tax-Qualified Employee Plans (in this case, the Holding Company's ESOP); provided, however, that the Tax- Qualified Employee Plans shall have first priority Subscription Rights to the extent that the total number of shares of Common Stock sold in the Conversion exceeds the maximum of the Estimated Valuation Range; (iii) Supplemental Eligible Account Holders (i.e., depositors in the Association on September 30, 1997); (iv) Other Members (e.g., depositors of the Association as of _________, 1997); and (v) employees, officers and directors of the Association. Subscription Rights received in any of the foregoing categories will be subordinated to the Subscription Rights received by those in a prior category. Subscription Rights will expire if not exercised by _:__ _.m., Lutherville, Maryland time, on __________, 1997, unless extended (the "Expiration Date"). Concurrently, and subject to the prior rights of holders of Subscription Rights, any shares of Common Stock not subscribed for in the Subscription Offering are being offered at the same price in the Community Offering to members of the general public, with a preference given to natural persons residing in Baltimore and Anne Arundel Counties, Maryland. The Association and the Holding Company have engaged Trident Securities as financial advisor and to assist in the distribution of shares of Common stock. Depending on market conditions and subject to the prior rights of holders of Subscription Rights, the Common Stock may be offered for sale to the general public on a best efforts basis in the Community Offering through a selected dealers arrangement to be coordinated by Trident Securities. 6 The Association has established a Stock Information Center, managed by Trident Securities, to coordinate the Subscription and Community Offering, including tabulating orders and answering questions about the Subscription and Community Offering received by telephone. All subscribers will be instructed to mail payment to the Stock Information Center or deliver payment directly to the Association's office. Payment for shares of Common Stock may be made by cash (if delivered in person), check or money order or by authorization of withdrawal from deposit accounts maintained with the Association. Such funds will not be available for withdrawal and will not be released until the Conversion is completed or terminated. The Association will not accept wire transfers for the payment of stock for any reason. See "The Conversion - Method of Payment for Subscriptions." Purchase Limitations. The Plan of Conversion places limitations on the number of shares which may be purchased in the Conversion by various categories of persons. With the exception of the Tax-Qualified Employee Plans and certain large depositors, no Eligible Account Holder, Supplemental Eligible Account Holder or Other Member may purchase in their capacity as such in the Subscription Offering more than $100,000 of Common Stock offered in the Conversion. In the aggregate, no person or group of persons acting in concert (other than the Tax-Qualified Employee Plans) or persons on a single account may purchase more than $100,000 of Common Stock offered in the Conversion. These purchase limits may be increased or decreased consistent with OTS regulations at the sole discretion of the Holding Company and the Association. See "The Con version - Offering of Holding Company Common Stock." Prospectus Delivery and Procedure for Purchasing Shares. To ensure that each purchaser receives a prospectus at least 48 hours prior to the Expiration Date in accordance with Rule 15c2-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), no prospectus will be mailed any later than five days prior to such date or hand delivered any later than two days prior to such date. Execution of the order form will confirm receipt or delivery in accordance with Rule 15c2-8. Order forms will be distributed only with a prospectus. The Association will accept for processing orders submitted on original order forms with an executed certification. Photocopies or facsimile copies of order forms or the form of certification will not be accepted. Payment by cash, check, money order, bank draft or debit authorization to an existing account at the Association must accompany the order form. No wire transfers will be accepted. See "The Conversion - Method of Payment for Subscriptions." In order to ensure that Eligible Account Holders, Supplemental Eligible Account Holders and Other Members receive their stock purchase priorities, depositors must list all accounts on the Order Form, giving all names on each account and the account number as of the applicable record date. Restrictions on Transfer of Subscription Rights. Prior to the completion of the Conversion, no person may transfer or enter into any agreement or understanding to transfer the legal or beneficial ownership of the Subscription Rights or the shares of Common Stock to be issued upon their exercise. Each person exercising Subscription Rights will be required to certify that a purchase of Common Stock is solely for the purchaser's own account and that there is no agreement or 7 understanding regarding the sale or transfer of such shares. Persons found to be selling or otherwise transferring their right to purchase stock in the Subscription Offering or purchasing Common Stock on behalf of another person will be subject to forfeiture of such rights and possible federal penalties and sanctions. See "The Conversion - Restrictions on Transfer of Subscription Rights and Shares." Stock Pricing. The price of the Common Stock is $10.00 per share and is the same for all purchasers, including insiders. The aggregate pro forma market value of the Holding Company and Wyman Park, as converted, was estimated by Ferguson, a firm experienced in appraising converting thrift institutions, to range from $6,502,500 to $8,797,500 at August 22, 1997 (the "Estimated Valuation Range"). Depending on market and financial conditions at the completion of the Subscription and Community Offering, the number of shares of Common Stock to be issued in the Conversion may be increased or decreased significantly from the 879,750 shares offered hereby and the price per share may be decreased. However, subscribers will be permitted to modify or rescind their subscriptions if the product of the number of shares to be issued multiplied by the price per share is less than $6,502,500 or more than $10,117,130. See "Pro Forma Data" and "The Conversion - Stock Pricing and Number of Shares to be Issued" for a description of the manner in which such valuation was made and the limitations on its use. The Ferguson appraisal is not intended to be, and must not be interpreted as, a recommendation of any kind as to the advisability of voting to approve the Conversion or of purchasing shares of Common Stock. The appraisal considers Wyman Park and the Holding Company only as going concerns and should not be considered as any indication of the liquidation value of Wyman Park or the Holding Company. Moreover, the appraisal is necessarily based on many factors which change from time to time. There can be no assurance that persons who purchase shares in the Conversion will be able to sell such shares at prices at or above the Purchase Price. Purchases by Directors and Officers The directors and officers of Wyman Park intend to purchase, in the Subscription Offering for investment purposes and at the same price as the shares are sold to other investors in the Conversion, approximately $600,000 of Common Stock or 7.8% of the shares to be issued in the Conversion at the midpoint of the Estimated Valuation Range (exclusive of an aggregate of 8% of the shares to be issued in the Conversion which are anticipated to be purchased by the ESOP). See "The Conversion - Participation by the Board." Potential Benefits of Conversion to Directors and Executive Officers Employee Stock Ownership Plan. The Board of Directors of the Association has adopted an ESOP, a tax-qualified employee benefit plan for officers and employees of the Holding Company and the Association. All employees of the Association are eligible to participate in the ESOP after they attain age 21 and complete one year of service. The Association contribution to the ESOP is allocated among participants on the basis of their relative compensation. Each participant's account will be credited with cash and shares of the Holding Company's Common Stock based upon compensation earned during the year with respect to which the contribution is made. The ESOP 8 intends to buy up to 8% of the Common Stock issued in the Conversion (approximately $520,200 to $703,800 of the Common Stock based on the issuance of the minimum and the maximum of the Estimated Valuation Range and the $10.00 per share Purchase Price). The ESOP will purchase the shares with funds borrowed from the Holding Company, and it is anticipated that the ESOP will repay the loans through periodic tax-deductible contributions from the Association over a ten-year period. These contributions will increase the compensation expense of the Association. See "Management - Benefit Plans - Employee Stock Ownership Plan" for a description of this plan. Employment Agreement. The Association has had, since 1989, an employment contract with its President, Ernest A. Moretti. The agreement provides for a salary equal to Mr. Moretti's current salary, contains bonus provisions tied to the Association's performance, and has a term of three years (subject to an annual extension for an additional year following an annual performance review). The key terms of this agreement are expected to be incorporated into a new agreement which also provides that under certain circumstances, including a change in control, Mr. Moretti would be entitled, subject to certain limitations, to a severance payment equal to 299% of his base amount of compensation, as defined in the agreement. Assuming the proposed contract was in effect and a change in control occured as of June 30, 1997, Mr. Moretti would have received approximately $360,836 pursuant to this change in control provision. See "Management - Employment Agreement" for a more detailed description of this agreement. Other Stock Benefit Plans. In addition to the ESOP and the employment agreements, in the future the Holding Company may consider the implementation of a stock option plan ("Stock Option Plan") and recognition and retention plan ("RRP") for the benefit of selected directors, officers and employees of the Holding Company and the Association. Any such Stock Option Plan or RRP will not be implemented within one year of the date of the consummation of the Conversion, subject to continuing OTS jurisdiction. It is anticipated that the Stock Option Plan and RRP will be comprised of at least 10% and 4%, respectively, of the Holding Company stock sold in the Conversion. Grants of common stock pursuant to the RRP will be issued without cost to the recipient. If a determination is made to implement a Stock Option Plan or RRP, it is anticipated that any such plans will be submitted to stockholders for their consideration at which time stockholders would be provided with detailed information regarding such plan. If such plans are approved, they will affect the Holding Company's net income and stockholders' equity, although the actual results cannot be determined until such plans are implemented. Use of Proceeds The net proceeds from the sale of Common Stock in the Conversion (estimated at $6.1 million, $7.2 million, $8.4 million and $9.7 million based on the minimum, midpoint, maximum and 15% above the maximum respectively, number of shares, respectively) will substantially increase the capital of Wyman Park. See "Pro Forma Data." The Holding Company will utilize approximately 50% of the net proceeds from the issuance of the Common Stock to purchase all of the common stock of Wyman Park to be issued upon Conversion and will retain approximately 50% of the net proceeds. The proceeds retained by the Holding Company will be invested initially in short-term securities of a type similar to those invested in by the Association. In addition, the Holding Company, subject to regulatory approval, is expected to fund the ESOP loan. Such proceeds will also be available for general corporate purposes, including the possible repurchase of shares of the Common Stock, as permitted by applicable regulation. The Holding Company currently has no specific plan to make any such repurchases of any of its Common Stock. The net proceeds received by Wyman Park will become part of Wyman Park's general funds for use in its business, subject to applicable regulatory restrictions, and will be available to use for the acquisition of deposits or assets or both from other institutions, although no such acquisitions are being 9 contemplated at this time, or for other corporate purposes. See "Use of Proceeds" for additional information on the utilization of the offering proceeds as well as on the OTS restrictions on repurchases of the Holding Company's stock. Dividends The Holding Company does not anticipate initially paying a dividend on the Common Stock. Dividends, when and if paid, will be subject to determination and declaration by the Board of Directors in its discretion, which will take into account the Holding Company's consolidated financial condition and results of operations, tax considerations, industry standards, economic conditions, regulatory restrictions, general business practices and other factors. See "Dividends," "Regulation - Regulatory Capital Requirements" and "- Limitations on Dividends and Other Capital Distributions." The Holding Company currently has no intention to initiate, and will not initiate for a period of at least one year following completion of the Stock Conversion, any action which leads to a return of capital (as distinguished from a dividend) to stockholders of the Holding Company. Market For Common Stock The Holding Company has never issued capital stock to the public and, consequently, there is no existing market for the Common Stock. Following the completion of the offering, it is anticipated that the common stock will be traded on the over-the-counter market with quotations available through the OTC Bulletin Board. Trident Securities has indicated its intention to make a market in the Common Stock If the common stock cannot be quoted and traded on the OTC Bulletin Board it is expected that the transactions in the common stock will be reported in the pink sheets published by the National Quotation Bureau, Inc. Making a market may include the solicitation of potential buyers and sellers in order to match buy and sell orders. However, Trident will not be subject to any obligation with respect to such efforts. There can be no assurance that an active or liquid trading market will develop for the Common Stock, or if a market develops, that it will continue. A public market having the desirable characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace of both willing buyers and sellers of the Common Stock at any given time, which is not within the control of the Holding Company or any market maker. Accordingly, there can be no assurance that purchasers will be able to sell their shares at or above the Purchase Price. See "Market for Common Stock." Risk Factors Special attention should be given to the following factors discussed under "Risk Factors": lending activities; vulnerability to changes in interest rates; competition; geographical concentration of loans; certain anti-takeover provisions; voting control of shares by the Board, management, and employee plans; low return on equity and low net interest margin; ESOP compensation expense; absence of prior market for common stock; proposed federal legislation; and risk of delay. 10 SELECTED CONSOLIDATED FINANCIAL INFORMATION June 30, ------------------------------------------ 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- (In Thousands) Selected Financial Condition Data: - ---------------------------------- Total assets ...................... $62,241 $63,866 $64,258 $64,666 $65,405 Loans receivable, net ............. 55,189 53,244 54,403 52,093 48,724 Mortgage-backed securities ........ 356 424 520 605 4,912 Investment securities ............. 2,993 2,964 5,920 7,935 8,300 Deposits .......................... 56,095 57,871 58,474 59,389 59,765 Total equity .................... 4,750 4,599 4,277 3,854 3,634 Year Ended June 30, ------------------------------------------ 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- (In Thousands) Selected Operations Data: - ------------------------- Total interest income ............ $ 4,658 $ 4,725 $ 4,788 $ 4,537 $ 4,988 Total interest expense ........... 2,756 3,073 2,891 2,777 3,202 ------- ------- ------- ------- ------- Net interest income ........... 1,902 1,652 1,897 1,760 1,786 Provision for (recovery of) loan losses ..................... 145 25 (88) 183 133 ------- ------- ------- ------- ------- Net interest income after provision for loan losses ....... 1,757 1,627 1,985 1,577 1,653 Fees and service charges ......... 48 47 36 28 23 Gain on sales of loans, mortgage-backed securities and investment securities ....... 6 20 23 442 354 Other non-interest income ........ 24 39 26 177 135 ------- ------- ------- ------- ------- Total non-interest income ........ 78 106 85 647 512 Total non-interest expense ....... 1,614 1,278 1,361 1,411 1,222 ------- ------- ------- ------- ------- Income before taxes and cumulative effect of accounting change ............... 221 455 709 813 943 Income tax provision ............. 87 161 276 315 370 Cumulative effect of accounting change ............... -- -- -- -- 69 ------- ------- ------- ------- ------- Net income ....................... $ 134 $ 294 $ 433 $ 498 $ 642 ======= ======= ======= ======= ======= 11
Year Ended June 30, ------------------------------------------------------- 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- Selected Financial Ratios and Other Data: - ----------------------------------------- Performance Ratios: Return on assets (ratio of net income to average total assets) ....................................................... .22% .46% .67% .80% .99% Return on retained earnings (ratio of net income to average equity) ............................................... 2.87 6.56 10.52 13.22 21.02 Interest rate spread information: Average during period .......................................... 2.76 2.26 2.70 2.46 2.54 End of period .................................................. 2.77 2.19 2.25 2.93 2.86 Net interest margin(1) .......................................... 3.14 2.63 2.98 2.75 2.81 Ratio of operating expense to average total assets .............. 2.62 2.01 2.11 2.27 1.89 Ratio of average interest-earning assets to average interest-bearing liabilities .................................. 108.40 107.66 106.24 106.66 105.31 Loans as a percentage of total assets ........................... 88.67 83.37 84.66 80.56 74.50 Quality Ratios: Non-performing assets to total assets at end of period ........... .28 .04 .30 .25 .28 Allowance for loan losses to non-performing loans ................ 153.11 456.89 51.89 196.32 234.46 Allowance for loan losses to loans receivable, net ............... .49 .24 .18 .60 .87 Capital Ratios: Retained earnings to total assets at end of period ............... 7.64 7.24 6.73 6.02 5.19 Average retained earnings to average assets ...................... 7.58 7.04 6.36 6.05 4.71 Other Data: Number of full-service offices ................................... 2 2 2 2 2
- ----------- (1) Net interest income divided by average interest earning assets. 12 RECENT FINANCIAL DATA SELECTED CONSOLIDATED FINANCIAL INFORMATION At At September 30, June 30, ------------- -------- 1997 1997 ---- ---- (In Thousands) Selected Financial Condition Data: - ---------------------------------- Total assets ........................................ $63,391 $62,241 Loans receivable, net ............................... 57,787 55,189 Mortgage-backed securities .......................... 334 356 Investment securities ............................... 2,000 2,993 Deposits ............................................ 55,898 56,095 Total borrowings .................................. 2,000 --- Total equity ........................................ 4,755 4,750 Three Months Ended September 30, ------------------ 1997 1996 ---- ---- (In Thousands) Selected Operations Data: - ------------------------- Total interest income ............................... $ 1,200 $ 1,169 Total interest expense .............................. 695 734 ------- ------- Net interest income ............................... 505 435 Provision for loan losses ........................... 3 4 ------- ------- Net interest income after provision for loan losses . 502 431 Fees and service charges ............................ 14 13 Gain on sales of loans .............................. --- 2 Other non-interest income ........................... 6 6 ------- ------- Total non-interest income ......................... 20 21 Total non-interest expense ........................ 520 662 ------- ------- Income (loss) before tax provision (benefit) ........ 2 (210) Income tax provision (benefit) ...................... 1 (82) ------- ------- Net income .......................................... $ 1 $ (128) ======= ======= 13 Three Months Ended September 30, ------------------ 1997 1996 ---- ---- Selected Financial Ratios and Other Data: - ----------------------------------------- Performance Ratios: Return on assets (ratio of net income (loss) to average total assets) ........................ .01% (.82)% Return on retained earnings (ratio of net income (loss) to average equity) ....................... .07 (11.13) Interest rate spread information: Average during period ............................ 2.90 2.46 End of period .................................... 2.65 2.35 Net interest margin(1) ............................ 3.28 2.84 Ratio of operating expense to average total assets. 3.33 4.26 Ratio of average interest-earning assets to average interest-bearing liabilities .................... 108.27 107.78 Loans as a percentage of total assets ............. 91.16 89.64 Quality Ratios: Non-performing assets to total assets at end of period ................................. .24 .04 Allowance for loan losses to non-performing loans .. 183.40 549.52 Allowance for loan losses to loans receivable, net . .47 .24 Capital Ratios: Retained earnings to total assets at end of period . 7.50 7.30 Average retained earnings to average assets ........ 7.70 7.41 Other Data: Number of full-service offices ..................... 2 2 - ----------- (1) Net interest income divided by average interest earning assets. 14 MANAGEMENT'S DISCUSSION OF RECENT FINANCIAL DATA The Association's total assets increased by approximately $1.2 million or 1.8% from $62.2 million at June 30, 1997 to $63.4 million at September 30, 1997. The increase in total assets for the three months ended September 30, 1997, was primarily attributable to an increase of $2.6 million or 4.7% in loans receivable, net, from $55.2 million to $57.8 million, which was partially offset by a decrease in cash and cash equivalents of $480,000 and a decrease in investment securities of $993,000. The increase in total assets was primarily funded by borrowing $2.0 million from the Federal Home Loan Bank of Atlanta. This funding was more than offset by a decrease of $197,000 or .4% in deposits and a decrease of $921,000 or 74.2% in advance payments by borrowers for taxes and insurance, while other liabilities increased by $263,000. The increase in loans receivable, net, consisted primarily of a $2.2 million increase in residential mortgage loans and a $362,000 increase in participation loans. The increase in residential mortgage loans was the result of a favorable interest rate environment and increased refinancing activity. At September 30, 1997, the Association exceeded all regulatory capital requirements, with tangible capital of $4.8 million (7.5% of adjusted total assets), core capital or $4.8 million (7.5% of adjusted total assets) and risk-based capital of $5.0 million (14.2% of risk-weighted assets). The Association reported net income of $1,000 for the three months ended September 30, 1997, as compared to a net loss of $128,000 for the three months ended September 30, 1996. The $129,000 improvement in earnings was primarily attributable to a $70,000 or 16.1% increase in net interest income and a $142,000 or 21.5% decrease in non-interest expense; both of which were partially offset by an $83,000 change in the income taxes from an $82,000 income tax benefit for the three months ended September 30, 1996 to a $1,000 provision for income taxes for the three months ended September 30, 1997. The $70,000 increase in net interest income consisted of a $31,000 or 2.7% increase in total interest income and a $39,000 or 5.3% decrease in total interest expense. The increase in total interest income was primarily attributable to a $3.1 million increase in average loans receivable for the three months ended September 30, 1997 compared to the three months ended September 30, 1996; offset by a $3.0 million decrease in average other investments for the same periods, respectively. This change in investment mix resulted in an improvement in the Association's yield on interest earning assets to 7.79% for the three months ended September 30, 1997 from 7.63% for the three months ended September 30, 1996. The decrease in total interest expense was primarily attributable to a continuing decrease in rates paid on certificate accounts which resulted in an improvement in the cost of interest-bearing liabilities to 4.89% for the three months ended September 30, 1997 from 5.17% for the three months ended September 30, 1996. Average interest rate spread was 2.90% for the three months ended September 30, 1997 compared to 2.46% for the three months ended September 30, 1996 and net interest margin was 3.28% and 2.84% for the same periods, respectively. The $142,000 decrease in non-interest expense was primarily attributable to a $408,000 decrease in federal deposit insurance premium expenses for the three months ended September 30, 1997 compared to the three months ended September 30, 1996 which was partially offset by a $266,000 increase in compensation expense 15 for the same periods, respectively. The decrease in federal deposit insurance premiums expense was primarily the result of the one time assessment to all associations during the three months ended September 30, 1996 by the Savings Association Insurance Fund to recapitalize that fund. The Association's portion of that assessment was approximately $383,000. The remaining decrease in the expense was the result of reduced insurance premiums in 1997 pursuant to that recapitalization. The increase in compensation expense was primarily due to the establishment of a non-qualified supplemental executive retirement plan for the benefit of the Association's President and Chief Executive Officer during the three months ended September 30, 1997. The $83,000 change in income taxes was primarily the result of applying the combined effective federal and state tax rate of 38.6% to the income (loss) before income taxes of $2,000 for the three months ended September 30, 1997 and ($210,000) for the three months ended September 30, 1996. 16 RISK FACTORS The following factors, in addition to those discussed elsewhere in this Prospectus, should be considered by investors before deciding whether to purchase the Common Stock offered in the Subscription and Community Offering. Vulnerability to Changes in Interest Rates The Association's profitability, like that of many financial institutions, is dependent to a large extent upon its net interest income, which is the difference between its interest income on interest-earning assets, such as loans and investments, and its interest expense on interest-bearing liabilities, such as deposits. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or reprice (for example, if mortgage loans pre-pay) more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income. At June 30, 1997, fixed-rate loans totaled $35.4 million or 63.4% of the Association's loan portfolio while adjustable-rate loans totaled $20.5 million or 36.6% of the Association's loan portfolio. It is likely that, in the event of an increase in interest rates, the Association would experience a decline in profitability. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Asset and Liability Management." Geographical Concentration of Loans At June 30, 1997, substantially all of the Association's real estate mortgage loans were secured by properties located in the Association's market area of Baltimore County and its contiguous counties in Maryland. While the Association currently believes that its loans are adequately secured or reserved for, in the event that real estate prices in the Association's market area substantially weaken or economic conditions in its market area deteriorate, some borrowers may default and the value of the real estate collateral may be insufficient to fully secure the loan. In such events, the Association may experience increased levels of delinquencies and related losses having an adverse impact on net income. Low Return on Equity and Low Net Interest Margin As a result of the Association's high capital levels and the additional capital that will be raised in the Conversion, its ability to leverage quickly the net proceeds from the Conversion is highly likely to be limited. In addition, recent policy changes may limit the amount of repurchases of common stock that can be effected by the Holding Company. Further, in comparison to its peers, the Association has a low net interest margin due in part to a high relative balance of certificate accounts compared to transaction accounts, the latter of which typically pay lower interest rates. Specifically, at June 30, 1997, the Association had $40.2 million in certificate accounts and $15.9 17 million in transaction accounts. Certificate accounts are traditionally believed to be subject to more rate competition than are transaction accounts, which can result in an otherwise higher cost of funds. Accordingly, it is anticipated that, for severl years, net interest margin and return on equity are likely to be low in comparison to the Association's peers. ESOP Compensation Expense In November, 1993, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position 93-6 "Employers' Accounting for Employee Stock Ownership Plans" ("SOP 93-6"). SOP 93-6 requires an employer to record compensation expense in an amount equal to the fair value of shares committed to be released to employees from an employee stock ownership plan. Assuming shares of Common Stock appreciate in value over time, the adoption of SOP 93-6 will increase compensation expense relating to the ESOP to be established in connection with the Conversion. It is impossible to determine at this time the extent of such impact on future net income. Voting Control of Shares by the Board, Management and Employee Plans The proposed purchases by the Board of Directors, management and employees in the Subscription and Community Offering could render it more difficult to obtain majority support for stockholder proposals opposed by the Board and management. Assuming the sale of shares at the minimum, midpoint and maximum of the Estimated Valuation Range, the proposed purchases of $600,000 of shares of the Common Stock by the Board and the executive officers would represent 9.2%, 7.8% and 6.8%, respectively, of the shares to be outstanding upon completion of the Stock Conversion. In addition, the ESOP intends to purchase 8% of the shares of Common Stock sold in the Subscription and Community Offering. (Prior to allocation, shares held by the ESOP will be voted by the independent trustee in its sole discretion.) See "Management - Benefit Plans," "Description of Capital Stock" and "Takeover Defensive Provisions." Absence of Prior Market for Common Stock Wyman Park, as a mutual thrift institution, and the Holding Company, as a newly organized company, have never issued capital stock. Consequently, there is not at this time an existing market for the Common Stock. Following the completion of the offering, it is anticipated that the common stock will be traded on the over-the-counter market with quotations available through the OTC Bulletin Board. If the common stock cannot be quoted and traded on the OTC Bulletin Board it is expected that the transactions in the common stock will be reported in the pink sheets published by the National Quotation Bureau, Inc. Making a market may include the solicitation of potential buyers and sellers in order to match buy and sell orders. However, Trident will not be subject to any obligation with respect to such efforts. There can be no assurance that an active and liquid market for the Common Stock will develop or be maintained, or that resales of the Common Stock can be made at or above the conversion offering price after the completion of the Conversion. See "Market for Common Stock." 18 A public trading market having the desirable characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace of both willing buyers and sellers of the Common Stock at any given time. Accordingly, there can be no assurance that an active and liquid market for the Common Stock will develop or be maintined or that resales of the Common Stock can be made at or above the Purchase Price. See "Market for Common Stock" and "The Conversion - Stock Pricing and Number of Shares to be Issued." Risk of Delay in Completion of the Offering The Subscription and Community Offering will expire at 12:00 noon, Lutherville, Maryland time on __________, 1997 unless extended by the Association and the Holding Company. However, unless waived by the Holding Company or the Association, all orders will be irrevocable unless the Conversion is not completed by _________, 1997. In the event the Conversion is not completed by ___________, 1997, subscribers will have the right to modify or rescind their subscriptions and to have their subscription funds returned with interest. Competition The Association experiences strong competition in its local market area in both originating loans and attracting deposits. This competition arises from a highly competitive market area with numerous savings institutions and commercial banks, as well as credit unions, mortgage bankers and, with respect to deposits, banking institutions and other financial intermediaries. The Association recognizes its need to monitor competition and modify its products and services as necessary and possible, taking into considerating the cost impact. As a result, such competition may limit Wyman Park's growth and profitability in the future. See "Business - Competition" and "- Orginations, Purchases and Sales of Loans." Certain Anti-Takeover Provisions Certain provisions of the Holding Company's certificate of incorporation and bylaws, including a provision limiting voting rights of beneficial owners of more than 10% of the Common Stock, and Wyman Park's stock charter and bylaws as well as certain Delaware laws and regulations, will assist the Holding Company in maintaining its status as an independent publicly owned corporation and may have certain anti-takeover effects. See "Restrictions on Acquisition of Stock and Related Takeover Defensive Provisions." Certificate of Incorporation and Bylaws of the Holding Company. The Holding Company's certificate of incorporation and bylaws provide for, among other things, a limit on voting more than 10% of the Common Stock described above, staggered terms for members of its Board of Directors, noncumulative voting for directors, limits on the calling of special meetings of stockholders and director nominations, a fair price or supermajority stockholder approval requirement for certain business combinations and certain shareholder proposal notice requirements. 19 Federal Stock Charter of the Association. Provisions in Wyman Park's federal stock charter that have an anti-takeover effect could also be applicable to changes in control of the Holding Company as the sole shareholder of the Association. Wyman Park's federal stock charter will include a provision applicable for five years which prohibits the acquisition or offer to acquire directly or indirectly the beneficial ownership of more than 10% of Wyman Park's securities by any person or entity other than the Holding Company. Any person violating this restriction may not vote Wyman Park's securities in excess of 10%. These provisions in the Holding Company's and Wyman Park's governing instruments may discourage potential proxy contests and other takeover attempts by making the Holding Company less attractive to a potential acquiror, particularly those takeover attempts which have not been negotiated with the Board of Directors of the Holding Company and/or Wyman Park, as the case may be. These provisions may also have the effect of discouraging a future takeover attempt which would not be approved by the Holding Company's Board, but pursuant to which stockholders may receive a substantial premium for their shares over then current market prices. As a result, stockholders who might desire to participate in such a transaction may not have any opportunity to do so. In addition, certain of these provisions that limit the ability of persons (including management or others) owning more than 10% of the shares to vote their shares will be enforced by the Board of Directors of the Holding Company or Wyman Park, as the case may be, to limit the voting rights of 10% or greater stockholders and thus could have the effect in a proxy contest or other solicitation to defeat a proposal that is desired by the holders of a majority of the shares of Common Stock. Federal Law and Regulations. Federal law also requires OTS approval prior to the acquisition of "control" (as defined in OTS regulations) of an insured institution, including a holding company thereof. In the event any person or group of persons acquires shares in violation of these limitations, such person or group may be restricted from voting his shares in excess of 10% of the outstanding Common Stock. Such laws and regulations may also limit a person's ability without regulatory approval to solicit proxies enabling him to elect one third or more of the Holding Company's Board of Directors or exert a controlling influence on the operations of Wyman Park or the Holding Company. In addition, certain of these provisions may limit the ability of persons (including management or others) owning more than 10% of the shares to vote their shares (by proxy or otherwise) for proposals that they believe to be in the best interests of shareholders. See "Management of the Association - Benefit Plans," "Description of Capital Stock" and "Restrictions on Acquisitions of Stock and Related Takeover Defensive Provisions." Proposed Federal Legislation The United States Congress is considering legislation that would require all federal thrift institutions, such as Wyman Park, to either convert to a national bank or a state chartered financial institution by a specified date to be determined. Under proposed legislation the Holding Company 20 likely would not be regulated as a thrift holding company, but rather as a bank holding company, and, as such, would be subject to the limitations of the Bank Holding Company Act of 1956, as amended. The OTS would also be abolished and its functions transferred among the other federal banking regulators. Accordingly, Wyman Park could be supervised by a regulator that is unfamiliar with the institution. Certain aspects of the legislation remain to be resolved and therefore no assurance can be given as to whether or in what form the legislation will be enacted or its effect on the Holding Company and the Association. USE OF PROCEEDS Although the actual net proceeds from the sale of the Common Stock cannot be determined until the Conversion is completed, it is presently anticipated that such net proceeds will be between $6.1 million and $8.4 million (or up to $9.7 million in the event of an increase in the aggregate pro forma market value of the Common Stock of up to 15% above the maximum of the Estimated Valuation Range). See "Pro Forma Data" and "The Conversion - Stock Pricing and Number of Shares to be Issued" as to the assumptions used to arrive at such amounts. The net proceeds from the sale of the Common Stock in the Conversion will substantially increase the capital of Wyman Park and will be used for general corporate purposes including its lending and investment activities. For information on the amount of pro forma net proceeds assuming the sale of various amounts of Common Stock, see "Pro Forma Data." In exchange for all of the common stock of Wyman Park issued upon conversion, the Holding Company will contribute to Wyman Park approximately 50% of the net proceeds from the sale of the Holding Company's Common Stock and the Holding Company will retain the remaining 50% of the net proceeds. On an interim basis, the proceeds will be invested by the Holding Company and Wyman Park in short-term investments or to repay borrowings. Such short-term investments are generally anticipated to be similar to those currently contained in the Association's portfolio. The specific types and amounts of short-term assets will be determined based on market conditions at the time of the completion of the Conversion. In addition, the Holding Company, subject to regulatory approval, is expected to provide the funding for the ESOP loan. See "Business - Lending Activities" and " - Investment Activities" and "Management of the Association - Benefit Plans - Employee Stock Ownership Plan." While the new capital resulting from the Conversion could increase the Association's return on assets (as a result of the earnings on the new capital), it will probably result in a decline in return on equity because it is unlikely that the Association will quickly be able to (i) invest the new capital in assets with rates equal to the average rates earned on the Association's seasoned asset portfolio and (ii) leverage the new capital by increasing liabilities to fund asset growth. See "Risk Factors Low Return on Equity and Low Net Interest Margin." In the future the Holding Company may consider the adoption of a restricted stock plan (i.e., the RRP) at the earliest, one year following the Conversion and subject to stockholder ratification. 21 If such a plan is implemented, the Holding Company may use a portion of the net proceeds to fund the purchase by the plan of the Holding Company's Common Stock. After the completion of the Conversion, it is anticipated that the Association will reinvest the proceeds of the interim short-term investments in loans and investment securities. Proceeds reinvested in loans are anticipated to be allocated among the Association's loan programs in proportions similar to recent lending volumes, provided suitable opportunities are available to the Association. Investment securities are anticipated to be similar to those in the Association's current portfolio. However, the reinvestment of the proceeds will be based on market conditions and investment opportunities. The timing and amount of such investments cannot now be determined nor can the Association identify the specific assets in which investments will be made. The proceeds may also be utilized by the Holding Company to repurchase (at prices which may be above or below the initial offering price) shares of the Common Stock through an open market repurchase program available to all stockholders subject to regulatory limitations, although the Holding Company currently has no specific plan to repurchase any of its stock. In the future, the Board of Directors of the Holding Company will make decisions on the repurchase of the Common Stock based on its view of the appropriateness of the price of the Common Stock as well as the Holding Company's and the Association's investment opportunities and capital needs. Under current OTS regulations, no repurchases may be made within the first year following Conversion except with OTS approval under "exceptional circumstances." During the second and third years following Conversion, OTS regulations permit, subject to certain limitations, the repurchase of up to 5% of the outstanding shares of stock during each twelve-month period with a greater amount permitted with OTS approval. In general, the OTS regulations do not restrict repurchases thereafter other than indirectly by virtue of limits on the Association's ability to pay dividends to the Holding Company which may be necessary to fund the repurchase. For a description of the restrictions on the Association's ability to provide the Holding Company with funds through dividends or other distributions, see "Dividends" and "The Conversion -Restrictions on Repurchase of Stock." The Holding Company or Wyman Park may consider expansion through the acquisition of other financial services providers (or branches, deposits or assets thereof) or through the expansion of banking services through Wyman Park's internet web site (www.wymanpark.com), although there are no specific plans, negotiations or written or oral agreements regarding any acquisitions at this time. In general, the Board will evaluate acquisition and diversification opportunities, if any, by whether they would enhance the Holding Company's and the Association's ability to fulfill their financial goals. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Holding Company may use remaining net proceeds to engage in activities not permissible for the Association. See "Regulation - Holding Company Regulation." 22 DIVIDENDS The Holding Company does not anticipate initially paying a dividend on the Common Stock. Dividends, when and if paid, will be subject to determination and declaration by the Board of Directors in its discretion, which will take into account the Holding Company's consolidated financial condition and results of operations, tax considerations, industry standards, economic conditions, regulatory restrictions, general business practices and other factors. See "Dividends," "Regulation - Regulatory Capital Requirements" and "- Limitations on Dividends and Other Capital Distributions." The Holding Company currently has no intention to initiate, and will not initiate for a period of at least one year following completion of the Stock Conversion, any action which leads to a return of capital (as distinguished from a dividend) to stockholders of the Holding Company. MARKET FOR COMMON STOCK The Holding Company has never issued capital stock to the public and, consequently, there is no existing market for the Common Stock. Following the completion of the offering, it is anticipated that the common stock will be traded on the over-the-counter market with quotations available through the OTC Bulletin Board. Trident Securities has indicated its intention to make a market in the Common Stock If the common stock cannot be quoted and traded on the OTC Bulletin Board it is expected that the transactions in the common stock will be reported in the pink sheets published by the National Quotation Bureau, Inc. Making a market may include the solicitation of potential buyers and sellers in order to match buy and sell orders. However, Trident will not be subject to any obligation with respect to such efforts. There can be no assurance that an active or liquid trading market will develop for the Common Stock, or if a market develops, that it will continue. A public market having the desirable characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace of both willing buyers and sellers of the Common Stock at any given time, which is not within the control of the Holding Company or any market maker. Accordingly, there can be no assurance that purchasers will be able to sell their shares at or above the Purchase Price. See "Market for Common Stock." 23 WYMAN PARK BANCORPORATION, INC. The Holding Company was incorporated by Wyman Park under the laws of the State of Delaware in September 1997 for the purpose of owning all of the outstanding stock of Wyman Park issued in the Conversion. The Holding Company has applied to the OTS to acquire all of the common stock of Wyman Park which will be outstanding upon completion of the Conversion. As a Delaware corporation, the Holding Company is authorized to engage in any activity that is permitted by the Delaware General Corporation Law. The Board of Directors of the Holding Company anticipates that, after completion of the Conversion, the Holding Company will conduct its business as a savings and loan holding company. The holding company structure will provide the Holding Company with greater flexibility than the Association by itself would have to diversify its business activities, through existing or newly formed subsidiaries, or through acquisitions or mergers of both mutual and stock thrift institutions as well as other companies. Although there are no current arrangements, understandings or agreements regarding any such acquisition, the Holding Company will be in a position after the Conversion to take advantage of any favorable acquisition opportunities that may arise, subject to regulatory restrictions. The assets of the Holding Company will initially consist of the stock of Wyman Park and approximately 50% of the net proceeds from the Conversion. The initial activities of the Holding Company are anticipated to be funded by such retained proceeds and the income thereon. Thereafter, activities of the Holding Company may also be funded through dividends from Wyman Park, if any, sales of additional securities, borrowings and income generated by other activities of the Holding Company. At this time, there are no plans regarding such activities. See "Dividends" and "Regulation-Holding Company Regulation." WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION Wyman Park's business involves attracting deposits from the general public and using such deposits to originate one- to four-family permanent and construction residential mortgage and, to a lesser extent, commercial real estate, multi-family, consumer (secured and unsecured), land and second mortgage loans in its market area. The Association also invests in investment securities consisting primarily of U.S. government obligations and various types of short-term liquid assets. See "Business." The Association's basic mission is to maintain its focus as an independent, community- oriented financial institution serving customers in its primary market area. The Board of Directors has sought to accomplish this mission through the adoption of a strategy designed to improve its capital position and maintain its high asset quality, manage the Association's sensitivity to changes in interest rates and improve the Association's net 24 interest margin. The Association has attempted to effect its strategy by (i) continuing to emphasize one- to four-family permanent and construction residential mortgage lending, (ii) supplementing residential lending with investments in commercial real estate, consumer and other loans, (iii) emphasizing the origination of adjustable rate and short-and medium-term (up to 15 years) loans and investments; and (iv) maintaining a low overhead. PRO FORMA DATA The following table sets forth the historical net income and retained earnings of Wyman Park at and for the year ended June 30, 1997 and, after giving effect to the Conversion, the pro forma consolidated net income, capital stock and stockholders' equity of the Holding Company at and for the year ended June 30, 1997. The pro forma data is computed on the assumptions that (i) the specified number of shares of Common Stock was sold at the beginning of the specified periods and yielded net proceeds to the Holding Company as indicated, (ii) 50% of such net proceeds were retained by the Holding Company and the remainder were used to purchase all of the stock of Wyman Park, and (iii) such net proceeds, less the amount of the ESOP funding, were invested by the Association and Holding Company at the beginning of the periods to yield a net after-tax return of 3.5% for the year ended June 30, 1997. The assumed return is based on the one year treasury bills, as adjusted for applicable federal taxes totaling 38.0% of such assumed returns. The use of this current rate is viewed to be more relevant in the current low rate environment than the use of an arithmetic average of the weighted average yield earned by the Association on its interest-earning assets and the weighted average rate paid on its deposits during such periods. In calculating the underwriting fees, the table assumes that (i) no commission was paid on $600,000 of shares sold to directors and officers and (ii) 8% of the total shares sold in the Conversion were sold to the ESOP at no commission. Total expenses are estimated to be $425,000 at the Midpoint of the Estimated Valuation Range. Actual Conversion expenses may be more or less than those estimated because the fees paid to Trident Securities and other brokers will depend upon the categories of purchasers, the Purchase Price and market conditions and other factors. The pro forma net income amounts derived from the assumptions set forth herein should not be considered indicative of the actual results of operations of the Holding Company that would have been attained for any period if the Conversion had been actually consummated at the beginning of such period, and the assumptions regarding investment yields should not be considered indicative of the actual yields expected to be achieved during any future period. The total number of shares to be issued in the Conversion may be increased or decreased significantly, and/or the price per share decreased, to reflect changes in market and financial conditions prior to the close of the Subscription and Community Offering. However, if the aggregate Purchase Price of the Common Stock sold in the Conversion is below $6.5 million (the minimum of the Estimated Valuation Range) or more than $10.1 million (15% above the Estimated Valuation Range), subscribers will be offered the opportunity to modify or cancel their subscriptions. See "The Conversion - Stock Pricing and Number of Shares to be Issued." 25
At or For the Year Ended June 30, 1997 ------------------------------------------------- 650,250 765,000 879,750 1,011,713 Shares Shares Shares Shares $10.00 $10.00 $10.00 $10.00 per Share per Share per Share per Share (Minimum (Midpoint (Maximum (Supermax of Range) of Range) of Range) of Range) --------- --------- --------- --------- (Dollars in Thousands, Except Per Share Amounts) Gross proceeds ....................... $ 6,503 $ 7,650 $ 8,798 $ 10,117 Less offering expenses and commissions ......................... (405) (425) (445) (465) --------- --------- --------- --------- Estimated net conversion proceeds ... 6,098 7,225 8,353 9,652 Less common stock acquired by ESOP(2) (520) (612) (704) (809) Less common stock acquired by RRP(3) (260) (306) (352) (405) --------- --------- --------- --------- Estimated proceeds available for investment ......................... $ 5,318 $ 6,307 $ 7,297 $ 8,438 ========= ========= ========= ========= Net Income: Historical ......................... $ 134 $ 134 $ 134 $ 134 Pro Forma Adjustments: Net income from proceeds(2) ....... 186 221 256 296 ESOP(2) ........................... (32) (38) (44) (50) RRP(3) ............................ (32) (38) (44) (50) --------- --------- --------- --------- Pro forma ....................... $ 256 $ 279 $ 302 $ 330 ========= ========= ========= ========= Per Share: Historical(4) .................... $ .21 $ .18 $ .16 $ .14 Pro forma Adjustments: Net income from proceeds ........ .31 .31 .31 .31 ESOP(2) ......................... (.05) (.05) (.05) (.05) RRP(3) .......................... (.05) (.05) (.05) (.05) --------- --------- --------- --------- Pro forma(8) ................ $ .42 $ .39 $ .37 $ .35 ========= ========= ========= ========= Pro forma price to earnings (P/E ratio)(1)(7) ................... 23.8x 25.6x 27.0x 28.6x Number of shares used in calculating earnings per share .................. 603,432 709,920 816,408 938,869 Stockholders' Equity (Book Value)(5): Historical ......................... $ 4,750 $ 4,750 $ 4,750 $ 4,750 Estimated net Conversion proceeds .. 6,098 7,225 8,353 9,652 Less common stock acquired by: ESOP(2) ........................... (520) (612) (704) (809) RRP(3) ............................ (260) (306) (352) (405) --------- --------- --------- --------- Pro forma(6) .................. $ 10,068 $ 11,057 $ 12,047 $ 13,188 ========= ========= ========= ========= Per Share(4): Historical(4) ...................... $ 7.30 $ 6.21 $ 5.40 $ 4.70 Estimated net conversion proceeds .. 9.38 9.44 9.49 9.54 Less common stock acquired by: ESOP(2) ........................... (.80) (.80) (.80) (.80) RRP(3) ............................ (.40) (.40) (.40) (.40) --------- --------- --------- --------- Pro forma(6)(8) ............... $ 15.48 $ 14.45 $ 13.69 $ 13.04 ========= ========= ========= ========= Pro forma price to book value ........ 64.6% 69.2% 73.0% 76.7% Number of shares used in calculating equity per share .................... 650,250 765,000 879,750 1,011,713
26 - --------------------- (1) Net income includes an after-tax charge of approximately $235,000 taken during the year ended June 30, 1997, representing a special assessment of 65.7 basis points on the Association's deposits at March 31, 1995, pursuant to legislation enacted to recapitalize SAIF. Excluding that charge, based on the other assumptions as reflected in this table, management estimates that pro forma earnings per share would have been $.81, $.72, $.66 and $.60, and the price to earnings ratio would have been 12.35, 13.89, 15.15 and 16.67 at the minimum, midpoint, maximum and 15% above the maximum of the Estimated Valuation Range, respectively. (2) It is assumed that 8% of the shares of Common Stock offered in the Conversion will be purchased by the ESOP. The funds used to acquire such shares will be borrowed by the ESOP from the net proceeds from the Conversion retained by the Holding Company. The Association intends to make contributions to the ESOP in amounts at least equal to the principal and interest requirement of the debt. The Association's payment of the ESOP debt is based upon equal installments of principal over a ten-year period plus interest. Interest income earned by the Holding Company on the ESOP debt offsets the interest paid by the Association on the ESOP loan. Accordingly, only the principal payments on the ESOP debt are recorded as an expense (tax-effected) to the Holding Company on a consolidated basis. The amount borrowed is reflected as a reduction of stockholders' equity. No reinvestment is assumed on proceeds contributed to fund the ESOP. The ESOP expense has been computed based on the requirements of SOP 93-6 which requires recognition of expense based upon the average market price of shares committed to be released during the year and the exclusion of unallocated shares from earnings per share computations. The valuation of shares committed to be released is based upon the average market value of the shares during the year, which, for purposes of this calculation, is assumed to be equal to the $10.00 per share offering price. In computing earnings per share, 10% of the ESOP shares purchased in the conversion are assumed to be committed to be released. See "Management - Benefit Plans - Employee Stock Ownership Plan." (3) Assumes a number of shares of Common Stock equal to 4% of the Common Stock to be sold in the Conversion will be purchased by the RRP in the open market following conversion. The dollar amount of the Common Stock to be purchased by the RRP is based on the Purchase Price in the Conversion and represents unearned compensation and is reflected as a reduction of capital. Such amount does not reflect possible increases or decreases in the value of such stock relative to the Purchase Price in the Conversion. As the Association accrues compensation expense to reflect the vesting of such shares pursuant to the RRP, the charge against capital will be reduced accordingly. RRP expense is based on amortization of the RRP over five years. Implementation of the RRP will require stockholder approval. For purposes of these tables, it is assumed that the RRP will be adopted by the Association's Board of Directors and approved by the Company's stockholders, and that the RRP will purchase the shares in the open market. If the shares to be purchased by the RRP are assumed to be newly issued shares purchased from the Company by the RRP at the Purchase Price, at the minimum, midpoint, maximum and 15% above of the maximum of the Estimated Valuation Range, the offering price to pro forma stockholders' equity per share would be 65.5%, 70.0%, 73.8% and 77.4%, for the year ended June 30, 1997. Assuming that all RRP shares are awarded through the use of authorized but unissued common stock, stockholders would be diluted by approximately 3.85%. See "Prospectus Summary - Benefits of Stock Conversion to Directors and Executive Officers -- Other Stock Benefit Plans." (4) Historical per share amounts have been computed as if the shares of Common Stock expected to be issued in the Conversion had been outstanding during the period or on the dates shown, but without any adjustment of historical net income or historical equity capital to reflect the investment of the estimated net proceeds of the sale of shares in the Conversion or the additional ESOP expense as described above. (5) "Book value" represents the difference between the stated amounts of the Association's assets and liabilities. The amounts shown do not reflect the effect of the Liquidation Account which will be established for the benefit of Eligible and Supplemental Eligible Account Holders in the Conversion and the tax bad debt reserves. See "The Conversion Effects of Conversion to Stock Form on Depositors and Borrowers of the Association" and "Regulation - Federal and State Taxation." The amounts shown for book value do not represent fair market values or amounts distributable to shareholders in the unlikely event of liquidation. (6) Does not represent possible future price appreciation or depreciation. (7) The pro forma price to earnings ratio for the year ended June 30, 1997 is determined by dividing the $10.00 Purchase Price by the annualized pro forma earnings per share. The annualized pro forma earnings per shares is determined by multiplying the pro forma earnings per share by six. (8) In the future the Holding Company may consider the implementation of a stock option plan for the benefit of selected directors, officers and employees of the Holding Company and the Association. Any such stock option plan will be implemented no earlier than one year after the date of the consummation of the Stock Conversion. If a determination is made to implement a stock option plan, it is anticipated that any such plan will be submitted to stockholders for their consideration at which time stockholders would be provided with detailed information regarding such plan. Assuming that such plan is approved and assuming that options are granted to purchase an aggregate amount of Common Stock equal to 10% of the shares issued in the Conversion at exercise prices equal to the market price of the Common Stock on the date of grant, then in the event the shares issued under the plan consist of newly issued shares of Common Stock and all options available for award under the plan were awarded, the interests of existing stockholders would be diluted. At the minimum, midpoint, maximum and 15% above the maximum of the Estimated Valuation Range, if all shares under the plan were equal to the Purchase Price in the Conversion, the additional shares issued would be 65,025, 76,500, 87,975 and 101,171, respectively, stockholders' equity per share at June 30, 1997 would be $14.98, $14.05, $13.36 and $12.76 respectively, net income per share for the year ended June 30, 1997 would be $.42, $.39, $.37 and $.35. 27 PRO FORMA REGULATORY CAPITAL ANALYSIS At June 30, 1997, the Association exceeded each of the three OTS capital requirements. Set forth below is a summary of the Association's compliance with the OTS capital standards as of June 30, 1997 on a historical basis, in accordance with generally accepted accounting principles ("GAAP"), and on a pro forma basis using the assumptions contained under the caption "Pro Forma Data" and assuming that the indicated number of shares were sold as of such date.
Pro Forma at June 30, 1997 ------------------------------------------------------------------------ 1,011,713 Shares 650,250 Shares 765,000 Shares 879,750 Shares 15% above Historical Minimum Midpoint Maximum Maximum ---------------- ----------------- ---------------- ---------------- ----------------- Amount Percent(1) Amount Percent(1) Amount Percent(1) Amount Percent(1) Amount Percent(1) ------ --------- ------ ---------- ------ ---------- ------ ---------- ------ ---------- (Dollars in Thousands) GAAP Capital(2) ..................... $4,750 7.6% $7,019 10.8% $7,445 11.4% $7,871 11.9% $8,362 12.5% ====== ==== ====== ==== ====== ==== ====== ==== ====== ==== Tangible Capital: Capital level ..................... 4,755 7.6 7,024 10.8 7,450 11.4 7,876 11.9 8,367 12.5 Requirement ....................... 934 1.5 976 1.5 983 1.5 991 1.5 1,000 1.5 ------ ---- ------ ---- ------ ---- ------ ---- ------ ---- Excess ............................ 3,821 6.1 6,048 9.3 6,467 9.9 6,885 10.4 7,367 11.0 ====== ==== ====== ==== ====== ==== ====== ==== ====== ==== Core Capital: Capital level ..................... 4,755 7.6 7,024 10.8 7,450 11.4 7,876 11.9 8,367 12.5 Requirement ....................... 1,867 3.0 1,951 3.0 1,967 3.0 1,982 3.0 2,000 3.0 ------ ---- ------ ---- ------ ---- ------ ---- ------ ---- Excess ............................ 2,888 4.6 5,073 7.8 5,483 8.4 5,894 8.9 6,367 9.5 ====== ==== ====== ==== ====== ==== ====== ==== ====== ==== Risk-Based Capital: Capital level(3) .................. 5,025 14.6 7,294 20.9 7,720 22.1 8,146 23.2 8,637 24.5 Requirement(4) .................... 2,748 8.0 2,792 8.0 2,800 8.0 2,809 8.0 2,818 8.0 ------ ---- ------ ---- ------ ---- ------ ---- ------ ---- Excess ............................ $2,277 6.6% $4,502 12.9% $4,920 14.1% $5,337 15.2% $5,819 16.5% ====== ==== ====== ==== ====== ==== ====== ==== ====== ====
- -------------- (1) Tangible and core capital levels are shown as a percentage of adjusted total assets; risk-based capital levels are shown as a percentage of risk-weighted assets. (2) Total retained earnings as calculated under GAAP. Assumes that the Association receives 50% of the net proceeds, offset in part by the aggregate purchase price of Common Stock acquired at $10.00 per share by the ESOP in the Conversion. The amount expected to be borrowed by the ESOP is deducted from pro forma capital to illustrate the possible impact on the Association. (3) Includes $270,000 of general valuation allowances, all of which qualify as supplementary capital. See "Regulation - Regulatory Capital Requirements." (4) Assumes reinvestment of net proceeds in 20% risk-weighted assets. 28 CAPITALIZATION Set forth below is the capitalization, including deposits, of Wyman Park as of June 30, 1997, and the pro forma capitalization of the Holding Company at the minimum, the midpoint, the maximum and 15% above the maximum of the Estimated Valuation Range, after giving effect to the Conversion and based on other assumptions set forth in the table and under the caption "Pro Forma Data."
Pro Forma Based Upon Sale at $10.00 Per Share of -------------------------------------------------------- 595,000 700,000 805,000 925,750 Historical Shares Shares Shares Shares ---------- ------ ------ ------ ------ (Dollars in thousands) Deposits(1) ......................................... $ 56,095 $ 56,095 $ 56,095 $ 56,095 $ 56,095 Borrowed funds(3) ................................... -- -- -- -- -- -------- -------- -------- -------- -------- Total deposits and borrowed funds ................... $ 56,095 $ 56,095 $ 56,095 $ 56,095 $ 56,095 ======== ======== ======== ======== ======== Stockholders' Equity: Serial Preferred Stock ($.01 par value) Authorized - 500,000 shares; none to be outstanding ................................... -- -- -- -- -- Common Stock ($.01 par value) Authorized - 2,000,000 shares; to be outstanding - (as shown)(4)(5) ................... -- 6 7 8 9 Additional paid-in capital ......................... -- 5,552 6,583 7,614 8,800 Retained earnings, substantially restricted(2) .................................... 4,755 4,755 4,755 4,755 4,755 Unrealized loss on securities available for sale, net of income taxes .................... (5) (5) (5) (5) (5) Less common stock acquired by: ESOP(3) .......................................... -- (476) (560) (644) (741) RRP(4) ........................................... -- (238) (280) (322) (370) -------- -------- -------- -------- -------- Total stockholders' equity ..................... $ 4,750 $ 10,068 $ 10,500 $ 11,406 $ 12,448 ======== ======== ======== ======== ======== Total stockholders equity as a percent of total assets ....................................... 7.6% 14.8% 16.0% 17.2% 18.5% ======== ======== ======== ======== ========
29 - ---------------- (1) No effect has been given to withdrawals from savings accounts for the purpose of purchasing Common Stock in the Stock Conversion. Any such withdrawals will reduce pro forma deposits by the amount of such withdrawals. (2) See "Dividends" and "Regulation - Limitations on Dividends and Other Capital Distributions" regarding restrictions on future dividend payments and "The Conversion - Effects of Conversion to Stock Form on Depositors and Borrowers of the Association" regarding the liquidation account to be established upon the Stock Conversion. (3) Assumes that 8.0% of the shares issued in the Stock Conversion will be acquired by the ESOP and that the ESOP will be funded by the Holding Company. The Association intends to make contributions to the ESOP sufficient to service and ultimately retire its debt. Since the Holding Company will finance the ESOP debt, the ESOP debt will be eliminated through consolidation and no liability will be reflected on the Holding Company's consolidated financial statements. Accordingly, the amount of stock acquired by the ESOP is shown in this table as a reduction of total stockholders' equity. See "Management - Benefit Plans - Employee Stock Ownership Plan." (4) Assumes a number of shares of Common Stock equal to 4% of the Common Stock to be sold in the Conversion will be purchased by the RRP in open market purchases. The dollar amount of Common Stock to be purchased is based on the $10.00 per share Purchase Price in the Conversion and represents unearned compensation and is reflected as a reduction of capital. Such amount does not reflect possible increases or decreases in the value of such stock relative to the Purchase Price in the Conversion. As the Association accrues compensation expense to reflect the vesting of such shares pursuant to the RRP, the charge against capital will be reduced accordingly. Implementation of the RRP will require stockholder approval. If the shares to fund the RRP are assumed to come from authorized but unissued shares purchased by the RRP from the Company at the Purchase price, at the minimum, midpoint, maximum and 15% above the maximum of the Estimated Valuation Range, the number of outstanding shares would be 618,800, 728,000, 837,200 and 962,780, respectively, and total stockholders' equity would be $9.8 million, $10.8 million, $11.7 million and $12.8 million, respectively, at June 30, 1997. As a result of the RRP acquiring authorized but unissued shares from the Company, stockholders' ownership in the Company would be diluted by approximately 3.85%. See "Prospectus Summary - Benefits of Stock Conversion to Directors and Executive Officers -- Other Stock Benefit Plans." (5) Does not include additional shares of Common Stock that possibly could be purchased by participants in the Option Plan, if implemented, under which directors, executive officers and other employees could be granted options to purchase an aggregate amount of Common Stock equal to 10% of the shares issued in the Conversion (70,000 shares at the midpoint of the Estimated Valuation Range) at exercise prices equal to the market price of the Common Stock on the date of grant. Implementation of the Option Plan may require stockholder approval. See "Prospectus Summary - Benefits of Stock Conversion to Directors and Executive Officers -- Other Stock Benefit Plans." CONSOLIDATED STATEMENTS OF OPERATIONS The following Consolidated Statements of Operations of Wyman Park for each of the years in the three year period ended June 30, 1997 have been audited by Wooden & Benson, Chartered, independent certified public accountants, whose report thereon appears elsewhere herein. The Statements of Income should be read in conjunction with the Consolidated Financial Statements and related Notes included elsewhere herein. 30 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 1997 1996 ---- ---- Interest and fees on loans receivable $4,250,470 $4,157,290 Interest on mortgage-backed securities 26,733 35,236 Interest on investment securities 140,065 306,709 Interest on other investments 240,959 226,328 ---------- ---------- Total interest income 4,658,227 4,725,563 Interest on saving deposits 2,749,541 3,064,802 Interest on escrow deposits 6,424 8,481 ---------- ---------- Total interest expense 2,755,965 3,073,283 Net interest income before provision for loan losses 1,902,262 1,652,280 Provision for loan losses (Notes 1 and 4) 145,000 25,000 ---------- ---------- Net interest income 1,757,262 1,627,280 Other income - ------------ Loan fees and service charges 48,284 46,937 Gain on sales of loans receivable 5,816 19,888 Other 24,411 39,303 ---------- ---------- Total other income 78,511 106,128 General and Administrative Expenses - ----------------------------------- Salaries and employee benefits 620,513 602,958 Occupancy costs 91,219 96,340 Federal deposit insurance premiums (Note 11) 461,177 134,371 Data processing 67,071 65,173 Advertising 63,145 68,914 Franchise and other taxes 44,730 46,681 Other 267,225 263,735 ---------- ---------- Total general and administrative expenses 1,615,080 1,278,172 Income before tax provision 220,693 455,236 Provision for income taxes (Notes 1 and 8) 86,888 161,119 ---------- ---------- Net income $ 133,805 $ 294,117 ========== ========== The accompanying notes to financial statements are an integral part of these statements. 31 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Management's discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Association. The information contained in this section should be read in conjunction with the consolidated financial statements and accompanying notes thereto and other sections contained in this Prospectus. The principal business of the Association consists of accepting deposits from the general public and investing these funds primarily in loans, investment securities and short-term liquid investments. The Association's loans consist primarily of loans secured by residential real estate located in its market areas, commercial real estate loans and consumer loans. The Association's net income is dependent primarily on its net interest income, which is the difference between interest earned on interest-earning assets and the interest paid on interest-bearing liabilities. Net interest income is a function of the Association's "interest rate spread," which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities. The interest rate spread is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. To a lesser extent, the Association's net income also is affected by the level of general and administrative expenses and the level of other income, which primarily consists of service charges and other fees. The operations of the Association are significantly affected by prevailing economic conditions, competition and the monetary, fiscal and regulatory policies of government agencies. Lending activities are influenced by the demand for and supply of housing, competition among lenders, the level of interest rates and the availability of funds. Deposit flows and costs of funds are influenced by prevailing market rates of interest, primarily on competing investments, account maturities and the levels of personal income and savings in the Association's market area. The Association has been notified by its service providers that they are addressing the year 2000 matter. Management of the Association wil continue to monitor this issue. Historically, the Association's mission has been to originate loans on a profitable basis to the communities it serves. In seeking to accomplish this mission, the Board of Directors and management have adopted a business strategy designed (i) to maintain the Association's capital level in excess of regulatory requirements; (ii) to maintain the Association's asset quality; (iii) to maintain, and if possible, increase the Association's earnings; and (iv) to manage the Association's exposure to changes in interest rates. Financial Condition June 30, 1997 compared to June 30, 1996 Total assets decreased approximately $1.7 million or 2.5%, to $62.2 million at June 30, 1997 from $63.9 million at June 30, 1996. This decrease in total assets was primarily the result of a $3.4 million decrease in cash and cash equivalents, including short-term interest bearing deposits in other banks and federal funds sold, which more than offset a $1.9 million increase in loans receivable. The 32 decrease in cash and cash equivalents was primarily due to management's decision during the year ended June 30, 1997 to improve the Association's net interest spread by investing excess liquid assets in higher yielding loans, as well as reducing interest expense by decreasing the level of certificate accounts. Management's strategy resulted in an increase in total loans receivable, which primarily consisted of a $769,000 increase in residential mortgage loans and a $1.4 million increase in commercial loans secured by real estate, including participating interests purchased from other lenders. The Association has experienced a decline in total deposits since 1993 as a result of its asset/liability management strategies and market conditions. During the same period total assets have also decreased and total loans have increased resulting in improved yield on interest-earning assets and reduced costs of funds in 1997. Management of the Association does not expect the decline in deposits to continue as marketing efforts are expanded to attract transaction accounts to replace higher costing certificate accounts; or, for there to be a negative impact on the Association's operations or liquidity. Total liabilities decreased approximately $1.8 million, or 3.0%, to $57.5 million at June 30, 1997 from $59.3 million at June 30, 1996. This decrease was primarily the result of a $1.8 million decrease in total deposits to approximately $56.1 million at June 30, 1997 from $57.9 million at June 30, 1996. This decrease in deposits consisted of a decrease in time deposits of approximately $2.1 million, resulting from management's decision to lower the Association's interest expense, and an increase of approximately $300,000 in other deposit accounts. Total equity of the Association increased approximately $151,000 to $4.75 million at June 30, 1997 from $4.60 million at June 30, 1990, due to net income of approximately $134,000 and a decrease of approximately $17,000 in unrealized losses on available-for-sale securities for the year ended June 30, 1997. Results of Operations Comparison of Operating Results for the Years Ended June 30, 1997 and 1996 Performance Summary. Net income for the year ended June 30, 1997 was approximately $134,000, a decrease of $160,000, or 54.5%, from net income of $294,000 for the year ended June 30, 1996. This decrease was primarily due to an increase in non-interest expenses of $337,000, which included a one time assessment of $383,000 for federal insurance premiums; an increase in provision for loan losses of $120,000, and a decrease in non-interest income of $28,000. These items more than offset the positive effects of a $250,000 increase in net interest income, producing a decrease of $234,000 in income before provision for income taxes of $221,000 for the year ended June 30, 1997 as compared to $455,000 for the year ended June 30, 1996. For the years ended June 30, 1997 and 1996, the returns on average assets were .22% and .46%, respectively, while the returns on average equity were 2.87% and 6.56%, respectively. 33 Net Interest Income. Net interest income increased by approximately $250,000, or 15.1%, to $1,902,000 for the year ended June 30, 1997 from $1,652,000 for the year ended June 30, 1996. This reflects a decrease of $67,000, or 1.4%, in interest income to $4,658,000 in fiscal 1997 from $4,725,000 in fiscal 1996 while interest expense was decreasing by $317,000, or 10.3%, to $2,756,000 in fiscal 1997 from $3,073,000 in fiscal 1996. The increase in net interest margin was primarily from the decrease in both average balances and rates of interest paid on certificate accounts. For the year ended June 30, 1997, the average yield on interest-earning assets was 7.69% compared to 7.52% for the year ended June 30, 1996. The average cost of interest-bearing liabilities was 4.93% for the year ended June 30, 1997, a decrease from 5.26% for the year ended June 30, 1996. The average balance of interest-earning assets decreased by $2.3 million or 3.6% to $60.6 million for year ended June 30, 1997, compared to $62.9 million for the year ended June 30, 1996. The average balance of interest-bearing liabilities decreased by $2.5 million or 4.3% to $55.9 million for the year ended June 30, 1997, compared to $58.4 million for the year ended June 30, 1996. The average interest rate spread increased to 2.76% for the year ended June 30, 1997 from 2.26% for the year ended June 30, 1996. The average net interest income margin increased to 3.14% for the year ended June 30, 1997 from 2.63% for the year ended June 30, 1996. 34 Yields Earned and Rates Paid The following table presents for the periods indicated the total dollar amount of interest income from average interest earning assets and the resultant yields, as well as the interest expense on average interest bearing liabilities, expressed both in dollars and rates. No tax equivalent adjustments were made. All average balances are monthly average balances. The use of monthly averages, rather than daily averages, does not materially affect the information in the table. Non-accruing loans have been included in the table as loans carrying a zero yield.
Year Ended June 30, -------------------------------------------------------------------------------------------- 1997 1996 1995 ---------------------------- ----------------------------- ---------------------------- Average Interest Average Interest Average Interest Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate Balance Paid Rate ------- ---- ---- ------- ---- ---- ------- ---- ---- (Dollars in Thousands) Interest-Earning Assets: Loans receivable(1)................ $53,903 $4,250 7.88% $53,033 $4,157 7.84% $55,460 $4,325 7.80% Mortgage-backed securities......... 383 27 7.05 468 35 7.49 552 33 5.98 Investment securities.............. 2,402 140 5.83 5,298 307 5.79 5,845 329 5.63 FHLB stock......................... 510 37 7.25 510 37 7.25 510 36 7.06 Other investments.................. 3,382 204 6.03 3,547 189 5.33 1,192 65 5.45 -------- ------- ---- ------- ------- ---- ------- ------ ---- Total interest-earning assets(1).. $60,580 4,658 7.69 $62,856 4,725 7.52 $63,559 4,788 7.53 ======= ------ ======= ------ ======= ------ Interest-Earning Liabilities: Savings deposits................... $ 5,856 174 2.97 $ 5,593 178 3.18 $ 5,777 204 3.53 Demand and NOW deposits............ 9,745 309 3.17 9,632 317 3.29 9,990 332 3.32 Certificate accounts............... 40,182 2,267 5.64 43,010 2,570 5.98 42,326 2,254 5.33 Escrow deposits.................... 115 6 5.22 147 8 5.44 193 11 5.69 Borrowings......................... --- --- --- --- --- --- 1,542 90 5.83 ------- ------- ----- ------- ------- ----- ------- ------- ---- Total interest-bearing liabilities $55,898 2,756 4.93 $58,382 3,073 5.26 $59,828 2,891 4.83 ======= ------- ======= ------- ======= ------- Net interest income................. $1,902 $1,652 $1,897 ====== ====== ====== Net interest rate spread............ 2.76% 2.26% 2.70% ==== ==== ==== Net earning assets.................. $4,682 $4,474 $3,731 ====== ====== ====== Net yield on average interest- earning assets...................... 3.14% 2.63% 2.98% ==== ==== ==== Average interest-earning assets to average interest-bearing liabilities 1.08x 1.08x 1.06x ===== ===== =====
- ----------------- (1) Calculated net of deferred loan fees, loan discounts, loans in process and loss reserves. 35 The following table presents the weighted average yields earned on loans, investments and other interest-earning assets, and the weighted average rates paid on savings deposits and the resultant interest rate spreads at the dates indicated. Weighted average balances are based on monthly balances. At June 30, ------------ 1997 1996 ---- ---- Weighted average yield on: Loans receivable .................... 7.89% 7.84% Mortgage-backed securities .......... 7.52 7.46 Investment securities ............... 5.94 5.61 Other interest-earning assets ....... 5.95 5.53 Combined weighted average yield on interest-earning assets ........ 7.71 7.50 Weighted average rate paid on: Savings deposits .................... 3.11 3.06 Demand and NOW deposits ............. 2.93 3.24 Certificate accounts ................ 5.71 6.07 Other interest-bearing liabilities .. 5.50 5.50 Combined weighted average rate paid on interest-bearing liabilities . 4.94 5.31 Spread ............................... 2.77 2.19 Provision for Loan Losses. During the year ended June 30, 1997, the Association recorded a provision for loan losses of $145,000 compared to $25,000 for the year ended June 30, 1996. This provision was recorded due to significant growth of $1.4 million or 30.6% in commercial real estate loans in the year ended June 30, 1997. The increased provision for loan losses is based on the continued growth in this type of lending as well as other commercial real estate lending, including participations, which has perceived higher inherent risk and credit risk than residential real estate loans. During the year ended June 30, 1997, the Association's nonperforming loans increased from $27,000 to $176,000, represented by two residential loans. This increase did not have a significant effect on the Association's provision for loan losses as management expects minimal losses, if any, related to these two loans. Management will continue to monitor its allowance for loan losses and make additions to the allowance through the provision for loan losses as economic conditions and other factors dictate. Although the Association maintains its allowance for loan losses at a level which it considers to be adequate to provide for loan losses, there can be no assurance that future losses will not exceed estimated amounts or that additional provisions for loan losses will not be required in the future. Non-Interest Income. For the year ended June 30, 1997, non-interest income decreased by approximately $28,000 or 26.0%, to $78,000 from $106,000 for the year ended June 30, 1996. This 36 decrease is primarily from a decrease in gains on the sale of loans receivable of $14,000 and a decrease in other non-interest income of $15,000. Non-Interest Expense. Non-interest expense increased by approximately $337,000 or 26.4%, to $1,615,000 for the year ended June 30, 1997 from $1,278,000 for the year ended June 30, 1996. This increase was primarily due to the increase in federal deposit insurance expense of $327,000 or 243.2% for the year ended June 30, 1997. The Savings Association Insurance Fund (the "SAIF") made a one time assessment to all associations during the year ended June 30, 1997 to recapitalize that fund. The Association's portion of that one time assessment was approximately $383,000. The rate of deposit insurance declined beginning January 1, 1997 as a result of the one time assessment, from 23 basis points per $100 of domestic deposits to zero. See "Regulation - Insurance of Accounts and Regulation by the FDIC." In addition, in the future, non-interest expense may increase due to expenses associated with the ESOP, other benefit programs and the costs of being a public company. Income Taxes. The provision for income taxes decreased by approximately $74,000 or 46.1% to $87,000 for the year ended June 30, 1997 from $161,000 for the year ended June 30, 1996. This decrease results from the decrease in income before the tax provision. The Association's effective tax rates were 39.4% and 35.4% for the years ended June 30, 1997 and 1996, respectively. The Association is generally taxed at a federal rate of 34% based on the IRS tax rate schedule for corporations. The Association is also subject to a Maryland franchise tax based on earnings at a flat rate of 7% of taxable income. This produces a combined federal and Maryland tax rate of 38.6% when the deductibility of the Maryland tax for federal purposes is considered. Variances from this rate in any given year are the result of certain items of income or expense not being included in or deducted from taxable income; and, from changes in the tax estimates of prior periods. The decrease in the provision for income taxes for the year ended June 30, 1997 is primarily the result of the corresponding $234,000 decrease in income before taxes. 37 Rate Volume Analysis The following schedule presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and that due to the changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.
Year Ended June 30, ----------------------------------- 1996 vs. 1997 ----------------------------------- Increase (Decrease) Due to Total ------------------- Increase Volume Rate (Decrease) ------ ---- ---------- (Dollars in Thousands) Interest-earning assets: Loans receivable .................................... $ 68 $ 25 $ 93 Mortgage-backed securities .......................... (6) (2) (8) Investment securities ............................... (169) 2 (167) Other ............................................... (10) 25 15 ----- ----- ----- Total interest-earning assets ..................... $(117) $ 50 (67) ===== ===== ----- Interest-bearing liabilities: Savings deposits .................................... $ 8 $ (12) (4) Demand and NOW deposits ............................. 3 (11) (8) Borrowings .......................................... -- -- -- Certificate accounts ................................ (169) (134) (303) Escrow deposits ..................................... (2) -- (2) Total interest-bearing liabilities ................ $(160) $(157) (317) ===== ===== ----- Net interest income .................................. $ 250 =====
Asset/Liability Management One of the Association's principal financial objectives is to achieve long-term profitability while reducing its exposure to fluctuations in interest rates. The Association has sought to reduce exposure of its earnings to changes in market interest rates by managing the mismatch between asset and liability maturities and interest rates. The principal element in achieving this objective has been to increase the interest-rate sensitivity of the Association's assets by originating loans with interest rates subject to periodic repricing to market conditions. Accordingly, the Association has emphasized the origination of one- to three-year adjustable rate mortgage loans, balloon loans, short-term and adjustable-rate commercial loans, and consumer loans for retention in its portfolio. 38 An asset or liability is interest rate sensitive within a specific time period if it will mature or reprice within that time period. If the Association's assets mature or reprice more quickly or to a greater extent than its liabilities, the Association's net portfolio value and net interest income would tend to increase during periods of rising interest rates but decrease during periods of falling interest rates. If the Association's assets mature or reprice more slowly or to a lesser extent than its liabilities, the Association's net portfolio value and net interest income would tend to decrease during periods of rising interest rates but increase during periods of falling interest rates. The Association's Board of Directors has formulated an Interest Rate Risk Management policy designed to promote long-term profitability while managing interest-rate risk. The Board of Directors has established an Asset/Liability Committee which consists primarily of the management team of the Association. This committee meets periodically and reports to the Board of Directors quarterly concerning asset/liability policies, strategies and the Association's current interest rate risk position. The committee's first priority is to structure and price the Association's assets and liabilities to maintain an acceptable interest rate spread while reducing the net effects of changes in interest rates. Management's principal strategy in managing the Association's interest rate risk has been to maintain short and intermediate term assets in the portfolio, including one and three year adjustable rate mortgage loans, as well as increased levels of commercial and consumer loans, which typically are for short or intermediate terms and carry higher interest rates than residential mortgage loans. In addition, in managing the Association's portfolio of investment securities and mortgage-backed and related securities, management seeks to purchase securities that mature on a basis that approximates as closely as possible the estimated maturities of the Association's liabilities or purchase securities that have adjustable rate provisions. The Association does not engage in hedging activities. In addition to shortening the average repricing of its assets, the Association has sought to lengthen the average maturity of its liabilities by adopting a tiered pricing program for its certificates of deposit, which provides higher rates of interest on its longer term certificates in order to encourage depositors to invest in certificates with longer maturities. This policy is blended with management's strategy for reducing the overall balance in certificate accounts in order to reduce the Association's interest expense. Net Portfolio Value. In order to encourage associations to reduce their interest rate risk, the OTS adopted a rule incorporating an interest rate risk ("IRR") component into the risk-based capital rules. The IRR component is a dollar amount that will be deducted from total capital for the purpose of calculating an institution's risk-based capital requirement and is measured in terms of the sensitivity of its net portfolio value ("NPV") to changes in interest rates. NPV is the difference between incoming and outgoing discounted cash flows from assets, liabilities, and off-balance sheet contracts. An institution's IRR is measured as the change to its NPV as a result of a hypothetical 200 basis points ("bp") change in market interest rates. A resulting change in NPV of more than 2% of the estimated market value of its assets will require the institution to deduct from its capital 50% of that excess change. The rules provide that the OTS will calculate the IRR component quarterly for each institution. Management reviews the OTS measurements on a 39 quarterly basis. In addition to monitoring selected measures on NPV, management also monitors effects on net interest income resulting from increases or decreases in rates. This measure is used in conjunction with NPV measures to identify excessive interest rate risk. The following table presents the Association's NPV at June 30, 1997, as calculated by the OTS, based on information provided to the OTS by the Association. NPV as % of Portfolio Value Net Portfolio Value of Assets Change --------------------------------------- --------------------- in Rates $ Amount $ Change % Change NPV Ratio % Change -------- -------- -------- -------- --------- -------- (Dollars in Thousands) +400 $3,154 $(3,681) (54)% 5.39% (5.27)% +300 4,150 (2,685) (39) 6.92 (3.74) +200 5,143 (1,692) (25) 8.37 (2.29) +100 6,072 (763) (11) 9.66 (1.00) Static 6,835 --- --- 10.66 --- (100) 7,273 439 6 11.18 .52 (200) 7,270 435 6 11.07 .41 (300) 7,075 240 4 10.71 .05 (400) 6,979 144 2 10.48 (.18) In the above table, the first column on the left presents the basis points increments of yield curve shifts. The second column presents the overall dollar amount of NPV at each basis point increment. The third and fourth columns present the Association's actual position in dollar change and percentage change in NPV at each basis point increment. The remaining columns present the Association's percentage and percentage change in its NPV as a percentage of portfolio value of assets. Had it been subject to the IRR component at June 30, 1997 the Association would have been considered to have had a greater than normal level of interest rate exposure and a deduction from capital of $89,000 would have been required. Although the OTS has informed the Association that it is not subject to the IRR component discussed above, the Association is still subject to interest rate risk and, as can be seen above, rising interest rates will reduce the Association's NPV. The OTS has the authority to require otherwise exempt institutions to comply with the rule concerning interest rate risk. See "Regulation - Regulatory Capital Requirements." Certain shortcomings are inherent in the method of analysis presented in the computation of NPV. Although certain assets and liabilities may have similar maturities or periods within which they will reprice, they may react differently to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. The Association's Board of Directors is responsible for reviewing the Association's asset and liability policies. The Board reviews interest rate risk and trends on a quarterly basis and liquidity, capital ratios and requirements, 40 on a monthly. Management is responsible for administering the policies and determinations of the Board of Directors with respect to the Bank's assets and liability goals and strategies. Notwithstanding its efforts with respect to asset/liability management, the Association remains subject to IRR, and expects that its profit margin will decrease if interest rates rise. Liquidity and Capital Resources The primary investment activity of the Association is originating one- to four-family residential mortgages, commercial real estate loans, and consumer loans to be held to maturity. For the fiscal years ended June 30, 1997 and 1996 the Association originated loans for its portfolio in the amount of $8.9 million and $9.0 million, respectively. For the same two fiscal years, these activities were funded from repayments of $7.2 million and $9.5 million, respectively, and sales and participations of $1.3 million and $990,000, respectively. The Association is required to maintain minimum levels of liquid assets under government regulations. The Association's short-term liquidity is determined by adding (1) cash on hand, (2) daily investable deposits, (3) U.S. Government agency obligations with maturities of less than one year and (4) accrued interest on unpledged liquid assets. Securities with maturities of greater than one year and less than five years are added to short-term liquidity to equal the Association's total liquidity. The Association's liquidity ratio is determined by dividing the liquidity by the average total liabilities of the preceding month. The Association's most liquid assets are cash and cash equivalents, which include short-term investments. At June 30, 1997 and 1996, cash and cash equivalents were $2.4 million and $5.8 million, respectively. In addition, the Association has used jumbo certificates of deposit as a source of funds. Deposits of $100,000 or more represented $5.7 million at June 30, 1997 (of which $4.2 million were jumbo certificates of deposit) and $5.2 million at June 30, 1996, or 10.1% and 8.9% of total deposits, respectively. The regulatory minimum for the Association is 1.0% short-term liquidity and 5.0% total liquidity. The Association has always met the liquidity requirements. The Association's eligible short-term liquidity ratios were 4.4% and 12.1%, respectively, at June 30, 1997 and 1996. The Association's eligible total liquidity ratios were 9.8% and 15.4%, respectively, at June 30, 1997 and 1996. Liquidity management for the Association is both an ongoing and long-term function of the Association's asset/liability management strategy. Excess funds, when applicable, generally are invested in overnight deposits at a correspondent bank and at the FHLB of Atlanta. Currently when the Association requires funds, beyond its ability to generate deposits, additional sources of funds are available through the FHLB of Atlanta. The Association has the ability to pledge its FHLB of Atlanta stock or certain other assets as collateral for such advances. The Association has not used FHLB advances during the past two fiscal years, but may use FHLB advances in the future to fund loan demand in excess of available funds. Management and the Board of Directors believe that due to significant amounts of adjustable rate mortgage loans that could be sold and the Association's ability to acquire funds from the FHLB of Atlanta, the Association's liquidity is adequate. 41 The Association has experienced a decline in total deposits since 1993 as a result of its asset/liability management strategies and market conditions. During the same period total assets has also decreased and total loans have increased resulting in improved yield on interest-earning assets and reduced costs of funds in 1997. Management of the Association does not expect the decline in deposits to continue as marketing efforts are expanded to attract transaction accounts to replace higher costing certificate accounts; or, for there to be a negative impact on the Association's operations or liquidity. Further, certificate accounts in the amount of $20.3 million or 50.3% of total certificate accounts at June 30, 1997 mature within one year compared to $25.4 million or 59.9% at June 30, 1996. Management of the Association expects the majority of these accounts to renew with no material adverse effect on the Association's operations or liquidity. Year Ended June 30, ---------------------------------- 1997 1996 1995 ------- ------- -------- (In Thousands) Net income .............................. $ 134 $ 294 $ 433 Adjustment to reconcile net income to net cash from operating activities .................. 118 78 (302) ------- ------- ------- Net cash from operating activities ...... 252 372 131 Net cash from investing activities ...... (1,937) 4,333 (9) Net cash from financing activities ...... (1,739) (750) (823) ------- ------- ------- Net change in cash and cash equivalents ........................... (3,424) 3,955 (701) Cash and cash equivalents at beginning of period ................... 5,801 1,846 2,547 ------- ------- ------- Cash and cash equivalents at end of period ......................... $ 2,377 $ 5,801 $ 1,846 ======= ======= ======= The Association's principal sources of funds are deposits, loan repayments and prepayments, and other funds provided by operations. While scheduled loan repayments are relatively predictable, deposit flows and early loan prepayments are more influenced by interest rates, general economic conditions, and competition. The Association maintains investments in liquid assets based upon management's assessment of (1) need for funds, (2) expected deposit flows, (3) yields available on short-term liquid assets and (4) objectives of the asset/liability management program. OTS regulations presently require the Association to maintain an average daily balance of investments in United States Treasury, federal agency obligations and other investments having maturities of five years or less in an amount equal to 5% of the sum of the Association's average daily balance of net withdrawable deposit accounts and borrowings payable in one year or less. The liquidity requirement, which may be changed from time to time by the OTS to reflect changing economic conditions, is intended to provide a source of relatively liquid funds upon which the Association may rely, if necessary, to fund deposit withdrawals or other short-term funding needs. At June 30, 1997, the Association's regulatory liquidity was 9.8%. For the last five fiscal years, the Association was in compliance with such requirement and management believes that the Association's liquidity is adequate. It should be noted that the Association has an immediately accessible line of credit with the FHLB Atlanta for $8.0 million. On June 30, 1997, the Association had commitments to originate fixed-rate commercial and residential loans totaling $1.8 million, and variable rate commercial and residential real estate mortgage loans totaling $49,000. Loan commitments are generally for 60 days. The Association considers its liquidity and capital reserves sufficient to meet its outstanding short- and long-term needs. 42 The Association is required by OTS regulations to meet certain minimum capital requirements, which must be generally as stringent as the requirements established for banks. Current capital requirements call for tangible capital of 1.5% of adjusted total assets, core capital (which for the Association consists solely of tangible capital) of 3.0% of adjusted total assets and risk-based capital (which for the Association consists of core capital and general valuation allowances) of 8% of risk-weighted assets (assets are weighted at percentage levels ranging from 0% to 100% depending on their relative risk). The OTS has proposed to amend the core capital requirement so that those associations that do not have the highest examination rating and an acceptable level of risk will be required to maintain core capital of from 4% to 5%, depending on the association's examination rating and overall risk. The Association does not anticipate that it will be adversely affected if the core capital requirements regulations are amended as proposed. The following table summarizes the Association's regulatory capital requirements and actual capital at June 30, 1997. (See Note 11 of Notes to Consolidated Financial Statements for a reconciliation of capital under generally accepted accounting principles and regulatory capital amounts.)
Excess of Actual Capital Over Current Actual Capital Current Requirement Requirement ------------------- ------------------- --------------------- Amount Percent Amount Percent Amount Percent Asset Total ------- ------- -------- ------- ---------- ------- ----------- Tangible Capital .......... $ 4,755 7.6% $ 934 1.5% $ 3,821 6.1% $62,249 Core Capital .............. 4,755 7.6 1,867 3.0 2,888 4.6 62,249 Risk-based Capital ........ 5,025 14.6 2,748 8.0 2,277 6.6 34,344
At June 30, 1997, the Association had a commitment for $27,500 of capital expenditures related to computer equipment and data processing. 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. The primary impact of inflation on the operations of the Association is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution's performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. 43 Current Accounting Issues Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" was issued by the Financial Accounting Standards Board (FASB) in June 1996. This statement provides that transfers of financial assets be recognized as sales only when certain specified criteria related to the transferor surrendering control of the assets are met. These criteria are more restrictive than under previous generally accepted accounting principles. The provisions of this statement will affect the accounting for certain transactions commonly entered into by community financial institutions such as repurchase agreements, bankers acceptances and participation loans. The statement is effective for transactions occurring after December 31, 1996 and is to be applied prospectively. SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125" was issued in December 1996. This statement defers, for one year, the effective date of Statement No. 125 for repurchase agreements, dollar-roll, securities lending and similar transactions. The effect, on the Association's financial position and results of operations, of implementing Statement No. 125 in 1997 was not material. SFAS No. 130, "Reporting Comprehensive Income" was issued in June 1997. This statement requires that comprehensive income - made up of all revenues, expenses, gains and losses - be reported and displayed in an entity's financial statements with the same prominence as its other financial statements. Currently, the only item that would be presented as a component of its net income is the change during the year in unrealized gain or loss on available for sale securities. The statement, which is effective for years beginning after December 15, 1997, will not affect the Association's financial position or its results of operations. SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" was also issued in June 1997. This statement requires that public business enterprises report financial and descriptive information about their reportable operating segments. Reportable operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker as a basis for allocating resources and assessing performance. It also requires those enterprises to report information about countries in which they do business and about major customers. The statement, which is effective for financial statement for periods beginning after December 15, 1997, will not affect the Association's financial position or its results of operations. 44 BUSINESS General Located in Lutherville, Maryland, the Association is a financial institution primarily engaged in the business of attracting savings deposits from the general public and investing such funds in permanent mortgage loans secured by one- to four-family residential real estate located primarily in central Baltimore County and northern Baltimore City, Maryland. Through its branch office located in Glen Burnie, a suburb to the south of Baltimore, the Association also services Anne Arundel County, Maryland. In addition to permanent mortgage loans, the Association also originates, to a lesser extent, loans for the construction of one- to four-family real estate, commercial loans secured by multi-family real estate (over four units) and nonresidential real estate, and consumer loans, including home equity lines of credit, home improvement loans, and loans secured by savings deposits. The Association invests in U.S. government obligations, interest-bearing deposits in other financial institutions, mortgage-backed securities, and other investments permitted by applicable law. Lending Activities General. The principal lending activity of the Association is originating first mortgage loans secured by owner-occupied one- to four-family residential properties located in its primary market areas. In addition, in order to increase the yield and the interest rate sensitivity of its portfolio and in order to provide more comprehensive financial services to families and community businesses in the Association's primary market area, Wyman Park also originates commercial real estate, multi-family, consumer (secured and unsecured), land, and second mortgage loans. See "- Originations, Purchases and Sales of Loans." The Association reserves the right in the future to adjust or discontinue any product offerings to respond to competitive or economic factors. 45 Loan Portfolio Composition. The following information concerning the composition of the Association's loan portfolios in dollar amounts and in percentages (before deductions for loans in process, deferred fees and discounts and allowances for losses) as of the dates indicated. June 30, ------------------------------------------- 1997 1996 ------------------ ------------------- Amount Percent Amount Percent ------ ------- ------ ------- (Dollars in Thousand) Real Estate Loans: One- to four-family ....... $46,346 82.92% $45,669 84.82% Multi-family .............. 211 .38 128 .24 Commercial ................ 5,806 10.39 4,448 8.26 Construction or development 150 .27 270 .50 ------- ------ ------- ------ Total real estate loans . 52,513 93.96 50,515 93.82 ------- ------ ------- ------ Other Loans: Consumer Loans: Deposit account loans .... 176 .31 138 .26 Home equity .............. 3,184 5.70 3,189 5.92 Home improvement ......... 16 .03 -- -- Total consumer loans .... 3,376 6.04 3,327 6.18 ------- -------- ------- ------ Total loans, gross ...... 55,889 100.00% 53,842 100.00% ------- ======== ------- ====== Less: Loans in process .......... (231) (270) Deferred fees and discounts (199) (203) Allowance for losses ...... (270) (125) ------- ------- Total loans receivable, net $55,189 $53,244 ======= ======= 46 The following table shows the composition of the Association's loan portfolios by fixed- and adjustable-rate at the dates indicated. June 30, ---------------------------------------- 1997 1996 ---------------- ---------------- Amount Percent Amount Percent ------ ------- ------ ------- (Dollars in Thousand) Fixed-Rate Loans: Real estate: One- to four-family .............. $30,505 54.58% $28,093 52.18% Multi-family ..................... -- -- 78 .14 Commercial ....................... 4,596 8.22 3,424 6.36 Construction or development ...... 150 .27 270 .50 ------- ------ ------- ------ Total real estate loans ....... 35,251 63.07 31,865 59.18 Consumer .......................... 192 .34 138 .26 ------- ------ ------- ------ Total fixed-rate loans ........ 35,443 63.41 32,003 59.44 ------- ------ ------- ------ Adjustable-Rate Loans: Real estate: One- to four-family .............. 15,841 28.34 17,576 32.64 Multi-family ..................... 211 .38 50 .09 Commercial ....................... 1,210 2.17 1,024 1.90 ------- ------ ------- ------ Total real estate loans ....... 17,262 30.89 18,650 34.63 Consumer .......................... 3,184 5.70 3,189 5.93 ------- ------ ------- ------ Total adjustable-rate loans ... 20,446 36.59 21,839 40.56 ------- ------ ------- ------ Total loans ................... 55,889 100.00% 53,842 100.00% ------- ====== ------- ====== Less: Loans in process .................. (231) (270) Deferred fees and discounts ....... (199) (203) Allowance for loan losses ......... (270) (125) ------- ------- Total loans receivable, net .... $55,189 $53,244 ======= ======= 47 The following schedule illustrates the interest rate sensitivity of the Association's loan portfolio at June 30, 1997. Mortgages which have adjustable or renegotiable interest rates are shown as maturing in the period during which the contract is due. The schedule does not reflect the effects of possible prepayments or enforcement of due-on-sale clauses. Real Estate --------------------------------------------------------- Multi-family and Construction One- to Four-Family Commercial or Development ------------------- ---------------- ----------------- Weighted Weighted Weighted Average Average Average Amount Rate Amount Rate Amount Rate ------ ---- ------ ---- ------ ---- (Dollars in Thousands) Due During Years Ending June 30, - ------------------ 1998(1) .......... $17,811 7.53% $ 485 9.14% $ 150 8.25% 1999 and 2000 .... 5,396 7.03 1,622 9.86 -- -- 2001 and 2002 .... 3,063 8.00 229 9.45 -- -- 2003-2007 ........ 6,138 7.61 1,210 9.92 -- -- 2008-2017 ........ 10,824 7.05 1,742 9.42 -- -- 2018 and following 3,114 7.57 729 7.34 -- -- ------- ------- ------- $46,346 7.40 $ 6,017 9.37 $ 150 8.25% ======= ======= ======= Consumer Total ---------------- ------------------- Weighted Weighted Average Average Amount Rate Amount Rate ------ ---- ------ ---- Due During Years Ending June 30, - ------------------ 1998(1) .................... $ 3,360 9.56% $21,806 7.88% 1999 and 2000 .............. 3 9.25 7,021 7.68 2001 and 2002 .............. 13 9.52 3,305 8.11 2003-2007 .................. -- -- 7,348 7.95 2008-2017 .................. -- -- 12,566 7.38 2018 and following ......... -- -- 3,843 7.53 ------- ------- $ 3,376 9.56 $55,889 7.74 ======= ======= - ---------- (1) Includes demand loans and loans having no stated maturity. The total amount of loans due after June 30, 1997 which have predetermined interest rates is $35,443,000 while the total amount of loans due after such dates which have floating or adjustable interest rates is $20,446,000. 48 Under federal law, the aggregate amount of loans that the Association is permitted to make to any one borrower is generally limited to 15% of unimpaired capital and surplus (25% if the security for such loan has a "readily ascertainable" value or 30% for certain residential development loans). At June 30, 1997, based on the above, the Association's regulatory loan-to-one borrower limit was approximately $750,000. On the same date, the Association had no borrowers with outstanding balances in excess of this amount. As of June 30, 1997, the largest dollar amount of indebtedness to one borrower or group of related borrowers was a $630,000 loan secured by a strip shopping center. The next two largest loans had outstanding balances of $627,000 and $583,000, respectively, and were secured by warehouse and offices, and a fast food restaurant and retail establishment. Such loans are performing in accordance with their terms. Loan applications are accepted by salaried employees at the Association's offices. Loan applications are presented for approval to the Loan or Executive Loan Committees of the Board of Directors or to the full Board of Directors, depending on the loan amount. Generally, the Loan Committee acts with respect to loan requests equal to or less than $250,000 (except for single family loan requests conforming to certain criteria, as to which the Loan Committee may approve amounts up to $500,000, while the Executive Loan Committee acts with respect to loan requests for more than $250,000 up to $500,000). Decisions on loan applications are made on the basis of detailed applications and property valuations (consistent with the Association's written lending policy) by qualified independent appraisers. The loan applications are designed primarily to determine the borrower's ability to repay and include income, length of employment, past credit history and the amount of current indebtedness. Significant items on the application are verified through use of credit reports, financial statements, tax returns and/or confirmations. The Association is an equal opportunity lender. One- to Four-Family Residential Real Estate Lending The cornerstone of the Association's lending program has long been the origination of long-term permanent loans secured by mortgages on owner-occupied one- to four-family residences. At June 30, 1997, $46.3 million, or 82.9% of the Association's gross loan portfolio consisted of permanent loans on one- to four-family residences. At that date, the average outstanding residential loan balance was approximately $73,000 and the largest outstanding residential loan had a principal balance of $382,000. Virtually all of the residential loans originated by Wyman Park are secured by properties located in the Association's market area. See "- Originations, Purchases and Sales of Loans." Although the Bank has generally sold its fixed-rate loan production since 1989, historically, Wyman Park originated for retention in its own portfolio 30-year fixed-rate loans secured by one- to four-family residential real estate. Beginning in the mid-1980s, in order to reduce its exposure to changes in interest rates, Wyman Park began to originate adjustable rate mortgage loans ("ARMs"), subject to market conditions and consumer preference. The Association has from time to time sold some of its ARM production, which conforms to standards promulgated by the Federal Home Loan Mortgage Corporation ("FHLMC"), and as a result of continued consumer demand, particularly during periods of relatively low interest rates, Wyman Park has also continued to originate fixed-rate residential loans in amounts and at rates and terms which are monitored for 49 compliance with the Association's asset/liability management policy. Currently, the Association originates both conforming and jumbo construction and jumbo fixed-rate permanent loans with maturities of up to 30 years. At June 30, 1997, the Association had $30.5 million of fixed-rate permanent residential loans, constituting 54.6% of the Association's loan portfolio at such date. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Asset/Liability Management." The Association's ARM and balloon loans are offered at rates, terms and points determined in accordance with market and competitive factors. The Association's current one- to four-family residential ARMs are fully amortizing loans with contractual maturities of up to 30 years. Balloon loans also have terms of up to 30 years. Though from time to time "teaser" rates are offered, applicants are qualified pursuant to FHLMC guidelines, which permits qualifications at less than the fully indexed rate, and no ARMs allow for negative amortization. The interest rates on the ARMs originated by Wyman Park are generally subject to adjustment at one-, three- and five-year intervals based on a margin over the Treasury Securities Constant Maturity Index. Decreases or increases in the interest rate of the Association's ARMs are generally limited to 6% above the initial interest rate over the life of the loan, and up to a 2% per adjustment period per year or per adjustment period. The Association's ARMs may be convertible into fixed-rate loans, depending on the program selected, and do not contain prepayment penalties. Loans are not assumable. At June 30, 1997, the total balance of one- to four-family ARMs was $15.8 million, or 28.3% of the Association's loan portfolio. As a service to its older customers, the Association also has originated, and thereafter sold, reverse mortgages, enabling the "homeowner" to utilize equity values that have built up in the underlying property. As discussed above, the Association evaluates both the borrower's ability to make principal, interest and escrow payments and the value of the property that will secure the loan. Wyman Park originates residential mortgage loans with loan-to-value ratios up to 97%. On mortgage loans exceeding an 80% loan-to-value ratio at the time of origination, Wyman Park will generally require private mortgage insurance in an amount intended to reduce the Association's exposure to less than 80% of the appraised value of the underlying property. The Association requires title insurance on its mortgage loans as well as fire and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan. The Association also requires flood insurance to protect the property securing its interest when the property is located in a flood plain. The Association's residential mortgage loans customarily include due-on-sale clauses giving the Association the right to declare the loan immediately due and payable in the event that, among other things, the borrower sells or otherwise disposes of the property subject to the mortgage and the loan is not repaid. 50 Construction and Development Lending The Association makes construction loans to individuals for the construction of their primary or secondary residences. Loans to individuals for the construction of their residences typically run for up to nine months. The borrower pays interest only during the construction period. Residential construction loans are generally underwritten pursuant to the same guidelines used for originating permanent residential loans. At June 30, 1997, the Association had one construction loan with an outstanding aggregate balance of $150,000 secured by residential property. The Association has participated in loans to builders and developers to finance the construction of residential property. Such loans generally have adjustable interest rates based upon prime or treasury indexes with terms of 18 months. The proceeds of the loan are advanced during construction based upon the percentage of completion as determined by an inspection by the lead lender. The loan amount normally does not exceed 75% of projected completed value. Whether the Association is willing to provide permanent takeout financing to the purchaser of the home is determined independently of the construction loan by separate underwriting. In the event that upon completion the house is not sold, the builder is required to make principal and interest payments until the house is sold. Building lot loans, which include loans to acquire vacant or raw land, are made to individuals. All of such loans are secured by land zoned for residential developments and located within the Association's market area. Before extending credit, the Association will require percolation tests and related permits to be secured. Construction and development lending, through participation or direct lending, generally affords the Association an opportunity to receive interest at rates higher than those obtainable from residential lending and to receive higher origination and other loan fees. In addition, such loans are generally made for relatively short terms. Nevertheless, construction lending to persons other than owner-occupants is generally considered to involve a higher level of credit risk than one- to four-family permanent residential lending due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on construction projects, real estate developers and managers. In addition, the nature of these loans is such that they are more difficult to evaluate and monitor. The Association's risk of loss on a construction or development loan is dependent largely upon the accuracy of the initial estimate of the property's value upon completion of the project and the estimated cost (including interest) of the project. If the estimate of value proves to be inaccurate, the Association may be confronted, at or prior to the maturity of the loan, with a project with a value which is insufficient to assure full repayment and/or the possibility of having to make substantial investments to complete and sell the project. Because defaults in repayment may not occur during the construction period, it may be difficult to identify problem loans at an early stage. When loan payments become due, the cash flow from the property may not be adequate to service the debt. In such cases, the Association may be required to modify the terms of the loan. 51 Commercial Real Estate Lending The Association's commercial real estate loan portfolio consists of loans on a variety of non-residential properties including retail facilities, warehouses, small office buildings, small industrial parks and shopping centers. At June 30, 1997, the Association's largest commercial real estate loan totaled $630,000 At that date, the Association had 23 other commercial real estate loans, all totaling $5.8 million or 10.4 % of gross loans receivable. As of June 30, 1997, none of these loans were non-performing. The Association has originated both balloon, adjustable-rate and fixed-rate commercial real estate loans, although most current originations have balloon or adjustable rates. Commercial loans generally adjust based on a constant maturity index plus a margin. Adjustable rate loans generally have a balloon feature after one or two adjustment periods to allow the Association to re-evaluate the terms of the loan. Balloon loans mature at the end of the initial balloon term and may be modified, extended or refinanced by the Association. Commercial loans are generally underwritten in amounts of up to 75% of the appraised value of the underlying property. Appraisals on properties securing commercial real estate loans originated by the Association are performed by a qualified independent appraiser at the time the loan is made. In addition, the Association's underwriting procedures generally require verification of the borrower's credit history, income and financial statements, banking relationships and income projections or operating histories for the property. Personal guarantees are generally obtained for the Association's commercial real estate loans. Substantially all of the commercial real estate loans originated by the Association are secured by properties located within the Association's market area. The table below sets forth by type of security property the estimated number, loan amount and outstanding balance of Wyman Park's commercial real estate loans at June 30, 1997. Outstanding Number of Original Principal Loans Loan Amount Balance --------- ----------- ----------- (Dollars in Thousands) Office ............................ 10 $1,850 $1,653 Retail ............................ 4 1,725 1,641 Small industrial .................. 2 535 482 Warehouse ......................... 4 1,372 1,262 Apartment ......................... 1 83 59 Land .............................. 3 758 709 ------ ------ ------ Total .......................... 24 $6,323 $5,806 ====== ====== ====== Commercial real estate loans generally present a higher level of credit risk than loans secured by one- to four-family residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties and the increased difficulty of evaluating and 52 monitoring these types of loans. Furthermore, the repayment of loans secured by commercial real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed), the borrower's ability to repay the loan may be impaired. Multi-Family Lending The Association has historically made a few permanent multi-family loans in its primary market area. As with commercial real estate loans, multi-family loans present a higher level of credit risk than do loans secured by one-to four-family residences. At June 30, 1997, loans secured by multi-family properties aggregated $211,000, or .38% of the Association's gross loans receivable. The Association's multi-family loan portfolio includes loans secured by five or more unit residential buildings located primarily in the Association's market area. Consumer Lending Management believes that offering consumer loan products helps to expand the Association's customer base and to create stronger ties to its existing customer base. In addition, because consumer loans generally have shorter terms to maturity and carry higher rates of interest than do residential mortgage loans, they can be valuable asset/liability management tools. The Association currently originates substantially all of its consumer loans in its market area. At June 30, 1997, the Association's consumer loans totaled $3.4 million or 6.0% of the Association's gross loan portfolio. Wyman Park offers a variety of consumer loans, including loans secured by savings deposits and home equity lines of credit as well as unsecured home improvement loans. The largest component of the Association's consumer lending program is its home equity line. At June 30, 1997, home equity loans totaled $3.2 million or 5.7% of gross loans receivable. The Association also employs its standard underwriting criteria discussed above in deciding whether to extend credit. The Association's home equity lines of credit are originated in amounts which, together with the amount of the first mortgage, generally do not exceed 80% of the appraised value of the property securing the loan. At June 30, 1997, the Association had $5.5 million of funds committed, but undrawn, under such lines. Home equity loans are adjustable in nature, floating at a stated margin above prime. The terms of other types of consumer loans vary according to the type of collateral, length of contract and creditworthiness of the borrower. The underwriting standards employed by the Association for consumer loans include a determination of the applicant's payment history on other debts and an assessment of the borrower's ability to meet payments on the proposed loan along with his existing obligations. In addition to the creditworthiness of the applicant, the underwriting process also includes a comparison of the value of the security, if any, in relation to the proposed loan amount. 53 Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans which are unsecured or secured by rapidly depreciable assets. In addition, consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans. Originations, Purchases and Sales of Loans The Association originates real estate and other loans through employees located at the Association's offices. Walk-in customers and referrals from its current customer base, advertisement, real estate brokers, mortgage loan brokers and builders are also important sources of loan originations as well as Wyman Park's internet web-site (www.wymanpark.com). The association utilized the services of mortgage or loan brokers from time to time. While generally a portfolio lender, the Association may in the future evaluate loan sale opportunities as they arise and make sales depending on market conditions. The following table shows the loan origination, purchase, sale and repayment activities of the Association for the periods indicated. Year Ended June 30, ------------------- 1997 1996 ------ ------- (Dollars in Thousands) Originations by type: Adjustable rate: Real estate - one- to four-family.................. $2,843 $ 1,314 - multi-family..................... 90 --- - commercial....................... 1,100 190 ------ ------- Total adjustable-rate....................... 4,033 1,504 ------ ------- Fixed rate: Real estate - one- to four-family.................. 3,907 6,991 - commercial....................... 936 550 Non-real estate - consumer......................... 18 --- ------ ------- Total fixed-rate............................ 4,861 7,541 ------ ------- Total loans originated...................... 8,894 9,045 ------ ------- Purchases: Real estate - one- to four-family.................. 983 --- - commercial....................... 805 300 ------ ------- Total loans purchased....................... 1,788 300 ------ ------- Sales and Repayments: Real estate - one- to four-family.................. 395 990 - commercial....................... 900 --- ------ ------- Total loans sold............................ 1,295 990 Principal repayments............................... 7,177 9,539 ------ ------- Total reductions............................ 8,472 10,529 Increase (decrease) in other items, net.............. (265) 24 ------ ------- Net increase (decrease)..................... $1,945 $(1,160) ====== ======= 54 Delinquencies and Non-Performing Assets Loan Portfolio Management. When a borrower fails to make a required payment on a loan, the Association attempts to cause the delinquency to be cured by contacting the borrower. A late notice is generated on all loans over 15 and 30 days delinquent. Another late notice is sent 60 days after the due date followed by telephone contact. If the delinquency is not cured by the 65th day, the customer is provided written notice that the account will be referred to counsel for collection and foreclosure, if necessary. A good faith effort by the borrower at this time will defer foreclosure for a reasonable length of time depending on individual circumstances. After 90 days, foreclosure proceedings are generally instituted. The Association may agree to accept a deed in lieu of foreclosure. If it becomes necessary to foreclose, the property is sold at public sale and the Association may bid on the property to protect its interest. Unsecured consumer loans are charged off if they remain delinquent for 120 days unless the borrower and lender agree on a payment plan. If terms of the plan are not met, they are then subject to charge off. Real estate acquired by Wyman Park as a result of foreclosure is classified as real estate owned until it is sold. When property is acquired by foreclosure, it is recorded at the lower of cost or estimated fair value, less estimated selling costs, at the date of acquisition, and any write-down resulting therefrom is charged to the allowance for loan losses. Subsequent decreases in the value of the property are charged to operations through the creation of a valuation allowance. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell. The following table sets forth the Association's loan delinquencies by type, by amount and by percentage of type at June 30, 1997.
Loans Delinquent For: ----------------------------------------------------- 60-89 Days 90 Days and Over Total Delinquent Loans ------------------------- ------------------------- -------------------------- Percent Percent Percent of Loan of Loan of Loan Number Amount Category Number Amount Category Number Amount Category ------ ------ -------- ------ ------ -------- ------ ------ -------- (Dollars in Thousands) Real Estate: One- to four-family ..................... 5 $178 .38% 2 $176 .38% 7 $354 .76% ---- ---- --- ---- --- --- Total .................................. 5 $178 .32% 2 $176 .31% 7 $354 .63% ==== ==== === ==== === ===
55 Non-Performing Assets. The table below sets forth the amounts and categories of non-performing assets in the Association's loan portfolio. Loans are placed on non-accrual status when the collection of principal and/or interest become doubtful. Foreclosed assets include assets acquired in settlement of loans. June 30, --------------- 1997 1996 ---- ---- (Dollars in Thousands) Non-accruing loans: One- to four family............................ $176 $ 27 ---- ---- Total non-performing assets...................... $176 $ 27 ==== ==== Total as a percentage of total assets............ .28% .04% === === For the year ended June 30, 1997 gross interest income which would have been recorded had the non-accruing loans been current in accordance with their original terms amounted to $18,964. The amount that was included in interest income on such loans was $14,492 for the year ended June 30, 1997. Classification of Assets. Federal regulations require that each savings institution classify its own assets on a regular basis. In addition, in connection with examinations of savings institutions, OTS and FDIC examiners have authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: Substandard, Doubtful and Loss. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Association will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of Substandard assets, with the additional characteristics that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified Loss is considered uncollectible and of such little value that continuance as an asset on the balance sheet of the institution, without establishment of a specific valuation allowance or charge-off, is not warranted. Assets classified as Substandard or Doubtful require the institution to establish prudent general allowances for loan losses. If an asset or portion thereof is classified as a Loss, the institution may charge off such amount against the loan loss allowance. If an institution does not agree with an examiner's classification of an asset, it may appeal this determination to the District Director of the OTS. On the basis of management's review of its assets, at June 30, 1997, the Association had two loans classified substandard with total principal of $176,000. Other Assets of Concern. In addition to non-performing loans and substandard loans discussed above, as of June 30, 1997, the Association had five loans totaling $178,000, which, because of known information about the possible credit problems of the borrowers or the cash flows of the security property, would cause management to have some doubts as to the ability of the 56 borrowers to comply with present loan repayment terms and may result in the future inclusion of such assets in non-performing asset categories. Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses charged to earnings based on management's evaluation of the risk inherent in its entire loan portfolio and changes in the nature and volume of its loan activity. Such evaluation, which includes a review of all loans of which full collectibility may not be reasonably assured, considers the estimated net realizable value of the underlying collateral, economic conditions, historical loan loss experience and other factors that warrant recognition in providing for an adequate allowance for loan losses. In determining the general reserves under these policies, historical charge-offs and recoveries, changes in the mix and levels of the various types of loans, net realizable values, the current loan portfolio and current economic conditions are considered. Management also considers the Association's non-performing assets in establishing its allowance for loan losses. As of June 30, 1997, the Association's allowance for loan losses as a percent of gross loans receivable and as a percent of non-performing loans amounted to .5% and 153%, respectively. In light of the level of non-performing assets to total assets and the nature of these assets, management believes that the allowance for loan losses is adequate. While management believes that it uses the best information available to determine the allowance for loan losses, unforeseen market conditions could result in adjustments to the allowance for loan losses, and net earnings could be significantly affected, if circumstances differ substantially from the assumptions used in making the final determination. The following table sets forth an analysis of the Association's allowance for loan losses. Year Ended June 30, ------------------- 1997 1996 ---- ---- (Dollars in Thousands) Balance at beginning of period.................... $125 $100 Charge-offs: Commercial real estate.......................... -- -- ---- ---- -- -- ---- ---- Net charge-offs................................... -- -- Additions charged to operations................... 145 25 ---- ---- Balance at end of period.......................... $270 $125 ==== ==== Ratio of net charge-offs during the period to average loans outstanding during the period...... --% --% ==== ==== Ratio of net charge-offs during the period to average non-performing assets.................... --% --% ==== ==== 57 The distribution of the Association's allowance for losses on loans at the dates indicated is summarized as follows:
June 30, -------------------------------------------------------------------------------- 1997 1996 ------------------------------------ ------------------------------------ Percent Percent of Loans of Loans Loan in Each Loan in Each Amount of Amounts Category Amount of Amounts Category Loan Loss by to Total Loan Loss by to Total Allowance Category Loans Allowance Category Loans --------- -------- -------- --------- -------- -------- (Dollars in Thousands) One- to four-family ................ $ 25 $46,346 82.92% $ 22 $45,669 84.82% Multi-family ....................... -- 211 .38 -- 128 .24 Commercial real estate ............. 56 5,806 10.39 43 4,448 8.26 Construction or development ....... -- 150 .27 -- 270 .50 Consumer ........................... -- 3,376 6.04 -- 3,327 6.18 Unallocated ........................ 189 -- -- 59 -- -- ------- ------- ------ ------- ------- ------ Total ......................... $ 270 $55,889 100.00% $ 125 $53,842 100.00% ======= ======= ====== ======= ======= ======
Investment Activities As part of its asset/liability management strategy and liquidity requirements, the Association invests in U.S. government and agency obligations to supplement its lending activities. The Association's investment policy also allows for investments in overnight funds, mortgage-backed securities and certificates of deposit. The Association may consider the expansion of investments into other securities if deemed appropriate. At June 30, 1997, the Association did not own any securities of a single issuer which exceeded 10% of the Association's retained earnings, other than U.S. government or federal agency obligations. See Note 3 of the Notes to the Consolidated Financial Statements for additional information regarding the Association's investment securities portfolio. The Association is required by federal regulations to maintain a minimum amount of liquid assets that may be invested in specified securities and is also permitted to make certain other securities investments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital." Cash flow projections are regularly reviewed and updated to assure that adequate liquidity is provided. As of June 30, 1997, the Association's liquidity ratio (liquid assets as a percentage of net withdrawable savings and current borrowings) was 9.8% as compared to the OTS requirement of 5.0%. All of the Association's investment securities, except mortgage-backed securities, are classified as available for sale. Mortgage-backed securities are classified as held to maturity. There were no sales of investment securities in fiscal 1997 or 1996. The Association may elect to classify investment securities acquired in the future as trading securities or as held to maturity, instead of available-for-sale, but there are no current plans to do so. 58 The following table sets forth the composition of the Association's investment and mortgage-backed securities at the dates indicated.
June 30, ------------------------------------------------ 1997 1996 --------------------- -------------------- Book % of Book % of Value Total Value Total ------ ------ ------ ------ (Dollars in Thousands) Investment securities: Federal agency obligations ........................... $2,992 85.44% $2,964 85.32% ------ ------ ------ ------ Subtotal .......................................... 2,992 85.44 2,964 85.32 FHLB stock ........................................... 510 14.56 510 14.68 ------ ------ ------ ------ Total investment securities and FHLB stock ........ $3,502 100.00% $3,474 100.00% ====== ====== ====== ====== Average remaining life of investment securities ........ 1.3 years 2.3 years Other interest-earning assets: Interest-bearing deposits with banks ................. $1,093 57.05% $3,483 60.46% Federal funds sold ................................... 823 42.95 2,278 39.54 ------ ------ ------ ------ Total ............................................. $1,916 100.00% $5,761 100.00% ====== ====== ====== ====== Mortgage-backed securities: FNMA ................................................. $ 2 .56% $ 3 .71% FHLMC ................................................ 354 99.44 421 99.29 ------ ------ ------ ------ Total mortgage-backed securities .................. $ 356 100.00% $ 424 100.00% ====== ====== ====== ======
At June 30, 1997, the composition and maturities of the investment securities portfolio, excluding FHLB stock, are indicated in the following table. 1 to 5 Years Total Investment Securities ------ --------------------------- Book Value Book Value Market Value ---------- ---------- ------------ (Dollars in Thousands) Federal agency obligations.......... $2,992 $2,992 $2,992 ------ ------ ------ Total investment securities......... $2,992 $2,992 $2,992 ====== ====== ====== Weighted average yield.............. 5.94% 5.94% 5.94% Mortgage-Backed Securities. Wyman Park has a $356,000 portfolio of mortgage-backed securities, all of which are insured or guaranteed by FHLMC or the Federal National Mortgage Association ("FNMA"). Accordingly, management believes that the Association's mortgage-backed securities are generally resistant to credit problems. Because these securities represent a passthrough of principal and interest from underlying individual thirty year mortgages, such securities do present prepayment risk. Any such individual security contains mortgages that can be prepaid at any time over the life of the security. In a rising interest rate environment the underlying mortgages are likely to extend their lives versus a stable or declining rate environment. A declining rate environment can result in rapid prepayment. There is no certainty as to the security life or speed of prepayment. The geographic makeup and correlated economic conditions of the underlying mortgages also pay an 59 important role in determining prepayment. In addition to prepayment risk, interest rate risk is inherent in holding any debt security. As interest rates rise the value of the security declines and conversely as interest rates decline values rise. Adjustable rate mortgage-backed securities have the advantage of moving their interest rate within limits with the contractual index used, subject to the risk of prepayment. All of the adjustable rate mortgage-backed securities in the portfolio are tied to the One Year Constant Maturity Treasury Index and all are considered held for investment. The market valuation does not consequently present a direct impact on equity. Mortgage-backed securities can serve as collateral for borrowings and, through sales and repayments, as a source of liquidity. For information regarding the carrying and market values of Wyman Park's mortgage-backed securities portfolio, see Note 3 of the Notes to Consolidated Financial Statements. Under the Association's risk-based capital requirement, mortgage-backed securities have a risk weight of 20% in contrast to the 50% risk weight carried by residential loans. See "Regulation." The following table sets forth the contractual maturities of the Association's mortgage-backed securities at June 30, 1997. Due in June 30, 1997 10 to 20 Balance Years Outstanding ----- ----------- (In Thousands) Federal Home Loan Mortgage Corporation.......... $354 $354 Federal National Mortgage Association........... 2 2 ----- ---- Total...................................... $356 $356 ==== ==== Sources of Funds General. The Association's primary sources of funds are deposits, amortization and prepayment of loan principal, maturities of investment securities, short-term investments and funds provided from operations as well as FHLB advances. Deposits. Wyman Park offers a variety of deposit accounts having a wide range of interest rates and terms. The Association's deposits consist of passbook and statement accounts, NOW accounts, Christmas Club and money market and certificate accounts, including Individual Retirement Accounts. The Association relies primarily on advertising, including newspaper and radio, pricing policies and customer service to attract and retain these deposits. Neither premiums nor brokered deposits are utilized. The flow of deposits is influenced significantly by general economic conditions, changes in money market and prevailing interest rates and competition. The Association's mix of transaction accounts and certificate accounts is less favorable than its peers, resulting in a higher cost of funds for the Association in relation to its peer group. At June 30, 1997, 28.3% of the Association's deposits were in transaction accounts, versus 71.7% in certificates. See "Risk Factors - Low Return on Equity and Low Net Interest Margin" and "-- Competition." 60 The Association has become more susceptible to short-term fluctuations in deposit flows, as customers have become more interest rate conscious. The Association manages the pricing of its deposits in keeping with its asset/liability management, profitability and growth objectives. Based on its experience, the Association believes that its passbook, demand and NOW accounts are relatively stable sources of deposits. However, the ability of the Association to attract and maintain certificate deposits, and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions. The following table sets forth the savings flows at the Association during the periods indicated. Year Ended June 30, ---------------------- 1997 1996 --------- -------- (Dollars in Thousands) Opening balance............................. $ 57,871 $ 58,473 Deposits.................................... 53,394 43,873 Withdrawals................................. (57,930) (47,539) Interest credited........................... 2,762 3,064 -------- -------- Ending balance.............................. $ 56,097 $ 57,871 ======== ======== Net decrease................................ $ (1,774) $ (602) ======== ======== Percent decrease............................ (3.07)% (1.03)% ======== ======== 61 The following table sets forth the dollar amount of savings deposits in the various types of deposit programs offered by the Association for the periods indicated. Year Ended June 30, -------------------------------------- 1997 1996 ----------------- ----------------- Percent Percent Amount of Total Amount of Total ------ -------- ------ -------- (Dollars in Thousands) Transactions and Savings Deposits: Commercial Demand 0% ............ $ 587 1.05% $ 337 .58% Passbook Accounts 2.96% ......... 6,027 10.74 5,857 10.12 NOW Accounts 1.75 % ............. 1,615 2.88 1,673 2.89 Money Market Accounts 3.10% ..... 7,627 13.59 7,637 13.19 ------- ------ ------- ------ Total Non-Certificates .......... 15,856 28.26 15,504 26.78 ------- ------ ------- ------ Certificates: 4.00 - 5.99% .................. $26,366 46.99% $23,101 39.90% 6.00 - 7.99% .................. 13,492 24.04 16,657 28.77 8.00 - 9.99% .................. 383 .68 2,609 4.51 ------- ------ ------- ------ Total Certificates .............. 40,241 71.71 42,367 73.18 ------- ------ ------- ------ Accrued Interest ................ 19 .03 21 .04 ------- ------ ------- ------ Total Deposits .................. $56,116 100.00% $57,892 100.00% ======= ====== ======= ====== 62 The following table shows rate and maturity information for the Association's certificates of deposit as of June 30, 1997. 4.00- 6.00- 8.00- Percent 5.99% 7.99% 9.99% Total of Total ----- ----- ----- ----- -------- (Dollars in Thousands) Certificate accounts maturing in quarter ending: - ------------------ September 30, 1997............. $ 5,540 $ 991 $ --- $ 6,531 16.23% December 31, 1997.............. 5,470 967 186 6,623 16.46 March 31, 1998................. 3,605 179 15 3,799 9.44 June 30, 1998.................. 3,216 86 --- 3,302 8.21 September 30, 1998............. 2,910 61 163 3,134 7.79 December 31, 1998.............. 2,292 53 3 2,348 5.83 March 30, 1999................. 506 451 16 973 2.42 June 30, 1999.................. 492 1,079 --- 1,571 3.90 September 30, 1999............. 267 1,227 --- 1,494 3.71 December 31, 1999.............. 138 900 --- 1,038 2.58 March 31, 2000................. 19 2,129 --- 2,148 5.34 Thereafter..................... 1,911 5,369 --- 7,280 18.09 -------- -------- ----- -------- ------ Total....................... $26,366 $13,492 $383 $40,241 100.00% ======= ======= ==== ======= ====== Percent of total............ 65.52% 33.53% .95% ===== ===== === At June 30, 1997 the Association had approximately $4.2 million in certificate accounts in amounts of $100,000 or more maturing as follows: Weighted Maturity Period Amount Average Rate --------------- ------ ------------ (Dollars in thousands) Three months or less..................... $ 983 4.78% Over three through six months............ 449 5.48 Over six through 12 months............... 213 5.08 Over 12 months........................... 2,552 6.23 ------- Total.................................... $4,197 5.75 ======= 63 The following table indicates the amount of the Association's certificates of deposit and other deposits by time remaining until maturity as of June 30, 1997.
Maturity ------------------------------------------- Over Over 3 Months 3 to 6 6 to 12 Over or Less Months Months 12 months Total -------- ------- ------- --------- ------- Certificates of deposit less than $100,000 $ 5,548 $ 6,174 $ 6,888 $17,434 $36,044 Certificates of deposit of $100,000 or more 983 449 213 2,552 4,197 Total certificates of deposit ............. $ 6,531 $ 6,623 $ 7,101 $19,986 $40,241 ======= ======= ======= ======= =======
For additional information regarding the composition of the Association's deposits, see Note 7 of Notes to Consolidated Financial Statements. Borrowings. Wyman Park's other available sources of funds, not currently utilized, include advances from the FHLB of Atlanta and other borrowings. As a member of the FHLB of Atlanta, the Association is required to own capital stock in the FHLB of Atlanta and is authorized to apply for advances from the FHLB of Atlanta. Each FHLB credit program has its own interest rate, which may be fixed or variable, and range of maturities. The FHLB of Atlanta may prescribe the acceptable uses for these advances, as well as limitations on the size of the advances and repayment provisions. The Association's immediate credit availability at the FHLB of Atlanta is approximately $8 million at June 30, 1997. The Association did not have any outstanding borrowings during the last two fiscal years, although the Association did borrow $1 million from the FHLB of Atlanta during the first quarter of fiscal 1998. Service Corporations As a federally chartered savings association, Wyman Park is permitted by OTS regulations to invest up to 2% of its assets, or approximately $1.3 million at June 30, 1997, in the stock of, or loans to, service corporation subsidiaries. As of such date, Wyman Park had one investment in a service corporation, WP Financial Corporation, which engages in the sale of annuities. The income derived from WP Financial Corporation is not material to the Association's results of operations. Competition Wyman Park experiences strong competition both in originating real estate loans and in attracting deposits. This competition arises from a highly competitive market area with numerous commercial banks and savings institutions, as well as credit unions and mortgage bankers and, with respect to deposits, banking institutions and other financial intermediaries. The Association competes for loans principally on the basis of the interest rates and loan fees it charges, the types of loans it originates and the quality of services it provides to borrowers. 64 The Association attracts all of its deposits through the communities in which its offices are located; therefore, competition for those deposits is principally from other savings institutions, commercial banks, securities firms, money market and mutual funds and credit unions located in the same community. The ability of the Association to attract and retain deposits depends on its ability to provide an investment opportunity that satisfies the requirements of investors as to rate of return, liquidity, risk, convenient locations and other factors. The Association competes for these deposits by offering a variety of deposit accounts at competitive rates, convenient business hours and a customer-oriented staff. At June 30, 1997, the Association had in excess 60 financial institutions competing with it in its market area. The Association estimates its market share of savings deposits in its market area to be approximately 11.4%. Competition may limit Wyman Park's growth and profitability in the future. See "Risk Factors - Competition." Employees At June 30, 1997, the Association had a total of 15 full-time employees and one part-time employee. None of the Association's employees are represented by any collective bargaining group. Management considers its employee relations to be good. Properties The following table sets forth information concerning the main office and a branch office of the Association at June 30, 1997. The Association believes that its current facilities are adequate. Net Book Owned Value at Year or June 30, Location Opened Leased(1) 1997 -------- ------ --------- ---- Main Office: 11 Ridgely Road 1977 Land Leased;(2) Lutherville, MD 21093 Building Owned $95,000 Branch Office: 7963 Baltimore/Annapolis Blvd. 1977 Leased(3) N/A Glen Burnie, MD 21060 - --------- (1) See Note 6 to Notes to Consolidated Financial Statements. (2) There are five, five-year options which expire in May 2027. (3) Lease expires in November, 2001. 65 The Association's depositor and borrower customer files are maintained by an independent data processing company. The net book value of the data processing and computer equipment utilized by the Association at June 30, 1997 was approximately $12,000. Legal Proceedings From time to time, Wyman Park is involved as plaintiff or defendant in various legal proceedings arising in the normal course of its business. While the ultimate outcome of these various legal proceedings cannot be predicted with certainty, it is the opinion of management that the resolution of these legal actions should not have a material effect on Wyman Park's financial position or results of operations. REGULATION General Wyman Park is a federally chartered savings association, the deposits of which are federally insured and backed by the full faith and credit of the United States Government. Accordingly, Wyman Park is subject to broad federal regulation and oversight extending to all its operations. Wyman Park is a member of the FHLB of Atlanta and is subject to certain limited regulation by the Board of Governors of the Federal Reserve System ("Federal Reserve Board"). As the savings and loan holding company of Wyman Park, the Holding Company also is subject to federal regulation and oversight. The purpose of the regulation of the Holding Company and other holding companies is to protect subsidiary savings associations. Wyman Park is a member of the SAIF, which together with the BIF are the two deposit insurance funds administered by the FDIC, and the deposits of Wyman Park are insured by the FDIC. As a result, the FDIC has certain regulatory and examination authority over Wyman Park. Certain of these regulatory requirements and restrictions are discussed below or elsewhere in this document. Federal Regulation of Savings Associations The OTS has extensive authority over the operations of savings associations. As part of this authority, Wyman Park is required to file periodic reports with the OTS and is subject to periodic examinations by the OTS and the FDIC. The last regular OTS examination of Wyman Park was as of December, 1996. Under agency scheduling guidelines, it is likely that another examination will be initiated in the near future. When these examinations are conducted by the OTS and the FDIC, the examiners may require the Association to provide for higher general or specific loan loss reserves. All savings associations are subject to a semi-annual assessment, based upon the savings association's total assets, to fund the operations of the OTS. The Association's OTS assessment for the fiscal year ended June 30, 1997 was $21,845. 66 The OTS also has extensive enforcement authority over all savings institutions and their holding companies, including Wyman Park and the Holding Company. This enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease-and-desist or removal orders and to initiate injunctive actions. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed with the OTS. Except under certain circumstances, public disclosure of final enforcement actions by the OTS is required. In addition, the investment, lending and branching authority of the Association is prescribed by federal laws and it is prohibited from engaging in any activities not permitted by such laws. For instance, no savings institution may invest in non-investment grade corporate debt securities. In addition, the permissible level of investment by federal associations in loans secured by non-residential real property may not exceed 400% of total capital, except with approval of the OTS. Federal savings associations are also generally authorized to branch nationwide. Wyman Park is in compliance with the noted restrictions. Wyman Park's general permissible lending limit for loans-to-one-borrower is equal to the greater of $500,000 or 15% of unimpaired capital and surplus (except for loans fully secured by certain readily marketable collateral, in which case this limit is increased to 25% of unimpaired capital and surplus). At June 30, 1997, the Association's lending limit under this restriction was $750,000. Assuming the sale of the minimum number of shares in the Conversion at June 30, 1997, that limit would be increased to $_____ million. Wyman Park is in compliance with the loans-to-one-borrower limitation. The OTS, as well as the other federal banking agencies, has adopted guidelines establishing safety and soundness standards on such matters as loan underwriting and documentation, asset quality, earnings standards, internal controls and audit systems, interest rate risk exposure and compensation and other employee benefits. Any institution which fails to comply with these standards must submit a compliance plan. Insurance of Accounts and Regulation by the FDIC Wyman Park is a member of the SAIF, which is administered by the FDIC. Deposits are insured up to applicable limits by the FDIC and such insurance is backed by the full faith and credit of the United States Government. As insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of and to require reporting by FDIC-insured institutions. It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious risk to the SAIF or the BIF. The FDIC also has the authority to initiate enforcement actions against savings associations, after giving the OTS an opportunity to take such action, and may terminate the deposit insurance if it determines that the institution has engaged in unsafe or unsound practices or is in an unsafe or unsound condition. The FDIC's deposit insurance premiums are assessed through a risk-based system under which all insured depository institutions are placed into one of nine categories and assessed insurance premiums based upon their level of capital and supervisory evaluation. Under the system, institutions 67 classified as well capitalized (i.e., a core capital ratio of at least 5%, a ratio of Tier 1 or core capital to risk-weighted assets ("Tier 1 risk-based capital") of at least 6% and a risk-based capital ratio of at least 10%) and considered healthy pay the lowest premium while institutions that are less than adequately capitalized (i.e., core or Tier 1 risk-based capital ratios of less than 4% or a risk-based capital ratio of less than 8%) and considered of substantial supervisory concern pay the highest premium. Risk classification of all insured institutions is made by the FDIC for each semi-annual assessment period. The FDIC is authorized to increase assessment rates, on a semiannual basis, if it determines that the reserve ratio of the SAIF will be less than the designated reserve ratio of 1.25% of SAIF insured deposits. In setting these increased assessments, the FDIC must seek to restore the reserve ratio to that designated reserve level, or such higher reserve ratio as established by the FDIC. The FDIC may also impose special assessments on SAIF members to repay amounts borrowed from the United States Treasury or for any other reason deemed necessary by the FDIC. In order to equalize the deposit insurance premium schedules for BIF and SAIF insured institutions, the FDIC imposed a one-time special assessment on all SAIF-assessable deposits pursuant to federal legislation passed on September 30, 1996. Wyman Park's special assessment, which was $383,000, was paid in November 1996, and included in federal deposit insurance expense in the fiscal year ended June 30, 1997. Effective January 1, 1997, the premium schedule for BIF and SAIF insured institutions ranged from 0 to 27 basis points. However, SAIF-insured institutions are required to pay a Financing Corporation (FICO) assessment, in order to fund the interest on bonds issued to resolve thrift failures in the 1980s, equal to 6.48 basis points for each $100 in domestic deposits, while BIF- insured institutions pay an assessment equal to 1.52 basis points for each $100 in domestic deposits. The assessment is expected to be reduced to 2.43 no later than January 1, 2000, when BIF insured institutions fully participate in the assessment. These assessments, which may be revised based upon the level of BIF and SAIF deposits will continue until the bonds mature in the year 2017. The Association will continue to be insured by the SAIF following completion of the Conversion. Regulatory Capital Requirements Federally insured savings associations, such as Wyman Park, are required to maintain a minimum level of regulatory capital. The OTS has established capital standards, including a tangible capital requirement, a leverage ratio (or core capital) requirement and a risk-based capital requirement applicable to such savings associations. These capital requirements must be generally as stringent as the comparable capital requirements for national banks. The OTS is also authorized to impose capital requirements in excess of these standards on individual associations on a case-by-case basis. 68 The capital regulations require tangible capital of at least 1.5% of adjusted total assets (as defined by regulation). Tangible capital generally includes common stockholders' equity and retained income, and certain noncumulative perpetual preferred stock and related income. In addition, all intangible assets, other than a limited amount of purchased mortgage servicing rights, must be deducted from tangible capital for calculating compliance with the requirement. At June 30, 1997, the Association did not have any intangible assets. The OTS regulations establish special capitalization requirements for savings associations that own subsidiaries. In determining compliance with the capital requirements, all subsidiaries engaged solely in activities permissible for national banks or engaged in certain other activities solely as agent for its customers are "includable" subsidiaries that are consolidated for capital purposes in proportion to the association's level of ownership. For excludable subsidiaries the debt and equity investments in such subsidiaries are deducted from assets and capital. Wyman Park does not have any non-includable subsidiaries. At June 30, 1997, Wyman Park had tangible capital of $4.8 million, or 7.6% of total assets, which is approximately $3.8 million above the minimum requirement of 1.5% of adjusted total assets in effect on that date. Wyman Park traditionally, and as of June 30, 1997, has a lower capital ratio than its peers, although the institution is still "well-capitalized" for regulatory purposes. On a pro forma basis, after giving effect to the sale of the minimum, midpoint and maximum number of shares of Common Stock offered in the Conversion and investment of 50% of the net proceeds in assets not excluded for tangible capital purposes, Wyman Park would have had tangible capital equal to 10.8%, 11.4% and 11.9%, respectively, of adjusted total assets at June 30, 1997, which is $6.0 million, $6.5 million and $6.9 million, respectively, above the requirement. The capital standards also require core capital equal to at least 3% of adjusted total assets. Core capital generally consists of tangible capital plus certain intangible assets, including a limited amount of purchased credit card relationships. As a result of the prompt corrective action provisions discussed below, however, a savings association must maintain a core capital ratio of at least 4% to be considered adequately capitalized unless its supervisory condition is such to allow it to maintain a 3% ratio. At June 30, 1997, Wyman Park had no intangibles which were subject to these tests. At June 30, 1997, Wyman Park had core capital equal to $4.8 million, or 7.6% of adjusted total assets, which is $2.9 million above the minimum leverage ratio requirement of 3% as in effect on that date. On a pro forma basis, after giving effect to the sale of the minimum, midpoint and maximum number of shares of Common Stock offered in the Conversion and investment of 50% of the net proceeds in assets not excluded from core capital, Wyman Park would have had core capital equal to 10.8%, 11.4% and 11.9%, respectively, of adjusted total assets at June 30, 1997, which is $5.1 million, $5.5 million and $5.9 million, respectively, above the requirement. The OTS risk-based requirement requires savings associations to have total capital of at least 8% of risk-weighted assets. Total capital consists of core capital, as defined above, and supplementary capital. Supplementary capital consists of certain permanent and maturing capital instruments that do not qualify as core capital and general valuation loan and lease loss allowances up to a maximum of 1.25% of risk-weighted assets. Supplementary capital may be used to satisfy the risk-based requirement only to the extent of core capital. The 69 OTS is also authorized to require a savings association to maintain an additional amount of total capital to account for concentration of credit risk and the risk of non-traditional activities. At June 30, 1997, Wyman Park had $270,000 of general loss reserves, which was less than 1.25% of risk-weighted assets. Certain exclusions from capital and assets are required to be made for the purpose of calculating total capital. Such exclusions consist of equity investments (as defined by regulation) and that portion of land loans and nonresidential construction loans in excess of an 80% loan-to-value ratio and reciprocal holdings of qualifying capital instruments. Wyman Park had no such exclusions from capital and assets at June 30, 1997. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet items, will be multiplied by a risk weight, ranging from 0% to 100%, based on the risk inherent in the type of asset. For example, the OTS has assigned a risk weight of 50% for prudently underwritten permanent one- to four-family first lien mortgage loans not more than 90 days delinquent and having a loan to value ratio of not more than 80% at origination unless insured to such ratio by an insurer approved by the FNMA or FHLMC. OTS regulations also require that savings associations with more than normal interest rate risk exposure deduct from its total capital, for purposes of determining compliance with such requirement, an amount equal to 50% of its interest-rate risk exposure multiplied by the present value of its assets. This exposure is a measure of the potential decline in the net portfolio value of a savings association, greater than 2% of the present value of its assets, based upon a hypothetical 200 basis point increase or decrease in interest rates (whichever results in a greater decline). Net portfolio value is the present value of expected cash flows from assets, liabilities and off-balance sheet contracts. The rule will not become effective until the OTS evaluates the process by which savings associations may appeal an interest rate risk deduction determination. It is uncertain as to when this evaluation may be completed. Any savings association with less than $300 million in assets and a total risk-based capital ratio in excess of 12% is exempt from this requirement unless the OTS determines otherwise. At the present time, the proposal is not expected to have a material impact on the Association. On June 30, 1997, Wyman Park had total risk-based capital of approximately $5.0 million (including $4.8 million in core capital and $270,000 in qualifying supplementary capital) and risk-weighted assets of $34.3 million; or total capital of 14.6% of risk-weighted assets. This amount was $2.3 million above the 8% requirement in effect on that date. On a pro forma basis, after giving effect to the sale of the minimum, midpoint and maximum number of shares of Common Stock offered in the Conversion, the infusion to the Association of 50% of the net Conversion proceeds and the investment of those proceeds in 20% risk-weighted government securities, Wyman Park would have had total risk-based capital of 20.9%, 22.1% and 23.2%, respectively, of risk-weighted assets, which is above the current 8% requirement by $4.5 million, $4.9 million and $5.3 million, respectively. 70 The OTS and the FDIC are authorized and, under certain circumstances required, to take certain actions against savings associations that fail to meet their capital requirements. The OTS is generally required to take action to restrict the activities of an "undercapitalized association" (generally defined to be one with less than either a 4% core capital ratio, a 4% Tier 1 risked-based capital ratio or an 8% risk-based capital ratio). Any such association must submit a capital restoration plan and until such plan is approved by the OTS may not increase its assets, acquire another institution, establish a branch or engage in any new activities, and generally may not make capital distributions. The OTS is authorized to impose the additional restrictions that are applicable to significantly undercapitalized associations. As a condition to the approval of the capital restoration plan, any company controlling an undercapitalized association must agree that it will enter into a limited capital maintenance guarantee with respect to the institution's achievement of its capital requirements. Any savings association that fails to comply with its capital plan or is "significantly undercapitalized" (i.e., Tier 1 risk-based or core capital ratios of less than 3% or a risk-based capital ratio of less than 6%) must be made subject to one or more of additional specified actions and operating restrictions which may cover all aspects of its operations and include a forced merger or acquisition of the association. An association that becomes "critically undercapitalized" (i.e., a tangible capital ratio of 2% or less) is subject to further mandatory restrictions on its activities in addition to those applicable to significantly undercapitalized associations. In addition, the OTS must appoint a receiver (or conservator with the concurrence of the FDIC) for a savings association, with certain limited exceptions, within 90 days after it becomes critically undercapitalized. Any undercapitalized association is also subject to the general enforcement authority of the OTS and the FDIC, including the appointment of a conservator or a receiver. The OTS is also generally authorized to reclassify an association into a lower capital category and impose the restrictions applicable to such category if the institution is engaged in unsafe or unsound practices or is in an unsafe or unsound condition. The imposition by the OTS or the FDIC of any of these measures on the Association may have a substantial adverse effect on its operations and profitability. Limitations on Dividends and Other Capital Distributions OTS regulations impose various restrictions on savings associations with respect to their ability to make distributions of capital, which include dividends, stock redemptions or repurchases, cash-out mergers and other transactions charged to the capital account. OTS regulations also prohibit a savings association from declaring or paying any dividends or from repurchasing any of its stock if, as a result, the regulatory capital of the association would be reduced below the amount required to be maintained for the liquidation account established in connection with its mutual to stock conversion. See "The Conversion--Effects of Conversion to Stock Form on Depositors and Borrowers of the Association" and "--Restrictions on Repurchase of Stock". 71 Generally, savings associations, such as Wyman Park, that before and after the proposed distribution meet their capital requirements, may make capital distributions during any calendar year equal to the greater of 100% of net income for the year-to-date plus 50% of the amount by which the lesser of the association's tangible, core or risk-based capital exceeds its capital requirement for such capital component, as measured at the beginning of the calendar year, or 75% of their net income for the most recent four quarter period. However, an association deemed to be in need of more than normal supervision by the OTS may have its dividend authority restricted by the OTS. Wyman Park may pay dividends in accordance with this general authority. Savings associations proposing to make any capital distribution need only submit written notice to the OTS 30 days prior to such distribution. Savings associations that do not, or would not meet their current minimum capital requirements following a proposed capital distribution, however, must obtain OTS approval prior to making such distribution. The OTS may object to the distribution during that 30- day period notice based on safety and soundness concerns. See "- Regulatory Capital Requirements." The OTS has proposed regulations that would revise the current capital distribution restrictions. Under the proposal a savings association may make a capital distribution without notice to the OTS (unless it is a subsidiary of a holding company) provided that it has a CAMEL 1 or 2 rating, is not of supervisory concern, and would remain adequately capitalized (as defined in the OTS prompt corrective action regulations) following the proposed distribution. Savings associations that would remain adequately capitalized following the proposed distribution but do not meet the other noted requirements must notify the OTS 30 days prior to declaring a capital distribution. The OTS stated it will generally regard as permissible that amount of capital distributions that do not exceed 50% of the institution's excess regulatory capital plus net income to date during the calendar year. A savings association may not make a capital distribution without prior approval of the OTS and the FDIC if it is undercapitalized before, or as a result of, such a distribution. As under the current rule, the OTS may object to a capital distribution if it would constitute an unsafe or unsound practice. No assurance may be given as to whether or in what form the regulations may be adopted. Liquidity All savings associations, including Wyman Park, are required to maintain an average daily balance of liquid assets equal to a certain percentage of the sum of its average daily balance of net withdrawable deposit accounts and borrowings payable in one year or less. For a discussion of what Wyman Park includes in liquid assets, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." This liquid asset ratio requirement may vary from time to time (between 4% and 10%) depending upon economic conditions and savings flows of all savings associations. At the present time, the minimum liquid asset ratio is 5%. In addition, short-term liquid assets (e.g., cash, certain time deposits, certain bankers acceptances and short-term United States Treasury obligations) currently must constitute at least 1% of the association's average 72 daily balance of net withdrawable deposit accounts and current borrowings. Penalties may be imposed upon associations for violations of either liquid asset ratio requirement. At June 30, 1997, the Association was in compliance with both requirements, with an overall liquid asset ratio of 9.8% and a short-term liquid assets ratio of 4.4%. Qualified Thrift Lender Test All savings associations, including Wyman Park, are required to meet a qualified thrift lender ("QTL") test to avoid certain restrictions on their operations. This test requires a savings association to have at least 65% of its portfolio assets (as defined by regulation) in qualified thrift investments on a monthly average for nine out of every 12 months on a rolling basis. As an alternative, the savings association may maintain 60% of its assets in those assets specified in Section 7701(a)(19) of the Internal Revenue Code. Under either test, such assets primarily consist of residential housing related loans and investments. At June 30, 1997, the Association met the test and has always met the test since its effectiveness. Any savings association that fails to meet the QTL test must convert to a national bank charter, unless it requalifies as a QTL and thereafter remains a QTL. If an association does not requalify and converts to a national bank charter, it must remain SAIF-insured until the FDIC permits it to transfer to the BIF. If such an association has not yet requalified or converted to a national bank, its new investments and activities are limited to those permissible for both a savings association and a national bank, and it is limited to national bank branching rights in its home state. In addition, the association is immediately ineligible to receive any new FHLB borrowings and is subject to national bank limits for payment of dividends. If such association has not requalified or converted to a national bank within three years after the failure, it must divest of all investments and cease all activities not permissible for a national bank. In addition, it must repay promptly any outstanding FHLB borrowings, which may result in prepayment penalties. If any association that fails the QTL test is controlled by a holding company, then within one year after the failure, the holding company must register as a bank holding company and become subject to all restrictions on bank holding companies. See "- Holding Company Regulation." Community Reinvestment Act Under the Community Reinvestment Act ("CRA"), every FDIC insured institution has a continuing and affirmative obligation consistent with safe and sound banking practices to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires the OTS, in connection with the examination of Wyman Park, to assess the institution's record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications, such as a merger or the establishment of a branch, by Wyman Park. An unsatisfactory rating may be used as the basis for the denial of an application by the OTS. The federal banking agencies, including the OTS, have recently revised the CRA regulations and the methodology for determining an institution's compliance with the CRA. Due to the heightened attention being given to the CRA 73 in the past few years, the Association may be required to devote additional funds for investment and lending in its local community. The Association was examined for CRA compliance in September 1995 and received a rating of satisfactory. Transactions with Affiliates Generally, transactions between a savings association or its subsidiaries and its affiliates are required to be on terms as favorable to the association as transactions with non-affiliates. In addition, certain of these transactions, such as loans to an affiliate, are restricted to a percentage of the association's capital. Affiliates of Wyman Park include the Holding Company and any company which is under common control with the Association. In addition, a savings association may not lend to any affiliate engaged in activities not permissible for a bank holding company or acquire the securities of most affiliates. The OTS has the discretion to treat subsidiaries of savings associations as affiliates on a case by case basis. Certain transactions with directors, officers or controlling persons are also subject to conflict of interest regulations enforced by the OTS. These conflict of interest regulations and other statutes also impose restrictions on loans to such persons and their related interests. Among other things, such loans must generally be made on terms substantially the same as for loans to unaffiliated individuals. Holding Company Regulation The Holding Company will be a unitary savings and loan holding company subject to regulatory oversight by the OTS. As such, the Holding Company is required to register and file reports with the OTS and is subject to regulation and examination by the OTS. In addition, the OTS has enforcement authority over the Holding Company and its non-savings association subsidiaries which also permits the OTS to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings association. As a unitary savings and loan holding company, the Holding Company generally is not subject to activity restrictions. If the Holding Company acquires control of another savings association as a separate subsidiary, it would become a multiple savings and loan holding company, and the activities of the Holding Company and any of its subsidiaries (other than Wyman Park or any other SAIF-insured savings association) would become subject to such restrictions unless such other associations each qualify as a QTL and were acquired in a supervisory acquisition. If Wyman Park fails the QTL test, the Holding Company must obtain the approval of the OTS prior to continuing after such failure, directly or through its other subsidiaries, any business activity other than those approved for multiple savings and loan holding companies or their subsidiaries. In addition, within one year of such failure the Holding Company must register as, and will become subject to, the restrictions applicable to bank holding companies. The activities authorized for a bank holding company are more limited than are the activities authorized for a unitary or multiple savings and loan holding company. See "--Qualified Thrift Lender Test." 74 The Holding Company must obtain approval from the OTS before acquiring control of any other SAIF-insured association. Such acquisitions are generally prohibited if they result in a multiple savings and loan holding company controlling savings associations in more than one state. However, such interstate acquisitions are permitted based on specific state authorization or in a supervisory acquisition of a failing savings association. Federal Securities Law The stock of the Holding Company will be registered with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Holding Company will be subject to the information, proxy solicitation, insider trading restrictions and other requirements of the SEC under the Exchange Act. Holding Company stock held by persons who are affiliates (generally officers, directors and principal stockholders) of the Holding Company may not be resold without registration or unless sold in accordance with certain resale restrictions. If the Holding Company meets specified current public information requirements, each affiliate of the Holding Company is able to sell in the public market, without registration, a limited number of shares in any three-month period. Federal Reserve System The Federal Reserve Board requires all depository institutions to maintain noninterest bearing reserves at specified levels against their transaction accounts (primarily checking, NOW and Super NOW checking accounts). At June 30, 1997, Wyman Park was in compliance with these reserve requirements. The balances maintained to meet the reserve requirements imposed by the Federal Reserve Board may be used to satisfy liquidity requirements that may be imposed by the OTS. See "-- Liquidity." Savings associations are authorized to borrow from the Federal Reserve Association "discount window," but Federal Reserve Board regulations require associations to exhaust other reasonable alternative sources of funds, including FHLB borrowings, before borrowing from the Federal Reserve Association. Federal Home Loan Bank System Wyman Park is a member of the FHLB of Atlanta, which is one of 12 regional FHLBs, that administers the home financing credit function of savings associations. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members (i.e., advances) in accordance with policies and procedures, established by the board of directors of the FHLB, which are subject to the oversight of the Federal Housing Finance Board. All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB. In addition, all long-term advances are required to provide funds for residential home financing. 75 As a member, Wyman Park is required to purchase and maintain stock in the FHLB of Atlanta. At June 30, 1997, Wyman Park had $510,000 in FHLB stock, which was in compliance with this requirement. In past years, Wyman Park has received substantial dividends on its FHLB stock. Over the past five fiscal years such dividends have averaged 6.5% and were 7.3% for fiscal year 1997. Under federal law the FHLBs are required to provide funds for the resolution of troubled savings associations and to contribute to low- and moderately priced housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects. These contributions have affected adversely the level of FHLB dividends paid and could continue to do so in the future. These contributions could also have an adverse effect on the value of FHLB stock in the future. A reduction in value of Wyman Park's FHLB stock may result in a corresponding reduction in Wyman Park's capital. For the year ended June 30, 1997, dividends paid by the FHLB of Atlanta to Wyman Park totaled $37,000, which was no increase over the amount of dividends received in fiscal year 1996. Federal and State Taxation Savings associations such as Wyman Park that meet certain conditions prescribed by the Internal Revenue Code of 1986, as amended (the "Code"), are permitted to establish reserves for bad debts and to make annual additions thereto which may, within specified formula limits, be taken as a deduction in computing taxable income for federal income tax purposes. The amount of the bad debt reserve deduction is computed under the experience method. Under the experience method, the bad debt reserve deduction is an amount determined under a formula based generally upon the bad debts actually sustained by the savings association over a period of years. In August 1996, legislation was enacted that repealed the percentage of taxable income method used by many thrifts, including the Association, to calculate their bad debt reserve for federal income tax purposes. As a result, small thrifts such as the Association must recapture that portion of the reserve that exceeds the amount that could have been taken under the experience method for tax years beginning after December 31, 1987. The recapture will occur over a six-year period, the commencement of which will be delayed until the first taxable year beginning after December 31, 1997, provided the institution meets certain residential lending requirements. At June 30, 1997, the Association had approximately $39,000 in bad debt reserves subject to recapture for federal income tax purposes. The deferred tax liability related to the recapture has been previously established so there will be no effect on future net income. In addition to the regular income tax, corporations, including savings associations such as Wyman Park, generally are subject to a minimum tax. An alternative minimum tax is imposed at a minimum tax rate of 20% on alternative minimum taxable income, which is the sum of a corporation's regular taxable income (with certain adjustments) and tax preference items, less any available exemption. The alternative minimum tax is imposed to the extent it exceeds the corporation's regular income tax and net operating losses can offset no more than 90% of alternative minimum taxable income. 76 A portion of the Association's reserves for losses on loans may not, without adverse tax consequences, be utilized for the payment of cash dividends or other distributions to a shareholder (including distributions on redemption, dissolution or liquidation) or for any other purpose (except to absorb bad debt losses). As of June 30, 1997, the portion of Wyman Park's reserves subject to this treatment for tax purposes totaled approximately $1.8 million. Wyman Park files federal income tax returns on a fiscal year basis using the accrual method of accounting. The Holding Company does not anticipate filing consolidated federal income tax returns with Wyman Park. Savings associations that file federal income tax returns as part of a consolidated group are required by applicable Treasury regulations to reduce their taxable income for purposes of computing the percentage bad debt deduction for losses attributable to activities of the non-savings association members of the consolidated group that are functionally related to the activities of the savings association member. Wyman Park has been audited by the IRS with respect to federal income tax returns through June, 1996. With respect to years examined by the IRS, either all deficiencies have been satisfied or sufficient reserves have been established to satisfy asserted deficiencies. In the opinion of management, any examination of still open returns (including returns of subsidiaries and predecessors of, or entities merged into, Wyman Park) would not result in a deficiency which could have a material adverse effect on the financial condition of Wyman Park. Maryland Taxation. The State of Maryland generally imposes a franchise tax on thrift institutions computed at a rate of 7% of net earnings. For the purpose of the 7% franchise tax, net earnings are defined as the net income of the thrift institution as determined for federal corporate income tax purposes, plus (i) interest income from obligations of the United States, of any state, including Maryland, and of any country, municipal or public corporation authority, special district or political subdivision of any state, including Maryland, (ii) any profit realized from the sale or exchange of bonds issued by the State of Maryland or any of its political subdivisions, and (iii) any deduction for state income taxes. Delaware Taxation. As a Delaware holding company, the Holding Company is exempted from Delaware corporate income tax but is required to file an annual report with and pay an annual fee to the State of Delaware. The Holding Company is also subject to an annual franchise tax imposed by the State of Delaware. MANAGEMENT Directors and Executive Officers of the Holding Company The Board of Directors of the Holding Company currently consists of nine members, each of whom is also a director of the Association. See "Management - Directors of the Association." Each Director of the Holding Company has served as such since the Holding Company's incorporation in September 1997. Directors of the Holding Company will serve three-year staggered 77 terms so that approximately one-third of the directors will be elected at each annual meeting of stockholders. The terms of the current directors of the Holding Company are the same as their terms as directors of the Association. The Holding Company may consider paying fees to directors. See "- Directors of the Association." The executive officers of the Holding Company are elected annually and hold office until their respective successor has been elected and qualified or until death, resignation or removal by the Board of Directors. The executive officers of the Holding Company, who have held their positions since September 1997, are set forth below. Name Title - ------------------- ------------------------------------------------ Ernest A. Moretti Director, President and Chief Executive Officer Ronald W. Robinson Chief Financial Officer Charmaine M. Snyder Corporate Secretary It is not anticipated that the executive officers of the Holding Company will receive any remuneration in their capacity as Holding Company executive officers. For information regarding compensation of directors and executive officers of the Association, see "- Compensation and Meetings of the Board of Directors of the Association" and "- Executive Compensation." Committees of the Holding Company The Holding Company formed standing Audit and Nominating Committees in connection with its organization in September 1997. The Holding Company committees did not meet during fiscal 1997. The Audit Committee will review audit reports and related matters to ensure effective compliance with regulations and internal policies and procedures. This committee also will act on the recommendation by management of an accounting firm to perform the Holding Company's annual audit and acts as a liaison between the auditors and the Board. The current members of this committee are Directors Heaver, Marsiglia, Salkin and, ex officio, Mr. Moretti. The Nominating Committee will meet annually in order to nominate candidates for membership on the Board of Directors. This committee is comprised of the Board members who are not up for election. Indemnification The Certificate of Incorporation of the Holding Company provides that a director or officer of the Holding Company shall be indemnified by the Holding Company to the fullest extent authorized by the Delaware General Corporation Law against all expenses, liability and loss reasonably incurred or suffered by such person in connection with his activities as a director or officer or as a director or officer of another company, if the director or officer held such position at the request of the Holding Company. Delaware law requires that such director, officer, employee or agent, in order to be indemnified, must have 78 acted in good faith and in a manner reasonably believed to be not opposed to the best interests of the Holding Company and, with respect to any criminal action or proceeding, either had reasonable cause to believe such conduct was lawful or did not have reasonable cause to believe his conduct was unlawful. The Certificate of Incorporation and Delaware law also provide that the indemnification provisions of such Certificate and the statute are not exclusive of any other right which a person seeking indemnification may have or later acquire under any statute, provision of the Certificate of Incorporation, Bylaws of the Holding Company, agreement, vote of stockholders or disinterested directors or otherwise. These provisions may have the effect of deterring shareholder derivative actions, since the Holding Company may ultimately be responsible for expenses for both parties to the action. A similar effect would not be expected for third-party claims. In addition, the Certificate of Incorporation and Delaware law also provide that the Holding Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Holding Company or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Holding Company has the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. The Holding Company intends to obtain such insurance. Directors of the Association Upon completion of the Conversion, each of the directors of the Association will continue to serve as a director of the converted Association. The Board of Directors of the Association currently consists of nine directors. The directors are divided into three classes. Approximately one-third of the directors are elected at each annual meeting of stockholders. Because the Holding Company will own all of the issued and outstanding shares of capital stock of the Association after the Conversion, directors of the Holding Company will elect the directors of the Association. Term of Director Office Name Age(1) Position(s) Held Since Expires ---- ------ ---------------- ----- ------- Allan B. Heaver 45 Chairman of the Board 1983 1998 Ernest A. Moretti 56 Director, President and Chief 1989 1999 Executive Officer H. Douglas Huether 71 Director 1965 1998 John K. White 65 Director 1987 1999 John R. Beever 64 Director 1984 1997 Albert M. Copp 62 Director 1992 1997 Gilbert D. Marsiglia, Sr. 59 Director 1988 1997 Jay H. Salkin 58 Director 1995 1998 G. Scott Barhight 40 Director 1996 1999 - -------- (1) At June 30, 1997. 79 The business experience of each director is set forth below. All directors have held their present positions for at least the past five years, except as otherwise indicated. Allan B. Heaver. Since 1986, Mr. Heaver has served as the Managing General Partner of Heaver Properties, a commercial real estate management/development company. Ernest A. Moretti. Mr. Moretti is President and Chief Executive Officer of the Association, a position he has held since 1989. M. Douglas Huether. Since 1970, Mr. Huether has served as President of Independent Can Company, a metal can manufacturing company and is currently its Chairman of the Board. John K. White. For over 25 years prior to his retirement, Mr. White served as Executive Vice President and is a current member of the Board of Directors of the Baltimore Life Insurance Company and Life of Maryland Insurance. John R. Beever. Since 1967, Mr. Beever has served as President and Chairman of the Board of John Dittmar & Sons, Inc., a manufacturer of architectural woodwork. Albert M. Copp. Since 1991, Mr. Copp has served as the Director of Strategic Business Development for Whitney, Bailey, Cox & Magnani, a civil/structural engineering company. Gilbert D. Marsiglia, Sr. Mr. Marsiglia is the President of the real estate brokerage firm of Gilbert D. Marsiglia & Co., Inc., a position he has held since 1973. Jay H. Salkin. Since 1981, Mr. Salkin has served as Senior Vice President - Branch Manager of Advest, Inc., an investment brokerage company. G. Scott Barhight. Mr. Barhight has been a partner with the law firm of Whiteford, Taylor & Preston, LLP since 1992. Executive Officers Who are not Directors Each of the executive officers of the Association will retain his or her office following the Conversion. Officers are elected annually by the Board of Directors of the Association. The business experience of the executive officers who are not also directors is set forth below. Ronald W. Robinson. Mr. Robinson, age 52, currently serves as Treasurer of the Association. Mr. Robinson has been employed by the Association since 1990. Charmaine M. Snyder. Ms. Snyder, age 40, serves as the Association's Corporate Secretary and Loan Servicing Manager. Ms. Snyder has been employed by the Association since 1976. 80 Meetings and Committees of the Board of Directors The Association's Board of Directors meets at least monthly. During the fiscal year ended June 30, 1997, the Board of Directors held 13 meetings. No director attended fewer than 75% of the total meetings of the Board of Directors and committees on which such Board member served during this period. The Association has standing Loan, Marketing, Pension, Audit and Compensation Committees, as well as an Executive Loan Committee and Executive Committee for Strategic Planning. The Loan Committee meets on an as-needed basis for the purpose of reviewing and acting upon all commercial loan applications up to $250,000 and residential loan applications up to $250,000 (or up to $500,000 if the loan meets certain conditions). This committee met 2 to 3 times a week during fiscal 1997 and is comprised Offrs. Moretti and Robinson. The Marketing Committee meets quarterly for the purpose of reviewing and implementing marketing strategies. This committee met six times during fiscal 1997 and is comprised of Directors Beever, Copp, Heaver, Marsiglia, and Moretti. The Pension Committee meets on an as-needed basis for the of reviewing and discussing retirement matters effecting the Association's personnel. This committee did not meet during fiscal 1997. Its members are Directors Heaver, Huether, Moretti and White. The Audit Committee meets annually with the Association's accounting firm in order to review the annual audit. This committee met once in fiscal 1997 and is comprised of Directors Heaver, Marsiglia, Moretti and Salkin. The Compensation Committee meets on an as-needed basis, but at least once during a fiscal year for the purpose of reviewing officers' salaries and bonuses. This committee met 3 times during fiscal 1997. The members of this committee are Directors Copp, Heaver, Huether, Moretti and White. The Executive Loan Committee meets on an as-needed basis, but at least once a month, for the purpose of reviewing the purchase and sale of investments as well as acting upon those loan applications outside the authority of the Loan Committee. This committee met 12 times during fiscal 1997. Its members are Directors Heaver, Salkin, Moretti and White as well as two other directors on a rotating basis. The Executive Committee for Strategic Planning meets on an as-needed basis. This committee sets the direction of the Association's business plan and oversees the progress in meeting stated goals. This committee also decides the implementation of new products for the Association and makes other major recommendations to the Board of Directors. This committee met 3 times in fiscal 1997 and is composed of Directors Heaver, Barhight, Beever, Huether, Moretti and Salkin. 81 Director Compensation Each director of the Association is currently paid a fee of $575 for each regular meeting attended. Non-employee directors receive committee fees of $175 for each meeting attended. Employee directors do not receive fees for participation on any committees. Executive Compensation The following table sets forth information concerning the compensation paid or granted to the Association's Chief Executive Officer and each executive officer who made in excess of $100,000 during fiscal 1997. No executive officer of the Holding Company received cash compensation in excess of $100,000 in fiscal 1997.
Summary Compensation Table ------------------------------------------------------ Long-Term Compensation Annual Compensation Awards ------------------- ----------------------- Restricted Name and Principal Other Annual Stock Options/ All Other Position Year(1) Salary($) Bonus($) Compensation($) Award($) SARs(#) Compensation($)(2) ------------------ ------- --------- -------- --------------- -------- ------- ------------------ Ernest A. Moretti 1997 $115,000 $23,000 $--- $ --- ---/--- $10,550 President, Chief Executive Officer and Director
- ----------- (1) In accordance with the revised rules on executive officer and director compensation disclosure adopted by the Securities and Exchange Commission, Summary Compensation information is excluded for the years ended June 30, 1996 and 1995, as the Association was not a public company during such periods. (2) Includes $5,000 of life, health and disability premiums paid by the Association, $3,900 paid by the Association in discretionary contributions pursuant to the Association's 401(k) Plan and the value of a car provided to Mr. Moretti of $1,650. Employment Agreement. The Association has had, since 1989, an employment contract with its President, Ernest A. Moretti. The agreement provides for a salary of $115,000, contains bonus provisions tied to the Association's performance and has a term of three years (subject to an annual extension for an additional year following an annual performance review). The key terms of this agreement are expected to be incorporated into a new agreement which also provides that under certain circumstances, including a change in control, Mr. Moretti would be entitled, subject to certain limitations, to a severance payment in lieu of salary equal to a percentage of his base amount of compensation, as defined. The contract provides for termination upon the employee's death, for cause or in certain events specified by OTS regulations. The employment contract is terminable by the employee upon 90 days' notice to the Association. In the event there is a change in control of the Association, as defined in the agreement, if employment terminates involuntarily in connection with such change in control or within 12 months thereafter, the employment contract provides for a payment equal to 299% of Mr. Moretti's base amount of compensation as defined in the Internal Revenue Code. Assuming a change in control were to take place as of June 30, 1997, the aggregate amounts payable to Mr. Moretti pursuant to this change in control provision would be approximately $360,836. 82 The contract provides, among other things, for participation in an equitable manner in employee benefits applicable to executive personnel. The employment conttact may have an "anti-takeover" effect that could affect a proposed future acquisition of control of the Association after its Stock Conversion. See "Restrictions on Acquisitions of Stock and Related Takeover Defensive Provisions." Benefit Plans General. Wyman Park currently provides insurance benefits to its employees, including health, life, dental, disability and major medical insurance, subject to certain deductibles and copayments by employees. Additionally the Association provides its employee with a defined benefit retirement plan and 401(k) plan. Pension Plan. The Association makes available to all full-time employees who have attained the age of 21 and completed at least one year of service with Wyman Park, a defined benefit noncontributory pension plan. The pension plan provides for monthly payments to or on behalf of each covered employee upon the employee's retirement at age 65. These payments are calculated in accordance with a formula based on the employee's "average monthly compensation," which is defined as the highest average of total compensation for the last five consecutive calendar years of employment. The following table sets forth, as of June 30, 1997, estimated annual retirement benefits for individuals at age 65 payable in the form of a combined ten-year certain and life annuity payment under the most advantageous plan provisions for various levels of compensation and years of service. Such payments are not subject to offset for social security benefits. The figures in this table are based upon the assumption that the Pension Plan continues in its present form and does not reflect benefits payable under the ESOP. At June 30, 1997, the estimated credited years of services of Mr. Moretti was 7 years. Pension Plan Table Years of Credited Service ---------------------------------------------------------------- High-Five Average Compensation 10 Years 15 Years 20 Years 25 Years 30 Years - ------------ -------- -------- -------- -------- -------- $15,000 $ 2,250.00 $ 3,375.00 $ 4,500.00 $ 5,625.00 $ 6,750.00 25,000 3,750.00 5,625.00 7,500.00 9,375.00 11,250.00 35,000 5,534.80 8,302.20 11,069.60 13,837.00 16,604.40 45,000 7,534.80 11,302.20 15,069.60 18,837.00 22,604.40 55,000 9,534.80 14,302.20 19,069.60 23,837.00 28,604.40 65,000 11,534.80 17,302.20 23,069.60 28,837.00 34,604.40 401(k) Plan. The Association provides its employees a qualified, tax-exempt pension plan with a "cash-or-deferred arrangement" qualifying under Section 401(k) of the Internal Revenue Code (the "401(k) Plan"). Employees who have attained age 21 and who have completed one year of employment, during which they worked at least 1,000 hours, are eligible to participate in the 401(k) Plan as of the first-day of the month following their eligibility date. Eligible employees are permitted to contribute up to 15% of their compensation to the 83 401(k) Plan on a pre-tax basis, up to a maximum of $9,500. The Association matches 50% of the first 3% of each participant's salary reduction contribution to the 401(k) Plan. Participant contributions to the 401(k) Plan are fully and immediately vested. Withdrawals are not permitted before age 59 1/2 except in the event of death, disability, termination of employment or reasons of proven financial hardship. With certain limitations, participants may make withdrawals from their accounts while actively employed. Upon termination of employment, the participant's accounts will be distributed, unless he or she elects to defer the payment. The 401(k) Plan may be amended by the Board of Directors, except that no amendment may be made which would reduce the interest of any participant in the 401(k) Plan trust fund or divert any of the assets of the 401(k) Plan trust fund to purposes other than the benefit of participants or their beneficiaries. During fiscal 1997, the Association made $13,060 in contributions to the 401(k) Plan. Employee Stock Ownership Plan. The Boards of Directors of Wyman Park and the Holding Company have approved the adoption of an ESOP for the benefit of employees of the Holding Company and its subsidiaries, including Wyman Park. The ESOP is designed to meet the requirements of an employee stock ownership plan as described at Section 4975(e)(7) of the Code and Section 407(d)(6) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The ESOP may borrow in order to finance purchases of the Holding Company's Common Stock. It is anticipated that the ESOP will be funded with a loan from the Holding Company (not to exceed an amount equal to 8% of the gross conversion proceeds). The Holding Company intends to apply to the OTS to permit it to lend funds to the ESOP. In the event the Holding Company is not permitted to lend funds to the ESOP and the ESOP is unable to obtain financing from an unrelated lender for its stock purchase, the Holding Company may contribute funds to the ESOP to enable it purchase up to 3% of the shares of Common Stock in the Conversion; provided, however that the total contributions of the Holding Company to the ESOP and RRPs for stock purchases in the Conversion may not exceed 4% of the Common Stock sold in the Conversion. GAAP generally requires that any borrowing by the ESOP from an unaffiliated lender be reflected as a liability in the Holding Company's consolidated financial statements, whether or not such borrowing is guaranteed by, or constitutes a legally binding contribution commitment of, the Holding Company or the Association. The funds used to acquire the ESOP shares are expected to be borrowed from the Holding Company. If the Holding Company finances the ESOP debt, the ESOP debt will be eliminated through consolidation and no liability will be reflected on the Holding Company's consolidated financial statements. In addition, shares purchased with borrowed funds will, to the extent of the borrowings, be excluded from stockholders' equity, representing unearned compensation to employees for future services not yet performed. Consequently, if the ESOP purchases already-issued shares in the open market, the Holding Company's consolidated liabilities will increase to the extent of the ESOP's borrowings, and total and per share stockholders' equity will be reduced to reflect such borrowings. If the ESOP purchases newly issued 84 shares from the Holding Company, total stockholders' equity would neither increase nor decrease, but per share stockholders' equity and per share net income would decrease because of the increase in the number of outstanding shares. In either case, as the borrowings used to fund ESOP purchases are repaid, total stockholders' equity will correspondingly increase. All employees of the Association are eligible to participate in the ESOP after they attain age 21 and complete one year of service. Employees will be credited for years of service to the Association prior to the adoption of the ESOP for participation and vesting purposes. The Association's contribution to the ESOP is allocated among participants on the basis of compensation. Each participant's account will be credited with cash and shares of Holding Company Common Stock based upon compensation earned during the year with respect to which the contribution is made. Contributions credited to a participant's account are vested on a graduated basis and become fully vested when such participant completes ten years of service. ESOP participants are en titled to receive distributions from their ESOP accounts only upon termination of service. Distributions will be made in cash and in whole shares of the Holding Company's Common Stock. Fractional shares will be paid in cash. Participants will not incur a tax liability until a distribution is made. Each participating employee is entitled to instruct the trustee of the ESOP as to how to vote the shares allocated to his or her account. The trustee will not be affiliated with the Holding Company or Wyman Park. The ESOP may be amended by the Board of Directors, except that no amendment may be made which would reduce the interest of any participant in the ESOP trust fund or divert any of the assets of the ESOP trust fund to purposes other than the benefit of participants or their beneficiaries. Other Stock Benefit Plans. In addition to the ESOP and the employment agreements, in the future the Holding Company may consider the implementation of a stock option plan ("Stock Option Plan") and recognition and retention plan ("RRP") for the benefit of selected directors, officers and employees of the Holding Company and the Association. Any such Stock Option Plan or RRP will not be implemented within one year of the date of the consummation of the Conversion, subject to continuing OTS jurisdiction. It is anticipated that the Stock Option Plan and RRP will be comprised of at least 10% and 4%, respectively, of the Holding Company stock sold in the Conversion. Grants of common stock pursuant to the RRP will be issued without cost to the recipient. If a determination is made to implement a Stock Option Plan or RRP, it is anticipated that any such plans will be submitted to stockholders for their consideration at which time stockholders would be provided with detailed 85 information regarding such plan. If such plans are approved, and affected, they will have a dilutive effect on the Holding Company's stockholders as well as affect the Holding Company's net income and stockholders' equity, although the actual results cannot be determined until such plans are implemented. Indebtedness of Management The Association has followed a policy of granting loans to officers and directors. Loans to directors and executive officers are made in the ordinary course of business and on the same terms and conditions as those of comparable transactions with the general public prevailing at the time, in accordance with the Association's underwriting guidelines, and do not involve more than the normal risk of collectibility or present other unfavorable features. All loans by the Association to its directors and executive officers are subject to OTS regulations restricting loan and other transactions with affiliated persons of the Association. Federal law currently requires that all loans to directors and executive officers generally be made on terms and conditions comparable to those for similar transactions with non-affiliates. Loans to all directors and executive officers and their associates totaled $477,500 at June 30, 1997, which was 10.1% of the Association's equity capital at that date. All loans to directors and executive officers were performing in accordance with their terms at June 30, 1997. THE CONVERSION The Board of Directors of the Association and the OTS have approved the Plan of Conversion. OTS approval does not constitute a recommendation or endorsement of the Plan of Conversion. Certain terms used in the following summary of the material terms of the Conversion are defined in the Plan of Conversion, a copy of which may be obtained by contacting Wyman Park. General The Board of Directors of the Association has adopted the Plan, subject to approval by the OTS and the members of the Association. Pursuant to the Plan, the Association is to be converted from a federally chartered mutual savings association to a federally chartered stock savings association, with the concurrent formation of a holding company. The OTS has approved the Plan, subject to its approval by the affirmative vote of the members of the Association holding not less than a majority of the total number of votes eligible to be cast at a special meeting called for that purpose (the "Special Meeting"), to be held on _______, 1997. The Conversion will be accomplished through amendment of the Association's federal charter to authorize capital stock, at which time the Association will become a wholly owned subsidiary of the Holding Company. The Conversion will be accounted for as a pooling of interests. Subscription Rights have been granted to Eligible Account Holders as of March 31, 1996, the Tax- Qualified Employee Plans of the Association and Holding Company, Supplemental Eligible Account Holders as of September 30, 1997, other members, and officers, directors and employees of the Association. Additionally, members of the general public may be afforded the opportunity to subscribe for Holding Company Common Stock in a direct Community Offering, with a preference to natural persons who reside in Baltimore and Anne Arundel Counties, Maryland. 86 See "- Offering of Holding Company Common Stock." Depending upon market conditions, any shares not initially subscribed for in the Subscription and Community Offering may be offered for sale on a best efforts basis by a selling group of broker-dealers. Subscriptions for shares will be subject to the maximum and minimum purchase limitations set forth in the Plan of Conversion. Business Purposes Wyman Park has several business purposes for the Conversion. The sale of Holding Company Common Stock will have the immediate result of providing the Association with additional equity capital in order to support the Association's existing operating strategies, subject to applicable regulatory restrictions. The sale of the Common Stock is the most effective means of increasing the Association's permanent capital and does not involve the high interest cost and repayment obligation of subordinated debt. In addition, investment of that part of the net Conversion proceeds paid by the Holding Company to the Association is expected to provide additional operating income to further increase the Association's capital on a continuing basis. The Board of Directors of the Association believes that a holding company structure could facilitate the acquisition of other savings institutions in the future as well as other companies. If a multiple holding company structure is utilized in a future acquisition, the acquired savings institution would be able to operate on a more autonomous basis as a wholly owned subsidiary of the Holding Company rather than as a division of the Association. For example, the acquired savings institution could retain its own directors, officers and corporate name as well as having representation on the Board of Directors of the Holding Company. As of the date hereof, there are no plans or understandings regarding the acquisition of any other institutions. The Board of Directors of the Association also believes that a holding company structure can facilitate the diversification of the Association's business activities. While the potential for diversification will be maximized if a unitary holding company structure is utilized because the types of business activities permitted to a unitary holding company are broader than those of a multiple holding company, either type of holding company may engage in a broader range of activities than may a thrift institution directly. Currently, there are no plans that the Holding Company engage in any material activities apart from holding the shares of the Association and investing the remaining net proceeds from the sale of Common Stock in the Conversion. The preferred stock and additional common stock of the Holding Company being authorized in the Conversion will be available for future acquisitions and for issuance and sale to raise additional equity capital, generally without stockholder approval, but subject to market conditions. Although the Holding Company currently has no plans with respect to future issuances of equity securities, the more flexible operating structure provided by the Holding Company and the stock form of ownership is expected to assist the Association in competing more aggressively with other financial institutions in its principal market area. The Conversion will structure the Association in the stock form used in the United States by all commercial banks, most major business corporations and an increasing number of savings institutions. The Conversion will permit the Association's members to become stockholders of the Holding Company, thereby 87 allowing members to own stock in the financial organization in which they maintain deposit accounts or with which they have a borrowing relationship. Such ownership should encourage members to promote the Association to others, thereby further contributing to the Association's earnings potential. The Association is also expected to benefit from its management and employees owning stock, because stock ownership is viewed as an effective performance incentive and a means of attracting, retaining and compensating personnel. Effects of Conversion to Stock Form on Depositors and Borrowers of the Association Voting Rights. Deposit account holders will have no voting rights in the converted Association or the Holding Company and will therefore not be able to elect directors of either entity or to control their affairs. These rights are currently accorded to deposit account holders with regard to the Association. Subsequent to Conversion, voting rights will be vested exclusively in the Holding Company as the sole stockholder of the Association. Voting rights as to the Holding Company will be held exclusively by its stockholders. Each purchaser of Holding Company Common Stock shall be entitled to vote on any matters to be considered by the Holding Company stockholders. A stockholder will be entitled to one vote for each share of Common Stock owned, subject to certain limitations applicable to holders of 10% or more of the shares of the Common Stock. See "Description of Capital Stock." Deposit Accounts and Loans. The general terms of the Association's deposit accounts, the balances of the individual accounts and the existing FDIC insurance coverage will not be affected by the Conversion. Furthermore, the Conversion will not affect the loan accounts, the balances of these accounts, or the obligations of the borrowers under their individual contractual arrangements with the Association. Tax Effects. The Association has received an opinion from Silver, Freedman & Taff, L.L.P. with regard to federal income taxation, and an opinion from Wooden & Benson, Chartered with regard to Maryland taxation, to the effect that the adoption and implementation of the Plan of Conversion set forth herein will not be taxable for federal or Maryland tax purposes to the Association or the Holding Company. See "- Income Tax Consequences." Liquidation Rights. The Association has no plans to liquidate, either before or subsequent to the completion of the Conversion. However, if there should ever be a complete liquidation, either before or after Conversion, deposit account holders would receive the protection of insurance by the FDIC up to applicable limits. Subject thereto, liquidation rights before and after Conversion would be as follows: Liquidation Rights in Present Mutual Institution. In addition to the protection of FDIC insurance up to applicable limits, in the event of a complete liquidation of the Association, each holder of a deposit account in the Association in its present mutual form would receive his or her pro rata share of any assets of the Association remaining after payment of claims of all 88 creditors (including the claims of all depositors in the amount of the withdrawal value of their accounts). Such holder's pro rata share of such remaining assets, if any, would be in the same proportion of such assets as the balance in his or her deposit account was to the aggregate balance in all deposit accounts in the Association at the time of liquidation. Liquidation Rights in Proposed Converted Institution. After Conversion, each deposit account holder, in the event of a complete liquidation of the Association, would have a claim of the same general priority as the claims of all other general creditors of the Association in addition to the protection of FDIC insurance up to applicable limits. Therefore, except as described below, the deposit account holder's claim would be solely in the amount of the balance in his or her deposit account plus accrued interest. The holder would have no interest in the assets of the Association above that amount. The Plan of Conversion provides that there shall be established, upon the completion of the Conversion, a special "liquidation account" for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders (i.e., depositors at March 31, 1996 and September 30, 1997) in an amount equal to the net worth of the Association as of the date of its latest statement of financial condition contained in the final prospectus relating to the sales of shares of Holding Company Common Stock in the Conversion. Each Eligible Account Holder and Supplemental Eligible Account Holder would have an initial interest in such liquidation account for each deposit account held in the Association on the applicable record date. A deposit account holder's interest as to each deposit account would be in the same proportion of the total liquidation account as the balance in his or her account on the applicable record date, was to the aggregate balance in all deposit accounts of Eligible Account Holders and/or Supplemental Eligible Account Holders on such dates. For deposit accounts in existence on both dates separate subaccounts shall be determined on the basis of the qualifying deposits in such deposit accounts on such record dates. However, if the amount in the deposit account on any annual closing date of the Association is less than the lowest amount in such account on March 31, 1996 or September 30, 1997 and on any subsequent closing date (each March 31st and September 30th), then the account holder's interest in this special liquidation account would be reduced by an amount proportionate to any such reduction, and the account holder's interest would cease to exist if such deposit account were closed. In addition, the interest in the special liquidation account would never be increased despite any increase in the balance of the account holders' related accounts after Conversion, and could only decrease. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders were satisfied would be distributed to the Holding Company as the sole stockholder of the Association. No merger, consolidation, purchase of bulk assets with assumption of deposit accounts and other liabilities, or similar transaction, whether the Association, as converted, or another SAIF-insured institution is the surviving institution, is deemed to be a complete liquidation for purposes of distribution of the liquidation account and, in any such transaction, the liquidation account would be assumed to the full extent authorized by regulations of the OTS as then 89 in effect. The OTS has stated that the consummation of a transaction of the type described in the preceding sentence in which the surviving entity is not a SAIF-insured institution would be reviewed on a case-by-case basis to determine whether the transaction should constitute a "complete liquidation" requiring distribution of any then remaining balance in the liquidation account. While the Association believes that such a transaction should not constitute a complete liquidation, there can be no assurance that the OTS will not adopt a contrary position. Common Stock. For information as to the characteristics of the Common Stock to be issued under the Plan of Conversion, see "Dividends" and "Description of Capital Stock." Common Stock issued under the Plan of Conversion cannot, and will not, be insured by the FDIC or any other governmental agency. The Association will continue, immediately after completion of the Conversion, to provide its services to depositors and borrowers pursuant to its existing policies and will maintain the existing management and employees of the Association. Other than for payment of expenses incident to the Conversion, no assets of the Association will be distributed in the Conversion. Wyman Park will continue to be a member of the FHLB System, and its deposit accounts will continue to be insured by the FDIC. The affairs of Wyman Park will continue to be directed by the existing Board of Directors and management. Offering of Holding Company Common Stock Under the Plan of Conversion, 879,750 shares of Holding Company Common Stock will be offered for sale, subject to certain restrictions described below, initially through a Subscription Offering. Federal conversion regulations require, with certain exceptions, that at least the minimum number of shares offered in a conversion be sold in order for the conversion to become effective. The Subscription and Community Offering will expire at 12:00 noon, Lutherville, Maryland time, on _______, 1997 (the "Subscription Expiration Date") unless extended by the Association and the Holding Company. Regulations of the OTS require that all shares to be offered in the Conversion be sold within a period ending not more than 45 days after the Subscription Expiration Date (or such longer period as may be approved by the OTS) or, despite approval of the Plan of Conversion by members, the Conversion will not be effected and Wyman Park will remain in mutual form. This period expires on _________, 1997, unless extended with the approval of the OTS. If the Subscription and Community Offering is extended beyond _________, 1997, all subscribers will have the right to modify or rescind their subscriptions and to have their subscription funds returned promptly with interest. In the event that the Conversion is not effected, all funds submitted and not previously refunded pursuant to the Subscription and Community Offering will be promptly refunded to subscribers with interest at the Association's current passbook rate, and all withdrawal authorizations will be terminated. Stock Pricing and Number of Shares to be Issued Federal regulations require that the aggregate purchase price of the securities of a thrift institution sold in connection with its conversion must be based on an appraised aggregate market value of the institution as converted (i.e., taking into account the expected receipt of proceeds from the sale of the 90 securities in the conversion), as determined by an independent valuation. Ferguson, which is experienced in the valuation and appraisal of business entities, including thrift institutions involved in the conversion process, was retained by the Association to prepare an appraisal of the estimated pro forma market value of the Association and the Holding Company upon Conversion. Ferguson will receive a fee of approximately $12,000 for its appraisal. The Association has agreed to indemnify Ferguson under certain circumstances against liabilities and expenses (including legal fees) arising out of, related to, or based upon the Conversion. Ferguson has prepared an appraisal of the estimated pro forma market value of the Association as converted. The Ferguson appraisal concluded that, at October 28, 1997, an appropriate range for the estimated pro forma market value of the Association and the Holding Company was from a minimum of $6,502,500 to a maximum of $8,797,500 with a midpoint of $7,650,000. Assuming that the shares are sold at $10.00 per share in the Conversion, the estimated number of shares to be issued in the Conversion is expected to be between 650,250 and 879,750. The Purchase Price of $10.00 was determined by discussion among the Boards of Directors of the Association, the Holding Company and Ferguson, taking into account, among other factors, (i) the requirement under OTS regulation that the Common Stock be offered in a manner that would achieve the widest distribution of shares and (ii) liquidity in the Common Stock subsequent to the Conversion. The appraisal involved a comparative evaluation of the operating and financial statistics of the Association with those of other thrift institutions. The appraisal also took into account such other factors as the market for thrift institution stocks generally, prevailing economic conditions, both nationally and in Maryland which affect the operations of thrift institutions, the competitive environment within which the Association operates and the effect of the Association becoming a subsidiary of the Holding Company. No detailed individual analysis of the separate components of the Holding Company's and the Association's assets and liabilities was performed in connection with the evaluation. The Plan of Conversion requires that all of the shares subscribed for in the Subscription and Community Offering be sold at the same price per share. The Board of Directors reviewed and discussed with Ferguson the appraisal, including the methodology and the appropriateness of the assumptions utilized and determined that in its opinion the Appraisal was not unreasonable. The Estimated Valuation Range may be amended with the approval of the OTS in connection with changes in the financial condition or operating results of the Association or market conditions generally. As described below, an amendment to the Estimated Valuation Range would not be made without a resolicitation of subscriptions and/or proxies except in limited circumstances. If, upon completion of the Subscription and Community Offering, at least the minimum number of shares are subscribed for, Ferguson, after taking into account factors similar to those involved in its prior Appraisal, will determine its estimate of the pro forma market value of the Association and the Holding Company upon Conversion, as of the close of the Subscription and Community Offering. If, based on the estimate of Ferguson, the aggregate pro forma market value is not within the Estimated Valuation Range, Ferguson, upon the consent of the OTS, will determine a new Estimated Valuation 91 Range ("Amended Valuation Range"). If the aggregate pro forma market value of the Association as converted and the Holding Company has increased in the Amended Valuation Range to an amount that does not exceed $10,117,130 (i.e., 15% above the maximum of the Estimated Valuation Range), then the number of shares to be issued may be increased to accommodate such increase in value without a resolicitation of subscriptions and/or proxies. In such event the Association and the Holding Company do not intend to resolicit subscriptions and/or proxies unless the Association and the Holding Company then determine, after consultation with the OTS, that circumstances otherwise require such a resolicitation. If, however, the aggregate pro forma market value of the Holding Company and the Association, as converted, at that time is less than $6,502,500 or more than $10,117,130, a resolicitation of subscribers and/or proxies may be made, the Plan of Conversion may be terminated or such other actions as the OTS may permit may be taken. In the event that upon completion of the Subscription and Community Offering, the pro forma market value of the Holding Company and Association, as converted, is below $6,502,500 or above $10,117,130 (15% above the maximum of the Estimated Valuation Range), the Holding Company intends to file the revised appraisal with the SEC by post-effective amendment to its Registration Statement on Form SB-2. See "Additional Information." If the Plan of Conversion is terminated, all funds would be returned promptly with interest at the rate of the Association's current passbook rate, and holds on funds authorized for withdrawal from deposit accounts would be released. If there is a resolicitation of subscriptions, subscribers will be given the opportunity to cancel or change their subscriptions and to the extent subscriptions are so canceled or reduced, funds will be returned with interest at the Association's current passbook savings rate, and holds on funds authorized for withdrawal from deposit accounts will be released or reduced. Unless there is a resolicitation, stock subscriptions received by the Holding Company and the Association may not be withdrawn by the subscriber and, if accepted by the Holding Company and the Association, are final. If the Conversion is not completed prior to _________, 1999 (two years after the date of the Special Meeting), the Plan of Conversion will automatically terminate. Any increase in the total number of shares of Common Stock to be offered in the Conversion will dilute a subscriber's percentage ownership interest and will reduce the pro forma net income and net worth on a per share basis. A decrease in the number of shares to be issued in the Conversion will increase a subscriber's proportionate ownership interest and will increase both pro forma net income and net worth on a per share basis while decreasing that amount on an aggregate basis. No sale of the shares will take place unless, prior thereto, Ferguson confirms to the OTS that, to the best of Ferguson's knowledge and judgment, nothing of a material nature has occurred which would cause Ferguson to conclude that the actual Purchase Price on an aggregate basis is incompatible with its estimate of the aggregate pro forma market value of the Holding Company and the Association as converted at the time of the sale. If, however, the facts do not justify such a statement, the Subscription and Community Offering or other sale may be canceled, or a new Estimated Valuation Range set and a new offering held. In preparing its valuation of the pro forma market value of the Association and the Holding Company upon Conversion, Ferguson relied upon and assumed the accuracy and completeness of all financial and statistical information provided by the Association and the Holding Company. Ferguson also considered information based upon other publicly available sources which it 92 believes are reliable. However, Ferguson does not guarantee the accuracy and completeness of such information and did not independently verify the financial statements and other data provided by the Association and the Holding Company or independently value the assets or liabilities of the Association and the Holding Company. The appraisal is not intended to be, and must not be interpreted as, a recommendation of any kind as to the advisability of voting to approve the Conversion or of purchasing shares of Common Stock. The appraisal considers Wyman Park and the Holding Company only as going concerns and should not be considered as any indication of the liquidation value of Wyman Park or the Holding Company. Moreover, the appraisal is necessarily based on many factors which change from time to time. There can be no assurance that persons who purchase shares in the Conversion will be able to sell such shares at prices at or above the Purchase Price. Subscription Offering In accordance with OTS regulations, nontransferable Subscription Rights have been granted under the Plan of Conversion to the following persons in the following order of priority: (1) Eligible Account Holders (deposit account holders of the Association as of March 31, 1996; (2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account Holders (deposit account holders of the Association as of September 30, 1997; (4) Other Members (certain borrowers and depositors of the Association, other than Eligible Account Holders or Supplemental Eligible Account Holders at the close of business on _________, 1997, the voting record date for the Special Meeting); and (5) officers, directors and employees of the Association. All subscriptions received will be subject to the availability of Holding Company Common Stock after satisfaction of all subscriptions of all persons having prior rights in the Subscription Offering, and to the maximum and minimum purchase limitations set forth in the Plan of Conversion. The preference categories are more fully described below. Category No. 1 is reserved for the Association's Eligible Account Holders. Subscription Rights to purchase shares under this category will be allocated among Eligible Account Holders to permit each such depositor to purchase shares in an amount equal to the greater of $100,000 of Common Stock or one-tenth of one percent (.10%) of the total shares offered in the Subscription and Community Offering, or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Common Stock to be issued by a fraction of which the numerator is the amount of the qualifying deposits of the Eligible Account Holder and the denominator is the total amount of the qualifying deposits of all Eligible Account Holders in the Association, in each case on the Eligibility Record Date, subject to the overall purchase limitation and exclusive of shares issued pursuant to an increase in the Estimated Valuation Range of up to 15% after satisfying the subscriptions of Tax-Qualified Employee Plans. To the extent shares are oversubscribed in this category, shares shall be allocated among subscribing Eligible Account Holders to permit each such depositor, to the extent possible, to purchase a number of shares sufficient to make his total allocations equal 100 shares. Any shares not so allocated shall be allocated among the subscribing Eligible Account Holders pro rata in the same proportion that each such subscriber's Qualifying Deposit, as defined in the Plan of Conversion, bears to the total Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unsatisfied. 93 Category No. 2 provides for the issuance of Subscription Rights to Tax-Qualified Employee Plans to purchase up to 10% of the total amount of shares of Common Stock issued in the Subscription and Community Offering on a second priority basis. However, such plans shall not, in the aggregate, purchase more than 10% of the Holding Company Common Stock issued. The ESOP intends to purchase a total of 8% of the Common Stock issued in the Conversion under this category. Subscription Rights received pursuant to this category shall be subordinated to all rights received by Eligible Account Holders to purchase shares pursuant to Category No. 1; provided, however, that notwithstanding any provision of the Plan of Conversion to the contrary, the Tax-Qualified Employee Plans shall have first priority Subscription Rights to the extent that the total number of shares of Common Stock sold in the Conversion exceeds the maximum of the Estimated Valuation Range. Category No. 3 is reserved for the Association's Supplemental Eligible Account Holders. Subscription Rights to purchase shares under this category will be allocated among Supplemental Eligible Account Holders to permit each such depositor to purchase shares in an amount equal to the greater of $100,000, one-tenth of one percent (.10%) of the total shares of Common Stock offered in the Conversion, or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Common Stock to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of the qualifying deposit of the Supplemental Eligible Account Holders in the converting Association in each case on December 31, 1996 (the "Supplemental Eligibility Record Date"), subject to the overall purchase limitation after satisfying the subscriptions of Eligible Account Holders and Tax Qualified Employee Plans. In the event of an oversubscription for shares, the shares available shall be allocated first to permit each subscribing Supplemental Eligible Account Holder, to the extent possible, to purchase a number of shares sufficient to make his total allocation (including the number of shares, if any, allocated in accordance with Category No. 1) equal to 100 shares, and thereafter among each subscribing Supplemental Eligible Account Holder pro rata in the same proportion that his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unsatisfied. Category No. 4 provides, to the extent that shares are then available after satisfying the subscriptions of Eligible Account Holders, Tax-Qualified Employee Plans and Supplemental Eligible Account Holders, for the issuance of Subscription Rights to Other Members to purchase shares equal to the greater of $100,000 of Common Stock or one-tenth of one percent (.10%) of the total amount of shares of Common Stock offered in the Subscription and Community Offering. In the event of an oversubscription, the available shares will be allocated on a pro rata basis in the same proportion as a subscriber's total votes on the Voting Record Date for the Special Meeting bears to the total votes of all subscribing Other Members on such date. Each depositor (including IRA and Keogh account beneficiaries) is entitled at the Special Meeting to cast one vote for each $100, or fraction thereof, of the aggregate withdrawal value of all of such depositor's savings accounts in the Association as of the applicable voting record date, up to a maximum of 1,000 votes. Each borrower member of the Association as of the Voting Record Date will be entitled to cast one vote as a borrower member. 94 Category No. 5 provides for the issuance of Subscription Rights to officers, directors and employees of the Association, to purchase up to $100,000 of Common Stock to the extent that shares are available after satisfying the subscriptions of eligible subscribers in preference Categories 1, 2, 3 and 4. The total number of shares which may be purchased under this Category may not exceed 24% of the total number of shares sold in the Conversion. In the event of an oversubscription, the available shares will be allocated on a pro rata basis in the same proportion that orders of each person bear to the total orders of all subscribers in this Category. Community Offering To the extent that shares remain available for purchase after satisfaction of all subscriptions received and accepted in the Subscription Offering, the Association may offer shares pursuant to the Plan to certain members of the general public in the Community Offering with a preference given to natural persons residing in Baltimore and Anne Arundel Counties, Maryland (the counties where the Association maintains its main and branch office, respectively). Any excess of shares available will be available for purchase by the general public in such a manner as to promote a wide distribution of the Common Stock. Finally, depending on market conditions, the Association may offer shares to the general public in a Syndicated Community Offering on a best efforts basis through a selected dealer arrangement. The opportunity to subscribe for shares of Common Stock in the Community Offering (including a Syndicated Community Offering, if any) is subject to the right of the Association and the Holding Company, in their sole discretion, to accept or reject any such orders in whole or in part either at the time of receipt of an order or as soon as practicable following the Subscription Expiration Date. Regulations of the OTS require that all shares to be offered in the Conversion be sold within a period ending not more than 45 days after the Subscription Expiration Date (or such longer period as may be approved by the OTS). This period expires on May 30, 1997 unless extended with the approval of the OTS. In addition, if the Subscription and Community Offering is extended beyond _________, 1997 all subscribers will be resolicited and notified of their rights to confirm, modify or rescind their subscriptions and to have their subscription funds returned promptly with interest. No person, together with associates of and persons acting in concert with such person, may purchase more than $100,000 of Common Stock in the Community Offering. Subject to the foregoing, in the event of an oversubscription in the Community Offering, shares will be allocated first to cover orders of natural persons residing in Shelby County, next to cover orders of other persons (whose order is accepted by the Association) so that such person may receive up to 1,000 shares and thereafter, to the extent shares remain available, on a pro rata basis in the same proportion that unfilled orders of each person bears to the total unfilled orders of all persons. Additional Purchase Restrictions In addition to the purchase limitations for each priority category described above under "Subscription Offering" and for purchases in the Public Offering, the Plan also provides for certain additional limitations to be placed upon the aggregate purchase of shares in the Conversion. Specifically, no person (other than a Tax- Qualified Employee Plan or certain large depositors) by 95 himself or herself or with an associate, and no group of persons acting in concert or persons on a single account, may subscribe for or purchase more than $100,000 of Common Stock offered in the Conversion based on the Estimated Valuation Range, without regard to an increase in the number of shares to be issued. For purposes of this limitation, an associate of a person does not include a Tax-Qualified Employee Plan or Non-Tax Qualified Employee Plan in which the person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity. Moreover, for purposes of this paragraph, shares held by one or more Tax Qualified or Non-Tax Qualified Employee Plans attributed to a person shall not be aggregated with shares purchased directly by or otherwise attributable to that person except for that portion of a plan which is self-directed by a person. See "-Stock Pricing and Number of Shares to be Issued" regarding potential changes in Subscription Rights in the event of a decrease in the number of shares to be issued in the Conversion. Officers and directors and their associates may not purchase, in the aggregate, more than 34% of the shares to be sold in the Conversion. For purposes of the Plan, the members of the Board of Directors are not deemed to be acting in concert solely by reason of their Board membership. For purposes of this limitation, an associate of an officer or director does not include a Tax-Qualified Employee Plan. Moreover, any shares attributable to the officers and directors and their associates, but held by a Tax- Qualified Employee Plan (other than that portion of a plan which is self-directed) shall not be included in calculating the number of shares which may be purchased under the limitations in this paragraph. Shares purchased by employees who are not officers or directors of the Association, or their associates, are not subject to this limitation. The term "associate" is used above to indicate any of the following relationships with a person: (i) any corporation or organization (other than the Holding Company or the Association or a majority-owned subsidiary of the Holding Company or the Association) of which a person is an officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity security; (ii) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person or any relative of such spouse who has the same home as such person or who is a director or officer of the Holding Company or the Association or any subsidiary of the Holding Company or the Association. The Boards of Directors of the Holding Company and the Association, in their sole discretion, may increase the maximum purchase limitations referred to above up to 9.99% of the total shares sold in the Subscription and Community Offering, provided that the percentage by which each such order exceeds 5% of the shares being offered in the Subscription and Community Offering shall not exceed, in the aggregate, 10% of the shares being offered in the Subscription and Community Offering. Requests to purchase additional shares of Holding Company Common Stock under this provision will be allocated by the Boards of Directors on a pro rata basis giving priority in accordance with the priority rights set forth above. Depending on market and financial conditions, the Boards of Directors of the Holding Company and the Association, with the approval of the OTS and without further approval of the members, may increase any of the above purchase limitations or decrease the maximum purchase limitation to as low as 1% of the shares of Common Stock offered in the Conversion. In the event such purchase limitations are changed, timely notice will be sent. Factors which conceivably would lead to a change of purchase limitations include, but are not limited necessarily, to a change in the appraisal of Wyman Park, and changes to or reassessments of the stock market in general. 96 To the extent that shares are available, each subscriber must subscribe for a minimum of 25 shares. In computing the number of shares to be allocated, all numbers will be rounded down to the next whole number. Common Stock purchased in the Conversion will be freely transferable except for shares purchased by executive officers and directors of the Association or the Holding Company. See "- Restrictions on Transfer of Subscription Rights and Shares." Marketing Arrangements Wyman Park and the Holding Company have retained Trident Securities, which is a broker-dealer registered with the Securities and Exchange Commission and a member of the NASD, to act as selling agent and to advise and consult with respect to the distribution of shares in the Subscription and Community Offering. Trident Securities has no obligation to purchase the Common Stock in the Conversion. Trident Securities will assist Wyman Park and the Holding Company in the Subscription and Community Offering with respect to, but not limited to, the following: (1) training and educating Wyman Park's employees regarding the mechanics and regulatory requirements of the Stock Conversion and offering process; (2) conducting informational meetings for subscribers and other potential purchasers; (3) keeping records of all stock subscriptions; (4) organizing and staffing the Stock Information Center; and (5) otherwise assisting in the sale of stock in the Subscription and Community Offering. For their services, Trident Securities will receive (i) a fee of 1.85% of the aggregate dollar amount of stock sold in the Subscription and Community Offering, excluding purchases by directors, officers, employees and their immediate family members, and employee stock ownership and benefit plans to investors who reside in the State of Maryland; (ii) a fee of 1.40% of the aggregate dollar amount of stock sold in the Subscription and Community Offering, excluding purchases by directors, officers, employees and their immediate family members, and employee stock ownership and benefit plans to investors who reside outside the State of Maryland; (iii) reasonable out-of-pocket expenses not to exceed $12,000; and (iv) fees and expenses for Trident Securities' counsel (not to exceed $34,000). For purposes of calculating Trident Securities fee, it is assumed that the amount of stock sold in the Conversion will not exceed the midpoint of the appraisal value of the Holding Company. The Holding Company has agreed to indemnify Trident Securities against certain claims or liabilities, including certain liabilities under the Securities Act of 1933, as amended, including indemnification for damages arising from material misstatements or material omissions based upon information supplied by the Holding Company or the Association. In addition, directors and executive officers of the Holding Company and the Association, may to a limited extent, participate in the solicitation of offers to purchase Common Stock. Other employees of the Association may participate in the Subscription and Community Offering in administrative capacities, providing clerical work in effecting a sales transaction or answering questions of a potential purchaser provided that the content of the employee's responses is limited to information contained in the Prospectus or other offering document. Other questions of prospective purchasers will be directed to registered representatives. Such other employees have been instructed not to solicit offers to purchase Common Stock or provide advice regarding the purchase of Common Stock. Sales of Common Stock by directors, executive officers and registered representatives will be made from the Stock Information Center. The Holding Company will rely on Rule 3a4-1 under the 97 Exchange Act, and sales of Common Stock will be conducted within the requirements of Rule 3a4-1, so as to permit officers, directors and employees to participate in the sale of Common Stock. No officer, director or employee of the Holding Company or Association will be compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on the transactions in the Common Stock. Method of Payment for Subscriptions To purchase shares in the Subscription and Community Offering, an executed original Order Form, including the certification form (facsimile and photocopies will not be accepted) with the required payment for each share subscribed for, or with appropriate authorization for withdrawal from the subscriber's deposit account at the Association (which may be given by completing the appropriate blanks in the order form), must be received by the Holding Company at an office of the Association by 12:00 noon, Lutherville, Maryland time on __________, 1997, the Subscription Expiration Date. Order Forms which are not received by such time or are executed defectively or altered or are received without full payment (or appropriate withdrawal instructions) are not required to be accepted. Payment for subscriptions may be made (i) in cash if delivered in person at the office of the Association, (ii) by check, bank draft or money order or (iii) by authorization of withdrawal from deposit accounts maintained with the Association. Interest will be paid on payments made by cash, check, bank draft or money order, whether or not the Conversion is completed or terminated, at the regular passbook rate of ___% per annum from the date payment is received until the completion or termination of the Conversion. If payment is made by authorization of withdrawal from deposit accounts, the funds authorized to be withdrawn from a deposit account will continue to accrue interest at the contractual rates until completion or termination of the Conversion, but a hold will be placed on such funds, thereby making them unavailable to the depositor until completion or termination of the Conversion. Under no circumstances will the Association accept wire transfers for payment of subscription orders. If a subscriber authorizes the Association to withdraw the amount of the purchase price from his certificate account, the Association will do so as of the effective date of Conversion. The Association will waive any applicable penalties for early withdrawal from certificate accounts. If the remaining balance in a certificate account is reduced below the applicable minimum balance requirement at the time that the funds actually are transferred under the authorization, the rate paid on the remaining balance of the certificate account will earn interest at the then-current passbook rate. If the ESOP subscribes for shares during the Subscription Offering, the ESOP will not be required to pay for the shares subscribed for at the time it subscribes, but rather, may pay for such shares of Common Stock subscribed for at the Purchase Price upon consummation of the Conversion, provided that there is in force from the time of its subscription until such time a loan commitment to lend to the ESOP, at such time, the aggregate Purchase Price of the shares for which it subscribed. Certificates representing shares of Common Stock purchased will be mailed to purchasers at the last address of such persons appearing on the records of the Holding Company, or to such other address as may be specified in properly completed order forms, as soon as practicable following consummation of 98 the sale of all shares of Common Stock. Any certificates returned as undeliverable will be disposed of in accordance with applicable law. To ensure that each purchaser receives a prospectus at least 48 hours prior to the Expiration Date in accordance with Rule 15c2-8 under the Exchange Act, no prospectus will be mailed any later than five days prior to such date or hand delivered any later than two days prior to such date. Execution of the order form will confirm receipt or delivery in accordance with Rule 15c2-8. Order forms will only be distributed with a prospectus. The Holding Company will accept for processing only orders submitted on original order forms with the form of certification. Photocopies or facsimile copies of order forms or certifications will not be accepted. Payment by cash, check, money order, bank draft or debit authorization to an existing account at the Association must accompany the order form. No wire transfers will be accepted. In order to ensure that Eligible Account Holders, Supplemental Eligible Account Holders and Other Members receive their stock purchase priorities, depositors as of the Eligibility Record Date (March 31, 1996), the Supplemental Eligibility Record Date (September 30, 1997) and/or the Voting Record Date (__________, 1997) must list all accounts on the stock order form giving all names on each account and the account number as of the applicable record date. In addition to the foregoing, if shares are offered through selected dealers in the Community Offering, a purchaser may pay for his shares with funds held by or deposited with a selected dealer. If an order form is executed and forwarded to the selected dealer or if the selected dealer is authorized to execute the order form on behalf of a purchaser, the selected dealer is required to forward the order form and funds to the Holding Company for deposit in a segregated account at the Association on or before noon of the business day following receipt of the order form or execution of the order form by the selected dealer. Alternatively, selected dealers may solicit indications of interest from their customers and thereafter seek their confirmation as to their intent to purchase. Those indicating an intent to purchase shall forward executed order forms and certifications to their selected dealer or authorize the selected dealer to execute such forms. The selected dealer will acknowledge receipt of the order to its customer in writing on the following business day and will debit such customer's account on the third business day after the customer has confirmed his intent to purchase (the "debit date") and on or before noon of the next business day following the debit date will send order forms and funds to the Holding Company for deposit in a segregated account at the Association. If such alternative procedure is employed, purchasers' funds are not required to be in their accounts with selected dealers until the debit date. 99 Restrictions on Transfer of Subscription Rights and Shares Prior to the completion of the Conversion, the OTS conversion regulations prohibit any person with Subscription Rights, including the Tax-Qualified Employee Plans, Eligible Account Holders, Supplemental Eligible Account Holders and Other Members of the Association, from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the Subscription Rights issued under the Plan or the shares of Common Stock to be issued upon their exercise. Such rights may be executed only by the person to whom they are granted and only for his account. Each person exercising Subscription Rights will be required to certify that he is purchasing shares solely for his own account and that he has no agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase Subscription Rights or shares of Common Stock prior to the completion of the Conversion. The Association and the Holding Company may pursue any and all legal and equitable remedies in the event they become aware of the transfer of Subscription Rights and will not honor orders known by them to involve the transfer of such rights. Except as to directors and executive officers of the Association and the Holding Company, the shares of Common Stock sold in the Conversion will be freely transferable. Shares purchased by directors, executive officers or their associates in the Conversion shall be subject to the restrictions that said shares shall not be sold during the period of one year following the date of purchase, except in the event of the death of the stockholder. Accordingly, stock certificates issued by the Holding Company to directors, executive officers and associates shall bear a legend giving appropriate notice of such restriction and, in addition, the Holding Company will give appropriate instructions to the transfer agent for the Holding Company's Common Stock with respect to the applicable restriction upon transfer of any restricted shares. Any shares issued at a later date as a stock dividend, stock split or otherwise, to holders of restricted stock, shall be subject to the same restrictions that may apply to such restricted stock. Holding Company Common Stock (like the stock of most companies) is subject to the requirements of the Securities Act of 1933, as amended (the "Securities Act"). Accordingly, the Holding Company's Common Stock may be offered and sold only in compliance with registration requirements or pursuant to an applicable exemption from registration. Holding Company's Common Stock received in the Conversion by persons who are not "affiliates" of the Holding Company may be resold without registration. Shares received by affiliates of the Holding Company (primarily the directors, officers and principal stockholders of the Holding Company) will be subject to the resale restrictions of Rule 144 under the Securities Act. Rule 144 generally requires that there be publicly available certain information concerning the Holding Company, and that sales thereunder be made in routine brokerage transactions or through a market maker. If the conditions of Rule 144 are satisfied, each affiliate (or group of persons acting in concert with one or more affiliates) is entitled to sell in the public market, without registration, in any three-month period, a number of shares which does not exceed the greater of (i) 1% of the number of outstanding shares of Holding Company stock, or (ii) if the stock is admitted to trading on a national securities exchange or 100 reported through the automated quotation system of a registered securities bank, the average weekly reported volume of trading during the four weeks preceding the sale. Participation by the Board and Executive Officers The directors and executive officers of Wyman Park have indicated their intention to purchase in the Conversion an aggregate of $600,000 of Common Stock, equal to 9.2%, 7.8%, 6.8% or 5.9% of the number of shares to be issued in the Subscription and Community Offering, at the minimum, midpoint, maximum and 15% above the maximum of the Estimated Valuation Range, respectively. The following table sets forth information regarding Subscription Rights to Common Stock intended to be exercised by each of the directors of the Association, including members of their immediate family and their IRAs, and by all directors and executive officers as a group. The following table assumes that 879,750 shares is the maximum and 765,000 is the midpoint of the Estimated Valuation Range, of Common Stock are issued at the Purchase Price of $10.00 per share and that sufficient shares will be available to satisfy the subscriptions indicated. The table does not include shares to be purchased through the ESOP (8% of shares issued in the Conversion).
Number of Aggregate Shares at Percent of Purchase $10.00 Shares at Name Title Price per Share Midpoint ---- ----- ----- --------- -------- Ernest A. Moretti............... President, Chief Executive Officer and Director $100,000 10,000 1.30% Allan B. Heaver................. Chairman of the Board 70,000 7,000 .92 H. Douglas Huether.............. Director 75,000 7,500 .98 John K. White................... Director 50,000 5,000 .65 John R. Beever.................. Director 70,000 7,000 .92 Albert M. Copp.................. Director 50,000 5,000 .65 Gilbert D. Marsiglia, Sr. ...... Director 35,000 3,500 .46 Jay H. Salkin................... Director 100,000 10,000 1.30 G. Scott Barhight............... Director 50,000 5,000 .65 All directors and officers as a group (13 persons)....... $600,000 60,000 7.84
Risk of Delayed Offering The completion of the sale of all unsubscribed shares in the Subscription and Community Offering will depend, in part, upon the Association's operating results and market conditions at the time of the Subscription and Community Offering. Under the Plan of Conversion, all shares offered in the Conversion must be sold within a period ending 24 months from the date of the Special Meeting. While the Association and the Holding Company anticipate completing the sale of shares offered in the Conversion within this period, if the Board of Directors of the Association and the Holding Company are of the 101 opinion that economic conditions generally or the market for publicly traded thrift institution stocks make undesirable a sale of the Holding Company's Common Stock, then the Subscription and Community Offering may be delayed until such conditions improve. A material delay in the completion of the sale of all unsubscribed shares in the Subscription and Community Offering may result in a significant increase in the costs of completing the Conversion. Significant changes in the Association's operations and financial condition, the aggregate market value of the shares to be issued in the Conversion and general market conditions may occur during such material delay. In the event the Conversion is not consummated within 24 months after the date of the Special Meeting of Members, the Association would charge accrued Conversion costs to then current period operations. Approval, Interpretation, Amendment and Termination All interpretations of the Plan of Conversion, as well as the completeness and validity of order forms and stock order and account withdrawal authorizations, will be made by the Association and the Holding Company and will be final, subject to the authority of the OTS and the requirements of applicable law. The Plan of Conversion provides that, if deemed necessary or desirable by the Boards of Directors of the Association and the Holding Company, the Plan of Conversion may be substantively amended (including an amendment to eliminate the formation of the Holding Company as part of the Conversion) by the Boards of Directors of the Association and the Holding Company, as a result of comments from regulatory authorities or otherwise, at any time with the concurrence of the OTS. In the event the Plan of Conversion is substantially amended, other than a change in the maximum purchase limits set forth herein, the Holding Company intends to notify subscribers of the change and to permit subscribers to modify or cancel their subscriptions. The Plan of Conversion will terminate if the sale of all shares is not completed within 24 months after the date of the Special Meeting of Members. The Plan of Conversion may be terminated by the Boards of Directors of the Holding Company and the Association with the concurrence of the OTS, at any time. A specific resolution approved by a two-thirds vote of the Boards of Directors of the Holding Company and the Association would be required to terminate the Plan of Conversion prior to the end of such 24-month period. Restrictions on Repurchase of Stock For a period of three years following Conversion, the Holding Company may not repurchase any shares of its capital stock, except in the case of an offer to repurchase on a pro rata basis made to all holders of capital stock of the Holding Company. Any such offer shall be subject to the prior approval of the OTS. Furthermore, the Holding Company may not repurchase any of its stock (i) if the result thereof would be to reduce the regulatory capital of the Association below the amount required for the liquidation account to be established pursuant to OTS regulations and (ii) except in compliance with the requirements of the OTS' capital distribution rule. The above limitations are subject to the OTS conversion rules which generally provide that the Holding Company may repurchase its capital stock provided (i) no repurchases occur within one year following the Conversion (subject to certain exceptions), (ii) repurchases during the second and third year after conversion are part of an open market stock repurchase program that does not allow for a repurchase of more than 5% of the Holding Company's 102 outstanding capital stock during a 12-month period, (iii) the repurchases do not cause the Association to become undercapitalized, and (iv) the Holding Company provides notice to the OTS at lease 10 days prior to the commencement of a repurchase program and the OTS does not object to such regulations. In addition, the above limitations do not preclude repurchases of capital stock by the Holding Company in the event applicable federal regulatory limitations are subsequently liberalized. Income Tax Consequences Consummation of the Conversion is expressly conditioned upon prior receipt by the Association of either a ruling from the IRS or an opinion of Silver, Freedman & Taff, L.L.P. with respect to federal taxation, and an opinion of Wooden & Benson, Chartered with respect to Maryland taxation, to the effect that consummation of the Conversion will not be taxable to the converted Association or the Holding Company. The full text of the Silver, Freedman & Taff, L.L.P. opinion, the Ferguson Letter and the Wooden & Benson, Chartered opinion, which opinions are summarized herein, were filed with the SEC as exhibits to the Holding Company's Registration Statement on Form SB-2. See "Additional Information." An opinion which is summarized below has been received from Silver, Freedman & Taff, L.L.P. with respect to the proposed Conversion of the Association to the stock form. The Silver, Freedman & Taff, L.L.P. opinion states that (i) the Conversion will qualify as a reorganization under Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended, and no gain or loss will be recognized to the Association in either its mutual form or its stock form by reason of the proposed Conversion, (ii) no gain or loss will be recognized to the Association in its stock form upon the receipt of money and other property, if any, from the Holding Company for the stock of the Association; and no gain or loss will be recognized to the Holding Company upon the receipt of money for Common Stock of the Holding Company; (iii) the assets of the Association in either its mutual or its stock form will have the same basis before and after the Conversion; (iv) the holding period of the assets of the Association in its stock form will include the period during which the assets were held by the Association in its mutual form prior to Conversion; (v) gain, if any, will be realized by the depositors of the Association upon the constructive issuance to them of withdrawable deposit accounts of the Association in its stock form, nontransferable subscription rights to purchase Holding Company Common Stock and/or interests in the Liquidation Account (any such gain will be recognized by such depositors, but only in an amount not in excess of the fair market value of the subscription rights and Liquidation Account interests received); (vi) the basis of the account holder's savings accounts in the Association after the Conversion will be the same as the basis of his or her savings accounts in the Association prior to the Conversion; (vii) the basis of each account holder's interest in the Liquidation Account is assumed to be zero; (viii) based on the Ferguson Letter, as hereinafter defined, the basis of the subscription rights will be zero; (ix) the basis of the Holding Company Common Stock to its stockholders will be the purchase price thereof; (x) a stockholder's holding period for Holding Company Common Stock acquired through the exercise of subscription rights shall begin on the date on which the subscription rights are exercised and the holding period for the Conversion Stock purchased in the Subscription and Community Offering will commence on the date following the date on which such stock is purchased; (xi) the Association in its stock form will succeed to and take into account the earnings and profits or deficit in earnings and profits, of the Association, in its mutual form, as 103 of the date of Conversion; (xii) the Association, immediately after Conversion, will succeed to and take into account the bad debt reserve accounts of the Association, in mutual form, and the bad debt reserves will have the same character in the hands of the Association after Conversion as if no Conversion had occurred; and (xiii) the creation of the Liquidation Account will have no effect on the Association's taxable income, deductions or addition to reserve for bad debts either in its mutual or stock form. The opinion from Silver, Freedman & Taff, L.L.P. is based, among other things, on certain assumptions, including the assumptions that the exercise price of the Subscription Rights to purchase Holding Company Common Stock will be approximately equal to the fair market value of that stock at the time of the completion of the proposed Conversion. With respect to the Subscription Rights, the Association will receive a letter from Ferguson (the "Ferguson Letter") which, based on certain assumptions, will conclude that the Subscription Rights to be received by Eligible Account Holders, Supplemental Eligible Account Holders and other eligible subscribers do not have any economic value at the time of distribution or at the time the Subscription Rights are exercised, whether or not a Public Offering takes place. The Association has also received an opinion of Silver, Freedman & Taff, L.L.P. to the effect that, based in part on the Ferguson Letter: (i) no taxable income will be realized by depositors as a result of the exercise of non-transferable Subscription Rights to purchase shares of Holding Company Common Stock at fair market value; (ii) no taxable income will be recognized by borrowers, directors, officers and employees of the Association on the receipt or exercise of Subscription Rights to purchase shares of Holding Company Common Stock at fair market value; and (iii) no taxable income will be realized by the Association or Holding Company on the issuance of Subscription Rights to eligible subscribers to purchase shares of Holding Company Common Stock at fair market value. Notwithstanding the Ferguson Letter, if the Subscription Rights are subsequently found to have a fair market value and are deemed a distribution of property, it is Silver, Freedman & Taff, L.L.P.'s opinion that gain or income will be recognized by various recipients of the Subscription Rights (in certain cases, whether or not the rights are exercised) and the Association and/or the Holding Company may be taxable on the distribution of the Subscription Rights. In any event, all recipients are encouraged to consult with their own tax advisors as to the tax consequences which may result. With respect to Maryland taxation, the Association has received an opinion from Wooden & Benson, Chartered to the effect that the Maryland tax consequences to the Association, in its mutual or stock form, the Holding Company, eligible account holders, parties receiving subscription rights, parties purchasing conversion stock, and other parties participating in the Conversion will be the same as the federal income tax consequences described above. Unlike a private letter ruling, the opinions of Silver, Freedman & Taff, L.L.P. and Wooden & Benson, Chartered, as well as the Ferguson Letter, have no binding effect or official status, and no assurance can be given that the conclusions reached in any of those opinions would be sustained by a court if contested by the IRS or the Maryland State tax authorities. 104 RESTRICTIONS ON ACQUISITIONS OF STOCK AND RELATED TAKEOVER DEFENSIVE PROVISIONS Although the Boards of Directors of the Association and the Holding Company are not aware of any effort that might be made to obtain control of the Holding Company after Conversion, the Board of Directors, as discussed below, believes that it is appropriate to include certain provisions as part of the Holding Company's certificate of incorporation to protect the interests of the Holding Company and its stockholders from takeovers which the Board of Directors of the Holding Company might conclude are not in the best interests of the Association, the Holding Company or the Holding Company's stockholders. The following discussion is a general summary of material provisions of the Holding Company's certificate of incorporation and bylaws and certain other regulatory provisions which may be deemed to have an "anti-takeover" effect. The following description of certain of these provisions is necessarily general and, with respect to provisions contained in the Holding Company's certificate of incorporation and bylaws and the Association's proposed federal stock charter and bylaws, reference should be made in each case to the document in question, each of which is part of the Association's Conversion Application filed with the OTS and the Holding Company's Registration Statement filed with the SEC. See "Additional Information." Provisions of the Holding Company's Certificate of Incorporation and Bylaws Directors. Certain provisions of the Holding Company's certificate of incorporation and bylaws will impede changes in majority control of the Board of Directors. The Holding Company's certificate of incorporation provides that the Board of Directors of the Holding Company will be divided into three classes, with directors in each class elected for three-year staggered terms except for the initial directors. Thus, assuming a Board of nine directors, it would take two annual elections to replace a majority of the Holding Company's Board. The Holding Company's bylaws provide that the size of the Board of Directors may be in creased or decreased only by a majority vote of the whole Board or by a vote of 80% of the shares eligible to be voted at a duly constituted meeting of stockholders called for such purpose. The bylaws also provide that any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, shall be filled for the remainder of the unexpired term by a majority vote of the directors then in office. Finally, the bylaws impose certain notice and information requirements in connection with the nomination by stockholders of candidates for election to the Board of Directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders. The certificate of incorporation provides that a director may only be removed for cause by the affirmative vote of 80% of the shares eligible to vote. Restrictions on Call of Special Meetings. The certificate of incorporation of the Holding Company provides that a special meeting of stockholders may be called only pursuant to a resolution of the Board of Directors and for only such business as directed by the Board. Stockholders are not authorized to call a special meeting. 105 Absence of Cumulative Voting. The Holding Company's certificate of incorporation does not provide for cumulative voting rights in the election of directors. Authorization of Preferred Stock. The certificate of incorporation of the Holding Company authorizes 500,000 shares of serial preferred stock, $.01 par value. The Holding Company is authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the Board of Directors is authorized to fix the designations, powers, preferences and relative participating, optional and other special rights of such shares, including voting rights (which could be multiple or as a separate class) and conversion rights. In the event of a proposed merger, tender offer or other attempt to gain control of the Holding Company that the Board of Directors does not approve, it might be possible for the Board of Directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of such a transaction. An effect of the possible issuance of preferred stock, therefore, may be to deter a future takeover attempt. The Board of Directors has no present plans or understandings for the issuance of any preferred stock and does not intend to issue any preferred stock except on terms which the Board deems to be in the best interests of the Holding Company and its stockholders. Limitation on Voting Rights. The certificate of incorporation of the Holding Company provides that in no event shall any record owner of any outstanding Common Stock which is beneficially owned, directly or indirectly, by a person who beneficially owns in excess of 10% of the then outstanding shares of Common Stock (the "Limit"), be entitled or permitted to have any vote in respect of the shares held in excess of the Limit. This limitation would not inhibit any person from soliciting (or voting) proxies from other beneficial owners for more than 10% of the Common Stock or from voting such proxies. Beneficial ownership is to be determined pursuant to Rule 13d-3 of the General Rules and Regulations of the Exchange Act, and in any event includes shares beneficially owned by any affiliate of such person, shares which such person or his affiliates (as defined in the certificate of incorporation) have the right to acquire upon the exercise of conversion rights or options and shares as to which such person and his affiliates have or share investment or voting power. Directors and officers of the Holding Company by reason of their acting in such capacity, shall not be deemed to beneficially own any shares owned by any other director or officer. This provision will be enforced by the Board of Directors to limit the voting rights of persons beneficially owning more than 10% of the stock and thus could be utilized in a proxy contest or other solicitation to defeat a proposal that is desired by a majority of the stockholders. Procedures for Certain Business Combinations. The Holding Company's certificate of incorporation requires that certain business combinations (including transactions initiated by management) between the Holding Company (or any majority-owned subsidiary thereof) and a 10% or more stockholder either (i) be approved by at least 80% of the total number of outstanding voting shares, voting as a single class, of the Holding Company, (ii) be approved by two-thirds of the continuing Board of Directors (i.e., persons serving prior to the 10% stockholder becoming such) or (iii) involve consideration per share generally equal to that paid by such 10% stockholder when it acquired its block of stock. It should be noted that since the Board and executive officers intend to purchase approximately $600,000 of the shares offered in the Conversion and 106 may control the voting of additional shares through the ESOP, the Board and management may be able to block the approval of combinations requiring an 80% vote even where a majority of the stockholders vote to approve such combinations. Amendment to Certificate of Incorporation and Bylaws. Amendments to the Holding Company's certificate of incorporation must be approved by the Holding Company's Board of Directors and also by a majority of the outstanding shares of the Holding Company's voting stock, provided, however, that approval by at least 80% of the outstanding voting stock is generally required for certain provisions (i.e., provisions re lating to number, classification, election and removal of directors; amendment of bylaws; call of special stockholder meetings; offers to acquire and acquisitions of control; director liability; certain business combinations; power of indemnification; and amendments to provisions relating to the foregoing in the certificate of incorporation). The bylaws may be amended by a majority vote of the Board of Directors or the affirmative vote of at least 80% of the total votes eligible to be voted at a duly constituted meeting of stockholders. Purpose and Takeover Defensive Effects of the Holding Company's Certificate of Incorporation and Bylaws. The Board of Directors of the Association believes that the provisions described above are prudent and will reduce the Holding Company's vulnerability to takeover attempts and certain other transactions which have not been negotiated with and approved by its Board of Directors. These provisions will also assist the Association in the orderly deployment of the Conversion proceeds into productive assets during the initial period after the Conversion. The Board of Directors believes these provisions are in the best interest of the Association and of the Holding Company and its stockholders. In the judgment of the Board of Directors, the Holding Com pany's Board will be in the best position to determine the true value of the Holding Company and to negotiate more effectively for what may be in the best interests of its stockholders. Accordingly, the Board of Directors believes that it is in the best interests of the Holding Company and its stockholders to encourage potential acquirors to negotiate directly with the Board of Directors of the Holding Company and that these provisions will encourage such negotiations and discourage hostile takeover attempts. It is also the view of the Board of Directors that these provisions should not discourage persons from proposing a merger or other transaction at prices reflective of the true value of the Holding Company and which is in the best interests of all stockholders. Attempts to take over financial institutions and their holding companies have recently become increasingly common. Takeover attempts which have not been negotiated with and approved by the Board of Directors present to stockholders the risk of a takeover on terms which may be less favorable than might otherwise be available. A transaction which is negotiated and approved by the Board of Directors, on the other hand, can be carefully planned and undertaken at an opportune time in order to obtain maximum value for the Holding Company and its stockholders, with due consideration given to matters such as the management and business of the acquiring corporation and maximum strategic development of the Holding Company's assets. 107 An unsolicited takeover proposal can seriously disrupt the business and management of a corporation and cause it great expense. Although a tender offer or other takeover attempt may be made at a price substantially above then current market price, such offers are sometimes made for less than all of the outstanding shares of a target company. As a result, stockholders may be presented with the alternative of partially liqui dating their investment at a time that may be disadvantageous, or retaining their investment in an enterprise which is under different management and whose objectives may not be similar to those of the remaining stockholders. The concentration of control, which could result from a tender offer or other takeover attempt, could also deprive the Holding Company's remaining stockholders of the benefits of certain protective provisions of the Exchange Act, if the number of beneficial owners becomes less than the 300 required for Exchange Act registration. Despite the belief of the Association and the Holding Company as to the benefits to stockholders of these provisions of the Holding Company's certificate of incorporation and bylaws, these provisions may also have the effect of discouraging a future takeover attempt which would not be approved by the Holding Company's Board, but pursuant to which stockholders may receive a substantial premium for their shares over then current market prices. As a result, stockholders who might desire to participate in such a transaction may not have any opportunity to do so. Such provisions will also render the removal of the Holding Company's Board of Directors and of management more difficult. The Board will enforce the voting limitation provisions of the charter in proxy solicitations and accordingly could utilize these provisions to defeat proposals that are favored by a majority of the stockholders. The Boards of Directors of the Association and the Holding Company, however, have concluded that the potential benefits outweigh the possible disadvantages. Pursuant to applicable law, at any annual or special meeting of its stockholders after the Conversion, the Holding Company may adopt additional charter provisions regarding the acquisition of its equity securities that would be permitted to a Delaware corporation. The Holding Company and the Association do not presently intend to propose the adoption of further restrictions on the acquisition of the Holding Company's equity securi ties. Other Restrictions on Acquisitions of Stock Delaware Anti-Takeover Statute. The State of Delaware has enacted legislation which provides that subject to certain exceptions a publicly held Delaware corporation may not engage in any business combination with an "interested stockholder" for three years after such stockholder became an interested stockholder, unless, among other things, the interested stockholder acquired at least 85% of the corporation's voting stock in the transaction that resulted in the stockholder becoming an interested stockholder. This legislation generally defines "interested stockholder" as any person or entity that owns 15% or more of the corporation's voting stock. The term "business combination" is defined broadly to cover a wide range of corporate transactions, including mergers, sales of assets, issuances of stock, transactions with subsidiaries and the receipt of disproportionate financial benefits. Under certain circumstances, either the board of directors or both the board and two-thirds of the stockholders other than the acquiror may approve a given business combination and thereby exempt the corporation from the operation of the statute. 108 However, these statutory provisions do not apply to Delaware corporations with fewer than 2,000 stockholders or which do not have voting stock listed on a national exchange or listed for quotation with a registered national securities association. The Holding Company's common stock has not been approved for listing on a national exchange or for quotation with a registered national securities association. Federal Regulation. A federal regulation prohibits any person prior to the completion of a conversion from transferring, or entering into any agreement or understanding to transfer, the legal or beneficial ownership of the subscription rights issued under a plan of conversion or the stock to be issued upon their exercise. This regulation also prohibits any person prior to the completion of a conversion from offering, or making an announcement of an offer or intent to make an offer, to purchase such subscription rights or stock. For three years following conversion, this regulation prohibits any person, without the prior approval of the OTS, from acquiring or making an offer to acquire more than 10% of the stock of any converted savings institution if such person is, or after consummation of such acquisition would be, the beneficial owner of more than 10% of such stock. In the event that any person, directly or indirectly, violates this regulation, the securities beneficially owned by such person in excess of 10% may not be counted as shares entitled to vote and may not be voted by any person or counted as voting shares in connection with any matter submitted to a vote of stockholders. Like the charter provisions outlined above, these federal regulations can make a change in control more difficult, even if desired by the holders of the majority of the shares of the stock. The Board of Directors reserves the right to ask the OTS or other federal regulators to enforce these restrictions against persons seeking to obtain control of the Company, whether in a proxy solicitation or otherwise. The policy of the Board is that these legal restrictions must be observed in every case, including instances in which an acquisition of control of the Company is favored by a majority of the stockholders. Federal law provides that no company, "directly or indirectly or acting in concert with one or more persons, or through one or more subsidiaries, or through one or more transactions," may acquire "control" of a savings association at any time without the prior approval of the OTS. In addition, federal regulations require that, prior to obtaining control of a savings association, a person, other than a company, must give 60 days' prior notice to the OTS and have received no OTS objection to such acquisition of control. Any company that acquires such control becomes a "savings and loan holding company" subject to registration, examination and regulation as a savings and loan holding company. Under federal law (as well as the regulations referred to below) the term "savings association" includes state and federally chartered SAIF-insured institutions and federally chartered savings banks whose accounts are insured by the SAIF and holding companies thereof. Control, as defined under federal law, in general means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of a savings association's directors, or a determination by the OTS that the acquiror has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution. Acquisition of more than 10% of any class of a savings association's voting stock, if the acquiror also is subject to any one of eight "control factors," constitutes a rebuttable determination of control under the regulations. Such control factors 109 include the acquiror being one of the two largest stockholders. The determination of control may be rebutted by submission to the OTS, prior to the acquisition of stock or the occurrence of any other circumstances giving rise to such determination, of a statement setting forth facts and circumstances which would support a finding that no control relationship will exist and containing certain undertakings. The regulations provide that persons or companies which acquire beneficial ownership exceeding 10% or more of any class of a savings association's stock must file with the OTS a certification that the holder is not in control of such institution, is not subject to a rebuttable determination of control and will take no action which would result in a determination or rebuttable determination of control without prior notice to or approval of the OTS, as applicable. DESCRIPTION OF CAPITAL STOCK Holding Company Capital Stock The 2.5 million shares of capital stock authorized by the Holding Company certificate of incorporation are divided into two classes, consisting of 2.0 million shares of Common Stock (par value $.01 per share) and 500,000 shares of serial preferred stock (par value $.01 per share). The Holding Company currently expects to issue between 650,250 and 879,750 shares of Common Stock in the Conversion and no shares of serial preferred stock. The aggregate par value of the issued shares will constitute the capital account of the Holding Company on a consolidated basis. Upon payment of the Purchase Price, all shares issued in the Conversion will be duly authorized, fully paid and nonassessable. The balance of the Purchase Price of Common Stock, less expenses of Conversion, will be reflected as paid-in capital on a consolidated basis. See "Capitalization." Each share of the Common Stock will have the same relative rights and will be identical in all respects with each other share of the Common Stock. The Common Stock of the Holding Company will represent non-withdrawable capital, will not be of an insurable type and will not be insured by the FDIC. Under Delaware law, the holders of the Common Stock will possess exclusive voting power in the Holding Company. Each stockholder will be entitled to one vote for each share held on all matters voted upon by stockholders, subject to the limitation discussed under "Restrictions on Acquisitions of Stock and Related Takeover Defensive Provisions - Provisions of the Holding Company's Certificate of Incorporation and Bylaws Limitation on Voting Rights." If the Holding Company issues preferred stock subsequent to the Conversion, holders of the preferred stock may also possess voting powers. Liquidation or Dissolution. In the event of any liquidation, dissolution or winding up of the Association, the Holding Company, as the sole holder of the Association's capital stock would be entitled to receive, after payment or provision for payment of all debts and liabilities of the Association (including all deposit accounts and accrued interest thereon) and after distribution of the balance in the special liquidation account to Eligible and Supplemental Eligible Account Holders, all assets of the Association available for distribution. In the event of liquidation, dissolution or winding up of the Holding Company, the holders of its Common Stock would be entitled to receive, 110 after payment or provision for payment of all its debts and liabilities, all of the assets of the Holding Company available for distribution. See "The Conversion - Effects of Conversion to Stock Form on Depositors and Borrowers of the Association." If preferred stock is issued subsequent to the Conversion, the holders thereof may have a priority over the holders of Common Stock in the event of liquidation or dissolution. No Preemptive Rights. Holders of the Common Stock will not be entitled to preemptive rights with respect to any shares which may be issued. The Common Stock will not be subject to call for redemption, and, upon receipt by the Holding Company of the full Purchase Price therefor, each share of the Common Stock will be fully paid and nonassessable. Preferred Stock. After Conversion, the Board of Directors of the Holding Company will be authorized to issue preferred stock in series and to fix and state the voting powers, designations, preferences and relative, participating, optional or other special rights of the shares of each such series and the qualifications, limitations and restrictions thereof. Preferred stock may rank prior to the Common Stock as to dividend rights, liquidation preferences, or both, and may have full or limited voting rights. The holders of preferred stock will be entitled to vote as a separate class or series under certain circumstances, regardless of any other voting rights which such holders may have. Except as discussed above, the Holding Company has no present plans for the issuance of the additional authorized shares of Common Stock or for the issuance of any shares of preferred stock. In the future, the authorized but unissued and unreserved shares of Common Stock will be available for general corporate purposes, including but not limited to possible issuance as stock dividends or stock splits, in future mergers or acquisitions, under a cash dividend reinvestment and stock purchase plan, in a future underwritten or other public offering, or under a stock based employee plan. The authorized but unissued shares of preferred stock will similarly be available for issuance in future mergers or acquisitions, in a future underwritten public offering or private placement or for other general corporate purposes. Except as described above or as otherwise required to approve the transaction in which the additional authorized shares of common stock or authorized shares of preferred stock would be issued, no stockholder approval will be required for the issuance of these shares. Accordingly, the Board of Directors of the Holding Company, without stockholder approval, can issue preferred stock with voting and conversion rights which could adversely affect the voting power of the holders of Common Stock. Restrictions on Acquisitions. See "Restrictions on Acquisitions of Stock and Related Takeover Defensive Provisions" for a description of certain provisions of the Holding Company's certificate of incorporation and bylaws which may affect the ability of the Holding Company's stockholders to participate in certain transactions relating to acquisitions of control of the Holding Company. Dividends. The Holding Company's Board of Directors may consider a policy of paying cash dividends on the Common Stock in the future. No decision has been made, however, as to the amount or timing of such dividends, if any. The declaration and payment of dividends are subject to, among other things, the Holding Company's then current and projected consolidated operating results, financial condition, regulatory restrictions, future growth plans and other 111 factors the Board deems relevant. Therefore, no assurance can be given that any dividends will be declared. The ability of the Holding Company to pay cash dividends to its stockholders will be dependent, in part, upon the ability of the Association to pay dividends to the Holding Company. OTS regulations do not permit the Association to declare or pay a cash dividend on its stock or repurchase shares of its stock if the effect thereof would be to cause its regulatory capital to be reduced below the amount required for the liquidation account or to meet applicable regulatory capital requirements. Delaware law generally limits dividends of the Holding Company to an amount equal to the excess of its net assets over its paid-in capital or, if there is no such excess, to its net earnings for the current and immediately preceding fiscal year. In addition, as the Holding Company does not anticipate, for the immediate future, engaging in activities other than (i) investing in cash, short-term securities and investment and mortgage-backed securities similar to those invested in by the Association and (ii) holding the stock of Wyman Park, the Holding Company's ability to pay dividends will be limited, in part, by the Association's ability to pay dividends, as set forth above. Earnings appropriated to the Association's "Excess" bad debt reserves and deducted for federal income tax purposes cannot be used by the Association to pay cash dividends to the Holding Company without adverse tax consequences. See "Regulation - Federal and State Taxation." LEGAL MATTERS The legality of the Common Stock and the federal income tax consequences of the Conversion will be passed upon for Wyman Park by the firm of Silver, Freedman & Taff, L.L.P. (a limited liability partnership including professional corporations), 1100 New York Avenue, N.W., Washington, DC 20005. Silver, Freedman & Taff, L.L.P. has consented to the references herein to its opinions. The Maryland tax consequences of the Conversion will be passed upon by Wooden & Benson, Chartered. Wooden & Benson, Chartered has consented to references herein to its opinion. Trident Securities, Inc. has been represented in the Conversion by Luse Lehman Gorman Pomerenk & Schick P.C., Washington, DC 20005. EXPERTS The financial statements of Wyman Park as of June 30, 1997 and 1996 and for each of the two years in the period ended June 30, 1997, appearing in this Prospectus and Registration Statement have been audited by Wooden & Benson, Chartered, independent auditors, as set forth in their report appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such report given upon the authority of said firm as experts in accounting and auditing. 112 Ferguson has consented to the inclusion herein of the summary of its appraisal report to the Association setting forth its opinion as to the estimated pro forma market value of the Holding Company and the Association as converted and to the reference to its opinion that Subscription Rights do not have any economic value. ADDITIONAL INFORMATION The Holding Company has filed with the SEC a registration statement under the Securities Act of 1933, as amended, with respect to the Common Stock offered hereby. As permitted by the rules and regulations of the SEC, this Prospectus does not contain all the information set forth in the registration statement. Such information can be examined without charge at the public reference facilities of the SEC located at 450 Fifth Street, N.W., Washington, DC 20549, and copies of such material can be obtained from the SEC at prescribed rates. In addition, the SEC maintains a website. The address of the SEC's website is "http://www.sec.gov." The statements contained herein as to the contents of any contract or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions thereof of the material aspects of such contract or other document; each such statement is qualified by reference to such contract or document. The Association has filed an Application for Conversion with the OTS with respect to the Conversion. Pursuant to the rules and regulations of the OTS, this Prospectus omits certain information contained in that Application. The Application may be examined at the principal offices of the OTS, 1700 G Street, N.W., Washington, D.C. 20552 and at the Southeast Regional Office of the OTS, 1475 Peachtree Street, N.E., Atlanta, GA 30309, without charge. In connection with the Conversion, the Holding Company will register the Common Stock with the SEC under Section 12(g) of the Exchange Act, and, upon such registration, the Holding Company and the holders of its Common Stock will become subject to the proxy solicitation rules, reporting requirements and restrictions on stock purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Exchange Act. Under the Plan, the Holding Company has undertaken that it will not terminate such registration for a period of at least three years following the Conversion. A copy of the Certificate of Incorporation and Bylaws of the Holding Company are available without charge from the Association. 113 WYMAN PARK BANCORPORATION, INC. Lutherville, Maryland INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Independent Auditors' Report............................................... F-2 Consolidated Financial Statements: Consolidated Statements of Financial Condition at June 30, 1997 and 1996............................................................. F-3 Consolidated Statements of Operations for the Years Ended June 30, 1997 and 1996.................................................... 31 Consolidated Statements of Equity for the Years Ended June 30, 1997 and 1996......................................... F-4 Consolidated Statements of Cash Flows for the Years Ended June 30, 1997 and 1996........................................ F-5 Notes to Consolidated Financial Statements................................. F-6 # # # # # All schedules are omitted because the required information is not applicable or is included in the Consolidated Financial Statements and related notes. Financial Statements of the Holding Company have not been provided because Wyman Park Bancorporation, Inc. has not conducted any operations to date and has not been capitalized. F-1 Independent Auditors' Report The Board of Directors Wyman Park Federal Savings and Loan Association and Subsidiary Lutherville, Maryland We have audited the accompanying consolidated statements of financial condition of Wyman Park Federal Savings and Loan Association and Subsidiary as of June 30, 1997 and 1996 and the related consolidated statements of operations, equity and cash flows for the years then ended. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wyman Park Federal Savings and Loan Association and Subsidiary as of June 30, 1997 and 1996, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. /s/Wooden & Benson July 18, 1997 Baltimore, Maryland F-2 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION JUNE 30, 1997 AND 1996
1997 1996 ----------- ----------- Assets Cash and noninterest bearing deposits $ 461,268 $ 40,139 Interest-bearing deposits in other banks 1,092,682 3,482,926 Federal funds sold 823,142 2,278,181 ----------- ----------- Total cash and cash equivalents (Notes 1 and 12) 2,377,092 5,801,246 Loans receivable, net (Notes 1, 4 and 12) 55,188,566 53,243,580 Mortgage-backed securities held-to-maturity at amortized cost, fair value of $360,666 (1997) and $428,502 (1996) (Notes 1, 3 and 12) 356,187 424,009 Investment securities available-for-sale at fair value, amortized cost of $3,000,000 (1997 and 1996) (Notes 1, 3 and 12) 2,992,500 2,964,375 Federal Home Loan Bank of Atlanta stock, at cost (Notes 2 and 12) 509,900 509,900 Accrued interest receivable (Note 5) 337,394 349,477 Ground rents owned, at cost (Note 12) 129,108 130,129 Property and equipment, net (Notes 1 and 6) 203,319 259,045 Prepaid expenses and other assets 88,764 100,715 Federal and state income taxes receivable -- 83,632 Deferred tax asset (Notes 1 and 8) 58,506 -- ----------- ----------- Total assets $62,241,336 $63,866,108 =========== =========== Liabilities and Equity Liabilities - ----------- Demand deposits $ 5,892,975 $ 5,710,113 Money market and NOW accounts 9,960,827 9,793,334 Time deposits 40,241,530 42,367,177 ----------- ----------- Total deposits (Notes 7 and 12) 56,095,332 57,870,624 Advance payments by borrowers for taxes, insurance and ground rents (Note 12) 1,240,877 1,206,553 Accrued interest payable on savings deposits 18,994 20,874 Accrued expenses and other liabilities 120,151 142,963 Federal and State income taxes payable 16,163 -- Deferred income taxes (Notes 1 and 8) -- 26,310 ----------- ----------- Total liabilities 57,491,517 59,267,324 Commitments and contingencies (Notes 4, 8 and 12) -- -- Equity - ------ Retained earnings, substantially restricted (Notes 8 and 11) 4,754,419 4,620,614 Unrealized losses on available for sale securities, net of income tax effect (Notes 1 and 3) (4,600) (21,830) ----------- ----------- Total equity 4,749,819 4,598,784 ----------- ----------- Total liabilities and equity $62,241,336 $63,866,108 =========== ===========
The accompanying notes to financial statements are an integral part of these statements. F-3 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland CONSOLIDATED STATEMENTS OF EQUITY FOR THE YEARS ENDED JUNE 30, 1997 AND 1996 Unrealized Losses Retained on Available For Income Sale Securities Total -------- ----------------- ---------- Balance at June 30, 1995 $4,326,497 $(49,005) $4,277,492 Net income 294,117 -- 294,117 Adjustment to unrealized holding gains (losses) - debt and equity securities -- 27,175 27,175 ---------- -------- ---------- Balance at June 30, 1996 4,620,614 (21,830) 4,598,784 Net income 133,805 -- 133,805 Adjustment to unrealized holding gains (losses) - debt and equity securities -- 17,230 17,230 ---------- -------- ---------- Balance at June 30, 1997 $4,754,419 $ (4,600) $4,749,819 ========== ======== ========== The accompanying notes to financial statements are an integral part of these statements. F-4 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
1997 1996 ----------- ----------- Cash flows from operating activities - ------------------------------------ Net income $ 133,805 $ 294,117 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 59,693 60,823 Deferred income tax provision (benefit) (95,712) 74,272 Provision for loan losses 145,000 25,000 Amortization of loan fees, premiums and discounts, net (88,311) (92,855) Loss on disposal of property and equipment 5,730 -- Gain on sales of loans receivable (5,816) (19,888) Decrease in accrued interest receivable 12,083 18,819 (Increase) decrease in prepaid expenses and other assets 10,140 (24,324) Increase (decrease) in accrued expenses and other liabilities (22,812) 10,857 Decrease in federal and state income taxes receivable 83,632 24,426 Increase in federal and state income taxes payable 16,163 -- Decrease in accrued interest payable on savings deposits (1,880) (799) Other -- 1,457 ----------- ----------- Net cash provided by operating activities 251,715 371,905 ----------- ----------- Cash flows from investing activities - ------------------------------------ Purchases of investment securities available for sale (1,000,000) (1,000,000) Sales and maturities of investment securities available for sale 1,000,000 4,000,000 Net (increase) decrease in loans receivable (1,502,401) 556,299 Purchase of loans receivable (1,788,457) (300,000) Sales of loans receivable 1,295,000 989,500 Mortgage-backed securities principal repayments 67,822 96,004 Purchases of property and equipment (9,697) (9,032) Sale of ground rents owned 1,021 822 ----------- ----------- Net cash provided by (used in ) investing activities (1,936,712) 4,333,593 ----------- ----------- Cash flows from financing activities - ------------------------------------ Net decrease in savings deposits (1,773,481) (603,855) Increase (decrease) in advance payments by borrowers for taxes, insurance and ground rents 34,324 (145,970) ----------- ----------- Net cash used in financing activities (1,739,157) (749,825) ----------- ----------- Net increase (decrease) in cash and cash equivalents (3,424,154) 3,955,673 Cash and cash equivalents at beginning of year 5,801,246 1,845,573 ----------- ----------- Cash and cash equivalents at end of year $ 2,377,092 $ 5,801,246 =========== =========== Supplemental information - ------------------------ Interest paid on savings deposits and borrowed funds $ 2,751,421 $ 3,074,082 =========== =========== Income taxes paid $ 82,805 $ 62,421 =========== ===========
The accompanying notes to financial statements are an integral part of these statements. F-5 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 -- Summary of Significant Accounting Policies ------------------------------------------ Principals of Consolidation --------------------------- The accompanying consolidated financial statements for the year ended June 30, 1997 include the Association and its wholly-owned subsidiary, W.P. Financial Corp. All significant intercompany transactions have been eliminated. Prior to the year ended June 30, 1997, W.P. Financial Corp. was inactive. Nature of Operations -------------------- The Association operates as a thrift institution taking deposits from the general public and using those funds to promote home ownership by making real estate loans in its service area. The Association also engages in other forms of lending and investments. As such, the Association is subject to the inherent risk that borrowers will default and properties or other collateral will not be sufficient to recover the loan balance. The Association's sound lending policies have mitigated this risk and losses from loans have been minimal. The Association is also subject to the risk that severe changes in prevailing interest rates could cause impairment of its earnings capability and the fair value of its net assets. However, management's operating strategies combined with a relatively stable interest rate environment since the mid-1980's, has resulted in the Association being profitable and increasing its capital position. Basis of Presentation --------------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuation of investments in real estate. In connection with these determinations, management obtains independent appraisals for significant properties and prepares net realizable value analyses as appropriate. Management believes that the allowances for losses on loans and investments in real estate are adequate. While management uses available information to recognize losses on loans and investments in real estate, future additions to the allowances may be necessary based on changes in economic conditions, particularly in the State of Maryland. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Association's allowances for losses on F-6 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 -- Summary of Significant Accounting Policies -- Continued ------------------------------------------ Basis of Presentation - Continued --------------------- loans and investments in real estate. Such agencies may require the Association to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Investment Securities and Mortgage-Backed Securities ---------------------------------------------------- The Association's debt and equity securities are classified into two categories. Debt securities that the Association has the positive intent and ability to hold to maturity are classified as held-to-maturity and recorded at amortized cost. Debt securities not classified as held-to-maturity and equity securities with readily determinable fair values are considered available-for-sale and are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of retained earnings (net of tax effects). The Association does not invest in securities for trading purposes. Fair value is determined based on bid prices published in financial newspapers or bid quotations received from securities dealers. Premiums and discounts on investment and mortgage-backed securities are amortized over the term of the security using the interest method. Gain or loss on sale of investments available-for-sale is reflected in income at the time of sale using the specific identification method. Property and Equipment ---------------------- Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are accumulated using the straight-line method over the estimated useful lives of the assets. Additions and improvements are capitalized, and charges for repairs and maintenance are expensed when incurred. The related cost and accumulated depreciation or amortization are eliminated from the accounts when an asset is sold or retired and the resultant gain or loss is credited or charged to income. Income Taxes ------------ Deferred income taxes result primarily because of temporary differences resulting from recognizing loan origination fees and costs in different periods for financial reporting purposes and income tax purposes prior to January 1, 1994, depreciation methods, loan loss recognition, Federal Home Loan Bank (FHLB) stock dividends, and a deferred compensation agreement. The Association changed its method of accounting for loan origination fees and costs for tax purposes for all transactions occurring on or after July 1, 1994 to conform with the method utilized for financial reporting purposes. F-7 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 -- Summary of Significant Accounting Policies -- Continued ------------------------------------------ Loan Fees --------- Origination and commitment fees and direct origination costs are deferred and amortized to income over the contractual lives of the related loans using the interest method. Under certain circumstances, commitment fees are recognized over the commitment period or upon expiration of the commitment. Unamortized loan fees are recognized in income when the related loans are sold or prepaid. Origination and commitment fees and direct origination costs on loans originated for sale are deferred and recognized as a component of gain or loss at the time of sale. Provision for Loan Losses ------------------------- The provision for loan losses is determined based on management's review of the loan portfolio and analyses of the borrowers' ability to repay, past collection experience, risk characteristics of individual loans or groups of similar loans and underlying collateral, current and prospective economic conditions and status of nonperforming loans. Loans or portions thereof are charged-off when considered, in the opinion of management, uncollectible. Interest on potential problem loans is not accrued when, in the opinion of management, the full collection of principal or interest is in doubt. Any interest ultimately collected on such loans is recorded in income in the period of recovery. In October, 1994, the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 114 "Accounting by Creditors for Impairment of a Loan" was amended by Statement No. 118 "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures" (collectively referred to as SFAS No. 114). SFAS No. 114 is effective for fiscal years beginning after December 15, 1994. The Statement addresses the accounting by creditors for impairment of certain loans. It is generally applicable for all loans except large groups of smaller balance homogenous loans that are collectively evaluated for impairment, including residential mortgage loans and consumer installment loans. It also applies to all loans that are restructured in a troubled debt restructuring involving a modification of terms. However, if a loan was restructured in a troubled debt restructuring involving a modification of terms before the effective date of this Statement and it is not impaired based on the terms specified by the restructuring agreement, a creditor may continue to account for the loan in accordance with the provisions of Statement No. 15, "Accounting for Troubled Debt Restructurings" prior to its amendment by this Statement. F-8 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 -- Summary of Significant Accounting Policies -- Continued ------------------------------------------ Provision for Loan Losses -- Continued ------------------------- SFAS No. 114 requires that impaired loans be measured based on the present value of expected future cash flows discounted at the loan's effective interest rates, or at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Association adopted the provisions of SFAS No. 114 on July 1, 1995. Adoption of the Statement had no impact on the Association's financial condition or results of its operations as of and for the year ended June 30, 1996. Foreclosed Real Estate ---------------------- Real estate acquired through foreclosure is initially recorded at the lower of cost or estimated fair value, less estimated selling costs. Management periodically evaluates the carrying value of real estate owned and establishes a valuation allowance for declines in fair value, less estimated selling costs, below the initially recorded value. Costs relating to holding such real estate are charged against income in the current period, while costs relating to improving such real estate are capitalized until a saleable condition is reached. Statements of Cash Flows ------------------------ For purposes of the statements of cash flows, the Association considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Cash equivalents consist of interest-bearing deposits and federal funds sold. Note 2 -- Insurance of Savings Accounts and Related Matters ------------------------------------------------- The Federal Deposit Insurance Corporation, through the Savings Association Insurance Fund, insures deposits of account holders up to $100,000. The Association pays an annual premium to provide for this insurance. The Association is a member of the Federal Home Loan Bank System and is required to maintain an investment in the stock of the Federal Home Loan Bank of Atlanta equal to at least 1% of the unpaid principal balances of its residential mortgage loans, .3% of its total assets or 5% of its outstanding advances from the bank, whichever is greater. Purchases and sales of stock are made directly with the bank at par value. F-9 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3 -- Investment Securities --------------------- Investment securities are summarized as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---------- ---------- ---------- ---------- Available-for-Sale Securities: - ------------------------------ June 30, 1997 U.S. government and agency securities $3,000,000 $ -- $ (7,500) $2,992,500 June 30, 1996 U.S. government and agency securities 3,000,000 -- (35,625) 2,964,375 Held-to-Maturity Securities: - ---------------------------- Mortgage-backed securities are guaranteed by the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC) as follows: June 30, 1997 FNMA $ 2,328 $ 81 $ -- $ 2,409 FHLMC 353,859 4,398 -- 358,257 --------- ------ -------- --------- Mortgage-backed securities $ 356,187 $4,479 $ -- $ 360,666 ========= ====== ======== ========= June 30, 1996 FNMA $ 2,525 $ 76 $ -- $ 2,601 FHLMC 421,484 4,417 -- 425,901 --------- ------ -------- --------- Mortgage-backed securities $ 424,009 $4,493 $ -- $ 428,502 ========= ====== ======== ========= The scheduled maturities of securities held-to-maturity and securities (other than equity securities) available-for-sale at June 30, 1997, were as follows: Held-to-Maturity Available-for-Sale ---------------------- ------------------------- Amortized Estimated Amortized Estimated Cost Fair Value Cost Fair Value --------- ---------- ---------- ---------- Due in one year or less $ -- $ -- $ -- $ -- Due from one to five years -- -- 3,000,000 2,992,500 Mortgage-backed securities 356,187 360,666 -- -- -------- -------- ---------- ---------- $356,187 $360,666 $3,000,000 $2,992,500 ======== ======== ========== ========== There were no sales of investment securities during the years ended June 30, 1997 and 1996. F-10 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 -- Loans Receivable ---------------- Substantially all of the Association's loans receivable are mortgage loans secured by residential and commercial real estate properties located in the State of Maryland. Loans are extended only after evaluation by management of customers' creditworthiness and other relevant factors on a case-by-case basis. The Association generally does not lend more than 90% of the appraised value of a property and requires private mortgage insurance on residential mortgages with loan-to-value ratios in excess of 80%. In addition, the Association generally obtains personal guarantees of repayment from borrowers and/or others for construction, commercial and multi-family residential loans and disburses the proceeds of construction and similar loans only as work progresses on the related projects. Residential lending is generally considered to involve less risk than other forms of lending, although payment experience on these loans is dependent to some extent on economic and market conditions in the Association's primary lending area. Commercial and construction loan repayments are generally dependent on the operations of the related properties or the financial condition of its borrower or guarantor. Accordingly, repayment of such loans can be susceptible to adverse conditions in the real estate market and the regional economy. Loans receivable are summarized as follows at June 30: 1997 1996 ----------- ----------- Loans secured by first mortgages on real estate: Residential - one-to-four-family $46,345,319 $45,669,570 Residential-multi-family 210,587 127,583 FHA insured and VA guaranteed 23,273 33,258 Commercial 5,806,328 4,447,535 Construction loans 150,000 270,000 ----------- ----------- Total first mortgage loans 52,512,234 50,514,688 Home equity lines-of-credit 3,183,895 3,189,104 Home improvement loans 16,358 124 Loans secured by savings deposits 175,898 137,553 ----------- ----------- 55,888,385 53,841,469 Less: Undisbursed portion of loans in process (231,000) (270,000) Unearned loan fees, net (198,819) (202,889) Allowance for loan losses (270,000) (125,000) ----------- ----------- Loans receivable, net $55,188,566 $53,243,580 =========== =========== Average annual yield on loans receivable for the years ended June 30 7.88% 7.84% ==== ==== F-11 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 -- Loans Receivable -- Continued ---------------- The following is a summary of nonperforming loans and troubled debt restructuring as of June 30: 1997 1996 -------- -------- Nonaccrual loans $176,349 $ 27,359 Troubled debt restructuring -- -- -------- -------- Total nonperforming loans and troubled debt restructuring $176,349 $ 27,359 ======== ======== Loans are placed on nonaccrual status when they become 90 days or more delinquent. Interest income on such loans is recognized only to the extent that payments have been received. The accrual of interest income on these loans is resumed only after the borrowers have taken steps to bring the loans current and management has reason to believe the loans are no longer impaired. The contractual amount of interest that would have been recorded on the above nonaccrual loans at June 30, 1997 and 1996 was $4,472 and $3,480, respectively. Actual interest income recorded on such loans was $14,492 and $2,566 for the years ended June 30, 1997 and 1996, respectively. Nonaccrual loans at June 30, 1997 and 1996 and for the years then ended were all residential mortgage loans not included within the scope of SFAS No. 114. Accordingly, there were no allowances for loan losses established specifically for these loans. The Association, through its normal asset review process, classifies certain loans which management believes involve a degree of risk warranting additional attention. Not included above in nonperforming and restructured loans was $178,260 and $270,387 at June 30, 1997 and 1996, respectively, which had not yet become 90 days or more delinquent, but had been designated by management for additional collection and monitoring efforts. Changes in the allowance for losses on loans are summarized as follows for the years ended June 30: 1997 1996 -------- -------- Balance at beginning of year $125,000 $100,000 Provision for loan losses 145,000 25,000 Charge-offs -- -- --------- -------- Balance at end of year $270,000 $125,000 ======== ======== F-12 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 -- Loans Receivable -- Continued ------------------ Commitments to extend credit are agreements to lend to customers, provided that terms and conditions established in the related contracts are met. At June 30, 1997 the Association had commitments to originate first mortgage loans on real estate and home equity loans, exclusive of undisbursed loan funds, of $1,821,100, of which $1,772,300 carry a fixed rate, ranging between 7% and 8.5%, based on the market rate at the date of commitment and $48,800 carry a variable rate of interest. The Association also had commitments to loan funds under unused home-equity lines of credit aggregating approximately $5,464,623. Such commitments carry a floating rate of interest. Commitments for mortgage loans generally expire within six months and such loans and other commitments are generally funded from loan principal repayments, excess liquidity and savings deposits. Since certain of the commitments may expire without being drawn upon or may not be utilized, the total commitment amounts do not necessarily represent future cash requirements. Substantially all of the Association's outstanding commitments at June 30, 1997 are for loans which would be secured by real estate with appraised values in excess of the commitment amounts. The Association's exposure to credit loss under these contracts in the event of non-performance by the other parties, assuming that the collateral proves to be of no value, is represented by the commitment amounts. Loans serviced for others, which are not included in the Association's assets, were approximately $2,338,256 and $1,490,408 at June 30, 1997 and 1996, respectively. A fee is charged for such servicing based on the unpaid principal balances. In the normal course of business, loans are made to officers and directors of the Association and their related interests. These loans are consistent with sound banking practices, are within regulatory lending limitations and do not involve more than normal risk of collectibility. Transactions in these loans (omitting loans which aggregate less than $60,000 per officer or director) for the year ended June 30, 1997 are summarized as follows: Balance at June 30, 1996 $391,775 New loans 89,524 Repayments (57,583) -------- Balance at June 30, 1997 $423,716 ======== F-13 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 5 -- Accrued Interest Receivable --------------------------- Accrued interest receivable is summarized as follows at June 30: 1997 1996 -------- -------- Loans receivable $269,162 $272,329 Mortgage-backed securities 4,360 5,045 Investment securities 57,688 58,523 Other 6,184 13,580 -------- -------- $337,394 $349,477 ======== ======== Note 6 -- Property and Equipment ---------------------- Property and equipment are summarized as follows at June 30: Estimated 1997 1996 Useful Lives -------- -------- ------------ Buildings and improvements $357,668 $357,668 23 years Furniture, fixtures and equipment 308,110 368,030 3-20 years Leasehold improvements 75,220 73,441 5-10 years -------- -------- Total at cost 740,998 799,139 Less accumulated depreciation and amortization 537,679 540,094 -------- -------- Property and equipment, net $203,319 $259,045 ======== ======== The provision for depreciation charged to operations for the years ended June 30, 1997 and 1996 amounted to $59,693 and $60,823, respectively. Depreciation is calculated on a straight line basis over the estimated useful life. The Association is obligated under long-term operating leases for its branch offices. These leases expire at various dates to 2002, subject to renewal options. The approximate future minimum rental payments under these leases at June 30, 1997 are as follows: Due in Year Ended June 30, -------------- 1998 $ 37,896 1999 37,896 2000 37,896 2001 37,896 2002 28,390 Subsequent to 2002 21,600 -------- Total $201,574 ======== Rent expense was $37,906 and $37,288 for the years ended June 30, 1997 and 1996, respectively. F-14 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7 -- Deposits -------- Time deposits are summarized as follows at June 30: 1997 1996 ------------------ ------------------ Amount % Amount % ----------- ----- ----------- ----- Contractual maturity of certificate accounts from June 30: - ----------------------------------- Under 12 months $20,255,689 50.3 $25,374,796 59.9 12 to 24 months 8,026,606 20.0 6,940,432 16.4 24 to 36 months 6,013,397 15.0 3,533,550 8.3 36 to 48 months 1,107,957 2.8 5,376,465 12.7 48 to 60 months 4,802,948 11.9 1,071,780 2.5 Over 60 months 34,933 0.0 70,154 0.2 ----------- ----- ----------- ----- $40,241,530 100.0 $42,367,177 100.0 =========== ===== =========== ===== Average annual rate on savings deposits for the year ended June 30 4.94% 5.31% ==== ==== Interest expense on savings deposits consists of the following for the years ended June 30: 1997 1996 ---------- ---------- Certificates $2,267,188 $2,570,023 Passbook 173,461 178,314 NOW and money market 308,892 316,465 ---------- ---------- $2,749,541 $3,064,802 As of June 30, 1997 and 1996, the Association had customer deposits in savings accounts of $100,000 or more of approximately $5,680,377 and $5,166,170, respectively. Note 8 -- Income Taxes ------------ The provision for income taxes consists of the following for the years ended June 30: 1997 1996 -------- -------- Current: Federal $149,745 $ 70,025 State 32,855 16,822 -------- -------- 182,600 86,847 -------- -------- Deferred: Federal (78,364) 60,539 State (17,348) 13,733 -------- -------- (95,712) 74,272 -------- -------- Provision for income taxes $ 86,888 $161,119 ======== ======== F-15 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 8 -- Income Taxes -- Continued ------------ The net deferred tax asset (liability) at June 30, 1997 and 1996 consists of total deferred tax assets of $175,506 and $143,808, respectively, and deferred tax liabilities of $117,000 and $170,118, respectively. The tax effects of temporary differences between the financial reporting and income tax basis of assets and liabilities relate to the following at June 30: 1997 1996 -------- -------- Interest and fees on loans $ 51,392 $ 63,437 Allowance for losses on loans 104,274 47,288 Federal Home Loan Bank stock dividends (80,684) (79,033) Deferred compensation 16,940 19,288 Unrealized loss on investment securities 2,900 13,795 Tax bad debt reserve (11,897) (29,263) Other (24,419) (61,822) -------- -------- $ 58,506 $(26,310) ======== ======== No valuation allowance has been provided against the net deferred tax asset at June 30, 1997 because the amount could be realized through a carryback against taxable income of prior years. A reconciliation between the provision for income taxes and the amount computed by multiplying income before provision for income taxes by the statutory Federal income tax rate is as follows for the years ended June 30: 1997 1996 -------- -------- Tax provision at statutory rate $ 75,036 $154,780 State income taxes, net of Federal income tax benefit 10,235 20,166 Other 1,617 (13,827) -------- -------- $ 86,888 $161,119 ======== ======== Before 1996, the Association was able to use the most beneficial of either the percentage of income method or an experience method, similar to that used by commercial banks, to determine its tax deduction for bad debts under Section 593 of the Internal Revenue Code. Under provisions of the Small Business Protection Act of 1996, Section 593 was repealed. The new law also provided that cumulative bad debt deductions taken after 1987 (the base year) were to be recaptured as taxable income over a six-year period beginning in 1996. It further provided that the first installment of the recapture could be deferred for up to two years if a residential lending test is met. The Association did not meet this test in the year ended June 30, 1997. There was no material adverse effect on the Association's financial position or results of F-16 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 8 -- Income Taxes -- Continued ------------ operations as a result of the new law. The Association qualifies as a small bank eligible to use the bank experience method for bad debt deductions. However, the deductions under this method are not expected to be as beneficial for determining the current tax provision as the method previously allowed. Retained earnings at June 30, 1997 include approximately $1,777,000 for which no deferred income tax liability has been recognized. This amount represents an allocation of income to bad-debt deductions for tax purposes only. Reduction of amounts so allocated for purposes other than tax bad-debt losses or adjustments arising from carryback of net operating losses would create income for tax purposes only, which would be subject to the then current corporate income tax rate. The unrecorded deferred income tax liability on the above amount is approximately $686,000. Note 9 -- Pension Plan ------------ Substantially all employees of the Association are participants in the Financial Institutions Retirement Fund, a multi-employer non-contributory defined benefit pension plan. The actuarail present value of benefit obligations and fair value of plan assets attributable to the Association are not available for this multi-employer plan. Pension expense in connection with the Financial Institutions Retirement Fund reflects the Association's required annual contribution to the Fund. Pension expense for the years ended June 30, 1997 and 1996 was $17,652 and $28,410, respectively. Note 10 -- Accounting Pronouncements With Future Effective Dates ----------------------------------------------------- SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" was issued in June 1996. This statement provides that transfers of financial assets be recognized as sales only when certain specified criteria related to the transferor surrendering control of the assets are met. These criteria are more restrictive than under previous generally accepted accounting principles. The provisions of this statement will affect the accounting for certain transactions commonly entered into by community financial institutions such as repurchase agreements, bankers acceptances and participation loans. The statement is effective for transactions occurring after December 31, 1996 and is to be applied prospectively. SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125" was issued in December 1996. This statement defers, for one year, the effective date of Statement No. 125 for repurchase agreements, dollar-roll, securities lending and similar transactions. F-17 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10 -- Accounting Pronouncements With Future Effective Dates -- Continued ----------------------------------------------------- The effect on the Association's financial position and results of operations of implementing Statement No. 125 in 1997 was not material. SFAS No. 130, "Reporting Comprehensive Income" was issued in June 1997. This statement requires that comprehensive income - made up of all revenues, expenses, gains and losses - be reported and displayed in an entity's financial statements with the same prominence as its other financial statements. Currently, the only item that would be presented as a component of the Association's comprehensive income which is not also a component of its net income is the change during the year in unrealized gain or loss on available for sale securities. The statement, which is effective for years beginning after December 15, 1997, will not affect the Association's financial position or its results of operations. SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" was also issued in June 1997. This statement requires that public business enterprises report financial and descriptive information about their reportable operating segments. Reportable operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker as a basis for allocating resources and assessing performance. It also requires those enterprises to report information about countries in which they do business and about major customers. The statement, which is effective for financial statements for periods beginning after December 15, 1997, will not affect the Association's financial position or its results of operations. Note 11 -- Regulatory Matters ------------------ The Association is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the Association's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines that involve quantitative measures of the Association's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Association's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Association to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as F-18 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 11 - Regulatory Matters - Continued ------------------ defined in the regulations) and risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of June 30, 1997, that the Association meets all capital adequacy requirements to which it is subject. As of June 30, 1997, the most recent notification from the Office of Thrift Supervision categorized the Association as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Association must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Associations' category. The Association's actual capital amounts and ratios are also presented in the table.
To be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions -------------------- ------------------- ------------------- Amount Ratio Amount Ratio Amount Ratio ---------- ------ ---------- ----- ---------- ----- As of June 30, 1997: Total Capital (to Risk Weighted Assets) $5,024,419 14.63% $2,747,520 8% $3,434,400 10% Tier I Capital (to Risk Weighted Assets) 4,754,419 13.84% 1,373,760 4% 2,060,640 6% Tier I Capital (to Average Assets) 4,754,419 7.73% 2,461,062 4% 3,076,328 5% As of June 30, 1996 Total Capital (to Risk Weighted Assets) 4,745,614 14.33% 2,649,760 8% 3,312,200 10% Tier I Capital (to Risk Weighted Assets) 4,620,614 13.95% 1,324,880 4% 1,987,320 6% Tier I Capital (to Average Assets) 4,620,614 7.25% 2,548,844 4% 3,186,055 5%
The Association also exceeds the minimum capital standards required by the Office of Thrift Supervision, its primary regulator, as follows: Actual Required Minimum Excess ---------- ---------------- ---------- As of June 30, 1997: Tangible capital $4,754,419 $ 934,000 $3,820,419 Core capital 4,754,419 1,867,000 2,887,419 Risk-based capital 5,024,419 2,748,000 2,276,419 As of June 30, 1996: Tangible capital 4,620,614 958,000 3,662,614 Core capital 4,620,614 1,916,000 2,704,614 Risk-based capital 4,745,614 2,650,000 2,095,614 F-19 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 11 - Regulatory Matters -- Continued ------------------ Total equity in accordance with generally accepted accounting principles (GAAP capital) is reconciled to regulatory capital as follows: Tangible Core Risk-Based Capital Capital Capital ------- ------- ------- GAAP capital as of June 30, 1997 $4,749,819 $4,749,819 $4,749,819 Add: Unrealized losses on available for sale securities not inclued in regulatory capital 4,600 4,600 4,600 Allowance for losses on loans included in risk-based capital-limited to 1.25% of risk-weighted assets -- -- 270,000 ---------- ---------- ---------- Regulatory capital as of June 30, 1997 $4,754,419 $4,754,419 $5,024,419 ========== ========== ========== GAAP capital as of June 30, 1996 $4,598,784 $4,598,784 $4,598,784 Add: Unrealized losses on available for sale securities not included in regulatory capital 21,830 21,830 21,830 Allowance for losses on loans included in risk-based capital-limited to 1.25% of risk-weighted assets -- -- 125,000 ---------- --------- ---------- Regulatory capital as of June 30, 1996 $4,620,614 $4,620,614 $4,745,614 ========== ========== ========== The Economic Growth and Regulatory Paperwork Reduction Act of 1996 was signed into law on September 30, 1996. One major provision of the act was that institutions such as the Bank, with deposits insured by the Federal Deposit Insurance Corporation's Savings Association Insurance Fund (SAIF), were assessed a one time charge to recapitalize the SAIF. Subsequent regulations established the amount of this assessment at .657% of the institution's insured deposits as of March 31, 1995. The law also provided that the assessment would be deductible for tax purposes in the year it was paid. The Bank paid its one-time assessment in the amount of $382,726 in November 1996. It is anticipated that future deposit insurance premiums will be less than those paid in the past because of the one-time assessment making the SAIF solvent. F-20 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 11 -- Regulatory Matters -- Continued ------------------ The act also allows for a merger of the SAIF with the Bank Insurance Fund as of January 1, 1999 if no savings institutions exist at that time. Consequently, the Bank may be required to change its charter to a national bank or state chartered bank before that date. Note 12 -- Disclosures About Fair Value of Financial Instruments ----------------------------------------------------- The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and Cash Equivalents -- For cash, non-interest bearing deposits, variable rate interest-bearing deposits in other banks and federal funds sold, the carrying amount is a reasonable estimate of fair value. Securities -- For marketable securities available for sale and mortgage-backed securities, fair values are based on quoted market prices or dealer quotes. Loans Receivable -- For fixed rate residential mortgages, fair value is based on computed present value of cash flows using weighted average term to maturity and weighted average rate of the Association's portfolio. For variable rate loans, the carrying amount is considered a reliable estimate of fair value. Ground Rents -- The fair value of ground rents is estimated by management based on anticipated realization in the current market. Ground rents are peculiar to the Baltimore Metropolitan area. They carry a fixed interest rate of 6%. Consequently, the fair value varies with fluctuations in market interest rates. Although the fair value may never recover to the Association's carrying amount, because ground rents do not have a stated maturity, any permanent decline in value will not be material to the Association's financial statements. Federal Home Loan Bank Stock -- Because of the limited nature of the market for this instrument, the carrying amount is a reasonable estimate of fair value. Deposit Liabilities -- The fair value of demand deposits, savings accounts and advance payments by borrowers for taxes, insurance and ground rents is the amount payable on demand at the reporting date. The fair value for certificate accounts, is based on computed present value of cash flows using the rates currently offered for deposits of similar remaining maturities. Commitments -- For commitments to originate loans and purchase loans and mortgage-backed securities, fair value considers the differences between current levels of interest rates and committed rates if any. F-21 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12 -- Disclosures About Fair Value of Financial Instruments -- Continued ----------------------------------------------------- The estimated fair values of the Association's financial instruments as of June 30 are as follows:
1997 1996 -------------------------- -------------------------- Carrying Carrying Amount Fair Value Amount Fair Value ----------- ----------- ----------- ----------- Financial Assets - ---------------- Cash and cash equivalents $ 2,377,092 $ 2,377,092 $ 5,801,246 $ 5,801,246 Investments securities available for sale 2,992,500 2,992,500 2,964,375 2,964,375 Mortgage-backed securities 356,187 360,666 424,009 428,502 Loans receivable 55,458,566 53,368,580 Less: allowance for loan losses 270,000 125,000 ----------- ----------- 55,188,566 56,052,888 53,243,580 53,886,140 Ground rents 129,108 77,465 130,129 78,077 Federal Home Loan Bank stock 509,900 509,900 509,900 509,900 Financial Liabilities - --------------------- Savings deposits 56,095,332 56,485,590 57,870,624 58,426,486 Advance payments by borrowers for taxes, insurance and ground rents 1,240,877 1,240,877 1,206,553 1,206,553 Loan commitments 7,285,723 7,285,723 6,792,764 6,792,764
Note 13 -- Plan of Conversion ------------------ On June 18, 1997, the Board of Directors adopted a plan of conversion which provides for (i) the conversion of the Association from a federally chartered mutual savings and loan association to a federally chartered stock savings and loan association, the "Converted Association," and (ii) the concurrent formation of a holding company for the Converted Association, the "Holding Company." The Association's plan of conversion provides for an initial issuance of shares of the Holding Company's capital stock to be offered to eligible members, employees and officers of the Association at a price based on an appraisal by an independent appraisal firm. Any shares not purchased by eligible members may be sold at the discretion of the Association to the public. The entire amount of capital stock issued by the Association will be acquired by the Holding Company. F-22 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 13 -- Plan of Conversion - Continued ------------------ Costs, including underwriting discounts, if any, to complete the conversion are expected to be deferred and deducted from the proceeds from the sale of capital stock. If the conversion does not take place all costs incurred will be charged to expense. Deferred costs aggregated $32,720 at June 30, 1997. For the purpose of granting eligible members of the Association a priority in the event of future liquidation, the Association will, at the time of conversion, establish a liquidation account equal to its retained income as of the date of the latest consolidated statement of financial condition used in the final conversion offering circular. In the event of future liquidation of the Association (and only in such an event), an eligible deposit account holder who continues to maintain his deposit account shall be entitled to receive a prorata distribution from the liquidation account, based on such holder's proportionate amount of the total current adjusted balances for deposit accounts then held by all eligible account holders, before any liquidation distribution may be made with respect to capital stock. After the conversion, no dividends may be paid to stockholders if such dividends reduce retained income of the Association below the amount required for the liquidation account. F-23 No person has been authorized to give any information or to make any representations in connection with this offering other than those contained in this Prospectus and, if given or made, such other information and representations must not be relied upon as having been authorized by the Holding Company. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Holding Company since the date hereof or that the information contained herein is correct as of any time subsequent to its date. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the registered securities to which it relates. This Prospectus does not constitute an offer to sell or a solicitation of a offer to buy such securities in any circumstances or jurisdictions in which such offer or solicitation is unlawful. TABLE OF CONTENTS Page ---- Prospectus Summary................................... Selected Consolidated Financial Information.......... Risk Factors......................................... Use of Proceeds...................................... Dividends............................................ Market for Common Stock.............................. Wyman Park Bancorporation, Inc....................... Wyman Park Federal Savings & Loan Association........ Pro Forma Data....................................... Pro Forma Regulatory Capital Analysis................ Capitalization....................................... Consolidated Statements of Operations................ Management's Discussion and Analysis of Financial Condition and Results of Operations....... Business............................................. Regulation........................................... Management........................................... The Conversion....................................... Restrictions on Acquisitions of Stock and Related Takeover Defensive Provisions............... Description of Capital Stock......................... Legal Matters........................................ Experts.............................................. Additional Information............................... Index to Consolidated Financial Statements........... Until the later of ________, 1997 or 25 days after commencement of the Offering all dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. [ ] Shares [LOGO] WYMAN PARK BANCORPORATION, INC. (Proposed Holding Company for Wyman Park Federal Savings & Loan Association) Common Stock Prospectus Trident Securities, Inc. __________, 1997 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 24. Indemnification of Directors and Officers - --------------------------------------------------- Article Eleventh of the Holding Company's Certificate of Incorporation provides for indemnification of directors and officers of the Holding Company against any and all liabilities, judgments, fines and reasonable settlements, costs, expenses and attorneys' fees incurred in any actual, threatened or potential proceeding, except to the extent that such indemnification is limited by Delaware law and such law cannot be varied by contract or bylaw. Article Eleventh also provides for the authority to purchase insurance with respect thereto. Section 145 of the General Corporation Law of the State of Delaware authorizes a corporation's Board of Directors to grant indemnity under certain circumstances to directors and officers, when made, or threatened to be made, parties to certain proceedings by reason of such status with the corporation, against judgments, fines, settlements and expenses, including attorneys' fees. In addition, under certain circumstances such persons may be indemnified against expenses actually and reasonably incurred in defense of a proceeding by or on behalf of the corporation. Similarly, the corporation, under certain circumstances, is authorized to indemnify directors and officers of other corporations or enterprises who are serving as such at the request of the corporation, when such persons are made, or threatened to be made, parties to certain proceedings by reason of such status, against judgments, fines, settlements and expenses, including attorneys' fees; and under certain circumstances, such persons may be indemnified against expenses actually and reasonably incurred in connection with the defense or settlement of a proceeding by or in the right of such other corporation or enterprise. Indemnification is permitted Item 25. Other Expenses of Issuance and Distribution - ----------------------------------------------------- Set forth below is an estimate of the amount of fees and expenses (other than underwriting discounts and commissions) to be incurred in connection with the issuance of the shares. Counsel fees and expenses ................................... $ 75,000 Accounting fees and expenses ................................ 30,000 Appraisal and business plan preparation fees and expenses ......................................... 23,000 Conversion Agent fees and expenses .......................... 8,000 Underwriting fees(1) (including financial advisory fee and expenses) ............................... 138,633 Underwriter's counsel fees and expenses ..................... 40,000 Printing, postage and mailing ............................... 50,000 Registration and Filing Fees ................................ 25,000 Blue Sky fees and expenses .................................. 6,000 Stock Transfer Agent and Certificates ....................... 7,500 Other expenses(1) ........................................... 41,867 -------- TOTAL .................................................. $445,000 ======== - ------------- (1) Based on maximum of Estimated Valuation Range. where such person (i) was acting in good faith; (ii) was acting in a manner he reasonably believed to be in or not opposed to the best interests of the corporation or other corporation or enterprise, as appropriate; (iii) with respect to a criminal proceeding, has no reasonable cause to believe his conduct was unlawful; and (iv) was not adjudged to be liable to the corporation or other corporation or enterprise (unless the court where the proceeding was brought determines that such person is fairly and reasonably entitled to indemnity). Unless ordered by a court, indemnification may be made only following a determination that such indemnification is permissible because the person being indemnified has met the requisite standard of conduct. Such determination may be made (i) by the Board of Directors of the Holding Company by a majority vote of a quorum consisting of directors not at the time parties to such proceeding; or (ii) if such a quorum cannot be obtained or the quorum so directs, then by independent legal counsel in a written opinion; or (iii) by the stockholders. Section 145 also permits expenses incurred by directors and officers in defending a proceeding to be paid by the corporation in advance of the final disposition of such proceedings upon the receipt of an undertaking by the director or officer to repay such amount if it is ultimately determined that he is not entitled to be indemnified by the corporation against such expenses. Item 26. Recent Sales of Unregistered Securities - ------------------------------------------------- The Registrant is newly incorporated, solely for the purpose of acting as the holding company of the Wyman Park Federal Savings & Loan Association, pursuant to the Plan of Conversion (filed as Exhibit 2 herein), and no sales of its securities have occurred to date. Item 27. Exhibits and Financial Statement Schedules - ---------------------------------------------------- (a) Exhibits: 1.1 Letter Agreement regarding management, marketing and consulting services 1.2 Form of Agency Agreement 2 Plan of Conversion 3.1 Certificate of Incorporation of the Holding Company* 3.2 Bylaws of the Holding Company* 3.3 Charter of Association in stock form* 3.4 Bylaws of Association in stock form* 4 Form of Stock Certificate of the Holding Company* 5 Opinion of Silver, Freedman & Taff, L.L.P. with Respect to Legality of Stock 8.1 Opinion of Silver, Freedman & Taff, L.L.P. with respect to Federal income tax consequences of the Stock Conversion* 8.2 Opinion of Wooden & Benson Chartered with respect to Maryland income tax consequences of the Stock Conversion* 10.1 Employment Agreement with Ernest A. Moretti 10.2 Letter Agreement regarding Appraisal Services and Business Plan Preparation 10.3 Employee Stock Ownership Plan* 22 Subsidiaries* 24.1 Consent of Silver, Freedman & Taff, L.L.P. 24.2 Consent of Wooden & Benson Chartered 24.3 Consent of Ferguson & Company 25 Power of Attorney (set forth on signature page) 99.1 Appraisal 99.2 Proxy Statement and form of proxy to be furnished to the Association's account holders* 99.3 Stock Order Form and Order Form Instructions 99.4 Certification* 99.5 Question and Answer Brochure 99.6 Advertising, Training and Community Informational Meeting Materials 99.7 Letter of Appraiser with respect to Subscription Rights - ----------- * Previously filed. Item 28. Undertakings - ---------------------- The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and it will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. SIGNATURES In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this Registration Statement to be signed on its behalf by the undersigned, in the City of Lutherville, State of Maryland, on September 22, 1997. WYMAN PARK BANCORPORATION, INC. By: /s/ Ernest A. Moretti --------------------------------- Ernest A. Moretti, President and Chief Executive Officer (Duly Authorized Representative) KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ernest A. Moretti his true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents or their substitutes or substitute may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. /s/ Ernest A. Moretti /s/ Ronald W. Robinson - ------------------------------------- ------------------------------ Ernest A. Moretti, Director, Ronald W. Robinson, President and Chief Executive Officer Chief Financial Officer (Chief Operating Officer) (Principal Financial Officer) Date: November 5, 1997 Date: November 5, 1997 ---------------- ---------------- /s/ Allan B. Heaver /s/ H. Douglas Huether - -------------------------------------- ------------------------------ Allan B. Heaver, Chairman of the Board H. Dougals Huether, Director Date: November 5, 1997 Date: November 5, 1997 ---------------- ---------------- /s/ John K. White /s/ John R. Beever - -------------------------------------- ------------------------------ John T. White, Director John R. Beever, Director Date: November 5, 1997 Date: November 5, 1997 ---------------- ---------------- /s/ Albert M. Copp /s/ Gilbert D. Marsiglia, Sr. - -------------------------------------- ------------------------------ Albert M. Copp, Director Gilbert D. Marsiglia, Director Date: November 5, 1997 Date: November 5, 1997 ---------------- ---------------- /s/ Jay H. Salkin /s/ G. Scott Barhight - -------------------------------------- ------------------------------ Jay H. Salkin, Director G. Scott Barhight, Director Date: November 5, 1997 Date: November 5, 1997 ---------------- ---------------- As filed with the Securities and Exchange Commission on September 22, 1997 Registration No. 333-________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- EXHIBITS TO FORM SB-2 UNDER THE SECURITIES ACT OF 1933 ---------- WYMAN PARK BANCORPORATION, INC. 11 West Ridgely Road Lutherville, Maryland 21094 ================================================================================ EXHIBIT INDEX Exhibits: - --------- 1.1 Letter Agreement regarding management, marketing and consulting services 1.2 Form of Agency Agreement 2 Plan of Conversion 3.1 Certificate of Incorporation of the Holding Company* 3.2 Bylaws of the Holding Company* 3.3 Charter of Association in stock form* 3.4 Bylaws of Association in stock form* 4 Form of Stock Certificate of the Holding Company* 5 Opinion of Silver, Freedman & Taff, L.L.P. with Respect to Legality of Stock 8.1 Opinion of Silver, Freedman & Taff, L.L.P. with respect to Federal income tax consequences of the Stock Conversion* 8.2 Opinion of Wooden & Benson Chartered with respect to Maryland income tax consequences of the Stock Conversion* 10.1 Employment Agreement with Ernest A. Moretti 10.2 Letter Agreement regarding Appraisal Services and Business Plan Preparation 10.3 Employee Stock Ownership Plan* 22 Subsidiaries* 24.1 Consent of Silver, Freedman & Taff, L.L.P. 24.2 Consent of Wooden & Benson Chartered 24.3 Consent of Ferguson & Company 25 Power of Attorney (set forth on signature page) 99.1 Appraisal 99.2 Proxy Statement and form of proxy to be furnished to the Association's account holders* 99.3 Stock Order Form and Order Form Instructions 99.4 Certification* 99.5 Question and Answer Brochure 99.6 Advertising, Training and Community Informational Meeting Materials 99.7 Letter of Appraiser with respect to Subscription Rights - ------------ * Previously filed. EX-1 2 EXHIBIT 1.1 Exhibit 1.1 June 3, 1997 Board of Directors Wyman Park Federal Savings and Loan Association 11 West Ridgely Road Lutherville, Maryland 21094 RE: Conversion Stock Marketing Services Gentlemen: This letter sets forth the terms of the proposed engagement between Trident Securities, Inc. ("Trident") and Wyman Park Federal Savings and Loan Association, (the "Association") concerning our investment banking services in connection with the conversion of the Association from a mutual to a capital stock form of organization. Trident is prepared to assist the Association in connection with the offering of its shares of common stock during the subscription offering and community offering as such terms are defined in the Association's Plan of Conversion (the "Plan"). The specific terms of the services contemplated hereunder shall be set forth in a definitive sales agency agreement (the "Agreement") between Trident and the Association to be executed on the date the offering circular/prospectus is declared effective by the appropriate regulatory authorities. The price of the shares during the subscription offering and community offering will be the price established by the Association's Board of Directors, based upon an independent appraisal as approved by the appropriate regulatory authorities. Trident will act as financial advisor and exercise its best efforts to assist the Association in the sale of its common stock during the subscription offering and community offering. Additionally, Trident may enter into agreements with other National Association of Securities Dealers, Inc., ("NASD") member firms to act as selected dealers, assisting in the sale of the common stock. Trident and the Association will determine the selected dealers to assist the Association during the community offering. At the appropriate time, Trident in conjunction with its counsel, will conduct an examination of the relevant documents and records of the Association as Trident deems necessary and appropriate. The Association will use its best efforts to make all documents, records and other information reasonably deemed necessary by Trident or its counsel available to them upon request. For its services hereunder, Trident will receive the following compensation and reimbursement from the Association: 1. A commission equal to 1.85% of the aggregate dollar amount of capital stock sold to residents in the state of Maryland and 1.40% of the aggregate dollar amount of capital stock sold to residents outside the state of Maryland in the subscription and community offerings, excluding any shares of conversion stock sold to the Association's directors, executive officers and the employee benefit plans. Additionally, commissions will be excluded on those shares sold to "associates" of the Association's directors and executive officers. The term "associates" as used herein shall have the same meaning as that found in the Association's Plan of Conversion. 2. For stock sold by other NASD member firms under selected dealer's agreements, the commission shall not exceed a fee to be agreed upon jointly by Trident and the Association to reflect market requirements at the time of the stock allocation in a Syndicated Community Offering. 3. The foregoing fees and commissions are to be payable to Trident at closing as defined in the Agreement to be entered into between the Association and Trident. 4. Trident shall be reimbursed for allocable expenses incurred by them, including legal fees, whether or not the Agreement is consummated. In this respect, Trident's out-of-pocket expenses will not exceed $12,000 and its legal fees will not exceed $28,000 and $6,000 for "Blue Sky" work. The Association will forward to Trident a check in the amount of $10,000 as an advance payment to defray the allocable expenses of Trident. It further is understood that the Association will pay all other expenses of the conversion including but not limited to its attorneys' fees, NASD filing fees, and filing and registration fees and fees of either Trident's attorneys or the attorneys relating to any required state securities law filings, telephone charges, air freight, rental equipment, supplies, transfer agent charges, fees relating to auditing and accounting and costs of printing all documents necessary in connection with the foregoing. For purposes of Trident's obligation to file certain documents and to make certain representations to the NASD in connection with the conversion, the Association warrants that: (a) the Association has not privately placed any securities within the last 18 months; (b) there have been no material dealings within the last 12 months between the Association and any NASD member or any person related to or associated with any such member; (c) except for Jay Salkin, none of the officers or directors of the Association has any affiliation with the NASD; (d) except as contemplated by this engagement letter with Trident, the Association has no financial or management consulting contracts outstanding with any other person; (e) the Association has not granted Trident a right of first refusal with respect to the underwriting of any future offering of the Association stock; and (f) there has been no intermediary between Trident and the Association in connection with the public offering of the Association's shares, and no person is being compensated in any manner for providing such service. The Association agrees to indemnify and hold Trident and its affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended) and their respective directors, officers, employees, agents and controlling persons (Trident and each such person being an "Indemnified Party") harmless from and against any and all losses, claims, damages and liabilities (or actions, including shareholder actions, in respect thereof), joint or several, to which such Indemnified Party may become subject under any applicable federal or state law, or otherwise, and related to or arising our of the performance by Trident of the services contemplated by, or the engagement of Trident and will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense arising therefrom, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by the Association. The Association will not be liable to any Indemnified Party under the foregoing indemnification provision (i) in any settlement by an Indemnified Party effected without its prior written consent; or (ii) to the extent that any loss, claim, damage or liability is found in a final judgment by a court of competent jurisdiction to have resulted primarily from Trident's bad faith, willful misconduct or gross negligence. Trident agrees to indemnify and hold the Association and its affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended) and its respective directors, officers, employees, agents and controlling persons (the Association, its holding company and each such person being an "Indemnified Party") harmless from and against any and all losses, claims, damages and liabilities (or actions, including shareholder actions, in respect thereof), joint or several, to which such Indemnified Party may become subject under any applicable federal or state law, or otherwise, and related to or arising out of the bad faith, willful misconduct or gross negligence of Trident, as found in a final judgment by a court of competent jurisdiction, in the performance by Trident of the services contemplated by, or the engagement of Trident and will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) in connection with the investigation of, preparation for or defense arising therefrom, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by Trident. Trident will not be liable to any Indemnified Party under the foregoing indemnification provision (i) in any settlement by an Indemnified Party effected without its prior written consent; or (ii) to the extent that any loss, claim, damage or liability is found in a final judgment by a court of competent jurisdiction to have resulted primarily from the Association's bad faith, willful misconduct or gross negligence. As promptly as possible after receipt by an Indemnified Party of notice of an intention to commence, or the commencement of, any action, suit or proceeding for which an Indemnified Party may seek indemnification, an Indemnified Party shall notify the indemnifying party in writing thereof, enclosing a copy of all letters or documents received and/or papers served; provided that a failure or delay in giving any such notice shall not affect the obligation of the indemnifying party to indemnify the Indemnified Party, unless and to the extent that such failure or delay materially adversely affects the indemnifying party. In case any such action, suit or proceeding shall be brought against an Indemnified Party, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof. After notice form the indemnifying party to any Indemnified Party of the same's election to assume the defense thereof, the indemnifying party shall not be liable to an Indemnified Party for any legal fees or other expenses subsequently incurred by an Indemnified Party in the defense thereof, other than for reasonable costs or investigation and except as provided in the next paragraph. An Indemnified Party shall have the right to employ its or his own counsel in any such action, suit or proceeding, but in such event the Indemnified Party's legal fees and other expenses shall not be reimbursed by the indemnifying party unless (i) the employment of such counsel has been requested by the Indemnified Party and authorized by the indemnifying party or (ii) the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the indemnifying party and the Indemnified Party in the defense of such action, suit or proceeding. In the event the Indemnified Party concludes that there may be such a conflict of interest, (i) the indemnifying party shall not have the right to assume and direct the defense of such action, suit or proceeding on behalf of the Indemnified Party and (ii) the indemnifying party shall indemnify the Indemnified Party for all reasonable legal fees and other expenses reasonably incurred by the Indemnified Party, but the indemnifying party shall not be liable for any settlement or negotiated disposition of such action, suit or proceeding or any part thereof effected without the written consent of the indemnifying party. If the indemnification provided for in this agreement is for any reason held unenforceable by an Indemnified Party, the Association agrees to contribute to the losses, claims, damages and liabilities for which such indemnification is held unenforceable (i) in such proportion as is appropriate to reflect the relative benefits to the Association, on the one hand, and Trident on the other hand, of the transaction as contemplated (whether or not the transaction is consummated) or, (ii) if (but only if) the allocation provided for in clause (i) is for any reason unenforceable, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Association, on the one hand, and Trident on the other hand, as well as other relevant equitable considerations. The Association agrees that for the purposes of this paragraph, the relative benefits of the Association and Trident of the transaction as contemplated shall be deemed to the in the same proportion that the total value received or contemplated to be received by the Association or its shareholders, as the case may be, as a result of or in connection with the transaction bears to the fees paid or to be paid to Trident under this legal agreement. The Association and Trident each agree that without each other's prior written consent, which shall not be unreasonably withheld, neither will settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification could be sought under the indemnification provision of this letter agreement (whether or not Trident, the Association or any other Indemnified Party is an actual or potential party to such claim, action or proceeding), unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action or proceeding. Notwithstanding the above, to the extent that the Association's indemnification or contribution is a "covered transaction" as defined in 12 U.S.C. 371c(b)(7), the Association's holding company shall assume the Association's obligation to indemnify or contribute. This letter is merely a statement of intent and is not a binding legal agreement except as to paragraph (4) above with regard to the obligation to reimburse Trident for allocable expenses to be incurred prior to the execution of the Agreement and the indemnity described herein. While Trident and the Association agree in principle to the contents hereof and propose to proceed promptly, and in good faith, to work out the arrangements with respect to the proposed offering, any legal obligations between Trident and the Association shall be only as set forth in a duly executed Agreement. Such Agreement shall be in form and content satisfactory to Trident and the Association, as well as their counsel, and Trident's obligations thereunder shall be subject to, among other things, there being in Trident's opinion no material adverse change in the condition or obligations of the Association or no market conditions which might render the sale of the shares by the Association hereby contemplated inadvisable. Trident agrees to maintain in confidence all information and documents (to be read in the broadest sense) received from the Association, and not to disclose any such information or documents except to Trident's officers, directors, counsel and representatives who need to know such information for the purpose of evaluating the transaction and who will, prior to being provided such information or documents, agree to be bound by the terms of this agreement, unless disclosure is required by law or regulation, in which case Trident will provide timely notice so that the Association may seek a protective order or other appropriate remedy and/or permit disclosure of only that portion of such information or documents which is legally required to be disclosed. Please acknowledge your agreement to the foregoing by signing below and returning to Trident one copy of this letter along with the advance payment of $10,000. This proposal is open for your acceptance for a period of thirty (30) days from the date hereof. Yours very truly, TRIDENT SECURITIES, INC. By: /s/ R. Lee Burrows, Jr. R. Lee Burrows, Jr. Managing Director Agreed and accepted to this 9th day of June, 1997 WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION By: /s/ Ernest A. Moretti Ernest A. Moretti President EX-1 3 EXHIBIT 1.2 Exhibit 1.2 WYMAN PARK BANCORPORATION, INC. WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION 595,000 to 925,750 Shares Common Stock (Par Value $0.01 Per Share) $10.00 Per Share SALES AGENCY AGREEMENT Trident Securities, Inc. 4601 Six Forks Road, Suite 400 Raleigh, North Carolina 27609 Dear Sirs: Wyman Park Bancorporation, Inc., a Delaware-chartered corporation (the "Company"), and Wyman Park Federal Savings & Loan Association, a federally chartered and insured mutual savings association (the "Association"), hereby confirm, as of November __, 1997, their respective agreements with Trident Securities, Inc. ("Trident"), a broker-dealer registered with the Securities and Exchange Commission ("Commission") and a member of the National Association of Securities Dealers, Inc. ("NASD"), as follows: 1. Introductory. The Association intends to convert from a federally chartered mutual savings association to a federally chartered stock savings association as a wholly owned subsidiary of the Company (together with the Offerings, as defined below, the issuance of shares of common stock of the Association to the Company and the incorporation of the Company, the "Conversion") pursuant to a plan of conversion adopted on June 18, 1997 (the "Plan"). In accordance with the Plan, the Company is offering shares of its common stock, par value $0.01 per share (the "Shares" and the "Common Stock"), pursuant to nontransferable subscription rights in a subscription offering (the "Subscription Offering") to certain depositors and borrowers of the Association, to directors, officers and employees of the Association, and to the Association's tax-qualified employee benefit plans (i.e., the Association's Employee Stock Ownership Plan (the "ESOP")). Concurrently with, during or promptly after the Subscription Offering, shares of the Common Stock not sold in the Subscription Offering may be offered to the general public in a community offering, with preference being given to natural persons residing in Baltimore and Anne Arundel Counties, Maryland (the "Community Offering") (the Subscription and Community Offerings are sometimes referred to collectively as the "Offerings"), subject to the right of the Company and the Association, in their absolute discretion, to reject orders in the Community Offering in whole or in part. In the Offerings, the Company is offering between 595,000 and 805,000 Shares, with the possibility of offering up to 925,750 Shares without a resolicitation of subscribers, as contemplated by Title 12 of the Code of Federal Regulations, Part 563b. Except for certain benefit plans, and certain larger depositors, no person may purchase more than $100,000 of the Shares issued in the Conversion and no person, together with associates of and persons acting in concert with such person, may purchase in the aggregate more than $100,000 of the Trident Securities, Inc. Sales Agency Agreement Page 2 Shares issued in the Conversion. The Company and the Association have been advised by Trident that it will utilize its best efforts in assisting the Company and the Association with the sale of the Shares in the Offerings and, if deemed necessary by the Company in a syndicated public offering. Prior to the execution of this Agreement, the Company has delivered to Trident the Prospectus dated November __, 1997 (as hereinafter defined) and all supplements thereto to be used in the Offerings. Such Prospectus contains information with respect to the Company, the Association and the Shares. 2. Representations and Warranties. (a) The Company and the Association jointly and severally represent and warrant to Trident that: (i) The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement, including exhibits and an amendment or amendments thereto, on Form S-1 (No. 333-_____), including a Prospectus relating to the Offerings, for the registration of the Shares under the Securities Act of 1933, as amended (the "Act"); and such registration statement has become effective under the Act and no stop order has been issued with respect thereto and no proceedings therefor have been initiated or, to the Company's best knowledge, threatened by the Commission. Except as the context may otherwise require, such registration statement, as amended or supplemented, on file with the Commission at the time the registration statement became effective, including the Prospectus, financial statements, schedules, exhibits and all other documents filed as part thereof, as amended and supplemented, is herein called the "Registration Statement," and the prospectus, as amended or supplemented, on file with the Commission at the time the Registration Statement became effective is herein called the "Prospectus," except that if the prospectus filed by the Company with the Commission pursuant to Rule 424(b) of the general rules and regulations of the Commission under the Act (together with the enforceable published policies and actions of the Commission thereunder, the "SEC Regulations") differs from the form of prospectus on file at the time the Registration Statement became effective, the term "Prospectus" shall refer to the Rule 424(b) prospectus from and after the time it is filed with or mailed for filing to the Commission and shall include any amendments or supplements thereto from and after their dates of effectiveness or use, respectively. If any Shares remain unsubscribed following completion of the Subscription Offering and, if any, the Community Offering, the Company (i) will promptly file with the Commission a post-effective amendment to such Registration Statement relating to the results of the Subscription Offering Trident Securities, Inc. Sales Agency Agreement Page 3 and, if any, the Community Offering, any additional information with respect to the proposed plan of distribution and any revised pricing information or (ii) if no such post-effective amendment is required, will file with, or mail for filing to, the Commission a prospectus or prospectus supplement containing information relating to the results of the Subscription and the Community Offerings and pricing information pursuant to Rule 424(c) of the Regulations, in either case in a form reasonably acceptable to the Company and Trident. (ii) The Association has filed an Application for Approval of Conversion on Form AC, including exhibits (as amended or supplemented, the "Form AC" and together with the Form H-(e)1-S referred to below, the "Conversion Application") with the Office of Thrift Supervision (the "Office") under the Home Owners' Loan Act, as amended (the "HOLA") and the enforceable rules and regulations, including published policies and actions, of the Office thereunder (the "OTS Regulations"), which has been approved by the Office; and the Prospectus and the proxy statement for the solicitation of proxies from members for the special meeting to approve the Plan (the "Proxy Statement") included as part of the Form AC have been approved for use by the Office. No order has been issued by the Office preventing or suspending the use of the Prospectus or the Proxy Statement; and no action by or before the Office revoking such approvals is pending or, to the Association's best knowledge, threatened. The Company has filed with the Office the Company's application on Form H-(e)1-S promulgated under the savings and loan holding company provisions of the Home Owners' Loan Act and the regulations promulgated thereunder ("HOLA") and has received approval of its acquisition of the Association from the Office. (iii) At the date of the Prospectus and at all times subsequent thereto through and including the Closing Date (i) the Registration Statement and the Prospectus (as amended or supplemented, if amended or supplemented) complied with the Act and the SEC Regulations, (ii) the Registration Statement (as amended or supplemented, if amended or supplemented) did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (iii) the Prospectus (as amended or supplemented, if amended or supplemented) did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Representations or warranties in this subsection shall not apply to statements or omissions made in reliance upon and in conformity with written Trident Securities, Inc. Sales Agency Agreement Page 4 information furnished to the Company or the Association relating to Trident by or on behalf of Trident expressly for use in the Registration Statement or Prospectus. (iv) The Company has been duly incorporated and is in good standing as a Delaware corporation, and the Association has been duly organized and has a corporate existence as a mutual savings association under the laws of the United States, and each of them is validly existing under the laws of the jurisdiction of its organization with full power and authority to own its property and conduct its business as described in the Registration Statement and Prospectus; the Association is a member in good standing of the Federal Home Loan Bank of Atlanta; and the deposit accounts of the Association are insured by the Savings Association Insurance Fund ("SAIF") administered by the Federal Deposit Insurance Corporation ("FDIC") up to the applicable legal limits. Each of the Company and the Association is not required to be qualified to do business as a foreign corporation in any jurisdiction where non-qualification would have a material adverse effect on the Company and the Association, taken as a whole. The Association does not own equity securities of or an equity interest in any business enterprise except as described in the Prospectus. Upon amendment of the Association's charter and bylaws as provided in the rules and regulations of the Office and completion of the sale by the Company of the Shares as contemplated by the Prospectus, (i) the Association will be converted pursuant to the Plan to a federally chartered capital stock savings association with full power and authority to own its property and conduct its business as described in the Prospectus, (ii) all of the authorized and outstanding capital stock of the Association will be owned of record and beneficially by the Company, and (iii) the Company will have no direct subsidiaries other than the Association. (v) The Association does not own equity securities of or an equity interest in any business enterprise except as described in the Prospectus. ____________ ("Subsidiary") is duly organized and in good standing under the laws of the State of ___________, with full power and authority to own its property and conduct its business and is not required to be qualified to do business as a foreign corporation in any jurisdiction where the failure to be so qualified would have a material adverse effect on the business, financial condition, operations, properties or assets of the Subsidiary. The Subsidiary holds all licenses, certificates and permits from governmental authorities necessary for the conduct of its business, except where failure to obtain such licenses, permits or authorizations would not have a material adverse effect Trident Securities, Inc. Sales Agency Agreement Page 5 on the financial condition, operations, property, assets or business of the Subsidiary. All of the outstanding stock of the Subsidiary has been duly authorized and is fully paid and nonassessable, and such stock is owned directly by the Association free and clear of any liens or encumbrances. The activities of the Subsidiary are permitted to subsidiaries of a federally-chartered savings bank by the OTS Regulations and the policies and practices of the OTS. (vi) The Association has good, marketable and insurable title to all assets material to its business and to those assets described in the Prospectus as owned by it, free and clear of all material liens, charges, encumbrances or restrictions, except for liens for taxes not yet due, except as described in the Prospectus and except as could not in the aggregate have a material adverse effect upon the operations or financial condition of the Association; and all of the leases and subleases material to the operations or financial condition of the Association, under which it holds properties, including those described in the Prospectus, are in full force and effect as described therein. (vii) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary actions on the part of each of the Company and the Association, and this Agreement is a valid and binding obligation with valid execution and delivery of each of the Company and the Association, enforceable in accordance with its terms (except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws relating to or affecting the enforcement of creditors' rights generally or the rights of creditors of savings and loan holding companies the accounts of whose subsidiaries are insured by the FDIC or by general equity principles, regardless of whether such enforceability is considered in a proceeding in equity or at law, and except to the extent that the provisions of Sections 8 and 9 hereof may be unenforceable as against public policy or pursuant to Sections 23A or 23B of the Federal Reserve Act, 12 U.S.C. Sections 371c ("Section 23A" or 371c- 1 ("Section 23B")). (viii) There is no litigation or governmental proceeding pending or, to the best knowledge of the Company or the Association, threatened against or involving the Company, the Association, or any of their respective assets which individually or in the aggregate would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), Trident Securities, Inc. Sales Agency Agreement Page 6 results of operations and business, including the assets and properties, of the Company and the Association, taken as a whole. (ix) The Company and the Association have received the opinions of Silver, Freedman & Taff, L.L.P. with respect to federal tax consequences of the Conversion, and of Wooden & Benson, Chartered with respect to the Maryland tax consequences of the Conversion, to the effect that the Conversion will constitute a tax-free reorganization under the Internal Revenue Code of 1986, as amended, and will not be a taxable transaction for the Association or the Company under the laws of Maryland, and the facts relied upon in such opinions are accurate and complete. (x) Each of the Company and the Association has all such corporate power, authority, authorizations, approvals and orders as may be required to enter into this Agreement and to carry out the provisions and conditions hereof, subject to the limitations set forth herein and subject to the satisfaction of certain conditions imposed by the Office in connection with its approvals of the Form AC and the Application H-(e)1-S, and except as may be required under the securities, or "blue sky," laws of various jurisdictions, and in the case of the Company, as of the Closing Date, will have such approvals and orders to issue and sell the Shares to be sold by the Company as provided herein, and in the case of the Association, as of the Closing Date, will have such approvals and orders to issue and sell the Shares of its Common Stock to be sold to the Company as provided in the Plan, subject to the issuance of amended charter in the form required for federally chartered stock savings associations (the "Stock Charter"), the form of which Stock Charter has been approved by the Office. (xi) To the best of its knowledge, neither the Company nor the Association is in violation of any rule or regulation of the Office or the FDIC that could reasonably be expected to result in any enforcement action against the Company, the Association, or their officers or directors that might have a material adverse effect on the financial condition, operations, businesses, assets or properties of the Company and the Association, taken as a whole. (xii) The consolidated financial statements and any related notes or schedules which are included in the Registration Statement and the Prospectus fairly present the consolidated financial condition, income, retained earnings and cash flows of the Association at the respective dates thereof and for the respective periods covered thereby and comply as to form Trident Securities, Inc. Sales Agency Agreement Page 7 with the applicable accounting requirements of the Regulations and the applicable accounting regulations of the Office. Such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as set forth therein, and such financial statements are consistent with financial statements and other reports filed by the Association with supervisory and regulatory authorities except as such generally accepted accounting principles may otherwise require. The tables in the Prospectus accurately present the information purported to be shown thereby at the respective dates thereof and for the respective periods therein. (xiii) There has been no material change in the financial condition, results of operations or business, including assets and properties, of the Company and the Association, taken as a whole, since the latest date as of which such condition is set forth in the Prospectus, except as set forth therein; and the capitalization, assets, properties and business of each of the Company and the Association conform to the descriptions thereof contained in the Prospectus. None of the Company nor the Association has any material liabilities of any kind, contingent or otherwise, except as set forth in the Prospectus. (xiv) There has been no breach or default (or the occurrence of any event which, with notice or lapse of time or both, would constitute a default) under, or creation or imposition of any lien, charge or other encumbrance upon any of the properties or assets of the Company and the Association pursuant to any of the terms, provisions or conditions of, any agreement, contract, indenture, bond, debenture, note, instrument or obligation to which the Company or the Association is a party or by which any of them or any of their respective assets or properties may be bound or is subject, or violation of any governmental license or permit or any enforceable published law, administrative regulation or order or court order, writ, injunction or decree, which breach, default, encumbrance or violation would have a material adverse effect on the financial condition, operations, business, assets or properties of the Company and the Association taken as a whole; all agreements which are material to the financial condition, results of operations or business of the Company and the Association taken as a whole are in full force and effect, and no party to any such agreement has instituted or, to the best knowledge of the Company and the Association, threatened any action or proceeding wherein the Company or the Association would be alleged to be in default thereunder. Trident Securities, Inc. Sales Agency Agreement Page 8 (xv) None of the Company or the Association is in violation of its respective charter or bylaws. The execution and delivery hereof and the consummation of the transactions contemplated hereby by the Company and the Association do not conflict with or result in a breach of the charter or bylaws of the Company or the Association (in either mutual or stock form) or constitute a material breach of or default (or an event which, with notice or lapse of time or both, would constitute a default) under, give rise to any right of termination, cancellation or acceleration contained in, or result in the creation or imposition of any lien, charge or other encumbrance upon any of the properties or assets of the Company or the Association pursuant to any of the terms, provisions or conditions of, any material agreement, contract, indenture, bond, debenture, note, instrument or obligation to which the Company or the Association is a party or violate any governmental license or permit or any enforceable published law, administrative regulation or order or court order, writ, injunction or decree (subject to the satisfaction of certain conditions imposed by the Office in connection with its approval of the Conversion Application), which breach, default, encumbrance or violation would have a material adverse effect on the financial condition, operations or business of the Company and the Association taken as a whole. (xvi) Subsequent to the respective dates as of which information is given in the Registration Statement and Prospectus and prior to the Closing Date (as hereinafter defined), except as otherwise may be indicated or contemplated therein, none of the Company or the Association has issued any securities which will remain issued at the Closing Date or incurred any liability or obligation, direct or contingent, or borrowed money, except borrowings in the ordinary course of business, or entered into any other transaction not in the ordinary course of business and consistent with prior practices, which is material in light of the business of the Company and the Association, taken as a whole. (xvii) Upon consummation of the Conversion, the authorized, issued and outstanding equity capital of the Company shall be within the range as set forth in the Prospectus under the caption "Capitalization," and no Common Stock of the Company shall be outstanding immediately prior to the Closing Date; the issuance and the sale of the Shares of the Company have been duly authorized by all necessary action of the Company and approved by the Office and, when issued in accordance with the terms of the Plan and paid for, shall be validly issued, fully paid and nonassessable and shall conform to the description thereof contained in the Prospectus; the issuance of the Shares is not subject to preemptive rights, except as set forth in the Trident Securities, Inc. Sales Agency Agreement Page 9 Prospectus; and good title to the Shares will be transferred by the Company upon issuance thereof against payment therefor, free and clear of all claims, encumbrances, security interests and liens against the Company whatsoever. The certificates representing the Shares will conform in all material respects with the requirements of applicable laws and regulations. The issuance and sale of the capital stock of the Association to the Company has been duly authorized by all necessary action of the Association and the Company and appropriate regulatory authorities (subject to the satisfaction of various conditions imposed by the Office in connection with its approval of the Conversion Application), and such capital stock, when issued in accordance with the terms of the Plan, will be fully paid and nonassessable and will conform in all material respects to the description thereof contained in the Prospectus. (xviii) No approval of any regulatory or supervisory or other public authority is required in connection with the execution and delivery of this Agreement or the issuance of the Shares, except for the declaration of effectiveness of any required post-effective amendment by the Commission and approval thereof by the Office and approval of the Company's application on Form H-(e)1-S by the Office, the issuance of the Stock Charter by the Office and as may be required under the securities laws of various jurisdictions. (xix) All material contracts and other documents required to be filed as exhibits to the Registration Statement or the Conversion Application have been filed with the Commission and/or the Office, as the case may be. (xx) Wooden & Benson, Chartered, which has audited the consolidated financial statements of the Association at June 30, 1997 and 1996 and for the years ended June 30, 1997, 1996 and 1995 included in the Prospectus, is an independent public accountant within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants and Title 12 of the Code of Federal Regulations, Section 571.2(c)(3). (xxi) For the past five years, the Company and the Association have timely filed all required federal, state and local franchise tax returns, and no deficiency has been asserted with respect to such returns by any taxing authorities, and the Company and the Association have paid all taxes that have become due and, to the best of their knowledge, have made adequate reserves for similar future tax liabilities, except where any failure to make Trident Securities, Inc. Sales Agency Agreement Page 10 such filings, payments and reserves, or the assertion of such a deficiency, would not have a material adverse effect on the condition of the Company and the Association taken as a whole. (xxii) All of the loans represented as assets of the Association on the most recent financial statements of the Association included in the Prospectus meet or are exempt from all requirements of federal, state or local law pertaining to lending, including without limitation truth in lending (including the requirements of Regulation Z and 12 C.F.R. Part 226 and Section 563.99), real estate settlement procedures, consumer credit protection, equal credit opportunity and all disclosure laws applicable to such loans, except for violations which, if asserted, would not have a material adverse effect on the Company and the Association taken as a whole. (xxiii) The records of account holders, depositors, borrowers and other members of the Association delivered to Trident by the Association or its agent for use during the Conversion have been prepared or reviewed by the Association and, to the best knowledge of the Company and the Association, are reliable and accurate. (xxiv) To the knowledge of the Company and the Association, none of the Company, the Association nor directors or employees of the Company or the Association have made any payment of funds of the Company or the Association as a loan to any person other than the Employee Stock Ownership Plan Trust for the purchase of the Shares. (xxv) To the best knowledge of the Company and the Association, the Company and the Association are in compliance with all laws, rules and regulations relating to the discharge, storage, handling and disposal of hazardous or toxic substances, pollutants or contaminants and neither the Company nor the Association believes that the Company or the Association is subject to liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or any similar law, except for violations which, if asserted, would not have a material adverse effect on the Company and the Association, taken as a whole. There are no actions, suits, regulatory investigations or other proceedings pending or, to the best knowledge of the Company or the Association, threatened against the Company or the Association relating to the discharge, storage, handling and disposal of hazardous or toxic substances, pollutants or contaminants. To the best knowledge of the Company and the Association, no disposal, release or discharge of hazardous or toxic substances, pollutants or Trident Securities, Inc. Sales Agency Agreement Page 11 contaminants, including petroleum and gas products, as any of such terms may be defined under federal, state or local law, has been caused by the Company or the Association or, to the best knowledge of the Company or the Association, has occurred on, in or at any of the facilities or properties of the Company or the Association, except such disposal, release or discharge which would not have a material adverse effect on the Company and the Association, taken as a whole. (xxvi) At the Closing Date, the Company and the Association will have completed the conditions precedent to, and shall have conducted the Conversion in all material respects in accordance with, the Plan, the OTS Regulations and all other applicable laws, regulations, published decisions and orders, including all terms, conditions, requirements and provisions precedent to the Conversion imposed by the Office. (b) Trident represents and warrants to the Company and the Association that: (i) Trident is registered as a broker-dealer with the Commission, and is in good standing with the Commission and the NASD. (ii) Trident is validly existing as a corporation in good standing under the laws of North Carolina, with full corporate power and authority to provide the services to be furnished to the Company and the Association hereunder. (iii) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of Trident, and this Agreement is a legal, valid and binding obligation of Trident, enforceable in accordance with its terms (except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws relating to or affecting the enforcement of creditors' rights generally or the rights of creditors of registered broker-dealers accounts of whose may be protected by the Securities Investor Protection Corporation or by general equity principles, regardless of whether such enforceability is considered in a proceeding in equity or at law, and except to the extent that the provisions of Sections 8 and 9 hereof may be unenforceable as against public policy or pursuant to Section 23A or Section 23B). Trident Securities, Inc. Sales Agency Agreement Page 12 (iv) Each of Trident and, to Trident's knowledge, its employees, agents and representatives who shall perform any of the services required hereunder to be performed by Trident shall be duly authorized and shall have all licenses, approvals and permits necessary to perform such services, and Trident is a registered selling agent in the jurisdictions listed in Exhibit A hereto and will remain registered in such jurisdictions in which the Company is relying on such registration for the sale of the Shares, until the Conversion is consummated or terminated. (v) The execution and delivery of this Agreement by Trident, the fulfillment of the terms set forth herein and the consummation of the transactions contemplated hereby shall not violate or conflict with the corporate charter or bylaws of Trident or violate, conflict with or constitute a breach of, or default (or an event which, with notice or lapse of time, or both, would constitute a default) under, any material agreement, indenture or other instrument by which Trident is bound or under any governmental license or permit or any law, administrative regulation, authorization, approval or order or court decree, injunction or order. (vi) Any funds received by Trident to purchase Common Stock will be handled in accordance with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (vii) There is not now pending or, to Trident's knowledge, threatened against Trident any action or proceeding before the Commission, the NASD, any state securities commission or any state or federal court concerning Trident's activities as a broker-dealer. 3. Employment of Trident; Sale and Delivery of the Shares. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company and the Association hereby employ Trident as their agent to utilize its best efforts in assisting the Company with the Company's sale of the Shares in the Subscription Offering and Community Offering. The employment of Trident hereunder shall terminate (a) forty-five (45) days after the Subscription and Community Offering closes, unless the Company and the Association, with the approval of the Office, are permitted to extend such period of time, or (b) upon consummation of the Conversion, whichever date shall first occur. In the event the Company is unable to sell a minimum of 595,000 Shares (or such lesser amount as the Office may permit) within the period herein provided, this Agreement shall terminate, and the Company and the Association shall refund promptly to any persons Trident Securities, Inc. Sales Agency Agreement Page 13 who have subscribed for any of the Shares, the full amount which it may have received from them, together with interest as provided in the Prospectus, and no party to this Agreement shall have any obligation to the other party hereunder, except as set forth in Sections 6, 8(a) and 9 hereof. Appropriate arrangements for placing the funds received from subscriptions for Shares in special interest-bearing accounts with the Association until all Shares are sold and paid for were made prior to the commencement of the Subscription and Community Offering, with provision for prompt refund to the purchasers as set forth above, or for delivery to the Company if all Shares are sold. If all conditions precedent to the consummation of the Conversion are satisfied, including the sale of all Shares required by the Plan to be sold, the Company agrees to issue or have issued such Shares and to release for delivery certificates to subscribers thereof for such Shares on the Closing Date against payment to the Company by any means authorized pursuant to the Prospectus, at the principal office of the Company at 11 West Ridgely Road, Lutherville, Maryland or at such other place as shall be agreed upon between the parties hereto. The date upon which Trident is paid the compensation due hereunder is herein called the "Closing Date." Trident agrees either (a) upon receipt of an executed order form of a subscriber to forward the offering price of the Common Stock ordered on or before twelve noon on the next business day following receipt or execution of an order form by Trident to the Association for deposit in a segregated account or (b) to solicit indications of interest in which event (i) Trident will subsequently contact any potential subscriber indicating interest to confirm the interest and give instructions to execute and return an order form or to receive authorization to execute the order form on the subscriber's behalf, (ii) Trident will mail acknowledgments of receipt of orders to each subscriber confirming interest on the business day following such confirmation, (iii) Trident will debit accounts of such subscribers on the third business day ("debit date") following receipt of the confirmation referred to in (i), and (iv) Trident will forward completed order forms together with such funds to the Association on or before twelve noon on the next business day following the debit date for deposit in a segregated account. Trident acknowledges that if the procedure in (b) is adopted, subscribers' funds are not required to be in their accounts until the debit date. Trident Securities, Inc. Sales Agency Agreement Page 14 In addition to the expenses specified in Section 6 hereof, Trident shall receive the following compensation for its services hereunder: (a) A commission equal to 1.85% of the aggregate dollar amount of Common Stock sold to investors who reside in the State of Maryland and a commission equal to 1.40% on sales to investors residing outside the state of Maryland. All such fees are to be payable in next-day funds to Trident on the Closing Date. No commissions shall be payable on shares purchased by officers, directors, employees or their associates or employee plans. Further, all commissions shall be based on the amount of stock sold; however, for the purpose of calculating Trident's commission, it shall be assumed that the amount of stock sold shall not be in excess of the midpoint of the appraised value as stated in the Prospectus. (b) For stock sold by other NASD member firms under selected dealer's agreements, the commission shall not exceed a fee to be agreed upon jointly by Trident and the Association to reflect market requirements at the time of the stock allocation in a Syndicated Public Offering. (c) Trident shall be reimbursed for allocable expenses, incurred by it whether or not the Offerings are successfully completed; provided, however, that reimbursable legal fees (non "Blue Sky" related matters) will not exceed $34,000, that other reimbursable expenses will not exceed $12,000 and that neither the Company nor the Association shall pay or reimburse Trident for any of the foregoing expenses accrued after Trident shall have notified the Company or the Association of its election to terminate this Agreement pursuant to Section 11 hereof or after such time as the Company or the Association shall have given notice in accordance with Section 12 hereof that Trident is in breach of this Agreement. Full payment to defray Trident's reimbursable expenses shall be made in next-day funds on the Closing Date or, if the Conversion is not completed and is terminated for any reason, within ten (10) business days of receipt by the Company of a written request from Trident for reimbursement of its expenses. Trident acknowledges receipt of $_____ advance payment from the Association which shall be credited against the total reimbursement due Trident hereunder. (d) Notwithstanding the limitations on reimbursement of Trident for allocable expenses provided in the immediately preceding paragraph (c), in the event that a resolicitation or other event causes the Offerings to be extended beyond their original expiration date, Trident shall be reimbursed for its allocable expenses incurred during such extended period, provided that the allowance for allocable expenses provided for in the immediately preceding paragraph (c) above have been Trident Securities, Inc. Sales Agency Agreement Page 15 exhausted and subject to the following. Such reimbursement shall be in amount equal to the product obtained by dividing $_____ (original out-of-pocket expenses) by the total number of days of the unextended Subscription Offering (calculated from the date of the Prospectus to the intended close of the Subscription Offering as stated in the Prospectus) and multiplying such product by the number of days of the extension (that number of days from the date of the supplemental prospectus used in the extended Subscription Offering to the closing of the extension of the Subscription Offering described in such supplemental prospectus). The Company shall pay any stock issue and transfer taxes which may be payable with respect to the sale of the Shares. The Company and the Association shall also pay all expenses of the Conversion incurred by them or on their prior approval including but not limited to their attorneys' fees, NASD filing fees, and attorneys' fees relating to any required state securities laws research and filings, telephone charges, air freight, rental equipment, supplies, transfer agent charges, fees relating to auditing and accounting and costs of printing all documents necessary in connection with the Conversion. 4. Offering. Subject to the provisions of Section 7 hereof, Trident is assisting the Company on a best efforts basis in offering a minimum of 595,000 and a maximum of 805,000 Shares, with the possibility of offering up to 925,750 Shares (except as the Office may permit to be decreased or increased) in the Subscription and Community Offerings. The Shares are to be offered to the public at the price set forth on the cover page of the Prospectus and the first page of this Agreement. 5. Further Agreements. The Company and the Association jointly and severally covenant and agree that: (a) The Company shall deliver to Trident, from time to time, such number of copies of the Prospectus as Trident reasonably may request. The Company authorizes Trident to use the Prospectus in any lawful manner in connection with the offer and sale of the Shares. (b) The Company will notify Trident immediately upon discovery, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement becomes effective or any supplement to the Prospectus has been filed, (ii) of the issuance by the Commission of any stop order relating to the Registration Statement or of the initiation or the threat of any proceedings for that purpose, (iii) of the receipt of any notice with respect to the suspension of the qualification of the Shares for offering or sale in any jurisdiction, and (iv) of the receipt of any comments from the staff of the Commission relating to the Registration Statement. If the Commission enters a stop order relating to the Trident Securities, Inc. Sales Agency Agreement Page 16 Registration Statement at any time, the Company will make every reasonable effort to obtain the lifting of such order at the earliest possible moment. (c) During the time when a prospectus is required to be delivered under the Act, the Company will comply so far as it is able with all requirements imposed upon it by the Act, as now in effect and hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the continuance of offers and sales of or dealings in the Shares in accordance with the provisions hereof and the Prospectus. If during the period when the Prospectus is required to be delivered in connection with the offer and sale of the Shares any event relating to or affecting the Company and the Association, taken as a whole, shall occur as a result of which it is necessary, in the opinion of counsel for Trident, with the concurrence of counsel to the Company, to amend or supplement the Prospectus in order to make the Prospectus not false or misleading in light of the circumstances existing at the time it is delivered to a purchaser of the Shares, the Company forthwith shall prepare and furnish to Trident a reasonable number of copies of an amendment or amendments or of a supplement or supplements to the Prospectus (in form and substance satisfactory to counsel for Trident) which shall amend or supplement the Prospectus so that, as amended or supplemented, the Prospectus shall not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time the Prospectus is delivered to a purchaser of the Shares, not misleading. The Company will not file or use any amendment or supplement to the Registration Statement or the Prospectus of which Trident has not first been furnished a copy or to which Trident shall reasonably object after having been furnished such copy. For the purposes of this subsection the Company and the Association shall furnish such information with respect to themselves as Trident from time to time may reasonably request. (d) The Company and the Association have taken or will take all reasonably necessary action as may be required to qualify or register the Shares for offer and sale by the Company under the securities or blue sky laws of such jurisdictions as Trident and either the Company or its counsel may agree upon; provided, however, that the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any such jurisdiction. In each jurisdiction where such qualification or registration shall be effected, the Company, unless Trident agrees that such action is not necessary or advisable in connection with the distribution of the Shares, shall file and make such statements or reports as are, or reasonably may be, required by the laws of such jurisdiction. (e) Appropriate entries will be made in the financial records of the Trident Securities, Inc. Sales Agency Agreement Page 17 Association sufficient to establish a liquidation account for the benefit of eligible account holders as of March 31, 1996 and supplemental eligible account holders as of September 30, 1997 in accordance with the requirements of the Office. (f) The Company will file a registration statement for the Common Stock under Section 12(g) of the Exchange Act, prior to completion of the stock offering pursuant to the Plan and shall request that such registration statement be effective upon completion of the Conversion. The Company shall maintain the effectiveness of such registration for a minimum period of three years or for such shorter period as may be required by applicable law. (g) The Company will make generally available to its security holders as soon as practicable, but not later than 45 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 of the regulations promulgated under the Act) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the effective date (as defined in said Rule 158) of the Registration Statement. (h) For a period of three (3) years from the date of this Agreement (unless the Common Stock shall have been deregistered under the Exchange Act), the Company will furnish to Trident, as soon as publicly available after the end of each fiscal year, a copy of its annual report to shareholders for such year; and the Company will furnish to Trident (i) as soon as publicly available, a copy of each report or definitive proxy statement of the Company filed with the Commission under the Exchange Act or mailed to shareholders, and (ii) from time to time, such other public information concerning the Company as Trident may reasonably request. (i) The Company shall use the net proceeds from the sale of the Shares consistently with the manner set forth in the Prospectus. (j) The Company shall not deliver the Shares until each and every condition set forth in Section 7 hereof has been satisfied, unless such condition is waived by Trident. (k) The Company shall advise Trident, if necessary, as to the allocation of deposits, in the case of eligible account holders and supplemental eligible account holders and votes, in the case of other members, and of the Shares in the event of an oversubscription and shall provide Trident final instructions as to the allocation of the Shares ("Allocation Instructions") in such event and such information shall be accurate and reliable. Trident shall be entitled to rely on such instructions and shall have no liability in respect of its reasonable reliance thereon, Trident Securities, Inc. Sales Agency Agreement Page 18 including without limitation, no liability for or related to any denial or grant of a subscription in whole or in part. (l) The Company and the Association will take such actions and furnish such information as are reasonably requested by Trident in order for Trident to ensure compliance with the NASD's "Interpretation Relating to Free-Riding and Withholding." 6. Payment of Expenses. Whether or not the Conversion is consummated, the Company and the Association shall pay or reimburse Trident for (a) all filing fees paid or incurred by Trident in connection with all filings with the NASD with respect to the Subscription and Community Offerings and, (b) in addition, if the Company is unable to sell a minimum of 595,000 Shares or such lesser amount as the Office may permit or the Conversion is otherwise terminated, the Company and the Association shall reimburse Trident for allocable expenses incurred by Trident relating to the offering of the Shares as provided in Section 3 hereof; provided, however, that neither the Company nor the Association shall pay or reimburse Trident for any of the foregoing expenses accrued after Trident shall have notified the Company or the Association of its election to terminate this Agreement pursuant to Section 11 hereof or after such time as the Company or the Association shall have given notice in accordance with Section 12 hereof that Trident is in breach of this Agreement. 7. Conditions of Trident's Obligations. Except as may be waived by Trident, the obligations of Trident as provided herein shall be subject to the accuracy of the representations and warranties contained in Section 2 hereof as of the date hereof and as of the Closing Date, to the performance by the Company and the Association of their obligations hereunder and to the following conditions: (a) At the Closing Date, Trident shall receive the favorable opinions of Silver, Freedman & Taff, L.L.P., special counsel for the Company and the Association, and _________________, Attorney at Law, counsel to the Association, dated the Closing Date, addressed to Trident, in form and substance reasonably satisfactory to counsel for Trident substantially as set forth in Exhibits B and C, respectively, hereto: Trident Securities, Inc. Sales Agency Agreement Page 19 In rendering such opinions, such counsel may rely as to matters of fact on certificates of officers and directors of the Company and the Association and certificates of public officials delivered pursuant hereto. Such counsel may assume that any agreement is the valid and binding obligation of any parties to such agreement other than the Company and the Association. Such opinions may be governed by, and interpreted in accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991), and, as a consequence, references in such opinions to such counsel's "knowledge" may be limited to "actual knowledge" as defined in the Accord (or knowledge based on certificates). Such opinions may be limited to present statutes, regulations and judicial interpretations and to facts as they presently exist; in rendering such opinions, such counsel need assume no obligation to revise or supplement them should the present laws be changed by legislative or regulatory action, judicial decision or otherwise; and such counsel need express no view, opinion or belief with respect to whether any proposed or pending legislation, if enacted, or any regulations or any policy statements issued by any regulatory agency, whether or not promulgated pursuant to any such legislation, would affect the validity of the execution and delivery by the Company and the Association of this Agreement or the issuance of the Shares. (b) At the Closing Date, Trident shall receive the letters of Silver, Freedman & Taff, L.L.P., special counsel for the Company and the Association, dated the Closing Date, addressed to Trident, in form and substance reasonably satisfactory to counsel for Trident substantially as set forth in Exhibit D, hereto: (c) Counsel for Trident shall have been furnished such documents as they reasonably may require for the purpose of enabling them to review or pass upon the matters required by Trident, and for the purpose of evidencing the accuracy, completeness or satisfaction of any of the representations, warranties or conditions herein contained, including but not limited to, resolutions of the Board of Directors of the Company and the Association regarding the authorization of this Agreement and the transactions contemplated hereby. (d) Prior to and at the Closing Date, in the reasonable opinion of Trident, (i) there shall have been no material change in the financial condition, business or results of operations of the Company and the Association, taken as a whole, since the latest date as of which such condition is set forth in the Prospectus, except as referred to therein; (ii) there shall have been no transaction entered into by the Company and the Association after the latest date as of which the financial condition of the Company or the Association is set forth in the Prospectus other than transactions referred to or contemplated therein, transactions in the ordinary course of business, and transactions which are not material to the Company and the Trident Securities, Inc. Sales Agency Agreement Page 20 Association, taken as a whole; (iii) none of the Company or the Association shall have received from the Office or Commission any direction (oral or written) to make any change in the method of conducting their respective businesses which is material to the business of the Company and the Association, taken as a whole, with which they have not complied; (iv) no action, suit or proceeding, at law or in equity or before or by any federal or state commission, board or other administrative agency, shall be pending or threatened against the Company or the Association or affecting any of their respective assets, wherein an unfavorable decision, ruling or finding would have a material adverse effect on the business, operations, financial condition or income of the Company and the Association, taken as a whole; and (v) the Shares shall have been qualified or registered for offering and sale by the Company under the securities or blue sky laws of such jurisdictions as Trident and the Company shall have agreed upon. (e) At the Closing Date, Trident shall receive a certificate of the principal executive officer and the principal financial officer of each of the Company and the Association, dated the Closing Date, to the effect that: (i) they have examined the Prospectus and, at the time the Prospectus became authorized by the Company for use, the Prospectus did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading with respect to the Company or the Association; (ii) since the date the Prospectus became authorized by the Company for use, no event has occurred which should have been set forth in an amendment or supplement to the Prospectus which has not been so set forth, including specifically, but without limitation, any material change in the business, financial condition or results of operations of the Company or the Association and, the conditions set forth in clauses (ii) through (iv) inclusive of subsection (d) of this Section 7 have been satisfied; (iii) to the best knowledge of such officers, no order has been issued by the Commission or the Office to suspend the Subscription Offering or the Community Offering or the effectiveness of the Prospectus, and no action for such purposes has been instituted or threatened by the Commission or the Office; (iv) to the best knowledge of such officers, no person has sought to obtain review of the final actions of the Office and division approving the Plan; and (v) all of the representations and warranties contained in Section 2 of this Agreement are true and correct, with the same force and effect as though expressly made on the Closing Date. (f) At the Closing Date, Trident shall receive, among other documents, (i) copies of the letters from the Office authorizing the use of the Prospectus and the Proxy Statement, (ii) a copy of the order of the Commission declaring the Registration Statement effective; (iii) copies of the letters from the Office evidencing Trident Securities, Inc. Sales Agency Agreement Page 21 the corporate existence of the Association; (iv) a copy of the letter from the appropriate Delaware authority evidencing the incorporation (and, if generally available from such authority, good standing) of the Company; (v) a copy of the Company's corporate charter certified by the appropriate Delaware governmental authority; and, (vi) if available, a copy of the letter from the Office approving the Association's Stock Charter. (g) As soon as available after the Closing Date, Trident shall receive a copy of the Association's certified Federal Stock Charter executed by the appropriate federal governmental authority. (h) Concurrently with the execution of this Agreement, Trident acknowledges receipt of a letter from Wooden & Benson, Chartered, independent certified public accountants, addressed to Trident and the Company, in substance and form satisfactory to counsel for Trident, with respect to the financial statements and certain financial information contained in the Prospectus. (i) At the Closing Date, Trident shall receive a letter in form and substance satisfactory to counsel for Trident from Wooden & Benson, Chartered, independent certified public accountants, dated the Closing Date and addressed to Trident and the Company, confirming the statements made by them in the letter delivered by them pursuant to the preceding subsection as of a specified date not more than five (5) days prior to the Closing Date. All such opinions, certificates, letters and documents shall be in compliance with the provisions hereof only if they are, in the reasonable opinion of Trident and its counsel, satisfactory to Trident and its counsel. Any certificates signed by an officer or director of the Company or the Association prepared for Trident's reliance and delivered to Trident or to counsel for Trident shall be deemed a representation and warranty by the Company and the Association to Trident as to the statements made therein. If any condition to Trident's obligations hereunder to be fulfilled prior to or at the Closing Date is not so fulfilled, Trident may terminate this Agreement or, if Trident so elects, may waive any such conditions which have not been fulfilled, or may extend the time of their fulfillment. If Trident terminates this Agreement as aforesaid, the Company and the Association shall reimburse Trident for its expenses as provided in Section 3(b) hereof. Trident Securities, Inc. Sales Agency Agreement Page 22 8. Indemnification. (a) The Company and the Association jointly and severally agree to indemnify and hold harmless Trident, its officers, directors and employees and each person, if any, who controls Trident within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against any and all loss, liability, claim, damage and expense whatsoever and shall further promptly reimburse such persons for any legal or other expenses reasonably incurred by each or any of them in investigating, preparing to defend or defending against any such action, proceeding or claim (whether commenced or threatened) arising out of or based upon (A) any misrepresentation by the Company or the Association in this Agreement or any breach of warranty by the Company or the Association with respect to this Agreement or arising out of or based upon any untrue or alleged untrue statement of a material fact or the omission or alleged omission of a material fact required to be stated or necessary to make not misleading any statements contained in (i) the Registration Statement or the Prospectus or (ii) any application (including the Form AC and the Form H-(e)1-S) or other document or communication (in this Section 8 collectively called "Application") prepared or executed by or on behalf of the Company or the Association or based upon written information furnished by or on behalf of the Company or the Association, whether or not filed in any jurisdiction, to effect the Conversion or qualify the Shares under the securities laws thereof or filed with the Office or Commission, unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or the Association with respect to Trident by or on behalf of Trident expressly for use in the Prospectus or any amendment or supplement thereof or in any Application, as the case may be, or (B) the participation by Trident in the Conversion. This indemnity shall be in addition to any liability the Company and the Association may have to Trident otherwise. (b) The Company shall indemnify and hold Trident harmless for any liability whatsoever arising out of (i) the Allocation Instructions or (ii) any records of account holders, depositors, borrowers and other members of the Association delivered to Trident by the Association or its agents for use during the Conversion. (c) Trident agrees to indemnify and hold harmless the Company and the Association, their officers, directors and employees and each person, if any, who controls the Company and the Association within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity from the Company and the Association to Trident, but only with respect to (A) statements or omissions, if any, made in the Prospectus or any amendment or supplement thereof, in any Application or to a purchaser of the Shares in reliance Trident Securities, Inc. Sales Agency Agreement Page 23 upon, and in conformity with, written information furnished to the Company or the Association with respect to Trident by or on behalf of Trident expressly for use in the Prospectus or in any Application; (B) any misrepresentation by Trident in Section 2(b) of this Agreement; or (C) any liability of the Company or the Association which is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have principally and directly resulted from gross negligence or willful misconduct of Trident. (d) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 8. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with the other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than the reasonable cost of investigation except as otherwise provided herein. In the event the indemnifying party elects to assume the defense of any such action and retain counsel acceptable to the indemnified party, the indemnified party may retain additional counsel, but shall bear the fees and expenses of such counsel unless (i) the indemnifying party shall have specifically authorized the indemnified party to retain such counsel or (ii) the parties to such suit include such indemnifying party and the indemnified party, and such indemnified party shall have been advised by counsel that one or more material legal defenses may be available to the indemnified party which may not be available to the indemnifying party, in which case the indemnifying party shall not be entitled to assume the defense of such suit notwithstanding the indemnifying party's obligation to bear the fees and expenses of such counsel. An indemnifying party against whom indemnity may be sought shall not be liable to indemnify an indemnified party under this Section 8 if any settlement of any such action is effected without such indemnifying party's consent. Notwithstanding the provisions of this Section 8, the Association shall not provide indemnification to the Company or Trident solely to the extent that such indemnification would cause the Association to violate Section 23A or Section 23B. Trident Securities, Inc. Sales Agency Agreement Page 24 9. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 8 above is for any reason held to be unavailable to Trident, the Company and/or the Association other than in accordance with its terms, the Company or the Association and Trident shall contribute to the aggregate losses, liabilities, claims, damages, and expenses of the nature contemplated by said indemnity agreement incurred by the Company or the Association and Trident (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Association on the one hand and Trident on the other from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above, but also the relative fault of the Company or the Association on the one hand and Trident on the other hand in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Association on the one hand and Trident on the other shall be deemed to be in the same proportions as the total net proceeds from the Conversion received by the Company and the Association bear to the total fees received by Trident under this Agreement. The relative fault of the Company or the Association on the one hand and Trident on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Association or by Trident and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Association and Trident agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by the indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 9, Trident shall not be required to contribute any amount in excess of the amount by which fees owed Trident pursuant to this Agreement exceeds the amount of any damages which Trident has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. Notwithstanding the provisions of this Section 9, the Association shall not provide contribution to the Company or Trident solely to the extent that such contribution would cause the Association to violate Section 23A or Section 23B. Trident Securities, Inc. Sales Agency Agreement Page 25 10. Survival of Agreements, Representations and Indemnities. The respective indemnities of the Company and the Association and Trident and the representation and warranties of the Company and the Association and of Trident set forth in or made pursuant to this Agreement shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of Trident or the Company or the Association or any controlling person or indemnified party referred to in Section 8 hereof, and shall survive any termination or consummation of this Agreement and/or the issuance of the Shares, and any legal representative of Trident, the Company, the Association and any such controlling persons shall be entitled to the benefit of the respective agreements, indemnities, warranties and representations. 11. Termination. Trident may terminate this Agreement by giving the notice indicated below in this Section at any time after this Agreement becomes effective as follows: (a) If any domestic or international event or act or occurrence has materially disrupted the United States securities markets such as to make it, in Trident's reasonable opinion, impracticable to proceed with the offering of the Shares; or if trading on the New York Stock Exchange shall have suspended; or if the United States shall have become involved in a war or major hostilities; or if a general banking moratorium has been declared by a state or federal authority which has material effect on the Association or the Conversion; or if a moratorium in foreign exchange trading by major international associations or persons has been declared; or if there shall have been a material change in the capitalization, condition or business of the Company, or if the Association shall have sustained a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act, whether or not said loss shall have been insured; or if there shall have been a material change in the condition or prospects of the Company or the Association. (b) If Trident elects to terminate this Agreement as provided in this Section, the Company and the Association shall be notified promptly by Trident by telephone or telegram, confirmed by letter. (c) If this Agreement is terminated by Trident for any of the reasons set forth in subsection (a) above, and to fulfill its obligations, if any, pursuant to Sections 3, 6, 8(a) and 9 of this Agreement and upon demand, the Company and the Association shall pay Trident the full amount so owing thereunder. (d) The Association may terminate the Conversion in accordance with the terms of the Plan. Such termination shall be without liability to any party, except Trident Securities, Inc. Sales Agency Agreement Page 26 that the Company and the Association shall be required to fulfill their obligations, to the extent applicable, pursuant to Sections 3(b), 3(c), 6, 8(a) and 9 of this Agreement. 12. Notices. All communications hereunder, except as herein otherwise specifically provided, shall be in writing and if sent to Trident shall be mailed, delivered or telegraphed and confirmed to Trident Securities, Inc., 4601 Six Forks Road, Suite 400, Raleigh, North Carolina 27609, Attention: Mr. R. Lee Burrows, Jr. (with a copy to Luse Lehman Gorman Pomerenk & Schick, 5335 Wisconsin Avenue, N.W., Suite 400, Washington, D.C. 20015, Attention: Ken Lehman, Esquire) and if sent to the Company or the Association shall be mailed, delivered or telegraphed and confirmed to Wyman Park Federal Savings & Loan Association, 11 West Ridgely Road, Lutherville, Maryland 21094, Attention: Ernest A. Moretti, President (with a copy to Silver, Freedman & Taff, L.L.P., Suite 700, 1100 New York Avenue, N.W., Washington, D.C. 20005-3934, Attention: Jeffrey M. Werthan, P.C.). 13. Parties. This Agreement shall inure solely to the benefit of, and shall be binding upon, Trident, the Company, the Association and the controlling and other persons referred to in Section 8 hereof, and their respective successors, legal representatives and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained. 14. Construction. Unless governed by preemptive federal law, this Agreement shall be governed by and construed in accordance with the substantive laws of North Carolina. 15. Counterparts. This Agreement may be executed in separate counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute but one and the same instrument. Trident Securities, Inc. Sales Agency Agreement Page 27 Please acknowledge your agreement to the foregoing by signing below and returning to the Company one copy of this letter. WYMAN PARK BANCORPORATION, INC. WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION By: ___________________________ By: _______________________ Ernest A. Moretti Ernest A. Moretti President and Chief President and Chief Executive Officer Executive Officer Date: _________________________ Date: _____________________ Agreed to and accepted: TRIDENT SECURITIES, INC. By: ___________________________ Date: _________________________ Exhibit A Jurisdictions where Trident is a Registered Selling Agent Trident Securities, Inc. is a registered selling agent in the jurisdictions listed below: Alabama Missouri Arizona Nebraska Arkansas Nevada California New Hampshire Colorado New Jersey Connecticut New Mexico Delaware New York District of Columbia North Carolina Florida North Dakota (Trident Securities, Inc. only, no agents) Georgia Ohio Idaho Oklahoma Illinois Oregon Indiana Pennsylvania Iowa Rhode Island Kansas South Carolina Kentucky Tennessee Louisiana Texas Maine Vermont Maryland Virginia Massachusetts Washington Michigan West Virginia Minnesota Wisconsin Mississippi Wyoming Trident Securities, Inc. is not a registered selling agent in the jurisdictions listed below: Alaska Hawaii Montana South Dakota Utah A-1 Exhibit B [Silver, Freedman & Taff, L.L.P. to insert introduction] (i) the Company has been duly incorporated, and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, and the Association is validly existing as a mutual savings association under the laws of the United States, each with full power and authority to own its properties and conduct its business as described in the Prospectus; (ii) the Association is a member of the Federal Home Loan Bank of Atlanta, and the deposit accounts of the Association are insured by the SAIF up to the applicable legal limits; (iii) to the best of our knowledge, the activities of the Association as such activities are described in the Prospectus are permitted under federal and Delaware law to subsidiaries of a Delaware business corporation and the Association does not have any subsidiaries; (iv) The Plan complies with, and, to the best of our knowledge, the Conversion of the Association from a federally chartered mutual savings association to a federally chartered stock savings association and the creation of the Company as a holding company for the Association have been effected in all material respects in accordance with, the HOLA and the OTS Regulations; to the best of our knowledge, all of the terms, conditions, requirements and provisions with respect to the Plan and the Conversion imposed by the Office, except with respect to the filing or submission of certain required post-Conversion reports or other materials by the Company or the Association, have been complied with by the Company and the Association; and, to the best of our knowledge, no person has sought to obtain regulatory or judicial review of the final action of the Office in approving the Plan; (v) the Company has authorized Common Stock as set forth in the Registration Statement and the Prospectus, and the description of such Common Stock in the Registration Statement and the Prospectus is accurate in all material respects; B-1 (vi) the issuance and sale of the Shares have been duly and validly authorized by all necessary corporate action on the part of the Company; the Shares, upon receipt of payment and issuance in accordance with the terms of the Plan and this Agreement, will be validly issued, fully paid, nonassessable and, except as disclosed in the Prospectus, free of preemptive rights, and good title thereto shall be transferred by the Company free and clear of all claims, encumbrances, security interests and liens created by the Company; (vii) the form of certificate used to evidence the Shares is in proper form and complies in all material respects with applicable Delaware law; (viii) the issuance and sale of the capital stock of the Association to the Company have been duly authorized by all necessary corporate action of the Association and the Company and have received the approval of the Office, and such capital stock, upon receipt of payment and issuance in accordance with the terms of the Plan, will be validly issued, fully paid and nonassessable and owned of record and, to our actual knowledge, beneficially by the Company; (ix) subject to the satisfaction of the conditions to the Office's approval of the Conversion Application, no further approval, authorization, consent or other order of any federal government board or body is required in connection with the execution and delivery of this Agreement, and the consummation of the Conversion, except with respect to the issuance to the Association of the Stock Charter by the Office and as may be required under the "blue sky" laws of various jurisdictions; (x) the execution and delivery of this Agreement and the consummation of the Conversion have been duly and validly authorized by all necessary corporate action on the part of each of the Company and the Association; (xi) the statements in the Prospectus and incorporated by reference in the Proxy Statement under the captions "Regulation," "Dividends," "Restrictions on Acquisitions of Stock and Related Takeover Defensive Provisions" and "Description of Capital Stock," insofar as they are, or refer to, statements of law or legal conclusions (excluding financial data included therein, as to which no opinion is expressed), have been prepared B-2 or reviewed by us and are correct in all material respects; (xii) the Form AC has been approved by the Office, and the Prospectus and the Proxy Statement have been authorized for use by the Office; the Registration Statement and any post-effective amendment thereto has been declared effective by the Commission; except as to any necessary qualifications or registration under the securities laws of the jurisdictions in which the Shares were offered, no further approval of any governmental authority is required for the issuance and sale of the Shares (subject to the satisfaction of various conditions subsequent imposed by the Office in connection with its approval of the Conversion Application), and, to the best of our knowledge, no proceedings are pending by or before the Commission or the Office seeking to revoke or rescind the orders declaring the Registration Statement effective or approving the Conversion Application or, to the best of our knowledge, are contemplated or threatened (provided that for this purpose we do not regard any litigation or governmental procedure to be "threatened" unless the potential litigant or government authority has manifested to the management of the Company or the Association, or to us, a present intention to initiate such litigation or proceeding); (xiii) the execution and delivery of this Agreement and the consummation of the Conversion by the Company and the Association do not conflict with or result in a breach of the charter or bylaws of the Company or the Association (in either mutual or stock form) (xiv) the Conversion Application, the Registration Statement, the Prospectus and the Proxy Statement, in each case as amended, comply as to form in all material respects with the requirements of the Act, the HOLA, the SEC Regulations and the OTS Regulations, as the case may be (except as to information with respect to Trident included therein and financial statements, notes to financial statements, financial tables and other financial and statistical data, including the appraisal, included therein, as to which no opinion is expressed); to the best of our knowledge, all material documents and exhibits required to be filed with the Conversion Application and the Registration Statement have been so filed and the descriptions in the Conversion Application and the Registration Statement of such documents and exhibits are accurate in all material respects. [Silver, Freedman & Taff, L.L.P. to insert conclusion] B-3 Exhibit C [_________________, Attorney at Law to insert introduction] (i) to our actual knowledge, the Association has obtained all licenses, permits and other governmental authorizations currently required for the conduct of its business as such business is described in the Prospectus, all such licenses, permits and other governmental authorizations are in full force and effect and the Association is in all material respects complying therewith, except where the failure to hold such licenses, permits or governmental authorizations or the failure to so comply would not have a material adverse effect on the Company and the Association, taken as a whole; (ii) there are no material legal or governmental proceedings pending or, to our actual knowledge, threatened against or involving the assets of the Company or the Association (provided that for this purpose we do not regard any litigation or governmental procedure to be "threatened" unless the potential litigant or government authority has manifested to the management of the Company or the Association, or to us, a present intention to initiate such litigation or proceeding); (iii) to our actual knowledge, the execution and delivery of the Agreement and the consummation of the Conversion by the Company and the Association do not constitute a material breach of or default (or an event which, with notice or lapse of time or both, would constitute a default) under, give rise to any right of termination, cancellation or acceleration contained in, or result in the creation or imposition of any lien, charge or other encumbrance upon any of the properties or assets of the Company or the Association pursuant to any of the terms, provisions or conditions of, any material agreement, contract, indenture, bond, debenture, note, instrument or obligation to which the Company or the Association is a party or violate any governmental license or permit or any enforceable published law, administrative regulation or order or court order, writ, injunction or decree (subject to the satisfaction of certain conditions imposed by the Office in connection with its approval of the Conversion Application), which breach, default, encumbrance or violation would have a material adverse effect on C-1 the financial condition, operations, business, assets or properties of the Company and the Association taken as a whole; (iv) to our actual knowledge, there has been no material breach of any provision of the Company's or the Association's charter or bylaws or breach or default (or the occurrence of any event which, with notice or lapse of time or both, would constitute a default) under any agreement, contract, indenture, bond, debenture, note, instrument or obligation to which the Company or the Association is a party or by which any of them or any of their respective assets or properties may be bound, or any governmental license or permit, or a violation of any enforceable published law, administrative regulation or order, or court order, writ, injunction or decree which breach, default, encumbrance or violation would have a material adverse effect on the financial condition, operations, business, assets or properties of the Company and the Association taken as a whole; and, (v) the Agreement is a legal, valid and binding obligation of each of the Company and the Association, enforceable in accordance with its terms (except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization, receivership, conservatorship or similar laws relating to or affecting the enforcement of creditors' rights generally or the rights of creditors of depository institutions whose accounts are insured by the FDIC or savings and loan holding companies the accounts of whose subsidiaries are insured by the FDIC or by general equity principles, regardless of whether such enforceability is considered in a proceeding in equity or at law, and except to the extent that the provisions of Sections 8 and 9 hereof may be unenforceable as against public policy or pursuant to Section 23A or Section 23B, as to which we render no opinion); [_________________, Attorney at Law to insert conclusion] C-2 Exhibit D [Silver, Freedman & Taff, L.L.P. to insert introduction] Based on such counsel's participation in conferences with representatives of the Company, the Association, its counsel, the independent appraiser, the independent certified public accountants, Trident and its counsel, review of documents and understanding of applicable law (including the requirements of Form SB-2 and the character of the Registration Statement contemplated thereby) and the experience such counsel has gained in its practice under the Act, nothing has come to such counsel's attention that would lead it to believe that the Registration Statement, as amended (except as to information in respect of Trident contained therein and except as to the financial statements, notes to financial statements, financial tables and other financial and statistical data contained therein, as to which such counsel expresses no opinion), at the time it became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading, or that the Prospectus, as amended (except as to information in respect of Trident contained therein and except as to financial statements, notes to financial statements, financial tables and other financial and statistical data contained therein as to which such counsel expresses no opinion), as of the date of the Prospectus and at the Closing Date, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (in making this statement such counsel may state that it has not undertaken to verify independently the information in the Registration Statement or Prospectus and, therefore, does not assume any responsibility for the accuracy or completeness thereof). [Silver, Freedman & Taff, L.L.P. to insert conclusion] D-1 EX-2 4 EXHIBIT 2 EXHIBIT 2 PLAN OF CONVERSION WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION Lutherville, Maryland PLAN OF CONVERSION From Mutual to Stock Form of Organization I. GENERAL On June 18, 1997, the Board of Directors of Wyman Park Federal Savings & Loan Association (the "Association") adopted a Plan of Conversion whereby the Association would convert from a federal mutual savings institution to a federal stock savings institution pursuant to the Rules and Regulations of the OTS. The Plan includes, as part of the conversion, the concurrent formation of a holding company. The new holding company is proposed to be chartered as a Delaware corporation under the name to be selected. The Plan provides that non-transferable subscription rights to purchase Holding Company Conversion Stock will be offered first to Eligible Account Holders of record as of the Eligibility Record Date, then to the Association's Tax-Qualified Employee Plans, then to Supplemental Eligible Account Holders of record as of the Supplemental Eligibility Record Date, then to Other Members, and then to directors, officers and employees. Concurrently with, at any time during, or promptly after the Subscription Offering, and on a lowest priority basis, an opportunity to subscribe may also be offered to the general public in a Direct Community Offering. The price of the Holding Company Conversion Stock will be based upon an independent appraisal of the Association and will reflect its estimated pro forma market value, as converted. It is the desire of the Board of Directors of the Association to attract new capital to the Association in order to increase its capital, support future savings growth and increase the amount of funds available for residential and other mortgage lending. The Converted Association is also expected to benefit from its management and other personnel having a stock ownership in its business, since stock ownership is viewed as an effective performance incentive and a means of attracting, retaining and compensating management and other personnel. No change will be made in the Board of Directors or management as a result of the Conversion. II. DEFINITIONS Acting in Concert: The term "acting in concert" shall have the same meaning given it in ss.574.2(c) of the Rules and Regulations of the OTS. Actual Subscription Price: The price per share, determined as provided in Section V of the Plan, at which Holding Company Conversion Stock will be sold in the Subscription Offering. Affiliate: An "affiliate" of, or a Person "affiliated" with, a specified Person, is a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified. Associate: The term "associate," when used to indicate a relationship with any Person, means (i) any corporation or organization (other than the Holding Company, the Association or 1 a majority-owned subsidiary of the Holding Company) of which such Person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of equity securities, (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person or who is a director or officer of the Holding Company or the Association or any subsidiary of the Holding Company; provided, however, that any Tax-Qualified or Non-Tax- Qualified Employee Plan shall not be deemed to be an associate of any director or officer of the Holding Company or the Association, to the extent provided in Section V hereof. Association: Wyman Park Federal Savings & Loan Association, or such other name as the institution may adopt. Conversion: Change of the Association's charter and bylaws to federal stock charter and bylaws; sale by the Holding Company of Holding Company Conversion Stock; and issuance and sale by the Converted Association of Converted Association Common Stock to the Holding Company, all as provided for in the Plan. Converted Association: The federally chartered stock savings institution resulting from the Conversion of the Association in accordance with the Plan. Deposit Account: Any withdrawable or repurchasable account or deposit in the Association, including Savings Accounts and demand deposits. Direct Community Offering: The offering to the general public of any unsubscribed shares which may be effected as provided in Section V hereof. Eligibility Record Date: The close of business on March 31, 1996. Eligible Account Holder: Any Person holding a Qualifying Deposit in the Association on the Eligibility Record Date. Exchange Act: The Securities Exchange Act of 1934, as amended. Holding Company: A Delaware corporation, the name of which will be determined, which upon completion of the Conversion will own all of the outstanding common stock of the Converted Association. Holding Company Conversion Stock: Shares of common stock, par value $.01 per share, to be issued and sold by the Holding Company as a part of the Conversion; provided, however, that for purposes of calculating Subscription Rights and maximum purchase limitations under the Plan, references to the number of shares of Holding Company Conversion Stock shall refer to the number of shares offered in the Subscription Offering. 2 Market Maker: A dealer (i.e., any Person who engages directly or indirectly as agent, broker or principal in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another Person) who, with respect to a particular security, (i) regularly publishes bona fide, competitive bid and offer quotations in a recognized inter-dealer quotation system; or (ii) furnishes bona fide competitive bid and offer quotations on request; and (iii) is ready, willing, and able to effect transactions in reasonable quantities at his quoted prices with other brokers or dealers. Maximum Subscription Price: The price per share of Holding Company Conversion Stock to be paid initially by subscribers in the Subscription Offering. Member: Any Person or entity that qualifies as a member of the Association pursuant to its charter and bylaws. Non-Tax-Qualified Employee Plan: Any defined benefit plan or defined contribution plan of the Association or the Holding Company, such as an employee stock ownership plan, stock bonus plan, profit-sharing plan or other plan, which with its related trust does not meet the requirements to be "qualified" under Section 401 of the Internal Revenue Code. OTS: Office of Thrift Supervision, Department of the Treasury. Officer: An executive officer of the Holding Company or the Association, including the Chairman of the Board, President, Executive Vice Presidents, Senior Vice Presidents in charge of principal business functions, Secretary and Treasurer. Order Forms: Forms to be used in the Subscription Offering to exercise Subscription Rights. Other Members: Members of the Association, other than Eligible Account Holders, Tax-Qualified Employee Plans or Supplemental Eligible Account Holders, as of the Voting Record Date. Person: An individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision thereof. Plan: This Plan of Conversion of the Association, including any amendment approved as provided in this Plan. Qualifying Deposit: The aggregate balance of each Deposit Account of an Eligible Account Holder as of the Eligibility Record Date or of a Supplemental Eligible Account Holder as of the Supplemental Eligibility Record Date. SAIF: Savings Association Insurance Fund. Savings Account: The term "Savings Account" means any withdrawable account in the Association, except a demand account. SEC: Securities and Exchange Commission. 3 Special Meeting: The Special Meeting of Members called for the purpose of considering and voting upon the Plan of Conversion. Subscription Offering: The offering of shares of Holding Company Conversion Stock for subscription and purchase pursuant to Section V of the Plan. Subscription Rights: Non-transferable, non-negotiable, personal rights of the Association's Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders, Other Members, and directors, Officers and employees to subscribe for shares of Holding Company Conversion Stock in the Subscription Offering. Supplemental Eligibility Record Date: The last day of the calendar quarter preceding approval of the Plan by the OTS. Supplemental Eligible Account Holder: Any person holding a Qualifying Deposit in the Association (other than an officer or director and their associates) on the Supplemental Eligibility Record Date. Tax-Qualified Employee Plans: Any defined benefit plan or defined contribution plan of the Association or the Holding Company, such as an employee stock ownership plan, stock bonus plan, profit-sharing plan or other plan, which with its related trust meets the requirements to be "qualified" under Section 401 of the Internal Revenue Code. Voting Record Date: The date set by the Board of Directors in accordance with federal regulations for determining Members eligible to vote at the Special Meeting. III. STEPS PRIOR TO SUBMISSION OF PLAN OF CONVERSION TO THE MEMBERS FOR APPROVAL Prior to submission of the Plan of Conversion to its Members for approval, the Association must receive from the OTS approval of the Application for Approval of Conversion to convert to the federal stock form of organization. The following steps must be taken prior to such regulatory approval: A. The Board of Directors shall adopt the Plan by not less than a two-thirds vote. B. The Association shall notify its Members of the adoption of the Plan by publishing a statement in a newspaper having a general circulation in each community in which the Association maintains an office. C. Copies of the Plan adopted by the Board of Directors shall be made available for inspection at each office of the Association. 4 D. The Association will promptly cause an Application for Approval of Conversion on Form AC to be prepared and filed with the OTS, an Application on Form H-(e)1 (or other applicable form) to be prepared and filed with the OTS and a Registration Statement on Form S-1 to be prepared and filed with the SEC. E. Upon receipt of notice from the OTS to do so, the Association shall notify its Members that it has filed the Application for Approval of Conversion by posting notice in each of its offices and by publishing notice in a newspaper having general circulation in each community in which the Association maintains an office. IV. CONVERSION PROCEDURE Following approval of the application by the OTS, the Plan will be submitted to a vote of the Members at the Special Meeting. If the Plan is approved by Members holding a majority of the total number of votes entitled to be cast at the Special Meeting, the Association will take all other necessary steps pursuant to applicable laws and regulations to convert to a federal stock savings institution as part of a concurrent holding company formation pursuant to the terms of the Plan. The Holding Company Conversion Stock will be offered for sale in the Subscription Offering at the Maximum Subscription Price to Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders, Other Members and directors, Officers and employees of the Association, prior to or within 45 days after the date of the Special Meeting. The Association may, either concurrently with, at any time during, or promptly after the Subscription Offering, also offer the Holding Company Conversion Stock to and accept subscriptions from other Persons in a Direct Community Offering; provided that the Association's Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders, Other Members and directors, Officers and employees shall have the priority rights to subscribe for Holding Company Conversion Stock set forth in Section V of this Plan. However, the Holding Company and the Association may delay commencing the Subscription Offering beyond such 45 day period in the event there exist unforeseen material adverse market or financial conditions. If the Subscription Offering commences prior to the Special Meeting, subscriptions will be accepted subject to the approval of the Plan at the Special Meeting. The period for the Subscription Offering and Direct Community Offering will be not less than 20 days nor more than 45 days unless extended by the Association. In connection with such extensions, subscribers and other purchasers will be permitted to increase, decrease or rescind their subscriptions or purchase orders to the extent required by the OTS in approving the extensions. Completion of the sale of all shares of Holding Company Conversion Stock is required within 24 months after the date of the Special Meeting. 5 V. STOCK OFFERING A. Total Number of Shares and Purchase Price of Holding Company Conversion Stock The total number of shares of Holding Company Conversion Stock to be issued and sold in the Conversion will be determined jointly by the Boards of Directors of the Holding Company and the Association prior to the commencement of the Subscription Offering, subject to adjustment if necessitated by market or financial conditions prior to consummation of the Conversion. The total number of shares of Holding Company Conversion Stock shall also be subject to increase in connection with any oversubscriptions in the Subscription Offering or Direct Community Offering. The aggregate price for which all shares of Holding Company Conversion Stock will be sold will be based on an independent appraisal of the estimated total pro forma market value of the Holding Company and the Converted Association. Such appraisal shall be performed in accordance with OTS guidelines and will be updated as appropriate under or required by applicable regulations. The appraisal will be made by an independent investment banking or financial consulting firm experienced in the area of thrift institution appraisals. The appraisal will include, among other things, an analysis of the historical and pro forma operating results and net worth of the Converted Association and a comparison of the Holding Company, the Converted Association and the Holding Company Conversion Stock with comparable thrift institutions and holding companies and their respective outstanding capital stocks. Based upon the independent appraisal, the Boards of Directors of the Holding Company and the Association will jointly fix the Maximum Subscription Price. The Actual Subscription Price for each share of Holding Company Conversion Stock will be determined by dividing the estimated appraised aggregate pro forma market value of the Holding Company and the Converted Association, based on the independent appraisal as updated upon completion of the Subscription Offering or other sale of all of the Holding Company Conversion Stock, by the total number of shares of Holding Company Conversion Stock to be issued and sold by the Holding Company upon Conversion. Such appraisal will then be expressed in terms of a specific aggregate dollar amount rather than as a range. B. Subscription Rights Non-transferable Subscription Rights to purchase shares will be issued without payment therefor to Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders, Other Members and directors, Officers and employees of the Association as set forth below. 6 1. Preference Category No. 1: Eligible Account Holders Each Eligible Account Holder shall receive non-transferable Subscription Rights to subscribe for shares of Holding Company Conversion Stock in an amount equal to the greater of $100,000, one-tenth of one percent (.10%) of the total offering of shares, or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of common stock to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the Eligible Account Holder and the denominator is the total amount of qualifying deposits of all Eligible Account Holders in the converting Association in each case on the Eligibility Record Date. If sufficient shares are not available, shares shall be allocated first to permit each subscribing Eligible Account Holder to purchase to the extent possible 100 shares, and thereafter among each subscribing Eligible Account Holder pro rata in the same proportion that his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unsatisfied. Non-transferable Subscription Rights to purchase Holding Company Conversion Stock received by directors and Officers of the Association and their Associates, based on their increased deposits in the Association in the one year period preceding the Eligibility Record Date, shall be subordinated to all other subscriptions involving the exercise of non-transferable Subscription Rights of Eligible Account Holders. 2. Preference Category No. 2: Tax-Qualified Employee Plans Each Tax-Qualified Employee Plan shall be entitled to receive non-transferable Subscription Rights to purchase up to 10% of the shares of Holding Company Conversion Stock, provided that singly or in the aggregate such plans (other than that portion of such plans which is self-directed) shall not purchase more than 10% of the shares of the Holding Company Conversion Stock. Subscription Rights received pursuant to this Category shall be subordinated to all rights received by Eligible Account Holders to purchase shares pursuant to Category No. 1; provided, however, that notwithstanding any other provision of this Plan to the contrary, the Tax-Qualified Employee Plans shall have a first priority Subscription Right to the extent that the total number of shares of Holding Company Conversion Stock sold in the Conversion exceeds the maximum of the appraisal range as set forth in the subscription prospectus. 3. Preference Category No. 3: Supplemental Eligible Account Holders Each Supplemental Eligible Account Holder shall receive non-transferable Subscription Rights to subscribe for shares of Holding Company Conversion Stock in an amount equal to the greater of $100,000, one-tenth of one percent (.10%) of the total offering of shares, or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of common stock to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of qualifying deposits of 7 all Supplemental Eligible Account Holders in the converting Association in each case on the Supplemental Eligibility Record Date. Subscription Rights received pursuant to this category shall be subordinated to all Subscription Rights received by Eligible Account Holders and Tax-Qualified Employee Plans pursuant to Category Nos. 1 and 2 above. Any non-transferable Subscription Rights to purchase shares received by an Eligible Account Holder in accordance with Category No. 1 shall reduce to the extent thereof the Subscription Rights to be distributed to such person pursuant to this Category. In the event of an oversubscription for shares under the provisions of this subparagraph, the shares available shall be allocated first to permit each subscribing Supplemental Eligible Account Holder to the extent possible, to purchase a number of shares sufficient to make his total allocation (including the number of shares, if any, allocated in accordance with Category No. 1) equal to 100 shares, and thereafter among each subscribing Supplemental Eligible Account Holder pro rata in the same proportion that his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unsatisfied. 4. Preference Category No. 4: Other Members Each Other Member shall receive non-transferable Subscription Rights to subscribe for shares of Holding Company Conversion Stock remaining after satisfying the subscriptions provided for under Category Nos. 1 through 3 above, subject to the following conditions: a. Each Other Member shall be entitled to subscribe for an amount of shares equal to the greater of $100,000 or one-tenth of one percent (.10%) of the total offering of shares of common stock in the Conversion, to the extent that Holding Company Conversion Stock is available. b. In the event of an oversubscription for shares under the provisions of this subparagraph, the shares available shall be allocated among the subscribing Other Members pro rata in the same proportion that his number of votes on the Voting Record Date bears to the total number of votes on the Voting Record Date of all subscribing Other Members on such date. Such number of votes shall be determined based on the Association's mutual charter and bylaws in effect on the date of approval by members of this Plan of Conversion. 5. Preference Category No. 5: Directors, Officers and Employees Each director, Officer and employee of the Association as of the date of the commencement of the Subscription Offering shall be entitled to receive non-transferable Subscription Rights to purchase shares of the Holding Company Conversion Stock to the 8 extent that shares are available after satisfying subscriptions under Category Nos. 1 through 4 above. The shares which may be purchased under this Category are subject to the following conditions: a. The total number of shares which may be purchased under this Category may not exceed 24% of the number of shares of Holding Company Conversion Stock. b. The maximum amount of shares which may be purchased under this Category by any Person is $100,000 of Holding Company Conversion Stock. In the event of an oversubscription for shares under the provisions of this subparagraph, the shares available shall be allocated pro rata among all subscribers in this Category. C. Direct Community Offering Any shares of Holding Company Conversion Stock not subscribed for in the Subscription Offering may be offered for sale in a Direct Community Offering. This will involve an offering of all unsubscribed shares directly to the general public with a preference to those natural persons residing in any county in which the Association has an office. The Direct Community Offering, if any, shall be for a period of not less than 20 days nor more than 45 days unless extended by the Holding Company and the Association, and shall commence concurrently with, during or promptly after the Subscription Offering. The purchase price per share to the general public in a Direct Community Offering shall be the same as the Actual Subscription Price. The Holding Company Conversion Stock will be offered and sold in the Direct Community Offering, in accordance with OTS regulations, so as to achieve the widest distribution of the Holding Company Conversion Stock. In the event that the number of shares subscribed for under this Section V.C. exceeds the number of available shares, will be allocated (to the extent shares remain available) first to cover orders of natural persons residing in any county in which the Association has an office, then to cover the orders of any other person subscribing for shares in the Community Offering so that each such person may receive 1,000 shares, and thereafter, on a pro rata basis to such persons based on the amount of their respective subscriptions. Securities dealers may also be used to sell unsubscribed shares. Commissions, fees and expenses of securities dealers in selling unsubscribed shares shall be paid by the Association. The Association may pay a reasonable consulting fee to investment banking firms that provided assistance and advice in connection with the Direct Community Offering. The Association and the Holding Company, in their sole discretion, may reject subscriptions, in whole or in part, received from any Person under this Section V.C. 9 If purchasers cannot be found for an insignificant residue of unsubscribed shares from the general public, other purchase arrangements will be made by the Board of Directors of the Association, if possible. Such other purchase arrangements will be subject to the approval of the OTS and may provide for purchases by directors, officers, their Associates and other persons in excess of the limitations provided in this Section V. If such other purchase arrangements cannot be made, the Plan will terminate. D. Additional Limitations Upon Purchases of Shares of Holding Company Conversion Stock The following additional limitations shall be imposed on all purchases of Holding Company Conversion Stock in the Conversion: 1. No Person, by himself or herself, or with an Associate or group of Persons acting in concert, may subscribe for or purchase in the Conversion an amount of shares of Holding Company Conversion Stock which exceeds $100,000 of Holding Company Conversion Stock offered in the Conversion based on the appraisal range contained in the Association's subscription prospectus (exclusive of any additional shares that may be offered pursuant to an increase in such appraisal range not requiring a resolicitation of subscribers). For purposes of this paragraph, an Associate of a Person does not include a Tax-Qualified or Non-Tax-Qualified Employee Plan in which the person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity. Moreover, for purposes of this paragraph, shares held by one or more Tax-Qualified or Non-Tax- Qualified Employee Plans attributed to a Person shall not be aggregated with shares purchased directly by or otherwise attributable to that Person. 2. Directors and Officers and their Associates may not purchase in all categories in the Conversion an aggregate of more than 34% of the Holding Company Conversion Stock. For purposes of this paragraph, an Associate of a Person does not include any Tax- Qualified Employee Plan. Moreover, any shares attributable to the Officers and directors and their Associates, but held by one or more Tax-Qualified Employee Plans shall not be included in calculating the number of shares which may be purchased under the limitation in this paragraph. 3. The minimum number of shares of Holding Company Conversion Stock that may be purchased by any Person in the Conversion is 25 shares, provided sufficient shares are available. 4. The Boards of Directors of the Holding Company and the Association may, in their sole discretion, increase the maximum purchase limitation referred to in subparagraph 1. herein up to 9.99%, provided that orders for shares exceeding 5% of the shares being offered in the Subscription Offering shall not exceed, in the aggregate, 10% of the shares being offered in the Subscription Offering. Requests to purchase additional shares of Holding Company Conversion Stock under this provision will be allocated by the Boards 10 of Directors on a pro rata basis giving priority in accordance with the priority rights set forth in this Section V. Depending upon market and financial conditions, the Boards of Directors of the Holding Company and the Association, with the approval of the OTS and without further approval of the Members, may increase or decrease any of the above purchase limitations. For purposes of this Section V, the directors of the Holding Company and the Association shall not be deemed to be Associates or a group acting in concert solely as a result of their serving in such capacities. Each Person purchasing Holding Company Conversion Stock in the Conversion shall be deemed to confirm that such purchase does not conflict with the above purchase limitations. E. Restrictions and Other Characteristics of Holding Company Conversion Stock Being Sold 1. Transferability. Holding Company Conversion Stock purchased by Persons other than directors and Officers of the Holding Company or the Association will be transferable without restriction. Shares purchased by directors or Officers shall not be sold or otherwise disposed of for value for a period of one year from the date of Conversion, except for any disposition of such shares (i) following the death of the original purchaser, or (ii) resulting from an exchange of securities in a merger or acquisition approved by the applicable regulatory authorities. Any transfers that could result in a change of control of the Association or the Holding Company or result in the ownership by any Person or group acting in concert of more than 10% of any class of the Association's or the Holding Company's equity securities are subject to the prior approval of the OTS. The certificates representing shares of Holding Company Conversion Stock issued to directors and Officers shall bear a legend giving appropriate notice of the one year holding period restriction. Appropriate instructions shall be given to the transfer agent for such stock with respect to the applicable restrictions relating to the transfer of restricted stock. Any shares of common stock of the Holding Company subsequently issued as a stock dividend, stock split, or otherwise, with respect to any such restricted stock, shall be subject to the same holding period restrictions for Holding Company or Association directors and Officers as may be then applicable to such restricted stock. No director or Officer of the Holding Company or of the Association, or Associate of such a director or Officer, shall purchase any outstanding shares of capital stock of the Holding Company for a period of three years following the Conversion without the prior written approval of the OTS, except through a broker or dealer registered with the SEC or in a "negotiated transaction" involving more than one percent of the then-outstanding shares of common stock of the Holding Company. As used herein, the term "negotiated transaction" means a transaction in which the securities are offered and the terms and arrangements relating to any sale are arrived at through direct communications between 11 the seller or any Person acting on its behalf and the purchaser or his investment representative. The term "investment representative" shall mean a professional investment advisor acting as agent for the purchaser and independent of the seller and not acting on behalf of the seller in connection with the transaction. 2. Repurchase and Dividend Rights. For a period of three years following Conversion, the Converted Association shall not repurchase any shares of its capital stock, except in the case of an offer to repurchase on a pro rata basis made to all holders of capital stock of the Converted Association. Any such offer shall be subject to the prior approval of the OTS. A repurchase of qualifying shares of a director shall not be deemed to be a repurchase for purposes of this Section V.E.2. Present regulations also provide that the Converted Association may not declare or pay a cash dividend on or repurchase any of its stock (i) if the result thereof would be to reduce the regulatory capital of the Converted Association below the amount required for the liquidation account to be established pursuant to Section XIII hereof, and (ii) except in compliance with requirements of Section 563.134 of the Rules and Regulations of the OTS. The above limitations are subject to Section 563b.3(g)(3) of the Rules and Regulations of the OTS, which generally provides that the Converted Association may repurchase its capital stock provided (i) no repurchases occur within one year following conversion, (ii) repurchases during the second and third year after conversion are part of an open market stock repurchase program that does not allow for a repurchase of more than 5% of the Association's outstanding capital stock during a twelve-month period without OTS approval, (iii) the repurchases do not cause the Association to become undercapitalized, and (iv) the Association provides notice to the OTS at least 10 days prior to the commencement of a repurchase program and the OTS does not object. In addition, the above limitations shall not preclude payments of dividends or repurchases of capital stock by the Converted Association in the event applicable federal regulatory limitations are liberalized subsequent to OTS approval of the Plan. 3. Voting Rights. After Conversion, holders of deposit accounts will not have voting rights in the Converted Association or the Holding Company. Exclusive voting rights as to the Converted Association will be vested in the Holding Company, as the sole stockholder of the Converted Association. Voting rights as to the Holding Company will be held exclusively by its stockholders. F. Exercise of Subscription Rights; Order Forms 1. If the Subscription Offering occurs concurrently with the solicitation of proxies for the Special Meeting, the subscription prospectus and Order Form may be sent to each Eligible Account Holder, Tax-Qualified Employee Plan, Supplemental Eligible Account Holder, Other Member, and director, Officer and employee at their last known address as shown on the records of the Association. However, the Association may, and if the Subscription Offering commences after the Special Meeting the Association shall, furnish 12 a subscription prospectus and Order Form only to Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders, Other Members, and directors, Officers and employees who have returned to the Association by a specified date prior to the commencement of the Subscription Offering a post card or other written communication requesting a subscription prospectus and Order Form. In such event, the Association shall provide a postage-paid post card for this purpose and make appropriate disclosure in its proxy statement for the solicitation of proxies to be voted at the Special Meeting and/or letter sent in lieu of the proxy statement to those Eligible Account Holders, Tax-Qualified Employee Plans or Supplemental Eligible Account Holders who are not Members on the Voting Record Date. 2. Each Order Form will be preceded or accompanied by a subscription prospectus describing the Holding Company and the Converted Association and the shares of Holding Company Conversion Stock being offered for subscription and containing all other information required by the OTS or the SEC or necessary to enable Persons to make informed investment decisions regarding the purchase of Holding Company Conversion Stock. 3. The Order Forms (or accompanying instructions) used for the Subscription Offering will contain, among other things, the following: (i) A clear and intelligible explanation of the Subscription Rights granted under the Plan to Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders, Other Members, and directors, Officers and employees; (ii) A specified expiration date by which Order Forms must be returned to and actually received by the Association or its representative for purposes of exercising Subscription Rights, which date will be not less than 20 days after the Order Forms are mailed by the Association; (iii) The Maximum Subscription Price to be paid for each share subscribed for when the Order Form is returned; (iv) A statement that 25 shares is the minimum number of shares of Holding Company Conversion Stock that may be subscribed for under the Plan; (v) A specifically designated blank space for indicating the number of shares being subscribed for; (vi) A set of detailed instructions as to how to complete the Order Form including a statement as to the available alternative methods of payment for the shares being subscribed for; 13 (vii) Specifically designated blank spaces for dating and signing the Order Form; (viii) An acknowledgement that the subscriber has received the subscription prospectus; (ix) A statement of the consequences of failing to properly complete and return the Order Form, including a statement that the Subscription Rights will expire on the expiration date specified on the Order Form unless such expiration date is extended by the Holding Company and the Association, and that the Subscription Rights may be exercised only by delivering the Order Form, properly completed and executed, to the Association or its representative by the expiration date, together with required payment of the Maximum Subscription Price for all shares of Holding Company Conversion Stock subscribed for; (x) A statement that the Subscription Rights are non-transferable and that all shares of Holding Company Conversion Stock subscribed for upon exercise of Subscription Rights must be purchased on behalf of the Person exercising the Subscription Rights for his own account; and (xi) A statement that, after receipt by the Association or its representative, a subscription may not be modified, withdrawn or canceled without the consent of the Association. G. Method of Payment Payment for all shares of Holding Company Conversion Stock subscribed for, computed on the basis of the Maximum Subscription Price, must accompany all completed Order Forms. Payment may be made in cash (if presented in Person), by check or money order, or, if the subscriber has a Deposit Account in the Association (including a certificate of deposit), the subscriber may authorize the Association to charge the subscriber's account. If a subscriber authorizes the Association to charge his or her account, the funds will continue to earn interest, but may not be used by the subscriber until all Holding Company Conversion Stock has been sold or the Plan of Conversion is terminated, whichever is earlier. The Association will allow subscribers to purchase shares by withdrawing funds from certificate accounts without the assessment of early withdrawal penalties with the exception of prepaid interest in the form of promotional gifts. In the case of early withdrawal of only a portion of such account, the certificate evidencing such account shall be canceled if the remaining balance of the account is less than the applicable minimum balance requirement, in which event the remaining balance will earn interest at the passbook rate. This waiver of the early withdrawal penalty is applicable only to withdrawals made in connection with the purchase of Holding Company Conversion Stock under the Plan of Conversion. Interest will also be paid, at not less than the then-current passbook rate, on all orders paid in cash, by check or money order, from the date payment is received until consummation of the Conversion. Payments made in cash, by check or 14 money order will be placed by the Association in an escrow or other account established specifically for this purpose. In the event of an unfilled amount of any subscription order, the Converted Association will make an appropriate refund or cancel an appropriate portion of the related withdrawal authorization, after consummation of the Conversion, including any difference between the Maximum Subscription Price and the Actual Subscription Price (unless subscribers are afforded the right to apply such difference to the purchase of additional whole shares). If for any reason the Conversion is not consummated, purchasers will have refunded to them all payments made and all withdrawal authorizations will be canceled in the case of subscription payments authorized from accounts at the Association. If any Tax-Qualified Employee Plans or Non-Tax-Qualified Employee Plans subscribe for shares during the Subscription Offering, such plans will not be required to pay for the shares subscribed for at the time they subscribe, but may pay for such shares of Holding Company Conversion Stock subscribed for upon consummation of the Conversion. In the event that, after the completion of the Subscription Offering, the amount of shares to be issued is increased above the maximum of the appraisal range included in the subscription prospectus, the Tax-Qualified and Non-Tax-Qualified Employee Plans shall be entitled to increase their subscriptions by a percentage equal to the percentage increase in the amount of shares to be issued above the maximum of the appraisal range provided that such subscriptions shall continue to be subject to applicable purchase limits and stock allocation procedures. H. Undelivered, Defective or Late Order Forms; Insufficient Payment The Boards of Directors of the Holding Company and the Association shall have the absolute right, in their sole discretion, to reject any Order Form, including but not limited to, any Order Forms which (i) are not delivered or are returned by the United States Postal Service (or the addressee cannot be located); (ii) are not received back by the Association or its representative, or are received after the termination date specified thereon; (iii) are defectively completed or executed; (iv) are not accompanied by the total required payment for the shares of Holding Company Conversion Stock subscribed for (including cases in which the subscribers' Deposit Accounts or certificate accounts are insufficient to cover the authorized withdrawal for the required payment); or (v) are submitted by or on behalf of a Person whose representations the Boards of Directors of the Holding Company and the Association believe to be false or who they otherwise believe, either alone or acting in concert with others, is violating, evading or circumventing, or intends to violate, evade or circumvent, the terms and conditions of this Plan. In such event, the Subscription Rights of the Person to whom such rights have been granted will not be honored and will be treated as though such Person failed to return the completed Order Form within the time period specified therein. The Association may, but will not be required to, waive any irregularity relating to any Order Form or require submission of corrected Order Forms or the remittance of full payment for subscribed shares by such date as the Association may specify. The interpretation of the Holding Company and the Association of the terms and conditions of this Plan and of the proper completion of the Order Form will be final, subject to the authority of the OTS. 15 I. Member in Non-Qualified States or in Foreign Countries The Holding Company and the Association will make reasonable efforts to comply with the securities laws of all states in the United States in which Persons entitled to subscribe for Holding Company Conversion Stock pursuant to the Plan reside. However, no shares will be offered or sold under the Plan of Conversion to any such Person who (1) resides in a foreign country or (2) resides in a state of the United States in which a small number of Persons otherwise eligible to subscribe for shares under the Plan of Conversion reside or as to which the Holding Company and the Association determine that compliance with the securities laws of such state would be impracticable for reasons of cost or otherwise, including, but not limited to, a requirement that the Holding Company or the Association or any of their officers, directors or employees register, under the securities laws of such state, as a broker, dealer, salesman or agent. No payments will be made in lieu of the granting of Subscription Rights to any such Person. VI. FEDERAL STOCK CHARTER AND BYLAWS A. As part of the Conversion, the Association will take all appropriate steps to amend its charter to read in the form of federal stock savings institution charter as prescribed by the OTS. A copy of the proposed stock charter is available upon request. By their approval of the Plan, the Members of the Association will thereby approve and adopt such charter. B. The Association will also take appropriate steps to amend its bylaws to read in the form prescribed by the OTS for a federal stock savings institution. A copy of the proposed federal stock bylaws is available upon request. C. The effective date of the adoption of the Association's federal stock charter and bylaws shall be the date of the issuance and sale of the Holding Company Conversion Stock as specified by the OTS. VII. HOLDING COMPANY CERTIFICATE OF INCORPORATION A copy of the proposed certificate of incorporation of the Holding Company will be made available from the Association upon request. VIII. DIRECTORS OF THE CONVERTED ASSOCIATION Each Person serving as a member of the Board of Directors of the Association at the time of the Conversion will thereupon become a director of the Converted Association. 16 IX. STOCK OPTION AND INCENTIVE PLAN AND RECOGNITION AND RETENTION PLAN In order to provide an incentive for directors, Officers and employees of the Holding Company and its subsidiaries (including the Association), the Board of Directors of the Holding Company intends to adopt, subject to shareholder approval, a stock option and incentive plan and a recognition and retention plan as permitted by applicable regulation. X. CONTRIBUTIONS TO TAX-QUALIFIED EMPLOYEE PLANS The Converted Association and the Holding Company may in their discretion make scheduled contributions to any Tax-Qualified Employee Plans, provided that any such contributions which are for the acquisition of Holding Company Conversion Stock, or the repayment of debt incurred for such an acquisition, do not cause the Converted Association to fail to meet its regulatory capital requirements. XI. SECURITIES REGISTRATION AND MARKET MAKING Promptly following the Conversion, the Holding Company will register its stock with the SEC pursuant to the Exchange Act. In connection with the registration, the Holding Company will undertake not to deregister such stock, without the approval of the OTS, for a period of three years thereafter. The Holding Company shall use its best efforts to encourage and assist two or more Market Makers to establish and maintain a market for its common stock promptly following Conversion. The Holding Company will also use its best efforts to cause its common stock to be quoted on the National Association of Securities Dealers, Inc. Automated Quotations System or to be listed on a national or regional securities exchange. XII. STATUS OF SAVINGS ACCOUNTS AND LOANS SUBSEQUENT TO CONVERSION Each Deposit Account holder shall retain, without payment, a withdrawable Deposit Account or Accounts in the Converted Association, equal in amount to the withdrawable value of such account holder's Deposit Account or Accounts prior to Conversion. All Deposit Accounts will continue to be insured by the Federal Deposit Insurance Corporation up to the applicable limits of insurance coverage, and shall be subject to the same terms and conditions (except as to voting and liquidation rights) as such Deposit Account in the Association at the time of the Conversion. All loans shall retain the same status after Conversion as these loans had prior to Conversion (except as to voting rights, if any). 17 XIII. LIQUIDATION ACCOUNT For purposes of granting to Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain Deposit Accounts at the Converted Association a priority in the event of a complete liquidation of the Converted Association, the Converted Association will, at the time of Conversion, establish a liquidation account in an amount equal to the net worth of the Association as shown on its latest statement of financial condition contained in the final offering circular used in connection with the Conversion. The creation and maintenance of the liquidation account will not operate to restrict the use or application of any of the regulatory capital accounts of the Converted Association; provided, however, that such regulatory capital accounts will not be voluntarily reduced below the required dollar amount of the liquidation account. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to the Deposit Account held, have a related inchoate interest in a portion of the liquidation account balance ("subaccount balance"). The initial subaccount balance of a Deposit Account held by an Eligible Account Holder or Supplemental Eligible Account Holder shall be determined by multiplying the opening balance in the liquidation account by a fraction of which the numerator is the amount of the Qualifying Deposit in the Deposit Account on the Eligibility Record Date or the Supplemental Eligibility Record Date and the denominator is the total amount of the Qualifying Deposits of all Eligible Account Holders and Supplemental Eligible Account Holders on such record dates in the Association. Such initial subaccount balance shall not be increased, and it shall be subject to downward adjustment as provided below. If the deposit balance in any Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder at the close of business on any annual closing date subsequent to the record date is less than the lesser of (i) the deposit balance in such Deposit Account at the close of business on any other annual closing date subsequent to the Eligibility Record Date or the Supplemental Eligibility Record Date or (ii) the amount of the Qualifying Deposit in such Deposit Account on the Eligibility Record Date or Supplemental Eligibility Record Date, the subaccount balance shall be reduced in an amount proportionate to the reduction in such deposit balance. In the event of a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related Deposit Account. If all funds in such Deposit Account are withdrawn, the related subaccount balance shall be reduced to zero. In the event of a complete liquidation of the Association (and only in such event), each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a liquidation distribution from the liquidation account in the amount of the then-current adjusted subaccount balances for Deposit Accounts then held before any liquidation distribution may be made to stockholders. No merger, consolidation, bulk purchase of assets with assumptions of Deposit Accounts and other liabilities, or similar transactions with another institution the accounts of which are insured by the Federal Deposit Insurance Corporation, shall be considered to be a complete liquidation. In such transactions, the liquidation account shall be assumed by the surviving institution. 18 XIV. RESTRICTIONS ON ACQUISITION OF CONVERTED ASSOCIATION Regulations of the OTS limit acquisitions, and offers to acquire, direct or indirect beneficial ownership of more than 10% of any class of an equity security of the Converted Association or the Holding Company. In addition, consistent with the regulations of the OTS, the charter of the Converted Association shall provide that for a period of five years following completion of the Conversion: (i) no Person (i.e., no individual, group acting in concert, corporation, partnership, association, joint stock company, trust, or unincorporated organization or similar company, syndicate, or any other group formed for the purpose of acquiring, holding or disposing of securities of an insured institution) shall directly or indirectly offer to acquire or acquire beneficial ownership of more than 10% of any class of the Association's equity securities. Shares beneficially owned in violation of this charter provision shall not be counted as shares entitled to vote and shall not be voted by any Person or counted as voting shares in connection with any matter submitted to the shareholders for a vote. This limitation shall not apply to any offer to acquire or acquisition of beneficial ownership of more than 10% of the common stock of the Association by a corporation whose ownership is or will be substantially the same as the ownership of the Association, provided that the offer or acquisition is made more than one year following the date of completion of the Conversion; (ii) shareholders shall not be permitted to cumulate their votes for elections of directors; and (iii) special meetings of the shareholders relating to changes in control or amendment of the charter may only be called by the Board of Directors. XV. AMENDMENT OR TERMINATION OF PLAN If necessary or desirable, the Plan may be amended at any time prior to submission of the Plan and proxy materials to the Members by a two-thirds vote of the respective Boards of Directors of the Holding Company and the Association. After submission of the Plan and proxy materials to the Members, the Plan may be amended by a two-thirds vote of the respective Boards of Directors of the Holding Company and the Association only with the concurrence of the OTS. In the event that the Association determines that for tax purposes or otherwise it is in the best interest of the Association to convert from a federal mutual to a federal stock institution without the concurrent formation of a holding company, the Plan may be substantively amended, with OTS approval, in such respects as the Board of Directors of the Association deems appropriate to reflect such change from a holding company conversion to a direct conversion. In the event the Plan is so amended, common stock of the Association will be substituted for Holding Company Conversion Stock in the Subscription and Direct Community Offerings, and subscribers will be resolicited as described in Section V hereof. Any amendments to the Plan (including amendments to reflect the elimination of the concurrent holding company formation) made after approval by the Members with the concurrence of the OTS shall not necessitate further approval by the Members unless otherwise required. The Plan may be terminated by a two-thirds vote of the Association's Board of Directors at any time prior to the Special Meeting of Members, and at any time following such Special Meeting with the concurrence of the OTS. In its discretion, the Board of Directors of the Association may modify or terminate the Plan upon the order or with the approval of the OTS and without further approval by Members. The Plan shall terminate if the sale of all shares of Holding 19 Company Conversion Stock is not completed within 24 months of the date of the Special Meeting. A specific resolution approved by a majority of the Board of Directors of the Association is required in order for the Association to terminate the Plan prior to the end of such 24 month period. XVI. EXPENSES OF THE CONVERSION The Holding Company and the Association shall use their best efforts to assure that expenses incurred by them in connection with the Conversion shall be reasonable. XVII. TAX RULING Consummation of the Conversion is expressly conditioned upon prior receipt of either a ruling of the United States Internal Revenue Service or an opinion of tax counsel with respect to federal taxation, and either a ruling of the Maryland taxation authorities or an opinion of tax counsel or other tax advisor with respect to Maryland taxation, to the effect that consummation of the transactions contemplated herein will not be taxable to the Holding Company or the Association. XVIII. EXTENSION OF CREDIT FOR PURCHASE OF STOCK The Association may not knowingly loan funds or otherwise extend credit to any Person to purchase in the Conversion shares of Holding Company Conversion Stock. 20 EX-3 5 EXHIBIT 3.4 EXHIBIT 3.4 BYLAWS OF THE ASSOCIATION IN STOCK FORM STOCK BYLAWS OF WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION Article I - Home Office The home office of the association shall be at 11 West Ridgely Road, City of Lutherville, County of Baltimore, in the State of Maryland. Article II - Shareholders Section 1. Place of Meetings. All annual and special meetings of shareholders shall be held at the home office of the association or at such other convenient place as the board of directors may determine. Section 2. Annual Meeting. A meeting of the shareholders of the association for the election of directors and for the transaction of any other business of the association shall be held annually within 150 days after the end of the association's fiscal year on the third Wednesday of each October if not a legal holiday, and if a legal holiday, then on the next day following which is not a legal holiday, at __________ a.m., or at such other date and time within such 150-day period as the board of directors may determine. Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by the regulations of the Office of Thrift Supervision ("Office"), may be called at any time by the chairman of the board, the president, or a majority of the board of directors, and shall be called by the chairman of the board, the president, or the secretary upon the written request of the holders of not less than one-tenth of all of the outstanding capital stock of the association entitled to vote at the meeting. Such written request shall state the purpose or purposes of the meeting and shall be delivered to the home office of the association addressed to the chairman of the board, the president, or the secretary. Section 4. Conduct of Meetings. Annual and special meetings shall be conducted in accordance with the most current edition of Robert's Rules of Order unless otherwise prescribed by regulations of the Office or these bylaws or the board of directors adopts another written procedure for the conduct of meetings. The board of directors shall designate, when present, either the chairman of the board or president to preside at such meetings. Section 5. Notice of Meetings. Written notice stating the place, day, and hour of the meeting and the purpose(s) for which the meeting is called shall be delivered not fewer than 20 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, or the secretary, or the directors calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed 1 to be delivered when deposited in the mail, addressed to the shareholder at the address as it appears on the stock transfer books or records of the association as of the record date prescribed in section 6 of this article II with postage prepaid. When any shareholders' meeting, either annual or special, is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than 30 days or of the business to be transacted at the meeting, other than an announcement at the meeting at which such adjournment is taken. Section 6. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors shall fix in advance a date as the record date for any such determination of shareholders. Such date in any case shall be not more than 60 days and, in case of a meeting of shareholders, not fewer than 10 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment. Section 7. Voting Lists. At least 20 days before each meeting of the shareholders, the officer or agent having charge of the stock transfer books for shares of the association shall make a complete list of the shareholders of record entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares held by each. This list of shareholders shall be kept on file at the home office of the association and shall be subject to inspection by any shareholder of record or the shareholder's agent at any time during usual business hours for a period of 20 days prior to such meeting. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder of record or any shareholder's agent during the entire time of the meeting. The original stock transfer book shall constitute prima facie evidence of the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. In lieu of making the shareholder list available for inspection by shareholders as provided in the preceding paragraph, the board of directors may elect to follow the procedures prescribed in ss. 552.6(d) of the Office's regulations as now or hereafter in effect. Section 8. Quorum. A majority of the outstanding shares of the association entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to constitute less than a quorum. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number of 2 shareholders voting together or voting by classes is required by law or the charter. Directors, however, are elected by a plurality of the votes cast at an election of directors. Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his or her duly authorized attorney in fact. Proxies may be given telephonically or electronically as long as the holder uses a procedure for verifying the identity of the shareholder. Proxies solicited on behalf of the management shall be voted as directed by the shareholder or, in the absence of such direction, as determined by a majority of the board of directors. No proxy shall be valid more than eleven months from the date of its execution except for a proxy coupled with an interest. Section 10. Voting of Shares in the Name of Two or More Persons. When ownership stands in the name of two or more persons, in the absence of written directions to the association to the contrary, at any meeting of the shareholders of the association any one or more of such shareholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority cannot agree. Section 11. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by any officer, agent, or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares held by an administrator, executor, guardian, or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares held in trust in an IRA or Keogh Account, however, may be voted by the association if no other instructions are received. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer into his or her name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Neither treasury shares of its own stock held by the association nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the association, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting. 3 Section 12. Cumulative Voting. Every shareholder entitled to vote at an election for directors shall have the right to vote, in person or by proxy, the number of shares owned by the shareholder for as many persons as there are directors to be elected and for whose election the shareholder has a right to vote, or to cumulate the votes by giving one candidate as many votes as the number of such directors to be elected multiplied by the number of shares shall equal or by distributing such votes on the same principle among any number of candidates. Section 13. Inspectors of Election. In advance of any meeting of shareholders, the board of directors may appoint any person other than nominees for office as inspectors of election to act at such meeting or any adjournment. The number of inspectors shall be either one or three. Any such appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board or the president may, or on the request of not fewer than 10 percent of the votes represented at the meeting shall, make such appointment at the meeting. If appointed at the meeting, the majority of the votes present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting or at the meeting by the chairman of the board or the president. Unless otherwise prescribed by regulations of the Office, the duties of such inspectors shall include: determining the number of shares and the voting power of each share, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; receiving votes, ballots, or consents; hearing and determining all challenges and questions in any way arising in connection with the rights to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all shareholders. Section 14. Nominating Committee. The board of directors shall act as a nominating committee for selecting the management nominees for election as directors. Except in the case of nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the secretary at least 20 days prior to the date of the annual meeting. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the association. No nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by shareholders are made in writing and delivered to the secretary of the association at least five days prior to the date of the annual meeting. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the association. Ballots bearing the names of all persons nominated by the nominating committee and by shareholders shall be provided for use at the annual meeting. However, if the nominating committee shall fail or refuse to act at least 20 days prior to the annual meeting, nominations for directors may be made at the annual meeting by any shareholder entitled to vote and shall be voted upon. Section 15. New Business. Any new business to be taken up at the annual meeting shall be stated in writing and filed with the secretary of the association at least five days before the date 4 of the annual meeting, and all business so stated, proposed, and filed shall be considered at the annual meeting; but no other proposal shall be acted upon at the annual meeting. Any shareholder may make any other proposal at the annual meeting and the same may be discussed and considered, but unless stated in writing and filed with the secretary at least five days before the meeting, such proposal shall be laid over for action at an adjourned, special, or annual meeting of the shareholders taking place 30 days or more thereafter. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors, and committees; but in connection with such reports, no new business shall be acted upon at such annual meeting unless stated and filed as herein provided. Section 16. Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of shareholders, may be taken without a meeting if consent in writing, setting forth the action so taken, shall be given by all of the shareholders entitled to vote with respect to the subject matter. Article III - Board of Directors Section 1. General Powers. The business and affairs of the association shall be under the direction of its board of directors. The board of directors shall annually elect a chairman of the board and a president from among its members and shall designate, when present, either the chairman of the board or the president to preside at its meetings. Section 2. Number and Term. The board of directors shall consist of nine members, and shall be divided into three classes as nearly equal in number as possible. The members of each class shall be elected for a term of three years and until their successors are elected and qualified. One class shall be elected by ballot annually. Section 3. Regular Meetings. A regular meeting of the board of directors shall be held without other notice than this bylaw following the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place, for the holding of additional regular meetings without other notice than such resolution. Directors may participate in a meeting by means of a conference telephone or similar communications device through which all persons participating can hear each other at the same time. Participation by such means shall constitute presence in person for all purposes. Section 4. Qualification. Each director shall at all times be the beneficial owner of not less than 100 shares of capital stock of the association unless the association is a wholly owned subsidiary of a holding company. Section 5. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president, or one-third of the directors. The persons authorized to call special meetings of the board of directors may fix any place, within the 5 association's normal lending territory, as the place for holding any special meeting of the board of directors called by such persons. Members of the board of directors may participate in special meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Such participation shall constitute presence in person for all purposes. Section 6. Notice. Written notice of any special meeting shall be given to each director at least 24 hours prior thereto when delivered personally or by telegram or at least five days prior thereto when delivered by mail at the address at which the director is most likely to be reached. Such notice shall be deemed to be delivered when deposited in the mail so addressed, with postage prepaid if mailed, when delivered to the telegraph company if sent by telegram, or when the association receives notice of delivery if electronically transmitted. Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. Section 7. Quorum. A majority of the number of directors fixed by section 2 of this article III shall constitute a quorum for the transaction of business at any meeting of the board of directors; but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed by section 5 of this Article III. Section 8. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is prescribed by regulation of the Office or by these bylaws. Section 9. Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors. Section 10. Resignation. Any director may resign at any time by sending a written notice of such resignation to the home office of the association addressed to the chairman of the board or the president. Unless otherwise specified, such resignation shall take effect upon receipt by the chairman of the board or the president. More than three consecutive absences from regular meetings of the board of directors, unless excused by resolution of the board of directors, shall automatically constitute a resignation, effective when such resignation is accepted by the board of directors. Section 11. Vacancies. Any vacancy occurring on the board of directors may be filled by the affirmative vote of a majority of the remaining directors although less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected to serve only until the next 6 election of directors by the shareholders. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the board of directors for a term of office continuing only until the next election of directors by the shareholders. Section 12. Compensation. Directors, as such, may receive a stated salary for their services. By resolution of the board of directors, a reasonable fixed sum, and reasonable expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the board of directors. Members of either standing or special committees may be allowed such compensation for attendance at committee meetings as the board of directors may determine. Section 13. Presumption of Assent. A director of the association who is present at a meeting of the board of directors at which action on any association matter is taken shall be presumed to have assented to the action taken unless his or her dissent or abstention shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the association within five days after the date a copy of the minutes of the meeting is received. Such right to dissent shall not apply to a director who voted in favor of such action. Section 14. Removal of Directors. At a meeting of shareholders called expressly for that purpose, any director may be removed only for cause by a vote of the holders of a majority of the shares then entitled to vote at an election of directors. If less than the entire board is to be removed, no one of the directors may be removed if the votes cast against the removal would be sufficient to elect a director if then cumulatively voted at an election of the class of directors of which such director is a part. Whenever the holders of the shares of any class are entitled to elect one or more directors by the provisions of the charter or supplemental sections thereto, the provisions of this section shall apply, in respect to the removal of a director or directors so elected, to the vote of the holders of the outstanding shares of that class and not to the vote of the outstanding shares as a whole. Article IV - Executive and Other Committees Section 1. Appointment. The board of directors, by resolution adopted by a majority of the full board, may designate the chief executive officer and two or more of the other directors to constitute an executive committee. The designation of any committee pursuant to this Article IV and the delegation of authority shall not operate to relieve the board of directors, or any director, of any responsibility imposed by law or regulation. Section 2. Authority. The executive committee, when the board of directors is not in session, shall have and may exercise all of the authority of the board of directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee; and except also that the executive committee shall not have the authority of the board of directors with reference to: the declaration of dividends; the amendment of the charter or bylaws of the association, 7 or recommending to the shareholders a plan of merger, consolidation, or conversion; the sale, lease, or other disposition of all or substantially all of the property and assets of the association otherwise than in the usual and regular course of its business; a voluntary dissolution of the association; a revocation of any of the foregoing; or the approval of a transaction in which any member of the executive committee, directly or indirectly, has any material beneficial interest. Section 3. Tenure. Subject to the provisions of section 8 of this article IV, each member of the executive committee shall hold office until the next regular annual meeting of the board of directors following his or her designation and until a successor is designated as a member of the executive committee. Section 4. Meetings. Regular meetings of the executive committee may be held without notice at such times and places as the executive committee may fix from time to time by resolution. Special meetings of the executive committee may be called by any member thereof upon not less than one day's notice stating the place, date, and hour of the meeting, which notice may be written or oral. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting. Section 5. Quorum. A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present. Section 6. Action Without a Meeting. Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the executive committee. Section 7. Vacancies. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors. Section 8. Resignations and Removal. Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full board of directors. Any member of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the association. Unless otherwise specified, such resignation shall take effect upon its receipt; the acceptance of such resignation shall not be necessary to make it effective. Section 9. Procedure. The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these bylaws. It shall keep regular minutes of its proceeding and report the same to the board of directors for its information at the meeting held next after the proceedings shall have occurred. 8 Section 10. Other Committees. The board of directors may by resolution establish an audit, loan, or other committee composed of directors as they may determine to be necessary or appropriate for the conduct of the business of the association and may prescribe the duties, constitution, and procedures thereof. Article V - Officers Section 1. Positions. The officers of the association shall be a president, one or more vice presidents, a secretary, and a treasurer or comptroller, each of whom shall be elected by the board of directors. The board of directors may also designate the chairman of the board as an officer. The offices of the secretary and treasurer or comptroller may be held by the same person and a vice president may also be either the secretary or the treasurer or comptroller. The board of directors may designate one or more vice presidents as executive vice president or senior vice president. The board of directors may also elect or authorize the appointment of such other officers as the business of the association may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices. Section 2. Election and Term of Office. The officers of the association shall be elected annually at the first meeting of the board of directors held after each annual meeting of the shareholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible. Each officer shall hold office until a successor has been duly elected and qualified or until the officer's death, resignation, or removal in the manner hereinafter provided. Election or appointment of an officer, employee, or agent shall not of itself create contractual rights. The board of directors may authorize the association to enter into an employment contract with any officer in accordance with regulations of the Office; but no such contract shall impair the right of the board of directors to remove any officer at any time in accordance with section 3 of this article V. Section 3. Removal. Any officer may be removed by the board of directors whenever in its judgment the best interests of the association will be served thereby, but such removal, other than for cause, shall be without prejudice to the contractual rights, if any, of the person so removed. Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise may be filled by the board of directors for the unexpired portion of the term. Section 5. Remuneration. The remuneration of the officers shall be fixed from time to time by the board of directors. 9 Article VI - Contracts, Loans, Checks, and Deposits Section 1. Contracts. To the extent permitted by regulations of the Office, and except as otherwise prescribed by these bylaws with respect to certificates for shares, the board of directors may authorize any officer, employee, or agent of the association to enter into any contract or execute and deliver any instrument in the name of and on behalf of the association. Such authority may be general or confined to specific instances. Section 2. Loans. No loans shall be contracted on behalf of the association and no evidence of indebtedness shall be issued in its name unless authorized by the board of directors. Such authority may be general or confined to specific instances. Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the association shall be signed by one or more officers, employees or agents of the association in such manner as shall from time to time be determined by the board of directors. Section 4. Deposits. All funds of the association not otherwise employed shall be deposited from time to time to the credit of the association in any duly authorized depositories as the board of directors may select. Article VII - Certificates for Shares and Their Transfer Section 1. Certificates for Shares. Certificates representing shares of capital stock of the association shall be in such form as shall be determined by the board of directors and approved by the Office. Such certificates shall be signed by the chief executive officer or by any other officer of the association authorized by the board of directors, attested by the secretary or an assistant secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar other than the association itself or one of its employees. Each certificate for shares of capital stock shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the association. All certificates surrendered to the association for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares has been surrendered and cancelled, except that in the case of a lost or destroyed certificate, a new certificate may be issued upon such terms and indemnity to the association as the board of directors may prescribe. Section 2. Transfer of Shares. Transfer of shares of capital stock of the association shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record or by his or her legal representative, who shall furnish proper evidence of such authority, or by his or her attorney authorized by a duly executed power of attorney and filed with the association. Such transfer shall be made only on surrender for cancellation of the certificate for such shares. The person in whose name shares of capital stock stand on the books of the association shall be deemed by the association to be the owner for all purposes. 10 Article VIII - Fiscal Year The fiscal year of the association shall end on the 30th day of June of each year. The appointment of accountants shall be subject to annual ratification by the shareholders. Article IX - Dividends Subject to the terms of the association's charter and the regulations and orders of the Office, the board of directors may, from time to time, declare, and the association may pay, dividends on its outstanding shares of capital stock. Article X - Corporate Seal The board of directors shall provide an association seal which shall be two concentric circles between which shall be the name of the association. The year of incorporation or an emblem may appear in the center. Article XI - Amendments These bylaws may be amended in a manner consistent with regulations of the Office and shall be effective after: (i) approval of the amendment by a majority vote of the authorized board of directors, or by a majority vote of the votes cast by the shareholders of the association at any legal meeting, and (ii) receipt of any applicable regulatory approval. When an association fails to meet its quorum requirements, solely due to vacancies on the board, then the affirmative vote of a majority of the sitting board will be required to amend the bylaws. 11 EX-10 6 EXHIBIT 10.1 EXHIBIT 10.1 FORM OF EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of this ___ day of __________, 199_, by and between Wyman Park Federal Savings & Loan Association (hereinafter referred to as the "Bank" whether in mutual or stock form), and Ernest A. Moretti (the "Employee"). WHEREAS, the Employee is currently serving as President and Chief Executive Officer of the Bank; and WHEREAS, the Bank has adopted a plan of conversion whereby the Bank will convert to capital stock form as the subsidiary of _____________________ (the "Holding Company"), subject to the approval of the Bank's members and the Office of Thrift Supervision (the "Conversion"); and WHEREAS, the board of directors of the Bank ("Board of Directors") recognizes that, as is the case with publicly held corporations generally, the possibility of a change in control of the Holding Company and/or the Bank may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Bank, the Holding Company and their respective stockholders; and WHEREAS, the Board of Directors believes it is in the best interests of the Bank to enter into this Agreement with the Employee in order to assure continuity of management of the Bank and to reinforce and encourage the continued attention and dedication of the Employee to the Employee's assigned duties without distraction in the face of potentially disruptive circumstances arising from the possibility of a change in control of the Holding Company or the Bank, although no such change is now contemplated; and WHEREAS, the Board of Directors has approved and authorized the execution of this Agreement with the Employee to take effect as stated in Section 2 hereof; NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein, it is AGREED as follows: 1. Definitions. (a) The term "Change in Control" means an event of a nature that (i) results in a change in control of the Bank or the Holding Company within the meaning of the Home Owners' Loan Act of 1933 and 12 C.F.R. Part 574 as in effect on the date hereof; or (ii) would be required to be reported in response to Item 1 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); (2) any person (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Bank or the Holding Company representing 20% or more of the Bank's or the 1 Holding Company's outstanding securities; (3) individuals who are members of the board of directors of the Bank or the Holding Company on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Holding Company's stockholders was approved by the nominating committee serving under an Incumbent Board, shall be considered a member of the Incumbent Board; (4) a reorganization, merger, consolidation, sale of all or substantially all of the assets of the Bank or the Holding Company or a similar transaction in which the Bank or the Holding Company is not the resulting entity or the Bank or the Holding Company survives only as a subsidiary of another entity; or (5) a merger of another corporation into the Bank or Holding Company which survives if, as a result of such merger, less than 60% of the outstanding voting securities of the Bank or Holding Company shall be owned in the aggregate immediately after such merger by the owners of the voting shares of the Bank or Holding Company outstanding immediately prior. The term "Change in Control" shall not include an acquisition of securities by an employee benefit plan of the Bank or the Holding Company or the acquisition of securities of the Bank by the Holding Company in connection with the Conversion. (b) The term "Commencement Date" means the date of completion of the initial public offering of the Holding Company's stock in connection with the Conversion. (c) The term "Date of Termination" means the later of (1) the date upon which the Bank gives notice to the Employee of the termination of the Employee's employment with the Bank or (2) the date upon which the Employee ceases to serve as an employee of the Bank. (d) The term "Involuntary Termination" means termination of the employment of Employee without the Employee's express written consent, and shall include a material diminution of or interference with the Employee's duties, responsibilities and benefits as President and Chief Executive Officer of the Bank, including (without limitation) any of the following actions unless consented to in writing by the Employee: (1) a change in the principal workplace of the Employee to a location outside of a 30 mile radius from the Bank's headquarters office as of the date hereof; (2) a material demotion of the Employee; (3) a material reduction in the number or seniority of other Bank personnel reporting to the Employee or a material reduction in the frequency with which, or in the nature of the matters with respect to which, such personnel are to report to the Employee, other than as part of a Bank- or Holding Company-wide reduction in staff; (4) a material adverse change in the Employee's salary, perquisites, benefits, contingent benefits or vacation, other than as part of an overall program applied uniformly and with equitable effect to all employees of the Bank or the Holding Company; and (5) a material permanent increase in the required hours of work or the workload of the Employee. The term "Involuntary Termination" does not include Termination for Cause or termination of employment due to retirement, death, disability or suspension or temporary 2 or permanent prohibition from participation in the conduct of the Bank's affairs under Section 8 of the Federal Deposit Insurance Act ("FDIA"). (e) The terms "Termination for Cause" and "Terminated for Cause" mean termination of the employment of the Employee because of the Employee's personal dishonesty, incompetence, willful misconduct, breach of a fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, material breach of any provision of this Agreement. No act or failure to act by the Employee shall be considered willful unless the Employee acted (or failed to act) with an absence of good faith and without a reasonable belief that his action or failure to act was reasonable and in the best interest of the Bank. Notwithstanding the prior sentence, it shall constitute a material breach of this Agreement should Employee, individually or acting in concert with a group, take any action leading to a change in control of the Bank or the Holding Company within the meaning of the Home Owners' Loan Act of 1933 and 12 C.F.R. Part 574 as in effect on the date hereof, that is opposed by a majority of the Board of Directors; provided, however, if Employee is acting in concert with one or more members of the Board of Directors in actions leading to a change in control of the Bank and the Employee reasonably believes such actions are in the best interest of the Bank, such directors shall not be a material breach of this Agreement even if a majority of the Board of Directors opposes any such change in control. The Employee shall not be deemed to have been Terminated for Cause unless and until there shall have been delivered to the Employee a copy of a resolution, duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with the Employee's counsel, to be heard before the Board), stating that in the good faith opinion of the Board the Employee has engaged in conduct described in the preceding sentence and specifying the particulars thereof in detail. 2. Term. The term of this Agreement shall be a period of three years commencing on the Commencement Date, subject to earlier termination as provided herein. Beginning on the first anniversary of the Commencement Date, and on each anniversary thereafter, the term of this Agreement shall be extended for a period of one year in addition to the then-remaining term, provided that (1) the Bank has not given notice to the Employee in writing at least 120 days prior to such anniversary that the term of this Agreement shall not be extended further; and (2) prior to such anniversary, the Board of Directors of the Bank explicitly reviews and approves the extension. Reference herein to the term of this Agreement shall refer to both such initial term and such extended terms. 3. Employment. The Employee is employed as President and Chief Executive Officer of the Bank. As such, the Employee shall render administrative and management services as are customarily performed by persons situated in similar executive capacities, and shall have such other powers and duties of an officer of the Bank as the Board of Directors may prescribe from time to time. 3 4. Compensation. (a) Salary. The Bank agrees to pay the Employee during the term of this Agreement an annual salary not less than $115,000. The amount of the Employee's salary shall be reviewed by the Board of Directors, beginning not later than the first anniversary of the Commencement Date. Adjustments in salary or other compensation shall not limit or reduce any other obligation of the Bank under this Agreement. The Employee's salary in effect from time to time during the term of this Agreement shall not thereafter be reduced. (b) Bonuses. The Employee shall be entitled to participate in an equitable manner with all other executive officers of the Bank in discretionary bonuses as authorized and declared by the Board of Directors to its executive employees. No other compensation provided for in this Agreement shall be deemed a substitute for the Employee's right to participate in such bonuses when and as declared by the Board of Directors. In addition to salary provided in this section above, Employee shall be entitled to receive, as he has from November 1, 1989, a "first tier" and "second tier" bonus. A "first tier" bonus of $15,000 per year shall be paid to Employee based on satisfaction of two criteria: (1) the Bank must achieve an after tax return on assets equal to or better than .5%, and (2) the achievement of the objectives contained in the Bank's strategic plan respecting such factors as gap position, asset mix, liquidity, and IDC rating, it being also agreed that the strategic plan shall be regularly updated by the officers and approved by the Strategic Planning Committee. A "second tier" bonus shall be paid to Employee based on 5% of any additional after tax earnings which the Bank enjoys beyond the requirements of the first tier bonus. In the case of both the "first tier" and "second tier" bonuses, payment of such bonuses shall also be contingent on the Bank maintaining at all times a supervisory rating of not less than "3" and required levels of tangible, core and risk-weighted capital as set forth in the regulations of the OTS in effect as of the date of this Agreement. (c) Expenses. The Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee in performing services under this Agreement in accordance with the policies and procedures applicable to the executive officers of the Bank, provided that the Employee accounts for such expenses as required under such policies and procedures. 5. Benefits. (a) Participation in Retirement and Employee Benefit Plans. The Employee shall be entitled to participate in all plans relating to pension, thrift, profit-sharing, group life insurance, medical and dental coverage, education, cash bonuses, and other retirement or employee benefits or combinations thereof, in which the Bank's executive officers participate. (b) Fringe Benefits. The Employee shall be eligible to participate in, and receive benefits under, any fringe benefit plans which are or may become applicable to the Bank's executive officers. 4 6. Vacations; Leave. The Employee shall be entitled to annual paid vacation of not less than four weeks per year and to voluntary leave of absence, with or without pay, from time to time at such times and upon such conditions as the Board of Directors may determine in its discretion. 7. Termination of Employment. (a) Involuntary Termination. The Board of Directors may terminate the Employee's employment at any time, but, except in the case of Termination for Cause, termination of employment shall not prejudice the Employee's right to compensation or other benefits under this Agreement. In the event of Involuntary Termination other than in connection with or within 12 months after a Change in Control, (1) the Bank shall pay to the Employee during the remaining term of this Agreement the Employee's salary at the rate in effect immediately prior to the Date of Termination, payable in such manner and at such times as such salary would have been payable to the Employee under Section 4(a) if the Employee had continued to be employed by the Bank, and (2) the Bank shall provide to the Employee during the remaining term of this Agreement health benefits as maintained by the Bank for the benefit of its executive officers from time to time during the remaining term of the Agreement or substantially the same health benefits as the Bank maintained for its executive officers immediately prior to the Date of Termination. (b) Termination for Cause. In the event of Termination for Cause, the Bank shall pay the Employee the Employee's salary through the Date of Termination, and the Bank shall have no further obligation to the Employee under this Agreement. (c) Voluntary Termination. The Employee's employment may be voluntarily terminated by the Employee at any time upon 90 days' written notice to the Bank or such shorter period as may be agreed upon between the Employee and the Board of Directors of the Bank. In the event of such voluntary termination, the Bank shall be obligated to continue to pay to the Employee the Employee's salary and benefits only through the Date of Termination, at the time such payments are due, and the Bank shall have no further obligation to the Employee under this Agreement. (d) Change in Control. In the event of Involuntary Termination in connection with or within 12 months after a Change in Control which occurs at any time while the Employee is employed under this Agreement, the Bank shall, subject to Section 8 of this Agreement, (1) pay to the Employee in a lump sum in cash within 25 business days after the Date of Termination an amount equal to 299% of the Employee's "base amount"1 as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"); and (2) provide to the Employee during the remaining term of this Agreement such health benefits as are maintained for executive officers of the Bank from time to time during the remaining term of this Agreement or substantially the same - ------------ 1 Note that "base amount" is not the same as base salary. "Base amount" is the employee's average annual compensation includable in his gross income for tax purposes during the most recent five full taxable years. 5 health benefits as the Bank maintained for its executive officers immediately prior to the Date of Termination. (e) Death; Disability. In the event of the death of the Employee while employed under this Agreement and prior to any termination of employment, the Employee's estate, or such person as the Employee may have previously designated in writing (the "Recipient"), shall be entitled to receive from the Bank in a lump sum the salary of the Employee for a period of six months following the date of death at the rate at which salary was payable to the Employee as of the date of death. If the Employee becomes disabled as defined in the Bank's then current disability plan, if any, or if the Employee is otherwise unable to serve as President and Chief Executive Officer, the Employee shall be entitled to receive group and other disability income benefits of the type, if any, then provided by the Bank for executive officers. (f) Temporary Suspension or Prohibition. If the Employee is suspended and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) or (g)(1) of the FDIA, 12 U.S.C. ss. 1818(e)(3) and (g)(1), the Bank's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay the Employee all or part of the compensation withheld while its obligations under this Agreement were suspended and (ii) reinstate in whole or in part any of its obligations which were suspended. (g) Permanent Suspension or Prohibition. If the Employee is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12 U.S.C. ss. 1818(e)(4) and (g)(1), all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected. (h) Default of the Bank. If the Bank is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but this provision shall not affect any vested rights of the contracting parties. (i) Termination by Regulators. All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Bank: (1) by the Director of the Office of Thrift Supervision (the "Director") or his or her designee, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the FDIA; or (2) by the Director or his or her designee, at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by any such action. 6 8. Certain Reduction of Payments by the Bank. (a) Notwithstanding any other provision of this Agreement, if the value and amounts of benefits under this Agreement, together with any other amounts and the value of benefits received or to be received by the Employee in connection with a Change in Control would cause any amount to be nondeductible by the Bank or the Holding Company for federal income tax purposes pursuant to Section 280G of the Code in effect as of the Commencement Date, then amounts and benefits under this Agreement shall be reduced (not less than zero) to the extent necessary so as to maximize amounts and the value of benefits to the Employee without causing any amount to become nondeductible by the Bank or the Holding Company pursuant to or by reason of such Section 280G in effect as of the Commencement Date and the Employee shall determine the allocation of such reduction among payments and benefits to the Employee. (b) Any payments made to the Employee pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. 1828(k) and any regulations promulgated thereunder. 9. No Mitigation. The Employee shall not be required to mitigate the amount of any salary or other payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by the Employee as the result of employment by another employer, by retirement benefits after the Date of Termination or otherwise. 10. Attorneys Fees. In the event the Bank exercises its right of Termination for Cause, but it is determined by a court of competent jurisdiction or by an arbitrator pursuant to Section 17 that cause did not exist for such termination, or if in any event it is determined by any such court or arbitrator that the Bank has failed to make timely payment of any amounts owed to the Employee under this Agreement, the Employee shall be entitled to reimbursement for all reasonable costs, including attorneys' fees, incurred in challenging such termination or collecting such amounts. Such reimbursement shall be in addition to all rights to which the Employee is otherwise entitled under this Agreement. 11. No Assignments. (a) This Agreement is personal to each of the parties hereto, and neither party may assign or delegate any of its rights or obligations hereunder without first obtaining the written consent of the other party; provided, however, that the Bank shall require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Bank, by an assumption agreement in form and substance satisfactory to the Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession or assignment had taken place. Failure of the Bank to obtain such an assumption agreement prior to the effectiveness of any such succession or assignment shall be a breach of this Agreement and 7 shall entitle the Employee to compensation from the Bank in the same amount and on the same terms as the compensation pursuant to Section 7(d) hereof. For purposes of implementing the provisions of this Section 11(a), the date on which any such succession becomes effective shall be deemed the Date of Termination. (b) This Agreement and all rights of the Employee hereunder shall inure to the benefit of and be enforceable by the Employee's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee should die while any amounts would still be payable to the Employee hereunder if the Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's devisee, legatee or other designee or if there is no such designee, to the Employee's estate. 12. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, to the Bank at its home office, to the attention of the Board of Directors with a copy to the Secretary of the Bank, or, if to the Employee, to such home or other address as the Employee has most recently provided in writing to the Bank. 13. Amendments. No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties, except as herein otherwise provided. 14. Headings. The headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. 15. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 16. Governing Law. This Agreement shall be governed by the laws of the United States to the extent applicable and otherwise by the laws of the State of Maryland. 17. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. 8 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. Attest: Wyman Park Federal Savings & Loan Association - --------------------- --------------------------- Secretary By: Its: Employee ---------------------------- Ernest A. Moretti 9 EX-10 7 EXHIBIT 10.2 Exhibit 10.2 [FERGUSON & COMPANY LETTERHEAD] June 19, 1997 Board of Directors Wyman Park Federal Savings and Loan Association 11 W. Ridgely Road Lutherville, MD 21093 Dear Directors: This letter sets forth the agreement between Wyman Park Federal Savings and Loan Association ("Wyman Park" or "Association"), Lutherville, Maryland, and Ferguson & Company ("F&C"), Irving, Texas, under the terms of which Wyman Park has engaged F&C, in connection with its conversion from mutual to stock form, to (1) determine the pro forma market value of the shares of common stock to be issued and sold by Wyman Park or its holding company; and (2) assist Wyman Park in preparing a business plan to be filed with the application for approval to convert to stock. F&C agrees to deliver the written valuation and business plan to Wyman Park at the above address on or before a mutually agreed upon date. Further, F&C agrees to perform such other services as are necessary or required in connection with comments from the applicable regulatory authorities relating to the business plan and appraisal and the preparation of appraisal updates as requested by Wyman Park or its counsel. It is understood that the services of F&C under this agreement shall be limited as herein described. F&C's fee for the business plan and initial appraisal valuation report and any required updates shall be $18,000. In addition, Wyman Park shall reimburse F&C for all out-of-pocket expenses. Payment under this agreement shall be made as follows: 1. Upon execution of this engagement letter--$5,000. 2. Upon delivery of the business plan--$6,000. 3. Upon delivery of the completed appraisal report--$7,000. 4. Out-of-pocket expenses are to be paid monthly. If, during the course of Wyman Park=s conversion, unforeseen events occur so as to change materially the nature or the work content of the services described in this contract, the terms of the contract shall be subject to renegotiation. Such unforeseen events shall include, but not be limited to, major changes in the conversion regulations, appraisal guidelines or processing procedures as they relate to conversion appraisals, major changes in Wyman Park=s management or operating policies, execution of a merger agreement with another institution prior to completion of conversion, and excessive delays or suspension of processing of conversions by the regulatory authorities such that completion of Wyman Park=s conversion requires the preparation by F&C of a new appraisal report or business plan, excluding appraisal updates during the course of the engagement. To induce F&C to provide the services described above, Wyman Park hereby agrees as follows: 1. Wyman Park shall supply to F&C such information with respect to its business and financial condition as F&C reasonably may request in order to make the aforesaid valuation. Such information made available to F&C shall include, but not be limited to, annual financial statements, periodic regulatory filings, material agreements, debt instruments and corporate books and records. 2. Wyman Park hereby represents and warrants, to the best of its knowledge, that any information provided to F&C does not and will not, at any time relevant hereto, contain any misstatement or untrue statement of a material fact or omit any and all material facts required to be stated therein or necessary to make the statements therein not false or misleading in light of the circumstances under which they were made. 3. Wyman Park shall indemnify and hold harmless F&C and any employees of F&C who act for or on behalf of F&C in connection with the services called for under this agreement, from and against any and all loss, cost, damage, claim, liability or expense of any kind, including reasonable attorneys fees and other expenses incurred in investigating, preparing to defend and defending any claim or claims (specifically including, but not limited to, claims under federal and state securities laws) arising out of any misstatement or untrue statement of a material fact contained in the information supplied by Wyman Park to F&C or by an omission to state a material fact in the information so provided which is required to be stated therein in order to make the statement therein not false or misleading. 4. F&C shall not be entitled to indemnification pursuant to Paragraph 3 above with regard to any claim arising where, with regard to the basis for such claim, F&C had knowledge that a statement of a fact material to the evaluation and contained in the information supplied by Wyman Park was untrue or had knowledge that a material fact was omitted from the information so provided and that such material fact was necessary in order to make the statement made to F&C not false or misleading. 5. F&C additionally shall not be entitled to indemnification pursuant to Paragraph 3 above notwithstanding its lack of actual knowledge of an intentional misstatement or omission of a material fact in the information provided if F&C is determined to have been negligent or to have failed to exercise due diligence in the preparation of its valuation. Wyman Park and F&C are not affiliated, and neither Wyman Park nor F&C has an economic interest in, or held in common with, the other and has not derived a significant portion of its gross revenue, receipts or net income for any period from transactions with the other. In order for F&C to consider this proposal binding, please acknowledge your consent to the foregoing by executing the enclosed copies of this letter and returning one copy to us, together with a check payable to Ferguson & Company in the amount of $5,000. The extra copy of this letter is for your conversion counsel. Yours very truly, /s/ Robin L. Fussell --------------------------- Robin L. Fussell Principal Agreed to ($5,000 check enclosed): Wyman Park Federal Savings and Loan Association Lutherville, Maryland By: /s/ Ernest A. Moretti - ------------------------- Date: June 24, 1996 ------------- EX-24 8 EXHIBIT 24.1 EXHIBIT 24.1 CONSENT OF SILVER, FREEDMAN & TAFF, L.L.P. CONSENT OF COUNSEL We consent to the use of our opinion, to the incorporation by reference of such opinion as an exhibit to the Form SB-2 and to the reference to our firm under the headings "The Conversion - Income Tax Consequences" and "Legal and Tax Matters" in the Prospectus and proxy statement included in this Form S-1. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. /s/ SILVER, FREEDMAN & TAFF, L.L.P. SILVER, FREEDMAN & TAFF, L.L.P. Washington, D.C. November 5, 1997 EX-24 9 EXHIBIT 24.2 Exhibit 24.2 Consent of Independent Auditors We hereby consent to the use in the OTS Application to Convert on Form AC and in the SEC Registration Statement on Form SB-2 of our report dated July 18, 1997, relating to the consolidated financial statements of Wyman Park Federal Savings and Loan Association for the two years ended June 30, 1997, and the use of our name under the caption "Experts" in the Prospectus, which is part of the OTS Application and the SEC Registration Statement. /s/ Wooden & Benson November 5, 1997 Baltimore, Maryland EX-24 10 EXHIBIT 24.3 [FERGUSON & COMPANY LETTERHEAD] November 5, 1997 Board of Directors Wyman Park Federal Savings and Loan Association 11 West Ridgely Road Lutherville, Maryland Directors: We hereby consent to the use of our firm's name in the Form AC Application for Conversion of Wyman Park Federal Savings and Loan Association, Lutherville, Maryland, and any amendments thereto, in the Form SB-2 Registration Statement of Wyman Park Bancorporation, Inc. and any amendments thereto, and in the Application H-(e)1-s for Wyman Park Bancorporation, Inc. We also hereby consent to the inclusion of, summary of, and references to our Appraisal Report and our opinion concerning subscription rights in such filings including the Prospectus of Wyman Park Bancorporation, Inc. Sincerely, /s/ Robin L. Fussell Robin L. Fussell Principal EX-99 11 EXHIBIT 99.1 Conversion Valuation Report - -------------------------------------------------------------------------------- Valued as of August 22, 1997 Wyman Park Federal Savings and Loan Association Lutherville, Maryland Prepared By: Ferguson & Company Suite 550 122 W. John Carpenter Frwy Irving, TX 75039 972/869-1177 TABLE OF CONTENTS Wyman Park Federal Savings and Loan Association Lutherville, Maryland PAGE ---- INTRODUCTION 1 SECTION I. -- FINANCIAL CHARACTERISTICS 3 PAST & PROJECTED ECONOMIC CONDITIONS 3 FINANCIAL CONDITION OF INSTITUTION 4 Balance Sheet Trends 4 Asset/Liability Management 4 Income and Expense Trends 9 Regulatory Capital Requirements 9 Lending 11 Nonperforming Assets 16 Loan Loss Allowance 18 Mortgage Backed Securities and Investments 19 Savings Deposits 20 Borrowings 22 Subsidiaries 22 Legal Proceedings 22 EARNINGS CAPACITY OF THE INSTITUTION 22 Asset-Size-Efficiency of Asset Utilization 23 Intangible Values 23 Effect of Government Regulations 23 Office Facilities 24 i FERGUSON & COMPANY TABLE OF CONTENTS -- CONTINUED Wyman Park Federal Savings and Loan Association Lutherville, Maryland PAGE ---- SECTION II -- MARKET AREA 1 DEMOGRAPHICS 1 SECTION III -- COMPARISON WITH PUBLICLY TRADED THRIFTS 1 COMPARATIVE DISCUSSION 1 Selection Criteria 1 Profitability 2 Balance Sheet Characteristics 2 Risk Factors 2 Summary of Financial Comparison 3 FUTURE PLANS 3 SECTION IV -- CORRELATION OF MARKET VALUE 1 MARKETABILITY & LIQUIDITY OF STOCK TO BE ISSUED 1 Financial Aspects 1 Market Area 2 Management 3 Dividends 3 Liquidity 3 Thrift Equity Market Conditions 4 EFFECT OF INTEREST RATES ON THRIFT STOCK 4 MARYLAND ACQUISITIONS 4 ii FERGUSON & COMPANY TABLE OF CONTENTS - CONTINUED Wyman Park Federal Savings and Loan Association Lutherville, Maryland PAGE ---- SECTION IV - CORRELATION OF MARKET VALUE - continued Adjustments Conclusion 7 Valuation Approach 7 Valuation Conclusion 8 iii FERGUSON & COMPANY LIST OF TABLES Wyman Park Federal Savings and Loan Association Lutherville, Maryland TABLE NUMBER TABLE TITLE PAGE - ------ ----------- ---- SECTION I -- FINANCIAL CHARACTERISTICS 1 Selected Financial and Other Data 6 2 Selected Operating Ratios 7 3 Loan Maturity Schedule 8 4 Maturities by Rate Type 8 5 Net Portfolio Value 9 6 Regulatory Capital Compliance 10 7 Analysis of Loan Portfolio 12 8 Loan Activity 13 9 Average Balances, Yields, Costs 14 10 Rate/Volume Analysis 15 11a Loan Delinquencies and Non-Performing Assets 16 11b Non-Performing Assets 16 12 Schedule of Classified Assets 17 13 Analysis of Allowance for Loan Losses 17 14 Allocation of Allowance for Loan Losses 18 15 Classification of Investment Securities 19 16 Deposit Portfolio 20 17 Time Deposit Rates and Maturities 21 17a Certificates by Time Remaining Until Maturity 21 18 Jumbo CD's at June 30, 1997 22 19 Office Facilities and Locations 24 SECTION II -- MARKET AREA 1 Key Economic Indicators 2 2 Employment by Industry 4 3 Market Area Deposits 5 iv FERGUSON & COMPANY LIST OF TABLES -- continued Wyman Park Federal Savings and Loan Association Lutherville, Maryland TABLE NUMBER TABLE TITLE PAGE - ------ ----------- ---- SECTION III -- COMPARISON WITH PUBLICLY TRADED THRIFTS 1 Comparatives General 4 2 Key Financial Indicators 5 3 Pro Forma Comparisons 6 4 Comparative Selection 8 SECTION IV -- CORRELATION OF MARKET VALUE 1 Appraisal Adjustments to Earnings 2 2 Acquisitions Since January 1, 1996 9 3 Recent Conversions 11 4 Comparison of Pricing Ratios 14 LIST OF FIGURES FIGURE NUMBER FIGURE TITLE PAGE - ------ ------------ ---- SECTION IV -- CORRELATION OF MARKET VALUE 1 SNL Index Since 1994 15 2 Interest Rates Last Six Months 16 v FERGUSON & COMPANY EXHIBITS Wyman Park Federal Savings and Loan Association Lutherville, Maryland EXHIBIT TITLE Exhibit I -- Ferguson & Co., LLP. Qualifications Exhibit II -- Selected national, Region, State, and Comparatives Information Exhibit III -- First Federal Savings and Loan Association TAFS Report Exhibit IV -- Comparative Group TAFS and BankSource Reports Exhibit V -- Pro Forma Calculations Pro Forma Assumptions Pro Forma Effect of Conversion Proceeds at the Minimum of the Range Pro Forma Effect of Conversion Proceeds at the Midpoint of the Range Pro Forma Effect of Conversion Proceeds at the Maximum of the Range Pro Forma Effect of Conversion Proceeds at the SuperMax of the Range Pro Forma Analysis Sheet vi SECTION I FINANCIAL CHARACTERISTICS FERGUSON & COMPANY Section I. INTRODUCTION WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION Wyman Park Federal Savings and Loan Association ("Wyman Park" or "Association") has operated in its mutual form since it was founded in 1914. Originally a Maryland-chartered mutual association, it converted to a federally chartered association in 1937. In 1937, when the Association received its federal charter, the name was changed to Wyman Park Federal Savings and Loan Association. Contemporaneously, with receiving its federal charter, it received insurance of accounts. The Association now conducts its business through two offices, one located at 11 West Ridgely Road, Lutherville, Maryland, and one branch office located in Glen Burnie, Maryland. At June 30, 1997, the Savings Association had $62.2 million in total assets, $56.1 million in deposits, and equity capital of $4.8 million which equated to 7.7% of total assets. WYMAN PARK BANCORPORATION, INC. Wyman Park Bancorporation, Inc. ("the Company" or "WPBI"), a Delaware Corporation, was organized in 1997 by the Association for the purpose of holding all of the common stock of the Association. Upon completion of the Conversion and Reorganization, the only significant assets of the Company will be all of the outstanding Association's Common Stock, the note evidencing the loan to the ESOP, and the portion of the net proceeds from the offering that is retained by the company. Wyman Park is a traditional thrift. The asset composition of the institution suggests that it is primarily a residential lender, with some commercial real estate loans. It invests primarily in: (1) 1-4 family loans; (2) commercial real estate loans; (3) construction loans; (4) consumer loans; (5) mortgage backed securities; (6) United States government and agency securities; and (7) temporary cash investments. It is funded principally by savings deposits, borrowings, and existing net worth. The Association offers a variety of loan products to accommodate its customer base. Single family loans dominate the Association's loan portfolio. The Association has emphasized the origination of adjustable loans and loans of short and medium term (15 years and less). The loan portfolio has been supplemented with some consumer lending and commercial lending. At June 30, 1997, gross loans on 1-4 family dwellings made up 74.30% of total assets and 82.92% of the net loan portfolio. Mortgage backed securities made up 0.57% of total assets. Investment securities made up 4.81% of Wyman Park's assets at June 30, 1997. Wyman Park had $176 thousand in non-performing assets at June 30, 1997 (0.28% of total assets) as compared to $27 thousand at June 30, 1996 (0.04% of total assets). The current level of nonperforming assets is nominal. Management has adequate control of the nonperforming assets and does a more than adequate job of managing such assets. The current nonperforming asset level is not likely to have a significant impact on the earning capacity of the Association. Savings deposits have decreased during the five years from June 30, 1993, to June 30, 1997, by $3.67 million. Between June 30, 1993, and June 30, 1994, the deposits fell from $59.77 million to $59.39 million. In 1995 deposits fell an additional $0.92 million. Contraction continued between 1995 and 1996 with deposits decreasing another $0.65 million. June 30, 1996 saw another decrease of .60 million to $57.87 million. Between June 30, 1996, and June 30, 1997, deposits continued shrinking by $1.77 million to their current level of $56.10 million. The Association's capital to assets ratio has shown steady growth. Equity capital, as a percentage of average assets, increased from 4.71% at June 30, 1993, to 6.05% at June 30, 1994. Between June 30, 1994, 1 and June 30, 1995, capital increased as a percentage of average assets, to 6.36%. June 30, 1997, saw equity capital as a percentage of assets climb to 7.04%. Between June 30, 1996, and June 30, 1997, equity capital increased further to 7.58% of average assets. The increase was due mainly to continued profitability, coupled with negative asset growth. The former increased equity capital, and the latter had a positive impact in ratio analysis by lowering the denominator. Nevertheless, pre-conversion capital levels remain ample. Equity capital, in dollars, has increased from $3.34 million to $4.76 million, which is a 40.02% increase in five years. Wyman Park's profitability, as measured by return on average assets ("ROAA"), was below its peer group average of thrifts filing TFR's with the OTS, consisting of OTS supervised thrifts with assets from $50 million to $100 million, between December 31, 1994 and March 31, 1997. For the years ending December 31, 1994, 1995, 1996, and the quarter ended March 31, 1997, Wyman Park ranked in the 23rd, 30th, 29th, and 46th percentile, respectively, in ROAA. In return on equity (ROAE) for the same periods, Wyman Park ranked in the 46th, 62nd, 37th, and 73rd percentile, respectively.1. The disparity between the peer rankings on ROAA and ROAE reflect the lower capital ratios of the institution. Although considered "Well Capitalized" by any regulatory standard, the higher performance in ROAE is, of course, the result of having less than peer average capital. However, after conversion the return on equity ratios will trend downward as capital increases. - -------- 1 "TAFS" by Sheshunoff Information Services, Inc., as of March 31, 1997. 2 FERGUSON & COMPANY Section I. I. FINANCIAL CHARACTERISTICS PAST & PROJECTED ECONOMIC CONDITIONS Fluctuations in thrift earnings in recent years have occurred within the time frames as a result of changing temporary trends in interest rates and other economic factors. However, the year-to-year results have been upward while the general trends in the thrift industry have been improving as interest rates declined. Interest rates began a general upward movement during late 1993, followed by a decline in interest margins and profitability. Rates began a general decline in mid 1995. Since early 1996, rates have moved in a narrow band. From mid-March until early June there was a slight upward trend, with the spread between the short end and the long end increasing. Early July saw the jobless rate dip, and responding to inflation fears, the rates rose slightly. In late July, Greenspan's comments sparked a rise in the Dow-Jones, but rates remained steady. Mid-August's report on the rising CPI caused a slight increase in rates, but they remained within the narrow band. The recent pass by the Federal Reserve in 1997, to raise rates provided some stability in rates and the equities market. Recently rates have been stable, and that stability has sparked a general upward trend in all equity markets. The overall economic environment has been conducive to profitability in the industry as well as in the area of equity markets. The economy continues to expand slowly, unemployment is at recent record low levels, and for the moment, inflation seems to be in restraint. August 1997 economic news showed that manufacturing levels were lower than previous months, adding confirmation to the belief that inflation is currently not a problem to the economy. A consensus indicates that although growing, the economy is not as robust as some would desire, that inflation is for the moment under control, and that the chance of a rate increase is nominal, for the moment. These factors have caused the equities market to rise beyond the expectations of most reasonable analysts. In addition, there is tremendous pressure on the general equities market produced by the volume of new dollars entering the mutual funds market. It is unreasonable to assume that the thrift equities market would escape the buying pressures that have driven up other markets. The general rise in the equity market has translated into overall gains in the thrift equity market. Recently, conversion stocks have become of interest to some mutual funds and institutional buyers. These factors, coupled with the circumstances of having fewer conversions in 1996 and 1997, have produced some dramatic results in the thrift equities market. The number of "conversion stock speculators" has grown as thrift and bank acquisitions have continued. The hope of a quick profit has many speculative dollars chasing fewer good conversion opportunities, bringing into play the principal of supply and demand. In the recent months, the thrift equities market has generally paralleled the other major equities markets. Some interim fluctuations have been caused by changes or anticipated changes in interest rates or other economic conditions that influence, or that are perceived to influence the market. In the general equities market, increased prices are usually a response to improved profits or anticipated improvements in profits, with price-to-earnings ratios increasing as increased earnings potentials are anticipated. There is little economic news that would indicate that the market will stop its upward trend. There will be periodic adjustments and price fluctuations, but the upward pressure will likely continue. However, it is not realistic to think that any market can continue to rise at a 15% to 20% rate per annum for an indefinite period, but accurately anticipating the change is unlikely. The thrift industry generally is better equipped to cope with changing interest rates than it was in the past, and investors have recognized the demonstrated ability of the thrift industry to maintain interest margins in spite of rising interest rates. However, much of the industry is still a long lender and, for the most part, a short borrower. Periods of gradually rising interest rates can be readily managed, but periods of rapidly rising rates and interest rate spikes can negate, to a certain degree, the positive impact of adjustable rate loans and investments. 3 FINANCIAL CONDITION OF INSTITUTION Balance Sheet Trends As Table I.1 shows, Wyman Park demonstrated a decrease in assets during the five year period between June 30, 1993, and June 30, 1997. Assets have declined from $65.41 million at June 30, 1993, to $64.67 million at June 30, 1994, to $64.26 million at June 30, 1995. Year end June 30, 1996, reflected a decline in total assets to $63.89 million and then a further loss to $62.24 million at June 30, 1997. The loan portfolio reflects an overall upward trend from $48.72 million at June 30, 1993, to $52.09 million at June 30, 1994, to $54.40 million at June 30, 1995. Loans then declined to $53.24 million at June 30, 1996, and then reversed to grow to $55.19 million at June 30, 1997. Wyman Park's ratio of interest earning assets ("IEA's") to interest bearing liabilities ("IBL's") has been on a steady increase, reflecting 105.31%, 106.66%, 106.24%, 107.66%, and 108.40% at June 30, 1993, 1994, 1995, 1996, and 1997, respectively (see Table I.2). However, an erratic average interest spread and a variable net interest margin have served to confuse the issue of sustainability of earnings. The capital infused by the Conversion should improve profitability, and the coming years may not have to bear expenses like the SAIF assessment and the increased operating expenses associated with pre-conversion activities that were incurred in 1997. Equity accounts increased steadily from $3.40 million at June 30, 1993, to $3.89 million at June 30, 1994, and to $4.33 million in 1995. Equity further increased to $4.62 million in 1996 to $4.76 million at June 30, 1997. During this period, net interest margins, net interest spread, and net interest income have been erratic, and profitability has trended downward during the entire five year period. Net interest income was $642 thousand in 1993, $498 thousand in 1994, $433 thousand in 1995, $294 thousand in 1996, and $134 thousand in1997. The income for 1996 was negatively impacted by the SAIF assessment of $383 thousand and an additional allocation to the reserve for loan and lease losses of $120 thousand. Adjusting for those expenditures, earnings for 1997 were $482 thousand for 1997. This level of income is closer to the historical earnings levels of the Association. Net interest spread nearly paralleled net interest income at 2.70% in 1995, 2.26% in 1996, and 2.76% in 1997. These ratios are followed closely by the net interest yield, which was 2.98% in 1995, 2.63% in 1996, and 2.76% in 1997. Net interest margin, which is net interest income divided by average interest earning assets, was 2.98% at June 30, 1995, 2.63% at June 30, 1996, and 3.14% at June 30, 1997. Income ratios are parallel to the net interest income of $1.90 million in 1995, the $1.65 million in 1996, and the $1.90 million in 1997. The major variable in income is the wide ranges of operating expenses. Asset/Liability Management Managing interest rate risk is a major and necessary component of the strategy used in operating a thrift. Most of a thrift's interest earning assets are long term, while most of the interest bearing liabilities have short to intermediate terms to contractual maturity. To compensate, asset/liability management techniques include: (1) making long term loans with interest rates that adjust to market periodically, (2) investing in assets with shorter terms to maturity, (3) lengthening the terms of savings deposits, and (4) seeking to employ any combination of the aforementioned techniques artificially through the use of synthetic hedge instruments. Table I.3 contains information on contractual loan maturities at June 30, 1997. However, this table must be read in conjunction with Table I.4 and Table I.5. Table I.3 shows that $34.08 million of the loan portfolio (60.98%) matures after one year. Of that $34.08 million, $16.40 million has maturity dates that are in excess of ten years. Table I.4 confirms the information in Table I.3 by showing that $20.45 million of the portfolio are adjustable loans. This is equivalent to 36.58%. Table I.3 indicates that $21.81 million matures within one year. This level of interest rate risk is not unusual in portfolios that are primarily 1 to 4 residential. Efforts on the part of Management to mitigate interest rate risk have been hampered by the asset 4 composition. There has been a lengthening of the maturity of deposits by offering higher rates for the longer term certificates. Conversely, the number of fixed rate mortgages increased from $32.00 million to $35.44 million in the period between June 30, 1996, and June 30, 1997. Contemporaneously, the level of adjustable rate loans dropped from $21.8 million to $20.45 million during the same 12 month period. Management plans to increase the number of commercial real estate loans. This will gradually have a positive effect on the interest rate risk, by providing more repricing opportunities. In addition, the additional capital that comes with the Conversion can be used to help with interest rate risk. Table I.5 provides rate shock information at varying levels of interest rate change and confirms the conclusions derived from Table I.5 in regard to the interest rate sensitivity of Wyman Park. The Association has significant interest rate risk and would suffer major deterioration in profitability, as well as an erosion in the value of its portfolio equity. A careful review of Table I.5 (Net Portfolio Value) shows that if there were a 200 basis point ("BP") rise in interest rates, Wyman Park's Net Portfolio Value ("NPV") would decrease by $1.69 million or 25.0% of the NPV. If interest rates were to increase by 400 BP, the NPV would be decreased by $3.68 million or 54.0% of the total NPV. Clearly, the impact of an increase in rates would be devastating to Wyman Park from an income view. However, the additional capital infused by the Conversion can be used to acquire assets of shorter maturities and assets that provide more repricing opportunities. This type of action would mitigate to a limited extent the degree of interest rate risk. Table I.5 was prepared by the Office of Thrift Supervision. 5 FERGUSON & COMPANY Section I. Table I.1 -- SELECTED CONSOLIDATED FINANCIAL INFORMATION
June 30, --------------------------------------------------- 1997 1996 1995 1994 1993 ------- ------- ------- ------- ------- (In Thousands) Selected Financial Condition Data: Total assets $62,241 $63,866 $64,258 $64,666 $65,405 Loans receivable, net 55,189 53,244 54,403 52,093 48,724 Mortgage-backed securities 356 424 520 605 4,912 Investment securities 2,993 2,964 5,920 7,935 8,300 Deposits 56,095 57,871 58,474 59,389 59,765 Total borrowings Retain Earnings 4,755 4,621 4,327 3,894 3,396
Year Ended June 30, --------------------------------------------------- 1997 1996 1995 1994 1993 ------- ------- ------- ------- ------- (In Thousands) Selected Operations Data Total interest income $ 4,658 $ 4,725 $ 4,788 $ 4,537 $ 4,988 Total interest expense 2,756 3,073 2,891 2,777 3,202 ------- ------- ------- ------- ------- Net interest income 1,902 1,652 1,897 1,760 1,786 Provision for recovery of loan losses 145 25 (88) 183 133 ------- ------- ------- ------- ------- Net int. inc. after provisions for loan losses 1,757 1,627 1,985 1,577 1,653 Fees and service charges 48 47 36 28 23 Gain (loss) on sales of loans, mortgage-backed securities and inv. secities. 6 20 23 442 354 Other non-interest income 24 39 26 177 135 ------- ------- ------- ------- ------- Total non-interest income 78 106 85 647 512 Total non-interest expense 1,614 1,278 1,361 1,411 1,222 ------- ------- ------- ------- ------- Income before taxes and cumulative effect of accounting change 221 455 709 813 943 Income tax provision 87 161 276 315 370 Cumulative effect of account changes -- -- -- -- 69 ------- ------- ------- ------- ------- Net income $ 134 $ 294 $ 433 $ 498 $ 642 ======= ======= ======= ======= =======
6 FERGUSON & COMPANY Section I. Table I.2 - Selected Operating Ratios
Year Ended June 30, ---------------------------------------------- 1997 1996 1995 1994 1993 ------ ------ ------ ------ ------ Selected Financial Ratios & Other Data: Performance Ratios: Return on assets (ratio of net income to average total assets) 0.22% 0.46% 0.67% 0.80% 0.99% Return on retained earnings (ratio of net income to average equity 2.87 6.56 10.52 13.22 21.02 Interest rate spread information: Average during period 2.76 2.26 2.70 2.46 2.54 End of period 2.77 2.19 2.25 2.93 2.86 Net interest margin (1) 3.14 2.63 2.98 2.75 2.81 Ratio of operating expense to average total assets 2.62 2.01 2.11 2.27 1.89 Ratio of average interest-earning assets to average interest bearing liabilities 108.40 107.66 106.24 106.66 105.31 Quality Ratios: Non-performing assets to total assets at end of period .28 .04 .30 .25 .28 Allowance for loan losses to non-performing loans 153.11 456.89 51.89 196.32 234.46 Allowance for loan losses to loans receivable, net 0.49 0.24 0.18 0.60 0.87 Capital Ratios: Retained earnings to total assets at end of period 7.64 7.24 6.73 6.02 5.19 Average retained earnings to average assets 7.58 7.04 6.36 6.05 4.71 Other Data: Number of full-service offices 2 2 2 2 2
- ---------- (1) Net interest income divided by average interest earning assets. Source: Offering Circular 7 FERGUSON & COMPANY Section I. Table I.3 -- Loan Maturity Schedule 1 year 5 years Less than through to Over 1 year 5 years 10 years 10 years Total ------ ------- -------- -------- ----- Mortgage(1) (2): One to Four Family $17,811 $ 8,459 $6,138 $13,938 $46,346 Construction 150 -- -- -- 150 Multi-Family & Commercial 485 1,851 1,210 2,471 6,017 Non-Mortgage Loans: Consumer 3,360 16 -- -- 3,376 Total $21,806 $10,326 $7,348 $16,409 $55,889 ======= ======= ====== ======= ======= - ---------- (1) Includes demand loans, loans having no maturity, and overdraft loans. (2) Mortgages which have adjustable or renegotiable interest rates are shown as maturing in the period during which the contract is due. Source: Offering circular Table I.4 - Loan Maturities by Rate Type The following tables sets forth the dollar amount of all loans, maturing or repricing, before net items, due after one year from June 30, 1997, which have fixed interest rates or which have adjustable interest rates. Fixed Adjustable Rate Rate Total ----- ---------- ----- (in thousands) Mortgage 1-4 Family $30,505 $15,841 $46,346 Construction 150 -- 150 Consumer 192 3,184 3,376 Commercial & Multi-Family 4,596 1,421 6,017 ------- ------- ------- Total (1) $35,443 $20,446 $55,889 ======= ======= ======= - ---------- (1) Gross Loans. Source: Offering circular 8 FERGUSON & COMPANY Section I. Table I.5 -- Net Portfolio Value As of June 30, 1997 -------------------------------------------------------------- NPV as % of Estimated Portfolio Value Change in NPV as a of Assets Interest Rates Estimated Percentage Amount ---------------------- (basis points) NPV of Assets of Change NPV Ratio % Change - -------------- --------- ---------- --------- --------- --------- (dollars in thousands) +400 $3,154 -54.0% $(3,681) 5.39% -5.27% 300 4,150 -39.0% (2,685) 6.92 -3.74% 200 5,143 -25.0% (1,692) 8.37 -2.29% 100 6,072 -11.0% (763) 9.66 -1.00% 0 6,835 0% -- 10.66 -- -100 7,273 6.0% 438 11.18 .52% 200 7,270 6.0% 435 11.07 .41% 300 7,075 4.0% 340 10.71 .05% 400 6,979 2.0% 144 10.48 -.18% Source: Office of Thrift Supervision, Risk Management Division Income and Expense Trends Wyman Park was profitable for the five years ending June 30, 1997. However, the year ending June 30, 1997, was significantly less profitable than preceding years. Profits were $642 thousand, $498 thousand, $433 thousand, $294 thousand, and $134 thousand in 1993, 1994, 1995, 1996, and 1997, respectively. The diminution of earnings in the last period can be attributed to the SAIF assessment of $383 thousand, and an addition to the loan and lease loss reserve of $120 thousand above the normal accrual. As mentioned earlier, net interest income has been erratic and so have net interest margins. Historically, net interest income before provisions for losses has followed the rate cycle, but the net after provisions has been erratic due to wide swings in the provisions for loan losses. These provisions were $133 thousand in 1993, $183 thousand in 1994, a negative $88 thousand in 1995, $25 thousand in 1996, and $145 thousand in 1997. The influence of non-interest income was extremely obvious in 1993 and 1994, as gains on the sale of assets added to the income of those two years. Gains on sale of assets was $354 thousand in 1993, and $442 thousand in 1994. As market conditions changed, the gain on sale of assets dropped to $23 thousand, $20 thousand, and $6 thousand in 1995, 1996, and 1997, respectively. Unfortunately, the asset structure and the income structure of the Association has kept the core earnings of the Association below peer level. The ability to generate core earnings will improve with the anticipated infusion of capital generated by the Conversion, and Wyman Park will gain core earnings parity with its peers in the near term. Regulatory Capital Requirements As Table I.6 demonstrates, Wyman Park meets all regulatory capital requirements and meets the regulatory definition of a "Well Capitalized" institution. Moreover, the additional capital raised in the stock conversion will add to the existing capital cushion. 9 FERGUSON & COMPANY Section I. Table I.6 - Regulatory Capital Compliance June 30, 1997 Amount (Million) Percent --------- ------- GAAP Capital $4.8 7.7% Tangible Capital: Capital level $4.8 7.7% Requirement 1.0 1.5% ---- ---- Excess $3.8 6.2% ==== ==== Core Capital: Capital level $4.8 7.7% Requirement 1.9 3.0% ---- ---- Excess $2.9 4.7% ==== ==== Risk Based Capital: Capital level $5.0 14.6% Requirement 2.7 8.0% ---- ---- Excess $2.3 6.6% ==== ==== Source: Wyman Park TFR, Form SB-2, and F&C calculations. 10 FERGUSON & COMPANY Section I. Lending Table I.7 provides an analysis of the Association's loan portfolio by type of loan security. This analysis shows that Wyman Park's loan composition is still dominated by 1-4 family dwelling loans. However, there is a noticeable increase in the amount of commercial real estate loans that are being added to the portfolio. This trend is consistent with the institution's business strategies, and it is unlikely that the strategies now in place will change in the near future. Table I.8 provides information with respect to loan originations and repayments. It also clearly shows the emphasis upon one to four family residential loans. Moreover, the table relates the impact upon the types of loans originated by changing interest rates. In the year ended June 30, 1995, the Association originated $11.35 million in loans. Adjustable rate loans were $9.61 million or 84.63%. As rates fell in the year ended June 30, 1996, we can see the impact of the refinancing activity. In that year $9.05 million in loans were originated, but the fixed rate loans were predominant at $7.54 million or 83.37%. The year ended June 30, 1997, resulted in $8.89 million in originations, with fixed rate loans comprising $4.86 million, or 54.65%, and adjustable rates at $4.03 million, or 45.35% of loans originated. If any conclusions can be drawn from this information, it is that one-to-four family residential loans will provide only temporary assistance in reducing interest rate risk. The majority of adjustable loans are made when rates are high, and when rates decrease they will refinance to the fixed rate loans. Table I.9 provides rates, yields, and average balances for the three years ended June 30, 1995, 1996, and 1997. Net yield on average interest-earning assets decreased from 7.53% in 1995, to 7.52% in 1996, then increased to 7.69% in 1997. Interest rates paid on average interest-bearing liabilities increased from 4.83% in 1995, to 5.26% in 1996, then fell to 4.93% in 1997. The net yield on interest earning assets went from 2.98% in 1995, to 2.63% in 1996, to 3.14% in 1997. Wyman Park's net interest spread changed from 2.70% in 1995, to 2.26% in 1996, to 2.76% in 1997. However, the ratio of average interest earning assets to average interest bearing liabilities increased from 106% in 1995, to 108% in 1996, and remained flat at 108% in 1997. The effect of interest rate risk can be seen when comparing 1995 with 1996. In that period, the cost of funds as shown in IBL's rate increased from 4.83% to 5.26%, a movement of 43 basis points, compared to the 1 BP move in the yield in IEA's. 11 FERGUSON & COMPANY Section I. Table I.7 -- Loan Portfolio Composition June 30, ------------------------------------------ 1997 1996 ------------------ ------------------ Amount Percent Amount Percent ------ ------- ------ ------- Real Estate Loans: One- to four-family $46,346 82.92% $45,669 84.82% Multi-family 211 0.38 128 0.24 Commercial 5,806 10.39 4,448 8.26 Construction or development 150 0.27 270 0.5 ------- ------ ------- ------ Total real estate loans 52,513 93.96 50,515 93.82 ------- ------ ------- ------ Other Loans: Consumer Loans: Deposit account 176 0.31 138 0.26 Student -- -- -- -- Automobile -- -- -- -- Home equity 3,184 5.70 3,189 5.92 Home improvement 16 0.03 -- -- ------- ------ ------- ------ Total consumer loans 3,376 6.04 3,327 6.18 Total loans 55,889 100.00% 53,842 100.00% ====== ====== Less: Loan in process (231) (270) Deferred fees and discounts (199) (203) Allowance for losses (270) (125) ------- ------- Total loans receivable, net $55,189 $53,244 ======= ======= Source: Offering Circular 12 FERGUSON & COMPANY Section I. Table I.8 - Loan Activity Table I.8 clearly demonstrates that Wyman Park can be considered primarily a residential lender. The information shows that although consumer and business type loans are becoming more common and are the growing portion of the loan portfolio, the residential loan portfolio is the major asset of the Association. Within the portfolio, fixed rate loans still dominate loan production. Year Ended June 30, --------------------------------- 1997 1996 1995 ------ ------ ------ (Dollars in Thousands) Originations by type: Adjustable rate: Real estate--one-to-four family $2,843 $1,314 $9,606 --multi-family 90 -- -- --commercial 1,100 190 -- Non-real estate--consumer -- -- -- --commercial business -- -- -- ------ ------ ------ Total adjustable-rate 4,033 1,504 9,606 ------ ------ ------ Fixed rate: Real estate--one-to-four family 3,907 6,991 1,744 --multi-family -- -- -- --commercial 936 550 -- Non-real estate--consumer 18 -- -- --commercial business -- -- -- ------ ------ ------ Total fixed-rate 4,861 7,541 1,744 ------ ------ ------ Total loans originated 8,894 9,045 11,350 ------ ------ ------ Purchases: Real estate--one-to-four family 983 -- -- --multi-family -- -- -- --commercial 805 300 -- Non-real estate--consumer -- -- -- --commercial business -- -- -- ------ ------ ------ Total loans purchased 1,788 300 -- Mortgage-backed securities -- -- -- ------ ------ ------ Total purchased 1,788 300 -- ------ ------ ------ Sales and Repayments: Real estate--one-to-four family 395 990 1,936 --multi-family -- -- -- --commercial 900 -- -- Non-real estate--consumer -- -- -- --commercial business -- -- -- ------ ------ ------ Total loans sold 1,295 990 1,936 Mortgage-backed securities -- -- -- ------ ------ ------ Total sales 1,295 990 1,936 Principal repayments 7,177 9,539 7,419 ------ ------ ------ Total reductions 8,472 10,529 9,355 Increase (decrease) in other items, net (265) 24 316 ------ ------ ------ Net increase (decrease) 1,945 (1,160) 2,311 ====== ====== ====== 13 FERGUSON & CO., LLP Section I.
Table I.9 Average Balances, Yields and Cost ------------------------------------------------------------------------------------------- Year Ended June 30, ------------------------------------------------------------------------------------------- 1997 1996 1995 ----------------------------- ----------------------------- ----------------------------- Average Interest Average Interest Average Interest Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate Balance Paid Rate ----------- -------- ------ ----------- -------- ------ ----------- -------- ------ Interest-earning assets: Loans receivable (1) $53,903 $4,250 7.88% $53,033 $4,157 7.84% $55,460 $4,325 7.80% Mortgage-backed securities 383 27 7.05 468 35 7.49 552 33 5.98 Investment securities 2,402 140 5.83 5,298 307 5.79 5,845 329 5.63 FHLB stock 510 37 7.25 510 37 7.25 510 36 7.06 Other investments 3,382 204 6.03 3,547 189 5.33 1,192 65 5.45 ------- ------ ------- ------ ------- ------ Total interest-earning assets (1) $60,580 $4,658 7.69 $62,856 $4,725 7.52 $63,559 $4,788 7.53 ======= ====== ======= ====== ======= ====== Interest-Earning Liabilities: Savings deposits $5,856 174 2.97% $ 5,593 $178 3.18% $ 5,777 $ 204 3.53% Demand and NOW deposits 9,745 309 3.17 9,632 317 3.29 9,990 332 3.32 Certificate accounts 40,182 2,267 5.64 43,010 2,570 5.98 42,326 2,254 5.33 Escrow deposits 115 6 5.22 147 8 5.44 193 11 5.69 Borrowings 1,542 90 5.83 ------- ------ ------- ------ ------- ------ Total interest-bearing liabilities $55,898 $2,756 4.93 $58,382 $3,073 5.26 $59,828 $2,891 4.83 ------- ------ ---- ------- ------ ---- ------- ------ ---- Net interest income $1,902 $1,652 $1,897 ====== ====== ====== Net interest rate spread 2.76% 2.26% 2.70% ==== ==== ==== Net earning assets $ 4,682 $ 4,474 $ 3,731 ======= ======= ======= Net yield on average interest-earning assets 3.14% 2.63% 2.98% ==== ==== ==== Average interest-earning assets to average interest-bearing liabilities 1.08x 1.08x 1.06x ====== ====== ======
Source: Offering circular 14 FERGUSON & CO., LLP Section I. Table I.10 provides a rate volume analysis, measuring differences in interest earning assets ("IEA's") and interest bearing liabilities ("IBL's"), and the interest rates thereon comparing the year ended June 30, 1995 with June 30, 1996, and then comparing the year ended June 30, 1996 with June 30, 1997. The table shows the effect of the changes in interest income and funding cost between 1995 and 1996, produced a decline in net income of $245 thousand. A negative $96 thousand in interest income can be attributed to volume (total loans decreased), and a positive $33 thousand can be attributed to rate (rates on loans were higher). For the same period, the interest expense decreased $74 thousand due to volume and increased $256 thousand due to rates (deposits dropped in volume and in funding cost). The period between June 30, 1996, and June 30, 1997, had an increase of $250 thousand. Analysis shows that the income on interest earning assets decreased $177 thousand due to volume (loan volumes continue to decline) and increased $50 thousand due to rates (rates increased slightly on loans funded). On the funding side, the cost of interest bearing liabilities was reduced $160 thousand due to volume and decreased an additional $157 thousand due to rates (deposit volumes and rates declined). The net result of the changes in the 1996 to 1997 period should have translated into additional profits, however, these potential profits were offset by the SAIF assessment ($383 thousand) and a higher than normal increase in the reserve for loan losses ($120 thousand). Although the Rate/Volume Analysis cannot predict performance in a changing rate environment, it can show the impact of interest rate changes upon net interest income and net interest margins. Table I.10 - Rate/Volume Analysis Year Ended June 30, ------------------------------------------------- 1996 vs. 1997 1995 vs. 1996 ------------------------ ------------------------ Increase Increase (Decrease) (Decrease) Due to Total Due to Total ------------- Increase ------------- Increase Volume Rate (Decrease) Volume Rate (Decrease) ------ ------ ---------- ------ ------ ---------- (Dollars in Thousands) Interest-earning assets: Loans Receivable 68 25 93 (190) 22 (168) Mortgage-backed securities (6) (2) (8) (5) 7 2 Investment securities (169) 2 (167) (31) 9 (22) Other (10) 25 15 130 (5) 125 ----- ----- ----- ----- ----- ----- Total interest-earning assets $(117) $ 50 $ (67) $ (96) $ 33 $ (63) ===== ===== ===== ===== ===== ===== Interest-bearing liabilities: Savings deposits $ 8 $ (12) $ (4) $ (7) $ (19) $ (26) Demand and NOW deposits 3 (11) (8) (12) (3) (15) Borrowings -- -- -- (90) -- (90) Certificate accounts (169) (134) (303) 38 278 316 Escrow deposits (2) -- (2) (3) -- (3) ----- ----- ----- ----- ----- ----- Total int.-bearing liab. $(160) $(157) $(317) $ (74) $ 256 $ 182 ===== ===== ===== ===== ===== ===== Net interest income $ 250 $(245) ===== ===== Source: Offering Circular 15 FERGUSON & CO., LLP Section I. Non-performing Assets As shown in Tables I.11 (a) and I.11 (b), Wyman Park's total non-performing loans as of June 30, 1997, were a nominal $176 thousand and represented 0.28% of total assets. All of the non-performing loans as of that date were secured. Past due loans were $178 thousand and were all secured by one-to-four residences. The level of non-performing assets does not appear to be a significant threat to the capitalization or future earnings of the institution. Table I.11 (a) Loan Delinquencies and Non-Performing Assets June 30, 1997
Loans Delinquent For: --------------------------------------------------------------------------------------- 60-89 Days 90 Days and Over Total Delinquent Loans --------------------------- --------------------------- --------------------------- % of Loan % of Loan % of Loan Number Amount Category Number Amount Category Number Amount Category ------ ------ --------- ------ ------ --------- ------ ------ --------- (Dollars in Thousands) Real Estate One to four family 5 $178 0.38% 2 $176 0.38 7 $354 0.76% --------------------------------------------------------------------------------------- Total 5 $178 0.38% 2 $176 0.38 7 $354 0.76% =======================================================================================
Source: Offering circular. Table I.11(b) - Non-Performing Assets June 30 -------------------- 1997 1996 ---- ---- (Dollars in Thousands) Non-Accruing Loans: One-to-four Family $176 $27 -------------------- Total non-performing Assets $176 $27 ==================== Total as a percentage of total assets 0.28% 0.04% Source: Offering Circular 16 FERGUSON & CO., LLP Section I. Table I.12 -- Schedule of Classified Assets ------------------------------ 1997 1996 1995 ---- ---- ---- (In Thousands) Classification Special Mention $178 $270 $ 47 Substandard 176 27 192 Doubtful 0 0 0 Loss 0 0 0 ------------------------------ Total classified assets $354 $297 $239 Source: Offering Circular The volume of total classified assets is nominal for an institution this size, and the classified assets are centered in Special Mention. It is apparent that Management has developed adequate management techniques for dealing with the classified assets of the Association. Equally as important is the fact that the majority of the assets classified by the examiner had already been identified as problem assets by Management. In other words, the portfolio is believed to hold only a minimum of asset quality surprises. Table I.13 -- Analysis of Allowance for Loan Losses The following table sets forth an analysis of the Association's allowance for possible loan losses for the periods indicated: As of June 30, 1997, the provision for loan and lease losses was equal to 0.50% of gross loans and 153% of non-performing loans. Considering the conservative underwriting of Management and the composition of the loan portfolio (mostly 1-4 residential loans), the Allowance for Loan and Lease Losses is adequate. June 30, ------------------ 1997 1996 ---- ---- Balance at beginning of period $125 $100 Loans charged-off: Mortgage loans 0 0 Commercial loans 0 0 Consumer loans 0 0 ---- ---- Total charge-offs $ 0 $ 0 ---- ---- Recoveries: 0 0 Net loans charged-off 0 0 Provision for loan losses 145 25 Balance at end of period $270 $125 ==== ==== Source: Audit Financial Statement 17 FERGUSON & CO., LLP Section I. Loan Loss Allowance Table I.13 provides an analysis of Wyman Park's loan loss allowance. Significant increases to the loan loss reserves were made at June 30, 1997. These increases in loan loss reserves were not dictated by historical or anticipated losses, but instead were provisions made in anticipation of the Conversion. Table I.14 shows the allocation of the loan loss allowance among the various loan categories for the years ending June, 30, 1996, and June 30, 1997. It must be noted that the major portion of the allocation is to the unallocated category. Table I.14 - Allocation of Loan Loss Allowance
June 30, 1997 June 30, 1996 ------------------------------- ------------------------------- % of % of Loan Loans in Loan Loans in Amounts Each Amounts Each By Category to By Category to Amount Category Total Loans Amount Category Total Loans ------ -------- ----------- ------ -------- ----------- (Dollars in Thousands) Allocated to : One to four Family $ 25 $46,346 82.92% $ 22 $45,669 84.82% ------------------------------- ------------------------------- Multi-Family 211 0.38% 128 .24% ------------------------------- ------------------------------- Commercial real estate 56 5,806 10.39% 43 4,448 8.26% ------------------------------- ------------------------------- Construction or Dev. 150 0.27% 270 .50% ------------------------------- ------------------------------- Consumer 3,376 6.04% 3,327 6.18% ------------------------------- ------------------------------- Unallocated 189 59 ------------------------------- ------------------------------- Total $270 $55,889 100.0% $125 $53,842 100.0% =============================== ===============================
Source: Offering Circular The preceding table (Table I.14) allocates the allowance for loan losses by loan category at the dates indicated. The allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any other category. 18 FERGUSON & CO., LLP Section I. Mortgage-Backed Securities and Investments Table I.15 provides a breakdown of mortgage-backed securities and investments as of June 30, 1997. Table I.15 -- Classification of Investment Securities
June 30, % of June 30, % of 1997 Total 1996 Total -------- ----- -------- ----- (Dollars in Thousands) All Inv. Sec. are classified "Available for Sale" - ------------------------------------------------- US government and agency obligations $2,992 85.44% $2,964 85.32% ------ ------ ------ ------ Sub Total 2,992 85.44% 2,964 85.32% FHLB Stock 510 14.56% 510 14.68% ------ ------ ------ ------ Total investment securities and FHLB Stock $3,502 100.00% 3,474 100.00% ====== ====== ====== ====== Average remaining life of investment securities 1.3 years 2.3 years Other Interest-earning assets: Interest bearing deposits with banks $1,093 57.05% $3,483 60.46% Federal funds sold 823 42.95% 2,278 39.54% ------ ------ ------ ------ Total $1,916 100.00% $5,761 100.00% ====== ====== ====== ====== All MBS's are "Held to Maturity" - -------------------------------- Mortgage-backed securities -- -- - FNMA $ 2 0.56% $ 3 0.71% FHLMC 354 99.44% 421 99.29% ------ ------ ------ ------ Total mortgage-backed securities $ 356 100.00% $ 424 100.00% ====== ====== ====== ======
Table I.15 is notable for showing that all of the investment securities owned by Wyman Park are classified as "Available for Sale," as of June 30, 1997, and all MBS's are classified as "Held to Maturity". Having the majority of all investments available for sale enhances actual liquidity and provides Management with the flexibility to properly manage the investment portfolio of the Association. All securities classified as "Available for Sale" are carried at their fair value as of June 30, 1997. Mortgage backed securities have been used by Management to supplement loan products. Competitive factors within the primary trade area of the Association have made expansion of the one to four residential portfolios difficult. Management has not committed a significant amount of its assets to Mortgage-Backed Securities ("MBS's"). At June 30, 1997, Wyman Park had $356 thousand in MBS's. Except for MBS's, the investment portfolio of Wyman Park is very short. The U.S. Government securities and agencies have an average remaining term of 1.3 years. The deposits in domestic banks and Fed funds have a maturity that is less than one year. The MBS portfolio of $356 thousand has a maturity that is more than 10 years but less than 20 years. 19 FERGUSON & CO., LLP Section I. Table I.16 -- Deposit Portfolio Deposits in the Association at June 30, 1997, were represented by the various types of deposit programs described below. 1997 1996 --------------------- --------------------- Amount Percentage Amount Percentage ------ ---------- ------ ---------- Certificates of Deposit 4.00 - 5.99% $26,366 46.99% $23,101 39.90% 6.00 - 7.99% 13,492 24.04% 16,657 28.77% 8.00 - 9.99% 383 0.68% 2,609 4.51% --------------------- --------------------- Sub Total 40,241 71.71% 42,367 73.18% --------------------- --------------------- Transaction accounts Non-interest bearing accts 587 1.05% 337 0.58% NOW and money market accounts 1.76% 1,615 2.88% 1,673 2.89% Passbook Accounts 2.96% 6,027 10.74% 5,857 10.12% Money Market Accts. 3.10% 7,627 13.59% 7,637 13.19% --------------------- --------------------- Sub Total 15,856 28.26% 15,504 26.78% --------------------- --------------------- Accrued Interest 19 0.03% 21 .04% --------------------- --------------------- Total Deposits $56,116 100.00% $57,892 100.00% ===================== ===================== Source: Offering circular Savings Deposit The Association offers a variety of deposit products that have a wide range of interest rates and terms. As the general customer base continues to become more sophisticated, Wyman Park is likely to become more susceptible to short-term interest rate changes. The Association experiences a higher cost of funds than its peers mainly due to its mix of transaction accounts and certificate accounts. In addition, smaller institutions like Wyman Park are often placed in a position of competitive disadvantage and are forced to price in reaction to competitive pressures. At June 30, 1997, Wyman Park's deposit portfolio of $56.11 million was composed as follows: total transaction type accounts--$9.83 million, or 17.52%; savings deposits and passbook account--$6.03 million, or 10.74%%, and certificate accounts--$40.24 million, or 71.71%. Certificates were comprised of $4.20 million, or 7.48% of total deposits that were in excess of $100 thousand, and $36.04 million, or 64.23% of total deposits that were less than $100 thousand. (See Table I.16 above.) Table I.17 displayed below shows the totals of certificates of deposits and the maturities by year with rate ranges at the year ending June 30, 1997. The rate section of Table I.17 clearly shows the cost of funds for the institution is affected more by rate than term. The Association has a heavy concentration in certificates of deposits with rates 6.00% and 7.99%, ($13.49 million, 33.53% of certificates). 20 FERGUSON & CO., LLP Section I. Table I.17 -- Time Deposit Rates and Maturities The following table sets forth the rates and maturities of time deposits at June 30, 1997. Certificate Accounts 4.00 6.00 8.00 Percent maturing to to to of in quarter ending: 5.99% 7.99% 9.99% Total Total - -------------------- ----- ----- ----- ----- ------- (Dollars in Thousands) September 30, 1997 $ 5,540 $ 991 $ 0 $ 6,531 16.23% December 31, 1997 5,470 967 186 6,623 16.46% March 31, 1998 3,605 179 15 3,799 9.44% June 30, 1998 3,216 86 0 3,302 8.21% September 30, 1998 2,910 61 163 3,134 7.79% December 31, 1998 2,292 53 3 2,348 5.83% March 31, 1999 506 451 16 973 2.42% June 30, 1999 492 1,079 0 1,571 3.90% September 30, 1999 267 1,227 0 1,494 3.71% December 31, 1999 138 900 0 1,038 2.58% March 31, 2000 19 2,129 0 2,148 5.34% Thereafter 1,911 5,369 0 7,280 18.09% --------------------------------------------------- Total $26,366 $13,492 $383 $40,241 100.00% =================================================== Percent of Total 65.52% 33.53% 0.95% ============================ Source: Offering circular Table I.17 (a) Certificates by Time Remaining Until Maturity
Maturity ------------------------------------------------- Over Over 3 Months 3 to 6 6 to 12 Over or Less Months Months 12 Months Total -------- ------ ------- --------- ----- Certificates of Deposit less than $100,000 $5,548 $6,174 $6,888 $17,434 $36,044 Certificates of Deposit of $100,000 or more 983 449 213 2,552 4,197 ------------------------------------------------- Total Certificates of Deposits $6,531 $6,623 $7,101 $19,986 $40,241 =================================================
Source: Offering Circular As of June 30, 1997, Wyman Park has 49.66% of its certificates of deposit maturing after one year (see Table I.17(a)). Taking a longer term position in the certificate of deposit portfolio is a method of improving interest rate risk. On the other hand the majority of the certificates that have maturities in excess of one year fall in the higher rate categories. Of the $13.49 million in deposits in the 6.00 to 7.99% range, $11.27 million are in the over 12 month schedule. Attempting to minimize interest rate risk on the liability side has served to reduce the net interest margins of Wyman Park. 21 FERGUSON & CO., LLP Section I. Wyman Park has limited dependency on jumbo certificates of deposit. At June 30, 1997, the Association had $4.20 million in certificates that were issued for $100 thousand or more, or 7.48% of its total deposits (see Table I.18). The jumbo dependency is not considered excessive. Table I.18 -- Jumbo CD's at June 30, 1997 Time Deposits over $100,000 -- Maturity Schedules Certificates of Weighted Maturity Period Deposits Average Rate --------------- -------- ------------ Three months or less $ 933 4.78% Over three through six months 449 5.48% Over six through 12 months 213 5.08% Over 12 months 2,552 6.23% ------ $4,197 5.75% ====== Source: Offering circular Borrowings At June 30, 1997, Wyman Park was a member of FHLB of Atlanta and had the availability of advances from the FHLB in the approximate amount of $8 million. Advances are not being utilized at this time, but remain a viable alternative source of funding to the Association. Subsidiaries At June 30, 1997, Wyman Park had one investment in a service corporation, W. P. Financial Corporation, a company which engages in the sale of annuities. Neither the investment in, nor the income derived from, the operation of the company have any material effect on the financial results of the Association. Legal Proceedings From time to time, Wyman Park becomes involved in legal proceedings principally related to the enforcement of its security interest in real estate loans. In the opinion of Management of the Association, no legal proceedings are in process or pending that would have a material effect on Wyman Park's financial position, results of operations, or liquidity. EARNINGS CAPACITY OF THE INSTITUTION As in any interest sensitive industry, the future earnings capacity of Wyman Park will be affected by the interest rate environment. Historically, the thrift industry has performed at less profitable levels in periods of rising interest rates. This performance is due principally to the general composition of the assets and the limited repricing opportunities afforded even the adjustable rate loans. The converse earnings situation (falling rates) does not afford the same degree of profitability potential for thrifts due to the tendency of borrowers to refinance both high rate loans, fixed rate loans, and adjustable loans as rates decline. Wyman Park is no exception to the aforementioned paradox. With its current asset and liability structure, however, the effect of rising interest rates will have a more negative impact on earnings. Management's strategy of offering a limited array of additional loan products that will 22 FERGUSON & CO., LLP Section I. provide additional repricing opportunities through the cash flow of payments or the adjustability of rates will eventually mitigate the effects of interest rate risk, and improve profitability. The addition of capital through the conversion will allow Wyman Park to grow. As growth is attained, the leverage of that new capital should, from a ratio of expenses to total assets standpoint, reduce the operating expense ratio. However, growth and additional leverage will likely be moderate and well controlled to maintain the current acceptable risk levels inherent in the Association's asset base. Asset-Size-Efficiency of Asset Utilization At its current size and in its current asset configuration, Wyman Park is an efficient operation. With total assets of approximately $62.24 million, Wyman Park has 15 full time equivalent employees. If current strategies are employed, the asset and liability composition of the institution changes and becomes more volume oriented, the current level of employees may not be adequate to manage additional asset and liability growth. Intangible Values Wyman Park's greatest intangible value (other than the goodwill discussed earlier) lies in its loyal deposit base. Wyman Park has a 83 year history of sound operations, controlled growth, and generally consistent earnings. The Association currently has 7.94% of the deposit market in its area, and it has the ability to increase market share (see Table II.3 in Section II). Wyman Park has no significant intangible values that could be attributed to unrecognized asset gains on investments and real estate. Effect of Government Regulations Government regulations will have the greatest impact in the area of cost of compliance and reporting. The Conversion will create an additional layer of regulations and reporting, and thereby increase the cost to the Association. Moreover, no future plans currently exist to make additional acquisitions, purchase additional branches, or complicate operations with matters that would add to reporting and regulatory compliance. However, economic situations change, and if an appropriate opportunity arises, it will be considered, and a proper request will be made of the regulators, if necessary. 23 FERGUSON & CO., LLP Section I. Office Facilities Wyman Park's main office is an adequately maintained facility. Table I.19 provides information on all of Wyman Park's offices. The Association's facilities are currently adequate for the convenience and needs of the Association's customer base. Table I.19 -- Office Facilities and Locations
Year Owned Net B.V Physical address Opened Leased (1) June 30 - ---------------- ------ ---------- ------- ($000's) Main Office: - ------------ 11 Ridgley Road, Lutherville, Maryland 1977 Land is Leased (2) Building is Owned $97,000 Branch Office - ------------- 7963 Baltimore/Annapolis Blvd., Glen Burine, MD 1977 Leased (3) N/A
Source: Wyman Park Association audited financial statement and the Offering Circular. (1) The Association is obligated under long operating leases for its offices. These leases expire at various dates to 2002. The future minimum payments due under the leases at June 30, 1997 are $201, 574. (2) There are five, five-year options which expire May 2027. (3) Lease expires in November 2001. 24 SECTION II MARKET AREA FERGUSON & COMPANY Section II. II. MARKET AREA DEMOGRAPHICS Wyman Park operates from its main office located at 11 Ridgely Road, Lutherville, Maryland. The Association has one branch office in addition to its main office. That office is located a 7963 Baltimore/Annapolis Blvd., Glen Burnie, Maryland. Wyman Park considers its primary Assessment Area to be the areas surrounding its offices. Although Wyman Park is located in the Baltimore MSA, its primary Assessment Area contains only the counties of Baltimore and Anne Arundel. More specifically, within those two counties, the closer competition for customers and deposits can be identified as occurring in the zip code areas surrounding each branch. Table II.1, below, presents historical and projected trends for the United States, Maryland, Baltimore County, and Anne Arundel County, along with the two zip codes that surround the branches. The information addresses population, income, employment, and housing trends. As indicated in Table II.1, below, the State of Maryland, the Baltimore MSA, the counties, and the two zip codes have experienced varying growth rates in terms of population. The State of Maryland experienced a growth rate from 1990 to 1996, of 6.40%, which is slightly lower than the recorded growth rate for all of the U. S. Within the trade area, historical growth rates vary. The Baltimore MSA and the County of Baltimore experienced much lower growth rates than the State. On the other hand, Anne Arundel County grew at a rate that exceeded the State (9.73% vs. 6.40%), the Glen Burnie Zip Code's growth rate equaled that of the State, and the Zip Code of Lutherville fell short of the State's growth rate (5.45% vs. 6.40%). Future prospects are similar to historical growth rates. Between 1996 and 2001, the State is expected to grow 5.33%; the Baltimore MSA, 4.32%; and Baltimore County, 3.0%. In the same period, Anne Arundel County is expected to grow 7.10%; the Glen Bernie Zip Code, 5.51%; and the Lutherville Zip Code, 3.71%. The single most impressive demographic factor about Wyman Park's assessment area is the Estimated Household Income for 2001. All of the surrounding area is anticipated to have the majority of its population in the two household income ranges that are between $25,000 to $100,000. Moreover, Anne Arundel County and the Lutherville Zip Code areas are expected to have a disproportionate percentage of their population in the $100,000 to $150,000 household income range. These growth rates are obviously being pushed along by the population and industrial growth rates that have been experienced by the recovery in the Baltimore MSA and its proximity, Washington, D. C. 1 FERGUSON & COMPANY Section II. Table II.1 - Demographic Trends Key Economic Indicators United States, Maryland, Baltimore MSA, Baltimore County, Anne Arundel County, Zip 21060(1), Zip 21093 (2)
==================================================================================================================== Anne United Baltimore Baltimore Arundel 21060 21093 Key Economic Indicator States Maryland MSA County County Zip Zip - -------------------------------------------------------------------------------------------------------------------- Total Population, 2001 Est. 278,802,003 5,358,628 2,591,459 740,667 502,080 28,267 34,516 1996 - 2001 Percent Change, Est. 5.09 5.33 4.32 3.00 7.10 5.51 3.71 Total Population, 1996 Est. 265,294,885 5,087,442 2,484,101 719,095 468,813 26,791 33,280 1990 - 96 Percent Change, Est. 6.67 6.40 4.28 3.90 9.73 6.40 5.45 Total Population, 1990 248,709,873 4,781,468 2,382,172 692,134 427,239 25,180 31,560 - -------------------------------------------------------------------------------------------------------------------- Household Income, 2001 Est. 33,189 47,915 45,324 44,145 55,740 45,030 62,127 1996 - 2001 Percent Change, Est. (3.88) 4.49 4.93 0.62 5.87 5.59 0.88 Household Income, 1996 Est. 34,530 45,857 43,194 43,872 52,651 42,646 61,587 - -------------------------------------------------------------------------------------------------------------------- Per Capita Income, 1990 16,738 21,037 19,991 21,601 22,444 18,008 31,752 - -------------------------------------------------------------------------------------------------------------------- Household Income Distrib.2001 Est. (%) $15,000 and less 20 12 14 10 7 11 5 $15,000 - $25,000 16 11 12 12 9 11 8 $25,000 - $50,000 34 32 33 36 31 38 26 $50,000 - $100,000 24 35 33 33 40 35 38 $100,000 - $150,000 4 8 7 7 10 4 15 $150,000 and over 2 3 3 3 4 0 8 - -------------------------------------------------------------------------------------------------------------------- Unemployment rate, 1990 6.24 6.93 6.84 6.86 7.37 7.30 6.65 - -------------------------------------------------------------------------------------------------------------------- Median Age of Population, 1996 Est. 34.3 34.6 35.0 36.7 34.5 34.8 41.7 Median Age of Population, 1990 32.9 33.0 33.4 35.2 32.7 33.1 40.6 - -------------------------------------------------------------------------------------------------------------------- Average Housing Value, 1990 79,098 142,450 123,426 125,124 158,769 102,706 187,088 - -------------------------------------------------------------------------------------------------------------------- Total Households, 2001 Est. 103,293,062 1,956,215 955,690 287,409 176,043 10,603 13,688 1996 - 2001 Percent Change, Est. 5.14 5.29 4.23 3.02 7.29 5.54 3.65 Total Households, 1996 98,239,161 1,858,013 916,918 278,971 164,080 10,046 13,206 1990 - 96 Percent Change, Est. 6.84 6.23 4.18 3.99 10.04 6.43 5.31 Total Households, 1990 91,947,410 1,748,991 880,145 268,280 149,114 9,439 12,540 - -------------------------------------------------------------------------------------------------------------------- Total Housing Units, 1990 101,641,260 1,891,917 928,076 281,553 157,194 8,109 12,930 % Vacant 10.07 7.55 6.25 4.71 5.14 4.87 2.95 % Occupied 89.93 92.45 93.75 95.29 94.86 95.13 97.05 % By Owner 57.78 60.11 59.51 63.22 69.12 61.99 78.21 % By Renter 32.15 32.33 34.23 32.07 25.74 33.14 18.85 ====================================================================================================================
(1) ZIP Code for Glen Burnie, MD. (2) ZIP Code for Lutherville, MD Source: Scan/US, Inc. Maryland is one of the more affluent states, and the comparison of household income demonstrates that fact. The estimated household income for the United States for 1996 was $34,530, and that of Maryland was $45,857. Maryland benefits economically from being close to the Capital. The Baltimore area, with its deep water port, has become a center for commercial, financial, distribution, transportation, and manufacturing. In addition, the State benefits from several large federal agency facilities.(1) - -------- (1) Marylanda, Encarta 96 Encyclopedia 2 FERGUSON & COMPANY Section II. Important to any financial institution that is in the business of financing homes is the growth in the number of households. Table II.1 shows that the prospects for the establishment of new households in the trade area are excellent. From 1990 until 1996, all of the counties in the trade area experienced an increase in the number of households. The greatest increase was seen in Anne Arundel County, with the number of households increasing 10.04% from 149,114 to 164,080; to Baltimore County showing the least amount of increase at 3.99% (from 268,280 to 278,971 households). The area, whether growing at 3.99% or 10.14%, is an economically stable area, growing and embedded with well paying sources of income. When home ownership is compared to the United States and the State of Maryland, all of the trade area has a higher incidence of home ownership than the United States and the State of Maryland. The principal sources of employment in Wyman Park's assessment area are shown in Table II.2, below. On average, the major sources of employment are trade, services, and public administration. The counties in the delineated trade area have only minor variations from the State in the percentage of residents who are employed in trade, services, and public administration. Manufacturing, the fourth most frequent source of employment, is higher in Baltimore County than it is in the entire State (11.0% for Baltimore County vs. 8.0% for the State). Anne Arundel County is only slightly higher in manufacturing than the State (9.0% vs. 8.0%). 3 FERGUSON & COMPANY Section II. Table II.2 -- EMPLOYMENT BY INDUSTRY As of Year End 1995 -------------------------------------- State Anne of Baltimore Arundel Employment by Industry (percent) Maryland County County - -------------------------------- -------------------------------------- (%) Construction/Agriculture/Mining 7.0% 6.0% 7.0% Manufacturing 8.0% 11.0% 9.0% Transportation/Utilities 5.0% 5.0% 6.0% Trade 25.0% 27.0% 28.0% Finance/Insurance 6.0% 6.0% 4.0% Services 30.0% 30.0% 27.0% Public Administration 19.0% 15.0% 19.0% -------------------------------------- Total 100.0% 100.0% 100.0% ====================================== This information gives rise to understanding the other demographic information. With trade, services, and public administration employing such high percentages of the population and contributing to the earnings of the citizenry, the concentration of income in the middle range is more clear, as is the estimated increase in household income. Obviously, the population within the assessment area of Wyman Park is better employed than the State average. This should equate to continued economic growth which should translate into more home buyers, more consumer goods being purchased, and a growing, stable, and robust economy. In summary, the demographics of the assessment area are very favorable. The area has and is expected to have an overall growth in population. This growth in population is being accompanied with an anticipated increase in household income that is creating a more stable per capita income and an anticipated increase in the number of new households that will be created. These factors, coupled with a strong tradition of home ownership in the area, should translate into an increased number of housing units being built and a good market for previously owned housing. Based on information publicly available on deposits as of June 30, 1996 (see Table II.3), in the two Zip Code areas which Wyman Park considers its closest competition, there are $886.2 million in total deposits. Banks controlled $638.2 million, credit unions $142.68 million, and other thrifts $47.42 million. As of that date, Wyman Park had 6.53% of the total deposit market, or $57.87 million. The Association is a major player in a limited area of the total market area that is located within their delineated market area. The statistics reveal success and opportunities for the institution. Additional capital infused by the Conversion will assist the Association in becoming more competitive. 4 FERGUSON & COMPANY Section II. Table II.3 -- Market Area Deposits As of June 30, ---------------------------------- Zip Codes 21060 and 21093 1996 1995 1994 - ------------------------- -------- -------- -------- (Dollars in Thousands) Wyman Park Federal -- Total $ 57,871 $ 58,474 $ 59,389 ---------------------------------- Lutherville Office 48,240 48,959 49,568 Glen Burnie Office 9,631 9,515 9,821 Other Savings and Loan Associations $ 47,422 $ 46,883 $ 96,173 ---------------------------------- Number of Branches 2 2 4 Total Savings and Loan Association Deposits $105,293 $105,357 $155,562 ---------------------------------- Total Number of Branches 4 4 6 Total Credit Union Deposits $142,683 $133,864 $138,419 ---------------------------------- Total Number of Branches 1 1 1 Total Bank Deposits $638,222 $648,918 $634,264 ---------------------------------- Total Number of Branches 16 15 15 Total Market Area Deposits $886,198 $888,139 $928,245 ================================== Wyman Park Federal -- Market Share 6.53% 6.58% 6.40% ================================== Growth opportunities for Wyman Park can be assessed by reviewing economic factors in its market area. The salient factors include growth trends, economic trends, and competition from other financial institutions. We have reviewed these factors to assess the potential for the market area. In assessing the growth potential of Wyman Park, we must also assess the willingness and flexibility of Management to respond to the competitive factors that exist in their market area. It is our analysis that the economic environment and the potential of the area is excellent, moreover, we feel that the current Management team can readily realize the potential afforded by the area's economic base. Our analysis of the economic potential and the potential of Management has a positive affect on the valuation of the institution. 5 SECTION III COMPARISON WITH PUBLICLY TRADED THRIFTS FERGUSON & COMPANY Section III. III. COMPARISON WITH PUBLICLY TRADED THRIFTS COMPARATIVE DISCUSSION This section presents an analysis of Wyman Park relative to a group of 12 publicly traded thrift institutions ("Comparative Group"). Such analysis is necessary to determine the adjustments that must be made to the pro forma market value of Wyman Park's stock. Table III.1 presents a listing of the comparative group with general information about the group. Table III.2 presents key financial indicators relative to profitability, balance sheet composition and strength, and risk factors. Table III.3 presents a pro forma comparison of Wyman Park to the comparative group. Exhibits III and IV contain selected financial information on Wyman Park and the comparative group. This information is derived from quarterly TFR's filed with the OTS. The selection criteria and comparison with the Comparative Group are discussed below. Selection Criteria Ideally, the comparative group would consist of thrifts in the same geographic region with identical local economies, asset size, capital level, earnings performance, asset quality, etc. However, there are few comparably sized institutions with stock that is liquid enough to provide timely, meaningful market values. Therefore, we have selected a group of comparatives that are listed on either the New York Stock Exchange ("NYSE"), the American Stock Exchange ("AMEX"), or NASDAQ. We excluded companies that are apparent takeover targets and companies with unusual characteristics that tend to distort both mean and median calculations. For example, we have excluded all companies with losses during the trailing 12 months. We have also excluded mutual holding companies (see Exhibit II.1). The principal source of data was SNL Securities, Charlottesville, Virginia. There are approximately 414 publicly traded thrifts listed on NYSE, AMEX, or NASDAQ. In developing statistics for the entire country, we eliminated certain institutions that skewed the results, in order to make the data more meaningful: o We eliminated companies with losses, o We eliminated indicated acquisition targets, o We eliminated companies with price/earnings ratios in excess of 25, o We eliminated companies that had not reported as a stock institution for one complete year, and o We eliminated mutual holding companies. The resulting group of approximately 271 publicly traded thrifts is included in Exhibit II.1. Because of the limited number of similar size thrifts with sufficient trading volume, we refined the search looking for members of the comparative groups among thrifts with assets between $50 million and $150 million. From that group we then eliminated the following: o Companies with loans to deposits less than 50%, o Companies with loans to deposits greater than 100%, o Companies with total assets greater than $150 million, o Companies with non-performing assets greater than 1%, o Companies with BIF insurance, o Companies with equity to assets .20%, o and Companies with excessive loan servicing. 1 FERGUSON & COMPANY Section III. The result was a group of 12 thrifts. Normally, we consider 10 to be the desired sample, but provided the extra comparative in case there are changes before this Conversion is completed. The selected group of comparatives has sufficient trading volume to provide meaningful price data. Eight of the comparative group members are located in the Midwest, three in the Mid-Atlantic, and one in the Southeast. Three of the group are located in Indiana, two in New York, and one each in Kentucky, Kansas, New Mexico, Ohio, Iowa, Missouri, and Pennsylvania. With total assets of approximately $62.3 million, Wyman Park is near the group selected, which has average assets of $104.9 million and median assets of $101.11 million. Profitability Using the comparison of profitability components as a percentage of average assets and using appraisal earnings, Wyman Park was above the comparative group in return on assets, 0.69% to 0.42%, based on appraisal earnings; and core income, 0.69% to 0.68%. Wyman Park was below the comparative group in other operating income, 0.12% to 0.29% and net interest income, 2.79% to 3.28%; but above the group in operating expense, 2.56% to 2.46%. After conversion, deployment of the proceeds will provide additional income, and Wyman Park will compare even more favorably with the comparative group in terms of return on average assets, with a return of .82% at the midpoint of the appraisal range. Pro forma return on average equity is 5.44% at the midpoint, versus a mean of 5.30%, and median of 4.77% for the comparative group. After conversion, the employment of funds and the growth of asset and liabilities will improve the profitability of this institution. Balance Sheet Characteristics The general asset composition of the Association is similar to that of the comparative group. Wyman Park has a lower level of passive investments with 9.08% of its assets invested in cash, investments, and mortgage-backed securities, versus 47.62% for the comparative group. In the investment portfolio, Wyman Park has 8.52% in cash and investment securities, and 0.56% in mortgage backed securities. The comparative group has 33.06% in cash and investments, and 14.56% in mortgage backed securities. Wyman Park has a higher percentage of its assets in loans at 87.53%, versus 63.68% for the comparative group. The Associations' percentage of interest earning assets to interest bearing liabilities is much lower than that of the group. Wyman Park has 108.4%, and the comparative group averages 113.62%. A portion of this disparity can be explained by understanding that Wyman Park, although considered "Well Capitalized" has only 7.53% of assets in equity capital, and the comparative group has an average of 13.09% in equity to assets which accounts for 5.56% of the disparity. After conversion, and after the utilization of the capital infusion for earning assets and supporting growth, Wyman Park's ratio will be more in line with that of the group of comparatives. The liability side differs mainly in that Wyman Park has no borrowings and higher percentage of deposits. Wyman Park funds its assets with 88.96% deposits, expressed as a percentage of total assets. On the other hand, the comparative group has deposits of 73.75% and borrowings of 12.01%. The comparison between Wyman Park's capital level and that of the comparative group will improve after conversion. After the Conversion, Wyman Park's equity to assets will be 15.45%, at the mid-point. The average equity to assets of the comparative group is 13.09% and the median is 12.39%. Risk Factors Both Wyman Park and the comparative group have reasonable and controllable levels of non-performing assets, with the Association being lower than the comparative group, 0.28% to 0.57% of assets. Wyman Park's loan loss allowance is 0.50% of net loans, which compares 2 FERGUSON & COMPANY Section III. favorably with the comparative group's 0.67%. In the area of interest rate risk and the implications of one year gap assets, the Association and the comparative group are far apart. Wyman Park has a negative one year gap of 7.05%, and the group has a negative 3.53%. This is reflective of Wyman Park's reliance upon on-to-four residential loans. Summary of Financial Comparison Based on the above discussion of operational, balance sheet, and risk characteristics of Wyman Park compared with the group, we believe that Wyman Park's performance is equal to that of the comparative group. While the Association's appraisal profitability levels are higher than the comparative group, the capital levels are below the comparative group, the conversion proceeds will increase its capital levels to near comparable levels, and will enhance profitability. FUTURE PLANS Wyman Park's future plans are to remain an independent, well capitalized, profitable institution with good asset quality, a commitment to serving the needs of its trade area, and emphasizing lending. The current strategy, which is reflected in the business plan, projects increased growth in commercial real estate lending. Management recognizes that it will take time to invest the proceeds of its capital infusion in a manner consistent with its historic performance and current lending policies. During that period of time, Management is willing to accept a lower return on assets, as well as a lower return on equity capital. Wyman Park has recently adhered to a no-growth policy. In fact, the Association has experienced asset downsizing in the last two years. Total assets, total loans, and total deposits have diminished approximately 4%. The additional capital raised by the sale of Common Stock will initially be used to purchase short term investment securities. Adjustable rate and short term loans will continue to be emphasized. The Association will continue to minimize long term, fixed rate loans. The Association's business plan projects that it will experience growth in loans, savings deposits, and liquidity. Wyman Park anticipates a moderate growth rate. The additional capital and the continuation of the holding company concept would make the acquisition of another institution or branches a viable option, along with de novo branching. At this time there are no plans for acquisition of institutions or new branches. If an economically viable opportunity arises, proper approval will be sought from the regulatory agencies. Increasing market penetration by increasing the number of services and products available, coupled with expanded marketing efforts and improved service, are the most likely methods to be employed to achieve growth. 3 FERGUSON & COMPANY Section III. Table III.1 -- Comparatives General Characteristics
Total Current Current Type Number Assets Stock Market of of ($000) Price Value Ticker Short Name City State Thrift Offices Mst RctQ IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ------- -------- -------- ------- ------- ALBC Albion Banc Corp. Albion NY Traditional 2 66,316 07/26/93 23.25 6.12 CLAS Classic Bancshares Inc. Ashland KY Traditional 3 130,525 12/29/95 14.00 18.27 FFSL First Independence Corp. Independence KS Traditional 2 110,876 10/08/93 12.88 12.77 GUPB GFSB Bancorp Inc. Gallup NM Traditional 1 86,911 06/30/95 18.75 15.08 HHFC Harvest Home Financial Corp. Cheviot OH Traditional 3 87,596 10/10/94 11.75 10.75 INCB Indiana Community Bank SB Lebanon IN Traditional 3 91,329 12/15/94 15.25 14.06 MWBI Midwest Bancshares Inc. Burlington IA Traditional 4 146,542 11/12/92 33.88 11.53 NSLB NS&L Bancorp Inc. Neosho MO Traditional 2 59,711 06/08/95 18.63 13.18 PRBC Prestige Bancorp Inc. Pleasant Hills PA Traditional 3 135,721 06/27/96 17.50 16.01 RIVR River Valley Bancorp Madison IN Traditional 6 140,442 12/20/96 16.88 20.09 SOBI Sobieski Bancorp Inc. South Bend IN Traditional 3 79,080 03/31/95 16.25 12.34 TPNZ Tappan Zee Financial Inc. Tarrytown NY Traditional 1 124,150 10/05/95 17.44 26.11 Maximum 6 146,542 33.88 26.11 Minimum 1 59,711 11.75 6.12 Average 3 104,933 18.04 14.69 Median 3 101,103 17.16 13.62
Source: SNL and F&C calculations 4 FERGUSON & COMPANY Section III. Table III.2 -- Key Financial Indicators Wyman Comparative Park Group ----- ----------- Profitability (% of average assets) Net income 0.69(*) 0.42 Net interest income 2.79 3.28 Loss (recovery) provisions 0.23 0.09 Other operating income 0.12 0.29 Operating expense 2.56 2.46 Core income ( excluding gains and losses on asset sales) 0.69 0.68 Balance Sheet Factors (% of assets) Cash and investments 8.52 33.06 Mortgage-backed securities 0.56 14.56 Loans 87.53 63.68 Savings deposits 88.96 73.75 Borrowings -- 12.01 Equity 7.53 13.09 Tangible equity 7.53 12.91 Risk Factors (%) Earning assets/costing liabilities 108.40 113.62 Non-performing assets/assets 0.28 0.57 Loss allowance/non performing assets 153.89 143.72 Loss allowance/loans 0.50 0.67 One year gap/assets (7.05) (3.53) (*) Based on Appraisal Earnings Source: SNL Securities and F&C caluculations 5 FERGUSON & COMPANY Section III. Table III.3 -- Pro Forma Comparison Converting Institution to Comparative Group As of August 22, 1997
Price Mk Value PE P/Book P/TBook P/Assets Div Yld Assets Eq/A TEq/A EPS ROAA ROAE Ticker Name ($) ($Mil) (X) (%) (%) (%) (%) ($000) (%) (%) ($) (%) (%) - ------ ---- ----- -------- --- ------ ------- -------- ------- ------ ---- ----- --- ---- ---- Wyman Park ---------- Before Conversion N/A N/A N/A N/A N/A N/A N/A 62,241 7.63 7.63 N/A 0.69 2.87 Pro Forma Supermax 10.000 9,258 15.13 74.34 74.34 13.24 3.00 69,939 17.81 17.81 0.66 0.86 4.95 Pro Forma Maximum 10.000 8,050 13.69 70.55 70.55 11.68 3.00 68,897 16.56 16.56 0.73 0.84 5.19 Pro Forma Midpoint 10.000 7,000 12.35 66.64 66.64 10.30 3.00 67,991 15.45 15.45 0.81 0.82 5.44 Pro Forma Minimum 10.000 5,950 10.90 61.99 61.99 8.87 3.00 67,085 14.31 14.31 0.92 0.80 5.73 Comparative Group ----------------- Averages 18.037 14.69 22.13 109.16 110.75 14.42 1.91 104,933 13.09 12.91 0.92 0.70 5.30 Medians 17.157 13.62 21.59 111.04 111.23 14.15 1.96 101,103 12.39 12.31 0.78 0.71 4.77 Maryland Public Thrifts ----------------------- Averages 24.438 49.16 17.68 129.38 129.75 13.54 1.34 408,115 11.05 11.04 1.68 0.78 8.61 Medians 19.125 28.67 16.46 133.66 133.66 12.08 1.48 258,330 8.38 8.30 0.93 0.73 8.66 Mid-Atlantic Region Thrifts --------------------------- Averages 24.396 214.99 17.50 150.04 161.75 14.42 1.72 1,490,157 10.11 9.69 1.51 0.91 9.70 Medians 21.375 64.11 16.76 140.20 145.93 13.05 1.70 500,925 8.91 8.25 1.35 0.88 9.40 All Public Thrifts ------------------ Averages 23.214 237.42 17.82 146.57 153.42 14.98 1.80 1,554,864 10.87 10.60 1.46 0.99 9.75 Medians 20.938 55.84 16.55 138.35 142.81 14.11 1.76 383,263 9.41 8.91 1.28 0.91 8.76 Comparative Group ----------------- ALBC AlbionBancCorp-NY 23.250 6.12 24.73 98.43 98.43 8.77 1.38 66,316.00 8.90 8.90 0.94 0.38 3.90 CLAS ClassicBcshs-KY 14.000 18.27 19.18 94.15 111.38 14.00 2.00 130,525.00 14.87 12.87 0.73 0.72 4.64 FFSL FirstIndcCorp-KS 12.875 12.77 18.13 110.99 110.99 11.58 1.94 110,876.00 10.43 10.43 0.71 0.69 6.20 GUPB GFSBBancorp-NM 18.750 15.08 22.32 111.08 111.08 18.11 2.13 86,911.00 16.30 16.30 0.84 0.93 4.89 HHFC HarvestHome-OH 11.750 10.75 22.17 103.89 103.89 12.27 3.40 87,596.00 11.81 11.81 0.53 0.57 4.44 INCB IndianaCommBkSB-IN 15.250 14.06 31.77 124.29 124.29 15.40 2.36 91,329.00 12.39 12.39 0.48 0.50 3.92 MWBI MidwestBncshrs-IA 33.875 11.53 12.06 116.57 116.57 8.05 1.77 146,542.00 6.91 6.91 2.81 0.75 10.82 NSLB NS&LBancorp-MO 18.625 13.18 31.04 112.81 112.81 22.07 2.69 59,711.00 19.56 19.56 0.60 0.77 3.72 PRBC PrestigeBancorp-PA 17.500 16.01 20.11 106.00 106.00 11.80 0.69 135,721.00 11.13 11.13 0.87 0.65 4.97 RIVR RiverValleyBncp-IN 16.875 20.09 14.55 115.42 117.19 14.30 0.95 140,442.00 12.39 12.23 1.16 0.88 7.23 SOBI SobieskiBancorp-IN 16.250 12.34 28.51 92.75 92.75 15.61 1.97 79,080.00 15.40 15.40 0.57 0.57 3.28 TPNZ TappanZeeFin-NY 17.438 26.11 21.01 123.59 123.59 21.03 1.61 124,150.00 17.02 17.02 0.83 1.00 5.63
Note: Stock prices are closing prices or last trade. Pro forma calculations for Wyman Park's are based on sales at $10 per share with a midpoint of $7,000,000 minimum of $5,950,000, and maximum of $8,050,000. 6 FERGUSON & COMPANY Section III. Table III.4 -- Selection of Comparatives
Deposit Current Current Price/ Price/ Insurance Stock Market LTM Core Agency Price Value Core EPS EPS Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) (x) (x) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- ------- -------- ------ ALBC Albion Banc Corp. Albion NY MA SAIF NASDAQ 07/26/93 23.625 6.22 25.13 13.13 CLAS Classic Bancshares Inc. Ashland KY MW SAIF NASDAQ 12/29/95 14.500 18.92 21.97 NA FFSL First Independence Corp. Independence KS MW SAIF NASDAQ 10/08/93 12.375 12.34 17.43 17.19 GUPB GFSB Bancorp Inc. Gallup NM SW SAIF NASDAQ 06/30/95 19.750 15.88 23.51 23.51 HHFC Harvest Home Financial Corp. Cheviot OH MW SAIF NASDAQ 10/10/94 11.750 10.75 23.50 16.32 INCB Indiana Community Bank SB Lebanon IN MW SAIF NASDAQ 12/15/94 15.250 14.06 31.77 25.42 MWBI Midwest Bancshares Inc. Burlington IA MW SAIF NASDAQ 11/12/92 34.750 12.10 12.68 13.16 NSLB NS&L Bancorp Inc. Neosho MO MW SAIF NASDAQ 06/08/95 16.625 11.76 28.66 23.09 PRBC Prestige Bancorp Inc. Pleasant Hills PA MA SAIF NASDAQ 06/27/96 15.875 14.52 NA 17.26 RIVR River Valley Bancorp Madison IN MW SAIF NASDAQ 12/20/96 15.500 18.45 NA 20.39 SOBI Sobieski Bancorp Inc. South Bend IN MW SAIF NASDAQ 03/31/95 15.750 11.96 27.63 21.88 TPNZ Tappan Zee Financial Inc. Tarrytown NY MA SAIF NASDAQ 10/05/95 17.500 26.85 21.34 24.31 Maximum 34.750 26.85 31.77 25.42 Minimum 11.750 6.22 12.68 13.13 Average 17.771 14.48 23.36 19.61 Median 15.813 13.20 23.51 20.39
--------------------------------------------------------------- Start with 413 Thrifts --------------------------------------------------------------- 1. Delete less than $50 million and greater than $200 million Remaining 116 2. Delete Merger Targets Remaining 113 3. Delete MHC's Remaining 107 4. Delete Loans to Deposits less than 50% Remaining 99 5. Delete Loans to Deposits greater than 100% Remaining 29 6. Delete greater than $150 million Remaining 24 7. Eliminate NPA's greater than 1% Remaining 17 8. Eliminate BIF insured Remaining 15 9. Eliminate Equity to Assets greater than 20% Remaining 13 10. Eliminate Excessive loan servicing Remaining 12 --------------------------------------------------------------- 7 FERGUSON & COMPANY Section III. Table III.4 -- Selection of Comparatives (Continued)
Tangible Return on Current Current Current Total Equity/ Equity Core Core Avg Assets Price/ Price/ Tang Price/ Dividend Assets Assets Tang Assets EPS EPS Before Extra Book Value Book Value Assets Yield ($000) (%) (%) ($) ($) (%) Ticker (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM Mst RctQ LTM - ------ ---------- ----------- ------ -------- -------- -------- ----------- ---- -------- ------------ ALBC 100.02 100.02 8.91 1.312 66,316 8.90 8.90 0.94 0.45 0.09 CLAS 98.84 117.12 14.55 1.931 131,554 14.72 12.72 0.66 NA 0.63 FFSL 106.68 106.68 11.13 2.020 110,876 10.43 10.43 0.71 0.18 0.43 GUPB 117.00 117.00 19.07 2.025 86,911 16.30 16.30 0.84 0.21 0.74 HHFC 105.76 105.76 13.22 3.404 83,103 12.50 12.50 0.50 0.18 0.27 INCB 124.29 124.29 15.40 2.361 91,329 12.39 12.39 0.48 0.15 0.17 MWBI 125.54 125.54 8.71 1.727 139,006 6.94 6.94 2.74 0.66 0.47 NSLB 101.62 101.62 20.25 3.008 58,089 19.92 19.92 0.58 0.18 0.50 PRBC 98.54 98.54 11.51 0.756 126,833 11.69 11.69 NA 0.23 0.27 RIVR 107.86 109.54 13.34 0.000 138,325 12.36 12.19 NA 0.19 NA SOBI 89.90 89.90 15.13 1.778 79,080 15.40 15.40 0.57 0.18 0.28 TPNZ 126.45 126.45 22.03 1.143 121,841 17.42 17.42 0.82 0.18 0.72 Maximum 126.45 126.45 22.03 3.40 139,006.00 19.92 19.92 2.74 0.66 0.74 Minimum 89.90 89.90 8.71 -- 58,089.00 6.94 6.94 0.48 0.15 0.09 Average 108.54 110.21 14.44 1.79 102,771.92 13.25 13.07 0.88 0.25 0.42 Median 106.22 108.11 13.95 1.85 101,102.50 12.45 12.45 0.69 0.18 0.43
8 FERGUSON & COMPANY Section III. Table III.4 -- Selection of Comparatives (Continued)
Return on ROACE ROACE Loans Avg Assets Before Before NPAs/ Loans/ Loans/ Deposits/ Borrowings/ Serviced Before Extra Extra Extra Merger Current Assets Deposits Assets Assets Assets For Others (%) (%) (%) Target? Pricing (%) (%) (%) (%) (%) ($000) Ticker Mst RctQ LTM Mst RctQ (Y/N) Date Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ - ------ ------------ ------ -------- ------- -------- -------- -------- -------- --------- ----------- ---------- ALBC 0.69 0.93 7.68 N 07/24/97 NA 96.00 72.82 75.86 13.98 NA CLAS 0.91 3.21 6.17 N 07/24/97 0.70 82.10 62.73 76.41 8.20 -- FFSL 0.64 3.86 6.15 N 07/24/97 NA 98.53 66.00 66.99 21.01 NA GUPB 0.81 3.86 4.76 N 07/24/97 NA 82.01 52.16 63.61 18.93 NA HHFC 0.78 1.89 6.27 N 07/24/97 0.15 76.48 52.98 69.27 17.69 NA INCB 0.60 1.29 4.77 N 07/24/97 NA 90.47 78.66 86.95 -- NA MWBI 0.72 6.77 10.23 N 07/24/97 0.82 79.76 59.93 75.14 17.27 -- NSLB 0.86 2.31 4.19 N 07/24/97 -- 75.11 55.13 73.40 5.16 -- PRBC 0.65 NA 5.34 N 07/24/97 0.32 94.98 65.36 68.81 17.98 -- RIVR 0.98 NA 8.05 N 07/24/97 0.12 92.54 79.38 85.78 0.36 NA SOBI 0.67 1.64 4.04 N 07/24/97 0.25 98.14 73.21 74.60 8.98 -- TPNZ 0.90 3.92 5.07 N 07/24/97 NA 56.72 45.77 80.70 -- NA Maximum 0.98 6.77 10.23 0.82 98.53 79.38 86.95 21.01 -- Minimum 0.60 0.93 4.04 -- 56.72 45.77 63.61 -- -- Average 0.77 2.97 6.06 0.34 85.24 63.68 74.79 10.80 -- Median 0.75 2.76 5.75 0.25 86.29 64.05 74.87 11.48 --
9 SECTION IV CORRELATION OF MARKET VALUE FERGUSON & COMPANY Section IV. IV. CORRELATION OF MARKET VALUE MARKETABILITY & LIQUIDITY OF STOCK TO BE ISSUED This section addresses the aforementioned factors and the estimated pro forma market. Certain factors must be considered to determine whether adjustments are required in correlating Wyman Park's market value to the comparative group. Those factors include financial aspects, market area, management, dividends, liquidity, thrift equity market conditions, and subscription interest value of the to-be-issued common shares, and compares the resulting market value of the Association to the members of its comparative group and the selected group of publicly held thrifts. Financial Aspects Section III includes a discussion regarding a comparison of Wyman Park's earnings, balance sheet characteristics, and risk factors with its comparative group. Table III.2 presents a comparison of certain key indicators, and Table III.3 presents certain key indicators on a pro forma basis after conversion. As shown in Table III.2, from an earnings viewpoint, Wyman Park is above its comparative group in return on assets (based on appraisal earnings) and core income as a percentage of average assets. This is principally a result of Wyman Park's earnings being adjusted for the SAIF assessment. Without the appraisal earnings adjustment, the return on assets for Wyman Park was 0.22%. The more accurate comparison would be to compare the core earnings of Wyman Park to the comparative group. In that comparison Wyman Park is higher than the comparative group in core earnings to assets (0.69% to 0.68%). Wyman Park has a lower net interest income than the comparables, 2.79% to the comparative group's 3.28%. Wyman Park has a higher loss provision than the comparative group (0.23% vs. 0.09%). However, if you adjust Wyman Park's 0.23% provision to a normal provision, the comparison would be 0.03% to 0.09%. Wyman Park has a lower other operating income (0.12% vs. 0.29%), and slightly higher operating expenses than the comparative group (2.56% vs. 2.46%). After considering all of the analytical factors, and adjusting to core earnings, we see that Wyman Park is remarkably similar in results to the comparative group. After Wyman Park completes its stock conversion, its return on average assets and core income as a percentage of average assets will increase, and out perform the comparable group principally in spite of the lower ratio of IEA's to IBL's, and a higher level of operating expense. Table III.3 projects that Wyman Park will out-perform the comparable group in return on assets with 0.82% at the midpoint, versus a mean of 0.70% and median of 0.71% for the comparative group. Wyman Park's pro forma equity to assets ratio at the midpoint is 15.45%, versus a mean of 13.09%, and median of 12.39% for the comparative group. Wyman Park's pro forma return on equity is higher than the comparative group--5.44% at the midpoint versus a mean of 5.30%, and median of 4.77% for the comparative group. Wyman Park's recorded earnings have been adjusted for appraisal purposes (see Table IV.1). The Association recorded gains of $6 thousand from the sale of assets, paid the SAIF special assessment of $383 thousand, and recorded, at June 30, 1997, an excess provision for loan loss reserves of $120 thousand. 1 FERGUSON & COMPANY Section IV. Table IV.1 - Appraisal Earnings Adjustments for the Twelve Months Ending June 30, 1997 (In Thousands) Appraisal Earnings Year End June 30, 1997 $134 ---- SAIF Assessment $383 Excess Loss Provision 120 Securities Gain (6) ---- 497 Tax @ 38% (194) Net Adjustments 303 ---- Adjusted Earnings $437 ==== Source: Wyman Park's audited financial statements and F&C calculations. Wyman Park's asset composition is similar to that of its comparative group--lending oriented (more than 50% of total assets are in loans); however, cash and investments and mortgage-backed securities present some differences from the comparative group. Wyman Park has 8.52% in cash and investment securities and a nominal 0.56% of total assets in MBS's. The comparative group has 33.06% in cash and investments, and 14.56% in MBS's. However, if you add MBS's to loans, Wyman Park then has 88.09% in combination (loans + MBS's), and the comparative group has 78.24% in the same combination. From the risk factor viewpoint, Wyman Park is similar to the comparative group. Wyman Park has 0.28% in non performing assets, and the comparative group has 0.57% in nonperforming assets. Obviously, Wyman Park's percentage is much smaller, but both levels are indicative of a quality portfolio, and neither should present any problems related to capital or future earnings of Wyman Park or the comparative group. Wyman Park's loan loss allowance is 0.50% of net loans, comparing favorably with the comparative group, which is 0.67%. Wyman Park's loan loss reserve is less, mainly due to Management's opinion that their asset composition has less risk than a traditional thrift. Its ratio of interest earning assets to interest bearing liabilities (108.40%) is well below the comparative group (113.62%). From an earnings perspective, this is a significant amount of difference, but Wyman Park's ratio will be in line with the comparative group after conversion. From an interest rate risk factor, Wyman Park has more risk than the comparable group, however, the amount of interest rate risk is manageable, and the Association's interest rate risk will decrease after the Conversion with the employment of the subsequent capital infusion. We believe that no adjustment is necessary relative to financial aspects of Wyman Park. Market Area Section II describes Wyman Park's market area. 2 FERGUSON & COMPANY Section IV. We believe that an upward adjustment is required for Wyman Park's market area. Management The CEO has served as President, CEO, and Director since 1989. He has in excess of 30 years of experience in the thrift industry and banking industry. Prior to joining Wyman Park, he was a Vice President of Yorkridge-Calvert Savings and Loan Association, where he was in charge of all residential lending. He is well qualified for the position he holds. The Treasurer has been with Wyman Park since 1990. He joined Wyman Park with an excess of 26 years experience in accounting, and 15 of the 26 years are in thrift accounting. He is also well qualified for the position he holds. The senior staff possess the necessary intellect, skills, levels of expertise, and experience to maintain the integrity of the assets and to implement the strategic goals of the organization. Wyman Park's results compare well with the comparative group. Therefore, the Association's Management has done the same quality job as its selected comparatives. The Board has not developed a formal management succession plan, however, that is not unusual for an Association of the size of Wyman Park.. The Association would be vulnerable to the loss of the CEO. We believe that no adjustment is required for Wyman Park's Management. Dividends Table III.3 provides dividend information relative to the comparative group and the thrift industry as a whole. The comparative group is paying a mean yield on a market price of 1.91% and a median of 1.96%, while all public thrifts are paying a mean of 1.80% and median of 1.76%. Maryland public thrifts are paying a mean of 1.34% and a median of 1.48%. Wyman Park intends to pay a dividend at an initial annual rate of 3.0%, on an offering price of $10.00 per share ($0.30 per share). Even with market appreciation, Wyman Park's dividend rate will be comparable. We believe that no adjustment is required relative to Wyman Park's intention to pay dividends. Liquidity The Holding Company has never issued capital stock to the public, and as a result, there is no existing market for the Common Stock. Although the Holding Company has applied to list its Common Stock on NASDAQ, there can be no assurance that a liquid trading market will develop. A public market having the desirable characteristics of depth, liquidity, and orderliness depends upon the presence in the marketplace of both willing buyers and sellers of the Common Stock. These characteristics are not within the control of the Association or the market. The peer group includes companies with sufficient trading volume to develop meaningful pricing characteristics for the stock. The market value of the comparative group ranges from $6.22 million to $26.85 million, with a mean value of $14.48 million. The midpoint of Wyman Park's valuation range is $7.0 million at $10.00 a share, or 700,000 shares. The liquidity of the stock can be affected by the size of the issue ($7.0 million at the mid-point at $10.00 per share). Of the 700,000 shares in the offering, approximately 75,000 shares will be purchased by insiders, 56,000 by the ESOP, leaving only 569,000 shares available to the market. Such a small number of shares is not sufficient to produce the trading volume necessary to develop a meaningful, liquid market. We believe a downward adjustment is required relative to the liquidity of Wyman Park. 3 FERGUSON & COMPANY Section IV. Thrift Equity Market Conditions As shown in Figure IV.1, which is a graph of the SNL Thrift Index covering from January 31, 1994, through August 22, 1997, the market, as reflected by the index, experienced fluctuations but ended in 1994-down 13.74, which is only 5.3%. Since year end 1994, the market has continued with a well defined increase and has moved from 244.7 at December 31, 1994, to 376.51 at December 29, 1995, an increase of 53.84%. From that point, the SNL Index rose consistently from the 376.51 reported at December 31, 1995, to 486.67 at December 31, 1996. The Index increased further until the end of February 1996, reaching 569.67. March 1996 brought the first retrenchment of the Index and it fell to 517.63 in April of 1997. From April 11, 1997, forward, the Index increased, with one noticeable decline in value in the third week of April 1997. By the end of the month of April, the Index rebounded, and has rebounded robustly since then, increasing from 537.21 at April 30, 1997, to 684.51 reported July 31, 1997. Since the end of July, the market has retreated slightly and at the appraisal date, August 2, 1997, was recorded at 663.36, down 3.8% since the end of July. EFFECT OF INTEREST RATES ON THRIFT STOCK The current interest rate environment and the anticipated rate environment will affect the pricing of thrift stocks and all other interest sensitive stocks. As the economy continues to expand, the fear of inflation can return. The Federal Reserve, in its resolve to curb inflation, has increased rates in the past, but has more recently relented and passed several opportunities to increase rates, until March 25, 1997, when the Federal Open Market Committee (FOMC) increased the discount rate 25 basis points. In some minds, this was an attempt to head off inflationary trends. According to the FOMC, "This action was taken in light of persisting strength in demand, which is progressively increasing the risk of inflationary imbalances developing in the economy that would eventually undermine the long expansion."1 This increase was clearly telegraphed by Chairman Greenspan who voiced concern about the levels of the equity markets. Following the March 25 increase, unemployment rates were announced at the 5.2% level, down from the 5.5% level at the beginning of 1996, and significantly down from the 6.7% level at the beginning of 1994.2 The good news about unemployment gave way to speculation that the March 25 increase was just the first of at least two or three increases, and the speculation was given some credence at that time by rises in the Employment Cost Index, an increase in Unit Labor Cost and an upward trend in the price of crude oil. By April 1, 1997, following the rate increase, the equities markets lost all of the gains registered since the first of the year. By the end of April 1997, the market had began a rebound and has trended upward since then. There have been specific days of price adjustment, but the overall trend is up notwithstanding recent dramatic ups and downs. Chairman Greenspan, in recent public appearances, has not articulated concerns about market levels and inflation. The thrift equities market is following the market in general. However, the thrift equities market will continue to be influenced by the speculation that there will eventually be a buyout, and the knowledge that thrift IPO stock can be purchased at significant discounts from book value. These two facts could keep the thrift equities market from falling as much as the other general markets, if there is a period of adjustment. However, if the merger and acquisition levels drop, if there were another sharp and sustained rise in the interest rates, or if other equity markets have protracted adjustment, the market in thrift equities would also adjust. Recent earnings reports by financial institutions that have made major acquisitions in the recent past have been disappointing. Even the vaunted Wells Fargo, the master at merger profitability, had to admit that its latest - -------- 1 US Financial Data, published by the Research Division of the Federal Reserve Bank of St. Louis, MO. 2 National Economic Trends, The Federal Reserve Bank of St. Louis, MO. 4 FERGUSON & COMPANY Section IV. acquisition produced losses. If such occurrences become general the large mergers could slow, but at the regional level, merger activity is likely to continue. What is likely to happen in the short to intermediate term is that rates will float around current levels for the next few months. The yield curve will continue to be of normal configuration. Most economists feel that a rise of three quarters of one percent on the short side and less on the long side could severely dampen the economy, but such increases are highly unlikely at this time. Following the March increase in rates, additional data has caused the concerns about rising inflation to moderate. Since lower rates benefit corporate earnings, the housing and stock market, not to mention the bond market, the economy has continued its expansion, but at a slightly slower rate. With the Federal Reserve always ready to raise (or lower) rates as economic conditions warrant, it is likely that before this expansionary cycle is over, interest rates will rise. The supply and demand portion of the equation is nicely balanced, and a continuation of such equilibrium will probably restrain rising rates in the near term. It is even possible that in the short-term, interest rates might ease a bit. The consumer seems to be happier now than in the past. Job markets remain strong and the unemployment rate is at 4.8%--the lowest since November of 1973. Consumer confidence is at a 28 year high. Our continuing economic health has always been dependent upon meaningful consumer participation, because consumers (household sector) actually account for 68% of the Gross Domestic Product ("GDP"). In the second quarter of 1997, consumers seemed to rein in their consumption. This lowering of consumption may be only to catch their economic breath and repay credit card debt, and other personal debt which has accumulated. Manufacturing is still strong, even with the slight drop in retail sales, home purchases, and other big ticket items. With consumer confidence at a high level, jobs plentiful, inflation seemingly in check, and the economy healthy and continuing to expand, why shouldn't the economy continue to roll onward and upward. From an analytical view, there is little on the economic horizon at this time that would interfere with continuing economic expansion for at least another 12 to 18 months. Thrift net interest margins have remained stable. The equilibrium in the supply and demand portion of the interest rate market has helped continue the profitability mode of the industry that started in 1993. Access to mortgage-backed securities and derivatives has made it possible for many to be profitable without making loans in significant volumes. With reduced deposit insurance premiums, perhaps they will become more willing to compete for customer deposits. However, even with portfolios replete with adjustable rate loans and adjustable MBS's, there remains a real fear that a quickly rising rate environment can cause the cost of funds to rise faster than the adjustable assets can accommodate, and accordingly, spreads would narrow. If rates rise in a slow and orderly manner, then the negative impact on spreads will be less, and the adjustable rate assets will have time to rise and protect rate spreads. Figure IV.2 graphically displays the rate environment since December 31, 1996. Since the year end, the yield curve has flattened with the high spread between the 1 year T-Bill and the 30 year long bond being 129 BP and the low 91 BP. Mortgage rates follow closely the long term government obligations. The lack of a significant spread since year end has not improved portfolio managers chances of improving profitability. 5 FERGUSON & COMPANY Section IV. MARYLAND ACQUISITIONS Table IV.2 provides information relative to acquisitions of financial institutions in Maryland between January 1, 1996, and August 22, 1997. There were 12 acquisitions completed during that time frame. Currently there are five publicly held thrifts in the State of Maryland. There are 60 publicly held thrifts in the Mid-Atlantic region of the country. Acquisitions of financial institutions in Maryland since January 1, 1996, have averaged 203.75% of tangible book value and 19.44 times earnings. The median price has been 194.24% of tangible book value and 23.13 times earnings. Thrifts generally sell at lower price/book multiples than do banks. This data does not reflect that, and in fact, reflects the opposite, but the limited number of thrifts in the database makes it dangerous to deduce that the overall price of thrifts are nearing the price of banks. Disparity, or the lack thereof, between the price of thrifts and banks aside, there is ample data shown to conclude that speculators in thrift IPO stock have good reason to believe that, in the event of a sell out, there would be a generous profit to be made. Such knowledge and hope for profits have created a whole new level of professional investors (speculators) and that, in turn, has increased the demand for thrift IPO stocks. Table IV.3, which has information on recent conversions since January 7, 1997, shows that recent price appreciation has been more vigorous than it was in past periods. Table IV.3 provides information on 13 conversions completed since January 1997. The average change in price since conversion is a gain of 66.15%, and the median change is a gain of 60.00%. All thrifts within that group have increased in value, ranging from a low of 35.0% to a high of 138.75%. The average increase in value at one day, one week, and one month after conversion has been 41.42%, 43.41%, and 47.16%, respectively. The median increase in value at one day, one week, and one month after conversion has been 33.75%, 37.50%, and 40.00%, respectively. A notable change in pricing patterns is that it is taking longer for the stocks to increase in value. In the recent past, it was not uncommon for a stock to gain 75% to 80% of its total price increase in the first day or week. However, more recent conversions gained 62.61% of their total price increase in the first day, and 65.62% of the total price increase in the first week. This is mainly due to the trend toward higher price to pro forma book values at closings. Since January 2, 1997, only two issues have closed at a price to pro forma book value of less than 71.00%, and they closed as 68.10% and 63.80% of pro forma book value. The remainder closed between 71.10% and 73.40% price to pro forma book value. Because of the lack of complete earnings information on recent conversions, a meaningful comparison of the price earnings ratios is difficult to make. However, there is sufficient information to review the current price-to-book ratio. The average price-to-book ratio as of August 22, 1997, is 112.84%, and the median is 105.53%. That compares to the offering price to pro forma book, where the average was 71.07%, and the median was 71.90%. We believe that a slight downward adjustment is required for the new issue discount. 6 FERGUSON & COMPANY Section IV. Adjustments Conclusion Adjustments Summary - -------------------------------------------------------------------------------- No Change Upward Down --------- ------ ---- Financial Aspects X Market Area X Management X Dividends X Liquidity X Thrift Equity Market Conditions X - -------------------------------------------------------------------------------- Valuation Approach Typically, investors rely on the price/earnings ratio as the most appropriate indicator of value. We consider price/earnings to be one of the important pricing methods in valuing a thrift stock. Price/book is a well recognized yardstick for measuring the value of financial institution stocks in general. Another method of viewing thrift values is price/assets, which is more meaningful in situations where the subject is thinly capitalized. Given the healthy condition of the thrift industry today, more emphasis is placed on price/earnings and price/book. Generally, price/earnings and price/book should be considered in tandem. Table III.3 presents Wyman Park's pro forma ratios and compares them to the ratios of its comparative group and the publicly held thrift industry as a whole. Wyman Park's earnings for the 12 months ended June 30, 1997, were approximately $134,000, with net adjustments of $497,000 ($303,000 after tax @ 39%) required to determine appraisal earnings of $437,000 (see Table IV.1). Management has exhibited, through its diversification of deposit and loan products, the flexibility in operations needed to serve both the public and the institution. The Association is not well positioned to manage interest rate variations. The Association projects moderate growth. The comparative group traded at an average of 22.13 times earnings at August 22, 1997, and at 109.16% of book value. The comparative group traded at a median of 21.59 times earnings and a median of 111.04% of book value. At the midpoint of the valuation range, Wyman Park is priced at 12.35 times earnings and 66.64% of book value. At the maximum end of the range, Wyman Park is priced at 13.69 times earnings and 70.55% of book value. At the supermaximum, Wyman Park is priced at 15.13 times earnings and 74.34% of book value. The midpoint valuation of $7,000,000 represents a discount of 39.0% from the average and a discount of 40.0% from the median of the comparative group on a price/book basis. The price/earnings ratio for Wyman Park at the midpoint represents a discount of 44.2% from the comparative group's mean and 42.8% from the median price/earnings ratio. The maximum valuation of $9,258,000 represents a discount of 35.4% from the average and 36.5% from the median of the comparative group on a price/book basis. The price/earnings ratio for Wyman Park at the maximum represents a discount of 38.1% from the average and a discount of 36.6% from the median of the comparative group. 7 FERGUSON & COMPANY Section IV. As shown in Table IV.3, conversions closing since January 2, 1997, have closed at an average price to book ratio of 71.07% and median of 71.90%. Wyman Park's pro forma price to book ratio is 66.64% at the midpoint, 70.55% at the maximum, and 74.34% at the supermaximum of the range. At the midpoint, Wyman Park is 6.23% below the average and 7.32% below the median. At the maximum of the range, Wyman Park is 0.73% below the average and 1.81% below the median. At the supermaximum of the range, Wyman Park's pro forma price to book ratio is 4.60% above the average and 3.39% above the median. Addressing the discounts between the pro forma book value of Wyman Park and the current price to book values of the comparative group (see Table IV.4), there are some notable factors. Should the issue close at the supermaximum, which is likely, then it would be closing at a premium of 4.6% on the average of recent conversion. It is important to realize that there is some point beyond which most knowledgeable investors will not travel as it relates to the price of thrift IPO stock. This valuation provides for a 15% increase between midpoint and maximum and an additional 15% to supermaximum, which would take the value higher than all of the most recent conversions. Valuation Conclusion We believe that as of August 22, 1997, the estimated pro forma market value of Wyman Park was $7,000,000. The resulting valuation range was $5,950,000 at the minimum to $8,050,000 at the maximum, based on a range of 15% below and 15% above the midpoint valuation. The supermaximum is $9,258,000, based on 1.15 times the maximum. Pro forma comparisons with the comparative group are presented in Table III.3 based on calculations shown in Exhibit V. 8 FERGUSON & COMPANY Section IV. Table IV.2 -- Bank and Thrift Acquisitions Since January 1, 1996
Buyer's Seller's Ann'd Ann'd Ann'd Ann'd Total Total Completed/ Deal Deal Deal Pr/ Deal Pr/ Assets Assets Announce Terminated Value Pr/Bk Tg Bk 4-Qtr Buyer ST Seller ST ($000) ($000) Date Date ($M) (%) (%) EPS (x) - ----- -- ------ -- ------- -------- -------- ---------- ----- ----- -------- -------- MainStreet BnGp Inc VA Commerce Bank Corp MD 1,361,815 69,315 06/24/97 NA 14.30 255.86 255.86 15.56 Crestar Financial VA American Natl Bncp MD 21,982,732 505,318 06/23/97 NA 77.10 161.48 161.48 53.29 Fulton Fin'l Corp PA Peoples Bk, Elkton MD 3,769,385 92,324 03/18/97 NA 21.90 221.06 221.06 17.59 Provident Bkshrs MD First Citizens Fin'l MD 2,798,839 687,196 03/11/97 NA 104.00 220.88 220.88 31.62 Mercantile Bankshrs MD Farmers Bank MD 6,546,631 27,392 12/10/96 07/01/97 3.90 163.32 163.32 21.67 Shore Bancshares MD Kent S&LA MD 141,115 24,034 12/05/96 03/31/97 5.10 169.89 169.89 16.67 Keystone Financial PA First Financial-W.MD MD 5,186,129 345,505 11/26/96 05/30/97 76.30 180.77 180.77 26.42 Mercantile Bankshrs MD Home Bank MD 6,546,631 45,394 10/21/96 07/01/97 13.90 259.96 259.96 22.20 Crestar Financial VA Citizens Bancorp MD 18,488,317 4,179,798 09/16/96 12/31/96 794.50 224.08 224.67 20.02 F&M National Corp VA Allegiance Banc Corp MD 1,833,820 138,090 04/22/96 10/01/96 27.90 215.83 215.83 24.59 Sandy Spring Bancorp MD Annapolis Bancshares MD 794,319 81,820 04/17/96 08/30/96 18.00 203.75 203.75 15.92 F&M Bancorp MD Home Federal Corp MD 739,854 214,615 04/02/96 11/15/96 30.60 165.00 167.52 12.05 Maximum 21,982,732 4,179,798 794.50 259.96 259.96 53.29 Minimum 141,115 24,034 3.90 161.48 161.48 12.05 Average 5,849,132 534,233 98.96 203.49 203.75 23.13 Median 3,284,112 115,207 24.90 209.79 209.79 20.85
NA=Not Available Source: SNL Securities LC, Charlottesville, VA 9 FERGUSON & COMPANY Section IV. Table IV.3 -- Recent Conversions
Conversion Pricing Ratios ------------------------------------------- Price/ Price/ Price/ Price/ Conversion Gross Offering Pro-Forma Pro-Forma Pro-Forma Adjusted Assets Proceeds Price Book Value Tang. Book Earnings Assets Ticker Short Name State IPO Date ($000) ($000) ($) (%) (%) (x) (%) - ------ ---------- ----- -------- ---------- -------- -------- ---------- ---------- --------- -------- AFBC Advance Financial Bancorp WV 01/02/97 91,852 10,845 10.00 71.10 71.09 16.80 10.60 RSLN Roslyn Bancorp Inc. NY 01/13/97 1,596,744 423,714 10.00 72.00 71.98 9.30 21.00 FAB FirstFed America Bancorp Inc. MA 01/15/97 723,778 87,126 10.00 72.00 72.02 13.60 10.70 EFBC Empire Federal Bancorp Inc. MT 01/27/97 86,810 25,921 10.00 68.10 68.09 21.50 23.00 MRKF Market Financial Corp. OH 03/27/97 45,547 13,357 10.00 71.10 71.07 26.20 22.70 GSLA GS Financial Corp. LA 04/01/97 86,521 34,385 10.00 63.80 63.75 38.70 28.40 HMLK Hemlock Federal Financial Corp IL 04/02/97 146,595 20,763 10.00 71.60 71.62 37.50 12.40 PSFC Peoples-Sidney Financial Corp. OH 04/28/97 86,882 17,854 10.00 71.20 71.24 11.50 17.00 HCBB HCB Bancshares Inc. AR 05/07/97 171,241 26,450 10.00 72.00 71.95 29.00 13.40 CFBC Community First Banking Co. GA 07/01/97 352,532 48,271 20.00 72.70 72.74 36.10 12.00 FBNW FirstBank Corp. ID 07/02/97 133,194 19,838 10.00 71.90 71.93 19.20 13.00 FSPT FirstSpartan Financial Corp. SC 07/09/97 375,526 88,608 20.00 73.00 72.98 26.00 19.10 GOSB GSB Financial Corp. NY 07/09/97 96,323 22,483 10.00 73.40 73.44 23.20 18.90 Maximum 1,596,744 423,714 20.00 73.40 73.44 38.70 28.40 Minimum 45,547 10,845 10.00 63.80 63.75 9.30 10.60 Average 307,196 64,586 11.54 71.07 71.07 23.74 17.09 Median 133,194 25,921 10.00 71.90 71.93 23.20 17.00
Table IV.3 -- Recent Conversions (Continued)
Post Conversion Increase (Decrease) Current Current Current Price One Price One Price One --------------------------------------- Stock Price/ Price/Tang Day After Week After Month After Price One Price One Price One To Price Book Value Book Value Conversion Conversion Conversion Day Week Month Date Ticker ($) (%) (%) ($) ($) ($) (%) (%) (%) (%) - ------ ------- ---------- ---------- ---------- ---------- ----------- --------- --------- --------- ---- AFBC 16.00 108.47 108.47 12.88 12.94 14.00 28.75 29.38 40.00 60.00 RSLN 23.88 163.75 164.54 15.00 15.94 16.00 50.00 59.38 60.00 138.75 FAB 19.13 124.59 124.59 13.63 14.13 14.88 36.25 41.25 48.75 91.25 EFBC 15.50 99.04 99.04 13.25 13.50 13.75 32.50 35.00 37.50 55.00 MRKF 14.13 95.25 95.25 12.94 12.25 12.63 29.38 22.50 26.25 41.25 GSLA 15.25 93.22 93.22 13.38 13.75 14.00 33.75 37.50 40.00 52.50 HMLK 15.38 105.53 105.53 12.88 12.88 13.00 28.75 28.75 30.00 53.75 PSFC 16.00 NA NA 12.56 12.88 13.25 25.63 28.75 32.50 60.00 HCBB 13.50 NA NA 12.63 12.75 12.88 26.25 27.50 28.75 35.00 CFBC 33.75 NA NA 31.88 33.00 34.00 59.38 65.00 70.00 68.75 FBNW 17.88 NA NA 15.81 15.56 17.75 58.13 55.63 77.50 78.75 FSPT 35.50 NA NA 36.69 37.00 35.63 83.44 85.00 78.13 77.50 GOSB 14.75 NA NA 14.63 14.88 14.38 46.25 48.75 43.75 47.50 Maximum 35.50 163.75 164.54 36.69 37.00 35.63 83.44 85.00 78.13 138.75 Minimum 13.50 93.22 93.22 12.56 12.25 12.63 25.63 22.50 26.25 35.00 Average 19.28 112.84 112.95 16.78 17.03 17.39 41.42 43.41 47.16 66.15 Median 16.00 105.53 105.53 13.38 13.75 14.00 33.75 37.50 40.00 60.00
10 FERGUSON & COMPANY Section IV. Table IV.4 -- Comparison of Pricing Ratios
Wyman Park Group Percent Premium Savings and Compared to (Discount) Versus Loan ----------------- ----------------- Association Average Median Average Median ----------- ------- ------ ------- ------ Comparison of PE ratio at midpoint to: - ------------------------------------------ Comparative group 12.35 22.13 21.59 (44.2) (42.8) Maryland Thrifts 12.35 17.68 16.46 (30.1) (25.0) Mid Atlantic Region Thrifts 12.35 17.50 16.76 (29.4) (26.3) All public thrifts 12.35 17.82 16.55 (30.7) (25.4) Recent conversions 12.35 23.74 23.20 (48.0) (46.8) Comparison of PE ratio at maximum to: - ------------------------------------------ Comparative group 13.69 22.13 21.59 (38.1) (36.6) Maryland Thrifts 13.69 17.68 16.46 (22.6) (16.8) Mid Atlantic Region Thrifts 13.69 17.50 16.76 (21.8) (18.3) All public thrifts 13.69 17.82 16.55 (23.2) (17.3) Recent conversions 13.69 23.74 23.20 (42.3) (41.0) Comparison of PE ratio at supermaximum to: - ------------------------------------------ Comparative group 15.13 22.13 21.59 (31.6) (29.9) Maryland Thrifts 15.13 17.68 16.46 (14.4) (8.1) Mid Atlantic Region Thrifts 15.13 17.50 16.76 (13.5) (9.7) All public thrifts 15.13 17.82 16.55 (15.1) (8.6) Recent conversions 15.13 23.74 23.20 (36.3) (34.8) Comparison of PB ratio at midpoint to: - ------------------------------------------ Comparative group 66.64 109.16 111.04 (39.0) (40.0) Maryland Thrifts 66.64 129.38 133.66 (48.5) (50.1) Mid Atlantic Region Thrifts 66.64 150.04 140.20 (55.6) (52.5) All public thrifts 66.64 146.57 138.35 (54.5) (51.8) Recent conversions 66.64 71.07 71.90 (6.2) (7.3) Comparison of PB ratio at maximum to: - ------------------------------------------ Comparative group 70.55 109.16 111.04 (35.4) (36.5) Maryland Thrifts 70.55 129.38 133.66 (45.5) (47.2) Mid Atlantic Region Thrifts 70.55 150.04 140.20 (53.0) (49.7) All public thrifts 70.55 146.57 138.35 (51.9) (49.0) Recent conversions 70.55 71.07 71.90 (0.7) (1.9) Comparison of PB ratio at supermaximum to: - ------------------------------------------ Comparative group 74.34 109.16 111.04 (31.9) (33.1) Maryland Thrifts 74.34 129.38 133.66 (42.5) (44.4) Mid Atlantic Region Thrifts 74.34 150.04 140.20 (50.5) (47.0) All public thrifts 74.34 146.57 138.35 (49.3) (46.3) Recent conversions 74.34 71.07 71.90 4.6 3.4
11 FERGUSON & COMPANY Section IV. Figure IV.1 -- SNL Index Date Index - ----------------- 31-Jan-94 258.47 28-Feb-94 249.53 31-Mar-94 241.57 29-Apr-94 248.31 31-May-94 263.34 30-Jun-94 269.58 29-Jul-94 276.69 31-Aug-94 287.18 30-Sep-94 279.69 31-Oct-94 236.12 30-Nov-94 245.84 30-Dec-94 244.73 31-Jan-95 256.10 28-Feb-95 277.00 31-Mar-95 278.40 28-Apr-95 295.44 31-May-95 307.60 23-Jun-95 313.95 31-Jul-95 328.20 31-Aug-95 355.50 29-Sep-95 362.29 31-Oct-95 354.05 30-Nov-95 370.17 29-Dec-95 376.51 31-Jan-95 370.69 29-Feb-96 373.64 29-Mar-96 382.13 30-Apr-96 377.24 31-May-96 382.99 28-Jun-96 387.18 30-Jul-96 388.38 30-Aug-96 408.34 13-Sep-96 416.01 20-Sep-96 419.50 30-Sep-96 429.28 30-Oct-96 456.70 15-Nov-96 468.06 29-Nov-96 485.83 13-Dec-96 473.64 20-Dec-96 481.56 31-Dec-96 486.63 10-Jan-97 484.33 31-Jan-97 520.08 14-Feb-97 547.17 27-Feb-97 569.67 14-Mar-97 560.67 31-Mar-97 527.74 15-Apr-97 525.48 30-Apr-97 537.21 20-May-97 571.30 30-May-97 577.94 12-Jun-97 604.15 30-Jun-97 624.55 17-Jul-97 652.44 30-Jul-97 684.51 08-Aug-97 664.56 22-Aug-97 663.36 12 FERGUSON & COMPANY Section IV. Figure IV.1 -- SNL Index (Continued) - ---------------------------------------------------------------------- Percent Change Since ------------------------------------------------- SNL Prev. Date Index Date 12/31/94 12/31/95 12/31/96 3/14/97 - ---- ----- ----- -------- -------- -------- ------- 31-Dec-94 244.70 31-Mar-95 278.40 13.77% 13.77% 30-Jun-95 313.50 12.61% 28.12% 30-Sep-95 362.30 15.57% 48.06% 31-Oct-95 354.10 -2.26% 44.71% 30-Nov-95 370.20 4.55% 51.29% 31-Dec-95 376.50 1.70% 53.86% 12-Jan-96 372.40 -1.09% 52.19% -1.09% 31-Jan-96 370.70 -0.46% 51.49% -1.54% 29-Feb-96 373.60 0.78% 52.68% -0.77% 29-Mar-96 382.10 2.28% 56.15% 1.49% 30-Apr-96 377.20 -1.28% 54.15% 0.19% 31-May-96 382.99 1.53% 56.51% 1.72% 28-Jun-96 387.18 1.09% 58.23% 2.84% 30-Jul-96 371.62 -4.02% 51.87% -1.30% 30-Aug-96 408.34 9.88% 66.87% 8.46% 20-Sep-96 419.50 2.73% 71.43% 11.42% 30-Sep-96 429.28 2.33% 75.43% 14.02% 30-Oct-96 456.70 6.39% 86.64% 21.30% 29-Nov-96 485.83 6.38% 98.54% 29.04% 13-Dec-96 473.64 -2.51% 93.56% 25.80% 20-Dec-96 481.56 1.67% 96.80% 27.90% 31-Dec-96 486.63 1.05% 98.87% 29.25% 10-Jan-97 484.33 -0.47% 97.93% 28.64% -0.47% 31-Jan-97 520.08 7.38% 112.54% 38.14% 6.87% 14-Feb-97 547.17 5.21% 123.61% 45.33% 12.44% 27-Feb-97 569.67 4.11% 132.80% 51.31% 17.06% 14-Mar-97 560.67 -1.58% 129.13% 48.92% 15.21% -1.58% 31-Mar-97 527.74 -5.87% 115.67% 40.17% 8.45% -7.36% 11-Apr-97 517.63 -1.92% 111.54% 37.48% 6.37% -9.14% 15-Apr-97 525.48 1.52% 114.74% 39.57% 7.98% -7.76% 30-Apr-97 537.21 2.23% 119.54% 42.69% 10.39% -5.70% 20-May-97 571.30 6.35% 133.47% 51.74% 17.40% 0.29% 30-May-97 577.94 1.16% 136.18% 53.50% 18.76% 1.45% 12-Jun-97 604.15 4.54% 146.89% 60.46% 24.15% 6.05% 30-Jun-97 624.55 3.38% 155.23% 65.88% 28.34% 9.63% 17-Jul-97 652.44 4.47% 166.63% 73.29% 34.07% 14.53% 30-Jul-97 684.51 4.92% 179.73% 81.81% 40.66% 20.16% 8-Aug-97 664.56 -2.91% 171.58% 76.51% 36.56% 16.66% 22-Aug-97 663.36 -0.18% 171.09% 76.19% 36.32% 16.45% - --------------------------------------------------------------------- 13 FERGUSON & COMPANY Section IV. Figure IV.2 -- Interest Rates - ------------------------------------------------------------- ---------- 1 Year 5 Year 10 Year 30 Year 1 to 30 Fed Fds (*) T-bill Treas. Treas. Treas. Yr. Spread - ------------------------------------------------------------- ---------- 31-Dec-96 5.18 5.48 6.12 6.34 6.58 1.10 - ------------------------------------------------------------- ---------- 17-Jan-97 5.19 5.60 6.33 6.56 6.81 31-Jan-97 5.18 5.60 6.36 6.62 6.89 1.29 - ------------------------------------------------------------ ---------- 14-Feb-97 5.05 5.48 6.14 6.37 6.65 27-Feb-97 5.16 5.52 6.25 6.45 6.71 1.19 - ------------------------------------------------------------ ---------- 14-Mar-97 5.19 5.69 6.41 6.58 6.85 31-Mar-97 5.40 5.91 6.75 6.96 7.15 1.24 - ------------------------------------------------------------ ---------- 18-Apr-97 5.48 6.00 6.80 6.92 7.13 30-Apr-97 5.45 5.89 6.57 6.71 6.95 1.06 - ------------------------------------------------------------ ---------- 16-May-97 5.49 5.85 6.54 6.68 6.90 30-May-97 5.43 5.85 6.60 6.75 6.99 1.14 - ------------------------------------------------------------ ---------- 13-Jun-97 5.48 5.71 6.40 6.52 6.80 27-Jun-97 5.42 5.64 6.33 6.45 6.75 1.11 - ------------------------------------------------------------ ---------- 18-Jul-97 5.44 5.53 6.14 6.23 6.52 1-Aug-97 5.57 5.47 6.00 6.11 6.38 0.91 - ------------------------------------------------------------ ---------- 15-Aug-97 5.45 5.61 6.20 6.37 6.65 22-Aug-97 5.55 5.54 6.20 6.36 6.65 1.11 - ------------------------------------------------------------ ---------- Rates December 31, 1996 through August 22, 1997 - ------------------------------------------------------------- ---------- 1 Year 5 Year 10 Year 30 Year 1 to 30 Fed Fds (*) T-bill Treas. Treas. Treas. Yr. Spread - ------------------------------------------------------------- ---------- 31-Dec-96 5.55 5.54 6.20 6.36 6.65 1.11 - ------------------------------------------------------------- ---------- Current Yield Curve 14 EXHIBIT I FERGUSON & COMPANY QUALIFICATIONS Ferguson & Company (F&C) is a financial, economic, and regulatory consulting firm providing services to financial institutions. It is located in Irving, Texas. Its services to financial institutions include: o Mergers and acquisition services, o Business plans, o Fairness opinions and conversion appraisals, o Litigation support, o Loan review and valuation, o Operational and efficiency consulting, o Human resources evaluation and management, and o Regulatory consulting. F&C developed several financial institution databases of information derived from periodic financial reports filed with regulatory authorities by financial institutions. For example, F&C developed TAFS and BankSource. TAFS includes thrifts filing TFR's with the OTS and BankSource includes banks and savings banks filing call reports with the FDIC. Both databases of information include information from the periodic reports plus numerous calculations derived from F&C's analysis. In addition, both databases are interactive, permitting the user to conduct merger analysis, do peer group comparisons, and a number of other items. F&C recently sold its electronic publishing segment to Sheshunoff Information Services Inc., Austin, Texas. Brief biographical information is presented below on F&C's principals: WILLIAM C. FERGUSON Mr. Ferguson has approximately 30 years of experience providing various services to financial institutions. He was a partner in a CPA firm prior to founding F&C in 1984. Mr. Ferguson is a frequent speaker for financial institution seminars and he has testified before Congressional Committees several times on his analysis of the state of the thrift industry. Mr. Ferguson has a B.A. degree from Austin Peay University and an M.S. degree from the University of Tennessee. He is a CPA. 1 CHARLES M. HEBERT Mr. Hebert has over 30 years of experience providing services to and managing financial institutions. He spent 7 years as a national bank examiner, 14 years in bank management, 5 years in thrift management, and has spent the last 7 years on the F&C consulting staff. Mr. Hebert holds a B.S. degree from Louisiana State University. He is a certified commercial lender. ROBIN L. FUSSELL Mr. Fussell has over 25 years of experience providing professional services to and managing financial institutions. He worked on the audit staff of a "Big Six" accounting firm for 12 years, served as CFO of a thrift for 3 years, and has worked in financial institution consulting for the last 12 years. He is a co-founder of F&C. He holds a B.S. degree from East Carolina University. He is a CPA. 2 EXHIBIT II Exhibit II.1 -- Selected Publicly Traded Thrifts
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- AADV Advantage Bancorp Inc. Kenosha WI MW SAIF NASDAQ 03/23/92 44.250 143.09 ABBK Abington Bancorp Inc. Abington MA NE BIF NASDAQ 06/10/86 29.250 53.83 ABCL Alliance Bancorp Inc. Hinsdale IL MW SAIF NASDAQ 07/07/92 31.625 169.03 ABCW Anchor BanCorp Wisconsin Madison WI MW SAIF NASDAQ 07/16/92 27.000 244.32 AFCB Affiliated Community Bancorp Waltham MA NE SAIF NASDAQ 10/19/95 26.875 173.87 AHM Ahmanson & Company (H.F.) Irwindale CA WE SAIF NYSE 10/25/72 50.750 4,939.80 ALBC Albion Banc Corp. Albion NY MA SAIF NASDAQ 07/26/93 23.250 6.12 ALBK ALBANK Financial Corp. Albany NY MA SAIF NASDAQ 04/01/92 38.000 487.34 AMFC AMB Financial Corp. Munster IN MW SAIF NASDAQ 04/01/96 15.000 14.46 ANDB Andover Bancorp Inc. Andover MA NE BIF NASDAQ 05/08/86 29.750 153.17 ASBI Ameriana Bancorp New Castle IN MW SAIF NASDAQ 03/02/87 18.500 59.76 ASBP ASB Financial Corp. Portsmouth OH MW SAIF NASDAQ 05/11/95 12.500 21.52 ASFC Astoria Financial Corp. Lake Success NY MA SAIF NASDAQ 11/18/93 46.750 973.76 BANC BankAtlantic Bancorp Inc. Fort Lauderdale FL SE SAIF NASDAQ 11/29/83 12.750 293.87 BDJI First Federal Bancorporation Bemidji MN MW SAIF NASDAQ 04/04/95 21.250 14.50 BFD BostonFed Bancorp Inc. Burlington MA NE SAIF AMSE 10/24/95 19.500 115.97 BFSB Bedford Bancshares Inc. Bedford VA SE SAIF NASDAQ 08/22/94 25.250 28.85 BKC American Bank of Connecticut Waterbury CT NE BIF AMSE 12/01/81 37.000 85.31 BKCT Bancorp Connecticut Inc. Southington CT NE BIF NASDAQ 07/03/86 30.500 77.28 BKUNA BankUnited Financial Corp. Coral Gables FL SE SAIF NASDAQ 12/11/85 11.500 102.00 BPLS Bank Plus Corp. Los Angeles CA WE SAIF NASDAQ NA 10.875 209.98 BVCC Bay View Capital Corp. San Mateo CA WE SAIF NASDAQ 05/09/86 25.625 332.59 BYFC Broadway Financial Corp. Los Angeles CA WE SAIF NASDAQ 01/09/96 11.000 9.19 CAFI Camco Financial Corp. Cambridge OH MW SAIF NASDAQ NA 18.250 58.66 CAPS Capital Savings Bancorp Inc. Jefferson City MO MW SAIF NASDAQ 12/29/93 15.875 30.03 CASB Cascade Financial Corp. Everett WA WE SAIF NASDAQ 09/16/92 13.250 34.06 CASH First Midwest Financial Inc. Storm Lake IA MW SAIF NASDAQ 09/20/93 18.000 49.21 CATB Catskill Financial Corp. Catskill NY MA BIF NASDAQ 04/18/96 16.500 77.88 CBCI Calumet Bancorp Inc. Dolton IL MW SAIF NASDAQ 02/20/92 41.750 88.13 CBSA Coastal Bancorp Inc. Houston TX SW SAIF NASDAQ NA 29.875 148.52 CBSB Charter Financial Inc. Sparta IL MW SAIF NASDAQ 12/29/95 21.000 87.14 CEBK Central Co-operative Bank Somerville MA NE BIF NASDAQ 10/24/86 19.250 37.83 CENF CENFED Financial Corp. Pasadena CA WE SAIF NASDAQ 10/25/91 33.125 189.76 CFB Commercial Federal Corp. Omaha NE MW SAIF NYSE 12/31/84 40.375 870.20 CFCP Coastal Financial Corp. Myrtle Beach SC SE SAIF NASDAQ 09/26/90 24.750 114.86 CFFC Community Financial Corp. Staunton VA SE SAIF NASDAQ 03/30/88 21.750 27.74 CFSB CFSB Bancorp Inc. Lansing MI MW SAIF NASDAQ 06/22/90 26.500 135.04 CFTP Community Federal Bancorp Tupelo MS SE SAIF NASDAQ 03/26/96 17.750 82.16 CFX CFX Corp. Keene NH NE BIF AMSE 02/12/87 18.875 248.09 CIBI Community Investors Bancorp Bucyrus OH MW SAIF NASDAQ 02/07/95 15.375 14.29 CKFB CKF Bancorp Inc. Danville KY MW SAIF NASDAQ 01/04/95 19.250 18.29 CLAS Classic Bancshares Inc. Ashland KY MW SAIF NASDAQ 12/29/95 14.000 18.27 CMRN Cameron Financial Corp Cameron MO MW SAIF NASDAQ 04/03/95 17.625 46.30 CNIT CENIT Bancorp Inc. Norfolk VA SE SAIF NASDAQ 08/06/92 50.750 83.89 COFI Charter One Financial Cleveland OH MW SAIF NASDAQ 01/22/88 52.875 2,442.08 COOP Cooperative Bankshares Inc. Wilmington NC SE SAIF NASDAQ 08/21/91 26.500 39.53 CRZY Crazy Woman Creek Bancorp Buffalo WY WE SAIF NASDAQ 03/29/96 14.375 13.73 CSA Coast Savings Financial Los Angeles CA WE SAIF NYSE 12/23/85 44.438 827.25 CTZN CitFed Bancorp Inc. Dayton OH MW SAIF NASDAQ 01/23/92 43.125 372.53 CVAL Chester Valley Bancorp Inc. Downingtown PA MA SAIF NASDAQ 03/27/87 24.000 49.41 DIBK Dime Financial Corp. Wallingford CT NE BIF NASDAQ 07/09/86 28.000 144.27 DME Dime Bancorp Inc. New York NY MA BIF NYSE 08/19/86 19.188 1,990.16 DNFC D & N Financial Corp. Hancock MI MW SAIF NASDAQ 02/13/85 19.000 155.64 DSL Downey Financial Corp. Newport Beach CA WE SAIF NYSE 01/01/71 21.500 574.77 EFBI Enterprise Federal Bancorp West Chester OH MW SAIF NASDAQ 10/17/94 20.125 40.27 EIRE Emerald Isle Bancorp Inc. Quincy MA NE BIF NASDAQ 09/08/86 21.500 48.33 EMLD Emerald Financial Corp. Strongsville OH MW SAIF NASDAQ NA 14.000 70.90
1 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- EQSB Equitable Federal Savings Bank Wheaton MD MA SAIF NASDAQ 09/10/93 37.500 22.58 ESBK Elmira Savings Bank (The) Elmira NY MA BIF NASDAQ 03/01/85 23.250 16.42 ETFS East Texas Financial Services Tyler TX SW SAIF NASDAQ 01/10/95 18.750 19.22 FBBC First Bell Bancorp Inc. Pittsburgh PA MA SAIF NASDAQ 06/29/95 16.500 107.43 FBCI Fidelity Bancorp Inc. Chicago IL MW SAIF NASDAQ 12/15/93 21.375 59.68 FBER 1st Bergen Bancorp Wood-Ridge NJ MA SAIF NASDAQ 04/01/96 17.750 53.26 FBHC Fort Bend Holding Corp. Rosenberg TX SW SAIF NASDAQ 06/30/93 32.000 26.47 FBSI First Bancshares Inc. Mountain Grove MO MW SAIF NASDAQ 12/22/93 24.250 26.57 FCME First Coastal Corp. Westbrook ME NE BIF NASDAQ NA 10.750 14.61 FDEF First Defiance Financial Defiance OH MW SAIF NASDAQ 10/02/95 15.000 140.12 FED FirstFed Financial Corp. Santa Monica CA WE SAIF NYSE 12/16/83 32.563 344.54 FESX First Essex Bancorp Inc. Andover MA NE BIF NASDAQ 08/04/87 17.000 127.56 FFBA First Colorado Bancorp Inc. Lakewood CO SW SAIF NASDAQ 01/02/96 17.813 295.05 FFBH First Federal Bancshares of AR Harrison AR SE SAIF NASDAQ 05/03/96 21.000 102.82 FFBI First Financial Bancorp Inc. Belvidere IL MW SAIF NASDAQ 10/04/93 19.250 7.99 FFBS FFBS BanCorp Inc. Columbus MS SE SAIF NASDAQ 07/01/93 21.000 32.71 FFBZ First Federal Bancorp Inc. Zanesville OH MW SAIF NASDAQ 07/13/92 18.500 29.08 FFCH First Financial Holdings Inc. Charleston SC SE SAIF NASDAQ 11/10/83 31.000 197.06 FFDB FirstFed Bancorp Inc. Bessemer AL SE SAIF NASDAQ 11/19/91 16.531 19.03 FFED Fidelity Federal Bancorp Evansville IN MW SAIF NASDAQ 08/31/87 8.500 21.14 FFES First Federal of East Hartford East Hartford CT NE SAIF NASDAQ 06/23/87 31.750 84.96 FFFC FFVA Financial Corp. Lynchburg VA SE SAIF NASDAQ 10/12/94 29.375 132.79 FFFD North Central Bancshares Inc. Fort Dodge IA MW SAIF NASDAQ 03/21/96 17.000 55.39 FFHH FSF Financial Corp. Hutchinson MN MW SAIF NASDAQ 10/07/94 18.125 54.97 FFHS First Franklin Corporation Cincinnati OH MW SAIF NASDAQ 01/26/88 20.000 23.84 FFIC Flushing Financial Corp. Flushing NY MA BIF NASDAQ 11/21/95 20.250 161.57 FFKY First Federal Financial Corp. Elizabethtown KY MW SAIF NASDAQ 07/15/87 20.750 86.53 FFLC FFLC Bancorp Inc. Leesburg FL SE SAIF NASDAQ 01/04/94 28.250 65.47 FFOH Fidelity Financial of Ohio Cincinnati OH MW SAIF NASDAQ 03/04/96 16.000 89.27 FFPB First Palm Beach Bancorp Inc. West Palm Beach FL SE SAIF NASDAQ 09/29/93 32.250 162.24 FFSL First Independence Corp. Independence KS MW SAIF NASDAQ 10/08/93 12.875 12.77 FFWC FFW Corp. Wabash IN MW SAIF NASDAQ 04/05/93 29.250 20.80 FFWD Wood Bancorp Inc. Bowling Green OH MW SAIF NASDAQ 08/31/93 16.500 34.96 FFYF FFY Financial Corp. Youngstown OH MW SAIF NASDAQ 06/28/93 27.375 112.65 FGHC First Georgia Holding Inc. Brunswick GA SE SAIF NASDAQ 02/11/87 7.500 22.89 FIBC Financial Bancorp Inc. Long Island City NY MA SAIF NASDAQ 08/17/94 19.500 33.58 FKFS First Keystone Financial Media PA MA SAIF NASDAQ 01/26/95 27.500 33.77 FKKY Frankfort First Bancorp Inc. Frankfort KY MW SAIF NASDAQ 07/10/95 9.750 33.00 FLAG FLAG Financial Corp. LaGrange GA SE SAIF NASDAQ 12/11/86 14.500 29.54 FLFC First Liberty Financial Corp. Macon GA SE SAIF NASDAQ 12/06/83 22.750 175.74 FMCO FMS Financial Corporation Burlington NJ MA SAIF NASDAQ 12/14/88 27.250 65.06 FMSB First Mutual Savings Bank Bellevue WA WE BIF NASDAQ 12/17/85 20.375 55.05 FNGB First Northern Capital Corp. Green Bay WI MW SAIF NASDAQ 12/29/83 12.750 112.63 FOBC Fed One Bancorp Wheeling WV SE SAIF NASDAQ 01/19/95 20.750 49.26 FRC First Republic Bancorp San Francisco CA WE BIF NYSE NA 23.563 228.39 FSBI Fidelity Bancorp Inc. Pittsburgh PA MA SAIF NASDAQ 06/24/88 21.250 32.93 FSPG First Home Bancorp Inc. Pennsville NJ MA SAIF NASDAQ 04/20/87 20.000 54.17 FSTC First Citizens Corp. Newnan GA SE SAIF NASDAQ 03/01/86 31.500 57.93 FTF Texarkana First Financial Corp Texarkana AR SE SAIF AMSE 07/07/95 22.313 39.95 FTFC First Federal Capital Corp. La Crosse WI MW SAIF NASDAQ 11/02/89 24.500 223.95 FTSB Fort Thomas Financial Corp. Fort Thomas KY MW SAIF NASDAQ 06/28/95 10.688 15.16 FWWB First SB of Washington Bancorp Walla Walla WA WE SAIF NASDAQ 11/01/95 24.125 253.10 GAF GA Financial Inc. Pittsburgh PA MA SAIF AMSE 03/26/96 17.563 140.24 GBCI Glacier Bancorp Inc. Kalispell MT WE SAIF NASDAQ 03/30/84 18.500 126.02 GDW Golden West Financial Oakland CA WE SAIF NYSE 05/29/59 82.250 4,666.74 GFCO Glenway Financial Corp. Cincinnati OH MW SAIF NASDAQ 11/30/90 26.000 29.64 GFSB GFS Bancorp Inc. Grinnell IA MW SAIF NASDAQ 01/06/94 14.500 14.32 GPT GreenPoint Financial Corp. New York NY MA BIF NYSE 01/28/94 63.000 2,728.72
2 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- GSB Golden State Bancorp Inc. Glendale CA WE SAIF NYSE 10/01/83 28.375 1,428.64 GSBC Great Southern Bancorp Inc. Springfield MO MW SAIF NASDAQ 12/14/89 16.875 136.77 GTFN Great Financial Corporation Louisville KY MW SAIF NASDAQ 03/31/94 33.875 467.63 GUPB GFSB Bancorp Inc. Gallup NM SW SAIF NASDAQ 06/30/95 18.750 15.08 HALL Hallmark Capital Corp. West Allis WI MW SAIF NASDAQ 01/03/94 21.500 31.02 HARB Harbor Florida Bancorp Inc. Fort Pierce FL SE SAIF NASDAQ 01/06/94 46.500 231.12 HARL Harleysville Savings Bank Harleysville PA MA SAIF NASDAQ 08/04/87 27.250 45.03 HAVN Haven Bancorp Inc. Woodhaven NY MA SAIF NASDAQ 09/23/93 37.125 162.73 HBBI Home Building Bancorp Washington IN MW SAIF NASDAQ 02/08/95 20.500 6.39 HBFW Home Bancorp Fort Wayne IN MW SAIF NASDAQ 03/30/95 21.375 53.97 HBNK Highland Federal Bank FSB Burbank CA WE SAIF NASDAQ NA 26.500 60.95 HBS Haywood Bancshares Inc. Waynesville NC SE BIF AMSE 12/18/87 19.000 23.76 HFFB Harrodsburg First Fin Bancorp Harrodsburg KY MW SAIF NASDAQ 10/04/95 15.250 30.88 HFFC HF Financial Corp. Sioux Falls SD MW SAIF NASDAQ 04/08/92 22.500 67.04 HFSA Hardin Bancorp Inc. Hardin MO MW SAIF NASDAQ 09/29/95 16.500 14.18 HHFC Harvest Home Financial Corp. Cheviot OH MW SAIF NASDAQ 10/10/94 11.750 10.75 HIFS Hingham Instit. for Savings Hingham MA NE BIF NASDAQ 12/20/88 23.625 30.80 HMCI HomeCorp Inc. Rockford IL MW SAIF NASDAQ 06/22/90 15.750 26.67 HMNF HMN Financial Inc. Spring Valley MN MW SAIF NASDAQ 06/30/94 24.500 103.19 HOMF Home Federal Bancorp Seymour IN MW SAIF NASDAQ 01/23/88 29.750 101.04 HPBC Home Port Bancorp Inc. Nantucket MA NE BIF NASDAQ 08/25/88 19.500 35.92 HRBF Harbor Federal Bancorp Inc. Baltimore MD MA SAIF NASDAQ 08/12/94 19.125 32.39 HRZB Horizon Financial Corp. Bellingham WA WE BIF NASDAQ 08/01/86 15.000 111.25 HTHR Hawthorne Financial Corp. El Segundo CA WE SAIF NASDAQ NA 16.438 49.88 HZFS Horizon Financial Svcs Corp. Oskaloosa IA MW SAIF NASDAQ 06/30/94 18.875 8.03 IFSB Independence Federal Savings Washington DC MA SAIF NASDAQ 06/06/85 13.156 16.84 INBI Industrial Bancorp Bellevue OH MW SAIF NASDAQ 08/01/95 15.125 79.81 IPSW Ipswich Savings Bank Ipswich MA NE BIF NASDAQ 05/26/93 26.000 30.89 ISBF ISB Financial Corporation New Iberia LA SW SAIF NASDAQ 04/07/95 24.750 170.79 ITLA ITLA Capital Corp. La Jolla CA WE BIF NASDAQ 10/24/95 17.875 140.24 IWBK InterWest Bancorp Inc. Oak Harbor WA WE SAIF NASDAQ NA 39.500 317.42 JSB JSB Financial Inc. Lynbrook NY MA BIF NYSE 06/27/90 44.688 441.25 JSBA Jefferson Savings Bancorp Ballwin MO MW SAIF NASDAQ 04/08/93 32.500 162.67 JXVL Jacksonville Bancorp Inc. Jacksonville TX SW SAIF NASDAQ 04/01/96 16.625 41.00 KFBI Klamath First Bancorp Klamath Falls OR WE SAIF NASDAQ 10/05/95 19.000 190.35 KNK Kankakee Bancorp Inc. Kankakee IL MW SAIF AMSE 01/06/93 29.500 42.04 KSAV KS Bancorp Inc. Kenly NC SE SAIF NASDAQ 12/30/93 18.500 16.38 KSBK KSB Bancorp Inc. Kingfield ME NE BIF NASDAQ 06/24/93 12.750 15.79 KYF Kentucky First Bancorp Inc. Cynthiana KY MW SAIF AMSE 08/29/95 12.375 16.33 LARK Landmark Bancshares Inc. Dodge City KS MW SAIF NASDAQ 03/28/94 21.500 36.78 LARL Laurel Capital Group Inc. Allison Park PA MA SAIF NASDAQ 02/20/87 21.500 31.02 LIFB Life Bancorp Inc. Norfolk VA SE SAIF NASDAQ 10/11/94 24.625 242.48 LISB Long Island Bancorp Inc. Melville NY MA SAIF NASDAQ 04/18/94 38.875 931.77 LOGN Logansport Financial Corp. Logansport IN MW SAIF NASDAQ 06/14/95 14.250 17.96 LONF London Financial Corporation London OH MW SAIF NASDAQ 04/01/96 15.000 7.65 LSBI LSB Financial Corp. Lafayette IN MW BIF NASDAQ 02/03/95 20.625 18.90 LSBX Lawrence Savings Bank North Andover MA NE BIF NASDAQ 05/02/86 11.375 48.72 LVSB Lakeview Financial West Paterson NJ MA SAIF NASDAQ 12/22/93 32.250 73.13 LXMO Lexington B&L Financial Corp. Lexington MO MW SAIF NASDAQ 06/06/96 15.875 18.07 MAFB MAF Bancorp Inc. Clarendon Hills IL MW SAIF NASDAQ 01/12/90 31.000 477.39 MARN Marion Capital Holdings Marion IN MW SAIF NASDAQ 03/18/93 23.000 40.67 MASB MASSBANK Corp. Reading MA NE BIF NASDAQ 05/28/86 51.500 138.32 MBB MSB Bancorp Inc. Goshen NY MA BIF AMSE 09/03/92 23.375 66.48 MBB MSB Bancorp, Inc. Goshen NY MA BIF AMSE NA 23.375 66.48 MBLF MBLA Financial Corp. Macon MO MW SAIF NASDAQ 06/24/93 23.500 30.51 MCBN Mid-Coast Bancorp Inc. Waldoboro ME NE SAIF NASDAQ 11/02/89 25.750 5.99 MCBS Mid Continent Bancshares Inc. El Dorado KS MW SAIF NASDAQ 06/27/94 30.000 58.75 MDBK Medford Savings Bank Medford MA NE BIF NASDAQ 03/18/86 30.250 137.37
3 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- MECH Mechanics Savings Bank Hartford CT NE BIF NASDAQ 06/26/96 22.750 120.35 MERI Meritrust Federal SB Thibodaux LA SW SAIF NASDAQ NA 40.500 31.35 METF Metropolitan Financial Corp. Mayfield Heights OH MW SAIF NASDAQ NA 18.750 66.11 MFBC MFB Corp. Mishawaka IN MW SAIF NASDAQ 03/25/94 21.000 35.49 MFFC Milton Federal Financial Corp. West Milton OH MW SAIF NASDAQ 10/07/94 13.625 31.40 MFLR Mayflower Co-operative Bank Middleboro MA NE BIF NASDAQ 12/23/87 18.000 16.03 MFSL Maryland Federal Bancorp Hyattsville MD MA SAIF NASDAQ 06/02/87 43.563 139.84 MIVI Mississippi View Holding Co. Little Falls MN MW SAIF NASDAQ 03/24/95 15.500 12.69 MLBC ML Bancorp Inc. Villanova PA MA SAIF NASDAQ 08/11/94 21.000 221.89 MSBF MSB Financial Inc. Marshall MI MW SAIF NASDAQ 02/06/95 13.500 16.86 MWBI Midwest Bancshares Inc. Burlington IA MW SAIF NASDAQ 11/12/92 33.875 11.53 MWBX MetroWest Bank Framingham MA NE BIF NASDAQ 10/10/86 6.250 87.20 MWFD Midwest Federal Financial Baraboo WI MW SAIF NASDAQ 07/08/92 21.000 34.18 NASB North American Savings Bank Grandview MO MW SAIF NASDAQ 09/27/85 51.750 116.66 NBN Northeast Bancorp Portland ME NE BIF AMSE 08/19/87 14.625 18.65 NEIB Northeast Indiana Bancorp Huntington IN MW SAIF NASDAQ 06/28/95 16.750 29.53 NHTB New Hampshire Thrift Bncshrs New London NH NE SAIF NASDAQ 05/22/86 16.625 34.32 NMSB NewMil Bancorp Inc. New Milford CT NE BIF NASDAQ 02/01/86 12.750 48.88 NSLB NS&L Bancorp Inc. Neosho MO MW SAIF NASDAQ 06/08/95 18.625 13.18 NSSB Norwich Financial Corp. Norwich CT NE BIF NASDAQ 11/14/86 25.000 135.33 NSSY Norwalk Savings Society Norwalk CT NE BIF NASDAQ 06/16/94 34.250 82.55 NTMG Nutmeg Federal S&LA Danbury CT NE SAIF NASDAQ NA 11.000 7.98 NWEQ Northwest Equity Corp. Amery WI MW SAIF NASDAQ 10/11/94 16.500 13.84 NYB New York Bancorp Inc. Douglaston NY MA SAIF NYSE 01/28/88 30.750 663.93 OFCP Ottawa Financial Corp. Holland MI MW SAIF NASDAQ 08/19/94 25.250 124.06 OHSL OHSL Financial Corp. Cincinnati OH MW SAIF NASDAQ 02/10/93 23.250 27.81 PALM Palfed Inc. Aiken SC SE SAIF NASDAQ 12/15/85 15.875 83.89 PAMM PacificAmerica Money Center Woodland Hills CA WE BIF NASDAQ 06/25/96 23.500 89.29 PBCI Pamrapo Bancorp Inc. Bayonne NJ MA SAIF NASDAQ 11/14/89 20.750 58.99 PBKB People's Bancshares Inc. New Bedford MA NE BIF NASDAQ 10/30/86 16.250 52.77 PCBC Perry County Financial Corp. Perryville MO MW SAIF NASDAQ 02/13/95 20.500 16.97 PCCI Pacific Crest Capital Agoura Hills CA WE BIF NASDAQ NA 15.250 44.81 PDB Piedmont Bancorp Inc. Hillsborough NC SE SAIF AMSE 12/08/95 10.875 29.91 PEEK Peekskill Financial Corp. Peekskill NY MA SAIF NASDAQ 12/29/95 16.250 51.89 PERM Permanent Bancorp Inc. Evansville IN MW SAIF NASDAQ 04/04/94 23.000 48.31 PFDC Peoples Bancorp Auburn IN MW SAIF NASDAQ 07/07/87 24.750 56.28 PFFB PFF Bancorp Inc. Pomona CA WE SAIF NASDAQ 03/29/96 19.375 362.62 PFNC Progress Financial Corporation Blue Bell PA MA SAIF NASDAQ 07/18/83 14.250 54.35 PFSB PennFed Financial Services Inc West Orange NJ MA SAIF NASDAQ 07/15/94 29.000 139.84 PHBK Peoples Heritage Finl Group Portland ME NE BIF NASDAQ 12/04/86 37.375 1,026.21 PHFC Pittsburgh Home Financial Corp Pittsburgh PA MA SAIF NASDAQ 04/01/96 19.375 38.16 PKPS Poughkeepsie Financial Corp. Poughkeepsie NY MA SAIF NASDAQ 11/19/85 7.438 93.68 PMFI Perpetual Midwest Financial Cedar Rapids IA MW SAIF NASDAQ 03/31/94 20.125 37.89 PRBC Prestige Bancorp Inc. Pleasant Hills PA MA SAIF NASDAQ 06/27/96 17.500 16.01 PSBK Progressive Bank Inc. Fishkill NY MA BIF NASDAQ 08/01/84 29.750 113.67 PTRS Potters Financial Corp. East Liverpool OH MW SAIF NASDAQ 12/31/93 24.000 11.79 PULS Pulse Bancorp South River NJ MA SAIF NASDAQ 09/18/86 20.500 63.15 PVFC PVF Capital Corp. Bedford Heights OH MW SAIF NASDAQ 12/30/92 21.375 54.63 PVSA Parkvale Financial Corporation Monroeville PA MA SAIF NASDAQ 07/16/87 29.250 118.61 PWBC PennFirst Bancorp Inc. Ellwood City PA MA SAIF NASDAQ 06/13/90 16.375 86.88 QCBC Quaker City Bancorp Inc. Whittier CA WE SAIF NASDAQ 12/30/93 20.750 97.59 QCFB QCF Bancorp Inc. Virginia MN MW SAIF NASDAQ 04/03/95 25.500 36.37 QCSB Queens County Bancorp Inc. Flushing NY MA BIF NASDAQ 11/23/93 52.000 528.06 RARB Raritan Bancorp Inc. Raritan NJ MA BIF NASDAQ 03/01/87 22.250 53.66 REDF RedFed Bancorp Inc. Redlands CA WE SAIF NASDAQ 04/08/94 16.750 120.17 RELY Reliance Bancorp Inc. Garden City NY MA SAIF NASDAQ 03/31/94 30.000 263.29 ROSE TR Financial Corp. Garden City NY MA BIF NASDAQ 06/29/93 27.375 482.04 SFED SFS Bancorp Inc. Schenectady NY MA SAIF NASDAQ 06/30/95 19.469 23.97
4 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- SFFC StateFed Financial Corporation Des Moines IA MW SAIF NASDAQ 01/05/94 22.000 17.24 SFIN Statewide Financial Corp. Jersey City NJ MA SAIF NASDAQ 10/02/95 18.750 88.32 SFSB SuburbFed Financial Corp. Flossmoor IL MW SAIF NASDAQ 03/04/92 27.500 34.71 SFSL Security First Corp. Mayfield Heights OH MW SAIF NASDAQ 01/22/88 19.250 145.95 SISB SIS Bancorp Inc. Springfield MA NE BIF NASDAQ 02/08/95 30.000 167.31 SKAN Skaneateles Bancorp Inc. Skaneateles NY MA BIF NASDAQ 06/02/86 22.500 21.47 SMBC Southern Missouri Bancorp Inc. Poplar Bluff MO MW SAIF NASDAQ 04/13/94 17.250 28.25 SOBI Sobieski Bancorp Inc. South Bend IN MW SAIF NASDAQ 03/31/95 16.250 12.34 SOPN First Savings Bancorp Inc. Southern Pines NC SE SAIF NASDAQ 01/06/94 20.375 74.96 SOSA Somerset Savings Bank Somerville MA NE BIF NASDAQ 07/09/86 3.625 60.36 SPBC St. Paul Bancorp Inc. Chicago IL MW SAIF NASDAQ 05/18/87 22.500 764.73 STFR St. Francis Capital Corp. Milwaukee WI MW SAIF NASDAQ 06/21/93 35.500 188.43 STSA Sterling Financial Corp. Spokane WA WE SAIF NASDAQ NA 17.875 99.50 SWBI Southwest Bancshares Hometown IL MW SAIF NASDAQ 06/24/92 20.875 55.33 SWCB Sandwich Co-operative Bank Sandwich MA NE BIF NASDAQ 07/25/86 32.750 62.72 TBK Tolland Bank Tolland CT NE BIF AMSE 12/19/86 17.625 27.50 THR Three Rivers Financial Corp. Three Rivers MI MW SAIF AMSE 08/24/95 16.375 13.49 THRD TF Financial Corporation Newtown PA MA SAIF NASDAQ 07/13/94 19.625 80.13 TPNZ Tappan Zee Financial Inc. Tarrytown NY MA SAIF NASDAQ 10/05/95 17.438 26.11 TRIC Tri-County Bancorp Inc. Torrington WY WE SAIF NASDAQ 09/30/93 22.750 13.85 TSH Teche Holding Co. Franklin LA SW SAIF AMSE 04/19/95 18.250 62.73 TWIN Twin City Bancorp Bristol TN SE SAIF NASDAQ 01/04/95 19.750 16.86 UBMT United Financial Corp. Great Falls MT WE SAIF NASDAQ 09/23/86 23.500 28.75 USAB USABancshares, Inc. Philadelphia PA MA BIF NASDAQ NA 8.500 6.24 VABF Virginia Beach Fed. Financial Virginia Beach VA SE SAIF NASDAQ 11/01/80 14.000 69.67 WAMU Washington Mutual Inc. Seattle WA WE BIF NASDAQ 03/11/83 62.563 15,766.70 WBST Webster Financial Corp. Waterbury CT NE SAIF NASDAQ 12/12/86 50.000 678.07 WCBI Westco Bancorp Westchester IL MW SAIF NASDAQ 06/26/92 26.000 64.39 WEFC Wells Financial Corp. Wells MN MW SAIF NASDAQ 04/11/95 16.125 31.59 WFI Winton Financial Corp. Cincinnati OH MW SAIF AMSE 08/04/88 15.750 31.28 WFSL Washington Federal Inc. Seattle WA WE SAIF NASDAQ 11/17/82 26.375 1,251.98 WHGB WHG Bancshares Corp. Lutherville MD MA SAIF NASDAQ 04/01/96 15.250 22.30 WRNB Warren Bancorp Inc. Peabody MA NE BIF NASDAQ 07/09/86 17.500 66.28 WSB Washington Savings Bank, FSB Waldorf MD MA SAIF AMSE NA 6.750 28.67 WSFS WSFS Financial Corporation Wilmington DE MA BIF NASDAQ 11/26/86 14.500 180.11 WSTR WesterFed Financial Corp. Missoula MT WE SAIF NASDAQ 01/10/94 21.750 121.04 WVFC WVS Financial Corp. Pittsburgh PA MA SAIF NASDAQ 11/29/93 27.375 47.83 WWFC Westwood Financial Corporation Westwood NJ MA SAIF NASDAQ 06/07/96 21.250 13.71 WYNE Wayne Bancorp Inc. Wayne NJ MA SAIF NASDAQ 06/27/96 24.000 50.88 YFCB Yonkers Financial Corporation Yonkers NY MA SAIF NASDAQ 04/18/96 17.250 52.11 YFED York Financial Corp. York PA MA SAIF NASDAQ 02/01/84 24.000 168.20 271 Maximum 82.250 15,766.700 Minimum 3.625 5.990 Average 23.214 237.415 Median 20.938 55.835
5 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- AADV 17.15 152.38 162.98 14.04 0.90 1,019,510 9.21 8.67 2.58 0.89 ABBK 16.34 156.17 173.38 10.80 1.37 501,256 6.92 6.27 1.79 0.73 ABCL 17.87 135.15 136.85 12.04 2.09 1,404,263 8.91 8.81 1.77 0.76 ABCW 7.85 101.93 103.89 6.34 1.19 1,925,866 6.22 6.11 3.44 0.96 AFCB 15.72 160.45 161.41 15.93 1.79 1,090,431 9.78 9.73 1.71 1.10 AHM 18.06 249.39 292.68 10.39 1.73 47,532,068 5.18 4.60 2.81 0.70 ALBC 24.73 98.43 98.43 8.77 1.38 66,316 8.90 8.90 0.94 0.38 ALBK 14.67 147.00 168.22 13.53 1.58 3,602,227 9.20 8.14 2.59 1.04 AMFC 22.06 102.60 102.60 15.35 1.60 94,179 14.96 14.96 0.68 0.80 ANDB 11.18 151.94 151.94 12.24 2.29 1,250,943 8.06 8.06 2.66 1.13 ASBI 18.14 137.14 137.24 15.02 3.24 397,730 10.96 10.95 1.02 0.84 ASBP 21.19 125.00 125.00 19.67 3.20 109,414 15.74 15.74 0.59 0.86 ASFC 16.52 163.52 194.71 12.80 1.28 7,664,495 7.83 6.66 2.83 0.79 BANC 17.00 149.30 181.62 8.39 0.91 2,730,474 5.62 4.67 0.75 0.64 BDJI 19.50 120.67 120.67 13.12 -- 110,589 10.87 10.87 1.09 0.63 BFD 20.10 126.87 131.22 11.88 1.44 975,922 8.79 8.52 0.97 0.66 BFSB 16.19 142.25 142.25 21.30 2.22 135,455 14.16 14.16 1.56 1.28 BKC 14.07 169.96 177.03 14.08 3.89 605,857 8.29 7.98 2.63 1.10 BKCT 16.40 176.00 176.00 18.04 3.28 428,362 10.25 10.25 1.86 1.25 BKUNA 20.18 151.52 186.99 5.64 -- 1,807,192 5.61 4.94 0.57 0.58 BPLS NM 117.31 117.57 5.94 -- 3,534,002 5.07 5.06 0.04 0.02 BVCC 17.20 169.48 201.93 10.74 1.25 3,096,213 6.34 5.37 1.49 0.63 BYFC 26.83 75.09 75.09 7.52 1.82 122,245 10.75 10.75 0.41 0.30 CAFI 13.62 125.17 135.69 11.98 2.71 489,833 9.57 8.89 1.34 0.89 CAPS 14.30 140.74 140.74 12.38 1.51 242,518 8.80 8.80 1.11 0.92 CASB 21.03 150.91 150.91 9.25 -- 368,126 6.13 6.13 0.63 0.52 CASH 13.04 115.24 130.06 13.13 2.00 374,824 11.40 10.23 1.38 0.93 CATB 20.37 109.42 109.42 27.40 1.70 284,238 25.04 25.04 0.81 1.41 CBCI 14.86 114.48 114.48 17.75 -- 496,561 15.50 15.50 2.81 1.37 CBSA 12.93 152.19 183.06 5.01 1.61 2,964,082 3.33 2.78 2.31 0.41 CBSB 19.81 153.17 173.12 22.16 1.52 393,268 14.47 13.02 1.06 1.16 CEBK 13.10 110.63 123.64 10.98 1.66 344,420 9.93 8.98 1.47 0.88 CENF 12.09 158.87 159.18 8.27 1.09 2,295,523 5.20 5.19 2.74 0.73 CFB 14.22 204.22 230.32 12.26 0.69 7,096,665 6.00 5.36 2.84 0.91 CFCP 25.52 369.96 369.96 22.84 1.46 502,761 6.17 6.17 0.97 1.03 CFFC 12.87 115.32 115.32 15.81 2.58 175,414 13.71 13.71 1.69 1.28 CFSB 16.67 209.49 209.49 15.97 2.26 845,438 7.62 7.62 1.59 1.07 CFTP 22.47 110.04 110.04 39.87 1.69 206,049 33.52 33.52 0.79 1.71 CFX 13.88 179.42 191.82 13.34 4.66 1,859,030 7.44 6.99 1.36 0.98 CIBI 15.53 130.08 130.08 14.98 2.08 97,446 11.52 11.52 0.99 0.99 CKFB 21.39 113.44 113.44 29.29 2.60 60,812 23.96 23.96 0.90 1.33 CLAS 19.18 94.15 111.38 14.00 2.00 130,525 14.87 12.87 0.73 0.72 CMRN 17.63 102.59 102.59 22.25 1.59 208,105 21.69 21.69 1.00 1.32 CNIT 16.58 163.08 177.57 11.80 1.97 709,550 7.24 6.69 3.06 0.75 COFI 14.49 250.00 267.05 16.77 1.89 14,564,703 6.71 6.31 3.65 1.23 COOP 77.94 146.98 146.98 11.22 -- 352,438 7.63 7.63 0.34 0.18 CRZY 20.54 97.92 97.92 25.29 2.78 54,275 25.82 25.82 0.70 1.30 CSA 18.67 184.70 187.11 9.09 -- 9,102,743 4.92 4.86 2.38 0.52 CTZN 16.40 188.90 209.75 12.03 0.84 3,097,515 6.37 5.77 2.63 0.82 CVAL 19.05 188.68 188.68 16.16 1.83 305,187 8.56 8.56 1.26 0.92 DIBK 10.33 207.10 214.07 16.49 1.43 873,878 7.96 7.72 2.71 1.88 DME 14.87 187.93 197.00 9.91 0.83 20,087,176 5.27 5.04 1.29 0.70 DNFC 13.57 175.28 177.24 9.67 1.05 1,608,837 5.58 5.52 1.40 0.81 DSL 15.14 140.89 142.86 9.77 1.49 5,885,670 6.93 6.84 1.42 0.73 EFBI 19.17 127.45 127.53 15.24 4.97 264,266 11.96 11.95 1.05 0.82 EIRE 13.52 160.57 160.57 11.36 1.30 425,014 7.07 7.07 1.59 0.89 EMLD 14.00 155.04 157.48 11.75 1.71 603,080 7.58 7.47 1.00 0.90
6 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- EQSB 11.36 145.35 145.35 7.33 -- 308,197 5.04 5.04 3.30 0.73 ESBK 20.95 112.21 117.01 7.21 2.75 227,828 6.30 6.05 1.11 0.35 ETFS 26.79 93.89 93.89 17.06 1.07 112,697 18.16 18.16 0.70 0.63 FBBC 14.35 153.06 153.06 15.04 2.42 714,366 9.82 9.82 1.15 1.23 FBCI 16.32 117.32 117.57 12.18 1.50 489,843 10.39 10.37 1.31 0.77 FBER 25.72 131.77 131.77 18.70 0.68 284,765 14.19 14.19 0.69 0.77 FBHC 21.62 137.75 147.87 8.31 1.25 318,668 6.03 5.64 1.48 0.51 FBSI 16.50 122.47 122.66 17.58 0.83 160,048 14.35 14.33 1.47 1.12 FCME 2.45 103.86 103.86 9.59 -- 152,386 9.23 9.23 4.39 4.08 FDEF 26.79 119.05 119.05 25.37 2.13 552,225 21.32 21.32 0.56 1.02 FED 16.04 170.13 172.02 8.21 -- 4,193,203 4.83 4.78 2.03 0.52 FESX 13.39 146.93 169.15 10.24 2.82 1,245,415 6.97 6.11 1.27 0.85 FFBA 16.19 151.09 153.16 19.53 2.47 1,510,376 12.92 12.77 1.10 1.21 FFBH 18.42 128.36 128.36 19.21 0.95 535,204 14.97 14.97 1.14 1.06 FFBI 21.63 109.25 109.25 9.46 -- 84,531 8.65 8.65 0.89 0.41 FFBS 17.07 123.46 123.46 25.42 2.38 128,676 19.42 19.42 1.23 1.49 FFBZ 17.45 209.99 210.23 14.45 1.30 201,262 7.55 7.54 1.06 0.96 FFCH 14.90 193.39 193.39 11.82 2.32 1,667,178 6.11 6.11 2.08 0.84 FFDB 12.52 114.16 125.23 10.75 3.03 176,528 9.42 8.65 1.32 0.94 FFED 31.48 164.41 164.41 8.46 4.71 250,285 5.14 5.14 0.27 0.29 FFES 12.91 134.36 134.36 8.64 1.89 983,594 6.43 6.43 2.46 0.70 FFFC 19.58 168.72 172.39 23.76 1.63 558,886 13.18 12.94 1.50 1.34 FFFD 15.32 114.79 114.79 26.02 1.47 212,869 22.67 22.67 1.11 1.91 FFHH 18.13 113.00 113.00 14.53 2.76 378,233 11.35 11.35 1.00 0.84 FFHS 16.95 116.48 117.23 10.51 1.60 226,944 9.02 8.97 1.18 0.64 FFIC 20.88 121.40 121.40 18.79 1.19 860,031 15.47 15.47 0.97 0.94 FFKY 15.37 167.34 177.81 22.93 2.70 377,380 13.70 13.01 1.35 1.53 FFLC 19.48 125.44 125.44 16.91 1.70 387,097 13.48 13.48 1.45 1.01 FFOH 19.28 131.47 148.98 17.01 1.75 524,743 12.94 11.60 0.83 0.95 FFPB NM 148.21 151.91 9.74 1.86 1,666,396 6.57 6.42 0.08 0.02 FFSL 18.13 110.99 110.99 11.58 1.94 110,876 10.43 10.43 0.71 0.69 FFWC 12.34 121.32 134.61 11.55 2.46 180,056 9.52 8.66 2.37 1.06 FFWD 18.75 173.32 173.32 21.33 2.42 163,918 12.30 12.30 0.88 1.26 FFYF 16.39 138.05 138.05 18.93 2.56 599,249 13.71 13.71 1.67 1.27 FGHC 20.27 178.15 194.30 14.64 0.71 156,383 8.22 7.59 0.37 0.78 FIBC 12.34 127.04 127.70 11.89 2.05 282,485 9.36 9.32 1.58 1.00 FKFS 13.48 144.05 144.05 10.53 0.73 320,797 7.31 7.31 2.04 0.78 FKKY 26.35 98.19 98.19 25.72 3.69 128,328 26.19 26.19 0.37 0.92 FLAG 80.56 138.89 138.89 13.31 2.35 221,926 9.58 9.58 0.18 0.16 FLFC 14.87 184.96 205.14 13.63 1.76 1,288,919 7.37 6.69 1.53 0.94 FMCO 12.27 178.81 182.03 11.72 0.73 554,925 6.56 6.45 2.22 1.02 FMSB 14.05 186.76 186.76 12.74 0.98 432,034 6.83 6.83 1.45 1.00 FNGB 10.37 78.37 78.37 8.83 2.51 637,725 11.27 11.27 1.23 0.90 FOBC 15.04 120.29 126.14 13.80 2.80 356,718 11.07 10.61 1.38 0.97 FRC 18.13 142.29 142.37 10.21 -- 2,238,033 7.17 7.17 1.30 0.60 FSBI 12.72 134.24 134.24 9.07 1.69 363,302 6.75 6.75 1.67 0.83 FSPG 11.30 155.64 158.23 10.37 2.00 522,396 6.66 6.56 1.77 0.97 FSTC 11.25 175.10 225.16 17.04 1.40 338,857 9.73 7.73 2.80 1.90 FTF 13.36 148.46 148.46 23.31 2.51 171,358 15.70 15.70 1.67 1.73 FTFC 15.51 221.12 235.12 14.25 1.96 1,571,981 6.44 6.08 1.58 0.90 FTSB 21.38 102.77 102.77 16.48 2.34 96,940 16.04 16.04 0.50 0.81 FWWB 20.98 153.86 166.61 23.62 1.16 1,074,166 14.23 13.29 1.15 1.16 GAF 19.73 123.25 124.56 18.70 2.73 749,748 15.18 15.04 0.89 1.12 GBCI 15.04 227.83 233.88 22.20 2.60 567,610 9.74 9.51 1.23 1.54 GDW 10.31 187.36 187.36 11.94 0.54 39,095,082 6.37 6.37 7.98 1.23 GFCO 14.69 108.83 110.31 10.32 3.08 287,088 9.49 9.37 1.77 0.71 GFSB 13.94 140.37 140.37 16.25 1.79 88,154 11.57 11.57 1.04 1.20 GPT 19.27 183.83 326.93 21.34 1.59 13,300,046 10.31 6.07 3.27 1.03
7 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- GSB 19.57 181.54 204.28 8.81 -- 16,218,259 6.24 5.66 1.45 0.68 GSBC 13.50 226.51 226.51 19.32 2.37 707,841 8.53 8.53 1.25 1.54 GTFN 22.43 166.05 173.36 15.34 1.77 3,046,227 9.23 8.88 1.51 0.72 GUPB 22.32 111.08 111.08 18.11 2.13 86,911 16.30 16.30 0.84 0.93 HALL 12.80 104.57 104.57 7.57 -- 409,820 7.24 7.24 1.68 0.61 HARB 17.68 246.68 255.07 20.70 3.01 1,116,718 8.39 8.14 2.63 1.22 HARL 13.97 204.73 204.73 13.37 1.47 336,666 6.53 6.53 1.95 1.02 HAVN 11.75 153.41 153.98 9.12 1.62 1,781,545 5.95 5.93 3.16 0.84 HBBI 25.63 101.69 101.69 14.18 1.46 45,064 12.81 12.81 0.80 0.52 HBFW 18.27 121.31 121.31 16.12 0.94 334,862 13.29 13.29 1.17 0.89 HBNK 19.06 161.68 161.68 12.09 -- 504,381 7.47 7.47 1.39 0.67 HBS 15.20 113.37 117.57 15.79 2.95 150,416 13.93 13.50 1.25 1.15 HFFB 20.33 97.26 97.26 28.34 2.62 108,950 26.92 26.92 0.75 1.35 HFFC 14.06 126.55 126.55 11.94 1.87 561,664 9.43 9.43 1.60 0.89 HFSA 18.97 105.23 105.23 13.13 2.91 108,018 12.48 12.48 0.87 0.79 HHFC 22.17 103.89 103.89 12.27 3.40 87,596 11.81 11.81 0.53 0.57 HIFS 12.70 151.25 151.25 14.15 2.03 217,586 9.36 9.36 1.86 1.22 HMCI 19.94 122.95 122.95 8.04 -- 331,608 6.54 6.54 0.79 0.42 HMNF 20.76 126.16 126.16 18.20 -- 566,865 14.43 14.43 1.18 0.88 HOMF 13.05 174.49 180.08 14.80 1.68 682,796 8.48 8.24 2.28 1.22 HPBC 11.34 171.20 171.20 18.07 4.10 198,748 10.56 10.56 1.72 1.68 HRBF 20.56 116.05 116.05 14.97 2.09 216,370 12.89 12.89 0.93 0.70 HRZB 14.29 137.49 137.49 21.45 2.67 518,661 15.60 15.60 1.05 1.54 HTHR 24.53 125.77 125.77 5.78 -- 863,096 5.94 5.94 0.67 0.72 HZFS 17.48 95.47 95.47 9.34 1.70 85,969 9.79 9.79 1.08 0.55 IFSB 20.24 98.25 112.06 6.41 1.67 262,753 6.52 5.76 0.65 0.33 INBI 18.67 130.05 130.05 23.03 3.17 346,596 17.70 17.70 0.81 1.27 IPSW 20.47 285.40 285.40 16.31 0.92 189,379 5.71 5.71 1.27 0.97 ISBF 22.10 140.55 165.22 18.03 1.62 947,107 12.04 10.43 1.12 0.85 ITLA 12.59 149.96 NA 16.48 -- 850,201 10.99 NA 1.42 1.46 IWBK 17.10 255.50 261.07 17.32 1.52 1,832,582 6.78 6.64 2.31 1.10 JSB 17.66 125.74 125.74 28.73 3.13 1,531,115 22.85 22.85 2.53 1.70 JSBA 15.19 135.64 174.83 12.59 1.23 1,292,021 8.54 6.75 2.14 0.77 JXVL 7.29 122.69 122.69 18.30 3.01 226,182 14.92 14.92 2.28 1.33 KFBI 22.35 122.03 122.03 26.15 1.58 727,903 19.55 19.55 0.85 1.19 KNK 15.05 110.94 118.05 12.30 1.63 341,678 11.09 10.49 1.96 0.82 KSAV 12.01 114.13 114.20 15.43 3.24 106,121 13.52 13.52 1.54 1.24 KSBK 10.04 150.71 159.38 10.82 0.63 145,888 7.18 6.81 1.27 1.08 KYF 15.87 110.89 110.89 18.35 4.04 88,959 16.55 16.55 0.78 1.13 LARK 16.80 116.91 116.91 16.12 1.86 228,100 13.79 13.79 1.28 1.04 LARL 11.50 145.86 145.86 14.63 2.42 211,987 10.03 10.03 1.87 1.43 LIFB 18.66 154.49 159.08 16.29 1.95 1,488,257 10.55 10.28 1.32 0.86 LISB 23.00 175.35 177.11 15.77 1.54 5,908,737 8.99 8.91 1.69 0.72 LOGN 15.16 112.56 112.56 21.60 2.81 83,152 19.19 19.19 0.94 1.51 LONF 19.48 102.74 102.74 20.21 1.60 38,240 19.66 19.66 0.77 0.99 LSBI 14.52 104.17 104.17 9.90 1.65 194,117 8.85 8.85 1.42 0.68 LSBX 8.36 152.68 152.68 13.27 -- 366,318 8.69 8.69 1.36 1.73 LVSB 18.43 161.98 202.58 15.42 0.78 481,646 9.52 7.76 1.75 0.95 LXMO 20.89 107.77 107.77 30.51 1.89 59,236 28.32 28.32 0.76 1.32 MAFB 13.60 184.63 211.32 14.37 0.90 3,321,464 7.78 6.87 2.28 1.16 MARN 14.84 104.12 104.12 23.46 3.83 173,304 22.54 22.54 1.55 1.67 MASB 15.19 143.37 143.37 15.25 2.49 905,417 10.64 10.64 3.39 1.04 MBB 21.85 110.52 225.19 8.17 2.57 813,902 8.92 5.36 1.07 0.51 MBB 21.85 110.52 225.19 8.17 2.57 813,902 8.92 5.36 1.07 0.51 MBLF 17.67 106.92 106.92 12.99 1.70 234,824 12.15 12.15 1.33 0.85 MCBN 15.42 116.52 116.52 10.03 2.02 59,739 8.60 8.60 1.67 0.67 MCBS 14.15 150.53 150.53 14.38 1.33 408,590 9.39 9.39 2.12 1.17 MDBK 13.81 142.42 152.85 12.81 2.38 1,072,557 8.99 8.43 2.19 1.01
8 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- MECH 8.07 142.81 142.81 14.61 -- 823,575 10.23 10.23 2.82 1.95 MERI 13.78 167.29 167.29 13.72 1.73 228,485 8.20 8.20 2.94 1.05 METF 15.50 203.36 224.82 8.05 -- 821,280 3.96 3.59 1.21 0.54 MFBC 19.27 104.74 104.74 14.30 1.52 248,241 13.65 13.65 1.09 0.86 MFFC 24.33 111.13 111.13 15.74 4.40 199,886 13.14 13.14 0.56 0.69 MFLR 14.63 136.26 138.67 12.85 3.33 124,688 9.43 9.28 1.23 0.93 MFSL 13.74 144.15 145.99 12.08 1.84 1,157,445 8.38 8.29 3.17 0.89 MIVI 17.82 96.33 96.33 18.19 1.03 69,775 18.88 18.88 0.87 1.03 MLBC 18.58 153.51 156.25 10.71 1.91 2,071,285 6.98 6.87 1.13 0.68 MSBF 16.67 132.74 132.74 22.57 2.07 74,698 16.99 16.99 0.81 1.46 MWBI 12.06 116.57 116.57 8.05 1.77 146,542 6.91 6.91 2.81 0.75 MWBX 12.25 206.95 206.95 15.39 1.92 566,517 7.45 7.45 0.51 1.37 MWFD 16.94 187.33 194.26 16.51 1.62 207,050 8.81 8.52 1.24 1.09 NASB 13.80 212.53 219.65 16.94 1.55 689,246 7.97 7.73 3.75 1.18 NBN 22.16 108.41 125.43 7.53 2.19 247,525 7.76 6.88 0.66 0.50 NEIB 14.44 110.27 110.27 16.75 1.91 176,309 15.19 15.19 1.16 1.21 NHTB 23.42 145.07 171.22 10.84 3.01 313,038 7.48 6.41 0.71 0.51 NMSB 21.98 154.17 154.17 15.13 1.88 323,061 9.82 9.82 0.58 0.80 NSLB 31.04 112.81 112.81 22.07 2.69 59,711 19.56 19.56 0.60 0.77 NSSB 19.23 170.07 188.39 18.99 2.24 712,699 11.17 10.19 1.30 1.05 NSSY 50.37 159.01 164.35 12.44 1.17 663,668 7.82 7.59 0.68 0.31 NTMG 32.35 149.66 149.66 8.52 -- 93,645 6.17 6.17 0.34 0.38 NWEQ 15.42 115.95 115.95 14.28 3.15 96,891 11.45 11.45 1.07 0.98 NYB 15.93 397.80 397.80 20.22 1.95 3,283,653 5.08 5.08 1.93 1.45 OFCP 19.73 164.92 205.45 14.40 1.58 861,334 8.73 7.13 1.28 0.76 OHSL 15.60 109.62 109.62 12.09 3.79 230,035 11.03 11.03 1.49 0.85 PALM 21.45 153.09 153.09 12.62 0.76 664,863 8.24 8.24 0.74 0.60 PAMM 6.04 152.10 152.10 32.80 -- 136,110 21.57 21.57 3.89 9.57 PBCI 14.21 124.85 125.83 15.90 4.82 370,987 12.74 12.65 1.46 1.24 PBKB 20.31 174.54 181.36 9.97 2.71 585,678 5.71 5.51 0.80 0.53 PCBC 15.19 108.98 108.98 20.92 1.95 81,105 19.20 19.20 1.35 1.07 PCCI 15.25 170.39 170.39 12.07 -- 371,126 7.08 7.08 1.00 0.98 PDB 36.25 146.56 146.56 24.37 3.68 122,761 16.63 16.63 0.30 0.64 PEEK 21.96 110.47 110.47 28.42 2.22 182,560 25.73 25.73 0.74 1.29 PERM 19.17 116.51 118.25 10.67 1.74 433,239 9.16 9.04 1.20 0.62 PFDC 13.31 128.71 128.71 19.57 2.42 287,564 15.20 15.20 1.86 1.46 PFFB 30.75 133.53 134.92 13.78 -- 2,631,413 10.32 10.22 0.63 0.46 PFNC 21.92 244.43 276.70 12.98 0.84 418,658 5.26 4.68 0.65 0.64 PFSB 13.88 132.84 158.82 10.58 0.97 1,321,751 7.36 6.23 2.09 0.84 PHBK 15.19 237.00 281.23 18.30 2.03 5,591,180 7.72 6.59 2.46 1.31 PHFC 21.06 136.35 137.90 14.89 1.24 256,265 10.92 10.81 0.92 0.80 PKPS 20.66 127.15 127.15 10.64 1.34 880,196 8.37 8.37 0.36 0.54 PMFI 34.70 111.81 111.81 9.54 1.49 397,229 8.53 8.53 0.58 0.29 PRBC 20.11 106.00 106.00 11.80 0.69 135,721 11.13 11.13 0.87 0.65 PSBK 13.28 151.25 169.32 12.93 2.29 878,823 8.55 7.71 2.24 0.97 PTRS 12.00 109.24 109.24 9.64 1.50 121,189 8.83 8.83 2.00 0.84 PULS 11.99 150.40 150.40 12.10 3.42 520,203 8.05 8.05 1.71 1.06 PVFC 8.94 218.34 218.34 15.33 -- 356,251 7.02 7.02 2.39 1.35 PVSA 11.99 157.77 158.97 11.97 1.78 991,239 7.58 7.53 2.44 1.08 PWBC 15.16 131.63 140.80 10.63 2.00 816,954 8.08 7.59 1.08 0.66 QCBC 20.75 138.89 138.98 12.18 -- 801,402 8.77 8.76 1.00 0.61 QCFB 14.25 134.35 134.35 24.30 -- 149,637 18.09 18.09 1.79 1.66 QCSB 25.49 262.23 262.23 36.09 1.92 1,466,906 11.85 11.85 2.04 1.61 RARB 14.74 178.29 181.19 14.14 2.16 379,428 7.93 7.81 1.51 1.03 REDF 22.64 155.81 156.40 13.17 -- 912,237 8.46 8.42 0.74 0.64 RELY 16.76 161.81 224.55 13.32 2.13 1,976,764 8.23 6.07 1.79 0.87 ROSE 16.59 203.53 203.53 13.57 2.19 3,551,783 6.20 6.20 1.65 0.89 SFED 17.70 111.63 111.63 13.92 1.44 172,849 12.47 12.47 1.10 0.79
9 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- SFFC 15.17 113.17 113.17 20.12 1.82 85,679 17.78 17.78 1.45 1.37 SFIN 13.69 134.89 135.18 13.12 2.35 673,214 9.73 9.71 1.37 0.90 SFSB 16.27 125.46 125.92 8.13 1.16 426,705 6.48 6.46 1.69 0.56 SFSL 14.92 237.07 240.93 22.32 1.66 653,226 9.42 9.28 1.29 1.34 SISB 9.09 163.84 163.84 11.66 1.87 1,434,545 7.20 7.20 3.30 1.38 SKAN 13.16 126.48 130.51 8.66 1.78 247,697 6.85 6.65 1.71 0.68 SMBC 16.91 108.83 108.83 17.05 2.90 165,688 15.67 15.67 1.02 1.01 SOBI 28.51 92.75 92.75 15.61 1.97 79,080 15.40 15.40 0.57 0.57 SOPN 17.41 111.58 111.58 25.48 3.93 294,217 22.84 22.84 1.17 1.69 SOSA 14.50 184.95 184.95 11.73 -- 514,502 6.33 6.33 0.25 0.79 SPBC 17.05 192.80 193.30 16.58 1.78 4,611,394 8.60 8.58 1.32 1.04 STFR 18.39 146.82 166.12 11.45 1.35 1,645,539 7.88 7.03 1.93 0.71 STSA 21.54 146.88 168.47 5.90 -- 1,686,395 5.54 5.04 0.83 0.44 SWBI 15.24 133.13 133.13 14.63 3.64 378,325 11.00 11.00 1.37 1.01 SWCB 14.06 157.23 164.24 12.50 3.66 501,894 7.95 7.63 2.33 0.98 TBK 15.74 166.27 171.12 11.54 1.14 238,227 6.94 6.76 1.12 0.79 THR 17.61 107.52 107.94 14.79 2.44 91,165 13.76 13.71 0.93 0.83 THRD 17.37 104.06 118.65 12.51 2.04 640,746 11.12 9.89 1.13 0.73 TPNZ 21.01 123.59 123.59 21.03 1.61 124,150 17.02 17.02 0.83 1.00 TRIC 16.49 101.07 101.07 15.48 2.64 89,457 15.32 15.32 1.38 1.02 TSH 15.87 117.51 117.51 15.44 2.74 406,253 13.14 13.14 1.15 0.96 TWIN 20.36 122.14 122.14 15.70 3.24 107,345 12.86 12.86 0.97 0.75 UBMT 20.26 117.85 117.85 26.69 4.17 107,723 22.65 22.65 1.16 1.34 USAB 34.00 131.99 134.49 12.92 -- 48,303 10.76 10.58 0.25 0.55 VABF 24.56 164.71 164.71 11.28 1.43 617,818 6.85 6.85 0.57 0.46 WAMU 24.44 303.70 320.02 16.21 1.73 48,763,153 5.24 5.00 2.56 0.71 WBST 15.87 200.72 234.96 10.08 1.60 5,943,766 5.02 4.32 3.15 0.71 WCBI 16.35 135.56 135.56 20.66 2.31 311,613 15.24 15.24 1.59 1.41 WEFC 14.79 110.22 110.22 15.64 2.98 202,035 14.19 14.19 1.09 1.06 WFI 12.50 138.64 141.64 9.86 2.92 317,392 7.11 6.97 1.26 0.88 WFSL 12.10 179.91 196.98 21.73 3.49 5,760,385 12.08 11.15 2.18 1.84 WHGB 26.29 107.70 107.70 22.24 1.31 100,235 20.66 20.66 0.58 0.85 WRNB 10.67 178.21 178.21 18.48 2.97 358,021 10.37 10.37 1.64 1.83 WSB 16.46 133.66 133.66 11.10 1.48 258,330 8.30 8.30 0.41 0.73 WSFS 10.43 229.43 231.26 11.94 -- 1,508,540 5.20 5.16 1.39 1.34 WSTR 17.98 116.06 145.10 12.67 2.02 955,639 10.91 8.92 1.21 0.82 WVFC 13.04 145.46 145.46 16.23 2.92 294,693 11.16 11.16 2.10 1.32 WWFC 15.98 134.84 151.35 12.31 0.94 111,394 9.13 8.21 1.33 0.84 WYNE 21.62 145.99 145.99 19.49 0.83 261,027 13.35 13.35 1.11 0.92 YFCB 16.75 121.99 121.99 18.18 1.39 288,089 14.90 14.90 1.03 1.15 YFED 19.05 168.07 168.07 14.47 2.50 1,162,393 8.61 8.61 1.26 0.77 271 Maximum 80.56 397.80 397.80 39.87 4.97 48,763,153 33.52 33.52 7.98 9.57 Minimum 2.45 75.09 75.09 5.01 -- 38,240 3.33 2.78 0.04 0.02 Average 17.82 146.57 153.42 14.98 1.80 1,554,864 10.87 10.60 1.46 0.99 Median 16.55 138.35 142.81 14.11 1.76 383,263 9.41 8.91 1.28 0.91
10 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- AADV 9.89 N 08/22/97 0.44 15.36 0.72 0.98 10.77 ABBK 10.71 N 08/22/97 0.17 14.63 0.50 0.81 11.68 ABCL 8.48 N 08/22/97 0.15 17.57 0.45 0.77 8.35 ABCW 15.09 N 08/22/97 0.92 7.42 0.91 0.91 13.93 AFCB 11.14 N 08/22/97 0.39 15.27 0.44 1.10 11.18 AHM 13.79 N 08/22/97 1.90 16.92 0.75 0.73 14.74 ALBC 3.90 N 08/22/97 0.60 12.92 0.45 0.69 7.68 ALBK 11.23 N 08/22/97 0.71 14.18 0.67 1.05 11.37 AMFC 4.54 N 08/22/97 0.81 22.06 0.17 0.67 4.28 ANDB 14.33 N 08/22/97 1.01 12.40 0.60 1.00 12.54 ASBI 7.64 N 08/22/97 0.40 18.50 0.25 0.83 7.60 ASBP 4.31 N 08/22/97 1.56 22.32 0.14 0.85 5.43 ASFC 10.05 N 08/22/97 0.45 17.19 0.68 0.75 9.80 BANC 10.83 N 08/22/97 0.87 15.94 0.20 0.66 11.50 BDJI 5.45 N 08/22/97 0.23 16.10 0.33 0.69 6.25 BFD 6.48 N 08/22/97 0.52 18.06 0.27 0.65 7.14 BFSB 8.90 N 08/22/97 -- 16.61 0.38 1.22 8.52 BKC 12.98 N 08/22/97 1.81 12.67 0.73 1.16 14.12 BKCT 12.07 N 08/22/97 1.19 15.25 0.50 1.29 12.72 BKUNA 8.04 N 08/22/97 0.60 20.54 0.14 0.48 8.00 BPLS 0.39 N 08/22/97 2.88 19.42 0.14 0.31 6.30 BVCC 10.26 N 08/22/97 0.79 18.30 0.35 0.60 9.51 BYFC 2.60 N 08/22/97 2.06 17.19 0.16 0.48 4.33 CAFI 9.59 N 08/22/97 0.34 12.01 0.38 1.02 10.59 CAPS 10.16 N 08/22/97 0.17 13.23 0.30 0.96 10.97 CASB 8.53 N 08/22/97 0.39 17.43 0.19 0.61 9.92 CASH 8.12 N 08/22/97 0.85 14.52 0.31 0.92 7.98 CATB 5.10 N 08/22/97 0.47 19.64 0.21 1.35 5.24 CBCI 8.66 N 08/22/97 1.16 12.00 0.87 1.60 10.40 CBSA 12.30 N 08/22/97 0.54 13.58 0.55 0.39 11.51 CBSB 7.78 N 08/22/97 0.56 21.00 0.25 1.08 7.67 CEBK 8.75 N 08/22/97 0.85 15.52 0.31 0.73 7.16 CENF 14.27 N 08/22/97 1.28 14.53 0.57 0.60 11.72 CFB 15.58 N 08/22/97 0.89 12.94 0.78 0.97 16.34 CFCP 16.66 N 08/22/97 0.21 22.10 0.28 1.11 18.07 CFFC 9.23 N 08/22/97 0.39 13.94 0.39 1.16 8.41 CFSB 13.83 N 08/22/97 0.17 14.10 0.47 1.22 15.91 CFTP 5.13 N 08/22/97 0.35 22.19 0.20 1.73 5.13 CFX 11.60 N 08/22/97 0.72 14.75 0.32 0.96 12.20 CIBI 8.18 N 08/22/97 0.72 14.24 0.27 1.01 8.86 CKFB 5.37 N 08/22/97 0.63 19.25 0.25 1.47 6.16 CLAS 4.64 N 08/22/97 0.66 17.50 0.20 0.72 4.89 CMRN 5.51 N 08/22/97 0.24 17.63 0.25 1.26 5.63 CNIT 10.46 N 08/22/97 0.42 15.29 0.83 0.81 11.22 COFI 18.22 N 08/22/97 0.22 13.77 0.96 1.27 18.76 COOP 2.29 N 08/22/97 0.30 20.08 0.33 0.61 8.05 CRZY 4.54 N 08/22/97 0.39 17.97 0.20 1.34 5.07 CSA 10.65 N 08/22/97 1.40 17.09 0.65 0.56 11.43 CTZN 12.75 N 08/22/97 0.41 14.38 0.75 0.89 13.88 CVAL 10.24 N 08/22/97 0.47 17.65 0.34 0.96 10.98 DIBK 23.00 N 08/22/97 0.38 9.09 0.77 1.97 25.24 DME 13.30 N 08/22/97 1.57 19.19 0.25 0.54 10.16 DNFC 14.10 N 08/22/97 0.34 13.19 0.36 0.79 13.96 DSL 9.65 N 08/22/97 0.95 17.92 0.30 0.57 8.03 EFBI 6.28 N 08/22/97 0.03 17.97 0.28 0.85 6.97 EIRE 12.99 N 08/22/97 0.40 12.80 0.42 0.93 13.30 EMLD 11.63 N 08/22/97 0.14 12.07 0.29 0.98 13.07
11 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- EQSB 14.49 N 08/22/97 0.15 11.43 0.82 0.70 13.83 ESBK 5.53 N 08/22/97 0.65 16.61 0.35 0.43 6.85 ETFS 3.38 N 08/22/97 0.17 24.67 0.19 0.65 3.51 FBBC 8.92 N 08/22/97 0.07 14.73 0.28 0.98 10.10 FBCI 7.37 N 08/22/97 0.80 14.44 0.37 0.84 8.12 FBER 4.69 N 08/22/97 0.83 21.13 0.21 0.85 5.57 FBHC 8.10 N 08/22/97 0.37 18.60 0.43 0.60 9.70 FBSI 7.33 N 08/22/97 0.08 15.54 0.39 1.14 7.96 FCME 53.47 N 08/22/97 1.95 13.44 0.20 0.73 8.06 FDEF 4.57 N 08/22/97 0.45 23.44 0.16 1.08 5.05 FED 11.28 N 08/22/97 1.39 16.28 0.50 0.51 10.73 FESX 11.63 N 08/22/97 0.56 15.18 0.28 0.72 10.19 FFBA 8.59 N 08/22/97 0.23 15.90 0.28 1.19 9.25 FFBH 6.61 N 08/22/97 0.19 22.83 0.23 0.81 5.24 FFBI 5.11 N 08/22/97 0.39 22.92 0.21 0.38 4.64 FFBS 7.62 N 08/22/97 0.03 15.44 0.34 1.62 8.37 FFBZ 12.66 N 08/22/97 0.47 14.45 0.32 1.11 14.72 FFCH 13.67 N 08/22/97 1.61 14.35 0.54 0.84 13.68 FFDB 9.54 N 08/22/97 0.72 12.16 0.34 0.98 10.05 FFED 5.39 N 08/22/97 0.12 11.18 0.19 0.80 15.52 FFES 11.12 N 08/22/97 0.31 14.17 0.56 0.64 10.10 FFFC 9.56 N 08/22/97 0.18 17.91 0.41 1.35 10.37 FFFD 7.43 N 08/22/97 0.12 14.17 0.30 1.84 7.80 FFHH 6.65 N 08/22/97 0.03 15.63 0.29 0.87 7.55 FFHS 7.08 N 08/22/97 0.41 14.71 0.34 0.73 8.16 FFIC 5.62 N 08/22/97 0.29 17.46 0.29 1.01 6.49 FFKY 11.20 N 08/22/97 0.23 13.65 0.38 1.68 12.28 FFLC 6.56 N 08/22/97 0.19 18.11 0.39 0.96 6.91 FFOH 6.61 N 08/22/97 0.08 17.39 0.23 0.94 7.17 FFPB 0.35 N 08/22/97 0.70 19.66 0.41 0.52 7.79 FFSL 6.20 N 08/22/97 0.37 17.88 0.18 0.64 6.17 FFWC 10.49 N 08/22/97 0.16 13.54 0.54 0.93 9.35 FFWD 9.76 N 08/22/97 0.02 17.19 0.24 1.29 10.36 FFYF 8.06 N 08/22/97 0.67 13.69 0.50 1.33 9.62 FGHC 9.53 N 08/22/97 1.41 15.63 0.12 1.00 11.97 FIBC 10.16 N 08/22/97 1.71 12.19 0.40 0.96 10.04 FKFS 10.49 N 08/22/97 1.60 12.50 0.55 0.78 10.93 FKKY 3.34 N 08/22/97 -- 24.38 0.10 0.95 3.69 FLAG 1.70 N 08/22/97 4.27 19.08 0.19 0.68 7.17 FLFC 12.83 N 08/22/97 0.81 13.87 0.41 1.01 13.69 FMCO 15.76 N 08/22/97 1.06 11.35 0.60 1.05 16.36 FMSB 15.01 N 08/22/97 -- 13.40 0.38 0.99 14.73 FNGB 7.86 N 08/22/97 0.06 10.28 0.31 0.89 7.82 FOBC 8.35 N 08/22/97 0.15 15.26 0.34 0.93 8.36 FRC 9.49 N 08/22/97 1.01 17.33 0.34 0.65 8.73 FSBI 11.94 N 08/22/97 0.31 13.28 0.40 0.75 10.90 FSPG 14.79 N 08/22/97 0.64 12.50 0.40 0.86 12.91 FSTC 19.95 N 08/22/97 NA 5.08 1.55 3.68 38.97 FTF 10.43 N 08/22/97 0.12 11.87 0.47 1.86 11.74 FTFC 13.96 N 08/22/97 NA 17.01 0.36 0.93 14.48 FTSB 4.47 N 08/22/97 1.42 11.62 0.23 1.38 8.60 FWWB 7.58 N 08/22/97 0.29 18.85 0.32 1.21 8.28 GAF 5.80 N 08/22/97 0.12 16.89 0.26 1.10 6.97 GBCI 16.25 N 08/22/97 0.12 13.60 0.34 1.64 17.10 GDW 19.73 N 08/22/97 1.31 13.71 1.50 0.88 13.91 GFCO 7.47 N 08/22/97 0.11 12.50 0.52 0.83 8.67 GFSB 10.24 N 08/22/97 1.54 12.95 0.28 1.27 11.06 GPT 9.59 N 08/22/97 2.89 17.50 0.90 1.12 10.49
12 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- GSB 10.56 N 08/22/97 1.46 16.50 0.43 0.74 11.55 GSBC 17.00 N 08/22/97 1.91 11.72 0.36 1.66 19.65 GTFN 7.50 N 08/22/97 0.36 20.16 0.42 0.77 8.37 GUPB 4.89 N 08/22/97 0.18 22.32 0.21 0.81 4.74 HALL 8.62 N 08/22/97 0.15 11.44 0.47 0.67 9.40 HARB 14.82 N 08/22/97 0.46 17.35 0.67 1.21 14.61 HARL 16.03 N 08/22/97 -- 12.85 0.53 1.09 16.89 HAVN 13.80 N 08/22/97 0.74 18.56 0.50 0.53 8.81 HBBI 4.03 N 08/22/97 0.38 18.30 0.28 0.72 5.67 HBFW 6.29 N 08/22/97 -- 17.24 0.31 0.89 6.61 HBNK 9.20 N 08/22/97 3.09 11.42 0.58 1.10 14.97 HBS 7.72 N 08/22/97 1.97 14.39 0.33 1.12 7.99 HFFB 4.99 N 08/22/97 -- 19.06 0.20 1.39 5.23 HFFC 9.66 N 08/22/97 0.33 12.50 0.45 0.99 10.56 HFSA 5.37 N 08/22/97 0.09 17.19 0.24 0.77 6.00 HHFC 4.44 N 08/22/97 0.11 15.46 0.19 0.80 6.56 HIFS 12.54 N 08/22/97 0.41 11.58 0.51 1.27 13.18 HMCI 6.80 N 08/22/97 2.91 17.12 0.23 0.51 7.88 HMNF 5.90 N 08/22/97 0.08 19.76 0.31 0.87 5.99 HOMF 14.67 N 08/22/97 0.45 13.77 0.54 1.13 13.40 HPBC 15.76 N 08/22/97 -- 10.83 0.45 1.68 15.74 HRBF 5.41 N 08/22/97 0.05 19.13 0.25 0.74 5.80 HRZB 9.82 N 08/22/97 -- 13.39 0.28 1.57 10.19 HTHR 13.27 N 08/22/97 8.93 7.47 0.55 1.59 28.90 HZFS 5.25 N 08/22/97 0.96 22.47 0.21 0.43 4.23 IFSB 4.92 N 08/22/97 2.03 16.45 0.20 0.39 5.96 INBI 6.78 N 08/22/97 0.22 14.54 0.26 1.51 8.43 IPSW 16.21 N 08/22/97 1.52 17.57 0.37 1.03 17.52 ISBF 6.26 N 08/22/97 NA 22.10 0.28 0.76 6.27 ITLA 12.69 N 08/22/97 1.47 11.76 0.38 1.45 12.99 IWBK 16.39 N 08/22/97 0.64 16.19 0.61 1.10 16.36 JSB 7.77 N 08/22/97 NA 16.19 0.69 1.85 8.24 JSBA 9.84 N 08/22/97 0.46 14.77 0.55 0.81 9.67 JXVL 8.42 N 08/22/97 0.78 10.14 0.41 1.75 11.48 KFBI 5.38 N 08/22/97 0.08 21.59 0.22 1.16 5.81 KNK 7.89 N 08/22/97 0.61 14.75 0.50 0.88 8.12 KSAV 8.86 N 08/22/97 0.35 12.17 0.38 1.39 10.15 KSBK 15.21 N 08/22/97 1.75 10.63 0.30 0.98 13.70 KYF 5.83 N 08/22/97 -- 15.47 0.20 1.17 7.19 LARK 7.02 N 08/22/97 0.04 17.34 0.31 0.97 6.90 LARL 13.82 N 08/22/97 0.43 11.20 0.48 1.39 13.58 LIFB 8.06 N 08/22/97 0.39 18.66 0.33 0.89 8.33 LISB 7.63 N 08/22/97 1.03 22.09 0.44 0.71 7.78 LOGN 7.40 N 08/22/97 0.61 14.84 0.24 1.46 7.53 LONF 4.77 N 08/22/97 0.80 22.06 0.17 0.85 4.30 LSBI 7.38 N 08/22/97 1.17 13.57 0.38 0.70 7.88 LSBX 20.78 N 08/22/97 0.30 8.89 0.32 1.60 18.57 LVSB 9.52 N 08/22/97 0.98 14.66 0.55 1.14 11.56 LXMO 4.46 N 08/22/97 0.48 18.04 0.22 1.52 5.43 MAFB 14.83 N 08/22/97 0.43 12.11 0.64 1.24 15.73 MARN 7.28 N 08/22/97 0.81 14.38 0.40 1.72 7.53 MASB 10.20 N 08/22/97 0.16 13.99 0.92 1.13 10.85 MBB 5.95 N 08/22/97 0.71 19.48 0.30 0.56 6.37 MBB 5.95 N 08/22/97 0.71 19.48 0.30 0.56 6.37 MBLF 6.52 N 08/22/97 0.25 18.36 0.32 0.79 6.21 MCBN 7.57 N 08/22/97 0.73 13.14 0.49 0.76 8.77 MCBS 11.06 N 08/22/97 0.15 12.71 0.59 1.18 11.85 MDBK 11.31 N 08/22/97 0.37 13.50 0.56 1.00 11.31
13 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- MECH 19.68 N 08/22/97 1.13 4.12 1.38 3.60 36.83 MERI 13.46 N 08/22/97 0.22 11.38 0.89 1.27 15.91 METF 13.86 N 08/22/97 0.49 13.79 0.34 0.59 15.15 MFBC 5.53 N 08/22/97 -- 17.50 0.30 0.85 6.06 MFFC 4.30 N 08/22/97 0.15 22.71 0.15 0.70 5.11 MFLR 9.66 N 08/22/97 1.02 12.16 0.37 1.08 11.33 MFSL 10.76 N 08/22/97 0.44 15.34 0.71 0.80 9.60 MIVI 5.77 N 08/22/97 0.28 14.90 0.26 1.18 6.82 MLBC 9.23 N 08/22/97 0.46 22.83 0.23 0.52 7.41 MSBF 7.85 N 08/22/97 0.06 14.67 0.23 1.43 8.39 MWBI 10.82 N 08/22/97 0.77 10.86 0.78 0.81 11.75 MWBX 17.82 N 08/22/97 0.70 11.16 0.14 1.36 18.35 MWFD 12.59 N 08/22/97 0.12 15.91 0.33 1.11 12.75 NASB 16.39 N 08/22/97 3.34 12.56 1.03 1.30 17.21 NBN 6.24 N 08/22/97 1.37 14.06 0.26 0.66 8.48 NEIB 7.43 N 08/22/97 0.40 13.09 0.32 1.20 7.88 NHTB 6.82 N 08/22/97 0.74 14.33 0.29 0.89 11.96 NMSB 7.67 N 08/22/97 0.87 21.25 0.15 0.81 8.07 NSLB 3.72 N 08/22/97 0.02 24.51 0.19 0.94 4.78 NSSB 9.60 N 08/22/97 1.29 18.94 0.33 1.06 9.55 NSSY 3.97 N 08/22/97 1.35 19.46 0.44 0.65 8.20 NTMG 6.31 N 08/22/97 1.11 25.00 0.11 0.49 7.99 NWEQ 8.16 N 08/22/97 1.25 12.89 0.32 1.02 8.96 NYB 27.70 N 08/22/97 1.09 13.25 0.58 1.63 32.18 OFCP 8.36 N 08/22/97 0.16 16.61 0.38 0.87 10.01 OHSL 7.42 N 08/22/97 0.01 14.53 0.40 0.86 7.92 PALM 7.44 N 08/22/97 2.12 15.88 0.25 0.82 9.99 PAMM 49.37 N 08/22/97 3.47 3.46 1.70 13.21 58.78 PBCI 8.63 N 08/22/97 2.14 11.79 0.44 1.37 10.69 PBKB 9.27 N 08/22/97 0.82 21.38 0.19 0.50 8.86 PCBC 5.72 N 08/22/97 -- 17.08 0.30 1.16 6.18 PCCI 12.40 N 08/22/97 1.29 12.71 0.30 1.04 14.25 PDB 3.09 N 08/22/97 0.65 20.91 0.13 1.15 6.76 PEEK 4.71 N 08/22/97 0.71 23.90 0.17 1.13 4.38 PERM 6.52 N 08/22/97 1.09 18.55 0.31 0.58 6.32 PFDC 9.55 N 08/22/97 0.34 12.89 0.48 1.53 10.08 PFFB 4.07 N 08/22/97 1.73 23.07 0.21 0.57 5.46 PFNC 12.31 N 08/22/97 1.46 16.19 0.22 0.84 15.89 PFSB 10.78 N 08/22/97 0.59 13.18 0.55 0.83 11.06 PHBK 16.17 N 08/22/97 0.83 14.60 0.64 1.30 16.19 PHFC 6.03 N 08/22/97 1.60 19.38 0.25 0.73 6.50 PKPS 6.52 N 08/22/97 3.81 20.66 0.09 0.58 6.85 PMFI 3.34 N 08/22/97 0.39 21.88 0.23 0.45 5.30 PRBC 4.97 N 08/22/97 0.30 16.20 0.27 0.68 5.98 PSBK 11.84 N 08/22/97 0.84 13.28 0.56 0.97 11.59 PTRS 9.48 N 08/22/97 0.50 9.23 0.65 1.06 11.83 PULS 13.51 N 08/22/97 0.57 11.39 0.45 1.10 13.79 PVFC 19.93 N 08/22/97 0.90 13.36 0.40 1.24 17.94 PVSA 14.91 N 08/22/97 0.27 11.79 0.62 1.07 14.75 PWBC 8.86 N 08/22/97 0.65 15.16 0.27 0.71 9.02 QCBC 6.72 N 08/22/97 1.31 17.29 0.30 0.70 7.87 QCFB 8.76 N 08/22/97 0.27 14.17 0.45 1.55 8.53 QCSB 11.15 N 08/22/97 0.57 24.07 0.54 1.54 12.67 RARB 13.25 N 08/22/97 0.29 15.03 0.37 0.99 12.53 REDF 8.06 N 08/22/97 2.19 12.69 0.33 1.06 12.65 RELY 10.51 N 08/22/97 0.77 15.63 0.48 0.90 11.10 ROSE 14.28 N 08/22/97 0.45 15.55 0.44 0.88 14.63 SFED 6.18 N 08/22/97 0.68 21.16 0.23 0.63 5.07
14 Exhibit II.1 -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- SFFC 7.36 N 08/22/97 NA 12.79 0.43 1.55 8.78 SFIN 9.33 N 08/22/97 0.38 14.20 0.33 0.82 8.78 SFSB 8.52 N 08/22/97 0.48 15.99 0.43 0.55 8.49 SFSL 14.39 N 08/22/97 0.28 18.51 0.26 1.35 14.52 SISB 18.99 N 08/22/97 0.43 14.42 0.52 0.83 11.63 SKAN 10.07 N 08/22/97 1.46 12.23 0.46 0.72 10.38 SMBC 6.29 N 08/22/97 1.10 17.25 0.25 0.96 6.06 SOBI 3.28 N 08/22/97 0.25 22.57 0.18 0.67 4.04 SOPN 6.96 N 08/22/97 0.08 15.92 0.32 1.80 7.60 SOSA 13.61 N 08/22/97 6.28 9.06 0.10 1.33 21.58 SPBC 11.66 N 08/22/97 0.21 15.63 0.36 1.11 12.61 STFR 8.11 N 08/22/97 0.16 15.57 0.57 0.79 9.57 STSA 7.84 N 08/22/97 0.61 17.88 0.25 0.49 8.97 SWBI 9.54 N 08/22/97 0.30 14.91 0.35 1.02 9.50 SWCB 12.17 N 08/22/97 0.81 14.36 0.57 0.91 11.42 TBK 11.78 N 08/22/97 2.13 14.69 0.30 0.83 11.73 THR 5.71 N 08/22/97 1.21 18.61 0.22 0.77 5.49 THRD 6.42 N 08/22/97 0.33 16.92 0.29 0.73 6.60 TPNZ 5.63 N 08/22/97 1.28 24.22 0.18 0.84 4.85 TRIC 6.79 N 08/22/97 -- 14.58 0.39 1.08 7.09 TSH 6.97 N 08/22/97 0.27 16.29 0.28 0.93 6.88 TWIN 5.88 N 08/22/97 0.08 16.46 0.30 0.91 7.08 UBMT 5.74 N 08/22/97 0.39 19.58 0.30 1.39 5.81 USAB 4.05 N 08/22/97 0.67 17.71 0.12 0.80 6.93 VABF 6.82 N 08/22/97 0.68 20.59 0.17 0.54 7.98 WAMU 12.58 N 08/22/97 0.81 16.82 0.93 0.98 18.47 WBST 13.33 N 08/22/97 0.85 13.02 0.96 0.82 16.31 WCBI 9.13 N 08/22/97 0.60 15.85 0.41 1.43 9.40 WEFC 7.56 N 08/22/97 0.21 14.40 0.28 1.06 7.44 WFI 12.23 N 08/22/97 0.29 11.58 0.34 0.86 12.00 WFSL 15.84 N 08/22/97 0.73 11.77 0.56 1.87 15.71 WHGB 3.72 N 08/22/97 0.15 22.43 0.17 0.93 4.37 WRNB 18.86 N 08/22/97 1.08 10.67 0.41 1.85 18.09 WSB 8.66 N 08/22/97 NA 16.88 0.10 0.72 8.67 WSFS 23.57 N 08/22/97 1.66 10.98 0.33 1.12 21.27 WSTR 6.48 N 08/22/97 0.17 15.54 0.35 0.83 7.53 WVFC 10.73 N 08/22/97 0.30 13.69 0.50 1.21 10.88 WWFC 8.78 N 08/22/97 -- 14.36 0.37 0.86 9.42 WYNE 6.16 N 08/22/97 0.91 22.22 0.27 0.83 6.02 YFCB 6.81 N 08/22/97 0.57 15.97 0.27 1.13 7.48 YFED 9.46 N 08/22/97 1.24 17.65 0.34 0.84 9.96 271 Maximum 53.47 8.93 25.00 1.70 13.21 58.78 Minimum 0.35 -- 3.46 0.09 0.31 3.51 Average 9.75 0.76 15.81 0.40 1.05 10.45 Median 8.76 0.48 15.45 0.34 0.93 9.40
15 Exhibit II.2 -- Selected Publicly Held Mid-Atlantic Thrifts
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- ALBC Albion Banc Corp. Albion NY MA SAIF NASDAQ 07/26/93 23.250 6.12 ALBK ALBANK Financial Corp. Albany NY MA SAIF NASDAQ 04/01/92 38.000 487.34 ASFC Astoria Financial Corp. Lake Success NY MA SAIF NASDAQ 11/18/93 46.750 973.76 CATB Catskill Financial Corp. Catskill NY MA BIF NASDAQ 04/18/96 16.500 77.88 CVAL Chester Valley Bancorp Inc. Downingtown PA MA SAIF NASDAQ 03/27/87 24.000 49.41 DME Dime Bancorp Inc. New York NY MA BIF NYSE 08/19/86 19.188 1,990.16 EQSB Equitable Federal Savings Bank Wheaton MD MA SAIF NASDAQ 09/10/93 37.500 22.58 ESBK Elmira Savings Bank (The) Elmira NY MA BIF NASDAQ 03/01/85 23.250 16.42 FBBC First Bell Bancorp Inc. Pittsburgh PA MA SAIF NASDAQ 06/29/95 16.500 107.43 FBER 1st Bergen Bancorp Wood-Ridge NJ MA SAIF NASDAQ 04/01/96 17.750 53.26 FFIC Flushing Financial Corp. Flushing NY MA BIF NASDAQ 11/21/95 20.250 161.57 FIBC Financial Bancorp Inc. Long Island City NY MA SAIF NASDAQ 08/17/94 19.500 33.58 FKFS First Keystone Financial Media PA MA SAIF NASDAQ 01/26/95 27.500 33.77 FMCO FMS Financial Corporation Burlington NJ MA SAIF NASDAQ 12/14/88 27.250 65.06 FSBI Fidelity Bancorp Inc. Pittsburgh PA MA SAIF NASDAQ 06/24/88 21.250 32.93 FSPG First Home Bancorp Inc. Pennsville NJ MA SAIF NASDAQ 04/20/87 20.000 54.17 GAF GA Financial Inc. Pittsburgh PA MA SAIF AMSE 03/26/96 17.563 140.24 GPT GreenPoint Financial Corp. New York NY MA BIF NYSE 01/28/94 63.000 2,728.72 HARL Harleysville Savings Bank Harleysville PA MA SAIF NASDAQ 08/04/87 27.250 45.03 HAVN Haven Bancorp Inc. Woodhaven NY MA SAIF NASDAQ 09/23/93 37.125 162.73 HRBF Harbor Federal Bancorp Inc. Baltimore MD MA SAIF NASDAQ 08/12/94 19.125 32.39 IFSB Independence Federal Savings Washington DC MA SAIF NASDAQ 06/06/85 13.156 16.84 JSB JSB Financial Inc. Lynbrook NY MA BIF NYSE 06/27/90 44.688 441.25 LARL Laurel Capital Group Inc. Allison Park PA MA SAIF NASDAQ 02/20/87 21.500 31.02 LISB Long Island Bancorp Inc. Melville NY MA SAIF NASDAQ 04/18/94 38.875 931.77 LVSB Lakeview Financial West Paterson NJ MA SAIF NASDAQ 12/22/93 32.250 73.13 MBB MSB Bancorp Inc. Goshen NY MA BIF AMSE 09/03/92 23.375 66.48 MBB MSB Bancorp, Inc. Goshen NY MA BIF AMSE NA 23.375 66.48 MFSL Maryland Federal Bancorp Hyattsville MD MA SAIF NASDAQ 06/02/87 43.563 139.84 MLBC ML Bancorp Inc. Villanova PA MA SAIF NASDAQ 08/11/94 21.000 221.89 NYB New York Bancorp Inc. Douglaston NY MA SAIF NYSE 01/28/88 30.750 663.93 PBCI Pamrapo Bancorp Inc. Bayonne NJ MA SAIF NASDAQ 11/14/89 20.750 58.99 PEEK Peekskill Financial Corp. Peekskill NY MA SAIF NASDAQ 12/29/95 16.250 51.89 PFNC Progress Financial Corporation Blue Bell PA MA SAIF NASDAQ 07/18/83 14.250 54.35 PFSB PennFed Financial Services Inc West Orange NJ MA SAIF NASDAQ 07/15/94 29.000 139.84 PHFC Pittsburgh Home Financial Corp Pittsburgh PA MA SAIF NASDAQ 04/01/96 19.375 38.16 PKPS Poughkeepsie Financial Corp. Poughkeepsie NY MA SAIF NASDAQ 11/19/85 7.438 93.68 PRBC Prestige Bancorp Inc. Pleasant Hills PA MA SAIF NASDAQ 06/27/96 17.500 16.01 PSBK Progressive Bank Inc. Fishkill NY MA BIF NASDAQ 08/01/84 29.750 113.67 PULS Pulse Bancorp South River NJ MA SAIF NASDAQ 09/18/86 20.500 63.15 PVSA Parkvale Financial Corporation Monroeville PA MA SAIF NASDAQ 07/16/87 29.250 118.61 PWBC PennFirst Bancorp Inc. Ellwood City PA MA SAIF NASDAQ 06/13/90 16.375 86.88 QCSB Queens County Bancorp Inc. Flushing NY MA BIF NASDAQ 11/23/93 52.000 528.06 RARB Raritan Bancorp Inc. Raritan NJ MA BIF NASDAQ 03/01/87 22.250 53.66 RELY Reliance Bancorp Inc. Garden City NY MA SAIF NASDAQ 03/31/94 30.000 263.29 ROSE TR Financial Corp. Garden City NY MA BIF NASDAQ 06/29/93 27.375 482.04 SFED SFS Bancorp Inc. Schenectady NY MA SAIF NASDAQ 06/30/95 19.469 23.97 SFIN Statewide Financial Corp. Jersey City NJ MA SAIF NASDAQ 10/02/95 18.750 88.32 SKAN Skaneateles Bancorp Inc. Skaneateles NY MA BIF NASDAQ 06/02/86 22.500 21.47 THRD TF Financial Corporation Newtown PA MA SAIF NASDAQ 07/13/94 19.625 80.13 TPNZ Tappan Zee Financial Inc. Tarrytown NY MA SAIF NASDAQ 10/05/95 17.438 26.11 USAB USABancshares, Inc. Philadelphia PA MA BIF NASDAQ NA 8.500 6.24 WHGB WHG Bancshares Corp. Lutherville MD MA SAIF NASDAQ 04/01/96 15.250 22.30 WSB Washington Savings Bank, FSB Waldorf MD MA SAIF AMSE NA 6.750 28.67 WSFS WSFS Financial Corporation Wilmington DE MA BIF NASDAQ 11/26/86 14.500 180.11 WVFC WVS Financial Corp. Pittsburgh PA MA SAIF NASDAQ 11/29/93 27.375 47.83 WWFC Westwood Financial Corporation Westwood NJ MA SAIF NASDAQ 06/07/96 21.250 13.71
16 Exhibit II.2 -- Selected Publicly Held Mid-Atlantic Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- WYNE Wayne Bancorp Inc. Wayne NJ MA SAIF NASDAQ 06/27/96 24.000 50.88 YFCB Yonkers Financial Corporation Yonkers NY MA SAIF NASDAQ 04/18/96 17.250 52.11 YFED York Financial Corp. York PA MA SAIF NASDAQ 02/01/84 24.000 168.20 Maximum 63.000 2,728.720 Minimum 6.750 6.120 Average 24.396 214.992 Median 21.375 64.105
17 Exhibit II.2 -- Selected Publicly Held Mid-Atlantic Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- ALBC 24.73 98.43 98.43 8.77 1.38 66,316 8.90 8.90 0.94 0.38 ALBK 14.67 147.00 168.22 13.53 1.58 3,602,227 9.20 8.14 2.59 1.04 ASFC 16.52 163.52 194.71 12.80 1.28 7,664,495 7.83 6.66 2.83 0.79 CATB 20.37 109.42 109.42 27.40 1.70 284,238 25.04 25.04 0.81 1.41 CVAL 19.05 188.68 188.68 16.16 1.83 305,187 8.56 8.56 1.26 0.92 DME 14.87 187.93 197.00 9.91 0.83 20,087,176 5.27 5.04 1.29 0.70 EQSB 11.36 145.35 145.35 7.33 -- 308,197 5.04 5.04 3.30 0.73 ESBK 20.95 112.21 117.01 7.21 2.75 227,828 6.30 6.05 1.11 0.35 FBBC 14.35 153.06 153.06 15.04 2.42 714,366 9.82 9.82 1.15 1.23 FBER 25.72 131.77 131.77 18.70 0.68 284,765 14.19 14.19 0.69 0.77 FFIC 20.88 121.40 121.40 18.79 1.19 860,031 15.47 15.47 0.97 0.94 FIBC 12.34 127.04 127.70 11.89 2.05 282,485 9.36 9.32 1.58 1.00 FKFS 13.48 144.05 144.05 10.53 0.73 320,797 7.31 7.31 2.04 0.78 FMCO 12.27 178.81 182.03 11.72 0.73 554,925 6.56 6.45 2.22 1.02 FSBI 12.72 134.24 134.24 9.07 1.69 363,302 6.75 6.75 1.67 0.83 FSPG 11.30 155.64 158.23 10.37 2.00 522,396 6.66 6.56 1.77 0.97 GAF 19.73 123.25 124.56 18.70 2.73 749,748 15.18 15.04 0.89 1.12 GPT 19.27 183.83 326.93 21.34 1.59 13,300,046 10.31 6.07 3.27 1.03 HARL 13.97 204.73 204.73 13.37 1.47 336,666 6.53 6.53 1.95 1.02 HAVN 11.75 153.41 153.98 9.12 1.62 1,781,545 5.95 5.93 3.16 0.84 HRBF 20.56 116.05 116.05 14.97 2.09 216,370 12.89 12.89 0.93 0.70 IFSB 20.24 98.25 112.06 6.41 1.67 262,753 6.52 5.76 0.65 0.33 JSB 17.66 125.74 125.74 28.73 3.13 1,531,115 22.85 22.85 2.53 1.70 LARL 11.50 145.86 145.86 14.63 2.42 211,987 10.03 10.03 1.87 1.43 LISB 23.00 175.35 177.11 15.77 1.54 5,908,737 8.99 8.91 1.69 0.72 LVSB 18.43 161.98 202.58 15.42 0.78 481,646 9.52 7.76 1.75 0.95 MBB 21.85 110.52 225.19 8.17 2.57 813,902 8.92 5.36 1.07 0.51 MBB 21.85 110.52 225.19 8.17 2.57 813,902 8.92 5.36 1.07 0.51 MFSL 13.74 144.15 145.99 12.08 1.84 1,157,445 8.38 8.29 3.17 0.89 MLBC 18.58 153.51 156.25 10.71 1.91 2,071,285 6.98 6.87 1.13 0.68 NYB 15.93 397.80 397.80 20.22 1.95 3,283,653 5.08 5.08 1.93 1.45 PBCI 14.21 124.85 125.83 15.90 4.82 370,987 12.74 12.65 1.46 1.24 PEEK 21.96 110.47 110.47 28.42 2.22 182,560 25.73 25.73 0.74 1.29 PFNC 21.92 244.43 276.70 12.98 0.84 418,658 5.26 4.68 0.65 0.64 PFSB 13.88 132.84 158.82 10.58 0.97 1,321,751 7.36 6.23 2.09 0.84 PHFC 21.06 136.35 137.90 14.89 1.24 256,265 10.92 10.81 0.92 0.80 PKPS 20.66 127.15 127.15 10.64 1.34 880,196 8.37 8.37 0.36 0.54 PRBC 20.11 106.00 106.00 11.80 0.69 135,721 11.13 11.13 0.87 0.65 PSBK 13.28 151.25 169.32 12.93 2.29 878,823 8.55 7.71 2.24 0.97 PULS 11.99 150.40 150.40 12.10 3.42 520,203 8.05 8.05 1.71 1.06 PVSA 11.99 157.77 158.97 11.97 1.78 991,239 7.58 7.53 2.44 1.08 PWBC 15.16 131.63 140.80 10.63 2.00 816,954 8.08 7.59 1.08 0.66 QCSB 25.49 262.23 262.23 36.09 1.92 1,466,906 11.85 11.85 2.04 1.61 RARB 14.74 178.29 181.19 14.14 2.16 379,428 7.93 7.81 1.51 1.03 RELY 16.76 161.81 224.55 13.32 2.13 1,976,764 8.23 6.07 1.79 0.87 ROSE 16.59 203.53 203.53 13.57 2.19 3,551,783 6.20 6.20 1.65 0.89 SFED 17.70 111.63 111.63 13.92 1.44 172,849 12.47 12.47 1.10 0.79 SFIN 13.69 134.89 135.18 13.12 2.35 673,214 9.73 9.71 1.37 0.90 SKAN 13.16 126.48 130.51 8.66 1.78 247,697 6.85 6.65 1.71 0.68 THRD 17.37 104.06 118.65 12.51 2.04 640,746 11.12 9.89 1.13 0.73 TPNZ 21.01 123.59 123.59 21.03 1.61 124,150 17.02 17.02 0.83 1.00 USAB 34.00 131.99 134.49 12.92 -- 48,303 10.76 10.58 0.25 0.55 WHGB 26.29 107.70 107.70 22.24 1.31 100,235 20.66 20.66 0.58 0.85 WSB 16.46 133.66 133.66 11.10 1.48 258,330 8.30 8.30 0.41 0.73 WSFS 10.43 229.43 231.26 11.94 -- 1,508,540 5.20 5.16 1.39 1.34 WVFC 13.04 145.46 145.46 16.23 2.92 294,693 11.16 11.16 2.10 1.32 WWFC 15.98 134.84 151.35 12.31 0.94 111,394 9.13 8.21 1.33 0.84
18 Exhibit II.2 -- Selected Publicly Held Mid-Atlantic Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- WYNE 21.62 145.99 145.99 19.49 0.83 261,027 13.35 13.35 1.11 0.92 YFCB 16.75 121.99 121.99 18.18 1.39 288,089 14.90 14.90 1.03 1.15 YFED 19.05 168.07 168.07 14.47 2.50 1,162,393 8.61 8.61 1.26 0.77 Maximum 34.00 397.80 397.80 36.09 4.82 20,087,176 25.73 25.73 3.30 1.70 Minimum 10.43 98.25 98.43 6.41 -- 48,303 5.04 4.68 0.25 0.33 Average 17.50 150.04 161.75 14.42 1.72 1,490,157 10.11 9.69 1.51 0.91 Median 16.76 140.20 145.93 13.05 1.70 500,925 8.91 8.25 1.35 0.88
19 Exhibit II.2 -- Selected Publicly Held Mid-Atlantic Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- ALBC 3.90 N 08/22/97 0.60 12.92 0.45 0.69 7.68 ALBK 11.23 N 08/22/97 0.71 14.18 0.67 1.05 11.37 ASFC 10.05 N 08/22/97 0.45 17.19 0.68 0.75 9.80 CATB 5.10 N 08/22/97 0.47 19.64 0.21 1.35 5.24 CVAL 10.24 N 08/22/97 0.47 17.65 0.34 0.96 10.98 DME 13.30 N 08/22/97 1.57 19.19 0.25 0.54 10.16 EQSB 14.49 N 08/22/97 0.15 11.43 0.82 0.70 13.83 ESBK 5.53 N 08/22/97 0.65 16.61 0.35 0.43 6.85 FBBC 8.92 N 08/22/97 0.07 14.73 0.28 0.98 10.10 FBER 4.69 N 08/22/97 0.83 21.13 0.21 0.85 5.57 FFIC 5.62 N 08/22/97 0.29 17.46 0.29 1.01 6.49 FIBC 10.16 N 08/22/97 1.71 12.19 0.40 0.96 10.04 FKFS 10.49 N 08/22/97 1.60 12.50 0.55 0.78 10.93 FMCO 15.76 N 08/22/97 1.06 11.35 0.60 1.05 16.36 FSBI 11.94 N 08/22/97 0.31 13.28 0.40 0.75 10.90 FSPG 14.79 N 08/22/97 0.64 12.50 0.40 0.86 12.91 GAF 5.80 N 08/22/97 0.12 16.89 0.26 1.10 6.97 GPT 9.59 N 08/22/97 2.89 17.50 0.90 1.12 10.49 HARL 16.03 N 08/22/97 -- 12.85 0.53 1.09 16.89 HAVN 13.80 N 08/22/97 0.74 18.56 0.50 0.53 8.81 HRBF 5.41 N 08/22/97 0.05 19.13 0.25 0.74 5.80 IFSB 4.92 N 08/22/97 2.03 16.45 0.20 0.39 5.96 JSB 7.77 N 08/22/97 NA 16.19 0.69 1.85 8.24 LARL 13.82 N 08/22/97 0.43 11.20 0.48 1.39 13.58 LISB 7.63 N 08/22/97 1.03 22.09 0.44 0.71 7.78 LVSB 9.52 N 08/22/97 0.98 14.66 0.55 1.14 11.56 MBB 5.95 N 08/22/97 0.71 19.48 0.30 0.56 6.37 MBB 5.95 N 08/22/97 0.71 19.48 0.30 0.56 6.37 MFSL 10.76 N 08/22/97 0.44 15.34 0.71 0.80 9.60 MLBC 9.23 N 08/22/97 0.46 22.83 0.23 0.52 7.41 NYB 27.70 N 08/22/97 1.09 13.25 0.58 1.63 32.18 PBCI 8.63 N 08/22/97 2.14 11.79 0.44 1.37 10.69 PEEK 4.71 N 08/22/97 0.71 23.90 0.17 1.13 4.38 PFNC 12.31 N 08/22/97 1.46 16.19 0.22 0.84 15.89 PFSB 10.78 N 08/22/97 0.59 13.18 0.55 0.83 11.06 PHFC 6.03 N 08/22/97 1.60 19.38 0.25 0.73 6.50 PKPS 6.52 N 08/22/97 3.81 20.66 0.09 0.58 6.85 PRBC 4.97 N 08/22/97 0.30 16.20 0.27 0.68 5.98 PSBK 11.84 N 08/22/97 0.84 13.28 0.56 0.97 11.59 PULS 13.51 N 08/22/97 0.57 11.39 0.45 1.10 13.79 PVSA 14.91 N 08/22/97 0.27 11.79 0.62 1.07 14.75 PWBC 8.86 N 08/22/97 0.65 15.16 0.27 0.71 9.02 QCSB 11.15 N 08/22/97 0.57 24.07 0.54 1.54 12.67 RARB 13.25 N 08/22/97 0.29 15.03 0.37 0.99 12.53 RELY 10.51 N 08/22/97 0.77 15.63 0.48 0.90 11.10 ROSE 14.28 N 08/22/97 0.45 15.55 0.44 0.88 14.63 SFED 6.18 N 08/22/97 0.68 21.16 0.23 0.63 5.07 SFIN 9.33 N 08/22/97 0.38 14.20 0.33 0.82 8.78 SKAN 10.07 N 08/22/97 1.46 12.23 0.46 0.72 10.38 THRD 6.42 N 08/22/97 0.33 16.92 0.29 0.73 6.60 TPNZ 5.63 N 08/22/97 1.28 24.22 0.18 0.84 4.85 USAB 4.05 N 08/22/97 0.67 17.71 0.12 0.80 6.93 WHGB 3.72 N 08/22/97 0.15 22.43 0.17 0.93 4.37 WSB 8.66 N 08/22/97 NA 16.88 0.10 0.72 8.67 WSFS 23.57 N 08/22/97 1.66 10.98 0.33 1.12 21.27 WVFC 10.73 N 08/22/97 0.30 13.69 0.50 1.21 10.88 WWFC 8.78 N 08/22/97 -- 14.36 0.37 0.86 9.42
20 Exhibit II.2 -- Selected Publicly Held Mid-Atlantic Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- WYNE 6.16 N 08/22/97 0.91 22.22 0.27 0.83 6.02 YFCB 6.81 N 08/22/97 0.57 15.97 0.27 1.13 7.48 YFED 9.46 N 08/22/97 1.24 17.65 0.34 0.84 9.96 Maximum 27.70 3.81 24.22 0.90 1.85 32.18 Minimum 3.72 -- 10.98 0.09 0.39 4.37 Average 9.70 0.83 16.39 0.39 0.91 9.99 Median 9.40 0.65 16.19 0.36 0.85 9.70
21 Exhibit II.3 -- Selected Publicly Held Maryland Thrifts
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- EQSB Equitable Federal Savings Bank Wheaton MD MA SAIF NASDAQ 09/10/93 37.500 22.58 HRBF Harbor Federal Bancorp Inc. Baltimore MD MA SAIF NASDAQ 08/12/94 19.125 32.39 MFSL Maryland Federal Bancorp Hyattsville MD MA SAIF NASDAQ 06/02/87 43.563 139.84 WHGB WHG Bancshares Corp. Lutherville MD MA SAIF NASDAQ 04/01/96 15.250 22.30 WSB Washington Savings Bank, FSB Waldorf MD MA SAIF AMSE NA 6.750 28.67 Maximum 43.563 139.840 Minimum 6.750 22.300 Average 24.438 49.156 Median 19.125 28.670
22 Exhibit II.3 -- Selected Publicly Held Maryland Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- EQSB 11.36 145.35 145.35 7.33 -- 308,197 5.04 5.04 3.30 0.73 HRBF 20.56 116.05 116.05 14.97 2.09 216,370 12.89 12.89 0.93 0.70 MFSL 13.74 144.15 145.99 12.08 1.84 1,157,445 8.38 8.29 3.17 0.89 WHGB 26.29 107.70 107.70 22.24 1.31 100,235 20.66 20.66 0.58 0.85 WSB 16.46 133.66 133.66 11.10 1.48 258,330 8.30 8.30 0.41 0.73 Maximum 26.29 145.35 145.99 22.24 2.09 1,157,445 20.66 20.66 3.30 0.89 Minimum 11.36 107.70 107.70 7.33 -- 100,235 5.04 5.04 0.41 0.70 Average 17.68 129.38 129.75 13.54 1.34 408,115 11.05 11.04 1.68 0.78 Median 16.46 133.66 133.66 12.08 1.48 258,330 8.38 8.30 0.93 0.73
23 Exhibit II.3 -- Selected Publicly Held Maryland Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- EQSB 14.49 N 08/22/97 0.15 11.43 0.82 0.70 13.83 HRBF 5.41 N 08/22/97 0.05 19.13 0.25 0.74 5.80 MFSL 10.76 N 08/22/97 0.44 15.34 0.71 0.80 9.60 WHGB 3.72 N 08/22/97 0.15 22.43 0.17 0.93 4.37 WSB 8.66 N 08/22/97 NA 16.88 0.10 0.72 8.67 Maximum 14.49 0.44 22.43 0.82 0.93 13.83 Minimum 3.72 0.05 11.43 0.10 0.70 4.37 Average 8.61 0.20 17.04 0.41 0.78 8.45 Median 8.66 0.15 16.88 0.25 0.74 8.67
24 Exhibit II.4 -- Comparatives General
Total Current Current Number Assets Stock Market of ($000) Price Value Ticker Short Name City State Offices Mst RctQ IPO Date ($) ($M) - ------ ---------- ---- ----- ------- -------- -------- ------- ------- ALBC Albion Banc Corp. Albion NY 2 66,316 07/26/93 23.25 6.12 CLAS Classic Bancshares Inc. Ashland KY 3 130,525 12/29/95 14.00 18.27 FFSL First Independence Corp. Independence KS 2 110,876 10/08/93 12.88 12.77 GUPB GFSB Bancorp Inc. Gallup NM 1 86,911 06/30/95 18.75 15.08 HHFC Harvest Home Financial Corp. Cheviot OH 3 87,596 10/10/94 11.75 10.75 INCB Indiana Community Bank SB Lebanon IN 3 91,329 12/15/94 15.25 14.06 MWBI Midwest Bancshares Inc. Burlington IA 4 146,542 11/12/92 33.88 11.53 NSLB NS&L Bancorp Inc. Neosho MO 2 59,711 06/08/95 18.63 13.18 PRBC Prestige Bancorp Inc. Pleasant Hills PA 3 135,721 06/27/96 17.50 16.01 RIVR River Valley Bancorp Madison IN 6 140,442 12/20/96 16.88 20.09 SOBI Sobieski Bancorp Inc. South Bend IN 3 79,080 03/31/95 16.25 12.34 TPNZ Tappan Zee Financial Inc. Tarrytown NY 1 124,150 10/05/95 17.44 26.11 Maximum 6 146,542 33.88 26.11 Minimum 1 59,711 11.75 6.12 Average 3 104,933 18.04 14.69 Median 3 101,103 17.16 13.62
25 Exhibit II.5 -- Comparatives Balance Sheet
Total Mortgage- Total Cash and Cash & Inv. Backed MBS's Net Net Loans Assets Investments % of Assets Securities % of Assets Loans % of Assets ($000) ($000) (%) ($000) (%) ($000) (%) Ticker Short Name Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ - ------ ---------- -------- ----------- ----------- ---------- ----------- -------- ----------- ALBC Albion Banc Corp. 66,316 15,377 23.19 8,772 13.23 47,090 71.01 CLAS Classic Bancshares Inc. 130,525 35,719 27.37 NA NA 86,140 66.00 FFSL First Independence Corp. 110,876 36,061 32.52 16,488 14.87 72,513 65.40 GUPB GFSB Bancorp Inc. 86,911 40,582 46.69 32,789 37.73 45,026 51.81 HHFC Harvest Home Financial Corp. 87,596 40,835 46.62 NA NA 45,063 51.44 INCB Indiana Community Bank SB 91,329 16,913 18.52 2,828 3.10 71,330 78.10 MWBI Midwest Bancshares Inc. 146,542 55,236 37.69 29,167 19.90 87,221 59.52 NSLB NS&L Bancorp Inc. 59,711 24,788 41.51 4,750 7.95 33,238 55.66 PRBC Prestige Bancorp Inc. 135,721 41,294 30.43 12,170 8.97 90,840 66.93 RIVR River Valley Bancorp 140,442 22,829 16.26 10,347 7.37 112,558 80.15 SOBI Sobieski Bancorp Inc. 79,080 18,771 23.74 14,182 17.93 57,698 72.96 TPNZ Tappan Zee Financial Inc. 124,150 64,801 52.20 NA NA 56,122 45.20 Maximum 146,542 64,801 52.20 32,789 37.73 112,558 80.15 Minimum 59,711 15,377 16.26 2,828 3.10 33,238 45.20 Average 104,933 34,434 33.06 14,610 14.56 67,070 63.68 Median 101,103 35,890 31.47 12,170 13.23 64,514 65.70
Exhibit II.5 -- Comparatives Balance Sheet (Continued)
Invest & Foreclosed Total Other Total Total Dep. Total Borrowings Other Real Estate Intangibles Assets Deposits % of Assets Borrowings % of Assets Liabilities ($000) ($000) ($000) ($000) (%) ($000) (%) ($000) Ticker Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ - ------ ----------- ----------- -------- -------- ----------- ---------- ----------- ----------- ALBC 105 -- 2,855 50,306 75.86 9,270 13.98 835 CLAS 370 2,996 5,300 99,108 75.93 10,977 8.41 1,031 FFSL 58 -- 2,244 74,275 66.99 23,300 21.01 1,734 GUPB -- -- 1,303 55,285 63.61 16,450 18.93 1,010 HHFC -- -- 1,698 57,072 65.15 19,650 22.43 525 INCB -- -- 3,086 79,413 86.95 -- -- 604 MWBI 473 -- 3,612 106,786 72.87 28,500 19.45 1,133 NSLB -- -- 1,685 44,018 73.72 3,000 5.02 1,014 PRBC 10 -- 3,577 88,896 65.50 30,281 22.31 1,435 RIVR 82 259 4,416 116,020 82.61 5,000 3.56 2,018 SOBI -- -- 2,611 58,996 74.60 7,100 8.98 803 TPNZ 122 -- 3,105 100,866 81.25 -- -- 2,158 Maximum 473 2,996 5,300 116,020 86.95 30,281 22.43 2,158 Minimum -- -- 1,303 44,018 63.61 -- -- 525 Average 102 271 2,958 77,587 73.75 12,794 12.01 1,192 Median 34 -- 2,971 76,844 74.16 10,124 11.48 1,023
26 Exhibit II.5 -- Comparatives Balance Sheet (Continued)
Regulatory Regulatory Regulatory Total Common Total Tangible Core Total Tangible Liabilities Equity Equity Capital Capital Capital Capital/ ($000) ($000) ($000) ($000) ($000) ($000) Tangible Ticker Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Assets (%) - ------ ----------- -------- -------- ---------- ---------- ---------- ---------- ALBC 60,411 5,905 5,905 NA NA NA 8.22 CLAS 111,116 19,409 19,409 7,676 7,676 8,003 NA FFSL 99,309 11,567 11,567 9,130 9,130 9,758 9.87 GUPB 72,745 14,166 14,166 -- NA NA 14.54 HHFC 77,247 10,349 10,349 NA NA NA NA INCB 80,017 11,312 11,312 11,311 11,311 11,821 NA MWBI 136,419 10,123 10,123 8,760 8,760 9,470 6.09 NSLB 48,032 11,679 11,679 8,650 8,650 8,692 13.83 PRBC 120,612 15,109 15,109 15,349 15,349 15,698 11.19 RIVR 123,038 17,404 17,404 12,154 12,154 12,608 NA SOBI 66,899 12,181 12,181 8,800 8,800 9,000 11.85 TPNZ 103,024 21,126 21,126 16,763 16,763 17,338 14.22 Maximum 136,419 21,126 21,126 16,763 16,763 17,338 14.54 Minimum 48,032 5,905 5,905 -- 7,676 8,003 6.09 Average 91,572 13,361 13,361 9,859 10,955 11,376 11.23 Median 89,663 11,930 11,930 8,965 9,130 9,758 11.52
Exhibit II.5 -- Comparatives Balance Sheet (Continued)
Loan Loss Publicly Tangible Earn Assets/ Full-Time Loans Core Risk-Based NPAs/ Reserves/ Reserves/ Reported Publicly Rep Int Bearing Equivalent Serviced Capital/ Capital/ Assets Assets NPLs Book Value Book Value Liabilities Employees For Others Adj Tangible Risk-Weightd (%) (%) (%) ($) ($) (%) (Actual) ($000) Ticker Assets (%) Assets (%) Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ - ------ ------------ ------------ -------- --------- --------- ---------- ------------ ------------ ---------- ---------- ALBC 8.22 16.67 0.60 0.47 104.30 23.62 23.62 107.07 27 10,947 CLAS NA NA 0.66 0.62 165.98 14.87 12.57 111.39 NA -- FFSL 9.87 23.77 0.37 0.60 187.11 11.60 11.60 111.21 24 2,316 GUPB 14.54 36.76 0.18 0.36 199.36 16.88 16.88 120.83 16 -- HHFC NA NA 0.11 0.13 117.00 11.31 11.31 112.43 NA NA INCB NA NA NA 0.56 NA 12.27 12.27 112.01 48 868 MWBI 6.09 15.27 0.77 0.48 109.06 29.06 29.06 105.60 39 -- NSLB 13.83 38.51 0.02 0.07 466.67 16.51 16.51 123.52 NA -- PRBC 11.19 25.63 0.30 0.26 87.47 16.51 16.51 111.16 33 -- RIVR NA NA 0.49 0.84 193.60 14.62 14.40 107.97 55 NA SOBI 11.85 28.52 0.25 0.25 102.04 17.52 17.52 117.19 22 -- TPNZ 14.22 38.00 1.28 0.54 45.58 14.11 14.11 123.01 14 NA Maximum 14.54 38.51 1.28 0.84 466.67 29.06 29.06 123.52 55 10,947 Minimum 6.09 15.27 0.02 0.07 45.58 11.31 11.31 105.60 14 -- Average 11.23 27.89 0.46 0.43 161.65 16.57 16.36 113.62 31 1,570 Median 11.52 27.08 0.37 0.48 117.00 15.69 15.46 111.70 27 --
27 Exhibit II.6 -- Comparatives Operations
Net Income Return on Core Average Before Return on Avg Assets Income/ Return on Assets Net Income Extra Items Avg Assets Before Extra Avg Assets Avg Equity ($000) ($000) ($000) (%) (%) (%) (%) Ticker Short Name LTM LTM LTM LTM LTM LTM LTM - ------ ---------- ------- ---------- ----------- ---------- ------------ ---------- ---------- ALBC Albion Banc Corp. 60,934 55 55 0.09 0.09 0.38 0.93 CLAS Classic Bancshares Inc. 123,944 665 665 0.54 0.54 0.72 3.46 FFSL First Independence Corp. 108,915 467 467 0.43 0.43 0.69 3.87 GUPB GFSB Bancorp Inc. 78,351 578 578 0.74 0.74 0.93 3.86 HHFC Harvest Home Financial Corp. 81,870 243 243 0.30 0.30 0.57 2.31 INCB Indiana Community Bank SB 90,855 150 150 0.17 0.17 0.50 1.29 MWBI Midwest Bancshares Inc. 139,312 631 631 0.45 0.45 0.75 6.56 NSLB NS&L Bancorp Inc. 58,716 290 290 0.49 0.49 0.77 2.39 PRBC Prestige Bancorp Inc. 117,057 431 431 0.37 0.37 0.65 2.83 RIVR River Valley Bancorp NA NA NA NA NA NA NA SOBI Sobieski Bancorp Inc. 79,053 225 225 0.28 0.28 0.57 1.64 TPNZ Tappan Zee Financial Inc. 119,994 866 866 0.72 0.72 1.00 4.06 Maximum 139,312 866 866 0.74 0.74 1.00 6.56 Minimum 58,716 55 55 0.09 0.09 0.38 0.93 Average 96,273 418 418 0.42 0.42 0.68 3.02 Median 90,855 431 431 0.43 0.43 0.69 2.83
Exhibit II.6 -- Comparatives Operations (Continued)
Return on Core Loan Loan Loss Total Total Net Loan Common Avg Equity Income/ Loss Prov. as % of Noninterest Noninterest Chargeoffs/ LTM EPS Dividends Before Extra Avg Equity Provision Avg Assets Income Expense Avg Loans After Extra Per Share (%) (%) ($000) (%) ($000) ($000) (%) ($) ($) Ticker LTM LTM LTM LTM LTM LTM LTM LTM LTM - ------ ------------ ---------- --------- ------------- ----------- ----------- ----------- ----------- --------- ALBC 0.93 3.90 140 0.23 250 1,925 0.16 0.22 0.31 CLAS 3.46 4.64 138 0.11 309 3,039 NA 0.55 0.20 FFSL 3.87 6.20 -- -- 234 2,115 0.03 0.45 0.23 GUPB 3.86 4.89 21 0.03 57 1,505 0.05 0.67 0.75 HHFC 2.31 4.44 7 0.01 60 1,680 -- 0.26 3.40 INCB 1.29 3.92 460 0.51 870 3,546 0.54 0.15 3.36 MWBI 6.56 10.82 48 0.03 298 2,536 -- 1.69 0.58 NSLB 2.39 3.72 (1) (0.00) 197 1,334 -- 0.44 0.50 PRBC 2.83 4.97 70 0.06 319 2,811 0.03 0.51 0.06 RIVR NA NA NA NA NA NA NA NA NA SOBI 1.64 3.28 -- -- 189 2,030 -- 0.29 0.07 TPNZ 4.06 5.63 74 0.06 139 2,886 0.11 0.60 0.20 Maximum 6.56 10.82 460 0.51 870 3,546 0.54 1.69 3.40 Minimum 0.93 3.28 (1) (0.00) 57 1,334 -- 0.15 0.06 Average 3.02 5.13 87 0.09 266 2,310 0.09 0.53 0.88 Median 2.83 4.64 48 0.03 234 2,115 0.03 0.45 0.31
28 Exhibit II.6 -- Comparatives Operations (Continued)
Dividend Interest Interest Net Interest Gain on Real Noninterest G&A Noninterest Payout Income/ Expense/ Income/ Sale/ Estate Income/ Expense/ Expense/ Ratio Avg Assets Avg Assets Avg Assets Avg Assets Expense Avg Assets Avg Assets Avg Assets (%) (%) (%) (%) (%) ($000) (%) (%) (%) Ticker LTM LTM LTM LTM LTM LTM LTM LTM LTM - ------ -------- ---------- ---------- ------------ ---------- ------- ----------- ---------- ----------- ALBC 140.91 7.52 4.02 3.50 0.01 (39.00) 0.41 3.22 3.16 CLAS 36.36 6.69 3.36 3.33 0.06 4.00 0.25 2.37 2.45 FFSL 50.00 7.34 4.55 2.78 -- 6.00 0.21 1.94 1.94 GUPB 111.94 7.30 4.01 3.29 0.02 -- 0.07 1.92 1.92 HHFC NM 7.08 4.25 2.83 0.01 -- 0.07 2.05 2.05 INCB NM 7.77 3.54 4.23 -- -- 0.96 3.90 3.90 MWBI 34.32 7.42 4.60 2.82 0.03 (30.00) 0.21 1.84 1.82 NSLB 113.64 6.48 3.41 3.07 0.05 -- 0.34 2.27 2.27 PRBC 11.76 6.85 3.66 3.20 -- -- 0.27 2.40 2.40 RIVR NA NA NA NA NA NA NA 2.68 NA SOBI 24.14 7.14 3.91 3.23 0.09 (3.00) 0.24 2.57 2.57 TPNZ 33.33 7.31 3.53 3.78 0.02 61.00 0.12 2.35 2.41 Maximum 140.91 7.77 4.60 4.23 0.09 61.00 0.96 3.90 3.90 Minimum 11.76 6.48 3.36 2.78 -- (39.00) 0.07 1.84 1.82 Average 61.82 7.17 3.89 3.28 0.03 (0.09) 0.29 2.46 2.44 Median 36.36 7.30 3.91 3.23 0.02 -- 0.24 2.36 2.40
Exhibit II.6 -- Comparatives Operations (Continued)
Net Oper Total Amortization Yield on Cost of Interest Expenses/ Nonrecurring of Tax Efficiency Int Earning Int Bearing Effective Yield Avg Assets Expense Intangibles Provision Ratio Assets Liabilities Tax Rate Spread (%) ($000) ($000) ($000) (%) (%) (%) (%) (%) Ticker LTM LTM LTM LTM LTM LTM LTM LTM LTM - ------ ---------- ------------ ------------ --------- ---------- ----------- ----------- --------- -------- ALBC 2.81 275 -- (7.00) 82.45 7.92 4.61 (14.58) 3.31 CLAS 2.12 416 93.00 251.00 66.28 7.07 4.02 27.40 3.05 FFSL 1.72 432 -- 253.00 64.57 7.48 5.21 35.14 2.27 GUPB 1.85 250 -- 298.00 57.05 7.37 5.03 34.02 2.34 HHFC 1.98 368 -- 103.00 70.65 7.22 4.91 29.77 2.31 INCB 2.95 474 -- 80.00 75.29 8.06 4.11 34.78 3.95 MWBI 1.63 675 -- 379.00 60.75 7.65 5.01 37.52 2.64 NSLB 1.94 281 -- 128.00 66.70 6.65 4.39 30.62 2.26 PRBC 2.13 502 -- 246.00 69.24 7.05 4.25 36.34 2.80 RIVR NA NA NA NA NA NA NA NA NA SOBI 2.33 414 -- 143.00 74.09 7.37 4.78 38.86 2.59 TPNZ 2.24 538 -- 332.00 60.45 7.49 4.41 27.71 3.08 Maximum 2.95 675 93 379 82.45 8.06 5.21 38.86 3.95 Minimum 1.63 250 -- (7) 57.05 6.65 4.02 (14.58) 2.26 Average 2.15 420 8 201 67.96 7.39 4.61 28.87 2.78 Median 2.12 416 -- 246 66.70 7.37 4.61 34.02 2.64
29 Exhibit II.7 -- Comparatives Pricing Characteristics
Current Current Price/ Current Current Current Total Stock Market LTM Price/ Price/Tang Price/ Dividend Assets Price Value Core EPS Book Value Book Value Assets Yield ($000) Ticker Name City State ($) ($M) (x) (%) (%) (%) (%) Mst RctQ - ------ ---- ---- ----- ------- ------- -------- ---------- ---------- ------ -------- -------- ALBC AlbionBancCorp-NY Albion NY 23.250 6.12 24.73 98.43 98.43 8.77 1.38 66,316 CLAS ClassicBcshs-KY Ashland KY 14.000 18.27 19.18 94.15 111.38 14.00 2.00 130,525 FFSL FirstIndcCorp-KS Independence KS 12.875 12.77 18.13 110.99 110.99 11.58 1.94 110,876 GUPB GFSBBancorp-NM Gallup NM 18.750 15.08 22.32 111.08 111.08 18.11 2.13 86,911 HHFC HarvestHome-OH Cheviot OH 11.750 10.75 22.17 103.89 103.89 12.27 3.40 87,596 INCB IndianaCommBkSB-IN Lebanon IN 15.250 14.06 31.77 124.29 124.29 15.40 2.36 91,329 MWBI MidwestBncshrs-IA Burlington IA 33.875 11.53 12.06 116.57 116.57 8.05 1.77 146,542 NSLB NS&LBancorp-MO Neosho MO 18.625 13.18 31.04 112.81 112.81 22.07 2.69 59,711 PRBC PrestigeBancorp-PA Pleasant Hills PA 17.500 16.01 20.11 106.00 106.00 11.80 0.69 135,721 RIVR RiverValleyBncp-IN Madison IN 16.875 20.09 14.55 115.42 117.19 14.30 0.95 140,442 SOBI SobieskiBancorp-IN South Bend IN 16.250 12.34 28.51 92.75 92.75 15.61 1.97 79,080 TPNZ TappanZeeFin-NY Tarrytown NY 17.438 26.11 21.01 123.59 123.59 21.03 1.61 124,150 Maximum 33.875 26.11 31.77 124.29 124.29 22.07 3.40 146,542 Minimum 11.750 6.12 12.06 92.75 92.75 8.05 0.69 59,711 Average 18.037 14.69 22.13 109.16 110.75 14.42 1.91 104,933 Median 17.157 13.62 21.59 111.04 111.23 14.15 1.96 101,103
Exhibit II.7 -- Comparatives Pricing Characteristics (Continued)
Tangible Core Core ROACE Core Core Equity/ Equity/ Core Income/ Income/ Before NPAs/ Price/ Core Income/ Income/ Assets Tang Assets EPS Avg Assets Avg Equity Extra Merger Current Assets Core EPS Avg Assets Avg Equity (%) (%) ($) (%) (%) (%) Target? Pricing (%) EPS ($) (%) (%) Ticker Mst RctQ Mst RctQ LTM LTM LTM LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ -------- ----------- ---- ---------- ---------- ------ ------- ------- -------- ------ -------- ---------- ---------- ALBC 8.90 8.90 0.94 0.38 3.90 0.93 N 08/22/97 0.60 12.92 0.45 0.69 7.68 CLAS 14.87 12.87 0.73 0.72 4.64 3.46 N 08/22/97 0.66 17.50 0.20 0.72 4.89 FFSL 10.43 10.43 0.71 0.69 6.20 3.87 N 08/22/97 0.37 17.88 0.18 0.64 6.17 GUPB 16.30 16.30 0.84 0.93 4.89 3.86 N 08/22/97 0.18 22.32 0.21 0.81 4.74 HHFC 11.81 11.81 0.53 0.57 4.44 2.31 N 08/22/97 0.11 15.46 0.19 0.80 6.56 INCB 12.39 12.39 0.48 0.50 3.92 1.29 N 08/22/97 NA 25.42 0.15 0.60 4.77 MWBI 6.91 6.91 2.81 0.75 10.82 6.56 N 08/22/97 0.77 10.86 0.78 0.81 11.75 NSLB 19.56 19.56 0.60 0.77 3.72 2.39 N 08/22/97 0.02 24.51 0.19 0.94 4.78 PRBC 11.13 11.13 0.87 0.65 4.97 2.83 N 08/22/97 0.30 16.20 0.27 0.68 5.98 RIVR 12.39 12.23 1.16 0.88 7.23 NA N 08/22/97 0.49 14.55 0.29 0.88 7.23 SOBI 15.40 15.40 0.57 0.57 3.28 1.64 N 08/22/97 0.25 22.57 0.18 0.67 4.04 TPNZ 17.02 17.02 0.83 1.00 5.63 4.06 N 08/22/97 1.28 24.22 0.18 0.84 4.85 Maximum 19.56 19.56 2.81 1.00 10.82 6.56 1.28 25.42 0.78 0.94 11.75 Minimum 6.91 6.91 0.48 0.38 3.28 0.93 0.02 10.86 0.15 0.60 4.04 Average 13.09 12.91 0.92 0.70 5.30 3.02 0.46 18.70 0.27 0.76 6.12 Median 12.39 12.31 0.78 0.71 4.77 2.83 0.37 17.69 0.20 0.76 5.44
30 Exhibit II.8 -- Comparatives Risk Characteristics
NPAs + Loans Net Loan NPAs/ 90+ Pst Due/ NPAs/ Reserves/ Reserves/ Chargeoffs/ Assets Assets Equity Loans NPAs Avg Loans (%) (%) (%) (%) (%) (%) Ticker Short Name Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ Mst RctQ - ------ ---------- -------- ------------ -------- --------- --------- ----------- ALBC Albion Banc Corp. 0.60 0.60 6.71 0.65 79.55 -- CLAS Classic Bancshares Inc. 0.66 0.94 4.41 0.93 94.15 -- FFSL First Independence Corp. 0.37 0.87 3.59 0.91 160.96 0.12 GUPB GFSB Bancorp Inc. 0.18 0.18 1.10 0.69 199.36 0.44 HHFC Harvest Home Financial Corp. 0.11 0.11 0.97 0.26 117.00 -- INCB Indiana Community Bank SB NA NA NA 0.71 NA 0.91 MWBI Midwest Bancshares Inc. 0.77 0.77 11.10 0.81 63.17 -- NSLB NS&L Bancorp Inc. 0.02 0.03 0.08 0.13 466.67 -- PRBC Prestige Bancorp Inc. 0.30 0.30 2.71 0.38 85.33 -- RIVR River Valley Bancorp 0.49 0.49 3.97 1.03 170.62 0.23 SOBI Sobieski Bancorp Inc. 0.25 0.25 1.61 0.35 102.04 -- TPNZ Tappan Zee Financial Inc. 1.28 1.73 7.55 1.18 42.10 -- Maximum 1.28 1.73 11.10 1.18 466.67 0.91 Minimum 0.02 0.03 0.08 0.13 42.10 -- Average 0.46 0.57 3.98 0.67 143.72 0.14 Median 0.37 0.49 3.59 0.70 102.04 --
Exhibit II.8 -- Comparatives Risk Characteristics (Continued)
Intangible One Year Earn Assets/ Loans/ Assets/ Cum Gap/ Net Int Bearing Assets Equity Assets Loans Liabilities (%) (%) (%) ($000) (%) Ticker Mst RctQ Mst RctQ Mst RctY Mst RctQ Mst RctQ - ------ -------- ---------- -------- -------- ------------ ALBC 72.82 -- NA 47,090 107.07 CLAS 66.61 15.44 NA 86,140 111.39 FFSL 66.00 -- (14.59) 72,513 111.21 GUPB 52.16 -- NA 45,026 120.83 HHFC 51.58 -- (6.90) 45,063 112.43 INCB 78.66 -- 25.59 71,330 112.01 MWBI 60.00 -- (10.88) 87,221 105.60 NSLB 55.74 -- NA 33,238 123.52 PRBC 67.19 -- (10.89) 90,840 111.16 RIVR 81.20 1.49 NA 112,558 107.97 SOBI 73.21 -- NA 57,698 117.19 TPNZ 45.75 -- NA 56,122 123.01 Maximum 81.20 15.44 25.59 112,558 123.52 Minimum 45.75 -- (14.59) 33,238 105.60 Average 64.24 1.41 (3.53) 67,070 113.62 Median 66.31 -- (10.88) 64,514 111.70
31 EXHIBIT III WYMAN PARK FEDERAL SAVINGS AND LOAN ASSOCIATION LUTHERVILLE, MARYLAND FINANCIAL HIGHLIGHTS 1994 1995 1996 YTD 3/97 ---- ---- ---- -------- (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 65,201 63,949 60,764 61,416 % Change in Assets 0.41 (1.92) (4.98) 1.07 Total Loans 56,462 53,147 54,543 53,108 Deposits 58,797 58,635 55,320 55,563 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 3,968 4,461 4,607 4,726 Tangible Capital 4,100 4,467 4,607 4,737 Core Capital 4,100 4,467 4,607 4,737 Risk-Based Capital 4,277 4,592 4,739 4,870 Equity Capital/Total Assets 6.09 6.98 7.58 7.70 Core Capital/Risk Based Assets 11.91 13.52 13.90 14.45 Core Capital/Adj Tang Assets 6.28 6.98 7.58 7.71 Tangible Cap/Tangible Assets 6.28 6.98 7.58 7.71 Risk-Based Cap/Risk-Wt Assets 12.42 13.90 14.30 14.86 PROFITABILITY: Net Income(Loss) 338 367 126 130 Ret on Avg Assets Bef Ext Item 0.52 0.57 0.20 0.85 Return on Average Equity 8.67 8.71 2.78 11.14 Net Interest Income/Avg Assets 2.91 2.61 2.71 3.12 Noninterest Income/Avg Assets 0.28 0.43 0.19 0.18 Noninterest Expense/Avg Assets 2.14 2.03 2.56 1.91 Yield/Cost Spread 2.76 2.44 2.50 2.94 LIQUIDITY: Int Earn Assets/Int Bear Liab 105.87 106.43 106.76 107.81 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 0.28 0.24 0.16 0.04 Nonaccrual Loans/Gross Loans 0.28 0.24 0.16 0.04 Nonaccrual Lns/Ln Loss Reserve 47.63 101.60 66.67 17.29 Repos Assets/Tot Assets -- -- -- -- Net Chrg-Off/Av Adj Lns 0.54 0.47 -- -- Nonmtg 1-4 Constr&Conv Lns/TA 7.33 6.68 8.77 8.92 1 EXHIBIT IV ALBC ALBION FEDERAL SAVINGS & LOAN ASSN. ALBION, NEW YORK FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 55,371 56,264 64,012 65,666 % Change in Assets 10.12 1.61 13.77 2.58 Total Loans 47,042 44,124 48,012 48,177 Deposits 38,494 46,432 48,493 50,279 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 4,787 4,992 4,988 5,120 Tangible Capital 4,787 4,916 4,948 5,071 Core Capital 4,787 4,916 4,948 5,071 Risk-Based Capital 5,011 5,160 5,157 5,268 Equity Capital/Total Assets 8.65 8.87 7.79 7.80 Core Capital/Risk Based Assets 15.63 16.39 15.32 15.48 Core Capital/Adj Tang Assets 8.65 8.75 7.73 7.73 Tangible Cap/Tangible Assets 8.65 8.75 7.73 7.73 Risk-Based Cap/Risk-Wt Assets 16.36 17.20 15.96 16.08 PROFITABILITY: Net Income(Loss) 357 169 (21) 113 Ret on Avg Assets Bef Ext Item 0.68 0.30 (0.04) 0.70 Return on Average Equity 7.78 3.46 (0.42) 8.94 Net Interest Income/Avg Assets 3.83 3.38 3.44 3.33 Noninterest Income/Avg Assets 0.32 0.38 0.44 0.64 Noninterest Expense/Avg Assets 2.90 3.23 3.68 2.86 Yield/Cost Spread 3.79 3.41 3.56 3.48 LIQUIDITY: Int Earn Assets/Int Bear Liab 108.07 105.09 103.30 102.39 Brokered Deposits/Tot Deposits 0 0 0 0 ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 0.64 0.82 1.47 1.08 Nonaccrual Loans/Gross Loans 0.46 0.73 0.52 0.63 Nonaccrual Lns/Ln Loss Reserve 99.11 131.97 120.10 153.30 Repos Assets/Tot Assets -- -- -- 0.18 Net Chrg-Off/Av Adj Lns 0.07 0.02 0.17 -- Nonmtg 1-4 Constr&Conv Lns/TA 4.70 4.51 3.63 3.43 1 CLAS CLASSIC BANK ASHLAND, KENTUCKY FINANCIAL HIGHLIGHTS ------------------------------ 1994 1995 1996 (All Amounts in Thousands) Num of Quarters Open for Period 4 4 4 BALANCE SHEET: Total Assets 60,891 62,486 128,361 % Change in Assets 3.70 2.62 205.42 Total Loans 35,095 42,638 79,805 Deposits 48,549 47,923 97,362 Broker Originated Deposits -- 3,462 -- CAPITAL: Equity Capital 7,470 13,158 19,151 Tangible Capital 7,470 12,905 16,094 Core Capital 7,470 12,905 16,094 Risk-Based Capital 7,470 13,171 16,094 Equity Capital/Total Assets 12.27 21.06 14.92 Core Capital/Risk Based Assets 32.14 47.59 11.77 Core Capital/Adj Tang Assets 12.27 20.78 12.84 Tangible Cap/Tangible Assets 12.27 20.78 12.12 Risk-Based Cap/Risk-Wt Assets 32.14 48.57 26.78 PROFITABILITY: Net Income(Loss) 417 324 258 Ret on Avg Assets Bef Ext Item 0.70 0.53 0.78 Return on Average Equity 5.77 3.14 5.44 Net Interest Income/Avg Assets 2.55 2.29 N/M Noninterest Income/Avg Assets 0.11 0.24 N/M Noninterest Expense/Avg Assets 1.56 1.74 N/M Yield/Cost Spread 2.14 1.51 N/M LIQUIDITY: Int Earn Assets/Int Bear Liab 111.30 124.15 112.42 Brokered Deposits/Tot Deposits -- 7.22 -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 2.05 0.80 1.12 Nonaccrual Loans/Gross Loans -- 0.79 1.07 Nonaccrual Lns/Ln Loss Reserve -- 129.32 68.31 Repos Assets/Tot Assets -- -- -- Net Chrg-Off/Av Adj Lns 0.59 0.51 0.01 Nonmtg 1-4 Constr&Conv Lns/TA 1.37 4.18 5.81 2 FFSL FIRST FEDERAL SAVINGS AND LOAN ASSN. INDEPENDENCE, KANSAS FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 91,415 100,497 107,627 107,927 % Change in Assets 6.30 9.93 7.09 0.28 Total Loans 57,559 61,344 70,066 70,627 Deposits 64,612 71,712 71,698 74,984 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 9,782 10,076 8,734 8,898 Tangible Capital 9,769 10,026 8,742 8,930 Core Capital 9,769 10,026 8,742 8,930 Risk-Based Capital 10,270 10,569 9,347 9,544 Equity Capital/Total Assets 10.70 10.03 8.12 8.24 Core Capital/Risk Based Assets 24.49 23.18 18.10 18.20 Core Capital/Adj Tang Assets 10.69 9.98 8.12 8.27 Tangible Cap/Tangible Assets 10.69 9.98 8.12 8.27 Risk-Based Cap/Risk-Wt Assets 25.75 24.43 19.35 19.45 PROFITABILITY: Net Income(Loss) 1,195 1,178 643 172 Ret on Avg Assets Bef Ext Item 1.35 1.23 0.62 0.64 Return on Average Equity 12.39 11.86 6.30 7.80 Net Interest Income/Avg Assets 3.76 3.26 2.94 2.69 Noninterest Income/Avg Assets 0.16 0.51 0.27 0.18 Noninterest Expense/Avg Assets 1.75 1.76 2.23 1.81 Yield/Cost Spread 3.52 2.92 2.60 2.50 LIQUIDITY: Int Earn Assets/Int Bear Liab 110.49 109.85 105.85 106.11 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 2.66 1.39 0.74 1.40 Nonaccrual Loans/Gross Loans 1.26 0.84 0.43 0.62 Nonaccrual Lns/Ln Loss Reserve 107.17 76.09 44.06 63.91 Repos Assets/Tot Assets -- -- -- 0.01 Net Chrg-Off/Av Adj Lns (0.05) 0.01 -- -- Nonmtg 1-4 Constr&Conv Lns/TA 9.59 8.62 8.60 8.38 3 GIPB GALLUP FEDERAL SAVINGS BANK GALLUP, NEW MEXICO FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 44,032 66,826 82,321 87,380 % Change in Assets 7.25 51.77 23.19 6.15 Total Loans 30,224 34,104 42,920 45,292 Deposits 36,950 39,772 53,903 55,465 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 6,676 12,290 11,945 11,917 Tangible Capital 6,676 12,078 11,614 11,614 Core Capital 6,676 12,078 11,614 11,614 Risk-Based Capital 6,894 11,926 11,150 11,084 Equity Capital/Total Assets 15.16 18.39 14.51 13.64 Core Capital/Risk Based Assets 31.08 48.98 36.52 29.31 Core Capital/Adj Tang Assets 15.16 18.19 14.17 13.34 Tangible Cap/Tangible Assets 15.16 18.19 14.17 13.34 Risk-Based Cap/Risk-Wt Assets 32.10 48.36 35.06 27.97 PROFITABILITY: Net Income(Loss) 588 721 573 161 Ret on Avg Assets Bef Ext Item 1.38 1.30 0.77 0.76 Return on Average Equity 9.14 7.60 4.82 5.40 Net Interest Income/Avg Assets 4.19 3.75 3.15 2.91 Noninterest Income/Avg Assets 0.13 0.13 0.12 0.12 Noninterest Expense/Avg Assets 2.17 1.78 2.03 1.63 Yield/Cost Spread 3.76 3.14 2.59 2.50 LIQUIDITY: Int Earn Assets/Int Bear Liab 114.99 120.11 112.65 111.71 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 0.30 0.09 0.29 0.34 Nonaccrual Loans/Gross Loans -- -- 0.28 0.34 Nonaccrual Lns/Ln Loss Reserve -- -- 36.63 46.02 Repos Assets/Tot Assets -- -- -- -- Net Chrg-Off/Av Adj Lns -- 0.11 (0.07) 0.19 Nonmtg 1-4 Constr&Conv Lns/TA 10.14 7.91 12.11 9.64 4 HHFC HARVEST HOME SVGS BK CHEVOIT, OHIO FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 ($'s in Thousands) Number of Open Quarters 4 4 4 1 BALANCE SHEET: Total Assets 65,431 66,135 81,666 81,208 % Change in Assets 1.81 1.08 23.48 (0.56) Securities-Book Value 24,575 24,096 34,723 34,022 Securities-Fair Value 23,840 24,096 34,723 34,022 Total Loans & Leases 36,632 38,576 42,834 44,025 Total Deposits 56,134 56,758 57,923 57,672 Loan/Deposit Ratio 65.26 67.97 73.95 76.34 Provision for Loan Losses 12 9 -- 3 CAPITAL: Equity Capital 8,262 8,275 8,069 8,146 Total Qualifying Capital(Est) 8,360 8,086 8,207 8,364 Equity Capital/Average Assets 12.74 12.58 11.04 10.00 Tot Qual Cap/Rk Bsd Asts(Est) 29.20 27.51 23.87 24.23 Tier 1 Cap/Rsk Bsed Asts(Est) 28.85 27.13 23.55 23.90 T1 Cap/Avg Assets(Lev Est) 12.05 12.09 10.33 10.13 Dividends Declared/Net Income -- 186.97 -- -- PROFITABILITY: Net Income(Loss) 450 468 194 153 Return on Average Assets 0.69 0.71 0.27 0.75 Return on Average Equity Cap 7.18 5.66 2.47 7.55 Net Interest Margin 2.95 3.02 2.87 2.83 Net Int Income/Avg Assets 2.90 2.96 2.78 2.75 Noninterest Income/Avg Assets 0.07 0.07 0.09 0.06 Noninterest Exp/Avg Assets 1.96 1.92 2.48 1.66 ASSET QUALITY: NPL+Frcl RE/Lns+Frcl RE 0.27 0.33 0.51 0.29 NPA's/Equity + LLR 1.20 1.53 2.65 1.53 LLR/Nonperf & Restrcd Lns 140.00 86.72 51.15 90.48 Foreclosed RE/Total Assets 0.05 -- -- -- 90+ Day Del Loans/Total Loans -- -- -- -- Loan Loss Reserves/Total Lns 0.27 0.29 0.26 0.26 Net Charge-Offs/Average Loans 0.02 -- -- -- Dom Risk R/E Lns/Tot Dom Lns 13.61 11.86 10.89 10.59 LIQUIDITY: Brokered Dep/Total Dom Deps -- -- -- -- $100M+ Time Dep/Total Dom Dep 2.95 3.47 3.29 3.56 Int Earn Assets/Int Bear Liab 111.74 111.74 108.83 109.04 Pledged Sec/Total Sec -- -- -- -- Fair Value Sec/Amort Cost Sec 97.01 101.92 99.89 99.54 5 INCB INDIANA COMMTY BANK SB LEBANON, INDIANA FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 ($'s in Thousands) Number of Open Quarters 4 4 4 1 BALANCE SHEET: Total Assets 88,347 90,666 89,476 91,582 % Change in Assets (0.41) 2.62 (1.31) 2.35 Securities-Book Value 10,314 9,320 5,657 7,769 Securities-Fair Value 10,045 9,409 5,711 7,793 Total Loans & Leases 69,380 72,948 72,836 71,839 Total Deposits 73,660 75,566 77,062 79,222 Loan/Deposit Ratio 94.19 96.54 94.52 90.68 Provision for Loan Losses 92 245 303 72 CAPITAL: Equity Capital 13,736 14,105 11,316 11,311 Total Qualifying Capital(Est) 14,135 14,609 11,918 11,821 Equity Capital/Average Assets 15.52 15.76 12.37 12.49 Tot Qual Cap/Rk Bsd Asts(Est) 23.85 23.66 18.85 19.00 Tier 1 Cap/Rsk Bsed Asts(Est) 23.02 22.94 17.90 18.18 T1 Cap/Avg Assets(Lev Est) 15.74 15.40 12.57 12.49 Dividends Declared/Net Income -- 38.38 2,305.22 122.06 PROFITABILITY: Net Income(Loss) 78 693 134 136 Return on Average Assets 0.09 0.77 0.15 0.60 Return on Average Equity Cap 0.80 4.98 1.07 4.81 Net Interest Margin 3.67 4.61 4.53 4.65 Net Int Income/Avg Assets 3.43 4.35 4.24 4.40 Noninterest Income/Avg Assets 0.59 0.78 0.88 0.79 Noninterest Exp/Avg Assets 3.14 3.64 4.55 3.91 ASSET QUALITY: NPL+Frcl RE/Lns+Frcl RE 0.37 0.27 0.16 0.20 NPA's/Equity + LLR 1.82 1.36 0.95 1.24 LLR/Nonperf & Restrcd Lns 188.80 225.25 532.74 346.94 Foreclosed RE/Total Assets -- -- -- -- 90+ Day Del Loans/Total Loans 0.37 0.27 0.16 0.02 Loan Loss Reserves/Total Lns 0.70 0.61 0.83 0.71 Net Charge-Offs/Average Loans 0.13 0.40 0.51 0.23 Dom Risk R/E Lns/Tot Dom Lns 6.47 7.33 10.96 8.53 LIQUIDITY: Brokered Dep/Total Dom Deps -- -- -- -- $100M+ Time Dep/Total Dom Dep 3.32 7.66 8.99 9.38 Int Earn Assets/Int Bear Liab 116.06 115.56 112.52 112.47 Pledged Sec/Total Sec -- 26.82 22.98 38.62 Fair Value Sec/Amort Cost Sec 97.39 100.33 100.56 100.17 6 MWBI MIDWEST FEDERAL S&LA OF EASTERN IOWA BURLINGTON, IOWA FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 131,055 133,548 135,767 138,277 % Change in Assets 0.18 1.90 1.66 1.85 Total Loans 70,724 74,518 81,847 83,211 Deposits 106,937 102,274 102,134 104,595 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 8,869 9,516 8,668 8,732 Tangible Capital 8,869 9,175 8,702 8,961 Core Capital 8,869 9,175 8,702 8,961 Risk-Based Capital 9,497 9,837 9,388 9,659 Equity Capital/Total Assets 6.77 7.13 6.38 6.31 Core Capital/Risk Based Assets 17.52 17.32 14.73 14.63 Core Capital/Adj Tang Assets 6.77 6.89 6.41 6.47 Tangible Cap/Tangible Assets 6.77 6.89 6.41 6.47 Risk-Based Cap/Risk-Wt Assets 18.76 18.57 15.89 15.77 PROFITABILITY: Net Income(Loss) 1,123 1,338 657 259 Ret on Avg Assets Bef Ext Item 0.86 1.01 0.48 0.76 Return on Average Equity 12.81 14.55 7.69 11.91 Net Interest Income/Avg Assets 2.91 2.79 2.75 2.74 Noninterest Income/Avg Assets 0.27 0.67 0.37 0.34 Noninterest Expense/Avg Assets 1.87 1.90 2.32 1.84 Yield/Cost Spread 2.91 2.76 2.77 2.73 LIQUIDITY: Int Earn Assets/Int Bear Liab 103.65 103.95 102.94 102.43 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 1.06 0.16 1.39 1.36 Nonaccrual Loans/Gross Loans 0.23 0.07 1.11 1.36 Nonaccrual Lns/Ln Loss Reserve 25.23 7.54 134.26 162.89 Repos Assets/Tot Assets -- -- -- -- Net Chrg-Off/Av Adj Lns 0.06 -- 0.05 -- Nonmtg 1-4 Constr&Conv Lns/TA 3.05 5.72 8.41 6.70 7 NSLB NEOSHO SAVINGS & LOAN ASSN., FA NEOSHO, MISSOURI FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 49,738 53,156 56,645 56,507 % Change in Assets (4.49) 6.87 6.56 (0.24) Total Loans 25,095 28,013 31,762 32,145 Deposits 43,274 41,964 44,062 43,630 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 6,018 9,947 8,339 8,475 Tangible Capital 6,018 9,947 8,339 8,475 Core Capital 6,018 9,947 8,339 8,475 Risk-Based Capital 6,036 9,945 8,381 8,518 Equity Capital/Total Assets 12.10 18.71 14.72 15.00 Core Capital/Risk Based Assets 34.70 51.58 38.31 35.21 Core Capital/Adj Tang Assets 12.10 18.71 14.72 15.00 Tangible Cap/Tangible Assets 12.10 18.71 14.72 15.00 Risk-Based Cap/Risk-Wt Assets 34.81 51.57 38.50 35.39 PROFITABILITY: Net Income(Loss) 471 471 186 93 Ret on Avg Assets Bef Ext Item 0.93 0.92 0.33 0.66 Return on Average Equity 8.16 5.90 1.97 4.42 Net Interest Income/Avg Assets 3.04 3.06 2.80 2.90 Noninterest Income/Avg Assets 0.59 0.54 0.43 0.36 Noninterest Expense/Avg Assets 2.17 2.32 2.79 2.24 Yield/Cost Spread 2.94 2.70 2.32 2.49 LIQUIDITY: Int Earn Assets/Int Bear Liab 110.37 119.53 114.10 114.51 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 0.04 0.12 0.14 -- Nonaccrual Loans/Gross Loans -- 0.12 0.14 -- Nonaccrual Lns/Ln Loss Reserve -- 89.74 107.14 -- Repos Assets/Tot Assets -- -- -- -- Net Chrg-Off/Av Adj Lns -- (0.02) -- -- Nonmtg 1-4 Constr&Conv Lns/TA 0.42 0.33 0.20 1.03 8 PRBC PRESTIGE BANK, FSB PITTSBURGH, PENNSYLVANIA FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 87,539 92,015 114,449 126,471 % Change in Assets 6.08 5.11 24.38 10.50 Total Loans 60,987 61,798 77,038 83,099 Deposits 75,313 80,858 87,453 90,695 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 7,024 7,219 11,629 11,740 Tangible Capital 7,024 7,282 11,787 12,158 Core Capital 7,024 7,282 11,787 12,158 Risk-Based Capital 7,328 7,569 12,094 12,480 Equity Capital/Total Assets 8.02 7.85 10.16 9.28 Core Capital/Risk Based Assets 18.93 18.75 23.20 21.07 Core Capital/Adj Tang Assets 8.02 7.91 10.28 9.58 Tangible Cap/Tangible Assets 8.02 7.91 10.28 9.58 Risk-Based Cap/Risk-Wt Assets 19.7478 19.4881 23.8061 21.6325 PROFITABILITY: Net Income(Loss) 549 197 86 191 Ret on Avg Assets Bef Ext Item 0.65 0.22 0.09 0.63 Return on Average Equity 8.11 2.77 0.87 6.54 Net Interest Income/Avg Assets 3.12 2.52 2.93 3.06 Noninterest Income/Avg Assets 0.37 0.29 0.33 0.30 Noninterest Expense/Avg Assets 2.39 2.49 3.06 2.28 Yield/Cost Spread 3.08 2.46 2.79 2.92 LIQUIDITY: Int Earn Assets/Int Bear Liab 105.60 105.03 107.94 106.44 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 0.64 0.57 0.50 0.49 Nonaccrual Loans/Gross Loans 0.64 0.50 0.44 0.47 Nonaccrual Lns/Ln Loss Reserve 128.62 106.62 110.75 122.05 Repos Assets/Tot Assets -- -- -- 0.01 Net Chrg-Off/Av Adj Lns -- 0.09 0.04 0.01 Nonmtg 1-4 Constr&Conv Lns/TA 0.84 0.86 0.89 0.79 9 RIVR MADISON FIRST FEDERAL SAVINGS & LOAN ASSN. MADISON, INDIANA FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 87,542 86,949 82,863 138,325 % Change in Assets 4.04 (0.68) (4.70) 166.90 Total Loans 56,533 58,408 59,746 108,640 Deposits 75,607 75,485 70,550 118,661 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 6,320 6,688 11,688 17,099 Tangible Capital 6,164 6,528 11,689 16,833 Core Capital 6,164 6,528 11,689 16,833 Risk-Based Capital 6,412 6,777 12,112 N/A Equity Capital/Total Assets 7.22 7.69 14.11 12.36 Core Capital/Risk Based Assets 15.16 15.35 26.60 15.72 Core Capital/Adj Tang Assets 7.05 7.54 14.11 15.73 Tangible Cap/Tangible Assets 7.05 7.54 14.11 15.73 Risk-Based Cap/Risk-Wt Assets 15.77 15.94 27.56 31.10 PROFITABILITY: Net Income(Loss) 652 356 (59) 341 Ret on Avg Assets Bef Ext Item 0.76 0.41 (0.24) 0.98 Return on Average Equity 10.88 5.47 (2.77) 8.05 Net Interest Income/Avg Assets 3.00 2.50 2.80 N/M Noninterest Income/Avg Assets 0.33 0.35 0.49 N/M Noninterest Expense/Avg Assets 2.05 2.19 3.22 N/M Yield/Cost Spread 3.08 2.57 2.75 N/A LIQUIDITY: Int Earn Assets/Int Bear Liab 102.01 101.97 113.10 112.12 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 0.05 0.01 0.26 0.12 Nonaccrual Loans/Gross Loans -- -- -- -- Nonaccrual Lns/Ln Loss Reserve -- -- -- -- Repos Assets/Tot Assets -- -- -- 0.06 Net Chrg-Off/Av Adj Lns 0.01 0.01 0.01 -- Nonmtg 1-4 Constr&Conv Lns/TA 8.01 12.42 10.21 N/A 10 SOBI SOBIESKI FEDERAL SAVINGS & LOAN ASSN. SOUTH BEND, INDIANA FINANCIAL HIGHLIGHTS ------------------------------------------ 1994 1995 1996 1997 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 70,694 72,595 75,773 76,285 % Change in Assets (4.11) 2.69 4.38 0.68 Total Loans 49,594 45,893 52,234 55,213 Deposits 64,309 61,399 59,714 59,045 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 5,917 10,002 9,321 8,803 Tangible Capital 5,917 9,964 9,331 8,814 Core Capital 5,917 9,964 9,331 8,814 Risk-Based Capital 6,117 10,164 9,531 9,014 Equity Capital/Total Assets 8.37 13.78 12.30 11.54 Core Capital/Risk Based Assets 19.89 35.15 29.37 27.61 Core Capital/Adj Tang Assets 8.37 13.73 12.31 11.55 Tangible Cap/Tangible Assets 8.37 13.73 12.31 11.55 Risk-Based Cap/Risk-Wt Assets 20.56 35.86 30.00 28.24 PROFITABILITY: Net Income(Loss) 686 363 74 106 Ret on Avg Assets Bef Ext Item 0.95 0.57 0.10 0.56 Return on Average Equity 12.25 5.09 0.76 4.68 Net Interest Income/Avg Assets 3.53 3.02 2.92 3.04 Noninterest Income/Avg Assets 0.22 0.23 0.37 0.27 Noninterest Expense/Avg Assets 2.20 2.40 3.08 2.41 Yield/Cost Spread 3.45 2.84 2.69 2.88 LIQUIDITY: Int Earn Assets/Int Bear Liab 105.04 109.97 107.58 108.24 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 0.30 0.17 0.38 0.37 Nonaccrual Loans/Gross Loans -- -- -- -- Nonaccrual Lns/Ln Loss Reserve -- -- -- -- Repos Assets/Tot Assets -- -- -- -- Net Chrg-Off/Av Adj Lns -- -- -- -- Nonmtg 1-4 Constr&Conv Lns/TA 0.50 3.57 4.53 4.85 11 TPNZ TARRYTOWN BANK, FSB TARRYTOWN, NEW YORK FINANCIAL HIGHLIGHTS ------------------------------------------- 1994 1995 1996 YTD 3/97 (All $ Amounts in Thousands) Num of Quarters Open for Period 4 4 4 1 BALANCE SHEET: Total Assets 88,922 105,172 113,708 117,216 % Change in Assets 3.92 18.27 8.12 3.09 Total Loans 47,144 51,327 56,486 55,504 Deposits 80,489 86,671 95,582 98,630 Broker Originated Deposits -- -- -- -- CAPITAL: Equity Capital 7,317 16,267 16,331 16,298 Tangible Capital 7,317 16,055 16,482 16,607 Core Capital 7,317 16,055 16,482 16,607 Risk-Based Capital 7,317 16,055 17,042 17,151 Equity Capital/Total Assets 8.23 15.47 14.36 13.90 Core Capital/Risk Based Assets 20.24 36.26 36.79 38.23 Core Capital/Adj Tang Assets 8.23 15.30 14.48 14.13 Tangible Cap/Tangible Assets 8.23 15.30 14.48 14.13 Risk-Based Cap/Risk-Wt Assets 20.24 36.26 38.04 39.48 PROFITABILITY: Net Income(Loss) 921 823 787 256 Ret on Avg Assets Bef Ext Item 1.06 0.85 0.70 0.89 Return on Average Equity 12.99 6.98 4.89 6.28 Net Interest Income/Avg Assets 4.15 3.53 3.67 3.70 Noninterest Income/Avg Assets 0.13 0.15 0.22 0.19 Noninterest Expense/Avg Assets 2.06 2.27 2.86 2.29 Yield/Cost Spread 4.10 3.22 3.23 3.27 LIQUIDITY: Int Earn Assets/Int Bear Liab 106.59 116.46 114.87 113.89 Brokered Deposits/Tot Deposits -- -- -- -- ASSET QUALITY: Nonperf Lns+REO/Total Lns+REO 4.62 5.43 3.49 2.97 Nonaccrual Loans/Gross Loans 0.90 1.45 1.08 0.82 Nonaccrual Lns/Ln Loss Reserve 79.67 110.39 96.88 68.94 Repos Assets/Tot Assets -- -- -- 0.10 Net Chrg-Off/Av Adj Lns 0.27 0.07 0.11 0.03 Nonmtg 1-4 Constr&Conv Lns/TA 8.35 6.59 5.83 5.52 12 EXHIBIT V Exhibit V. -- Pro Forma Assumptions 1. Net proceeds from the conversion were invested at the beginning of the period at 5.65%, which was the approximate rate on the one-year treasury bill on June 30, 1997. This rate was selected because it is considered more representative of the rate the Association is likely to earn. 2. Wyman Park's ESOP will acquire 8% of the conversion stock with loan proceeds obtained from the Holding Company; therefore, there will be no interest expense. We assumed that the ESOP expense is 10% annually of the initial ESOP expense. 3. Wyman Park's RP will acquire 4% of the stock through open market purchases at $10 per share and the expense is recognized ratably over five years as the shares vest. 4. All pro forma income and expense items are adjusted for income taxes at a combined state and federal rate of 39%. 5. In calculating the pro forma adjustments to net worth, the ESOP and RP are deducted in accordance with generally accepted accounting principles. 6. Earnings per share calculations have ignored AICPA OP 93-6. Calculating earnings per share under SOP 93-6 and assuming 10% of the ESOP shares are committed to be released and allocated to individual accounts at the beginning of the period would yield earnings per share of $.99, $0.87, $0.79 and $0.71 and a price to earnings ratio of 10.12, 11.46, 12.71and 14.04, at the minimum, midpoint, maximum and super maximum, respectively. 1 Exhibit V Pro Forma Effect of Conversion Proceeds At the Minimum of the Conversion Valuation Range 30-Jun-97 WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD - --------------------------------------------------- 1. Conversion Proceeds Pro Forma Market Value (Minimum) $5,950,000 Less: Estimated Expenses (392,000) ---------- Net Conversion Proceeds $5,558,000 2. Estimated Additional Income From Conversion Proceeds Net Conversion Proceeds $5,558,000 Less: ESOP Contributions (476,000) MRP Contributions (238,000) ---------- Net Conversion Proceeds after ESOP & MRP $4,844,000 Estimated Incremental Rate of Return(1) 3.45% ---------- Estimated Additional Income $ 166,948 Less: ESOP Expense (29,036) MRP Expense (29,036) ---------- $ 108,876 ---------- 3. Pro Forma Calculations Before Conversion After Period Conversion Results Conversion ------ ----------------------------------------------- a. Pro Forma Earnings Twelve Months Ended 30-Jun-97 $ 437,000 $ 108,876 $ 545,876 b. Pro Forma Net Worth 30-Jun-97 $ 4,754,419 $4,844,000 $ 9,598,419 c. Pro Forma Net Assets 30-Jun-97 $62,241,000 $4,844,000 $67,085,000 (1) Investment rate of 5.65%, subject to an effective tax rate of 39%. 2 Exhibit V Pro Forma Effect of Conversion Proceeds At the Midpoint of the Conversion Valuation Range 30-Jun-97 WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD - --------------------------------------------------- 1. Conversion Proceeds Pro Forma Market Valuation (Midpoint) $7,000,000 Less: Estimated Expenses (410,000) ---------- Net Conversion Proceeds $6,590,000 2. Estimated Additional Income From Conversion Proceeds Net Conversion Proceeds $6,590,000 Less: ESOP Contributions (560,000) MRP Contributions (280,000) ---------- Net Conversion Proceeds after ESOP & MRP $5,750,000 Estimated Incremental Rate of Return(1) 3.45% ---------- Estimated Additional Income $ 198,174 Less: ESOP Expense (34,160) MRP Expense (34,160) ---------- $ 129,854 ---------- 3. Pro Forma Calculations Before Conversion After Period Conversion Results Conversion ------ ----------------------------------------------- a. Pro Forma Earnings Twelve Months Ended 30-Jun-97 $ 437,000 $ 129,854 $ 566,854 b. Pro Forma Net Worth 30-Jun-97 $ 4,754,419 $5,750,000 $10,504,419 c. Pro Forma Net Assets 30-Jun-97 $62,241,000 $5,750,000 $67,991,000 (1) Investment rate of 5.65%, subject to an effective tax rate of 39%. 3 Exhibit V Pro Forma Effect of Conversion Proceeds At the Maximum of the Conversion Valuation Range 30-Jun-97 WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD - --------------------------------------------------- 1. Conversion Proceeds Pro Forma Market Valuation (Maximum) $8,050,000 Less: Estimated Expenses (428,000) ---------- Net Conversion Proceeds $7,622,000 2. Estimated Additional Income From Conversion Proceeds Net Conversion Proceeds $7,622,000 Less: ESOP Contributions (644,000) MRP Contributions (322,000) ---------- Net Conversion Proceeds after ESOP & MRP $6,656,000 Estimated Incremental Rate of Return(1) 3.45% ---------- Estimated Additional Income $ 229,399 Less: ESOP Expense (39,284) MRP Expense (39,284) ---------- $ 150,831 ---------- 3. Pro Forma Calculations Before Conversion After Period Conversion Results Conversion ------ ----------------------------------------------- a. Pro Forma Earnings Twelve Months Ended 30-Jun-97 $ 437,000 $ 150,831 $ 587,831 b. Pro Forma Net Worth 30-Jun-97 $ 4,754,419 $6,656,000 $11,410,419 c. Pro Forma Net Assets 30-Jun-97 $62,241,000 $6,656,000 $68,897,000 (1) Investment rate of 5.65%, subject to an effective tax rate of 39%. 4 Exhibit V Pro Forma Effect of Conversion Proceeds At the SuperMax of the Conversion Valuation Range 30-Jun-97 WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD - --------------------------------------------------- 1. Conversion Proceeds Pro Forma Market Valuation (Final) $9,257,500 Less: Estimated Expenses $ (448,000) ---------- Net Conversion Proceeds $8,809,500 2. Estimated Additional Income From Conversion Proceeds Net Conversion Proceeds $8,809,500 Less: ESOP Contributions $ (740,600) MRP Contributions $ (370,300) ---------- Net Conversion Proceeds after ESOP & MRP $7,698,600 Estimated Incremental Rate of Return(1) 3.45% ---------- Estimated Additional Income $ 265,332 Less: ESOP Expense $ (45,177) MRP Expense $ (45,177) ---------- $ 174,979 ---------- 3. Pro Forma Calculations Before Conversion After Period Conversion Results Conversion ------ ----------------------------------------------- a. Pro Forma Earnings Twelve Months Ended 30-Jun-97 $ 437,000 $ 174,979 $ 611,979 b. Pro Forma Net Worth 30-Jun-97 $ 4,754,419 $7,698,600 $12,453,019 c. Pro Forma Net Assets 30-Jun-97 $62,241,000 $7,698,600 $69,939,600 (1) Investment rate of 5.65%, subject to an effective tax rate of 39%. 5 Exhibit V Pro Forma Analysis Sheet Name of Association: WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD Date of Letter to Assn.: Sept 19, 97 Date of Market Prices: 30-Jun-97
Mid-Atlantic Publicly All Publicly Comparatives Held Thrifts Held Thrifts -------------- -------------- -------------- Symbols Value Mean Median Mean Median Mean Median --------------- ---- ------ ---- ------ ---- ------ Price-Earnings Ratio P/E Last Twelve Months N/A At Minimum of Range 10.90 At Midpoint of Range 12.35 22.13 21.59 17.50 16.76 17.82 16.55 At Maximum of Range 13.69 At SuperMax of Range 15.13 Price-Book Ratio P/B Last Twelve Months N/A At Minimum of Range 61.99% At Midpoint of Range 66.64% 109.16 111.04 150.04 140.20 146.57 138.35 At Maximum of Range 70.55% At SuperMax of Range 74.34% Price-Asset Ratio P/A Last Twelve Months N/A At Minimum of Range 8.87% At Midpoint of Range 10.30% 14.42 14.15 14.42 13.05 14.98 14.11 At Maximum of Range 11.68% At SuperMax of Range 13.24% Twelve Mo. Earnings Base Y $ 437,000 Period Ended 30-Jun-97 Book Value B $ 4,754,419 As of 30-Jun-97 Total Assets A $62,241,000 As of 30-Jun-97 Return on Money (1) R 3.45% Conversion Expense X $ 410,000 Underwriting Commission C 0.00% Percentage Underwritten S 0.00% Estimate Dividend Dollar Amount DA $ -- Yield DY ESOP Contributions P $ 560,000 MRP Contributions I $ 280,000 ESOP Annual Expense E $ 34,160 MRP Annual Contributions M $ 34,160 Cost of ESOP Borrowings F 0.00%
(1) Investment rate of 5.65%, subject to an effective tax rate of 39%. 6 Exhibit V Pro Forma Analysis Sheet Calculation of Estimated Value (V) at Midpoint Value 1. V= P/A(A-X-P-I) $ 7,000,000 ------------------------ 1-P/A(1-(CxS)) 2. V= P/B(B-X-P-I) $ 7,000,000 ------------------------ 1-P/B(1-(CxX)) 3. V= P/E(Y-R(X+P+I)-(E+M+ST)) $ 7,000,000 ------------------------ 1-P/E(R(1-(CxX)) Value Estimated Value Per Share Total Shares Date - --------------- --------- ------------ --------- $7,000,000 $10.00 700,000 30-Jun-97 Range of Value $7.0 million x 1.15 = $8.05 million or 805,000 shares at $10.00 per share. $7.0 million x .085 = $5.950 million or 595,500 shares at $10.00 per share. Calculation of Estimated Value (V) Supermax 1. V= P/A(A-X-P-I) $ 9,257,500 ------------------------ 1-P/A(1-(CxS)) 2. V= P/B(B-X-P-I) $ 9,257,500 ------------------------ 1-P/B(1-(CxX)) 3. V= P/E(Y-R(X+P+I)-(E+M)) $ 9,257,500 ------------------------ 1-P/E(R(1-(CxX)) Value Final Value Per Share Total Shares Date - --------------- --------- ------------ --------- $9,257,500 $10.00 925,750 30-Jun-97 7 FERGUSON & CO., LLP September 19, 1997 Board of Directors Wyman Park Federal Savings and Loan Association 11 West Ridgely Road Lutherville, Maryland Dear Directors: We have completed and hereby provide, as of August 22, 1997, an independent appraisal of the estimated pro forma market value of Wyman Park Federal Savings and Loan Association ("Wyman Park" or the "Association"), Lutherville, Maryland, in connection with the conversion of Wyman Park from the mutual form to the stock form of organization ("Conversion"). This appraisal report is furnished pursuant to the regulatory filing of the Association's Application for Conversion ("Form AC") with the Office of Thrift Supervision ("OTS"). Ferguson & Company ("F&C") is a consulting firm that specializes in providing financial, economic, and regulatory services to financial institutions. The background and experience of F&C is presented in Exhibit I. We believe that, except for the fees we will receive for preparing the appraisal and assisting with Wyman Park's business plan, we are independent. F&C personnel are prohibited from owning stock in conversion clients for a period of at least one year after conversion. In preparing our appraisal, we have reviewed Wyman Park's Application for Approval of Conversion, including the Proxy Statement as filed with the OTS. We conducted an analysis of Wyman Park that included discussions with Wooden & Benson, Chartered., the Association's independent auditors, and with Silver, Freedman & Taff, L.L.P., the Association's conversion counsel. In addition, where appropriate, we considered information based on other available published sources that we believe is reliable; however, we cannot guarantee the accuracy or completeness of such information. We also reviewed the economy in Wyman Park's primary market area (assessment area) and compared the Association's financial condition and operating results with that of selected publicly traded thrift institutions. We reviewed conditions in the securities markets in general and in the market for thrifts stocks in particular. Our appraisal is based on Wyman Park's representation that the information contained in the Form AC and additional evidence furnished to us by the Association and its independent auditors are truthful, accurate, and complete. We did not independently verify the financial statements and other information provided by Wyman Park and its auditors, nor did we independently value the Association's assets or liabilities. The valuation considers Wyman Park only as a going concern and should not be considered an indication of its liquidation value It is our opinion that, as of August 22, 1997, the estimated pro forma market value of Wyman Park was $7,000,000, or 700,000 shares at $10.00 per share. The resultant valuation range FERGUSON & CO., LLP was $5,950,000 at the minimum (595,000 shares at $10.00 per share) to $8,050,000 at the maximum (805,000 shares at $10.00 per share), based on a range of 15 percent below and above the midpoint valuation. The supermaximum was $9,258,000 (925,800 shares at $10.00 per share). Our valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock in the conversion. Moreover, because such valuation is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion will thereafter be able to sell such shares at prices related to the foregoing estimate of the Association's pro forma market value. F&C is not a seller of securities within the meaning of any federal or state securities laws and any report prepared by F&C shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. Our opinion is based on circumstances as of the date hereof, including current conditions in the United States securities markets. Events occurring after the date hereof, including, but not limited to, changes affecting the United States securities markets and subsequent results of operations of First Federal, could materially affect the assumptions used in preparing this appraisal. The valuation reported herein will be updated as provided in the OTS conversion regulations and guidelines. All updates will consider, among other things, any developments or changes in Wyman Park's financial performance and condition, management policies, and current conditions in the equity markets for thrift shares. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments will be made to the estimated pro forma market value. The reasons for any such adjustments will be explained in detail at the time. Respectfully, Ferguson & Company Charles M. Hebert Principal FERGUSON & CO., LLP STATEMENT OF APPRAISER'S INDEPENDENCE Wyman Park Federal Savings and Loan Association Lutherville, Maryland We are the appraiser for Wyman Park Federal Savings and Loan Association in connection with its conversion, reorganization and issuance of Public Shares. We are submitting our independent estimate of the pro forma market value of the Wyman Park Federal Savings and Loan Association's stock to be issued in the conversion and reorganization. In connection with our appraisal of the to-be-issued stock, we have received a fee which was not related to the estimated final value. The estimated pro forma market value is solely the opinion of our company and it was not unduly influenced by Wyman Park Federal Savings and Loan Association, its conversion counsel, its selling agent, or any other party connected with the conversion. Wyman Park Federal Savings and Loan Association has agreed to indemnify Ferguson & Company under certain circumstances against liabilities arising out of our services. Specifically, we are indemnified against liabilities arising from our appraisal except to the extent such liabilities are determined to have arisen because of our negligence or willful conduct. Ferguson & Company Charles M. Hebert Principal September 19, 1997 Conversion Valuation Report Update - -------------------------------------------------------------------------------- Valued as of October 28, 1997 Wyman Park Federal Savings and Loan Association Lutherville, Maryland Prepared By: Ferguson & Company Suite 550 122 W. John Carpenter Frwy Irving, TX 75039 972/869-1177 FERGUSON & CO., LLP Suite 305 860 West Airport Pkwy. Hurst, Texas 76054 (817) 577-9558 (817) 577-3054 Fax October 30, 1997 Board of Directors Wyman Park Federal Savings and Loan Association 11 West Ridgely Road Lutherville, Maryland Dear Directors: We have completed and hereby provide, as of October 28, 1997, an updated independent appraisal of the estimated pro forma market value of Wyman Park Federal Savings and Loan Association ('Wyman Park" or the "Association"), Lutherville, Maryland, in connection with the conversion of Wyman Park from the mutual to stock form of organization ("Conversion"). This appraisal report update is furnished pursuant to an amendment to the Association's Application for Conversion ('Form AC") filed with the Office of Thrift Supervision ("OTS"). The necessity for this update arises from recent changes in overall thrift market values. Our original appraisal report, dated August 22, 1997, is incorporated herein by reference. In preparing this appraisal update, we reviewed our original appraisal and the Form AC, including the proxy statement. We considered, among other items, recent developments in stock market conditions and available financial information on Wyman Park. In addition, where appropriate, we considered information based on other available published sources that we believe is reliable; however, we cannot guarantee the accuracy or completeness of such information. Our appraisal update is based on the Association's representation that the information in the application for conversion and additional evidence furnished us by the Association are accurate and complete. We did not independently verify the financial statements and other information furnished by the Association, nor did we independently value its assets and liabilities. Ile appraisal update considers the Association as a going concern and should not be considered as an indication of its liquidation value. Our valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock in the conversion. Moreover, because such valuation is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion will thereafter be able to sell such shares at prices related to the foregoing estimate of the Association! s pro forma market value. Ferguson & Company ("F&C") is not a seller of securities within the meaning of any federal or state securities laws and any report prepared by F&C shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. Board of Directors October 30, 1997 Page 2 Recent Financial Performance The Association has a June 30 fiscal year. The Form AC has June 30, 1997 audited financial statements and no unaudited financial statements. Our original appraisal of August 22, 1997 was based on June 30, 1997 financial statements. The Association is including capsule information on the September 30, 1997 financial statements in this amendment. Accordingly, this appraisal update is based on the September 30, 1997 financial information (see Exhibit IX). The unaudited financial statements indicate net income of $1,000 for the September 30, 1997 quarter. Equity was $4,755,000 at September 30, 1997, a $5,000 increase from $4,750,000 at June 30, 1997, and assets at September 30, 1997 are approximately $63,391,000. Net loss for the September 30, 1996 quarter was $128,000. The 1996 quarter included the SAIF assessment, which was $383,000 pretax and approximately $237,000 after tax. The adjusted appraisal earnings for the September 30, 1996 quarter is $106,000, with the SAIF assessment and a small adjustment of $2,000 for gains on sale of loans being the only adjustments. The September 1997 year includes three items of income or expense that need to be adjusted for appraisal purposes. The first adjustment of $120,000 relates to excessive provisions for loan and lease losses. The second is for $4,000 gains on the sale of assets. The final adjustment is for $272,000 which represents a payment for retirement benefits for the Chief Executive Officer. The appraisal earnings figure for the twelve months ending June 30, 1997 was $437,000, including adjustments for the SAIF assessment gains on the sale of assets, and abnormal loan loss provisions. The appraisal earnings for the year ending September 30, 1997 is $504,000, up $67,000 from the June 30, 1997 year. Although profits are up for this period, the amount of interest rate risk in the portfolio still makes the sustainability of future earnings questionable in a period of rising interest rates. General Since our original appraisal as of August 22, 1997, the overall thrift equity market has shown upward movement in value, after taking into consideration the recent fluctuations in the market. Figure I shows the movement of the SNL Thrift index from December 31, 1994 to October 28, 1997, the date of this update. The table shows that the index increased by 12.43% during the update period. The general level of interest rates has decreased slightly during the update period (see Figure 11). Exhibit I provides information on thrift conversions completed since March 31, 1997. All of the 11 thrifts have increased in value since conversion. The thrifts have averaged an increase of 62.58%, with a median increase of 63.75%. Individual changes have ranged from an increase of 32.50% to an increase of 80.0%. Short term price increases have occurred as follows: One day--average 48.33%, median 47.50%; one week--average 50.62%, median 53.70%; and one month--average 50.77%, median 46.68%. The group of comparative institutions, which is included in Exhibit V, experienced an average increase in per share value of 13.77% and a median increase in value of 12.82% during the update period, with three decreasing in value, and nine increasing in value. Recent conversions have experienced dramatic increases in prices. These price increases are reflective of general market pressures and supply and demand. The majority of the price increase is during Board of Directors October 30, 1997 Page 3 the first day and first week. Following that, prices seem to increase with or without significant trading volume and with little regard to price earnings ratios. The eight that have been completed since June 30, 1997 have experienced an average first day increase of 57.15% and a minimum first day increase of 40.0%. Valuation Approach Exhibit VI indicates the pro forma market valuation of Wyman Park versus the comparative group and all publicly held thrifts. Pro forma pricing ratios for Wyman Park are based on the financial information shown in Exhibit VIII. Pro forma earnings are based on currently available interest rates and pro forma assets and book value information are taken from the September 30, 1997 financial data included in the offering circular capsule information. At the adjusted $7,650,000 midpoint of the range, Wyman Park is valued at 69.16% of pro forma book value, representing a discount of 43.7% from the mean and 42.9% from the median of the comparative group. The midpoint price is 11.92 times pro forma earnings, representing a discount of 53.3% from the mean and 54.6% from the median of the comparative group. As compared to all publicly held thrifts, at the midpoint of the range, Wyman Park's price earnings ratio represents a discount of 39.6% from the mean and 35.9% from the median. Wyman Park's value of 69.16% of pro forma book value is well below the mean of 162.30% and median of 152.11% of all publicly held thrifts. As compared to thrift conversions completed within the past six months (see Exhibit), Wyman Park's price to pro forma book of 69.16% at the mid point represents a 2.5% discount from the mean and a discount of 3.8% from the median. And its price earnings ratio of 11.92 represents a 51.5% discount from the mean and a 48.8% discount from the median. At the supermaximum, Wyman Park's price to pro forma book ratio of 76.69% represents a premium of 8. 1 % over the mean and 6.7% over the median of conversions completed since March 31, 1997. Wyman Park's pro forma price to book of 76.69% is higher than all but one of the recent conversions, and that one closed at 76.70% price to book value. Conclusion In our opinion, Wyman Park's estimated pro forma market value at October 28, 1997 was $7,650,000, which increased $650,000, or 9.3% from our original appraisal as of August 22, 1997. The resulting valuation range is $6,502,500 at the minimum to $8,797,500 at the maximum, based on a range of 15% below and 15% above the midpoint valuation. The supermaximurn is $10,117,125, based on 1.15 times the maximum. Pro forma comparisons with the comparative group are presented in Exhibit VI based on calculations shown in Exhibit VIII. During the update period from August 22, 1997 to October 28, 1997, thrift equity markets have shown significant movement. Interest rates have decreased slightly during the update period. The SNL Thrift Index increased 12.43%, the average value of the comparative group increased 13.77%, and the median value of the comparative group increased 12.82%. Recent conversions have shown very strong Board of Directors October 30, 1997 Page 4 receptivity since June 30, 1997. Wyman Park continues to have significant interest rate risk and the sustainability of profits is still in question. Considering all of the above factors together, we believe the 9.3% increase in the midpoint value is justified. Our opinion is based upon circumstances as of the date hereof, including current conditions in the United States securities markets. Events occurring after the date hereof, including, but not limited to, changes affecting the United States securities markets and subsequent results of operations of Wyman Park, could materially affect the assumptions, used in preparing this opinion. Respectfully, Ferguson & Company Charles M. Hebert Principal List of Figures and Exhibits Figure Number Title Page - ------ ----- ---- I SNL Index 1 II Selected Interest Rates 2 Exhibit Number - ------- I Recent Conversions 1 II Selected Publicly Held Thrifts 4 III Selected Mid-Atlantic Thrifts 28 IV Selected Maryland Thrifts 36 V Comparative Group Price Changes 40 VI Pro Forma Comparisons 42 VII Comparison of Pricing Ratios 44 VIII Pro Forma Assumptions 45 Pro Forma Effect of Conversion Proceeds 46 Pro Forma Analysis Sheet 50 IX Recent Operating Results 52 X Appraisal Earnings 54 FIGURES FERGUSON & COMPANY Date Index - ----------------- 31-Jan-94 258.47 28-Feb-94 249.53 31-Mar-94 241.57 29-Apr-94 248.31 31-May-94 263.34 30-Jun-94 269.58 29-Jul-94 276.69 31-Aug-94 287.18 30-Sep-94 279.69 31-Oct-94 236.12 30-Nov-94 245.84 30-Dec-94 244.73 31-Jan-95 256.10 28-Feb-95 277.00 31-Mar-95 278.40 28-Apr-95 295.44 31-May-95 307.60 23-Jun-95 313.95 31-Jul-95 328.20 31-Aug-95 355.50 29-Sep-95 362.29 31-Oct-95 354.05 30-Nov-95 370.17 29-Dec-95 376.51 31-Jan-95 370.69 29-Feb-96 373.64 29-Mar-96 382.13 30-Apr-96 377.24 31-May-96 382.99 28-Jun-96 387.18 30-Jul-96 388.38 30-Aug-96 408.34 30-Sep-96 429.28 30-Oct-96 456.70 29-Nov-96 485.83 31-Dec-96 486.63 10-Jan-97 484.33 31-Jan-97 520.08 27-Feb-97 569.67 14-Mar-97 560.67 31-Mar-97 527.74 15-Apr-97 525.48 30-Apr-97 537.21 20-May-97 571.30 30-May-97 577.94 12-Jun-97 604.15 30-Jun-97 624.55 17-Jul-97 652.44 30-Jul-97 684.51 08-Aug-97 664.56 22-Aug-97 663.36 28-Aug-97 661.21 02-Sep-97 677.20 12-Sep-97 698.55 23-Sep-97 729.07 30-Sep-97 737.50 09-Oct-97 766.19 21-Oct-97 773.33 24-Oct-97 768.59 28-Oct-97 745.83 FERGUSON & COMPANY ---------------------------------------------------------------- Percent Change Since --------------------------------------------- SNL Prev. Date Index Date 12/31/94 12/31/95 12/31/96 8/22/97 ---- ----- ----- -------- -------- -------- ------- 31-Dec-94 244.70 31-Mar-95 278.40 13.77% 13.77% 30-Jun-95 313.50 12.61% 28.12% 30-Sep-95 362.30 15.57% 48.06% 31-Oct-95 354.10 -2.26% 44.71% 30-Nov-95 370.20 4.55% 51.29% 31-Dec-95 376.50 1.70% 53.86% 12-Jan-96 372.40 -1.09% 52.19% -1.09% 31-Jan-96 370.70 -0.46% 51.49% -1.54% 29-Feb-96 373.60 0.78% 52.68% -0.77% 29-Mar-96 382.10 2.28% 56.15% 1.49% 30-Apr-96 377.20 -1.28% 54.15% 0.19% 31-May-96 382.99 1.53% 56.51% 1.72% 28-Jun-96 387.18 1.09% 58.23% 2.84% 30-Jul-96 371.62 -4.02% 51.87% -1.30% 30-Aug-96 408.34 9.88% 66.87% 8.46% 20-Sep-96 419.50 2.73% 71.43% 11.42% 30-Sep-96 429.28 2.33% 75.43% 14.02% 30-Oct-96 456.70 6.39% 86.64% 21.30% 29-Nov-96 485.83 6.38% 98.54% 29.04% 13-Dec-96 473.64 -2.51% 93.56% 25.80% 20-Dec-96 481.56 1.67% 96.80% 27.90% 31-Dec-96 486.63 1.05% 98.87% 29.25% 10-Jan-97 484.33 -0.47% 97.93% 28.64% -0.47% 31-Jan-97 520.08 7.38% 112.54% 38.14% 6.87% 14-Feb-97 547.17 5.21% 123.61% 45.33% 12.44% 27-Feb-97 569.67 4.11% 132.80% 51.31% 17.06% 14-Mar-97 560.67 -1.58% 129.13% 48.92% 15.21% 31-Mar-97 527.74 -5.87% 115.67% 40.17% 8.45% 15-Apr-97 525.48 -0.43% 114.74% 39.57% 7.98% 30-Apr-97 537.21 2.23% 119.54% 42.69% 10.39% 20-May-97 571.30 6.35% 133.47% 51.74% 17.40% 30-May-97 577.94 1.16% 136.18% 53.50% 18.76% 12-Jun-97 604.15 4.54% 146.89% 60.46% 24.15% 30-Jun-97 624.55 3.38% 155.23% 65.88% 28.34% 17-Jul-97 652.44 4.47% 166.63% 73.29% 34.07% 30-Jul-97 684.51 4.92% 179.73% 81.81% 40.66% 8-Aug-97 664.56 -2.91% 171.58% 76.51% 36.56% ------ Apprisal Date - 22-Aug-97 663.36 -0.18% 171.09% 76.19% 36.32% - -------------------------------------------------------------------------------- 28-Aug-97 661.21 -0.32% 170.21% 75.62% 35.88% -0.32% 2-Sep-97 677.20 2.42% 176.75% 79.87% 39.16% 2.09% 12-Sep-97 698.55 3.15% 185.47% 85.54% 43.55% 5.30% 23-Sep-97 729.07 4.37% 197.94% 93.64% 49.82% 9.91% 30-Sep-97 737.50 1.16% 201.39% 95.88% 51.55% 11.18% 9-Oct-97 766.19 3.89% 213.11% 103.50% 57.45% 15.50% 21-Oct-97 773.33 4.86% 216.03% 105.40% 58.92% 16.58% 24-Oct-97 768.59 -0.61% 214.09% 104.14% 57.94% 15.86% ------ ----- Update - 28-Oct-97 745.83 -3.56% 204.79% 98.10% 53.26% 12.43% - -------------------------------------------------------------------------------- Figure 1 -- SNL Index Source: SNL Securities and F&C calculations. 1 FERGUSON & COMPANY - ------------------------------------------------------------- ---------- 1 Year 5 Year 10 Year 30 Year 1 to 30 Fed Fds (*) T-bill Treas. Treas. Treas. Yr. Spread - ------------------------------------------------------------- ---------- 31-Dec-96 5.18 5.48 6.12 6.34 6.58 1.10 - ------------------------------------------------------------- ---------- 17-Jan-97 5.19 5.60 6.33 6.56 6.81 31-Jan-97 5.18 5.60 6.36 6.62 6.89 1.29 - ------------------------------------------------------------ ---------- 14-Feb-97 5.05 5.48 6.14 6.37 6.65 27-Feb-97 5.16 5.52 6.25 6.45 6.71 1.19 - ------------------------------------------------------------ ---------- 14-Mar-97 5.19 5.69 6.41 6.58 6.85 31-Mar-97 5.40 5.91 6.75 6.96 7.15 1.24 - ------------------------------------------------------------ ---------- 18-Apr-97 5.48 6.00 6.80 6.92 7.13 30-Apr-97 5.45 5.89 6.57 6.71 6.95 1.06 - ------------------------------------------------------------ ---------- 16-May-97 5.49 5.85 6.54 6.68 6.90 30-May-97 5.43 5.85 6.60 6.75 6.99 1.14 - ------------------------------------------------------------ ---------- 13-Jun-97 5.48 5.71 6.40 6.52 6.80 27-Jun-97 5.42 5.64 6.33 6.45 6.75 1.11 - ------------------------------------------------------------ ---------- 18-Jul-97 5.44 5.53 6.14 6.23 6.52 1-Aug-97 5.57 5.47 6.00 6.11 6.38 0.91 - ------------------------------------------------------------ ---------- 15-Aug-97 5.45 5.61 6.20 6.37 6.65 29-Aug-97 5.56 5.59 6.22 6.34 6.61 1.02 - ------------------------------------------------------------ ---------- 12-Sep-97 5.48 5.59 6.23 6.34 6.64 26-Sep-97 5.45 5.46 6.00 6.08 6.36 0.90 - ------------------------------------------------------------ ---------- 10-Oct-97 5.46 5.40 5.88 5.99 6.29 28-Oct-97 5.45 5.39 5.88 6.16 6.22 0.83 - ------------------------------------------------------------ ---------- (*) Average of Rates Available INREREST RATES FROM MARCH 14, 1997 TO OCTOBER 28, 1997 [GRAPHIC OMITTED] - ------------------------------------------------------------- ---------- 1 Year 5 Year 10 Year 30 Year 1 to 30 Fed Fds (*) T-bill Treas. Treas. Treas. Yr. Spread - ------------------------------------------------------------- ---------- 28-Oct-97 5.45 5.39 5.88 6.16 6.22 0.83 - ------------------------------------------------------------- ---------- CURRENT YIELD CURVE [GRAPHIC OMITTED] (*) Average of Rates Available Figure IV.2 -- Rates Source: US FInancial Data, Federal Reserve Bank of St. Louis, MO 2 EXHIBITS FERGUSON & COMPANY Exhibit I -- Recent Conversions
Conversion Pricing Ratios ------------------------------------------- Price/ Price/ Price/ Price/ Conversion Gross Offering Pro-Forma Pro-Forma Pro-Forma Adjusted Assets Proceeds Price Book Value Tang. Book Earnings Assets Ticker Short Name State IPO Date ($000) ($000) ($) (%) (%) (x) (%) - ------ ---------- ----- -------- ---------- -------- -------- ---------- ---------- --------- -------- OTFC Oregon Trail Financial Corp. OR 10/06/97 204,213 46,949 10.00 76.60 76.63 18.50 18.70 SHSB SHS Bancorp Inc. PA 10/01/97 81,688 8,200 10.00 70.70 70.73 13.90 9.10 OSFS Ohio State Financial Services OH 09/29/97 33,929 6,332 10.00 63.30 63.33 17.00 15.70 FSPT FirstSpartan Financial Corp. SC 07/09/97 375,526 88,608 20.00 73.00 72.98 26.00 19.10 GOSB GSB Financial Corp. NY 07/09/97 96,323 22,483 10.00 73.40 73.44 23.20 18.90 FBNW FirstBank Corp. ID 07/02/97 133,194 19,838 10.00 71.90 71.93 19.20 13.00 CFBC Community First Banking Co. GA 07/01/97 352,532 48,271 20.00 72.70 72.74 36.10 12.00 HCBB HCB Bancshares Inc. AR 05/07/97 171,241 26,450 10.00 72.00 71.95 29.00 13.40 PSFC Peoples-Sidney Financial Corp. OH 04/28/97 86,882 17,854 10.00 71.20 71.24 11.50 17.00 HMLK Hemlock Federal Financial Corp IL 04/02/97 146,595 20,763 10.00 71.60 71.62 37.50 12.40 GSLA GS Financial Corp. LA 04/01/97 86,521 34,385 10.00 63.80 63.75 38.70 28.40 Maximum 375,526 88,608 20.00 76.60 76.63 38.70 28.40 Minimum 33,929 6,332 10.00 63.30 63.33 11.50 9.10 Average All Recent Conversion Since March 31, 1997 160,786 30,921 11.82 70.93 70.94 24.60 16.15 ---------------------------------------------- Median 133,194 22,483 10.00 71.90 71.93 23.20 15.70 Maximum 375,526 88,608 20.00 76.60 76.63 36.10 19.10 Minimum 33,929 6,332 10.00 63.30 63.33 13.90 9.10 Average All Recent Conversion Since July 1, 1997 182,486 34,383 12.86 71.66 71.69 21.99 15.21 ---------------------------------------------- Median 133,194 22,483 10.00 72.70 72.74 19.20 15.70
Exhibit I -- Recent Conversions (Continued)
Post Conversion Increase (Decrease) Current Current Current Price One Price One Price One ----------------------------------------- Stock Price/ Price/Tang Day After Week After Month After One One One To Price Book Value Book Value Conversion Conversion Conversion Day After Week After Month After Date Ticker ($) (%) (%) ($) ($) ($) (%) (%) (%) (%) - ------ ------- ---------- ---------- ---------- ---------- ----------- --------- ---------- ----------- ---- OTFC 16.250 NA NA 16.75 16.38 NA 67.50 63.75 NA 62.50 SHSB 15.750 NA NA 14.75 16.25 15.75 47.50 62.50 57.50 57.50 OSFS 14.960 NA NA 15.50 15.37 14.96 55.00 53.70 49.60 49.60 FSPT 35.000 NA NA 36.69 37.00 35.63 83.44 85.00 78.13 75.00 GOSB 15.000 NA NA 14.63 14.88 14.38 46.25 48.75 43.75 50.00 FBNW 16.375 NA NA 15.81 15.56 17.75 58.13 55.63 77.50 63.75 CFBC 36.000 NA NA 31.88 33.00 34.00 59.38 65.00 70.00 80.00 HCBB 13.250 92.85 96.50 12.63 12.75 12.88 26.25 27.50 28.75 32.50 PSFC 17.500 121.53 121.53 12.56 12.88 13.25 25.63 28.75 32.50 75.00 HMLK 17.000 112.88 112.88 12.88 12.88 13.00 28.75 28.75 30.00 70.00 GSLA 17.250 105.44 105.44 13.38 13.75 14.00 33.75 37.50 40.00 72.50 Maximum 36.00 121.53 121.53 36.69 37.00 35.63 83.44 85.00 78.13 80.00 Minimum 13.25 92.85 96.50 12.56 12.75 12.88 25.63 27.50 28.75 32.50 Average 19.49 108.18 109.09 17.95 18.24 18.56 48.33 50.62 50.77 62.58 Median 16.38 109.16 109.16 14.75 15.37 14.67 47.50 53.70 46.68 63.75 Maximum 36.00 -- -- 36.69 37.00 35.63 83.44 85.00 78.13 80.00 Minimum 14.96 -- -- 14.63 14.88 14.38 46.25 48.75 43.75 49.60 Average 21.33 NA NA 20.86 21.20 22.08 59.60 62.05 62.75 62.62 Median 16.25 NA NA 15.81 16.25 16.75 58.13 62.50 63.75 62.50
Source: SNL Securities and F&C calculations. 1 FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- AADV Advantage Bancorp Inc. Kenosha WI MW SAIF NASDAQ 03/23/92 55.000 177.86 ABBK Abington Bancorp Inc. Abington MA NE BIF NASDAQ 06/10/86 32.500 59.81 ABCL Alliance Bancorp Inc. Hinsdale IL MW SAIF NASDAQ 07/07/92 24.875 199.51 ABCW Anchor BanCorp Wisconsin Madison WI MW SAIF NASDAQ 07/16/92 28.250 255.76 AFCB Affiliated Community Bancorp Waltham MA NE SAIF NASDAQ 10/19/95 28.500 185.04 AHM Ahmanson & Company (H.F.) Irwindale CA WE SAIF NYSE 10/25/72 60.938 5,753.23 ALBC Albion Banc Corp. Albion NY MA SAIF NASDAQ 07/26/93 29.000 7.25 ALBK ALBANK Financial Corp. Albany NY MA SAIF NASDAQ 04/01/92 45.500 585.68 AMFC AMB Financial Corp. Munster IN MW SAIF NASDAQ 04/01/96 16.750 16.14 ANDB Andover Bancorp Inc. Andover MA NE BIF NASDAQ 05/08/86 35.500 182.78 ANE Alliance Bncorp of New England Tolland CT NE BIF AMSE 12/19/86 16.625 25.94 ASBI Ameriana Bancorp New Castle IN MW SAIF NASDAQ 03/02/87 18.750 60.57 ASBP ASB Financial Corp. Portsmouth OH MW SAIF NASDAQ 05/11/95 13.375 23.02 ASFC Astoria Financial Corp. Lake Success NY MA SAIF NASDAQ 11/18/93 50.813 1,050.10 ATSB AmTrust Capital Corp. Peru IN MW SAIF NASDAQ 03/28/95 13.750 7.24 BANC BankAtlantic Bancorp Inc. Fort Lauderdale FL SE SAIF NASDAQ 11/29/83 13.500 144.15 BDJI First Federal Bancorporation Bemidji MN MW SAIF NASDAQ 04/04/95 24.625 16.81 BFD BostonFed Bancorp Inc. Burlington MA NE SAIF AMSE 10/24/95 20.625 116.53 BFSB Bedford Bancshares Inc. Bedford VA SE SAIF NASDAQ 08/22/94 23.000 26.28 BKC American Bank of Connecticut Waterbury CT NE BIF AMSE 12/01/81 44.500 102.94 BKCT Bancorp Connecticut Inc. Southington CT NE BIF NASDAQ 07/03/86 36.750 93.46 BKUNA BankUnited Financial Corp. Coral Gables FL SE SAIF NASDAQ 12/11/85 12.875 114.19 BVCC Bay View Capital Corp. San Mateo CA WE SAIF NASDAQ 05/09/86 29.875 371.09 BYFC Broadway Financial Corp. Los Angeles CA WE SAIF NASDAQ 01/09/96 12.625 10.54 CAFI Camco Financial Corp. Cambridge OH MW SAIF NASDAQ NA 22.500 72.32 CAPS Capital Savings Bancorp Inc. Jefferson City MO MW SAIF NASDAQ 12/29/93 17.250 32.63 CASB Cascade Financial Corp. Everett WA WE SAIF NASDAQ 09/16/92 12.500 42.33 CASH First Midwest Financial Inc. Storm Lake IA MW SAIF NASDAQ 09/20/93 19.625 53.65 CATB Catskill Financial Corp. Catskill NY MA BIF NASDAQ 04/18/96 17.500 85.72 CBCI Calumet Bancorp Inc. Dolton IL MW SAIF NASDAQ 02/20/92 50.500 106.60 CBK Citizens First Financial Corp. Bloomington IL MW SAIF AMSE 05/01/96 18.750 48.64 CBSA Coastal Bancorp Inc. Houston TX SW SAIF NASDAQ NA 29.375 146.65 CBSB Charter Financial Inc. Sparta IL MW SAIF NASDAQ 12/29/95 21.000 87.15 CEBK Central Co-operative Bank Somerville MA NE BIF NASDAQ 10/24/86 22.500 44.21 CFB Commercial Federal Corp. Omaha NE MW SAIF NYSE 12/31/84 48.063 1,037.28 CFCP Coastal Financial Corp. Myrtle Beach SC SE SAIF NASDAQ 09/26/90 24.500 113.70 CFFC Community Financial Corp. Staunton VA SE SAIF NASDAQ 03/30/88 21.750 27.74 CFSB CFSB Bancorp Inc. Lansing MI MW SAIF NASDAQ 06/22/90 30.625 155.79 CFTP Community Federal Bancorp Tupelo MS SE SAIF NASDAQ 03/26/96 16.375 75.80 CFX CFX Corp. Keene NH NE BIF AMSE 02/12/87 24.875 596.43 CIBI Community Investors Bancorp Bucyrus OH MW SAIF NASDAQ 02/07/95 15.000 13.75 CKFB CKF Bancorp Inc. Danville KY MW SAIF NASDAQ 01/04/95 19.000 17.62 CLAS Classic Bancshares Inc. Ashland KY MW SAIF NASDAQ 12/29/95 15.500 20.23 CMRN Cameron Financial Corp Cameron MO MW SAIF NASDAQ 04/03/95 18.125 46.44 CMSB Commonwealth Bancorp Inc. Norristown PA MA SAIF NASDAQ 06/17/96 17.375 282.22 CNIT CENIT Bancorp Inc. Norfolk VA SE SAIF NASDAQ 08/06/92 61.250 101.25 COFI Charter One Financial Cleveland OH MW SAIF NASDAQ 01/22/88 58.750 2,911.83 CRZY Crazy Woman Creek Bancorp Buffalo WY WE SAIF NASDAQ 03/29/96 14.750 14.08 CTZN CitFed Bancorp Inc. Dayton OH MW SAIF NASDAQ 01/23/92 49.500 428.58 CVAL Chester Valley Bancorp Inc. Downingtown PA MA SAIF NASDAQ 03/27/87 26.000 56.22 DIBK Dime Financial Corp. Wallingford CT NE BIF NASDAQ 07/09/86 31.000 160.02 DIME Dime Community Bancorp Inc. Brooklyn NY MA BIF NASDAQ 06/26/96 20.750 271.67 DME Dime Bancorp Inc. New York NY MA BIF NYSE 08/19/86 24.063 2,442.20 DNFC D & N Financial Corp. Hancock MI MW SAIF NASDAQ 02/13/85 23.875 196.83
2 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- DSL Downey Financial Corp. Newport Beach CA WE SAIF NYSE 01/01/71 24.438 653.81 EBSI Eagle Bancshares Tucker GA SE SAIF NASDAQ 04/01/86 18.063 102.23 EFBI Enterprise Federal Bancorp West Chester OH MW SAIF NASDAQ 10/17/94 26.250 52.11 EGFC Eagle Financial Corp. Bristol CT NE SAIF NASDAQ 02/03/87 48.375 305.54 EIRE Emerald Isle Bancorp Inc. Quincy MA NE BIF NASDAQ 09/08/86 31.500 70.87 EMLD Emerald Financial Corp. Strongsville OH MW SAIF NASDAQ NA 17.750 90.02 EQSB Equitable Federal Savings Bank Wheaton MD MA SAIF NASDAQ 09/10/93 43.875 26.42 ESBK Elmira Savings Bank (The) Elmira NY MA BIF NASDAQ 03/01/85 28.125 19.87 ETFS East Texas Financial Services Tyler TX SW SAIF NASDAQ 01/10/95 19.125 19.61 FBBC First Bell Bancorp Inc. Pittsburgh PA MA SAIF NASDAQ 06/29/95 17.125 111.49 FBCI Fidelity Bancorp Inc. Chicago IL MW SAIF NASDAQ 12/15/93 23.500 65.68 FBCV 1ST Bancorp Vincennes IN MW SAIF NASDAQ 04/07/87 38.500 26.63 FBER 1st Bergen Bancorp Wood-Ridge NJ MA SAIF NASDAQ 04/01/96 18.250 54.76 FBHC Fort Bend Holding Corp. Rosenberg TX SW SAIF NASDAQ 06/30/93 19.250 31.85 FBSI First Bancshares Inc. Mountain Grove MO MW SAIF NASDAQ 12/22/93 24.625 26.90 FCBF FCB Financial Corp. Oshkosh WI MW SAIF NASDAQ 09/24/93 27.000 109.97 FCME First Coastal Corp. Westbrook ME NE BIF NASDAQ NA 13.750 18.69 FDEF First Defiance Financial Defiance OH MW SAIF NASDAQ 10/02/95 15.750 141.07 FED FirstFed Financial Corp. Santa Monica CA WE SAIF NYSE 12/16/83 35.688 377.76 FESX First Essex Bancorp Inc. Andover MA NE BIF NASDAQ 08/04/87 19.500 146.77 FFBA First Colorado Bancorp Inc. Lakewood CO SW SAIF NASDAQ 01/02/96 19.875 327.63 FFBH First Federal Bancshares of AR Harrison AR SE SAIF NASDAQ 05/03/96 20.500 100.37 FFBI First Financial Bancorp Inc. Belvidere IL MW SAIF NASDAQ 10/04/93 19.250 7.99 FFBS FFBS BanCorp Inc. Columbus MS SE SAIF NASDAQ 07/01/93 22.063 34.36 FFBZ First Federal Bancorp Inc. Zanesville OH MW SAIF NASDAQ 07/13/92 19.625 30.84 FFCH First Financial Holdings Inc. Charleston SC SE SAIF NASDAQ 11/10/83 35.750 227.67 FFDB FirstFed Bancorp Inc. Bessemer AL SE SAIF NASDAQ 11/19/91 22.750 26.19 FFDF FFD Financial Corp. Dover OH MW SAIF NASDAQ 04/03/96 18.500 26.73 FFED Fidelity Federal Bancorp Evansville IN MW SAIF NASDAQ 08/31/87 9.250 23.01 FFES First Federal of East Hartford East Hartford CT NE SAIF NASDAQ 06/23/87 35.000 93.88 FFFC FFVA Financial Corp. Lynchburg VA SE SAIF NASDAQ 10/12/94 31.625 142.96 FFFD North Central Bancshares Inc. Fort Dodge IA MW SAIF NASDAQ 03/21/96 17.625 57.42 FFFL Fidelity Bankshares Inc. (MHC) West Palm Beach FL SE SAIF NASDAQ 01/07/94 27.000 182.82 FFHH FSF Financial Corp. Hutchinson MN MW SAIF NASDAQ 10/07/94 19.125 57.56 FFHS First Franklin Corporation Cincinnati OH MW SAIF NASDAQ 01/26/88 23.000 27.42 FFIC Flushing Financial Corp. Flushing NY MA BIF NASDAQ 11/21/95 21.125 168.65 FFKY First Federal Financial Corp. Elizabethtown KY MW SAIF NASDAQ 07/15/87 22.000 91.50 FFLC FFLC Bancorp Inc. Leesburg FL SE SAIF NASDAQ 01/04/94 35.000 80.53 FFOH Fidelity Financial of Ohio Cincinnati OH MW SAIF NASDAQ 03/04/96 15.500 86.49 FFPB First Palm Beach Bancorp Inc. West Palm Beach FL SE SAIF NASDAQ 09/29/93 38.250 193.08 FFSL First Independence Corp. Independence KS MW SAIF NASDAQ 10/08/93 14.625 14.51 FFSX First Fed SB of Siouxland(MHC) Sioux City IA MW SAIF NASDAQ 07/13/92 32.000 90.66 FFWC FFW Corp. Wabash IN MW SAIF NASDAQ 04/05/93 31.250 22.34 FFWD Wood Bancorp Inc. Bowling Green OH MW SAIF NASDAQ 08/31/93 17.500 37.07 FFYF FFY Financial Corp. Youngstown OH MW SAIF NASDAQ 06/28/93 28.500 117.48 FGHC First Georgia Holding Inc. Brunswick GA SE SAIF NASDAQ 02/11/87 8.125 24.80 FIBC Financial Bancorp Inc. Long Island City NY MA SAIF NASDAQ 08/17/94 22.500 38.47 FISB First Indiana Corporation Indianapolis IN MW SAIF NASDAQ 08/02/83 24.375 257.43 FKFS First Keystone Financial Media PA MA SAIF NASDAQ 01/26/95 29.250 35.92 FLFC First Liberty Financial Corp. Macon GA SE SAIF NASDAQ 12/06/83 23.250 179.60 FMCO FMS Financial Corp. Burlington NJ MA SAIF NASDAQ 12/14/88 28.500 68.04 FMSB First Mutual Savings Bank Bellevue WA WE BIF NASDAQ 12/17/85 27.500 74.56 FNGB First Northern Capital Corp. Green Bay WI MW SAIF NASDAQ 12/29/83 13.500 119.34 FOBC Fed One Bancorp Wheeling WV SE SAIF NASDAQ 01/19/95 24.000 56.96
3 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- FSBI Fidelity Bancorp Inc. Pittsburgh PA MA SAIF NASDAQ 06/24/88 24.000 37.20 FSPG First Home Bancorp Inc. Pennsville NJ MA SAIF NASDAQ 04/20/87 22.500 60.94 FSTC First Citizens Corp. Newnan GA SE SAIF NASDAQ 03/01/86 38.000 69.88 FTF Texarkana First Financial Corp Texarkana AR SE SAIF AMSE 07/07/95 24.875 44.53 FTFC First Federal Capital Corp. La Crosse WI MW SAIF NASDAQ 11/02/89 27.250 249.74 FTSB Fort Thomas Financial Corp. Fort Thomas KY MW SAIF NASDAQ 06/28/95 13.375 18.97 FWWB First SB of Washington Bancorp Walla Walla WA WE SAIF NASDAQ 11/01/95 24.125 253.10 GAF GA Financial Inc. Pittsburgh PA MA SAIF AMSE 03/26/96 18.625 148.50 GBCI Glacier Bancorp Inc. Kalispell MT WE SAIF NASDAQ 03/30/84 20.000 136.24 GDW Golden West Financial Oakland CA WE SAIF NYSE 05/29/59 85.813 4,871.64 GFCO Glenway Financial Corp. Cincinnati OH MW SAIF NASDAQ 11/30/90 30.625 34.91 GFSB GFS Bancorp Inc. Grinnell IA MW SAIF NASDAQ 01/06/94 17.125 16.92 GPT GreenPoint Financial Corp. New York NY MA BIF NYSE 01/28/94 62.250 2,665.92 GSB Golden State Bancorp Inc. Glendale CA WE SAIF NYSE 10/01/83 33.625 1,696.57 GSBC Great Southern Bancorp Inc. Springfield MO MW SAIF NASDAQ 12/14/89 20.125 162.62 GSFC Green Street Financial Corp. Fayetteville NC SE SAIF NASDAQ 04/04/96 18.000 77.37 GUPB GFSB Bancorp Inc. Gallup NM SW SAIF NASDAQ 06/30/95 21.250 15.98 HALL Hallmark Capital Corp. West Allis WI MW SAIF NASDAQ 01/03/94 28.484 41.10 HARB Harbor Florida Bancorp (MHC) Fort Pierce FL SE SAIF NASDAQ 01/06/94 62.500 310.84 HARL Harleysville Savings Bank Harleysville PA MA SAIF NASDAQ 08/04/87 29.250 48.60 HAVN Haven Bancorp Inc. Woodhaven NY MA SAIF NASDAQ 09/23/93 42.125 184.76 HBBI Home Building Bancorp Washington IN MW SAIF NASDAQ 02/08/95 21.625 6.74 HBFW Home Bancorp Fort Wayne IN MW SAIF NASDAQ 03/30/95 24.313 61.38 HBNK Highland Federal Bank FSB Burbank CA WE SAIF NASDAQ NA 32.000 73.60 HBS Haywood Bancshares Inc. Waynesville NC SE BIF AMSE 12/18/87 21.125 26.41 HFFB Harrodsburg First Fin Bancorp Harrodsburg KY MW SAIF NASDAQ 10/04/95 16.000 32.40 HFFC HF Financial Corp. Sioux Falls SD MW SAIF NASDAQ 04/08/92 25.500 76.06 HFGI Harrington Financial Group Richmond IN MW SAIF NASDAQ NA 12.625 41.12 HFNC HFNC Financial Corp. Charlotte NC SE SAIF NASDAQ 12/29/95 14.875 255.74 HFSA Hardin Bancorp Inc. Hardin MO MW SAIF NASDAQ 09/29/95 17.625 15.15 HHFC Harvest Home Financial Corp. Cheviot OH MW SAIF NASDAQ 10/10/94 14.750 13.49 HIFS Hingham Instit. for Savings Hingham MA NE BIF NASDAQ 12/20/88 28.500 37.15 HMCI HomeCorp Inc. Rockford IL MW SAIF NASDAQ 06/22/90 20.250 34.58 HMNF HMN Financial Inc. Spring Valley MN MW SAIF NASDAQ 06/30/94 24.250 102.14 HOMF Home Federal Bancorp Seymour IN MW SAIF NASDAQ 01/23/88 35.000 119.04 HPBC Home Port Bancorp Inc. Nantucket MA NE BIF NASDAQ 08/25/88 23.250 42.82 HRBF Harbor Federal Bancorp Inc. Baltimore MD MA SAIF NASDAQ 08/12/94 20.750 35.14 HRZB Horizon Financial Corp. Bellingham WA WE BIF NASDAQ 08/01/86 16.313 120.99 HTHR Hawthorne Financial Corp. El Segundo CA WE SAIF NASDAQ NA 17.500 54.04 HZFS Horizon Financial Svcs Corp. Oskaloosa IA MW SAIF NASDAQ 06/30/94 22.500 9.57 IBSF IBS Financial Corp. Cherry Hill NJ MA SAIF NASDAQ 10/13/94 16.000 176.23 IFSB Independence Federal Svgs Bank Washington DC MA SAIF NASDAQ 06/06/85 13.813 17.70 INBI Industrial Bancorp Inc. Bellevue OH MW SAIF NASDAQ 08/01/95 17.250 89.23 INCB Indiana Community Bank SB Lebanon IN MW SAIF NASDAQ 12/15/94 15.000 13.83 IPSW Ipswich Savings Bank Ipswich MA NE BIF NASDAQ 05/26/93 13.000 30.91 ISBF ISB Financial Corp. New Iberia LA SW SAIF NASDAQ 04/07/95 24.250 167.34 ITLA ITLA Capital Corp. La Jolla CA WE BIF NASDAQ 10/24/95 20.000 156.94 IWBK InterWest Bancorp Inc. Oak Harbor WA WE SAIF NASDAQ NA 37.375 300.34 JSB JSB Financial Inc. Lynbrook NY MA BIF NYSE 06/27/90 47.000 465.21 JSBA Jefferson Savings Bancorp Ballwin MO MW SAIF NASDAQ 04/08/93 40.000 200.25 JXVL Jacksonville Bancorp Inc. Jacksonville TX SW SAIF NASDAQ 04/01/96 18.500 45.62 KFBI Klamath First Bancorp Klamath Falls OR WE SAIF NASDAQ 10/05/95 22.625 226.67 KNK Kankakee Bancorp Inc. Kankakee IL MW SAIF AMSE 01/06/93 31.500 44.91 KSAV KS Bancorp Inc. Kenly NC SE SAIF NASDAQ 12/30/93 21.500 19.04
4 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- KSBK KSB Bancorp Inc. Kingfield ME NE BIF NASDAQ 06/24/93 14.000 17.33 KYF Kentucky First Bancorp Inc. Cynthiana KY MW SAIF AMSE 08/29/95 13.500 17.59 LARK Landmark Bancshares Inc. Dodge City KS MW SAIF NASDAQ 03/28/94 24.000 41.06 LARL Laurel Capital Group Inc. Allison Park PA MA SAIF NASDAQ 02/20/87 25.750 37.15 LFBI Little Falls Bancorp Inc. Little Falls NJ MA SAIF NASDAQ 01/05/96 17.500 45.64 LFED Leeds Federal Savings Bk (MHC) Baltimore MD MA SAIF NASDAQ 05/02/94 31.500 108.82 LIFB Life Bancorp Inc. Norfolk VA SE SAIF NASDAQ 10/11/94 23.625 232.65 LISB Long Island Bancorp Inc. Melville NY MA SAIF NASDAQ 04/18/94 43.750 1,051.00 LOGN Logansport Financial Corp. Logansport IN MW SAIF NASDAQ 06/14/95 15.000 18.91 LONF London Financial Corporation London OH MW SAIF NASDAQ 04/01/96 20.375 10.39 LSBI LSB Financial Corp. Lafayette IN MW BIF NASDAQ 02/03/95 25.500 23.37 LSBX Lawrence Savings Bank North Andover MA NE BIF NASDAQ 05/02/86 13.375 57.31 LVSB Lakeview Financial Paterson NJ MA SAIF NASDAQ 12/22/93 24.063 108.50 LXMO Lexington B&L Financial Corp. Lexington MO MW SAIF NASDAQ 06/06/96 16.375 18.64 MAFB MAF Bancorp Inc. Clarendon Hills IL MW SAIF NASDAQ 01/12/90 30.500 465.10 MARN Marion Capital Holdings Marion IN MW SAIF NASDAQ 03/18/93 27.000 47.95 MASB MASSBANK Corp. Reading MA NE BIF NASDAQ 05/28/86 43.500 154.89 MBB MSB Bancorp Inc. Goshen NY MA BIF AMSE 09/03/92 27.375 77.86 MBB MSB Bancorp, Inc. Goshen NY MA BIF AMSE NA 27.375 77.86 MBBC Monterey Bay Bancorp Inc. Watsonville CA WE SAIF NASDAQ 02/15/95 18.250 59.17 MBLF MBLA Financial Corp. Macon MO MW SAIF NASDAQ 06/24/93 25.750 33.43 MCBN Mid-Coast Bancorp Inc. Waldoboro ME NE SAIF NASDAQ 11/02/89 28.031 6.53 MDBK Medford Savings Bank Medford MA NE BIF NASDAQ 03/18/86 35.000 158.94 MECH Mechanics Savings Bank Hartford CT NE BIF NASDAQ 06/26/96 24.875 131.67 MERI Meritrust Federal SB Thibodaux LA SW SAIF NASDAQ NA 47.750 36.97 METF Metropolitan Financial Corp. Mayfield Heights OH MW SAIF NASDAQ NA 20.250 71.39 MFBC MFB Corp. Mishawaka IN MW SAIF NASDAQ 03/25/94 22.750 37.55 MFFC Milton Federal Financial Corp. West Milton OH MW SAIF NASDAQ 10/07/94 15.250 35.15 MFLR Mayflower Co-operative Bank Middleboro MA NE BIF NASDAQ 12/23/87 23.500 20.92 MFSL Maryland Federal Bancorp Hyattsville MD MA SAIF NASDAQ 06/02/87 45.500 147.13 MIVI Mississippi View Holding Co. Little Falls MN MW SAIF NASDAQ 03/24/95 18.000 14.74 MSBF MSB Financial Inc. Marshall MI MW SAIF NASDAQ 02/06/95 17.625 21.74 MWBI Midwest Bancshares Inc. Burlington IA MW SAIF NASDAQ 11/12/92 51.000 17.30 MWBX MetroWest Bank Framingham MA NE BIF NASDAQ 10/10/86 8.250 115.14 MWFD Midwest Federal Financial Baraboo WI MW SAIF NASDAQ 07/08/92 24.000 39.06 NASB North American Savings Bank Grandview MO MW SAIF NASDAQ 09/27/85 49.750 111.26 NBN Northeast Bancorp Auburn ME NE BIF AMSE 08/19/87 23.500 30.39 NEIB Northeast Indiana Bancorp Huntington IN MW SAIF NASDAQ 06/28/95 18.375 32.39 NHTB New Hampshire Thrift Bncshrs New London NH NE SAIF NASDAQ 05/22/86 22.000 45.42 NMSB NewMil Bancorp Inc. New Milford CT NE BIF NASDAQ 02/01/86 12.250 46.98 NSLB NS&L Bancorp Inc. Neosho MO MW SAIF NASDAQ 06/08/95 18.250 12.91 NTMG Nutmeg Federal S&LA Danbury CT NE SAIF NASDAQ NA 11.500 8.49 NWEQ Northwest Equity Corp. Amery WI MW SAIF NASDAQ 10/11/94 17.500 14.68 OCN Ocwen Financial Corp. West Palm Beach FL SE SAIF NYSE NA 56.563 1,711.18 OFCP Ottawa Financial Corp. Holland MI MW SAIF NASDAQ 08/19/94 26.625 142.53 OHSL OHSL Financial Corp. Cincinnati OH MW SAIF NASDAQ 02/10/93 26.500 31.69 PBCI Pamrapo Bancorp Inc. Bayonne NJ MA SAIF NASDAQ 11/14/89 22.625 64.32 PBHC Oswego City Savings Bk (MHC) Oswego NY MA BIF NASDAQ 11/16/95 27.500 52.71 PBKB People's Bancshares Inc. New Bedford MA NE BIF NASDAQ 10/30/86 18.625 60.49 PCBC Perry County Financial Corp. Perryville MO MW SAIF NASDAQ 02/13/95 20.500 16.97 PCCI Pacific Crest Capital Agoura Hills CA WE BIF NASDAQ NA 16.250 47.76 PEEK Peekskill Financial Corp. Peekskill NY MA SAIF NASDAQ 12/29/95 16.750 53.48 PERM Permanent Bancorp Inc. Evansville IN MW SAIF NASDAQ 04/04/94 25.000 52.51 PERT Perpetual Bank (MHC) Anderson SC SE SAIF NASDAQ 10/26/93 51.000 76.73
5 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- PFDC Peoples Bancorp Auburn IN MW SAIF NASDAQ 07/07/87 31.500 71.62 PFFB PFF Bancorp Inc. Pomona CA WE SAIF NASDAQ 03/29/96 19.125 342.40 PFNC Progress Financial Corp. Blue Bell PA MA SAIF NASDAQ 07/18/83 13.875 55.64 PFSB PennFed Financial Services Inc West Orange NJ MA SAIF NASDAQ 07/15/94 29.813 143.78 PFSL Pocahontas FS&LA (MHC) Pocahontas AR SE SAIF NASDAQ 04/05/94 34.750 56.73 PHBK Peoples Heritage Finl Group Portland ME NE BIF NASDAQ 12/04/86 39.250 1,078.38 PHFC Pittsburgh Home Financial Corp Pittsburgh PA MA SAIF NASDAQ 04/01/96 18.750 36.93 PRBC Prestige Bancorp Inc. Pleasant Hills PA MA SAIF NASDAQ 06/27/96 18.250 16.70 PSBK Progressive Bank Inc. Fishkill NY MA BIF NASDAQ 08/01/84 34.000 130.15 PTRS Potters Financial Corp. East Liverpool OH MW SAIF NASDAQ 12/31/93 26.875 12.88 PULS Pulse Bancorp South River NJ MA SAIF NASDAQ 09/18/86 26.125 80.48 PVFC PVF Capital Corp. Bedford Heights OH MW SAIF NASDAQ 12/30/92 20.000 51.80 PVSA Parkvale Financial Corporation Monroeville PA MA SAIF NASDAQ 07/16/87 28.750 146.79 PWBC PennFirst Bancorp Inc. Ellwood City PA MA SAIF NASDAQ 06/13/90 17.875 94.92 QCBC Quaker City Bancorp Inc. Whittier CA WE SAIF NASDAQ 12/30/93 20.000 93.46 QCFB QCF Bancorp Inc. Virginia MN MW SAIF NASDAQ 04/03/95 28.500 40.65 QCSB Queens County Bancorp Inc. Flushing NY MA BIF NASDAQ 11/23/93 35.750 540.12 RARB Raritan Bancorp Inc. Raritan NJ MA BIF NASDAQ 03/01/87 27.750 65.83 REDF RedFed Bancorp Inc. Redlands CA WE SAIF NASDAQ 04/08/94 18.750 134.52 RELI Reliance Bancshares Inc. Milwaukee WI MW SAIF NASDAQ 04/19/96 8.750 22.12 RELY Reliance Bancorp Inc. Garden City NY MA SAIF NASDAQ 03/31/94 30.500 265.73 ROSE TR Financial Corp. Garden City NY MA BIF NASDAQ 06/29/93 30.375 534.36 SCCB S. Carolina Community Bancshrs Winnsboro SC SE SAIF NASDAQ 07/07/94 21.500 15.04 SFED SFS Bancorp Inc. Schenectady NY MA SAIF NASDAQ 06/30/95 21.500 26.47 SFFC StateFed Financial Corporation Des Moines IA MW SAIF NASDAQ 01/05/94 27.000 21.16 SFIN Statewide Financial Corp. Jersey City NJ MA SAIF NASDAQ 10/02/95 19.500 91.85 SFSB SuburbFed Financial Corp. Flossmoor IL MW SAIF NASDAQ 03/04/92 33.750 42.61 SFSL Security First Corp. Mayfield Heights OH MW SAIF NASDAQ 01/22/88 17.875 135.53 SGVB SGV Bancorp Inc. West Covina CA WE SAIF NASDAQ 06/29/95 18.000 42.16 SHEN First Shenango Bancorp Inc. New Castle PA MA SAIF NASDAQ 04/06/93 34.250 70.86 SISB SIS Bancorp Inc. Springfield MA NE BIF NASDAQ 02/08/95 33.875 189.05 SKAN Skaneateles Bancorp Inc. Skaneateles NY MA BIF NASDAQ 06/02/86 30.250 28.89 SMBC Southern Missouri Bancorp Inc. Poplar Bluff MO MW SAIF NASDAQ 04/13/94 17.750 29.07 SOBI Sobieski Bancorp Inc. South Bend IN MW SAIF NASDAQ 03/31/95 18.250 13.86 SOPN First Savings Bancorp Inc. Southern Pines NC SE SAIF NASDAQ 01/06/94 23.500 86.46 SOSA Somerset Savings Bank Somerville MA NE BIF NASDAQ 07/09/86 5.125 85.34 SPBC St. Paul Bancorp Inc. Chicago IL MW SAIF NASDAQ 05/18/87 24.188 825.62 SSB Scotland Bancorp Inc Laurinburg NC SE SAIF AMSE 04/01/96 10.625 20.33 SSM Stone Street Bancorp Inc. Mocksville NC SE SAIF AMSE 04/01/96 20.250 38.44 STFR St. Francis Capital Corp. Milwaukee WI MW SAIF NASDAQ 06/21/93 38.500 204.16 STSA Sterling Financial Corp. Spokane WA WE SAIF NASDAQ NA 21.000 158.91 SVRN Sovereign Bancorp Inc. Wyomissing PA MA SAIF NASDAQ 08/12/86 17.563 1,981.78 SWBI Southwest Bancshares Hometown IL MW SAIF NASDAQ 06/24/92 25.750 68.42 SWCB Sandwich Bancorp Inc. Sandwich MA NE BIF NASDAQ 07/25/86 36.000 68.95 THR Three Rivers Financial Corp. Three Rivers MI MW SAIF AMSE 08/24/95 18.000 14.82 THRD TF Financial Corporation Newtown PA MA SAIF NASDAQ 07/13/94 24.000 98.12 TPNZ Tappan Zee Financial Inc. Tarrytown NY MA SAIF NASDAQ 10/05/95 20.500 30.69 TRIC Tri-County Bancorp Inc. Torrington WY WE SAIF NASDAQ 09/30/93 27.750 16.20 TSH Teche Holding Co. Franklin LA SW SAIF AMSE 04/19/95 20.000 68.75 TWIN Twin City Bancorp Bristol TN SE SAIF NASDAQ 01/04/95 13.750 17.50 UBMT United Financial Corp. Great Falls MT WE SAIF NASDAQ 09/23/86 24.000 29.36 UFRM United Federal Savings Bank Rocky Mount NC SE SAIF NASDAQ 07/01/80 11.375 34.97 VABF Virginia Beach Fed. Financial Virginia Beach VA SE SAIF NASDAQ 11/01/80 15.125 75.27 WAMU Washington Mutual Inc. Seattle WA WE BIF NASDAQ 03/11/83 68.125 17,520.12
6 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- WAYN Wayne Svgs Community Bank(MHC) Wooster OH MW SAIF NASDAQ 06/25/93 25.500 57.39 WBST Webster Financial Corp. Waterbury CT NE SAIF NASDAQ 12/12/86 59.938 812.41 WCBI Westco Bancorp Westchester IL MW SAIF NASDAQ 06/26/92 26.500 65.56 WEFC Wells Financial Corp. Wells MN MW SAIF NASDAQ 04/11/95 17.000 33.31 WFI Winton Financial Corp. Cincinnati OH MW SAIF AMSE 08/04/88 19.500 38.73 WFSL Washington Federal Inc. Seattle WA WE SAIF NASDAQ 11/17/82 31.125 1,478.71 WHGB WHG Bancshares Corp. Lutherville MD MA SAIF NASDAQ 04/01/96 15.125 22.11 WOFC Western Ohio Financial Corp. Springfield OH MW SAIF NASDAQ 07/29/94 24.500 57.72 WRNB Warren Bancorp Inc. Peabody MA NE BIF NASDAQ 07/09/86 20.250 76.92 WSB Washington Savings Bank, FSB Waldorf MD MA SAIF AMSE NA 7.625 32.39 WSFS WSFS Financial Corp. Wilmington DE MA BIF NASDAQ 11/26/86 17.500 217.74 WSTR WesterFed Financial Corp. Missoula MT WE SAIF NASDAQ 01/10/94 24.750 138.03 WVFC WVS Financial Corp. Pittsburgh PA MA SAIF NASDAQ 11/29/93 31.000 54.19 WYNE Wayne Bancorp Inc. Wayne NJ MA SAIF NASDAQ 06/27/96 22.500 45.31 YFCB Yonkers Financial Corporation Yonkers NY MA SAIF NASDAQ 04/18/96 18.750 56.64 YFED York Financial Corp. York PA MA SAIF NASDAQ 02/01/84 26.125 183.09 Maximum 85.813 17,520.12 Minimum 5.125 6.53 Average 25.442 261.60 Median 23.000 61.16
7 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- AADV 21.32 189.39 202.58 17.45 0.73 1,019,510 9.21 8.67 2.58 0.89 ABBK 18.16 173.52 192.65 12.01 1.23 501,256 6.92 6.27 1.79 0.73 ABCL 19.28 154.50 156.35 14.55 1.77 1,371,184 9.41 9.31 1.29 0.85 ABCW 15.27 204.41 208.03 13.08 1.13 1,954,749 6.40 6.30 1.85 0.93 AFCB 16.38 164.93 165.79 16.40 2.11 1,128,579 9.76 9.71 1.74 1.08 AHM 20.52 302.12 355.53 12.29 1.44 46,799,157 5.10 4.51 2.97 0.73 ALBC 29.90 121.04 121.04 10.57 1.10 68,628 8.73 8.73 0.97 0.37 ALBK 17.23 170.48 193.53 15.76 1.58 3,716,954 9.24 8.23 2.64 1.04 AMFC 24.63 114.57 114.57 17.14 1.67 94,179 14.96 14.96 0.68 0.80 ANDB 14.61 175.74 175.74 14.27 1.92 1,280,601 8.12 8.12 2.43 1.03 ANE 14.84 156.84 161.41 10.89 1.20 238,227 6.94 6.76 1.12 0.79 ASBI 18.38 138.99 139.09 15.23 3.41 397,730 10.96 10.95 1.02 0.84 ASBP 22.29 130.11 130.11 20.47 2.99 112,469 15.74 15.74 0.60 0.85 ASFC 18.61 172.19 203.58 13.29 1.18 7,904,363 7.71 6.60 2.73 0.77 ATSB 31.98 96.97 97.93 10.02 1.46 72,245 10.33 10.24 0.43 0.29 BANC 26.47 192.03 231.56 10.57 0.98 2,844,996 5.50 4.60 0.51 0.54 BDJI 22.59 139.84 139.84 15.20 -- 110,589 10.87 10.87 1.09 0.63 BFD 20.02 133.67 138.42 12.13 1.36 960,704 8.52 8.25 1.03 0.66 BFSB 14.74 129.58 129.58 19.40 2.44 135,455 14.16 14.16 1.56 1.28 BKC 16.54 191.65 198.84 16.88 3.24 609,923 8.81 8.52 2.69 1.10 BKCT 19.34 205.08 205.08 22.05 2.72 423,800 10.75 10.75 1.90 1.24 BKUNA 22.59 169.63 209.35 6.32 -- 1,807,192 5.61 4.94 0.57 0.58 BVCC 20.32 201.72 241.51 11.74 1.07 3,162,207 5.82 4.91 1.47 0.62 BYFC 30.79 86.18 86.18 8.63 1.58 122,245 10.75 10.75 0.41 0.30 CAFI 16.79 154.32 167.29 14.76 2.31 489,833 9.57 8.89 1.34 0.89 CAPS 15.54 152.93 152.93 13.46 1.39 242,518 8.80 8.80 1.11 0.92 CASB 19.84 142.37 142.37 8.73 -- 368,126 6.13 6.13 0.63 0.52 CASH 14.22 125.64 141.80 14.31 1.83 374,824 11.40 10.23 1.38 0.93 CATB 21.60 116.05 116.05 29.06 1.60 284,238 25.04 25.04 0.81 1.41 CBCI 17.00 134.59 134.59 21.83 -- 488,346 16.22 16.22 2.97 1.41 CBK 34.72 116.17 116.17 17.91 -- 271,573 14.08 14.08 0.54 0.58 CBSA 13.00 145.93 173.61 5.01 1.63 2,929,560 3.47 2.93 2.26 0.40 CBSB 19.81 153.17 173.12 22.16 1.52 393,268 14.47 13.02 1.06 1.16 CEBK 15.31 129.31 144.51 12.84 1.42 344,420 9.93 8.98 1.47 0.88 CFB 16.07 233.43 260.79 14.39 0.58 7,207,143 6.16 5.55 2.99 0.94 CFCP 25.26 366.22 366.22 22.61 1.47 502,761 6.17 6.17 0.97 1.03 CFFC 12.87 115.32 115.32 15.81 2.58 175,414 13.71 13.71 1.69 1.28 CFSB 17.50 235.03 235.03 18.12 2.22 859,962 7.71 7.71 1.75 1.14 CFTP 21.55 117.30 117.30 36.26 1.83 209,035 27.45 27.45 0.76 1.61 CFX 19.13 242.68 251.77 21.14 3.54 2,821,182 8.71 8.42 1.30 0.95 CIBI 15.15 125.42 125.42 15.10 2.13 92,304 12.04 12.04 0.99 0.94 CKFB 21.11 111.96 111.96 28.91 2.63 60,812 23.96 23.96 0.90 1.33 CLAS 21.23 104.24 123.31 15.50 1.81 130,525 14.87 12.87 0.73 0.72 CMRN 18.13 105.50 105.50 22.88 1.55 208,105 21.69 21.69 1.00 1.32 CMSB 22.28 133.45 171.18 12.39 1.61 2,278,099 9.28 7.39 0.78 0.58 CNIT 20.02 196.82 214.31 14.24 1.63 709,550 7.24 6.69 3.06 0.75 COFI 16.64 271.61 295.67 19.16 1.70 15,196,993 7.05 6.52 3.53 1.24 CRZY 21.07 100.48 100.48 25.95 2.71 54,275 25.82 25.82 0.70 1.30 CTZN 18.82 216.82 240.76 13.80 0.73 3,097,515 6.37 5.77 2.63 0.82 CVAL 20.63 207.67 207.67 17.37 1.61 323,673 8.36 8.36 1.26 0.93 DIBK 10.76 213.20 219.55 17.37 1.29 921,510 8.14 7.93 2.88 1.90 DIME 21.17 142.32 165.21 20.66 1.16 1,315,026 14.52 12.76 0.98 1.04 DME 19.72 231.82 243.55 12.58 0.67 19,413,597 5.42 5.18 1.22 0.66 DNFC 15.92 215.87 218.04 11.22 0.84 1,754,069 5.25 5.20 1.50 0.83
8 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- DSL 17.33 156.55 158.59 11.17 1.31 5,853,968 7.13 7.05 1.41 0.70 EBSI 17.54 145.08 145.08 12.05 3.32 848,490 8.30 8.30 1.03 0.76 EFBI 25.74 163.25 163.35 18.91 3.81 275,620 11.58 11.57 1.02 0.78 EGFC 32.04 219.69 281.41 15.09 2.07 2,013,359 6.87 5.44 1.51 0.43 EIRE 18.98 228.59 228.59 15.98 0.89 443,503 6.99 6.99 1.66 0.92 EMLD 15.85 191.27 194.20 14.92 1.35 603,493 7.80 7.70 1.12 0.97 EQSB 13.30 170.06 170.06 8.57 -- 308,197 5.04 5.04 3.30 0.73 ESBK 25.34 135.74 141.55 8.72 2.28 227,828 6.30 6.05 1.11 0.35 ETFS 27.32 95.77 95.77 17.40 1.05 112,697 18.16 18.16 0.70 0.63 FBBC 15.15 155.40 155.40 16.37 2.34 681,215 10.53 10.53 1.13 1.09 FBCI 17.03 125.94 126.21 13.19 1.36 497,862 10.48 10.46 1.38 0.81 FBCV 27.90 117.99 120.27 10.21 1.04 260,935 8.65 8.50 1.38 0.36 FBER 26.45 135.49 135.49 19.23 1.10 284,765 14.19 14.19 0.69 0.77 FBHC 25.67 165.66 177.91 9.99 1.04 318,668 6.03 5.64 0.75 0.51 FBSI 15.99 118.73 118.73 16.53 0.81 162,755 13.92 13.92 1.54 1.08 FCBF 22.69 143.62 143.62 20.90 2.96 526,203 14.55 14.55 1.19 1.06 FCME 3.13 132.85 132.85 12.26 -- 152,386 9.23 9.23 4.39 4.08 FDEF 26.25 124.90 124.90 24.56 2.03 574,364 19.66 19.66 0.60 1.01 FED 16.60 178.35 180.15 9.20 -- 4,104,647 5.16 5.11 2.15 0.56 FESX 16.67 163.87 187.32 12.13 2.46 1,209,698 7.40 6.54 1.17 0.77 FFBA 17.91 165.63 167.86 21.66 2.42 1,512,605 13.08 12.93 1.11 1.20 FFBH 17.98 125.31 125.31 18.75 1.17 535,204 14.97 14.97 1.14 1.06 FFBI 21.63 109.25 109.25 9.46 -- 84,531 8.65 8.65 0.89 0.41 FFBS 17.94 130.01 130.01 26.28 2.27 130,762 19.23 19.23 1.23 1.47 FFBZ 18.51 222.76 223.01 15.33 1.22 201,262 7.55 7.54 1.06 0.96 FFCH 17.19 223.02 223.02 13.63 2.35 1,667,178 6.11 6.11 2.08 0.84 FFDB 17.23 157.11 172.35 14.79 2.20 176,528 9.42 8.65 1.32 0.94 FFDF 30.33 125.25 125.25 30.58 1.62 88,000 24.41 24.41 0.61 0.93 FFED 34.26 177.88 177.88 9.59 4.32 240,001 5.39 5.39 0.27 0.30 FFES 16.51 143.44 143.44 9.51 1.71 987,416 6.63 6.63 2.12 0.60 FFFC 21.08 181.65 185.59 25.58 1.52 558,886 13.18 12.94 1.50 1.34 FFFD 15.33 116.49 116.49 26.69 1.42 215,133 22.92 22.92 1.15 1.83 FFFL 33.75 218.45 220.05 18.29 3.33 999,289 8.37 8.32 0.80 0.59 FFHH 18.21 117.76 117.76 14.83 2.61 388,135 11.17 11.17 1.05 0.84 FFHS 19.01 131.50 132.26 11.86 1.74 231,189 9.02 8.97 1.21 0.65 FFIC 19.74 123.68 128.81 17.56 1.14 960,130 14.21 13.71 1.07 0.97 FFKY 15.28 174.60 185.03 23.92 2.55 382,585 13.70 13.03 1.44 1.62 FFLC 24.65 152.97 152.97 21.00 1.37 383,382 13.73 13.73 1.42 0.94 FFOH 17.42 125.61 141.68 16.36 1.81 528,704 13.03 11.72 0.89 0.94 FFPB 24.68 170.84 174.90 10.68 1.57 1,808,419 6.25 6.11 1.55 0.48 FFSL 20.60 126.08 126.08 13.15 1.71 110,876 10.43 10.43 0.71 0.69 FFSX 27.59 227.27 229.06 19.84 1.50 456,850 8.73 8.67 1.16 0.71 FFWC 13.08 129.61 143.81 12.34 2.30 180,056 9.52 8.66 2.39 1.06 FFWD 19.89 183.82 183.82 22.62 2.29 163,918 12.30 12.30 0.88 1.26 FFYF 15.66 140.39 140.39 19.23 2.46 610,974 13.69 13.69 1.82 1.26 FGHC 21.96 192.99 210.49 15.86 0.66 156,383 8.22 7.59 0.37 0.78 FIBC 14.15 143.22 143.86 12.95 1.78 296,956 9.04 9.00 1.59 0.94 FISB 18.61 172.63 174.73 16.64 1.97 1,547,121 9.64 9.54 1.31 0.95 FKFS 14.34 153.22 153.22 11.20 0.68 320,797 7.31 7.31 2.04 0.78 FLFC 15.20 189.02 209.65 13.93 1.72 1,288,919 7.37 6.69 1.53 0.94 FMCO 12.84 187.01 190.38 12.26 0.98 554,925 6.56 6.45 2.22 1.02 FMSB 18.46 243.36 243.36 16.53 0.73 451,120 6.79 6.79 1.49 1.00 FNGB 21.77 163.83 163.83 18.17 2.37 656,745 11.09 11.09 0.62 0.89 FOBC 18.05 137.54 143.88 15.92 2.58 357,721 11.18 10.73 1.33 0.94
9 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- FSBI 14.37 151.61 151.61 10.24 1.50 363,302 6.75 6.75 1.67 0.83 FSPG 12.71 175.10 178.01 11.67 1.78 522,396 6.66 6.56 1.77 0.97 FSTC 13.57 211.23 271.62 20.56 1.16 338,857 9.73 7.73 2.80 1.90 FTF 14.90 165.50 165.50 25.99 2.25 171,358 15.70 15.70 1.67 1.73 FTFC 19.75 237.78 252.31 16.01 1.76 1,559,672 6.73 6.37 1.38 0.90 FTSB 26.75 128.61 128.61 20.63 1.87 96,940 16.04 16.04 0.50 0.81 FWWB 20.98 153.86 166.61 23.62 1.16 1,074,166 14.23 13.29 1.15 1.16 GAF 19.81 126.53 127.74 18.51 2.58 802,304 14.63 14.51 0.94 1.07 GBCI 16.26 246.31 252.84 24.00 2.40 567,610 9.74 9.51 1.23 1.54 GDW 14.80 189.18 189.18 12.42 0.51 39,228,359 6.56 6.56 5.80 0.86 GFCO 17.30 128.19 129.93 12.16 2.61 287,088 9.49 9.37 1.77 0.71 GFSB 15.29 155.54 155.54 17.91 1.52 94,496 11.51 11.51 1.12 1.27 GPT 18.15 184.99 345.07 20.36 1.61 13,093,985 9.69 5.44 3.43 1.05 GSB 20.38 208.08 232.54 10.32 -- 16,432,304 6.35 5.79 1.65 0.74 GSBC 16.10 270.13 270.13 23.04 2.19 707,841 8.53 8.53 1.25 1.54 GSFC 25.00 122.20 122.20 44.31 2.44 174,605 36.25 36.25 0.72 1.66 GUPB 22.14 122.06 122.06 18.14 1.88 93,793 14.87 14.87 0.96 0.95 HALL 16.00 134.55 134.55 9.82 -- 418,467 7.30 7.30 1.78 0.63 HARB 23.67 321.17 331.56 27.48 2.24 1,131,024 8.56 8.31 2.64 1.20 HARL 15.00 219.76 219.76 14.36 1.50 336,666 6.53 6.53 1.95 1.02 HAVN 16.72 168.03 168.57 10.08 1.42 1,833,284 6.00 5.98 2.52 0.68 HBBI 26.70 107.27 107.27 14.96 1.39 45,064 12.81 12.81 0.81 0.52 HBFW 20.78 137.99 137.99 18.33 0.82 334,862 13.29 13.29 1.17 0.89 HBNK 17.68 186.05 186.05 14.26 -- 515,990 7.67 7.67 1.81 0.86 HBS 16.90 126.04 130.72 17.56 2.65 150,416 13.93 13.50 1.25 1.15 HFFB 21.33 102.04 102.04 29.73 2.50 108,949 26.92 26.92 0.75 1.35 HFFC 14.83 139.96 139.96 13.23 1.65 574,889 9.43 9.42 1.72 0.94 HFGI 22.95 163.11 163.11 7.89 0.95 521,043 4.84 4.84 0.55 0.36 HFNC 23.61 158.75 158.75 28.64 1.88 892,920 18.04 18.04 0.63 1.18 HFSA 19.37 111.90 111.90 12.91 2.72 117,364 11.53 11.53 0.91 0.75 HHFC 27.83 130.42 130.42 15.40 2.98 87,596 11.81 11.81 0.53 0.57 HIFS 14.39 177.02 177.02 17.18 1.68 216,240 9.71 9.71 1.98 1.25 HMCI 27.36 154.93 154.93 10.58 -- 326,877 6.83 6.83 0.74 0.41 HMNF 20.21 120.71 120.71 17.95 -- 568,847 14.88 14.88 1.20 0.85 HOMF 15.35 205.28 211.86 17.41 1.43 682,796 8.48 8.24 2.28 1.22 HPBC 13.29 199.57 199.57 21.30 3.44 201,014 10.67 10.67 1.75 1.67 HRBF 22.31 125.91 125.91 16.24 2.31 216,370 12.89 12.89 0.93 0.70 HRZB 15.54 149.52 149.52 23.33 2.70 518,661 15.60 15.60 1.05 1.54 HTHR 26.12 133.89 133.89 6.15 -- 863,096 5.94 5.94 0.67 0.72 HZFS 17.72 109.60 109.60 10.91 1.60 87,784 9.95 9.95 1.27 0.66 IBSF 27.12 138.05 138.05 24.02 2.50 733,344 17.40 17.40 0.59 0.85 IFSB 25.11 99.45 112.48 6.85 1.59 258,460 6.88 6.14 0.55 0.27 INBI 17.97 146.68 146.68 25.20 3.25 354,116 17.18 17.18 0.96 1.44 INCB 28.85 121.26 121.26 14.76 2.40 93,702 12.17 12.17 0.52 0.53 IPSW 19.12 271.97 271.97 15.26 0.92 202,509 5.61 5.61 0.68 0.97 ISBF 21.65 137.71 161.88 17.67 2.06 947,107 12.04 10.43 1.12 0.85 ITLA 13.42 162.34 NA 17.41 -- 901,555 10.72 NA 1.49 1.46 IWBK 16.18 241.75 247.03 16.39 1.71 1,832,582 6.78 6.64 2.31 1.10 JSB 18.50 130.88 130.88 30.39 2.98 1,531,068 23.21 23.21 2.54 1.72 JSBA 18.69 166.94 215.17 15.50 1.00 1,292,021 8.54 6.75 2.14 0.77 JXVL 8.11 136.53 136.53 20.37 2.70 226,182 14.92 14.92 2.28 1.33 KFBI 26.62 145.31 145.31 31.14 1.41 727,903 19.55 19.55 0.85 1.19 KNK 16.07 118.47 126.05 13.14 1.52 341,678 11.09 10.49 1.96 0.82 KSAV 16.41 130.78 130.86 17.31 2.79 109,937 13.24 13.23 1.31 1.20
10 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- KSBK 11.02 165.48 175.00 11.88 0.57 145,888 7.18 6.81 1.27 1.08 KYF 17.31 120.97 120.97 20.04 3.70 88,856 16.57 16.57 0.78 1.12 LARK 18.75 130.51 130.51 18.00 1.67 228,100 13.79 13.79 1.28 1.04 LARL 13.77 174.69 174.69 17.53 2.02 211,987 10.03 10.03 1.87 1.43 LFBI 33.02 120.61 130.60 16.01 1.14 299,989 13.28 12.39 0.53 0.47 LFED 33.16 232.82 232.82 37.92 2.41 286,999 16.29 16.29 0.95 1.17 LIFB 17.90 148.21 152.62 15.63 2.03 1,488,257 10.55 10.28 1.32 0.86 LISB 24.72 192.39 194.19 17.72 1.37 5,930,784 9.21 9.13 1.77 0.73 LOGN 15.96 116.64 116.64 22.04 2.67 85,801 18.89 18.89 0.94 1.47 LONF 26.46 139.55 139.55 27.45 1.18 38,240 19.66 19.66 0.77 0.99 LSBI 17.96 128.79 128.79 12.24 1.33 194,117 8.85 8.85 1.42 0.68 LSBX 9.76 170.60 170.60 16.23 -- 352,980 9.52 9.52 1.37 1.73 LVSB 27.04 241.60 302.30 23.01 0.52 481,646 9.52 7.76 0.89 0.95 LXMO 21.55 111.17 111.17 31.47 1.83 59,236 28.32 28.32 0.76 1.32 MAFB 13.09 177.12 201.59 13.80 0.92 3,370,587 7.79 6.91 2.33 1.15 MARN 17.42 122.23 122.23 27.55 3.26 173,304 22.54 22.54 1.55 1.67 MASB 17.13 153.98 156.31 16.60 2.21 932,757 10.78 10.64 2.54 1.04 MBB 25.35 129.43 263.73 9.57 2.19 813,902 8.92 5.36 1.08 0.51 MBB 25.35 129.43 263.73 9.57 2.19 813,902 8.92 5.36 1.08 0.51 MBBC 32.59 118.05 128.07 14.33 0.66 412,810 11.33 10.54 0.56 0.46 MBLF 19.36 117.15 117.15 14.24 1.55 234,823 12.15 12.15 1.33 0.85 MCBN 15.23 123.76 123.76 10.62 1.86 61,473 8.58 8.58 1.84 0.72 MDBK 15.77 159.38 170.07 14.37 2.06 1,106,345 9.02 8.50 2.22 1.00 MECH 9.28 152.33 152.33 15.85 -- 830,741 10.41 10.41 2.68 1.79 MERI 14.69 191.84 191.84 15.84 1.47 233,311 8.26 8.26 3.25 1.15 METF 16.74 219.63 242.81 8.69 -- 821,280 3.96 3.59 1.21 0.54 MFBC 19.96 112.01 112.01 14.67 1.41 255,921 13.10 13.10 1.14 0.83 MFFC 27.23 124.39 124.39 17.59 3.93 200,238 13.12 13.12 0.56 0.69 MFLR 18.95 171.91 174.85 16.65 2.89 125,671 9.68 9.54 1.24 0.92 MFSL 13.83 147.58 NA 12.52 1.85 1,175,006 8.48 NA 3.29 0.92 MIVI 20.69 111.87 111.87 21.12 0.89 69,775 18.88 18.88 0.87 1.03 MSBF 21.23 173.30 173.30 29.46 1.59 74,698 16.99 16.99 0.83 1.46 MWBI 17.35 166.94 166.94 11.55 1.41 149,850 6.92 6.92 2.94 0.77 MWBX 15.57 263.58 263.58 19.66 1.46 585,760 7.47 7.47 0.53 1.37 MWFD 19.35 214.09 222.02 18.87 1.42 207,050 8.81 8.52 1.24 1.09 NASB 13.02 196.10 202.90 15.05 1.61 736,585 7.68 7.44 3.82 1.20 NBN 26.40 167.38 191.06 11.44 1.36 261,800 7.60 6.81 0.89 0.58 NEIB 14.94 118.47 118.47 17.02 1.74 190,319 14.37 14.37 1.23 1.20 NHTB 26.51 186.76 219.34 14.29 2.27 315,280 7.65 6.59 0.83 0.61 NMSB 20.42 145.49 145.49 14.80 2.61 317,407 10.17 10.17 0.60 0.82 NSLB 30.42 110.54 110.54 21.62 2.74 59,711 19.56 19.56 0.60 0.77 NTMG 33.82 148.96 148.96 8.29 1.74 102,438 8.37 8.37 0.34 0.40 NWEQ 16.36 122.98 122.98 15.15 2.97 96,891 11.45 11.45 1.07 0.98 OCN 33.87 409.28 420.23 55.75 -- 3,069,300 13.62 13.31 1.67 1.74 OFCP 22.19 188.16 232.94 16.44 1.37 866,966 8.74 7.18 1.20 0.79 OHSL 16.67 123.72 123.72 13.51 3.32 234,600 10.92 10.92 1.59 0.88 PBCI 13.97 133.96 134.91 17.29 4.42 371,958 12.91 12.83 1.62 1.33 PBHC 28.65 228.79 272.28 27.31 1.02 193,005 11.94 10.23 0.96 0.95 PBKB 23.28 200.05 207.87 11.43 2.36 585,678 5.71 5.51 0.80 0.53 PCBC 15.19 108.98 108.98 20.92 1.95 81,105 19.20 19.20 1.35 1.07 PCCI 14.25 171.59 171.59 11.67 -- 409,198 6.80 6.80 1.14 1.04 PEEK 22.64 113.87 113.87 29.30 2.15 182,560 25.73 25.73 0.74 1.29 PERM 21.19 126.65 128.53 11.60 1.60 433,239 9.16 9.04 1.18 0.62 PERT 31.68 253.23 253.23 29.95 2.75 256,211 11.83 11.83 1.61 1.11
11 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- PFDC 16.94 163.81 163.81 24.91 2.03 287,564 15.20 15.20 1.86 1.46 PFFB 28.54 130.19 NA 13.09 -- 2,615,466 10.06 NA 0.67 0.46 PFNC 20.11 237.18 NA 12.74 0.87 436,746 5.33 NA 0.69 0.71 PFSB 13.74 132.92 156.99 10.54 0.94 1,363,950 7.33 6.27 2.17 0.82 PFSL 22.28 235.43 235.43 14.98 2.59 378,700 6.36 6.36 1.56 0.69 PHBK 15.39 239.04 279.96 17.81 1.94 6,056,083 7.45 6.43 2.55 1.30 PHFC 20.38 131.95 133.45 14.41 1.28 256,265 10.92 10.81 0.92 0.80 PRBC 20.05 108.12 108.12 12.11 0.66 137,834 11.21 11.21 0.91 0.62 PSBK 15.18 172.85 193.62 14.78 2.00 878,823 8.55 7.70 2.24 0.97 PTRS 13.44 122.33 122.33 10.80 1.49 121,189 8.83 8.83 2.00 0.84 PULS 14.51 186.21 186.21 15.30 2.68 526,016 8.21 8.21 1.80 1.10 PVFC 11.76 194.55 194.55 13.70 -- 373,081 7.04 7.04 1.70 1.33 PVSA 14.38 189.14 190.40 14.60 1.81 1,005,440 7.72 7.67 2.00 1.08 PWBC 17.52 143.69 153.70 11.61 2.01 816,954 8.08 7.59 1.02 0.66 QCBC 17.24 130.46 130.46 11.03 -- 847,024 8.46 8.46 1.16 0.69 QCFB 14.84 148.21 148.21 25.94 -- 156,727 17.50 17.50 1.92 1.60 QCSB 25.54 269.61 269.61 35.05 2.24 1,541,049 11.22 11.22 1.40 1.54 RARB 18.38 222.36 225.98 17.64 1.73 379,428 7.93 7.81 1.51 1.03 REDF 25.34 174.42 175.07 14.75 -- 912,237 8.46 8.42 0.74 0.64 RELI 31.25 96.37 96.37 47.07 -- 47,009 48.85 48.85 0.28 1.47 RELY 16.94 158.11 215.24 13.06 2.10 2,034,753 8.26 6.20 1.80 0.84 ROSE 18.08 217.90 217.90 14.48 2.11 3,691,564 6.24 6.24 1.68 0.87 SCCB 26.88 125.73 125.73 32.29 2.79 46,598 25.67 25.67 0.80 1.20 SFED 19.55 123.28 123.28 15.37 1.30 172,849 12.47 12.47 1.10 0.79 SFFC 18.62 138.89 138.89 24.70 1.48 85,679 17.78 17.78 1.45 1.37 SFIN 14.23 140.29 140.59 13.64 2.26 673,214 9.73 9.71 1.37 0.90 SFSB 20.21 148.48 149.01 9.85 0.95 432,559 6.63 6.61 1.67 0.54 SFSL 17.19 220.14 223.72 20.73 1.79 653,226 9.42 9.28 1.04 1.34 SGVB 31.58 140.96 143.31 10.30 -- 409,340 7.31 7.19 0.57 0.35 SHEN 15.43 151.88 151.88 17.65 1.75 401,437 11.62 11.62 2.22 1.17 SISB 16.69 178.85 178.85 13.01 1.65 1,453,017 7.36 7.36 2.03 0.82 SKAN 17.59 166.67 171.58 11.67 1.32 247,643 7.00 6.81 1.72 0.68 SMBC 18.49 109.84 109.84 18.08 2.82 160,393 16.46 16.46 0.96 0.95 SOBI 29.44 105.86 105.86 16.96 1.75 81,733 15.12 15.12 0.62 0.60 SOPN 20.09 128.70 128.70 29.39 3.75 294,217 22.84 22.84 1.17 1.69 SOSA 17.08 248.79 248.79 16.40 -- 520,339 6.60 6.60 0.30 0.99 SPBC 17.79 201.90 202.41 18.15 1.65 4,548,436 8.99 8.97 1.36 1.07 SSB 15.18 79.00 79.00 29.26 2.82 69,479 37.03 37.03 0.70 1.71 SSM 20.05 125.54 125.54 36.22 2.22 106,115 28.85 28.85 1.01 1.71 STFR 19.95 159.22 180.16 12.42 1.25 1,645,539 7.88 7.03 1.93 0.71 STSA 18.92 161.79 176.77 8.50 -- 1,870,513 5.25 4.83 1.11 0.53 SVRN 18.11 239.60 293.21 13.57 0.46 14,601,008 5.08 4.31 0.97 0.61 SWBI 18.39 160.84 160.84 18.25 2.95 375,004 11.34 11.34 1.40 1.02 SWCB 15.45 172.83 180.54 13.74 3.33 501,894 7.95 7.63 2.33 0.98 THR 18.95 115.76 116.20 15.58 2.22 95,130 13.46 13.41 0.95 0.84 THRD 22.43 124.93 141.51 15.69 1.67 625,338 11.63 10.41 1.07 0.67 TPNZ 24.70 145.29 145.29 24.72 1.37 124,150 17.02 17.02 0.83 1.00 TRIC 18.02 119.97 119.97 18.37 2.16 88,173 15.31 15.31 1.54 1.07 TSH 17.39 128.78 128.78 16.92 2.50 406,253 13.14 13.14 1.15 0.96 TWIN 22.92 126.49 126.49 16.36 2.91 106,931 12.94 12.94 0.60 0.72 UBMT 19.83 119.40 119.40 27.80 4.08 105,600 23.29 23.29 1.21 1.39 UFRM 34.47 169.78 169.78 12.69 2.11 275,529 7.47 7.47 0.33 0.38 VABF 26.54 177.94 177.94 12.18 1.32 617,818 6.85 6.85 0.57 0.46 WAMU 29.11 335.92 362.56 18.32 1.64 95,607,369 5.58 5.21 2.34 0.68
12 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- WAYN 34.46 244.02 244.02 22.57 2.43 254,230 9.25 9.25 0.74 0.66 WBST 18.22 223.40 259.47 11.93 1.34 6,811,014 5.34 4.63 3.29 0.73 WCBI 16.56 136.46 136.46 21.21 2.26 309,070 15.54 15.54 1.60 1.41 WEFC 15.60 114.40 114.40 16.27 2.82 204,761 14.22 14.22 1.09 1.04 WFI 14.55 166.38 169.71 11.93 2.36 324,532 7.17 7.04 1.34 0.86 WFSL 14.15 205.99 224.41 25.85 2.96 5,719,589 12.55 11.64 2.20 1.85 WHGB 26.08 106.81 106.81 22.06 1.32 100,235 20.66 20.66 0.58 0.85 WOFC 31.82 104.79 112.39 14.45 4.08 396,492 13.79 12.98 0.77 0.45 WRNB 12.82 198.53 198.53 21.12 2.57 364,130 10.65 10.65 1.58 1.76 WSB 18.60 150.99 150.99 12.54 1.31 258,330 8.30 8.30 0.41 0.73 WSFS 13.89 262.76 264.75 14.56 -- 1,495,609 5.54 5.51 1.26 1.13 WSTR 20.97 130.06 161.24 13.81 1.86 999,203 10.62 8.75 1.18 0.75 WVFC 14.76 164.72 164.72 18.38 2.58 294,693 11.16 11.16 2.10 1.32 WYNE 20.83 136.45 136.45 16.95 0.89 267,285 12.43 12.43 1.08 0.85 YFCB 18.20 132.60 132.60 19.76 1.28 288,089 14.90 14.90 1.03 1.15 YFED 20.73 182.95 182.95 15.75 2.30 1,162,393 8.61 8.61 1.26 0.77 Maximum 34.72 409.28 420.23 55.75 4.42 95,607,369 48.85 48.85 5.80 4.08 Minimum 3.13 79.00 79.00 5.01 -- 38,240 3.47 2.93 0.27 0.27 Average 19.83 162.31 170.17 17.23 1.70 1,670,568 11.41 11.16 1.40 0.97 Median 18.61 152.11 156.33 15.85 1.66 381,007 9.70 9.47 1.23 0.93
13 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- AADV 9.89 N 10/28/97 0.44 19.10 0.72 0.98 10.77 ABBK 10.71 N 10/28/97 0.17 16.25 0.50 0.81 11.68 ABCL 9.33 N 10/28/97 0.21 13.82 0.45 1.10 12.01 ABCW 14.53 N 10/28/97 NA 15.03 0.47 0.94 14.59 AFCB 11.05 N 10/28/97 0.34 16.96 0.42 1.03 10.56 AHM 14.58 N 10/28/97 1.86 18.35 0.83 0.80 15.76 ALBC 4.03 N 10/28/97 0.72 40.28 0.18 0.27 3.03 ALBK 11.33 N 10/28/97 0.73 17.23 0.66 1.03 11.06 AMFC 4.54 N 10/28/97 0.81 24.63 0.17 0.67 4.28 ANDB 12.93 N 10/28/97 0.91 14.31 0.62 1.04 13.10 ANE 11.78 N 10/28/97 2.13 13.85 0.30 0.83 11.73 ASBI 7.64 N 10/28/97 0.40 18.75 0.25 0.83 7.60 ASBP 4.52 N 10/28/97 0.88 17.60 0.19 1.06 6.74 ASFC 9.80 N 10/28/97 0.41 17.89 0.71 0.76 9.81 ATSB 3.01 N 10/28/97 3.63 38.19 0.09 0.25 2.45 BANC 9.56 N 10/28/97 NA 37.50 0.09 0.37 6.65 BDJI 5.48 N 10/28/97 0.23 18.66 0.33 0.69 6.37 BFD 6.87 N 10/28/97 NA 19.83 0.26 0.62 6.88 BFSB 8.90 N 10/28/97 -- 15.13 0.38 1.22 8.52 BKC 13.05 N 10/28/97 1.77 15.24 0.73 1.16 13.72 BKCT 12.04 N 10/28/97 1.04 19.14 0.48 1.24 11.78 BKUNA 8.04 N 10/28/97 0.66 22.99 0.14 0.48 8.00 BVCC 10.07 N 10/28/97 0.63 20.19 0.37 0.63 10.14 BYFC 2.60 N 10/28/97 2.06 19.73 0.16 0.48 4.33 CAFI 9.59 N 10/28/97 0.34 14.80 0.38 1.02 10.59 CAPS 10.16 N 10/28/97 0.16 14.38 0.30 0.96 10.97 CASB 8.50 N 10/28/97 0.41 16.45 0.19 0.61 9.92 CASH 8.12 N 10/28/97 0.85 15.83 0.31 0.92 7.98 CATB 5.10 N 10/28/97 0.47 20.83 0.21 1.35 5.24 CBCI 8.96 N 10/28/97 1.27 17.06 0.74 1.36 8.67 CBK 3.82 N 10/28/97 0.39 33.48 0.14 0.58 4.06 CBSA 11.94 N 10/28/97 0.59 14.40 0.51 0.36 10.59 CBSB 7.78 N 10/28/97 0.56 21.00 0.25 1.08 7.67 CEBK 8.75 N 10/28/97 0.85 18.15 0.31 0.73 7.16 CFB 15.97 N 10/28/97 0.88 15.81 0.76 0.94 15.48 CFCP 16.66 N 10/28/97 0.21 21.88 0.28 1.11 18.07 CFFC 9.23 N 10/28/97 0.39 13.94 0.39 1.16 8.41 CFSB 14.86 N 10/28/97 0.16 15.63 0.49 1.23 15.92 CFTP 4.97 N 10/28/97 0.30 27.29 0.15 1.27 4.30 CFX 11.09 N 10/28/97 NA 18.29 0.34 0.82 9.20 CIBI 7.98 N 10/28/97 0.63 14.42 0.26 0.96 8.28 CKFB 5.37 N 10/28/97 0.63 19.00 0.25 1.47 6.16 CLAS 4.64 N 10/28/97 0.66 19.38 0.20 0.72 4.89 CMRN 5.51 N 10/28/97 0.24 18.13 0.25 1.26 5.63 CMSB 5.76 N 10/28/97 0.47 24.13 0.18 0.51 5.36 CNIT 10.46 N 10/28/97 0.42 18.45 0.83 0.81 11.22 COFI 18.34 N 10/28/97 0.20 15.96 0.92 1.26 18.35 CRZY 4.54 N 10/28/97 0.39 18.44 0.20 1.34 5.07 CTZN 12.75 N 10/28/97 0.41 16.50 0.75 0.89 13.89 CVAL 10.48 N 10/28/97 0.23 20.31 0.32 0.89 10.56 DIBK 23.53 N 10/28/97 0.36 9.81 0.79 1.92 24.10 DIME 6.20 N 10/28/97 0.73 30.51 0.17 0.70 4.73 DME 12.47 N 10/28/97 1.02 16.71 0.36 0.74 14.43 DNFC 14.74 N 10/28/97 0.35 15.71 0.38 0.80 14.64
14 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- DSL 9.57 N 10/28/97 0.95 17.46 0.35 0.65 9.25 EBSI 8.78 N 10/28/97 1.07 16.73 0.27 0.76 8.92 EFBI 6.10 N 10/28/97 NA 29.83 0.22 0.63 5.37 EGFC 5.98 N 10/28/97 0.52 NM (0.27) (0.36) (5.07) EIRE 13.23 N 10/28/97 0.17 18.31 0.43 0.90 12.87 EMLD 12.70 N 10/28/97 NA 14.79 0.30 1.00 13.04 EQSB 14.49 N 10/28/97 0.15 13.38 0.82 0.70 13.83 ESBK 5.53 N 10/28/97 0.66 20.09 0.35 0.43 6.85 ETFS 3.38 N 10/28/97 0.17 25.16 0.19 0.65 3.51 FBBC 9.27 N 10/28/97 0.09 14.27 0.30 1.05 10.37 FBCI 7.81 N 10/28/97 0.41 15.46 0.38 0.88 8.40 FBCV 4.40 N 10/28/97 1.12 16.31 0.59 0.62 7.32 FBER 4.69 N 10/28/97 0.83 21.73 0.21 0.85 5.57 FBHC 8.10 N 10/28/97 0.37 21.88 0.22 0.60 9.70 FBSI 7.68 N 10/28/97 0.13 13.99 0.44 1.13 8.45 FCBF 6.32 N 10/28/97 0.15 21.77 0.31 1.08 6.92 FCME 53.13 N 10/28/97 1.95 17.19 0.20 0.73 7.90 FDEF 4.70 N 10/28/97 0.45 26.25 0.15 0.95 4.65 FED 11.68 N 10/28/97 1.20 16.22 0.55 0.58 11.48 FESX 10.65 N 10/28/97 NA 16.81 0.29 0.75 10.42 FFBA 8.96 N 10/28/97 0.20 15.53 0.32 1.36 10.45 FFBH 6.61 N 10/28/97 0.19 22.28 0.23 0.81 5.24 FFBI 5.11 N 10/28/97 0.41 22.92 0.21 0.38 4.64 FFBS 7.51 N 10/28/97 0.03 22.06 0.25 1.17 6.06 FFBZ 12.66 N 10/28/97 0.47 15.33 0.32 1.11 14.72 FFCH 13.67 N 10/28/97 1.61 16.55 0.54 0.84 13.68 FFDB 9.54 N 10/28/97 0.72 16.73 0.34 0.98 10.05 FFDF 3.77 N 10/28/97 0.07 38.54 0.12 0.76 3.08 FFED 5.58 N 10/28/97 0.13 17.79 0.13 0.55 10.45 FFES 9.47 N 10/28/97 0.25 16.83 0.52 0.59 9.03 FFFC 9.56 N 10/28/97 0.18 19.28 0.41 1.35 10.37 FFFD 7.57 N 10/28/97 0.22 14.21 0.31 1.82 7.97 FFFL 6.47 N 10/28/97 0.34 30.68 0.22 0.61 7.05 FFHH 6.96 N 10/28/97 0.15 15.94 0.30 0.88 7.82 FFHS 7.31 N 10/28/97 0.33 19.17 0.30 0.64 7.21 FFIC 6.05 N 10/28/97 NA 17.60 0.30 0.98 6.60 FFKY 11.85 N 10/28/97 0.08 15.28 0.36 1.61 11.74 FFLC 6.42 N 10/28/97 0.18 28.23 0.31 0.75 5.52 FFOH 7.08 N 10/28/97 0.29 17.61 0.22 0.91 6.99 FFPB 7.19 N 10/28/97 NA 24.52 0.39 0.46 7.25 FFSL 6.20 N 10/28/97 0.37 20.31 0.18 0.64 6.17 FFSX 8.61 N 10/28/97 NA 27.59 0.29 0.70 8.19 FFWC 10.49 N 10/28/97 0.16 14.47 0.54 0.93 9.35 FFWD 9.76 N 10/28/97 0.02 18.23 0.24 1.29 10.36 FFYF 8.58 N 10/28/97 0.66 14.84 0.48 1.23 9.08 FGHC 9.53 N 10/28/97 1.41 16.93 0.12 1.00 11.97 FIBC 10.10 N 10/28/97 NA 14.06 0.40 0.93 10.07 FISB 9.90 N 10/28/97 NA 17.92 0.34 0.98 10.02 FKFS 10.49 N 10/28/97 1.60 13.30 0.55 0.78 10.93 FLFC 12.81 N 10/28/97 0.81 14.18 0.41 1.02 13.61 FMCO 15.76 N 10/28/97 1.06 11.88 0.60 1.05 16.36 FMSB 15.00 N 10/28/97 NA 17.19 0.40 1.07 15.66 FNGB 7.88 N 10/28/97 0.08 21.09 0.16 0.92 8.26 FOBC 8.26 N 10/28/97 0.19 18.75 0.32 0.88 7.95
15 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- FSBI 11.94 N 10/28/97 0.30 15.00 0.40 0.75 10.90 FSPG 14.79 N 10/28/97 0.64 14.06 0.40 0.86 12.91 FSTC 19.95 N 10/28/97 1.10 6.13 1.55 3.68 38.97 FTF 10.43 N 10/28/97 0.12 13.23 0.47 1.86 11.74 FTFC 13.94 N 10/28/97 NA 18.92 0.36 0.90 13.69 FTSB 4.47 N 10/28/97 1.42 14.54 0.23 1.38 8.60 FWWB 7.58 N 10/28/97 0.29 18.85 0.32 1.21 8.28 GAF 6.10 N 10/28/97 0.24 16.63 0.28 1.11 7.31 GBCI 16.25 N 10/28/97 0.12 14.71 0.34 1.64 17.10 GDW 13.67 N 10/28/97 NA 13.75 1.56 0.91 14.02 GFCO 7.49 N 10/28/97 0.31 14.72 0.52 0.83 8.67 GFSB 11.03 N 10/28/97 NA 14.76 0.29 1.29 11.21 GPT 9.92 N 10/28/97 2.88 16.56 0.94 1.08 10.79 GSB 11.69 N 10/28/97 1.36 18.68 0.45 0.77 12.20 GSBC 17.00 N 10/28/97 1.91 13.98 0.36 1.66 19.65 GSFC 4.72 N 10/28/97 0.16 26.47 0.17 1.66 4.85 GUPB 5.44 N 10/28/97 0.15 15.18 0.35 1.26 8.11 HALL 8.94 N 10/28/97 NA 15.82 0.45 0.63 8.72 HARB 14.58 N 10/28/97 0.43 22.64 0.69 1.23 14.62 HARL 16.03 N 10/28/97 -- 13.80 0.53 1.09 16.89 HAVN 11.35 N 10/28/97 NA 19.87 0.53 0.54 9.02 HBBI 4.07 N 10/28/97 0.38 19.31 0.28 0.72 5.67 HBFW 6.29 N 10/28/97 -- 19.61 0.31 0.89 6.61 HBNK 11.72 N 10/28/97 2.52 16.67 0.48 0.88 11.88 HBS 7.72 N 10/28/97 1.97 16.00 0.33 1.12 7.99 HFFB 4.99 N 10/28/97 -- 20.00 0.20 1.39 5.23 HFFC 10.13 N 10/28/97 0.48 12.75 0.50 1.05 11.48 HFGI 7.49 N 10/28/97 0.20 45.09 0.07 0.19 3.78 HFNC 4.72 N 10/28/97 0.88 28.61 0.13 0.94 5.09 HFSA 5.54 N 10/28/97 NA 20.98 0.21 0.59 4.92 HHFC 4.44 N 10/28/97 0.11 19.41 0.19 0.80 6.56 HIFS 12.98 N 10/28/97 NA 13.70 0.52 1.26 13.18 HMCI 6.43 N 10/28/97 NA 24.11 0.21 0.48 7.11 HMNF 5.81 N 10/28/97 0.10 21.65 0.28 0.79 5.46 HOMF 14.67 N 10/28/97 0.45 16.20 0.54 1.13 13.40 HPBC 15.62 N 10/28/97 -- 12.92 0.45 1.63 15.35 HRBF 5.41 N 10/28/97 0.05 20.75 0.25 0.74 5.80 HRZB 9.82 N 10/28/97 -- 14.57 0.28 1.57 10.19 HTHR 13.28 N 10/28/97 7.17 7.95 0.55 1.59 28.95 HZFS 6.37 N 10/28/97 NA 13.39 0.42 0.81 8.26 IBSF 4.54 N 10/28/97 0.08 26.67 0.15 0.88 5.09 IFSB 4.09 N 10/28/97 2.02 115.11 0.03 0.06 0.85 INBI 7.92 N 10/28/97 0.14 17.25 0.25 1.40 8.06 INCB 4.24 N 10/28/97 0.13 53.57 0.07 0.32 2.57 IPSW 16.37 N 10/28/97 0.84 18.06 0.18 0.91 16.10 ISBF 6.26 N 10/28/97 NA 21.65 0.28 0.76 6.27 ITLA 13.05 N 10/28/97 NA 12.50 0.40 1.46 13.42 IWBK 16.39 N 10/28/97 0.64 15.32 0.61 1.10 16.36 JSB 7.68 N 10/28/97 NA 18.36 0.64 1.74 7.61 JSBA 9.84 N 10/28/97 0.46 18.18 0.55 0.81 9.67 JXVL 8.42 N 10/28/97 0.78 11.28 0.41 1.75 11.48 KFBI 5.37 N 10/28/97 0.08 25.71 0.22 1.16 5.77 KNK 7.89 N 10/28/97 0.61 15.75 0.50 0.88 8.12 KSAV 8.77 N 10/28/97 NA 17.34 0.31 1.10 8.19
16 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- KSBK 15.21 N 10/28/97 1.75 11.67 0.30 0.98 13.70 KYF 6.68 N 10/28/97 -- 16.88 0.20 1.17 7.19 LARK 7.02 N 10/28/97 0.04 19.35 0.31 0.97 6.90 LARL 13.65 N 10/28/97 0.43 13.41 0.48 1.39 13.70 LFBI 3.43 N 10/28/97 0.98 29.17 0.15 0.52 3.93 LFED 7.25 N 10/28/97 0.03 30.29 0.26 1.24 7.66 LIFB 8.08 N 10/28/97 0.39 17.90 0.33 0.88 8.42 LISB 7.93 N 10/28/97 NA 24.31 0.45 0.71 7.78 LOGN 7.54 N 10/28/97 0.49 15.63 0.24 1.46 7.68 LONF 4.77 N 10/28/97 0.80 29.96 0.17 0.85 4.30 LSBI 7.38 N 10/28/97 1.17 16.78 0.38 0.70 7.88 LSBX 20.04 N 10/28/97 NA 9.55 0.35 1.73 19.05 LVSB 9.52 N 10/28/97 0.98 22.28 0.27 1.14 11.56 LXMO 4.46 N 10/28/97 0.48 18.61 0.22 1.52 5.43 MAFB 14.72 N 10/28/97 NA 13.38 0.57 1.08 13.79 MARN 7.28 N 10/28/97 0.81 16.88 0.40 1.72 7.53 MASB 9.90 N 10/28/97 0.16 17.26 0.63 1.01 9.45 MBB 5.98 N 10/28/97 0.71 22.08 0.31 0.57 6.49 MBB 5.98 N 10/28/97 0.71 22.08 0.31 0.57 6.49 MBBC 3.90 N 10/28/97 0.33 38.02 0.12 0.36 3.32 MBLF 6.52 N 10/28/97 0.25 20.12 0.32 0.79 6.21 MCBN 8.25 N 10/28/97 0.55 14.02 0.50 0.76 9.11 MDBK 11.18 N 10/28/97 0.27 15.91 0.55 0.97 10.74 MECH 17.84 N 10/28/97 0.91 17.27 0.36 0.92 8.89 MERI 14.61 N 10/28/97 0.25 14.92 0.80 1.14 13.75 METF 13.86 N 10/28/97 0.49 14.89 0.34 0.59 15.15 MFBC 5.62 N 10/28/97 NA 19.61 0.29 0.79 5.89 MFFC 4.30 N 10/28/97 0.15 25.42 0.15 0.70 5.11 MFLR 9.53 N 10/28/97 0.81 17.80 0.33 0.94 9.83 MFSL 11.03 N 10/28/97 0.45 16.98 0.67 0.77 9.15 MIVI 5.77 N 10/28/97 0.28 17.31 0.26 1.18 6.82 MSBF 7.85 N 10/28/97 0.06 19.16 0.23 1.43 8.39 MWBI 11.05 N 10/28/97 0.81 15.55 0.82 0.81 11.74 MWBX 18.02 N 10/28/97 0.69 14.73 0.14 1.35 18.14 MWFD 12.59 N 10/28/97 0.12 18.18 0.33 1.11 12.75 NASB 16.21 N 10/28/97 3.11 12.69 0.98 1.24 15.90 NBN 7.40 N 10/28/97 1.11 53.41 0.11 0.30 3.85 NEIB 7.78 N 10/28/97 NA 13.13 0.35 1.28 8.66 NHTB 8.22 N 10/28/97 0.70 18.33 0.30 0.87 11.73 NMSB 7.93 N 10/28/97 NA 19.14 0.16 0.85 8.34 NSLB 3.72 N 10/28/97 0.02 24.01 0.19 0.94 4.78 NTMG 6.36 N 10/28/97 0.77 28.75 0.10 0.54 7.36 NWEQ 8.16 N 10/28/97 1.25 13.67 0.32 1.02 8.96 OCN 19.54 N 10/28/97 NA 33.67 0.42 1.67 15.97 OFCP 8.88 N 10/28/97 0.27 22.19 0.30 0.79 9.17 OHSL 7.86 N 10/28/97 NA 16.56 0.40 0.85 7.70 PBCI 9.61 N 10/28/97 NA 12.86 0.44 1.36 10.62 PBHC 8.27 N 10/28/97 NA 29.89 0.23 0.91 7.64 PBKB 9.27 N 10/28/97 0.82 24.51 0.19 0.50 8.86 PCBC 5.72 N 10/28/97 0.03 17.08 0.30 1.16 6.18 PCCI 13.77 N 10/28/97 1.06 13.10 0.31 1.01 14.31 PEEK 4.71 N 10/28/97 0.71 24.63 0.17 1.13 4.38 PERM 6.52 N 10/28/97 1.09 21.55 0.29 0.58 6.32 PERT 9.03 N 10/28/97 0.12 28.98 0.44 1.06 8.78
17 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- PFDC 9.55 N 10/28/97 0.34 16.41 0.48 1.53 10.08 PFFB 4.33 N 10/28/97 NA 25.16 0.19 0.49 4.89 PFNC 13.61 N 10/28/97 NA 16.52 0.21 0.85 16.08 PFSB 10.97 N 10/28/97 NA 13.31 0.56 0.80 10.98 PFSL 11.23 N 10/28/97 0.10 22.86 0.38 0.66 10.39 PHBK 16.37 N 10/28/97 NA 14.43 0.68 1.31 16.89 PHFC 6.03 N 10/28/97 1.60 18.75 0.25 0.73 6.50 PRBC 5.11 N 10/28/97 0.33 19.01 0.24 0.60 5.32 PSBK 11.84 N 10/28/97 0.84 15.18 0.56 0.97 11.59 PTRS 9.48 N 10/28/97 0.69 10.34 0.65 1.06 11.83 PULS 13.90 N 10/28/97 NA 14.51 0.45 1.10 13.49 PVFC 19.39 N 10/28/97 1.11 11.36 0.44 1.35 19.25 PVSA 14.93 N 10/28/97 0.26 14.09 0.51 1.08 14.80 PWBC 8.86 N 10/28/97 0.65 16.55 0.27 0.71 9.02 QCBC 7.79 N 10/28/97 1.35 15.15 0.33 0.73 8.51 QCFB 8.60 N 10/28/97 0.17 14.54 0.49 1.62 9.09 QCSB 11.48 N 10/28/97 NA 23.52 0.38 1.43 12.45 RARB 13.25 N 10/28/97 0.29 18.75 0.37 0.99 12.53 REDF 8.06 N 10/28/97 2.19 14.20 0.33 1.06 12.65 RELI 2.66 N 10/28/97 NA 218.75 0.01 0.12 0.25 RELY 10.22 N 10/28/97 NA 17.73 0.43 0.77 9.43 ROSE 14.14 N 10/28/97 NA 17.26 0.44 0.87 14.02 SCCB 4.49 N 10/28/97 1.06 24.43 0.22 1.31 5.06 SFED 6.18 N 10/28/97 0.68 23.37 0.23 0.63 5.07 SFFC 7.36 N 10/28/97 1.34 15.70 0.43 1.55 8.78 SFIN 9.33 N 10/28/97 0.38 14.77 0.33 0.82 8.78 SFSB 8.28 N 10/28/97 NA 20.09 0.42 0.53 8.09 SFSL 14.39 N 10/28/97 0.28 17.19 0.26 1.35 14.52 SGVB 4.25 N 10/28/97 0.88 37.50 0.12 0.27 3.72 SHEN 10.46 N 10/28/97 NA 15.29 0.56 1.16 10.21 SISB 11.33 N 10/28/97 NA 15.40 0.55 0.86 12.08 SKAN 9.99 N 10/28/97 1.78 17.19 0.44 0.68 9.91 SMBC 5.92 N 10/28/97 0.89 23.36 0.19 0.75 4.66 SOBI 3.53 N 10/28/97 0.17 32.59 0.14 0.57 3.72 SOPN 6.96 N 10/28/97 0.08 18.36 0.32 1.80 7.60 SOSA 16.47 N 10/28/97 5.91 14.24 0.09 1.27 19.78 SPBC 12.11 N 10/28/97 NA 17.28 0.35 1.08 12.17 SSB 4.69 N 10/28/97 -- 17.71 0.15 1.47 4.00 SSM 4.84 N 10/28/97 -- 36.16 0.14 0.98 2.77 STFR 8.11 N 10/28/97 0.16 16.89 0.57 0.79 9.57 STSA 9.47 N 10/28/97 0.47 18.75 0.28 0.48 8.98 SVRN 11.89 N 10/28/97 NA 15.14 0.29 0.46 8.43 SWBI 9.55 N 10/28/97 0.20 17.88 0.36 1.07 9.61 SWCB 12.17 N 10/28/97 0.81 15.79 0.57 0.91 11.42 THR 6.61 N 10/28/97 1.14 16.67 0.27 0.91 6.72 THRD 6.02 N 10/28/97 0.27 26.09 0.23 0.59 5.17 TPNZ 5.63 N 10/28/97 1.28 28.47 0.18 0.84 4.85 TRIC 7.21 N 10/28/97 -- 16.52 0.42 1.10 7.17 TSH 6.97 N 10/28/97 0.27 17.86 0.28 0.93 6.88 TWIN 5.59 N 10/28/97 0.08 18.09 0.19 0.90 6.97 UBMT 5.99 N 10/28/97 NA 19.35 0.31 1.41 6.14 UFRM 5.02 N 10/28/97 0.54 71.09 0.04 0.16 2.20 VABF 6.78 N 10/28/97 0.68 22.24 0.17 0.54 7.98 WAMU 11.92 N 10/28/97 NA 26.20 0.65 0.73 12.76
18 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit II -- Selected Publicly Traded Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- WAYN 7.18 N 10/28/97 0.72 31.88 0.20 0.73 7.98 WBST 13.84 N 10/28/97 0.72 15.61 0.96 0.82 15.26 WCBI 9.19 N 10/28/97 0.21 15.77 0.42 1.45 9.44 WEFC 7.37 N 10/28/97 NA 15.18 0.28 1.06 7.46 WFI 12.06 N 10/28/97 0.28 15.23 0.32 0.80 11.15 WFSL 15.62 N 10/28/97 0.69 13.90 0.56 1.91 15.38 WHGB 3.72 N 10/28/97 0.15 22.24 0.17 0.93 4.37 WOFC 3.17 N 10/28/97 0.34 30.63 0.20 0.44 3.26 WRNB 17.58 N 10/28/97 NA 15.34 0.33 1.50 14.23 WSB 8.66 N 10/28/97 NA 19.06 0.10 0.72 8.67 WSFS 20.39 N 10/28/97 1.21 12.87 0.34 1.13 20.54 WSTR 6.48 N 10/28/97 NA 21.34 0.29 0.68 6.33 WVFC 10.71 N 10/28/97 0.09 15.82 0.49 1.20 10.79 WYNE 6.04 N 10/28/97 NA 22.50 0.25 0.73 5.68 YFCB 6.81 N 10/28/97 0.57 17.36 0.27 1.13 7.48 YFED 9.46 N 10/28/97 1.24 19.21 0.34 0.84 9.96 Maximum 53.13 7.17 218.75 1.56 3.68 38.97 Minimum 2.60 -- 6.13 (0.27) (0.36) (5.07) Average 9.40 0.66 20.41 0.36 0.96 9.47 Median 8.61 0.43 17.60 0.32 0.91 8.78
19 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit III -- Mid-Atlantic Selected Thrifts
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- ALBC Albion Banc Corp. Albion NY MA SAIF NASDAQ 07/26/93 29.000 7.25 ALBK ALBANK Financial Corp. Albany NY MA SAIF NASDAQ 04/01/92 45.500 585.68 ASFC Astoria Financial Corp. Lake Success NY MA SAIF NASDAQ 11/18/93 50.813 1,050.10 CATB Catskill Financial Corp. Catskill NY MA BIF NASDAQ 04/18/96 17.500 85.72 CMSB Commonwealth Bancorp Inc. Norristown PA MA SAIF NASDAQ 06/17/96 17.375 282.22 CVAL Chester Valley Bancorp Inc. Downingtown PA MA SAIF NASDAQ 03/27/87 26.000 56.22 DIME Dime Community Bancorp Inc. Brooklyn NY MA BIF NASDAQ 06/26/96 20.750 271.67 DME Dime Bancorp Inc. New York NY MA BIF NYSE 08/19/86 24.063 2,442.20 EQSB Equitable Federal Savings Bank Wheaton MD MA SAIF NASDAQ 09/10/93 43.875 26.42 ESBK Elmira Savings Bank (The) Elmira NY MA BIF NASDAQ 03/01/85 28.125 19.87 FBBC First Bell Bancorp Inc. Pittsburgh PA MA SAIF NASDAQ 06/29/95 17.125 111.49 FBER 1st Bergen Bancorp Wood-Ridge NJ MA SAIF NASDAQ 04/01/96 18.250 54.76 FFIC Flushing Financial Corp. Flushing NY MA BIF NASDAQ 11/21/95 21.125 168.65 FIBC Financial Bancorp Inc. Long Island City NY MA SAIF NASDAQ 08/17/94 22.500 38.47 FKFS First Keystone Financial Media PA MA SAIF NASDAQ 01/26/95 29.250 35.92 FMCO FMS Financial Corp. Burlington NJ MA SAIF NASDAQ 12/14/88 28.500 68.04 FSBI Fidelity Bancorp Inc. Pittsburgh PA MA SAIF NASDAQ 06/24/88 24.000 37.20 FSPG First Home Bancorp Inc. Pennsville NJ MA SAIF NASDAQ 04/20/87 22.500 60.94 GAF GA Financial Inc. Pittsburgh PA MA SAIF AMSE 03/26/96 18.625 148.50 GPT GreenPoint Financial Corp. New York NY MA BIF NYSE 01/28/94 62.250 2,665.92 HARL Harleysville Savings Bank Harleysville PA MA SAIF NASDAQ 08/04/87 29.250 48.60 HAVN Haven Bancorp Inc. Woodhaven NY MA SAIF NASDAQ 09/23/93 42.125 184.76 HRBF Harbor Federal Bancorp Inc. Baltimore MD MA SAIF NASDAQ 08/12/94 20.750 35.14 IBSF IBS Financial Corp. Cherry Hill NJ MA SAIF NASDAQ 10/13/94 16.000 176.23 IFSB Independence Federal Svgs Bank Washington DC MA SAIF NASDAQ 06/06/85 13.813 17.70 JSB JSB Financial Inc. Lynbrook NY MA BIF NYSE 06/27/90 47.000 465.21 LARL Laurel Capital Group Inc. Allison Park PA MA SAIF NASDAQ 02/20/87 25.750 37.15 LFBI Little Falls Bancorp Inc. Little Falls NJ MA SAIF NASDAQ 01/05/96 17.500 45.64 LFED Leeds Federal Savings Bk (MHC) Baltimore MD MA SAIF NASDAQ 05/02/94 31.500 108.82 LISB Long Island Bancorp Inc. Melville NY MA SAIF NASDAQ 04/18/94 43.750 1,051.00 LVSB Lakeview Financial Paterson NJ MA SAIF NASDAQ 12/22/93 24.063 108.50 MBB MSB Bancorp Inc. Goshen NY MA BIF AMSE 09/03/92 27.375 77.86 MBB MSB Bancorp, Inc. Goshen NY MA BIF AMSE NA 27.375 77.86 MFSL Maryland Federal Bancorp Hyattsville MD MA SAIF NASDAQ 06/02/87 45.500 147.13 PBCI Pamrapo Bancorp Inc. Bayonne NJ MA SAIF NASDAQ 11/14/89 22.625 64.32 PBHC Oswego City Savings Bk (MHC) Oswego NY MA BIF NASDAQ 11/16/95 27.500 52.71 PEEK Peekskill Financial Corp. Peekskill NY MA SAIF NASDAQ 12/29/95 16.750 53.48 PFNC Progress Financial Corp. Blue Bell PA MA SAIF NASDAQ 07/18/83 13.875 55.64 PFSB PennFed Financial Services Inc West Orange NJ MA SAIF NASDAQ 07/15/94 29.813 143.78 PHFC Pittsburgh Home Financial Corp Pittsburgh PA MA SAIF NASDAQ 04/01/96 18.750 36.93 PRBC Prestige Bancorp Inc. Pleasant Hills PA MA SAIF NASDAQ 06/27/96 18.250 16.70 PSBK Progressive Bank Inc. Fishkill NY MA BIF NASDAQ 08/01/84 34.000 130.15 PULS Pulse Bancorp South River NJ MA SAIF NASDAQ 09/18/86 26.125 80.48 PVSA Parkvale Financial Corporation Monroeville PA MA SAIF NASDAQ 07/16/87 28.750 146.79 PWBC PennFirst Bancorp Inc. Ellwood City PA MA SAIF NASDAQ 06/13/90 17.875 94.92 QCSB Queens County Bancorp Inc. Flushing NY MA BIF NASDAQ 11/23/93 35.750 540.12 RARB Raritan Bancorp Inc. Raritan NJ MA BIF NASDAQ 03/01/87 27.750 65.83 RELY Reliance Bancorp Inc. Garden City NY MA SAIF NASDAQ 03/31/94 30.500 265.73 ROSE TR Financial Corp. Garden City NY MA BIF NASDAQ 06/29/93 30.375 534.36 SFED SFS Bancorp Inc. Schenectady NY MA SAIF NASDAQ 06/30/95 21.500 26.47 SFIN Statewide Financial Corp. Jersey City NJ MA SAIF NASDAQ 10/02/95 19.500 91.85 SHEN First Shenango Bancorp Inc. New Castle PA MA SAIF NASDAQ 04/06/93 34.250 70.86 SKAN Skaneateles Bancorp Inc. Skaneateles NY MA BIF NASDAQ 06/02/86 30.250 28.89 SVRN Sovereign Bancorp Inc. Wyomissing PA MA SAIF NASDAQ 08/12/86 17.563 1,981.78
20 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit III -- Mid-Atlantic Selected Thrifts (Continued)
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- THRD TF Financial Corporation Newtown PA MA SAIF NASDAQ 07/13/94 24.000 98.12 TPNZ Tappan Zee Financial Inc. Tarrytown NY MA SAIF NASDAQ 10/05/95 20.500 30.69 WHGB WHG Bancshares Corp. Lutherville MD MA SAIF NASDAQ 04/01/96 15.125 22.11 WSB Washington Savings Bank, FSB Waldorf MD MA SAIF AMSE NA 7.625 32.39 WSFS WSFS Financial Corp. Wilmington DE MA BIF NASDAQ 11/26/86 17.500 217.74 WVFC WVS Financial Corp. Pittsburgh PA MA SAIF NASDAQ 11/29/93 31.000 54.19 WYNE Wayne Bancorp Inc. Wayne NJ MA SAIF NASDAQ 06/27/96 22.500 45.31 YFCB Yonkers Financial Corporation Yonkers NY MA SAIF NASDAQ 04/18/96 18.750 56.64 YFED York Financial Corp. York PA MA SAIF NASDAQ 02/01/84 26.125 183.09 Maximum 62.250 2,665.92 Minimum 7.625 7.25 Average 26.409 254.30 Median 24.063 77.86
21 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit III -- Mid-Atlantic Selected Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- ALBC 29.90 121.04 121.04 10.57 1.10 68,628 8.73 8.73 0.97 0.37 ALBK 17.23 170.48 193.53 15.76 1.58 3,716,954 9.24 8.23 2.64 1.04 ASFC 18.61 172.19 203.58 13.29 1.18 7,904,363 7.71 6.60 2.73 0.77 CATB 21.60 116.05 116.05 29.06 1.60 284,238 25.04 25.04 0.81 1.41 CMSB 22.28 133.45 171.18 12.39 1.61 2,278,099 9.28 7.39 0.78 0.58 CVAL 20.63 207.67 207.67 17.37 1.61 323,673 8.36 8.36 1.26 0.93 DIME 21.17 142.32 165.21 20.66 1.16 1,315,026 14.52 12.76 0.98 1.04 DME 19.72 231.82 243.55 12.58 0.67 19,413,597 5.42 5.18 1.22 0.66 EQSB 13.30 170.06 170.06 8.57 -- 308,197 5.04 5.04 3.30 0.73 ESBK 25.34 135.74 141.55 8.72 2.28 227,828 6.30 6.05 1.11 0.35 FBBC 15.15 155.40 155.40 16.37 2.34 681,215 10.53 10.53 1.13 1.09 FBER 26.45 135.49 135.49 19.23 1.10 284,765 14.19 14.19 0.69 0.77 FFIC 19.74 123.68 128.81 17.56 1.14 960,130 14.21 13.71 1.07 0.97 FIBC 14.15 143.22 143.86 12.95 1.78 296,956 9.04 9.00 1.59 0.94 FKFS 14.34 153.22 153.22 11.20 0.68 320,797 7.31 7.31 2.04 0.78 FMCO 12.84 187.01 190.38 12.26 0.98 554,925 6.56 6.45 2.22 1.02 FSBI 14.37 151.61 151.61 10.24 1.50 363,302 6.75 6.75 1.67 0.83 FSPG 12.71 175.10 178.01 11.67 1.78 522,396 6.66 6.56 1.77 0.97 GAF 19.81 126.53 127.74 18.51 2.58 802,304 14.63 14.51 0.94 1.07 GPT 18.15 184.99 345.07 20.36 1.61 13,093,985 9.69 5.44 3.43 1.05 HARL 15.00 219.76 219.76 14.36 1.50 336,666 6.53 6.53 1.95 1.02 HAVN 16.72 168.03 168.57 10.08 1.42 1,833,284 6.00 5.98 2.52 0.68 HRBF 22.31 125.91 125.91 16.24 2.31 216,370 12.89 12.89 0.93 0.70 IBSF 27.12 138.05 138.05 24.02 2.50 733,344 17.40 17.40 0.59 0.85 IFSB 25.11 99.45 112.48 6.85 1.59 258,460 6.88 6.14 0.55 0.27 JSB 18.50 130.88 130.88 30.39 2.98 1,531,068 23.21 23.21 2.54 1.72 LARL 13.77 174.69 174.69 17.53 2.02 211,987 10.03 10.03 1.87 1.43 LFBI 33.02 120.61 130.60 16.01 1.14 299,989 13.28 12.39 0.53 0.47 LFED 33.16 232.82 232.82 37.92 2.41 286,999 16.29 16.29 0.95 1.17 LISB 24.72 192.39 194.19 17.72 1.37 5,930,784 9.21 9.13 1.77 0.73 LVSB 27.04 241.60 302.30 23.01 0.52 481,646 9.52 7.76 0.89 0.95 MBB 25.35 129.43 263.73 9.57 2.19 813,902 8.92 5.36 1.08 0.51 MBB 25.35 129.43 263.73 9.57 2.19 813,902 8.92 5.36 1.08 0.51 MFSL 13.83 147.58 NA 12.52 1.85 1,175,006 8.48 NA 3.29 0.92 PBCI 13.97 133.96 134.91 17.29 4.42 371,958 12.91 12.83 1.62 1.33 PBHC 28.65 228.79 272.28 27.31 1.02 193,005 11.94 10.23 0.96 0.95 PEEK 22.64 113.87 113.87 29.30 2.15 182,560 25.73 25.73 0.74 1.29 PFNC 20.11 237.18 NA 12.74 0.87 436,746 5.33 NA 0.69 0.71 PFSB 13.74 132.92 156.99 10.54 0.94 1,363,950 7.33 6.27 2.17 0.82 PHFC 20.38 131.95 133.45 14.41 1.28 256,265 10.92 10.81 0.92 0.80 PRBC 20.05 108.12 108.12 12.11 0.66 137,834 11.21 11.21 0.91 0.62 PSBK 15.18 172.85 193.62 14.78 2.00 878,823 8.55 7.70 2.24 0.97 PULS 14.51 186.21 186.21 15.30 2.68 526,016 8.21 8.21 1.80 1.10 PVSA 14.38 189.14 190.40 14.60 1.81 1,005,440 7.72 7.67 2.00 1.08 PWBC 17.52 143.69 153.70 11.61 2.01 816,954 8.08 7.59 1.02 0.66 QCSB 25.54 269.61 269.61 35.05 2.24 1,541,049 11.22 11.22 1.40 1.54 RARB 18.38 222.36 225.98 17.64 1.73 379,428 7.93 7.81 1.51 1.03 RELY 16.94 158.11 215.24 13.06 2.10 2,034,753 8.26 6.20 1.80 0.84 ROSE 18.08 217.90 217.90 14.48 2.11 3,691,564 6.24 6.24 1.68 0.87 SFED 19.55 123.28 123.28 15.37 1.30 172,849 12.47 12.47 1.10 0.79 SFIN 14.23 140.29 140.59 13.64 2.26 673,214 9.73 9.71 1.37 0.90 SHEN 15.43 151.88 151.88 17.65 1.75 401,437 11.62 11.62 2.22 1.17 SKAN 17.59 166.67 171.58 11.67 1.32 247,643 7.00 6.81 1.72 0.68 SVRN 18.11 239.60 293.21 13.57 0.46 14,601,008 5.08 4.31 0.97 0.61
22 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit III -- Mid-Atlantic Selected Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- THRD 22.43 124.93 141.51 15.69 1.67 625,338 11.63 10.41 1.07 0.67 TPNZ 24.70 145.29 145.29 24.72 1.37 124,150 17.02 17.02 0.83 1.00 WHGB 26.08 106.81 106.81 22.06 1.32 100,235 20.66 20.66 0.58 0.85 WSB 18.60 150.99 150.99 12.54 1.31 258,330 8.30 8.30 0.41 0.73 WSFS 13.89 262.76 264.75 14.56 -- 1,495,609 5.54 5.51 1.26 1.13 WVFC 14.76 164.72 164.72 18.38 2.58 294,693 11.16 11.16 2.10 1.32 WYNE 20.83 136.45 136.45 16.95 0.89 267,285 12.43 12.43 1.08 0.85 YFCB 18.20 132.60 132.60 19.76 1.28 288,089 14.90 14.90 1.03 1.15 YFED 20.73 182.95 182.95 15.75 2.30 1,162,393 8.61 8.61 1.26 0.77 Maximum 33.16 269.61 345.07 37.92 4.42 19,413,597 25.73 25.73 3.43 1.72 Minimum 12.71 99.45 106.81 6.85 -- 68,628 5.04 4.31 0.41 0.27 Average 19.74 162.91 176.71 16.47 1.62 1,637,673 10.55 10.16 1.45 0.90 Median 18.61 151.61 164.72 15.30 1.60 481,646 9.21 8.61 1.22 0.87
23 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit III -- Mid-Atlantic Selected Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- ALBC 4.03 N 10/28/97 0.72 40.28 0.18 0.27 3.03 ALBK 11.33 N 10/28/97 0.73 17.23 0.66 1.03 11.06 ASFC 9.80 N 10/28/97 0.41 17.89 0.71 0.76 9.81 CATB 5.10 N 10/28/97 0.47 20.83 0.21 1.35 5.24 CMSB 5.76 N 10/28/97 0.47 24.13 0.18 0.51 5.36 CVAL 10.48 N 10/28/97 0.23 20.31 0.32 0.89 10.56 DIME 6.20 N 10/28/97 0.73 30.51 0.17 0.70 4.73 DME 12.47 N 10/28/97 1.02 16.71 0.36 0.74 14.43 EQSB 14.49 N 10/28/97 0.15 13.38 0.82 0.70 13.83 ESBK 5.53 N 10/28/97 0.66 20.09 0.35 0.43 6.85 FBBC 9.27 N 10/28/97 0.09 14.27 0.30 1.05 10.37 FBER 4.69 N 10/28/97 0.83 21.73 0.21 0.85 5.57 FFIC 6.05 N 10/28/97 NA 17.60 0.30 0.98 6.60 FIBC 10.10 N 10/28/97 NA 14.06 0.40 0.93 10.07 FKFS 10.49 N 10/28/97 1.60 13.30 0.55 0.78 10.93 FMCO 15.76 N 10/28/97 1.06 11.88 0.60 1.05 16.36 FSBI 11.94 N 10/28/97 0.30 15.00 0.40 0.75 10.90 FSPG 14.79 N 10/28/97 0.64 14.06 0.40 0.86 12.91 GAF 6.10 N 10/28/97 0.24 16.63 0.28 1.11 7.31 GPT 9.92 N 10/28/97 2.88 16.56 0.94 1.08 10.79 HARL 16.03 N 10/28/97 -- 13.80 0.53 1.09 16.89 HAVN 11.35 N 10/28/97 NA 19.87 0.53 0.54 9.02 HRBF 5.41 N 10/28/97 0.05 20.75 0.25 0.74 5.80 IBSF 4.54 N 10/28/97 0.08 26.67 0.15 0.88 5.09 IFSB 4.09 N 10/28/97 2.02 115.11 0.03 0.06 0.85 JSB 7.68 N 10/28/97 NA 18.36 0.64 1.74 7.61 LARL 13.65 N 10/28/97 0.43 13.41 0.48 1.39 13.70 LFBI 3.43 N 10/28/97 0.98 29.17 0.15 0.52 3.93 LFED 7.25 N 10/28/97 0.03 30.29 0.26 1.24 7.66 LISB 7.93 N 10/28/97 NA 24.31 0.45 0.71 7.78 LVSB 9.52 N 10/28/97 0.98 22.28 0.27 1.14 11.56 MBB 5.98 N 10/28/97 0.71 22.08 0.31 0.57 6.49 MBB 5.98 N 10/28/97 0.71 22.08 0.31 0.57 6.49 MFSL 11.03 N 10/28/97 0.45 16.98 0.67 0.77 9.15 PBCI 9.61 N 10/28/97 NA 12.86 0.44 1.36 10.62 PBHC 8.27 N 10/28/97 NA 29.89 0.23 0.91 7.64 PEEK 4.71 N 10/28/97 0.71 24.63 0.17 1.13 4.38 PFNC 13.61 N 10/28/97 NA 16.52 0.21 0.85 16.08 PFSB 10.97 N 10/28/97 NA 13.31 0.56 0.80 10.98 PHFC 6.03 N 10/28/97 1.60 18.75 0.25 0.73 6.50 PRBC 5.11 N 10/28/97 0.33 19.01 0.24 0.60 5.32 PSBK 11.84 N 10/28/97 0.84 15.18 0.56 0.97 11.59 PULS 13.90 N 10/28/97 NA 14.51 0.45 1.10 13.49 PVSA 14.93 N 10/28/97 0.26 14.09 0.51 1.08 14.80 PWBC 8.86 N 10/28/97 0.65 16.55 0.27 0.71 9.02 QCSB 11.48 N 10/28/97 NA 23.52 0.38 1.43 12.45 RARB 13.25 N 10/28/97 0.29 18.75 0.37 0.99 12.53 RELY 10.22 N 10/28/97 NA 17.73 0.43 0.77 9.43 ROSE 14.14 N 10/28/97 NA 17.26 0.44 0.87 14.02 SFED 6.18 N 10/28/97 0.68 23.37 0.23 0.63 5.07 SFIN 9.33 N 10/28/97 0.38 14.77 0.33 0.82 8.78 SHEN 10.46 N 10/28/97 NA 15.29 0.56 1.16 10.21 SKAN 9.99 N 10/28/97 1.78 17.19 0.44 0.68 9.91 SVRN 11.89 N 10/28/97 NA 15.14 0.29 0.46 8.43
24 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit III -- Mid-Atlantic Selected Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- THRD 6.02 N 10/28/97 0.27 26.09 0.23 0.59 5.17 TPNZ 5.63 N 10/28/97 1.28 28.47 0.18 0.84 4.85 WHGB 3.72 N 10/28/97 0.15 22.24 0.17 0.93 4.37 WSB 8.66 N 10/28/97 NA 19.06 0.10 0.72 8.67 WSFS 20.39 N 10/28/97 1.21 12.87 0.34 1.13 20.54 WVFC 10.71 N 10/28/97 0.09 15.82 0.49 1.20 10.79 WYNE 6.04 N 10/28/97 NA 22.50 0.25 0.73 5.68 YFCB 6.81 N 10/28/97 0.57 17.36 0.27 1.13 7.48 YFED 9.46 N 10/28/97 1.24 19.21 0.34 0.84 9.96 Maximum 20.39 2.88 115.11 0.94 1.74 20.54 Minimum 3.43 -- 11.88 0.03 0.06 0.85 Average 9.21 0.70 20.85 0.37 0.87 9.17 Median 9.46 0.65 17.89 0.33 0.85 9.02
25 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit IV -- Select Maryland Thrifts
Deposit Current Current Insurance Stock Market Agency Price Value Ticker Short Name City State Region (BIF/SAIF) Exchange IPO Date ($) ($M) - ------ ---------- ---- ----- ------ ---------- -------- -------- ------- --------- EQSB Equitable Federal Savings Bank Wheaton MD MA SAIF NASDAQ 09/10/93 43.875 26.42 HRBF Harbor Federal Bancorp Inc. Baltimore MD MA SAIF NASDAQ 08/12/94 20.750 35.14 LFED Leeds Federal Savings Bk (MHC) Baltimore MD MA SAIF NASDAQ 05/02/94 31.500 108.82 MFSL Maryland Federal Bancorp Hyattsville MD MA SAIF NASDAQ 06/02/87 45.500 147.13 WHGB WHG Bancshares Corp. Lutherville MD MA SAIF NASDAQ 04/01/96 15.125 22.11 WSB Washington Savings Bank, FSB Waldorf MD MA SAIF AMSE NA 7.625 32.39 Maximum 45.500 147.13 Minimum 7.625 22.11 Average 27.396 62.00 Median 26.125 33.77
26 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit IV -- Select Maryland Thrifts (Continued)
Tangible Core Price/ Current Current Current Total Equity/ Equity/ Core Income/ LTM Price/ Price/Tang Price/ Dividend Assets Assets Tang Assets EPS Avg Assets Core EPS Book Value Book Value Assets Yield ($000) (%) (%) ($) (%) Ticker (x) (%) (%) (%) (%) Mst RctQ Mst RctQ Mst RctQ LTM LTM - ------ -------- ---------- ---------- ------ -------- --------- -------- ----------- ---- ---------- EQSB 13.30 170.06 170.06 8.57 -- 308,197 5.04 5.04 3.30 0.73 HRBF 22.31 125.91 125.91 16.24 2.31 216,370 12.89 12.89 0.93 0.70 LFED 33.16 232.82 232.82 37.92 2.41 286,999 16.29 16.29 0.95 1.17 MFSL 13.83 147.58 NA 12.52 1.85 1,175,006 8.48 NA 3.29 0.92 WHGB 26.08 106.81 106.81 22.06 1.32 100,235 20.66 20.66 0.58 0.85 WSB 18.60 150.99 150.99 12.54 1.31 258,330 8.30 8.30 0.41 0.73 Maximum 33.16 232.82 232.82 37.92 2.41 1,175,006 20.66 20.66 3.30 1.17 Minimum 13.30 106.81 106.81 8.57 -- 100,235 5.04 5.04 0.41 0.70 Average 21.21 155.70 157.32 18.31 1.53 390,856 11.94 12.64 1.58 0.85 Median 20.46 149.29 150.99 14.39 1.58 272,665 10.69 12.89 0.94 0.79
27 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit IV -- Select Maryland Thrifts (Continued)
Core Core Core Income/ NPAs/ Price/ Core Income/ Income/ Avg Equity Merger Current Assets Core EPS Avg Assets Avg Equity (%) Target? Pricing (%) EPS ($) (%) (%) Ticker LTM (Y/N) Date Mst RctQ (x) Mst RctQ Mst RctQ Mst RctQ - ------ ---------- ------- -------- -------- ------ -------- ---------- ---------- EQSB 14.49 N 10/28/97 0.15 13.38 0.82 0.70 13.83 HRBF 5.41 N 10/28/97 0.05 20.75 0.25 0.74 5.80 LFED 7.25 N 10/28/97 0.03 30.29 0.26 1.24 7.66 MFSL 11.03 N 10/28/97 0.45 16.98 0.67 0.77 9.15 WHGB 3.72 N 10/28/97 0.15 22.24 0.17 0.93 4.37 WSB 8.66 N 10/28/97 NA 19.06 0.10 0.72 8.67 Maximum 14.49 0.45 30.29 0.82 1.24 13.83 Minimum 3.72 0.03 13.38 0.10 0.70 4.37 Average 8.43 0.17 20.45 0.38 0.85 8.25 Median 7.96 0.15 19.91 0.26 0.76 8.17
28 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit V -- Comparative Price Changes
% % Total Current Current 22-Aug-97 22-Aug-97 Change Change Number Assets Stock Market Stock Market Stock Market of ($000) Price Value Price Value Price Value Ticker Short Name City State Offices Mst RctQ IPO Date ($) ($M) ($) ($M) (%) (%) - ------ ---------- ---- ----- ------- -------- -------- ------- ------- --------- --------- ------ ------ ALBC Albion Banc Corp. Albion NY 2 68,628 07/26/93 29.000 7.25 23.250 6.12 24.73 18.46 CLAS Classic Bancshares Inc. Ashland KY 3 130,525 12/29/95 15.500 20.23 14.000 18.27 10.71 10.73 FFSL First Independence Corp. Independence KS 2 110,876 10/08/93 14.625 14.51 12.875 12.77 13.59 13.63 GUPB GFSB Bancorp Inc. Gallup NM 1 93,793 06/30/95 21.250 15.98 18.750 15.08 13.33 5.97 HHFC Harvest Home Financial Corp. Cheviot OH 3 87,596 10/10/94 14.750 13.49 11.750 10.75 25.53 25.49 INCB Indiana Community Bank SB Lebanon IN 4 93,702 12/15/94 15.000 13.83 15.250 14.06 (1.64) (1.64) MWBI Midwest Bancshares Inc. Burlington IA 4 149,850 11/12/92 51.000 17.30 33.875 11.53 50.55 50.04 NSLB NS&L Bancorp Inc. Neosho MO 2 59,711 06/08/95 18.250 12.91 18.625 13.18 (2.01) (2.05) PRBC Prestige Bancorp Inc. Pleasant Hills PA 4 137,834 06/27/96 18.250 16.70 17.500 16.01 4.29 4.31 RIVR River Valley Bancorp Madison IN 6 140,442 12/20/96 16.250 19.34 16.875 20.09 (3.70) (3.73) SOBI Sobieski Bancorp Inc. South Bend IN 3 81,733 03/31/95 18.250 13.86 16.250 12.34 12.31 12.32 TPNZ Tappan Zee Financial Inc. Tarrytown NY 1 124,150 10/05/95 20.500 30.69 17.438 26.10 17.56 17.59 Maximum 6 149,850 51.000 30.69 33.875 26.10 50.55 50.04 Minimum 1 59,711 14.625 7.25 11.750 6.12 (3.70) (3.73) ------- Average 3 106,570 21.052 16.34 18.037 14.69 13.77 12.59 Median 3 102,335 18.250 15.25 17.157 13.62 12.82 11.52 -------
29 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit VI -- Pro Forma Comparison Converting Institution to Comparative Group As of October 28, 1997
Price Mk Value PE P/Book P/TBook P/Assets Div Yld Assets Eq/A TEq/A EPS ROAA ROAE Ticker Name ($) ($Mil) (X) (%) (%) (%) (%) ($000) (%) (%) ($) (%) (%) - ------ ---- ----- -------- --- ------ ------- -------- ------- ------ ---- ----- --- ---- ---- Wyman Park ---------- Before Conversion N/A N/A N/A N/A N/A N/A N/A 63,391 7.50 7.50 N/A 0.78 10.92 Pro Forma Supermax 10.000 10,117 14.68 76.69 76.69 14.45 3.00 70,019 18.37 18.37 0.68 0.97 5.28 Pro Forma Maximum 10.000 8,798 13.25 73.00 73.00 12.77 3.00 68,878 17.05 17.05 0.75 0.95 5.57 Pro Forma Midpoint 10.000 7,650 11.92 69.16 69.16 11.27 3.00 67,888 15.87 15.87 0.84 0.93 5.87 Pro Forma Minimum 10.000 6,503 10.50 64.62 64.62 9.72 3.00 66,888 14.65 14.65 0.95 0.91 6.24 Comparative Group ----------------- Averages 21.052 16.34 25.50 122.75 124.48 15.69 1.73 106,570 12.93 12.75 0.90 0.67 5.11 Medians 18.250 15.25 26.27 121.15 121.66 15.08 1.73 102,335 12.28 12.20 0.72 0.66 4.54 Maryland Public Thrifts ----------------------- Averages 27.396 62.00 21.21 155.70 157.32 18.31 1.53 390,856 11.94 12.64 1.58 0.85 8.43 Medians 26.125 33.77 20.46 149.29 150.99 14.39 1.58 272,665 10.69 12.89 0.94 0.79 7.96 Mid-Atlantic Region Thrifts --------------------------- Averages 26.409 254.30 19.74 162.91 176.71 16.47 1.62 1,637,673 10.55 10.16 1.45 0.90 9.21 Medians 24.063 77.86 18.61 151.61 164.72 15.30 1.60 481,646 9.21 8.61 1.22 0.87 9.46 All Public Thrifts ------------------ Averages 25.442 261.60 19.83 162.31 170.17 17.23 1.70 1,670,568 11.41 11.16 1.40 0.97 9.40 Medians 23.000 61.16 18.61 152.11 156.33 15.85 1.66 381,007 9.70 9.47 1.23 0.93 8.61 Comparative Group ----------------- ALBC AlbionBancCorp-NY 29.000 7.3 29.9 121.0 121.0 10.6 1.1 68,628 8.73 8.73 0.97 0.37 4.03 CLAS ClassicBcshs-KY 15.500 20.2 21.2 104.2 123.3 15.5 1.8 130,525 14.87 12.87 0.73 0.72 4.64 FFSL FirstIndcCorp-KS 14.625 14.5 20.6 126.1 126.1 13.2 1.7 110,876 10.43 10.43 0.71 0.69 6.20 GUPB GFSBBancorp-NM 21.250 16.0 22.1 122.1 122.1 18.1 1.9 93,793 14.87 14.87 0.96 0.95 5.44 HHFC HarvestHome-OH 14.750 13.5 27.8 130.4 130.4 15.4 3.0 87,596 11.81 11.81 0.53 0.57 4.44 INCB IndianaCommBkSB-IN 15.000 13.8 28.9 121.3 121.3 14.8 2.4 93,702 12.17 12.17 0.52 0.53 4.24 MWBI MidwestBncshrs-IA 51.000 17.3 17.4 166.9 166.9 11.6 1.4 149,850 6.92 6.92 2.94 0.77 11.05 NSLB NS&LBancorp-MO 18.250 12.9 30.4 110.5 110.5 21.6 2.7 59,711 19.56 19.56 0.60 0.77 3.72 PRBC PrestigeBancorp-PA 18.250 16.7 20.1 108.1 108.1 12.1 0.7 137,834 11.21 11.21 0.91 0.62 5.11 RIVR RiverValleyBncp-IN 16.250 19.3 33.4 111.2 112.9 13.8 1.0 140,442 12.39 12.23 0.52 0.39 3.26 SOBI SobieskiBancorp-IN 18.250 13.9 29.4 105.9 105.9 17.0 1.8 81,733 15.12 15.12 0.62 0.60 3.53 TPNZ TappanZeeFin-NY 20.500 30.7 24.7 145.3 145.3 24.7 1.4 124,150 17.02 17.02 0.83 1.00 5.63
Note: Stock prices are closing prices or last trade. Pro forma calculations for Wyman Park's are based on sales at $10 per share with a midpoint of $7,650,000 minimum of $6,502,500, and maximum of $8,797,500. 30 Source: SNL Securities and F&C calculations. FERGUSON & COMPANY Exhibit VII -- Comparison of Pricing Ratios
Wyman Park Group Percent Premium Savings and Compared to (Discount) Versus Loan ----------------- ----------------- Association Average Median Average Median ----------- ------- ------ ------- ------ Comparison of PE ratio at midpoint to: - ------------------------------------------ Comparative group 11.92 25.50 26.27 (53.3) (54.6) Maryland Thrifts 11.92 21.21 20.46 (43.8) (41.7) Mid Atlantic Region Thrifts 11.92 19.74 18.61 (39.6) (35.9) All public thrifts 11.92 19.83 18.61 (39.9) (35.9) Recent conversions 11.92 24.60 23.30 (51.5) (48.8) Comparison of PE ratio at maximum to: - ------------------------------------------ Comparative group 12.30 25.50 26.27 (51.8) (53.2) Maryland Thrifts 12.30 21.21 20.46 (42.0) (39.9) Mid Atlantic Region Thrifts 12.30 19.74 18.61 (37.7) (33.9) All public thrifts 12.30 19.83 18.61 (38.0) (33.9) Recent conversions 12.30 24.60 23.30 (50.0) (47.2) Comparison of PE ratio at supermaximum to: - ------------------------------------------ Comparative group 13.62 25.50 26.27 (46.6) (48.2) Maryland Thrifts 13.62 21.21 20.46 (35.8) (33.4) Mid Atlantic Region Thrifts 13.62 19.74 18.61 (31.0) (26.8) All public thrifts 13.62 19.83 18.61 (31.3) (26.8) Recent conversions 13.62 24.60 23.30 (44.6) (41.5) Comparison of PB ratio at midpoint to: - ------------------------------------------ Comparative group 69.16 122.75 121.15 (43.7) (42.9) Maryland Thrifts 69.16 155.70 149.29 (55.6) (53.7) Mid Atlantic Region Thrifts 69.16 162.91 151.60 (57.5) (54.4) All public thrifts 69.16 162.30 152.11 (57.4) (54.5) Recent conversions 69.16 70.93 71.90 (2.5) (3.8) Comparison of PB ratio at maximum to: - ------------------------------------------ Comparative group 73.00 122.75 121.15 (40.5) (39.7) Maryland Thrifts 73.00 155.70 149.29 (53.1) (51.1) Mid Atlantic Region Thrifts 73.00 162.91 151.60 (55.2) (51.8) All public thrifts 73.00 162.30 152.11 (55.0) (52.0) Recent conversions 73.00 70.93 71.90 2.9 1.5 Comparison of PB ratio at supermaximum to: - ------------------------------------------ Comparative group 76.69 122.75 121.15 (37.5) (36.7) Maryland Thrifts 76.69 155.70 149.29 (50.7) (48.6) Mid Atlantic Region Thrifts 76.69 162.91 151.60 (52.9) (49.4) All public thrifts 76.69 162.30 152.11 (52.7) (49.6) Recent conversions 76.69 70.93 71.90 8.1 6.7
31 Source: SNL Securities and F&C calculations. FERGUSON & CO., LLP Exhibit VIII -- Pro Forma Assumptions 1. Net proceeds from the conversion were invested at the beginning of the period at 5.46%, which was the approximate rate on the one-year treasury bill on September 30, 1997. This rate was selected because it is considered more representative of the rate the Association is likely to earn. 2. Wyman Park's ESOP will acquire 8% of the conversion stock with loan proceeds obtained from the Holding Company; therefore, there will be no interest expense. We assumed that the ESOP expense is 10% annually of the initial ESOP expense. 3. Wyman Park's RP will acquire 4% of the stock through open market purchases at $10 per share and the expense is recognized ratably over five years as the shares vest. 4. All pro forma income and expense items are adjusted for income taxes at a combined state and federal rate of 38%. 5. In calculating the pro forma adjustments to net worth, the ESOP and RP are deducted in accordance with generally accepted accounting principles. 6. Earnings per share calculations have ignored AICPA OP 93-6. Calculating earnings per share under SOP 93-6 and assuming 10% of the ESOP shares are committed to be released and allocated to individual accounts at the beginning of the period would yield earnings per share of $1.03, $0.90, $0.81 and $0.73 and a price to earnings ratio of 9.75, 11.06, 12.30and 13.62, at the minimum, midpoint, maximum and super maximum, respectively. 32 Exhibit VIII Pro Forma Effect of Conversion Proceeds At the Minimum of the Conversion Valuation Range 30-Sep-97 WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD - --------------------------------------------------- 1. Conversion Proceeds Pro Forma Market Value (Minimum) $6,502,500 Less: Estimated Expenses (415,000) ---------- Net Conversion Proceeds $6,087,500 2. Estimated Additional Income From Conversion Proceeds Net Conversion Proceeds $6,087,500 Less: ESOP Contributions (520,200) MRP Contributions (260,100) ---------- Net Conversion Proceeds after ESOP & MRP $5,307,200 Estimated Incremental Rate of Return(1) 3.39% ---------- Estimated Additional Income $ 179,659 Less: ESOP Expense (32,252) MRP Expense (32,252) ---------- $ 115,155 ---------- 3. Pro Forma Calculations Before Conversion After Period Conversion Results Conversion ------ ----------------------------------------------- a. Pro Forma Earnings Twelve Months Ended 30-Sep-97 $ 504,000 $ 115,155 $ 619,155 b. Pro Forma Net Worth 30-Sep-97 $ 4,755,000 $5,307,200 $10,062,200 c. Pro Forma Net Assets 30-Sep-97 $61,581,000 $5,307,200 $66,888,200 (1) Investment rate of 5.46%, subject to an effective tax rate of 38%. 33 Exhibit VIII Pro Forma Effect of Conversion Proceeds At the Midpoint of the Conversion Valuation Range 30-Sep-97 WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD - --------------------------------------------------- 1. Conversion Proceeds Pro Forma Market Valuation (Midpoint) $7,650,000 Less: Estimated Expenses (425,000) ---------- Net Conversion Proceeds $7,225,000 2. Estimated Additional Income From Conversion Proceeds Net Conversion Proceeds $7,225,000 Less: ESOP Contributions (612,000) MRP Contributions (306,000) ---------- Net Conversion Proceeds after ESOP & MRP $6,307,000 Estimated Incremental Rate of Return(1) 3.39% ---------- Estimated Additional Income $ 213,505 Less: ESOP Expense (37,944) MRP Expense (37,944) ---------- $ 137,617 ---------- 3. Pro Forma Calculations Before Conversion After Period Conversion Results Conversion ------ ----------------------------------------------- a. Pro Forma Earnings Twelve Months Ended 30-Sep-97 $ 504,000 $ 137,617 $ 641,617 b. Pro Forma Net Worth 30-Sep-97 $ 4,755,000 $6,307,000 $11,062,000 c. Pro Forma Net Assets 30-Sep-97 $61,581,000 $6,307,000 $67,888,000 (1) Investment rate of 5.46%, subject to an effective tax rate of 38%. 34 Exhibit VIII Pro Forma Effect of Conversion Proceeds At the Maximum of the Conversion Valuation Range 30-Sep-97 WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD - --------------------------------------------------- 1. Conversion Proceeds Pro Forma Market Valuation (Maximum) $8,797,500 Less: Estimated Expenses (445,000) ---------- Net Conversion Proceeds $8,352,500 2. Estimated Additional Income From Conversion Proceeds Net Conversion Proceeds $8,352,500 Less: ESOP Contributions (703,800) MRP Contributions (351,900) ---------- Net Conversion Proceeds after ESOP & MRP $7,296,800 Estimated Incremental Rate of Return(1) 3.39% ---------- Estimated Additional Income $ 247,011 Less: ESOP Expense (43,636) MRP Expense (43,636) ---------- $ 159,740 ---------- 3. Pro Forma Calculations Before Conversion After Period Conversion Results Conversion ------ ----------------------------------------------- a. Pro Forma Earnings Twelve Months Ended 30-Sep-97 $ 504,000 $ 159,740 $ 663,740 b. Pro Forma Net Worth 30-Sep-97 $ 4,755,000 $7,296,800 $12,051,800 c. Pro Forma Net Assets 30-Sep-97 $61,581,000 $7,296,800 $68,877,800 (1) Investment rate of 5.46%, subject to an effective tax rate of 38%. 35 Exhibit VIII Pro Forma Effect of Conversion Proceeds At the SuperMax of the Conversion Valuation Range 30-Sep-97 WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD - --------------------------------------------------- 1. Conversion Proceeds Pro Forma Market Valuation (Final) $10,117,125 Less: Estimated Expenses $ (465,000) ----------- Net Conversion Proceeds $ 9,652,125 2. Estimated Additional Income From Conversion Proceeds Net Conversion Proceeds $ 9,652,125 Less: ESOP Contributions $ (809,370) MRP Contributions $ (404,685) ----------- Net Conversion Proceeds after ESOP & MRP $ 8,438,070 Estimated Incremental Rate of Return(1) 3.39% ----------- Estimated Additional Income $ 285,646 Less: ESOP Expense $ (50,181) MRP Expense $ (50,181) ----------- $ 185,284 ----------- 3. Pro Forma Calculations Before Conversion After Period Conversion Results Conversion ------ ----------------------------------------------- a. Pro Forma Earnings Twelve Months Ended 30-Sep-97 $ 504,000 $ 185,284 $ 689,284 b. Pro Forma Net Worth 30-Sep-97 $ 4,755,000 $8,438,070 $13,193,070 c. Pro Forma Net Assets 30-Sep-97 $61,581,000 $8,438,070 $70,019,070 (1) Investment rate of 5.46%, subject to an effective tax rate of 38%. 36 Exhibit VIII Pro Forma Analysis Sheet Name of Association: WYMAN PARK SAVINGS AND LOAN ASSN., LUTHERSVILLE, MD Date of Letter to Assn.: 30-Oct-97 Date of Market Prices: 30-Sep-97
Mid-Atlantic Publicly All Publicly Comparatives Held Thrifts Held Thrifts -------------- -------------- -------------- Symbols Value Mean Median Mean Median Mean Median --------------- ---- ------ ---- ------ ---- ------ Price-Earnings Ratio P/E Last Twelve Months N/A At Minimum of Range 10.50 At Midpoint of Range 11.92 25.50 26.27 19.74 18.61 19.83 18.61 At Maximum of Range 13.25 At SuperMax of Range 14.68 Price-Book Ratio P/B Last Twelve Months N/A At Minimum of Range 64.62% At Midpoint of Range 69.16% 122.75 121.15 162.91 151.61 170.17 156.33 At Maximum of Range 73.00% At SuperMax of Range 76.69% Price-Asset Ratio P/A Last Twelve Months N/A At Minimum of Range 9.72% At Midpoint of Range 11.27% 15.69 15.08 16.47 15.30 17.23 15.85 At Maximum of Range 12.77% At SuperMax of Range 14.45% Twelve Mo. Earnings Base Y $ 504,000 Period Ended 30-Sep-97 Book Value B $ 4,755,000 As of 30-Sep-97 Total Assets A $61,581,000 As of 30-Sep-97 Return on Money (1) R 3.3852% Conversion Expense X $ 425,000 Underwriting Commission C 0 Percentage Underwritten S 0 Estimate Dividend Dollar Amount DA $ 0 Yield DY ESOP Contributions P $ 612,000 MRP Contributions I $ 306,000 ESOP Annual Expense E $ 37,944 MRP Annual Contributions M $ 37,944 Cost of ESOP Borrowings F $ 0
(1) Investment rate of 5.46%, subject to an effective tax rate of 38%. 37 Exhibit VIII Pro Forma Analysis Sheet Calculation of Estimated Value (V) at Midpoint Value 1. V= P/A(A-X-P-I) $ 7,650,000 ------------------------ 1-P/A(1-(CxS)) 2. V= P/B(B-X-P-I) $ 7,650,000 ------------------------ 1-P/B(1-(CxX)) 3. V= P/E(Y-R(X+P+I)-(E+M+ST)) $ 7,650,000 ------------------------ 1-P/E(R(1-(CxX)) Value Estimated Value Per Share Total Shares Date - --------------- --------- ------------ --------- $7,650,000 $10.00 765,000 30-Sep-97 Range of Value $7.65 million x 1.15 = $8.7975 million or 8,797,500 shares at $10.00 per share. $7.65 million x .085 = $6.5025 million or 650,250 shares at $10.00 per share. Calculation of Estimated Value (V) Supermax 1. V= P/A(A-X-P-I) $10,117,125 ------------------------ 1-P/A(1-(CxS)) 2. V= P/B(B-X-P-I) $10,117,125 ------------------------ 1-P/B(1-(CxX)) 3. V= P/E(Y-R(X+P+I)-(E+M)) $10,117,125 ------------------------ 1-P/E(R(1-(CxX)) Value Final Value Per Share Total Shares Date - --------------- --------- ------------ --------- $10,117,125 $10.00 1,011,713 30-Sep-97 38 FERGUSON & COMPANY Exhibit IX -- Recent Operating Results At At September 30 June 30 1997 1997 ------------ ------- (In Thousands) Selected Financial Condition Data: Total Assets $63,391 $61,570 Loans receivable- net 57,787 55,189 Mortgage-backed securities 334 356 Investment securities 2,000 2,993 Deposits 55,898 56,095 Total Borrowings 2,000 -- Retained earnings--substantially restricted 4,755 4,750 Three Months Ended September 30 ---------------------- 1997 1996 ------ ------ (In Thousands) Selected Operations Data: Total interest income $1,200 $1,169 Total interest expense 695 734 ------ ------ Net interest income 505 435 Provision for loan losses 3 4 ------ ------ Net interest income after prov. for loan losses 502 431 ------ ------ Fees and service charges 14 13 Gain on sale of loans -- 2 Other non-interest income 6 6 ------ ------ Total non-interest income 20 21 ------ ------ Total non-interest expense 520 662 ------ ------ Income (loss) before income taxes 2 (210) Income tax provision (benefit) 1 (82) ------ ------ Net income (loss) 1 (128) ====== ====== 39 Source: Unaudited financial statements. FERGUSON & COMPANY Exhibit IX -- Recent Operating Results Three Months Ended September 30 ---------------------- 1997 1996 ------ ------ Selected Financial Ratios & Other Data: Performance Ratios: - ------------------- Return on assets (ratio of net income (loss) to average total assets) 0.01% -0.82% Return on retained earnings (ratio of net income (loss) to average equity) 0.07% -11.13% Interest rate spread information: - --------------------------------- Average during the period 2.90% 2.46% End of period 2.65% 2.35% Net interest margin 3.28% 2.84% Ratio of operating expenses to average total assets 3.33% 4.26% Ratio of average interest-earning assets to average interest-bearning liabilities 108.27% 107.78% Loans as a percentage of total assets 91.16% 89.64% Quality Ratios: - --------------- Non-performing assets to total assets at the end of the period 0.24% 0.04% Allowance for loan losses to non-performing loans 183.40% 549.52% Allowance for loan losses to average assets 0.47% 0.24% Capital Ratios: - --------------- Retained earnings to total assets at the end of the period 7.50% 7.30% Average retained earnings to average assets 7.70% 7.41% Other Data: - ----------- Number of full-service offices 2 2 40 Source: Unaudited financial statements. FERGUSON & COMPANY Exhibit X -- Appraisal Earnings for Year Ended September 30, 1997 Earnings for 12 months ending June 30, 1997 $134,000 Add back operating loss for 3 months ending September 30, 1996 128,000 Add earnings for 3 months ending September 30, 1997 1,000 ------------------------ Sub Total 263,000 Adjustments: Excessive Loan Loss Provision 120,000 Security Gains (4,000) Retirement Benefits expensed in 3 months ending September 30, 1997 272,000 -------- Adjustments Total 388,000 Tax effect at 38% 147,000 ------------------------ Net Adjustment 241,000 Appraisal Earnings for 12 months ending September 30, 1997 $504,000 ======== 41 Source: Audited and unaudited statements and F&C calculations. EX-99 12 EXHIBIT 99.3 EXHIBIT 99.3 STOCK ORDER FORM, ORDER FORM INSTRUCTIONS Stock Order Form, Order Form Instructions Wyman Park Bancorporation, Inc. STOCK ORDER FORM & (Proposed Holding Company for CERTIFICATION FORM Wyman Park Federal Savings & Loan Association) Note: Please read the Stock Order Form Guide and Instructions on the back of this form before completion. - -------------------------------------------------------------------------------- Deadline The Subscription Offering ends at ____, Lutherville, Maryland, Time, on ___________, 1997. Your Stock Order Form and Certification Form, properly executed and with the correct payment, must be received at the address on the bottom of this form by this deadline, or it will be considered void. - -------------------------------------------------------------------------------- Number of Shares (1) Number of Shares Price Per Share (2) Total Amount Due -------------------- -------------------- X $10.00 = -------------------- -------------------- The minimum number of shares that may be subscribed for is 25 and the maximum purchase is 10,000 shares in the Subscription Offering. No person, together with associates of and persons acting in concert with such person, may purchase more than 10,000 shares of the Common Stock in the Subscription and Community Offering. The price per share is based upon a valuation that is subject to review prior to filling individual stock orders. - -------------------------------------------------------------------------------- Method of Payment (3) [ ] Enclosed is a check, bank draft or money order payable to Wyman Park Bancorporation, Inc. for $___________ (or cash if presented in person). (4) [ ] I authorize Wyman Park Federal Savings & Loan Association to make withdrawals from my Wyman Park Federal Savings & Loan Association account(s) shown below, and understand that the amounts will not otherwise be available for withdrawal: Account Number(s) Amount(s) ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ Total Withdrawal --------- Purchaser Information (5) [ ] Check here if you are a director, officer or employee of Wyman Park Federal Savings & Loan Association or a member of such person's immediate family. [ ] Check here if you are a depositor or a borrower then enter below information for all accounts you had at the Eligibility Record Date, Supplemental Eligibility Record Date (xxxxxx xx, 19xx) or the Voting Record Date. If additional space is needed, please utilize the back of this form. Please confirm account(s) by initialing here. ______________ Account Title (Names on Accounts Account Number ------------------------------------------------------------------ ---------------------------------------------------- ------------------------------------------------------------------ ---------------------------------------------------- ------------------------------------------------------------------ - -------------------------------------------------------------------------------- (6) Stock Registration [ ] Individual [ ] Corporation [ ] Joint Tenants [ ] Partnership [ ] Tenants in Common [ ] Individual Retirement Account [ ] Uniform Transfer to Minors [ ] Fiduciary/Trust (Under [ ] Uniform Gift to Minors Agreement Dated______________) ---------------------------------------------------------------------------- Name Social Security or Tax I.D. ---------------------------------------------------------------------------- Name Daytime Telephone ---------------------------------------------------------------------------- Street Address Evening Telephone ---------------------------------------------------------------------------- City State Zip Code County of Residence ---------------------------------------------------------------------------- NASD Affiliation (This section only applies to those individuals who meet the delineated criteria) [ ] Check here if you are a member of the National Association of Securities Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of the immediate family of any such person to whose support such person contributes, directly or indirectly, or the holder of an account in which an NASD member or person associated with an NASD member has a beneficial interest. To comply with conditions under which an exemption from the NASD's Interpretation With Respect to Free-Riding and Withholding is available, you agree, if you have checked the NASD affiliation box: (1) not to sell, transfer or hypothecate the stock for a period of three months following the issuance and (2) to report this subscription in writing to the applicable NASD member within one day of the payment therefor. - -------------------------------------------------------------------------------- Acknowledgment By signing below, I acknowledge receipt of the Prospectus dated XXXXX XX, 1997 and understand I may not change or revoke my order once it is received by Wyman Park Bancorporation, Inc. I also certify that this stock order is for my account and there is no agreement or understanding regarding any further sale or transfer of these shares. Federal regulations prohibit any persons from transferring, or entering into any agreement directly or indirectly to transfer, the legal or beneficial ownership of conversion subscription rights or the underlying securities to the account of another person. Wyman Park Federal Savings & Loan Association will pursue any and all legal and equitable remedies in the event it becomes aware of the transfer of subscription rights and will not honor orders known by it to involve such transfer. Under penalties of perjury, I further certify that: (1) the social security number or taxpayer identification number given above is correct; and (2) I am not subject to backup withholding. You must cross out this item, (2) above, if you have been notified by the Internal Revenue Service that you are subject to backup withholding because of underreporting interest or dividends on your tax return. By signing below, I also acknowledge that I have not waived any rights under the Securities Act of 1933 and the Securities Exchange Act of 1934. - -------------------------------------------------------------------------------- Signature Sign and date this form. When purchasing as a custodian, corporate officer, etc., include your full title. An additional signature is required only if payment is by withdrawal from an account that requires more than one signature to withdraw funds. YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH THE PROVISIONS OF THE PROSPECTUS. THIS ORDER IS NOT VALID IF THE STOCK ORDER FORM AND CERTIFICATION FORM ARE NOT BOTH SIGNED. If you need help completing this Form, you may call the Stock Information Center at (XXX) XXX-XXXX. - -------------------------------------------------------------------------------- Signature Title (if applicable) Date - -------------------------------------------------------------------------------- Signature Title (if applicable) Date - -------------------------------------------------------------------------------- THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. - -------------------------------------------------------------------------------- Date Rec'd ___/___/___ Order # ____________ Batch # ____________ OFFICE USE Check # ______________ Category ____________ Amount $______________ Initials ____________ - -------------------------------------------------------------------------------- STOCK INFORMATION CENTER 11 West Ridgely Road Lutherville, MD 21094 (XXX) XXX-XXXX Item Instruction - -------------------------------------------------------------------------------- Items 1 and 2 - Fill in the number of shares that you wish to purchase and the total payment due. The amount due is determined by multiplying the number of shares by the subscription price of $10.00 per share. The minimum purchase is 25 shares. The maximum purchase amount in the Conversion by any person is 10,500 shares in the Subscription Offering. No person, together with associates of and persons acting in concert with such person, may purchase more than 10,000 shares of the Common Stock in the Subscription and Community Offering. Wyman Park Bancorporation, Inc. has reserved the right to reject the subscription of any order received in the Public Offering, if any, in whole or in part. Item 3 - Payment for shares may be made in cash (only if delivered by you in person) or by check, bank draft or money order made payable to Wyman Park Bancorporation, Inc. DO NOT MAIL CASH. If you choose to make a cash payment, take your Stock Order Form, signed Certification Form and payment in person to Wyman Park Federal Savings & Loan Association. Your funds will earn interest at Wyman Park Federal Savings & Loan Association current passbook of rate. Item 4 - To pay by withdrawal from a savings account or certificate at Wyman Park Federal Savings & Loan Association, insert the account number(s) and the amount(s) you wish to withdraw from each account. If more than one signature is required to withdraw, each must sign in the Signature box on the front of this form. To withdraw from and account with checking privileges, please write a check. No early withdrawal penalty will be charged on funds used to purchase stock. A hold will be placed on the account(s) for the amount(s) you show. Payments will remain in certificate account(s) until the stock offering closes. However, if a partial withdrawal reduces the balance of a certificate account to less than the applicable minimum, the remaining balance will thereafter earn interest at the passbook rate. Item 5 - Please check this box if you were a depositor on the Eligibility Record Date (XXXXXXX XX, 19XX), and/or a depositor on the Supplemental Eligibility Record Date (XXXXX XX, 19XX) or a depositor on the Voting Record Date (XXXXXXXX, 19XX) or a borrower as of both XXXXXX XX, 19XX and the Voting Record Date and list all names on the account(s) and all account number(s) of those accounts you had at these dates to ensure proper identification of your purchase rights. Items 6 - The stock transfer industry has developed a uniform system of shareholder registrations that we will use in the issuance of Wyman Park Bancorporation, Inc. common stock. Print the name(s) in which you want the stock registered and the mailing address of the registration. Include the first name, middle initial and last name of the shareholder. Avoid the use of two initials. Please omit words that do not affect ownership rights, such as "Mrs.", "Mr.", "Dr.", "special account", etc. Subscription rights are not transferable. If you are a qualified member, to protect your priority over other purchasers as described in the Prospectus, you must take ownership in at least one of the account holder's names. Enter the Social Security or Tax I.D. number of one registered owner. This registered owner must be listed on the first "NAME" line. Be sure to include your telephone number because we will need to contact you if we cannon execute your order as given. Review the Stock Ownership Guide on this page and refer to the instructions for Uniform Gift to Minors/Uniform Transfer to Minors and Fiduciaries. Account Title (Names on Accounts) Account Number ---------------------------------------------------------------------- --------------------------------------- ---------------------------------------------------------------------- --------------------------------------- ---------------------------------------------------------------------- --------------------------------------- ---------------------------------------------------------------------- --------------------------------------- ---------------------------------------------------------------------- Stock Ownership Guide - -------------------------------------------------------------------------------- Individual - The Stock is to be registered in an individual's name only. You may not list beneficiaries for this ownership. Joint Tenants - Joint tenants with right of survivorship identifies two or more owners. When stock is held by joint tenants with rights of survivorship, ownership automatically passes to the surviving joint tenant(s) upon the death of any joint tenant. You may not list beneficiaries for this ownership. Tenants in Common - Tenants in common may also identify two or more owners. When stock is to be held by tenants in common, upon the death of one co-tenant, ownership of the stock will be held by the surviving co-tenant(s) and by the heirs of the the deceased co-tenant. All parties must agree to the transfer or sale of shares held by tenants in common. You may not list beneficiaries for this ownership. Individual Retirement Account - Individual Retirement Account ("IRA") holders may make stock purchases from their deposits through a prearranged "trustee-to-trustee" transfer. Stock may only be held in a self-directed IRA. The Wyman Park Federal Savings & Loan Association does not offer a self-directed IRA. Please contact the Stock Information Center if you have any questions about your IRA account. There will be no early withdrawal or IRS penalties incurred by these transactions. Uniform Gift to Minors - For residents of many states, stock may be held in the name of a custodian for the benefit of a minor under the Uniform Transfer to Minors Act. For residents in other states, stock may be held in a similar type of ownership under the Uniform Gift to Minors Act of the individual states. For either ownership, the minor is the actual owner of the stock wit the adult custodian being responsible for the investment until the child reaches legal age. Instructions: See your legal advisor if you are unsure about the correct registration of your stock. On the first line, print the first name, middle initial and last name of the custodian, with the abbreviation "CUST" after the name. Print the first name, middle initial and last name of the minor on the second "NAME" line. Only one custodian and one minor may be designated. Corporation/Partnership - Corporations/Partnerships may purchase stock. Please provide the Corporation/Partnership's legal name and Tax I.D. To have depositor rights, the Corporation/Partnership must have an account in the legal name. Please contact the Stock Information Center to verify depositor rights and purchase limitations. Fiduciary/Trust - Generally, fiduciary relationships (such as Trusts, Estates, Guardianships, etc.) are established under a form of trust agreement or are pursuant to a court order. Without a legal document establishing a fiduciary relationship, your stock may not be registered in a fiduciary capacity. Instructions: On the first "NAME" line, print the first name, middle initial and last name of the fiduciary in the fiduciary is an individual. If the fiduciary is a corporation, list the corporate title on the first "NAME" line. Following the name, print the fiduciary "title" such as trustee, executor, personal representative, etc. On the second "NAME" line, print either the name of the maker, donor or testator OR the name of the beneficiary. Following the name, indicate the type of legal document establishing the fiduciary relationship (agreement, court order, etc.). In the blank after "Under Agreement Dated", fill in the date of the document governing the relationship. The date of the document need not be provided for a trust created by a will. An example of a fiduciary ownership of stock in the case of a trust is: John D. Smith, Trustee for Thomas A. Smith Under Agreement Dated 06/09/87. Definition of Associate - -------------------------------------------------------------------------------- The term "associate" of a person is defined to mean (i) any corporation or other organization (other than Wyman Park Bancorporation, Inc. ("Holding Company"), Wyman Park Federal Savings & Loan Association ("Association"), or a majority owned subsidiary of the Association) of which such person is a director, officer or partner or is directly or indirectly the beneficial owner of 10% or more of any class of equity securities; (ii) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, provided, however, that such term shall not include any tax-qualified employee stock benefit plan of the Holding Company or the Association in which such person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such person, who either has the same home as such person or who is a director or officer of the Holding Company or the Association or any of their subsidiaries. EX-99 13 EXHIBIT 99.5 Exhibit 99.5 Wyman Park Federal Savings & Loan Association ("Wyman Park" or the "Association") Lutherville, Maryland Questions and Answers Regarding the Subscription and Community Offering MUTUAL TO STOCK CONVERSION -------------------------- Wyman Park's Board of Directors has unanimously voted to convert the savings association from its present mutual form to a stock institution, subject to approval of the conversion by Wyman Park's members and regulatory authorities. Complete details on the conversion, including reasons for conversion, are contained in the Prospectus and Proxy Statement. We urge you to read them carefully. This brochure is provided to answer basic questions you might have about the conversion. Remember, the conversion will not affect the rate on any of your savings accounts, deposit certificates, or loans. 1. Q. What is a "Conversion"? A. Conversion is a change in the legal form of organization. Following completion of the conversion from a federal mutual savings and loan association to a federal stock savings and loan association, Wyman Park intends to convert from a federal stock savings and loan association to a national bank to be known as "Wyman Park Savings Bank, N.A." (the "Bank"). Wyman Park currently operates as a federal mutual savings and loan association with no shareholders. Through the conversion, Wyman Park will form a holding company, Wyman Park Bancorporation, which will ultimately own all of the outstanding stock of the Association. Wyman Park Bancorporation will issue stock in the conversion, as described below, and will be a publicly-owned company. 2. Q. Why is Wyman Park converting? A. The stock form of ownership is used by most business corporations and financial institutions. Wyman Park has reached an important point in its development with its decision to convert to the stock form of ownership. Wyman Park's management believes the continued diversification of the institution's asset and deposit base and the establishment of new banking services should enhance long-term operating potential. The capital raised by issuing stock will: * Enhance the Association's capital position. * Facilitate future access to the capital markets. * Provide additional funds for increased lending and investment opportunities. * Enable the Association to provide banking services. * Enhance long-term operating potential. 3. Q. Will the conversion have any effect on savings accounts, certificates of deposit or loans with Wyman Park? A. No. The conversion will not change the amount, interest rate or withdrawal rights of savings and checking accounts or certificates of deposit. The rights and obligations of borrowers under their loan agreements will not be affected. However, upon consummation of the conversion, Wyman Park's deposit account holders and certain borrowers will no longer have voting rights unless they purchase common stock in Wyman Park Bancorporation. 4. Q. Will the conversion cause any changes in personnel or manage- ment? A. No. The conversion will not cause any changes in personnel or management. The normal day-to-day operations will continue as before. 5. Q. Did the Board of Directors of Wyman Park approve the conversion? A. Yes. The Board of Directors unanimously adopted the Plan of Conversion on June 18, 1997. THE SUBSCRIPTION AND COMMUNITY OFFERING --------------------------------------- 6. Q. Who is entitled to buy Wyman Park Bancorporation common stock? A. Subscription rights to buy common stock will be given in order of priority to (i) depositors of the Association as of March 31, 1996 with a $50.00 minimum deposit at that date (the "Eligible Account Holders"); (ii) the Wyman Park Bancorporation's employee stock ownership plan (the "ESOP"), a tax qualified employee stock benefit plan; (iii) depositors of the Association with $50.00 or more on deposit as of September 30, 1997 (the "Supplemental Eligible Account Holders"); (iv) depositors of the Association as of __________, 1997 and borrowers as of both October 17, 1990 and __________, 1997 ("Other Members"); and (v) directors, officers and employees of the Association, subject to the purchase limitations set forth in the Plan of Conversion. Shares that are not subscribed for during the subscription offering, if any, may be offered to the general public ("Other Subscribers") through a community offering with preference given to natural persons and trusts of natural persons who are permanent residents of Anne Arundel and Baltimore Counties, Maryland (the "Local Community"). It is anticipated that any shares not subscribed for in the Subscription and Community Offerings will be offered to certain members of the general public through a syndicate of registered broker dealers pursuant to selected dealers agreements in a Syndicated Community Offering. 7. Q. How do I subscribe for shares of stock? A. Eligible customers wishing to exercise their subscription rights must return the enclosed Stock Order Form to Wyman Park. The original Stock Order Form must be completed and returned along with full payment or appropriate instructions authorizing a withdrawal from a deposit account at Wyman Park on or prior to the close of the Subscription Offering which is 12:00 noon, Lutherville, Maryland time, on November ??, 1997, unless extended. Facsimile or photocopies of the Stock Order Form will not be accepted. Additionally, Order Forms which are not received by such time or are executed defectively or altered are not required to be accepted. Members of the public who wish to order stock directly from Wyman Park in the Community Offering should return their Stock Order Form and accompanying payment to Wyman Park prior to 12:00 noon, Lutherville, Maryland time on November ??, 1997, unless extended. 8. Q. How can I pay for my subscription? A. First, you may pay for your stock by check or money order. These funds will earn interest at Wyman Park's passbook rate from the day we receive them until the completion or termination of the conversion. The passbook rate was ?.?% as of November ??, 1997. Second, you may authorize us to withdraw funds from your Wyman Park savings account or certificate of deposit without early withdrawal penalty. These funds will continue to earn interest at the rate in effect for your account until completion of the offering at which time your funds will be withdrawn for your purchase. Funds remaining in this account (if any) will continue at the contractual rate unless the withdrawal reduces the account balance below the applicable minimum in which case you will receive interest at the passbook rate. A hold will be placed on your account for the amount you specify for stock payment. You will not have access to these funds from the day we receive your order until the completion or termination of the conversion. If you want to use Individual Retirement Account deposits held at Wyman Park to purchase stock, call our Stock Information Center at (410) ???-???? for assistance. There will be no early withdrawal or IRS penalties incurred by these transactions. 9. Q. When must I place my order for shares of stock? A. To exercise subscription rights in the subscription offering, a Stock Order Form must be received by Wyman Park with full payment for all shares subscribed for not later than 12:00 noon, Lutherville, Maryland time, on November ??, 1997. Non-customers desiring to order shares through the community offering must order shares before the close of the community offering, which will be at 12:00 noon, Lutherville, Maryland time on November ??, 1997, unless extended. 10. Q. How many shares of stock are being offered? A. Wyman Park Bancorporation, Inc. is offering 810,000 shares of common stock at a price of $10.00 per share. The number of shares may be decreased to 595,000 or increased to 925,750 in response to the independent appraiser's final determination of the consolidated pro forma market value of the common stock issued in the conversion. 11. Q. What is the minimum and maximum number of shares that I can purchase during the offering period? A. The minimum number of shares that may be purchased is 25 shares. No Stock Order Form will be accepted for less than $250.00. The maximum number of shares may not exceed 10,000 shares for any individual or associates or any group acting in concert as defined in Wyman Park's Plan of Conversion. 12. Q. How was it determined that between 595,000 shares and 935,750 shares of stock would be issued at $10.00 per share? A. The share range was determined through an appraisal of Wyman Park by Ferguson & Company, an independent appraisal firm specializing in the thrift industry. 13. Q. Must I pay a commission on the stock for which I subscribe? A. No. You will not pay a commission on stock purchased in the Subscription Offering, the Community Offering or the Syndicated Community Offering, if any. Conversion expenses, including commissions, will be deducted from the proceeds of the offering upon completion of the conversion. 14. Q. Will I receive interest on funds I submit for stock purchases? A. Yes. Wyman Park will pay its current passbook rate from the date funds are received (with a completed Stock Order Form) during the subscription and community offerings until completion of the conversion. That rate, as of November ??, 1997 was ?.?%. 15. Q. If I have misplaced my Stock Order Form, what should I do? A. Wyman Park will mail you another order form or you may obtain one from the Wyman Park main office. If you need assistance in obtaining or completing a Stock Order Form, a Wyman Park employee or a Trident Securities, Inc. representative will be happy to help you. 16. Q. Will there be any dividends paid on the stock? A. The Company anticipates paying an annual cash dividend at a rate of approximately 3.0%, or $0.30 per share following the first full quarter following completion of the Conversion. The payment of cash dividends on the Common Stock will be subject to the requirements of applicable law and the determination by the Board of Directors of the Company that the net income, capital and financial condition of the Company, banking industry trends and general economic conditions justify the payment of dividends. In addition, from time to time in an effort to manage capital to a reasonable level, the Board may determine if it is prudent to pay periodic special cash dividends. Periodic special cash dividends, if paid, may be paid in addition to, or in lieu of, regular cash dividends. Like all possible dividends, there can be no assurance that periodic special cash dividends will be paid or, that, if paid, will continue to be paid. In conjunction with the conversion, Wyman Park has established a dividend direct deposit plan. This allows customers to have dividend checks deposited directly into their Wyman Park savings or checking accounts. Customers may choose to participate in the direct deposit plan by checking the appropriate box on the stock order form and listing their account number to be used for deposits. 17. Q. How much stock do the directors and officers of Wyman Park intend to purchase through the Subscription Offering? A. Directors and executive officers intend to purchase approximately $_______ (_____% at the midpoint of the offering) of the stock to be offered in the conversion. The purchase price paid by directors and officers will be the same as that paid by customers and the general public. 18. Q. Are the subscription rights transferable to another party? A. No. Pursuant to federal regulations, subscription rights granted to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members may be exercised only by the person(s) to whom they are granted. Any person found to be transferring subscription rights will be subject to forfeiture of such rights. 19. Q. I closed my account several months ago. Someone told me that I am still eligible to buy stock. Is that true? A. If you were an account holder on the Eligibility Record Date, March 31, 1996, or the Supplemental Eligibility Record Date, September 30, 1997, you are entitled to purchase stock without regard to whether you continued to hold your Wyman Park account. 20. Q. May I obtain a loan from Wyman Park using stock as collateral to pay for my shares? A. No. Federal regulations do not allow Wyman Park to make loans for this purpose, but other financial institutions could make a loan for this purpose. 21. Q. Will the FDIC (Federal Deposit Insurance Corporation) insure the shares of stock? A. No. The shares are not and may not be insured by the FDIC. However, the Savings Association Insurance Fund of the FDIC will continue to insure savings accounts and certificates of deposit up to the applicable limits allowed by law. 22. Q. Will there be a market for the stock following the conversion? A. Neither the Company nor the Association has ever issued stock before, and due to the relatively small size of the Offerings, it is unlikely that an active and liquid trading market will develop or be maintained. The Company will request that Trident Securities undertake to match offers to buy and offers to sell the Common Stock, and Trident Securities intends to list the Common Stock over-the-counter through the National Daily Quotation System "Pink Sheets" published by the National Quotation Bureau, Inc. However, purchasers of Common Stock should have a long-term investment intent and recognize that the absence of an active and liquid trading market may make it difficult to sell the Common Stock and may have an adverse effect on the price. 23. Q. Can I purchase stock using funds in a Wyman Park IRA account? A. Yes. Contact the Stock Information Center for the necessary forms. However, it takes several days to process the necessary IRA forms and, therefore, it is necessary that your response be received by November ??, 1997, to accommodate your order. ABOUT VOTING "FOR" THE PLAN OF CONVERSION ----------------------------------------- 24. Q. Am I eligible to vote at the Special Meeting of Members to be held to consider the Plan of Conversion? A. At the Special Meeting of Members to be held on November ??, 1997, you are eligible to vote if you are one of the "Voting Members," who are holders of Wyman Park's deposit accounts as of _______, 1997 or loans as of both October 20, 1990 and _______, 1997 (the "Voting Record Date") for the Special Meeting. However, Association members of record as of the close of business on the Voting Record Date who cease to be depositors or borrowers prior to the date of the Special Meeting are no longer members and will not be entitled to vote at the Special Meeting. If you are a Voting Member, you should have received a proxy statement and proxy card with which to vote. 25. Q. How many votes do I have as a Voting Member? A. Each account holder is entitled to one vote for each $100, or fraction thereof, on deposit in such account. Each borrower who holds eligible borrowings is entitled to cast one vote in addition to the number of votes, if any, he or she is entitled to vote as an account holder. No member may cast more than 1,000 votes. 26. Q. If I vote "against" the Plan of Conversion and it is approved, will I be prohibited from buying stock during the subscription offering? A. No. Voting against the Plan of Conversion in no way restricts you from purchasing stock in either the subscription offering or the community offering. 27. Q. What happens if Wyman Park does not get enough votes to approve the Plan of Conversion? A. Wyman Park's Conversion would not take place and Wyman Park would remain a mutual savings and loan association. 28. Q. As a qualifying depositor or borrower of Wyman Park, am I required to vote? A. No. However, failure to return your proxy card will have the same effect as a vote "Against" the Plan of Conversion. 29. Q. What is a Proxy Card? A. A Proxy Card gives you the ability to vote without attending the Special Meeting in person. You may attend the meeting and vote in person, even if you have returned your proxy card, if you choose to do so. However, if you are unable to attend, you still are represented by proxy. 30. Q. How does the conversion affect me? A. The conversion is intended, among other things, to assist Wyman Park in maintaining and expanding its many services to Wyman Park's customers and community. By purchasing stock, you will also have the opportunity to invest in Wyman Park Bancorporation, Inc., the holding company that will own the nationally-chartered bank into which Wyman Park will convert. However, there is no obligation to purchase stock; the purchase of stock is strictly optional. 31. Q. How can I get further information concerning the stock offering? A. You may call the Stock Information Center, collect at (410) ???-???? for further information or a copy of the Prospectus, Stock Order Form, Proxy Statement and Proxy Card. This information is neither an offer to sell nor a solicitation of an offer to buy securities. The offer is made only by the Prospectus. A Prospectus can be obtained at any Wyman Park office or by calling the Wyman Park Stock Information Center. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful. The stock is not a deposit or account and is not federally insured or guaranteed. FOR YOUR CONVENIENCE In order to assist you during the stock offering period, we have established a Stock Information Center to answer your questions. Please call collect: (410) ???-???? EX-99 14 EXHIBIT 99.6 Exhibit 99.6 Press Release FOR IMMEDIATE RELEASE ---------------------- For More Information Contact: Ernest A. Moretti, President Telephone: (410) 252-6450 WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION STOCK SALE APPROVED Lutherville, Maryland - Mr. Ernest A. Moretti, President of Wyman Park Federal Savings & Loan Association ("Wyman Park"), Lutherville, Maryland, announced today that Wyman Park has received approval from the Office of Thrift Supervision to convert from a federal mutual savings and loan association to a federal stock savings and loan association and to become a wholly owned subsidiary of a newly-formed holding company, Wyman Park Bancorporation, Inc. (the "Company"). A Prospectus and Proxy Statement describing the Plan of Conversion will be mailed to certain members of Wyman Park on or about ___________, 1997. Under the Plan of Conversion, the company is offering an estimated _______ shares of common stock at $10.00 per share. Certain of Wyman Park's past and present depositors and borrowers will have the opportunity to purchase stock through a subscription offering that closes on ________, 1997. Shares that are not subscribed for during the subscription offering, if any, may be offered to the general public, with preference given to natural persons who are permanent residents of Anne Arundel and Baltimore Counties, Maryland, in a community offering. The offerings are being managed by Trident Securities, Inc., of Raleigh, North Carolina. Silver, Freedman & Taff, L.C. of Washington, DC acted as special counsel. Mr. Moretti stated "Wyman Park remains committed to its local market as a hometown community financial institution with even stronger financial resources." Wyman Park Federal Savings & Loan Association is located in Lutherville, Maryland. At September 30, 1997, Wyman Park had total assets of $___ million and retained income of $___ million. Customers or interested members of the community with questions concerning the stock offering should call the institution at (410) 252-6450 or visit Wyman Park. Press Release FOR IMMEDIATE RELEASE --------------------- Contact: Ernest A. Moretti, President Telephone: (410) 252-6450 WYMAN PARK BANCORPORATION, HOLDING COMPANY FOR WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION COMPLETES INITIAL STOCK OFFERING Lutherville, Maryland - Ernest A. Moretti, President of Wyman Park Federal Savings & Loan Association ("Wyman Park"), based in Lutherville, Maryland, announced today that Wyman Park Bancorporation, Inc., the holding company for Wyman Park Federal Savings & Loan Association, has completed its initial common stock offering. It is anticipated that the common stock of Wyman Park Bancorporation, Inc. will begin trading on the OTC Bulletin Board under the symbol "????" on December ??, 1997. Wyman Park Bancorporation, will issue _______ shares of its common stock. The net proceeds contributed to Wyman Park upon conversion will substantially increase its capital. Wyman Park ultimately intends to use such funds for general corporate purposes, among them the origination of loans and other investments. It is expected that in the interim all or part of the proceeds will be invested in short-term and intermediate-term securities. On __________ ??, 1997, Wyman Park's Plan of Conversion was approved by Wyman Park's depositor and certain borrower members at a Special Meeting that was held at the main office of the institution. Mr. Moretti indicated that the Officers and Board of Directors of Wyman Park want to express their thanks for the response by customers and the community to the stock offering and that the Association looks forward to serving the needs of its customers as a stock institution. Trident Securities, Inc. of Raleigh, North Carolina managed the subscription and community offerings for Wyman Park Bancorporation. Silver, Freedman & Taff, L.L.P. of Washington , DC acted as special counsel. OFFICER AND DIRECTOR STOCK PURCHASE COMMITMENTS Name Amount Shares Percent@Midpoint - ---- ------ ----- ---------------- Ernest A. Moretti, President, Director and C.E.O. $ __,___ _.__% Allan B. Heaver Chairman of the Board $ __,___ _.__% H. Douglas Heuther Director $ __,___ _.__% John K. White Director $ __,___ _.__% John R. Beever Director $ __,___ _.__% Albert M. Kopp Director $ __,___ _.__% Gilbert D. Marsiglia, Sr. Director $ __,___ _.__% Jay H. Salkin Director $ __,___ _.__% G. Scott Barhight Director $ __,___ _.__% All directors and executive officers as a group (13 persons) and their associat $ __,___ __.__% ========================================== This information is neither an offer to sell nor a solicitation of an offer to buy securities. The offer is made only by the Prospectus. The stock is not a deposit or account and is not federally insured or guaranteed. (Wyman Park Letterhead) ________, 1995 Dear Retirement Account Participant: As you know Wyman Park Federal Savings & Loan Association is converting from a federal mutual savings and loan association to a federal stock savings and loan association. The Association is providing current and certain former depositors and borrowers an opportunity to purchase stock through a Subscription Offering. Wyman Park Bancorporation, Inc., the proposed holding company for Wyman Park, is offering up to 805,000 shares of common stock at $10.00 per share. As the holder of a Retirement Account you have an opportunity to become a shareholder of Wyman Park Bancorporation, Inc. If you desire to purchase stock using funds being held in your Retirement Account, we can assist you in self-directing those funds which are currently held in certificates of deposit. This process can be done without an early withdrawal penalty or without a negative tax consequence to your retirement account. The stock that you purchase would be held in a self-directed retirement plan. If you are interested in receiving more information on self-directing your IRA, please contact our Stock Information Center at (410) ???-????. This transaction cannot be done through the mail and will require that you visit the Wyman Park office. Furthermore, it takes several days to process the necessary IRA forms and regulations concerning retirement accounts require that your response be received by [one week prior to closing], 1997 to accommodate your interest. Sincerely, Ernest A. Moretti President This does not constitute an offer to sell, or the solicitation of an offer to buy shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful. The shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion are not deposits or accounts and are not federally insured or guaranteed. POSTER Wyman Park Federal Savings & Loan Association STOCK OFFERING MATERIALS AVAILABLE HERE Subscription Rights for the Stock Offering by Wyman Park Bancorporation, Inc. Expire on _______, 1997 - -------------------------------------------------------------------------------- This announcement is neither an offer to sell nor a solicitation of an offer to buy these securities. The offer is made only by the Prospectus and Proxy Statement. These shares have not been approved or disapproved by the Securities and Exchange Commission, Office of Thrift Supervision, or Federal Deposit Insurance Corporation, nor has such Commission,Office or Corporation passed upon the accuracy or adequacy of the Prospectus and Proxy Statement. Any representation to the contrary is unlawful. New Issue ______, 1997 - --------- Up to 805,000 Shares These shares are being offered pursuant to a Plan of Conversion whereby Wyman Park Federal Savings & Loan Association of Lutherville, Maryland will convert from a federal mutual savings and loan association to a federal stock savings and loan association and become the wholly-owned subsidiary of Wyman Park Bancorporation, Inc. Common Stock ---------------------- Price $10.00 Per Share ---------------------- Copies of the Prospectus may be obtained in any State in which this announcement is circulated from such of the undersigned or other brokers and dealers as may legally offer these securities in such state. Trident Securities, Inc. For a copy of the Prospectus call (410) ???-????. - -------------------------------------------------------------------------------- * Sent to prospects who are customers * _________ , 1997 &salutation& &firstname& &lastname& &address& &city&, &state& &zip& Dear &prefername&: Recently you may have read in the newspaper that Wyman Park Federal Savings & Loan Association will convert from a federal mutual savings and loan association to a federal stock savings and loan association. This is the most significant event in the history of the Association in that it allows customers, community members, employees and directors the opportunity to share in Wyman Park's future by becoming charter stockholders of Wyman Park Bancorporation, Inc., the Association's proposed holding company. As a customer of Wyman Park, you should have received a packet of information regarding the conversion, including a Prospectus and a Proxy Statement. In addition, we are holding several presentations for friends of the officers and directors to discuss the stock offering in more detail. You will receive an invitation in the near future. Please feel free to call me or the Wyman Park's Stock Information Center at (410) ???-???? if you have any questions. I look forward to seeing you at one of our informational presentations. Sincerely, Ernest A. Moretti President This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful. The shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion are not deposits or accounts and are not federally insured or guaranteed. * Sent to prospects who are not customers * _________, 1997 &salutation& &firstname& &lastname& &address& &city&, &state& &zip& Dear &prefername&: Recently you may have read in the newspaper that Wyman Park Federal Savings & Loan Association will be converting from a federal mutual savings and loan association to a federal stock savings and loan association. This is the most significant event in the history of the Association in that it allows customers, community members, employees and directors the opportunity to share in Wyman Park's future by becoming charter stockholders of the Association's Holding Company, Wyman Park Bancorporation, Inc. [Director/officer] has asked that you be sent a Prospectus and stock order form which will allow you to become a charter stockholder, should you desire. In addition, we are holding several presentations for friends of the officers and directors to discuss the stock offering in more detail. You will receive an invitation in the near future. Please feel free to call me or the Wyman Park's Stock Information Center at (410) ???-???? if you have any questions. I look forward to seeing you at one of our informational presentations. Sincerely, Ernest A. Moretti President This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful. The shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion are not deposits or accounts and are not federally insured or guaranteed. * Sent to individuals requesting information * _________, 1997 &salutation& &firstname& &lastname& &address& &city&, &state& &zip& Dear &prefername&: Enclosed you will find the offering materials relating to the mutual to stock conversion of Wyman Park Federal Savings & Loan Association, and the initial stock offering of the Association's Holding Company, Wyman Park Bancorporation, Inc. In connection with the conversion, Wyman Park Bancorporation, Inc. is offering up to 805,000 shares of its common stock at a price of $10.00 per share. Please review the enclosed Prospectus so that you may make an informed investment decision based on your individual financial situation. If you wish to purchase stock, the enclosed order form should be completed and returned to Wyman Park no later than ____ p.m. Central Time, on ________, 1997. If you have any questions concerning the conversion, please feel free to call the Wyman Park's Stock Information Center at (410) _________. Sincerely, Ernest A. Moretti President This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful. The shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion are not deposits or accounts and are not federally insured or guaranteed. The Directors and Officers of Wyman Park Federal Savings & Loan Association cordially invite you to attend a brief presentation regarding the stock offering of Wyman Park Bancorporation, Inc., our proposed holding company Please join us at the [Place] [Address] [Date] at 6:00 p.m. for hors d'oeuvres R.S.V.P. (___) (Collect) list of directors and officers * Sent to those attending a community meeting * __________, 1997 &salutation& &firstname& &lastname& &address& &city&, &state& &zip& Dear &prefername&: Thank you for attending our informational presentation relating to Wyman Park Federal Savings & Loan Association's conversion to a stock institution. The information presented at the meeting and the Prospectus you recently received should assist you in making an informed investment decision. Obviously, we are excited about this stock offering and the opportunity to share in the future of Wyman Park. This conversion is the most important event in our history and it gives the Association the strength and corporate flexibility to compete in the future. We will contact you in the near future to get an indication of your interest in our offering. In the meantime, if your investment decision is made, feel free to return your order form at your convenience, but not later than _________, 1997. If you have any questions, please call the Stock Information Center at (410) ???-????. Sincerely, Ernest A. Moretti President This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful. The shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion are not deposits or accounts and are not federally insured or guaranteed. * Sent to those not attending a community meeting * _________, 1997 &salutation& &firstname& &lastname& &address& &city&, &state& &zip& Dear &prefername&: I am sorry you were unable to attend our recent presentation regarding Wyman Park Federal Savings & Loan Association's mutual to stock conversion. The Board of Directors and management team of Wyman Park are committed to contributing to long term shareholder value and as a group we intend to personally invest approximately $???,000 of our own funds. We are enthusiastic about the stock offering and the opportunity to share in the future of Wyman Park. We have established a Stock Information Center to assist you with any questions regarding the stock offering. Should you require any assistance between now and _________, 1997, I encourage you to either stop by our Stock Information Center or call (410) ???-????. I hope you will join me as a charter stockholder in Wyman Park Federal Savings & Loan Association. Sincerely, Ernest A. Moretti President This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful. The shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion are not deposits or accounts and are not federally insured or guaranteed. * Final Reminder Letter * _________, 1997 &salutation&firstname&lastname& &address& &city&, &state& &zip& Dear &prefername&: 111111111 Just a quick note to remind you that the deadline for purchasing stock in Wyman Park Bancorporation, Inc. is quickly approaching. I hope you will join me in becoming a charter stockholder in one of Maryland's newest publicly owned financial institutions. The deadline for becoming a charter stockholder is _________, 1997. If you have any questions, I hope you will call our Stock Information Center at (410) ???-????. Once again, I look forward to having you join me as a charter stockholder in Wyman Park Bancorporation, Inc. Sincerely, Ernest A. Moretti President This does not constitute an offer to sell, or the solicitation of an offer to buy, shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion, nor does it constitute the solicitation of a proxy in connection with the conversion. Such offers and solicitations of proxies are made only by means of the Prospectus and the Proxy Statement, respectively. There shall be no sale of stock in any state in which any offer, solicitation of an offer or sale of stock would be unlawful. The shares of Wyman Park Bancorporation, Inc. common stock offered in the conversion are not deposits or accounts and are not federally insured or guaranteed. ================================================================================ P R O X Y G R A M (LOGO) ================================================================================ YOUR VOTE ON OUR CONVERSION PLAN HAS NOT BEEN RECEIVED. ---- YOUR VOTE IS VERY IMPORTANT, PARTICULARLY SINCE FAILURE TO VOTE IS EQUIVALENT TO - ---------------------------- VOTING AGAINST THE PLAN. VOTING FOR THE CONVERSION PLAN WILL NOT AFFECT THE INSURANCE OF YOUR ACCOUNT. IT WILL CONTINUE TO BE INSURED UP TO THE LEGAL LIMIT ($100,000 PER ---------------- ACCOUNT AS DEFINED BY LAW) BY THE SAVINGS ASSOCIATION INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION, AN AGENCY OF THE U.S. GOVERNMENT. REMEMBER, VOTING FOR CONVERSION DOES NOT OBLIGATE YOU TO BUY ANY STOCK. -------- PLEASE ACT PROMPTLY! SIGN THE ENCLOSED PROXY CARD AND MAIL OR DELIVER IT TO ---------- WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION. WE RECOMMEND THAT YOU VOTE "FOR" THE PLAN OF CONVERSION. ----- THANK YOU! THE BOARD OF DIRECTORS AND MANAGEMENT OF WYMAN PARK FEDERAL SAVINGS & LOAN ASSOCIATION, F.A. ================================================================================ EX-99 15 EXHIBIT 99.7 Exhibit 99.7 October 27, 1997 Board of Directors Wyman Park Federal Savings and Loan Association 11 West Ridgely Road Lutherville, Maryland Gentlemen: All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion adopted by the Board of Directors of Wyman Park Federal Savings and Loan Association, Lutherville, Maryland, ("Wyman Park" or "Association") on June 18, 1997. It is our understanding that, pursuant to Office of Thrift Supervision regulations, subscription rights are non-transferable. Persons violating such prohibition may lose their rights to purchase stock in the Conversion and be subject to other possible sanctions. Because the Subscription Rights to purchase shares of Common Stock in the Association to be issued to the Association's employee stock benefit plans, depositors of the Association, and to other members of the Association will be acquired by such recipients, without cost, will be non-transferable and of short duration and will afford the recipients the right only to purchase shares of Common Stock at the same price as will paid by members of the general public in a Community Offering, we are of the opinion that: the Subscription Rights will have no ascertainable fair market value and, the price at which the Subscription Rights are exercisable will not be more or less than the fair market value of the shares on the date exercise. Sincerely, Ferguson & Company /s/ Charles M. Hebert Charles M. Hebert Principal -----END PRIVACY-ENHANCED MESSAGE-----