-----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, E5CntQMtzqUm+mg4IIzFbQYxBs6GMw9bRdu7G2huFqXM1XrWxfp9Hcro8tDFiTgu TBEb4M3brWGfgOQ/pGma6w== 0000939057-97-000123.txt : 19970912 0000939057-97-000123.hdr.sgml : 19970912 ACCESSION NUMBER: 0000939057-97-000123 CONFORMED SUBMISSION TYPE: S-3D PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970910 EFFECTIVENESS DATE: 19970910 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION FINANCIAL BANCSHARES INC CENTRAL INDEX KEY: 0000926164 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 570264560 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-3D SEC ACT: SEC FILE NUMBER: 333-35319 FILM NUMBER: 97678460 BUSINESS ADDRESS: STREET 1: 203 WEST MAIN ST CITY: UNION STATE: SC ZIP: 29379 BUSINESS PHONE: 8644277692 MAIL ADDRESS: STREET 1: 203 WEST MAIN STREET STREET 2: PO BOX 866 CITY: UNION STATE: SC ZIP: 29379 S-3D 1 UNION FINANCIAL BANCSHARES, INC. FORM S-3 As filed with the Securities and Exchange Commission on September 10, 1997 Registration No. _____ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________ FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ________________ UNION FINANCIAL BANCSHARES, INC. (Exact name of registrant as specified in its charter) Delaware 57-1001177 - --------------------------------------------- ------------------- (State or other jurisdiction of incorporation (IRS. Employer or organization) Identification No.) 203 West Main Street Union, South Carolina 29379 (864) 427-9000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Paul M. Aguggia, Esq. Aaron M. Kaslow, Esq. Breyer & Aguggia Suite 470 East 1300 I Street, N.W. Washington, D.C. 20005 (202) 737-7900 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [X] If any securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ ] CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------ Proposed Proposed Maximum Maximum Offering Aggregate Amount of Title of Shares Amount to be Price Offering Registration to be Registered Registered(1) Per Unit(2) Price(2) Fee - ------------------------------------------------------------------------------ Common Stock, par value $0.01 per share 150,000 $22.38 $3,357,000 $1,017 - ------------------------------------------------------------------------------ (1) Pursuant to Rule 416, this Registration Statement also covers an indeterminate number of shares of Common Stock as may become issuable as a result of stock splits, stock dividends or similar transactions. (2) Estimated solely for the purpose of calculating the registration fee. Based on the average of bid and asked price as of September 5, 1997 pursuant to Rule 457(c). [Union Financial letterhead] Dear Stockholder: I am pleased to send you this prospectus describing the Dividend Reinvestment and Stock Purchase Plan (the "Plan") of Union Financial Bancshares, Inc. ("Union Financial" or the "Corporation"). The Board of Directors of Union Financial has voted to establish the Plan under which shares of the Corporation's common stock ("Common Stock") are available for sale to the stockholders of the Corporation at a 5% discount from the average of the bid and ask trading prices on the Investment Date. You pay no service charges or brokerage commissions for Common Stock purchased under the Plan. Participants in the Plan may: . automatically reinvest all of the dividends on their Common Stock in additional shares of Common Stock of the Corporation and, if they wish, make monthly optional cash payments of as little as $25 per investment and as much as $50,000 per year to purchase additional shares of Common Stock of the Corporation; or . continue to receive cash dividends on all shares and make monthly optional cash payments of as little as $25 per investment or as much as $50,000 per year to purchase additional shares of Common Stock of the Corporation. The Plan is completely voluntary. You may terminate your participation at any time. If you wish to participate in the Plan, return the enclosed Authorization Form. If you decide not to participate in the Plan, you will continue to receive your dividends, if and when declared, by check from the Corporation. The accompanying material presents the details of the Plan in a simple question-and-answer format. Also set forth is important information regarding Union Financial. Please read this material carefully. It should answer most questions you may have about the Plan. If you have additional questions, please address them to Investor Relations, Union Financial Bancshares, Inc., 203 West Main Street, Union, South Carolina 29379 (telephone number (864) 427-9000) or to Registrar and Transfer Company, Dividend Reinvestment Plans, 10 Commerce Drive, Cranford, New Jersey 07016 (telephone number (800) 368-5948). Sincerely, Dwight V. Neese President and Chief Executive Officer PROSPECTUS Union Financial Bancshares, Inc. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN _______________________ Common Stock (Par Value $0.01 Per Share) _______________________ The Dividend Reinvestment and Stock Purchase Plan ("the Plan") of Union Financial Bancshares, Inc. ("Corporation") provides holders of record of shares of the Corporation's common stock, par value $0.01 per share ("Common Stock"), with a convenient and economical way to purchase shares of the Corporation's Common Stock and to reinvest at no cost their cash dividends in additional shares of Common Stock. Any holder of record of shares of Common Stock is eligible to participate in the Plan. Beneficial owners of Common Stock whose only shares are registered in names other than their own (e.g. held in street name in a brokerage account) are not eligible until they become stockholders of record by withdrawing the shares from their brokerage account and registering the shares in their own name. Participants in the Plan may elect to have the cash dividends paid on their shares of Common Stock automatically reinvested in additional shares of Common Stock. Participants may also purchase additional shares of Common Stock by making optional cash investments in accordance with the provisions of the Plan. Holders of Common Stock who choose not to participate in the Plan will continue to receive cash dividends on shares of Common Stock registered in their name, as declared. Shares of Common Stock purchased under the Plan will be purchased either directly from the Corporation or in the open market. The purchase price for each share of Common Stock purchased with reinvested dividends and optional cash payments will be 95% of the market price for the relevant date of investment. See Question 14. This Prospectus relates to 150,000 shares of Common Stock registered for sale under the Plan. Such shares may be either authorized but unissued shares or shares reacquired and held in the Corporation's treasury. This Prospectus also covers an indeterminate number of shares of Common Stock as may become issuable as a result of stock splits, stock dividends or similar transactions. Participants should retain this Prospectus for future reference. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SHARES OF THE CORPORATION'S COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. The date of this Prospectus is September 10, 1997. -2- AVAILABLE INFORMATION The Corporation is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC" or the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the following regional offices of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60621. Copies of such material also can be obtained at prescribed rates from the Commission's Public Reference Section at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Reports, proxy statements and other information filed by the Corporation are also available on the Internet at the Commission's World Wide Web site at http://www.sec.gov. This Prospectus constitutes part of a Registration Statement on Form S-3 filed by the Corporation with the Commission under the Securities Act of 1933, as amended. This Prospectus omits certain of the information contained in the Registration Statement in accordance with the rules and regulations of the Commission. Reference is hereby made to the Registration Statement and related exhibits for further information with respect to the Corporation and the Common Stock. Statements contained herein concerning the provisions of any document are not necessarily complete and, in each instance, where a copy of such document has been filed as an exhibit to the Registration Statement or otherwise has been filed with the Commission, reference is made to the copy so filed. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed by the Corporation with the SEC are hereby incorporated by reference: (i) the Corporation's Annual Report on Form 10-KSB for its fiscal year ended September 30, 1996, (ii) the Corporation's Quarterly Reports on Form 10-QSB for the quarters ended December 31, 1996, March 31, 1997 and June 30, 1997; and (iii) the Corporation's Current Reports on Form 8-K dated October 8, 1996. All documents subsequently filed by the Corporation pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to termination of this offering shall be deemed to be incorporated by reference from the date of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this material to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. -3- The Corporation will provide without charge to each person to whom this Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference herein (other than certain exhibits to such documents). Written or oral request should be directed to the Corporate Secretary, Union Financial Bancshares, Inc., 203 West Main Street, Union, South Carolina 29379 (telephone number is(864) 427-9000). THE CORPORATION The Corporation was formed in 1994 for the purpose of becoming a savings and loan holding company for Provident Community Bank, formerly Union Federal Savings Bank (the "Bank"). Subsequent to the completion of the holding company reorganization, the Corporation has engaged in no significant activity other than holding the stock of the Bank and certain passive investment activities. The Bank is a federally-chartered, capital stock savings bank headquartered in Union, South Carolina. The Bank, which was originally chartered in 1934 as a mutual savings and loan association, converted from mutual to stock form in 1987. The Bank conducts its operations through its main office, which is located at 203 West Main Street, Union, South Carolina, and three full service branch offices located in Union, Jonesville and Laurens, South Carolina. The Bank is a member of the Federal Home Loan Bank and its deposits are insured up to applicable limits by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation. The business of the Bank consists primarily of attracting deposits from the general public and originating mortgage loans on residential properties located in South Carolina. The Bank also makes commercial real estate, construction and consumer loans and invests in obligations of the federal government and its agencies and of state and local municipalities. The principal sources of funds for the Bank's lending activities include deposits received from the general public, interest and principal repayments on loans and, to a lesser extent, borrowings. The Bank's primary source of income is interest earned on loans and investments. The Bank's principal expense is interest paid on deposit accounts and borrowings and expenses incurred in operating the Bank. UNION FINANCIAL BANCSHARES, INC. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN On May 20, 1997, the Board of Directors of the Corporation voted to adopt this Plan under which shares of the Corporation's authorized but unissued Common Stock, par value $.01 per share, are available for issuance and sale to the stockholders of the Corporation. The Plan will be in effect until amended, altered or terminated. The Corporation has reserved 150,000 shares of its Common Stock for issuance and sale under the Plan pursuant to this Prospectus. The Plan is set forth below as a series of questions and answers explaining its significant aspects. -4- PURPOSE 1. What is the purpose of the Plan? The purpose of the Plan is to provide participants with a simple and convenient method of reinvesting cash dividends paid on shares of Common Stock of the Corporation and investing optional cash payments in shares of Common Stock without payment of any brokerage commission or service charge. Shares of Common Stock purchased under the Plan by participants will be issued by the Corporation. To the extent that such additional shares are purchased directly from the Corporation, the Corporation will receive additional funds to be used for general corporate purposes. The Corporation expects that generally all Plan purchases will be directly from the Corporation. The Plan offers participants the following options: (a) to have all the cash dividends on their shares of Common Stock automatically reinvested in Common Stock of the Corporation and to make optional cash payments of not less than $25 per investment nor more than $50,000 per year for the purchase of additional shares, or (b) to continue to receive cash dividends on all shares and to make optional cash payments of not less than $25 per investment nor more than $50,000 per year for the purchase of additional shares. 2. What are the advantages of the Plan? (a) The Plan provides participants with the opportunity to reinvest cash dividends paid on all of their shares of Common Stock in additional shares of Common Stock at a discount of 5% from the average of the bid and ask prices of such shares on the Investment Date (see Question 14). (b) The Plan provides participants with the opportunity to make monthly investments of optional cash deposits, subject to minimum and maximum amounts, for the purchase of additional shares of Common Stock at a discount of 5% from the average of the bid and ask prices of such shares on the Investment Date (see Question 14). (c) No brokerage commissions or service charges are paid by participants in connection with any purchase of shares made under the Plan. (d) All cash dividends paid on participants' shares can be fully invested in additional shares of Common Stock because the Plan permits fractional shares to be credited to Plan accounts. Dividends on such fractional shares, as well as on whole shares, will also be reinvested in additional shares which will be credited to Plan accounts. (e) Periodic statements reflecting all current activity, including share purchases and latest Plan account balance, simplify participants' record keeping. (f) The Plan Administrator provides for the safekeeping of stock certificates for shares credited to each Plan account. -5- ADMINISTRATION 3. Who administers the Plan for participants? Registrar and Transfer Company, the Corporation's stock transfer agent, (the "Plan Administrator") administers the Plan for participants by maintaining records, sending statements of account to participants and performing other duties relating to the Plan. Shares of Common Stock purchased under the Plan are registered in the name of the Plan Administrator's nominee, as agent for participants in the Plan, and are credited to the accounts of the participants in the Plan. The Corporation may replace the Plan Administrator at any time within its sole discretion. The Plan Administrator may be contacted by mail at: Registrar and Transfer Company Dividend Reinvestment Plans 10 Commerce Drive Cranford, New Jersey 07016 (800) 368-5948 PARTICIPATION 4. Who is eligible to participate? All holders of record of Common Stock are eligible to participate in the Plan. If the shares you hold are in your own name, you may participate directly in the Plan. If your stock is registered in another party's name (e.g., in a broker's "street name" or in the name of a bank nominee), you must become a stockholder of record by having the shares transferred into your name. Stockholders who reside in jurisdictions in which it is unlawful for the Corporation to permit their participation are not eligible to participate in the Plan. 5. How does an eligible stockholder participate? To participate in the Plan, a stockholder must complete an Authorization Form and return it to the Plan Administrator. An Authorization Form is enclosed with this Prospectus. Additional copies of the Authorization Form will be provided from time to time to the holders of the Corporation's Common Stock, and may be obtained at any time by written request to Union Financial Bancshares, Inc., 203 West Main Street, Union South Carolina 29379, or to the Plan Administrator at the address set forth in Question 3. -6- 6. When may an eligible stockholder join the Plan? An eligible stockholder may join the Plan at any time. If the Authorization Form is received by the Plan Administrator on or before the record date for a dividend payment, and the participant elects to reinvest the dividends in shares of Common Stock, such reinvestment of dividends will begin with that dividend payment. See Question 11 below for information concerning the investment of optional cash payments. 7. What does the Authorization Form provide? The Authorization Form allows you to indicate how you wish to participate in the Plan by checking the appropriate box. You may indicate which of the following investment options you choose: (a) Full Dividend Reinvestment directs the Corporation to pay the Plan Administrator for reinvestment in accordance with the Plan all the cash dividends on all of the shares of Common Stock then or subsequently owned by participants, and also permits participants to make optional cash payments for the purchase of additional shares of Common Stock in accordance with the Plan; or (b) Additional Cash Purchase Only permits participants to make optional cash payments for the purchase of additional shares of Common Stock in accordance with the Plan, without participation in dividend reinvestment. Participants may select either of the two options. If the dividend reinvestment option is chosen, dividends will be reinvested on a cumulative basis on all the shares held of record by the participant and on all Plan shares held in the Plan account, until the participant specifies otherwise or withdraws from the Plan altogether, or until the Plan is terminated. The Authorization Form also appoints the Plan Administrator as agent for each participant and directs the Plan Administrator to apply cash dividends and any optional cash payments a participant might make to the purchase of shares of Common Stock in accordance with the terms of the Plan. 8. May a stockholder have dividends reinvested under the Plan with respect to less than all of the shares of Common Stock registered in that stockholder's name? No. Participants may only have dividends reinvested with respect to all of the shares of Common Stock registered in that stockholder's name. -7- OPTIONAL CASH PAYMENTS 9. How do optional cash payments work? If a stockholder participant chooses to participate by optional cash payments, the Plan Administrator will apply any optional cash payment received by the Plan Administrator from the participant to the purchase of shares of Common Stock for the participant's account. If the participant has elected the dividend reinvestment option, dividends payable on shares of Common Stock purchased with optional cash payments will be automatically reinvested in shares of Common Stock. The intended purpose of the Plan is meant to preclude any person, organization, or other entity from establishing a series of related accounts for the purpose of conducting arbitrage operations and/or exceeding the optional cash payment limit. 10. How are optional cash payments made? An initial optional cash payment may be made by participants when enrolling by enclosing a check for not less than $25 nor more than $50,000 with the Authorization Form. Checks should be made payable to Registrar and Transfer Company and returned along with the Authorization Form in the envelope provided. Thereafter, optional cash payments may be made each month by sending to the Plan Administrator the participant's check for not less than $25 nor more than $50,000, together with the account identification stub furnished by the Plan Administrator. The election to make optional cash payments is available to each participant at any time. Optional cash payments by participants must be at least $25 per calendar month and cannot exceed a total of $50,000 in any year. The same amount of money need not be sent each month and there is no obligation to make an optional cash payment at any time. 11. When will optional cash payments received by the Plan Administrator be invested? Optional cash payments will be invested on the Investment Date as defined in Question 12 below. Optional cash payments received by the Plan Administrator less than two business days before a given Investment Date will be returned to the participant by the Plan Administrator. Since no interest will be paid by the Corporation or the Plan Administrator on optional cash payments, participants are urged to make optional cash payments shortly before the Investment Date. However, participants should allow sufficient time to insure that an optional cash payment will be received at least two business days before the Investment Date. Participants may request in writing that the Plan Administrator return all or a portion of their uninvested optional cash payments at any time up to two business days before the Investment Date. Any optional cash payment received more than 30 days before an Investment Date will be returned. OPTIONAL -8- CASH PAYMENTS DO NOT CONSTITUTE DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT INSURED BY THE FDIC OR ANY GOVERNMENT AGENCY. PURCHASES 12. When will purchases be made? In a month in which a regular dividend is paid on the Common Stock, the investment date for the regular dividend on the Common Stock and any optional cash payments is the dividend payment date; but in a month in which a dividend payment date for Common Stock does not occur, the investment date for optional cash payments is the 10th day of such month (each, an "Investment Date"). Dividends, when declared, are generally paid on or about the 1st day of each May, August, November and February. The corresponding record dates are generally about the middle of the calendar month prior to the month in which the dividend is paid. In any case, if an Investment Date falls on a day that is not a trading day, the Investment Date will be the prior trading day. 13. How many shares of Common Stock will be purchased for participants? The number of shares purchased for participants shall be determined by dividing the amount of dividends and/or optional cash payments in the account of each participant available for investment on the Investment Date by the purchase price per share on such date. If the funds available from participants are not sufficient to purchase an exact number of shares, participants' plan accounts will be credited with fractional shares computed to four decimal places, which will earn proportionate dividends as declared. Participants may not specify the number of shares to be purchased on a given Investment Date. 14. What will be the price of shares of Common Stock purchased under the Plan? The price of shares of Common Stock purchased by the Plan Administrator from the Corporation for participants will be 95% of the average of the bid and ask prices on the OTC Bulletin Board on the Investment Date, computed to three decimal places. The Corporation may amend the Plan in the future to eliminate or reduce the discount. The Corporation will bear all costs of administering the Plan, except as described under Question 17 below. 15. May dividends on shares purchased through the Plan be sent directly to the beneficial owner? No. The purpose of the Plan is to provide participants with a convenient method of purchasing shares of Common Stock and to have the dividends on those shares reinvested. Accordingly, dividends paid on shares held in the Plan will be automatically reinvested in additional shares of Common Stock unless and until the participant elects to terminate participation in the Plan as to any or all shares in the Plan as described -9- below. See Questions 22 and 25. In the event a shareholder withdraws a portion of his or her shares from the Plan, dividends will continue to be reinvested in shares of Common Stock for the Common Stock remaining in the Plan. 16. Will the Plan have a dilutive effect on the Corporation's book value per share? Possibly. The issuance of Common Stock purchased with reinvested quarterly cash dividends and optional cash payments will have a dilutive effect on the book value per share of the Corporation's Common Stock if such shares are issued at a price below the then prevailing book value of the Common Stock. The exact amount of such dilution will depend upon the number of shares issued under the Plan and the issue price of such shares. All stockholders have the right to participate in the Plan and reinvest cash dividends in Common Stock of the Corporation and make limited optional cash payments under the Plan. COSTS 17. Are there any expenses to participants in connection with purchases of Common Stock from the Corporation under the Plan? All costs or expenses arising out of the purchase of shares pursuant to the Plan, including the Plan Administrator's fees, will be paid by the Corporation. There will be no brokerage fees for shares purchased under the Plan. All administrative costs of the Plan will be paid by the Corporation. REPORTS TO PARTICIPANTS 18. How will participants be advised of their purchases of stock? As soon as practicable after each purchase, participants will receive a statement of his or her account from the Plan Administrator. These statements are participants' continuing record of the cost of shares purchased and the number of shares acquired, and should be retained for tax purposes. CASH DIVIDENDS 19. Will participants be credited with dividends on shares held in their account under the Plan? Yes. Participants' accounts will be credited with dividends on shares held in their accounts. The Plan Administrator will reinvest the dividends in additional shares of Common Stock. -10- STOCK SPLITS, STOCK DIVIDENDS, AND RIGHTS OFFERINGS 20. What is the effect of a stock split, stock dividend or rights offering by the Corporation under the Plan? Any stock dividend or stock split declared by the Corporation on shares held by the Plan Administrator for participants will be credited to participants' accounts without charge. In the event that the Corporation makes available to its shareholders the right to purchase additional shares, debentures or other securities, such rights accruing on the shares held by the Plan Administrator for participants will be sold and the proceeds of the sale will be promptly applied to the purchase of additional shares of the Corporation for participants' accounts. If, however, participants wish to exercise such rights, they may, by written request received by the Plan Administrator prior to the record date for such rights, obtain a certificate for the full shares in their accounts so that such rights to purchase additional shares accruing to those certificates will flow directly to the participants. STOCK CERTIFICATES 21. Will stock certificates be issued for shares of Common Stock purchased? No. Certificates for Common Stock purchased under the Plan will not be issued to participants. This service protects against the loss, theft and destruction of stock certificates evidencing shares of the Corporation's Common Stock. However, stock certificates will be issued to participants upon specific written request. See Question 22. The number of shares credited to an account under the Plan will be shown on the participant's statement of account. Participants' rights under the Plan and shares credited to the accounts of participants under the Plan may not be pledged. Participants who wish to pledge such shares must request that certificates for such shares be issued in their name. Accounts under the Plan are maintained in the names in which the certificates of participants were registered at the time they entered the Plan. Consequently, certificates for whole shares will be similarly registered when issued. WITHDRAWAL OF SHARES FROM THE PLAN 22. How may participants withdraw shares previously purchased under the Plan? A shareholder who has previously purchased shares under the Plan may withdraw all or a portion of such shares from their Plan account by notifying the Plan Administrator in writing to that effect and specifying in the notice the number of shares to be withdrawn. Certificates for whole shares so withdrawn will be registered in the name of -11- and issued to the participant. Certificates representing fractional interests will not be issued. If a notice of withdrawal is received less than 15 days before a dividend record date, the previously purchased shares will be withdrawn from the participant's account but dividends paid for that record date will be reinvested and the shares credited to the participant's account. Provided that notice of withdrawal is received no later than 15 days before a dividend record date, the previously purchased shares will be withdrawn from the participant's account and all future dividends on such shares will be paid in cash and sent directly to the participant if the participant has elected only the optional cash payment feature. Whether or not shares have been withdrawn, dividends will continue to be reinvested and shares will be credited to the participant's account if the participant has elected and not discontinued the dividend reinvestment feature. 23. What happens to any fractional interest when participants withdraw from the Plan? Any fractional interest withdrawn will be liquidated at the then current market value and a cash payment made promptly from the proceeds less brokerage commissions and transfer taxes, if any. The current market value will be determined in the same manner as the price for shares purchased through the Plan. See Question 14. The net sales proceeds for any fractional interest together with certificates for whole shares will be mailed to the withdrawing participant by the Plan Administrator. 24. What happens to participants' Plan accounts if all shares held in the Plan by the participant are transferred or sold? If you cease to be a record shareholder, you cease to be eligible to participate in the Plan. Periodically, the Plan Administrator will review nonrecord-shareholder Plan accounts and may issue a certificate for whole shares and a cash payment for any fractional share (as described above) to close each such account. TERMINATION OF PARTICIPATION 25. How may participation in the Plan be terminated? Participants may terminate participation in the Plan at any time by notifying the Plan Administrator in writing. Any notice of termination received by the Plan Administrator less than five business days before the next dividend record date will not be effective until dividends paid for such record date have been reinvested and the shares credited to the participant's account. Upon termination of participation in the Plan, the Plan Administrator will send the participant a stock certificate for the number of whole shares in the participant's account and a check in the amount equal to the value of any fractional share, based upon the market price of the Common Stock. See Question 14. -12- ADDITIONAL SERVICES 26. Safekeeping of Shares As an additional service to the Plan participants, you may deposit certificates for shares of Common Stock of the Corporation held by you with the Plan Administrator for safekeeping. If you wish to use this service, you should send to the Plan Administrator the certificate or certificates to the address set forth in Question 3. Delivery of certificates is at the risk of the shareholder and, for delivery by mail, insured registered mail with return receipt requested is recommended. The receipt of any shares delivered for safekeeping will be shown on your account statement. Participating shareholders may withdraw their shares from the Plan Administrator's custody at any time by requesting in writing that a certificate be issued for some or all of the full shares held by it. OTHER INFORMATION 27. What happens when participants sell or transfer all of the shares registered in their name? If participants dispose of all shares of Common Stock registered in their name (other than shares credited to their account under the Plan), the Plan Administrator will continue to reinvest the dividends on the shares credited to their account under the Plan until the participant withdraws from the Plan; provided, however, that if following such a disposition of stock the participant's account under the Plan contains less than five shares of Common Stock, then at the Corporation's election, a certificate will be issued for the full shares in the account, any fractional shares in the account will be sold and the proceeds paid to the participant, and the account will be terminated. 28. How will participants' shares held under the Plan be voted at meetings of stockholders? Shares credited to the account of participants under the Plan (other than fractional shares) will be automatically added to the shares covered by the proxy sent to the stockholder with respect to their other shares in the Corporation and may be voted by such holder pursuant to such proxy. 29. What are the income tax consequences of participation in the Plan? In general, participants in the Plan have the same federal and state income tax obligations with respect to dividends credited to their accounts under the Plan as other holders of shares of Common Stock who elect to receive cash dividends directly. Participants are treated for income tax purposes as having received, on the dividend payment date, a dividend in an amount equal to the fair market value of the Common Stock credited to their account under the Plan, even though that amount was not actually received by the participant in cash but, instead, was applied to the purchase of additional shares for their account. -13- The basis of each share credited to participants' accounts pursuant to the dividend reinvestment aspect of the Plan is the fair market value of the Common Stock, and the holding period for such shares begins on the day following the dividend payment date. The difference between the fair market value of the Common Stock and the cash payment therefore, will be taxable to the shareholder as ordinary income. The basis of the shares credited to participants' accounts pursuant to the optional cash investment aspect of the Plan is the amount paid by the participant to acquire the shares. The holding period for such shares begins on the day following the Investment Date. The receipt by participants of certificates representing whole shares previously credited to their account under the Plan upon withdrawal from the Plan or pursuant to the request of the participant will not result in the recognition of taxable income. Participants will recognize a gain or loss when fractional shares are sold on behalf of the participant upon withdrawal from the Plan or when the participant sells shares after the participant's withdrawal from the Plan. Each shareholder should consult his or her own tax adviser regarding the income tax effect of participation in the Plan. 30. What are the responsibilities of the Corporation under the Plan? The Corporation and the Plan Administrator in administering the Plan will not be liable for any act done in good faith or for the good faith omission to act, including, without limitation, any claim of liability arising out of failure to terminate participants' accounts upon the participant's death or judicially declared incompetency prior to receipt by the Plan Administrator of notice in writing of such death or incompetency or with respect to the prices at which shares are purchased for the participant's account, and the times when such purchases are made, or with respect to any loss or fluctuation in the market value after purchase of shares. 31. Who bears the risk of market price fluctuations in the Common Stock? Participants' investments in shares acquired under the Plan are no different from direct investments in shares of the Corporation. The participant bears the risk of loss and realizes the benefits of any gain from market price changes with respect to all such shares held in the Plan, or otherwise. 32. May the Plan be changed or discontinued? The Plan may be amended, suspended, modified or terminated at any time by the Board of Directors of the Corporation without the approval of the participants. Notice of any such suspension or termination or material amendment or modification will be sent to all participants, who shall at all times have the right to withdraw from the Plan. The Corporation or the Plan Administrator may terminate a stockholder's individual participation in the Plan at any time by written notice to the stockholder. In -14- such event, the Plan Administrator will request instructions from the participant for disposition of the shares in the account. If the Plan Administrator does not receive instructions from the participant, it will send the participant a certificate for the number of full shares held for the participant under the Plan and a check for any fractional share. DESCRIPTION OF CAPITAL STOCK The Corporation is authorized to issue 2,500,000 shares of Common Stock and 500,000 shares of preferred stock, par value $0.01 per share. Each share of Common Stock has the same relative rights and is identical in all respects with every other share of Common Stock. The following summary does not purport to be a complete description of the applicable provisions of the Corporation's Certificate of Incorporation and Bylaws or of applicable statutory or other law, and is qualified in its entirety by reference thereto. See "AVAILABLE INFORMATION." Common Stock Voting Rights. The holders of Common Stock possess exclusive voting rights in the Corporation. Each holder of Common Stock is entitled to one vote for each share held of record on all matters submitted to a vote of holders of Common Stock. Holders of shares of Common Stock are not entitled to cumulate votes for the election of directors. Dividends. The holders of Common Stock are entitled to such dividends as the Board of Directors may declare from time to time out of funds legally available therefor. Dividends from the Corporation depend upon the receipt by the Corporation of dividends from the Bank because the Corporation generally has no source of income other than dividends from the Bank. Liquidation. In the event of liquidation, dissolution or winding up of the Corporation, the holders of shares of Common Stock are entitled to share ratably in all assets remaining after payment of all debts and other liabilities of the Corporation. Other Characteristics. Holders of Common Stock do not have any preemptive, conversion or other subscription rights with respect to any additional shares of Common Stock which may be issued. Therefore, the Board of Directors may authorize the issuance and sale of shares of capital stock of the Corporation without first offering them to existing shareholders of the Corporation. The Common Stock is not subject to any redemption or sinking fund provisions. Preferred Stock The Corporation's Certificate of Incorporation authorizes the Board of Directors to issue from time to time one or more series of preferred stock with such designations and preferences, relative, participating, optional and other special rights and qualifications, -15- limitations and restrictions thereon, as permitted by law and as fixed from time to time by resolution of the Board of Directors. Because of its broad discretion with respect to the creation and issuance of any series of preferred stock without stockholder approval, the Board of Directors could adversely affect the voting power of the holders of common stock, and by issuing shares of preferred stock with certain voting, conversion and/or redemption rights, could discourage any attempt to obtain control of the Corporation in any transaction not approved by the Board of Directors. USE OF PROCEEDS The Corporation does not know the number of shares of Common Stock that ultimately will be sold under the Plan, or the prices thereof, but the Corporation intends to use the net proceeds from the sale of Common Stock offered pursuant to the Plan for general corporate purposes, including increased lending. LEGAL OPINIONS The validity of the shares of Common Stock offered hereby will be passed upon for the Company by Breyer & Aguggia, special counsel for the Corporation. EXPERTS The consolidated financial statements of the Corporation as of September 30, 1996, and the related consolidated statements of income, shareholders' equity and cash flows for the year then ended, incorporated in this Prospectus by reference to the Corporation's Annual Report on Form 10-KSB for the year ended September 30, 1996, have been so incorporated in reliance upon the report of Elliott, Davis & Company, LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The consolidated financial statements of the Corporation as of September 30, 1995 and for each of the two years in the period ended September 30, 1995 included in the Corporation's Annual Report of Form 10-KSB for the year ended September 30, 1996 and incorporated by reference herein, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and has been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling the Corporation -16- pursuant to the foregoing provisions, the Corporation has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is therefore unenforceable. -17- No person has been authorized to give any information or make any representations not contained in this Prospectus in connection with the offer made hereby, and, if given or made, any such information or representation must not be relied upon as having been authorized by the Corporation. This Prospectus 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, or to any person to whom, such offer or solicitation would be unlawful. Neither the delivery of this Prospectus nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Corporation since any of the dates as of which information is furnished herein or since the date hereof. Table of Contents Page ---- Available Information . . . . . . . . . . 3 Incorporation of Certain Information by Reference. . . . . . . . 3 The Corporation . . . . . . . . . . . . . 4 Union Financial Bancshares, Inc. Dividend Reinvestment and Stock Purchase Plan . . . . . . . . 4 Description of Capital Stock. . . . . . . 15 Use of Proceeds . . . . . . . . . . . . . 16 Legal Opinions. . . . . . . . . . . . . . 16 Experts . . . . . . . . . . . . . . . . . 16 Indemnification . . . . . . . . . . . . . 16 UNION FINANCIAL BANCSHARES, INC. Common Stock ($0.01 Par Value) DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN PROSPECTUS September 10, 1997 Part II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other expenses of Issuance and Distribution. Estimated expenses are expected to be minimal and will be paid by the Corporation. Item 15. Indemnification of Directors and Officers. Article XVI of the Holding Company's Certificate of Incorporation provides for indemnification of the directors, officers, employees and agents of the Holding Company for expenses (including attorney's fees) actually and reasonably incurred in connection with the defense or settlement of any threatened, pending or completed action or suit if such director is successful on the merits or otherwise, or acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interest of the Holding Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Section 145 of the Delaware General Corporation Law sets forth circumstances under which directors, officers, employees and agents may be insured or indemnified against liability which they may incur in their capacities: 145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE.-- (a) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. (b) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in II-1 defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made (1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her or incurred by him or her any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under this section. (h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, II-2 officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Item 16. Exhibits 5. Opinion of Breyer & Aguggia 23.1 Consent of Breyer & Aguggia (contained in its opinion) 23.2 Consent of Elliott, Davis & Company, LLP 23.3 Consent of Deloitte & Touche LLP 24. Power of attorney (contained in signature page) 99. Authorization card Item 17. Undertakings. The undersigned hereby undertakes that, for the purpose of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Union, State of South Carolina, on the 10th day of September, 1997. UNION FINANCIAL BANCSHARES, INC. By: /s/ Dwight V. Neese ----------------------------------- Dwight V. Neese President and Chief Executive Officer POWER OF ATTORNEY We, the undersigned directors and officers of Union Financial Bancshares, Inc. (the "Corporation") do hereby severally constitute and appoint Dwight V. Neese and Richard H. Flake true and lawful attorneys and agents to do any and all things and acts in our names in the capacities indicated below and to execute any and all instruments for us and in our names in the capacities indicated below which said Dwight V. Neese and Richard H. Flake may deem necessary or advisable to enable the Corporation to comply with the Securities Act of 1933 in connection with the Registration Statement on Form S-3 relating to the offering of the Corporation's Common Stock, including specifically, but not limited to, power and authority to sign for us or any of us in our names in the capacities indicated below the Registration Statement and any and all amendments (including post-effective amendments) thereto; and we hereby ratify and confirm all that said Dwight V. Neese and Richard H. Flake shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated. By: /s/ Dwight V. Neese Date: September 10, 1997 ------------------------------------------ Dwight V. Neese President, Chief Executive Officer and Director (Principal Executive Officer) By: /s/ Richard H. Flake Date: September 10, 1997 ------------------------------------------ Richard H. Flake Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) By: /s/ Carl L. Mason Date: September 10, 1997 ------------------------------------------ Carl L. Mason Chairman of the Board By: /s/ William M. Graham Date: September 10, 1997 ------------------------------------------ William M. Graham Vice Chairman of the Board By: /s/ Mason G. Alexander Date: September 10, 1997 ------------------------------------------ Mason G. Alexander Director By: /s/ James W. Edwards Date: September 10, 1997 ------------------------------------------ James W. Edwards Director By: /s/ Louis M. Jordan Date: September 10, 1997 ------------------------------------------ Louis M. Jordan Director By: /s/ David G. Russell Date: September 10, 1997 ------------------------------------------ David G. Russell Director Exhibit 5 Opinion of Breyer & Aguggia 1300 I Street, N.W. Suite 470 East Washington, D.C. 20005 Telephone (202) 737-7900 Breyer & Aguggia Facsimile (202) 737-7979 ============================================================================== September 10, 1997 Board of Directors Union Financial Bancshares, Inc. 203 W. Main Street Union, South Carolina 29379 RE: Union Financial Bancshares, Inc. Registration Statement on Form S-3 Gentlemen: You have requested our opinion as special counsel for Union Financial Bancshares, Inc. (the "Corporation"), a Delaware corporation, in connection with the above-referenced registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended. In rendering this opinion, we understand that the common stock of the Corporation will be offered and sold in the manner described in the Prospectus, which is part of the Registration Statement. We have examined such records and documents and made such examination as we have deemed relevant in connection with this opinion. Based upon the foregoing, it is our opinion that the shares of common stock of the Corporation will upon issuance be legally issued, fully paid and nonassessable. This opinion is furnished for use as an exhibit to the Registration Statement. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading "Legal Opinions." Very truly yours, /s/ Breyer & Aguggia BREYER & AGUGGIA Washington, D.C. Exhibit 23.2 Consent of Elliott, Davis & Company, LLP E D ELLIOTT, DAVIS & COMPANY, L.L.P. Certified Public Accountants CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference, in the Registration Statement on Form S-3 pertaining to the Dividend Reinvestment and Stock Purchase Plan of Union Financial Bancshares, Inc., of our report dated November 14, 1996, with respect to the consolidated financial statements of Union Financial Bancshares and subsidiary incorporated by reference in the Annual Report on Form 10-KSB for the year ended September 30, 1996. /s/ Elliott, Davis & Company, LLP September 10, 1997 Greenville, South Carolina Internationally -- Moore Stephens Elliott Davis, L.L.C. 870 S. PLEASANTSBURG DRIVE POST OFFICE BOX 6286 GREENVILLE, SOUTH CAROLINA 29606-6286 TELEPHONE (864) 242-3370 TELEFAX (864) 232-7161 Exhibit 23.3 Consent of Deloitte & Touche LLP INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Union Financial Bancshares, Inc. on Form S-3 of our report dated November 21, 1995, appearing in and incorporated by reference in the Annual Report on Form 10-KSB of Union Financial Bancshares, Inc. for the year ended September 30, 1996 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP Greenville, SC September 8, 1997 Exhibit 99 Authorization Card Stock Purchase and Dividend Reinvestment Plan Authorization Form Union Financial Bancshares, Inc. - ---------------------------------- 203 West Main Street Union, South Carolina 29379 Please sign the authorization located on the reverse side of this form and complete the information below only if it has changed. Name 1 - ---------------------------------- Name 2 - ---------------------------------- Street Address - ---------------------------------- City/State/Zip Code - ---------------------------------- Home Telephone Number ( ) - ---------------------------------- Business Telephone Number ( ) - ---------------------------------- NOTE: This Is Not A Proxy Completion and return of this Authorization Form authorizes your enrollment in the Union Financial Bancshares, Inc. Dividend Reinvestment and Stock Purchase Plan. Do not return this form unless you wish to participate in the Plan. Full Common Stock Dividend Reinvestment - If you check this option, you authorize the purchase of additional shares of Common Stock with the cash dividends on all shares of Common Stock currently or subsequently registered in your name, as well as on the shares of Common Stock credited to your Plan account. You may also make optional cash payments at any time under the above option in amounts of not less than $25.00 per payment, up to a total of $50,000.00 per calendar year. Optional Cash Purchases Only - If you check this option, a Plan account will be established to receive your optional cash payments of not less than $25.00 per payment, up to a total of $50,000.00 per calendar year. Such cash payments will be used to purchase additional shares of Common Stock. If you choose to make an optional cash purchase, a check for your initial optional cash purchase must accompany this Authorization Form. Your participation is subject to the terms of the Plan set forth in the Prospectus. Please return this Authorization Form in the envelope provided to: Registrar and Transfer Company, 10 Commerce Drive, Cranford, New Jersey 07016. If you wish to reinvest dividends on your Common Stock, check the following: [ ] Full Common Stock Dividend Reinvestment. (The above option permits you to make optional cash purchases; if you so choose, a check must accompany this form.) If you wish to make optional cash purchases only, check the following: [ ] Optional Cash Purchases Only. (Check must accompany this card.) A check in the amount of $_______________ payable to Registrar and Transfer Company is enclosed. Sign here exactly as name(s) appear on stock certificate(s). If shares are held jointly, all holders must sign. Stockholder X Date ------------------------------------- ------------------- Stockholder X Date ------------------------------------- ------------------- -----END PRIVACY-ENHANCED MESSAGE-----