N.Y. Comp. Codes R. & Regs. Tit. 3 § 86.14 - Proxy statement

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The proxy statement required by this Part shall comply with form 86-PS, except that a converting institution may combine the proxy statement and offering circular in one document. A short-form proxy statement shall contain the information required by Items 1, 2, 3, 4 and 5 of form 86-PS. A short-form proxy statement shall also include cross references to the sections of the offering circular containing the information required by form 86-PS, which reads in its entirety as follows:

FORM 86-PS

[Facing Sheet]

NEW YORK STATE BANKING DEPARTMENT

2 Rector Street

New York, New York 10006

Proxy Statement

_______________________

(Exact name of converting institution as specified in charter)

________________

(Street address of converting institution)

___________

(City, State and ZIP Code)

Proxy Statement Form -- Index to Items

Item 1. Notice of Meeting

Item 2. Revocability of Proxy

Item 3. Persons Making Solicitation

Item 4. Voting Rights and Vote Required for Approval

Item 5. Directors and Executive Officers

Item 6. Remuneration and Other Transactions with Management and Others

Item 7. Business of the Converting Institution

Item 8. Description of the Plan of Conversion

Item 9. Description of Capital Stock

Item 10. Capitalization

Item 11. Use of New Capital

Item 12. New Charter, Bylaws or Other Documents

Item 13. Other Matters

Item 14. Financial Statements

Item 15. Consents of Experts and Reports

Item 16. Attachments

FORM 86-PS

Information Required in Conversion Proxy Statement

Note:

1. Except as otherwise specifically provided, where any item calls for information for a specified period in regard to directors, officers, trustees or other persons holding specified positions or relationships, the information shall be given in regard to any person who held any of the specified positions or relationships at any time during the period. However, information need not be included for any portion of the period during which such person did not hold any such position or relationship provided a statement to that effect is made.

2. The proxy statement shall include such information which the Superintendent by interpretative release or otherwise has deemed necessary to comply with items of this Form 87-PS.

Item 1. Notice of Meeting. The cover page of the proxy statement shall give notice of the meeting of the depositors or shareholders called by the board of directors or trustees to act upon the conversion. The cover page shall include the date, time, and place of the meeting, a brief description of each matter to be acted upon at the meeting, the date of record for depositors or shareholders entitled to vote at the meeting, the date of the statement, and the full address, zip code and telephone number of the converting institution.

Item 2. Revocability of Proxy. State that the person giving the proxy has the power to revoke it before the proxy is exercised at the meeting. If the right of revocation is subject to compliance with any formal procedure, briefly describe such procedure. Briefly describe any charter, bylaw or applicable Federal or State law requirements otherwise restricting voting by proxy. State that the proxy is solicited for the meeting called to consider the conversion, and any adjournment thereof, and will not be used for any other meeting.

Item 3. Persons Making the Solicitation.

(a) State whether the solicitation is made by the management of the converting institution. Give the name of any director or trustee of the converting institution who has informed the management in writing that he intends to oppose any action intended to be taken by the management and indicate the action which he intends to oppose.

(b) If the solicitation is to be made otherwise than by the use of the mails, describe the methods to be employed. If the solicitations is to be made by specially engaged employees or paid solicitors, state the material features of any contract or arrangement for such solicitation and identify the parties.

(c) If the solicitation is made otherwise than by the management of the converting institution, so state and give the names of the eligible account holder by whom or on whose behalf it is made, the name of any person soliciting proxies on behalf of such eligible account holder, the length of time he or she has been a depositor, and the reasons he or she is making the solicitation. Any such solicitation normally need not respond to Items 5 through 16, but must include such information as to make such solicitation comply with section 86.4(h) of Part 86. All proxy solicitation materials used by or on behalf of an eligible account holder shall solicit proxies only for an affirmative or negative vote with respect to the plan of conversion approved by the board of trustees or directors for presentation to eligible account holders and may not confer discretionary authority. If the depositor' s proxy solicitation is being financed by a third party, such party's identity and any interest of such person in the transaction must be disclosed.

Item 4. Voting Rights and Vote Required for Approval.

(a) Describe briefly the voting rights of the depositors or shareholders. State the approximate total number of votes entitled to be cast at the meeting.

(b) As part of the description give the date of record for the depositors or shareholders entitled to vote at the meeting.

(c) As to each matter which will be submitted to a vote of the depositors or shareholders, state the vote required for its approval.

Item 5. Directors, Trustees and Executive Officers.

(a) Furnish the information regarding directors, trustees and executive officers and certain relationships and related transactions required to be disclosed under Item 5 of 12 CFR 563b.101.[FN1] Unless the context otherwise requires, the words registrant and issuer in those regulations shall refer to the converting institution and the word Commission shall refer to the Banking Department.

(b) State whether control of the converting institution has been exercised through the use of proxies and the nature of such control.

Item 6. Management Remuneration.

(a) Furnish the information regarding management remuneration required to be disclosed under Item 6 of 12 CFR 563b.101.1 Unless the context otherwise requires, the words registrant and issuer in those regulations shall refer to the converting institution and the word Commission shall refer to the Banking Department.

(b) A statement shall be included in this Item indicating that an independent executive compensation expert (the name of such expert shall be given) has reviewed the total compensation package for executive officers, directors or trustees for the purpose of determining whether or not such compensation package, viewed as a whole and on an individual basis, is reasonable and proper in comparison to compensation provided to executive officers, directors or trustees of similar publicly traded financial institutions.

Item 7. Business of the Converting Institution.

(a) Narrative Description of Business.

(1) Discuss briefly the organizational history of the converting institution, including the year or the organization, the identity of the chartering authority, and any material charter conversion.

(2) Describe the business conducted and intended to be conducted by the converting institution and its subsidiaries. This should include a description of the general development of the business of the converting institution and any predecessor(s) during the past five years, or such shorter period as the applicant may have been engaged in business. Information shall be disclosed for earlier periods if material to an understanding of the general development of the business. Any material changes in the mode of conducting the business should be discussed.

(3) Consideration should be given to inclusion of a description of the converting institution's historical practices, including the average remaining term of maturity of its portfolio of mortgage loans, and present intention regarding the making of loans, whether real estate or other, the nature of security received, the terms of loans, whether carrying fixed or variable interest rates, and the retention of loans or their resale in secondary mortgage markets. Historical description might require a general identification of the magnitude of various activities.

(4) Also explain any significant impact to the thrift institution as a result of any material acquisitions.

(b) Selected Financial Data. Furnish in comparative columnar form a summary of selected financial data for the converting institution for:

(1) each of the last five fiscal years of the converting institution (or for the life of the converting institution and its predecessors, if less); and

(2) any additional fiscal years necessary to keep the summary from being misleading.

Instructions.

1. The purpose of the summary of selected financial data shall be to supply in convenient and readable format selected data which highlight significant trends in the converting institution's financial condition and results of operations.

2. Subject to appropriate variation to conform to the nature of the converting institution's business, the following items, as a minimum, shall be included in the summary: total interest income; total interest expense; income (loss) from continuing operations; net income; total loans; total investments; total assets; total savings; total borrowings; total regulatory capital; and total number of offices indicating the number which provide full service. Converting institutions may include additional items which they believe would enhance understanding and highlight trends in their financial and results of operations. Briefly describe, or cross reference to a discussion of, factors such as accounting changes, business combinations, or dispositions of business operations that materially affect the comparability of the information reflected in selected financial data. Discussion of, or reference to, any material uncertainties should also be included where those matters might cause the data reflected not be indicative of the converting institution's future financial condition or results of operations.

3. Those converting institutions which elect to provide five-year summary information in accordance with the standards identified in Instruction 3 to Item 7(b) of 12 CFR 563b.101 (see footnote #1)[FN1], may combine such information with the selected financial data appearing pursuant to this Item.

4. All references to the converting institution in the summary and in these instructions shall mean the converting institution and its consolidated subsidiaries.

5. If interim-period financial statements are included, or are required to be included by Item 14, converting institutions should update the selected financial data for the interim period to reflect any material change in the trends indicated, where such updating information is necessary, converting institutions shall provide the information on a comparative basis unless not necessary to an understanding of the updating information.

(1) Discuss the converting institution's financial condition, changes in financial condition, and results of operations. The discussion shall provide information as specified in subparagraphs (i), (ii) and (iii) of this paragraph with respect to liquidity, capital resources, and results of operations and also should provide all other information which the converting institution believes to be necessary to an understanding of its financial condition, changes in financial condition, and results of operations. Significant business combinations should be discussed. Discussion of liquidity and capital resources may be combined whenever the two topics are interrelated. Where in the converting institution's judgment a discussion of subdivisions of the converting institution's business would be appropriate to an understanding of the business, the discussion should focus on each relevant, reportable segment or other subdivision of the business and on the converting institution as a whole.

(i) Liquidity. Identify any known trends or any known demands, commitments, events, or uncertainties which will result in or which are reasonably likely to result in the converting institution's liquidity increasing or decreasing in any material way. If a material deficiency is identified, indicate the course of action which the converting institution has taken or proposes to take to remedy the deficiency. Identify and separately describe internal and external sources of liquidity, and briefly discuss any material unused sources of liquid assets. Comment on maturity imbalances between assets and liabilities and planned activities in the secondary mortgage market.

(ii) Committed Resources.

(a) Describe the converting institution's material commitments for loan fundings or other expenditures as of the end of the last fiscal period and indicate the general purpose of the commitments and the anticipated source of funds needed to fulfill the commitments.

(b) Describe any known material trends, favorable or unfavorable, in the converting institution's committed resources. Indicate any expected material changes in the mix and the relative cost of the resources. This discussion should consider changes between savings, equity, debt, and any off-balance-sheet financing arrangements.

(iii) Results of Operations.

(a) Describe any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount or reported income from continuing operations and, in each case, indicate the extent to which income was affected. In addition, describe any other significant components of revenues or expenses which, in the converting institution's judgment should be described in order to understand the converting institution's results of operations.

(b) Describe any known trends or uncertainties which have had, or which the converting institution reasonably expects will have, a materially favorable or unfavorable impact on net sales or revenues or income from continuing operations. If the converting institution knows of events which will cause a material change in the relationship between costs and revenues (such as known future increases in costs of money or interest rates) the change in the relationship should be disclosed.

(c) To the extent that the financial statements disclose material increases in interest expense, provide a narrative discussion of the extent to which the increases are attributable to increases in rates or to increases in volume.

(d) For the three most recent fiscal years of the converting institution, or for those fiscal years in which the converting institution has been engaged in business, whichever period is shorter, discuss the impact of inflation and changing prices on the converting institution's revenues and on income from continuing operations.

(e) For the most recent financial statement presented, discuss any unusual risk characteristics in the assets of the converting institution. This would include real estate development, significant amounts of commercial real estate as loan collateral, and any other significant risk factors inherent in the converting institution's lending or investment portfolios, including significant increases in amounts of nonaccrual, past due, restructured, and potential problem loans.

Instructions.

1. The converting institution' s discussion and analysis shall be of the financial statements and of other statistical data which the converting institution believes will enhance a reader's understanding of its financial condition, changes in financial condition, and results of operations. Generally, the discussion should cover the three-year period covered by the financial statements and should utilize year-to-year comparisons or other formats which in the converting institution's judgment enhance a reader's understanding. However, where trend information is relevant, reference to the five-year selected financial data appearing in Item 7(b) above may be necessary.

2. The purpose of the discussion and analysis should be to provide to investors and other users information relevant to an assessment of the financial condition and results of operations of the converting institution as determined by evaluating the amounts and certainty of cash flows from operations and from outside sources. The information provided in this Item 7(c) need only include that which is available to the converting institution without undue effort or expense and which does not clearly appear in the converting institution's financial statements.

3. The discussion and analysis should specifically focus on material events and uncertainties known to management which would cause reported financial information not to be necessarily indicative of future operating results or future financial condition. This would include description and amounts of (a) matters which would have an impact on future operations and have not had an impact in the past, and (b) matters which would have an impact on reported operations and are not expected to have an impact upon future operations.

4. Where the consolidated financial statements reveal material changes from year to year in one or more line items, the causes for the changes should be described to the extent necessary to an understanding of the converting institution's business as a whole; provided, however, if the causes for a change in one line item also relate to other line items, no repetition is required and a line-by-line analysis of the financial statements as a whole is not required or generally appropriate. Converting institutions need not recite the amounts of changes from year to year which are readily computable from the financial statements. The discussion should not merely repeat numerical data contained in the consolidated financial statements.

5. The term liquidity as used in paragraph (c)(1)(i) of this Item 7 refers to the ability of an enterprise to generate adequate amounts of cash to meet the enterprise's needs for cash. Except where it is otherwise clear from the discussion, the converting institution should indicate those balance sheet conditions or income or cash flow items which the converting institution believes may be indicators of its liquidity condition. Liquidity generally should be discussed on both a long-term and short-term basis. The issue of liquidity should be discussed in the context of the converting institution's own business or businesses.

6. Converting institutions are encouraged, but not required, to supply forward-looking information. This is to be distinguished from presently known data which will have an impact upon future operating results, such as known future increases in rates or other costs. This latter data is required to be disclosed.

7. Converting institutions which elect to provide narrative explanations of supplementary information disclosed in accordance with Instruction 7 to Item 7(c)(1) of 12 CFR 563b.101 (see footnote #1), may combine the explanations with their discussion and analysis required pursuant to this provision or they may supply the information separately.

8. Converting institutions which elect not to provide explanations of supplementary information disclosed in accordance with Instruction 8 to Item 7(c)(1) of 12 CFR 563b.101 (see footnote #1).

9. All references to the converting institution in the discussion and in these instructions shall mean the converting institution and its consolidated subsidiaries.

(2) If interim-period financial statements are included or are required to be included by Item 14, a management's discussion and analysis of the financial condition and results of operations shall be provided to enable the reader to assess material changes in financial condition and results of operations between the periods specified in (i) and (ii) below. The discussion and analysis shall include a discussion of material changes in those items specifically listed in paragraph (c)(1) of this Item 7, except that the impact of inflation and changing prices on operations for interim period needs not be addressed.

(i) Material Changes in Financial Condition. Discuss any material changes in financial condition from the end of the preceding fiscal year to the date of the most recent interim balance sheet provided. If the interim financial statements include an interim balance sheet as of the corresponding interim date of the preceding fiscal year, any material change in financial condition from that date to the date of the most recent interim balance sheet provided shall also be discussed. If discussions of changes from both the end and the corresponding interim date of the preceding fiscal year are required, the discussions may be combined at the discretion of the converting institution.

(ii) Material Changes in Results of Operations. Discuss any material changes in the converting institution's results of operations with respect to the most recent fiscal year-to-date period for which an income statement is provided and the corresponding year-to-date period of the preceding fiscal year. If the converting institution is required to or has elected to provide an income statement for the most recent fiscal year quarter, the discussion also shall cover material changes with respect to that fiscal quarter and the corresponding fiscal quarter in the preceding fiscal year. In addition, if the converting institution has elected to provide an income statement for the 12- month period ended as of the date of the most recent interim balance sheet provided, the discussion shall also cover material changes with respect to that 12-month period and the 12-month period ended as of the corresponding interim balance sheet date of the preceding fiscal year.

Instructions.

1. If interim financial statements are presented together with financial statements for full fiscal years, the discussion of the interim financial information shall be prepared pursuant to paragraph (c)(2) and the discussion of the full fiscal year information shall be prepared pursuant to paragraph (c)(1) of this Item 7. Such discussions may be combined.

2. The discussion and analysis required by this paragraph (c)(2) is required to focus only on material changes. Where the interim financial statements reveal material changes from period to period in one or more significant line items, the causes for the changes should be described if they have not already been disclosed; however, if the causes for a change in one line item also relate to other line items, no repetition is required. Converting institutions need not recite the amounts of changes from period to period which are readily computable from the financial statements. This discussion should not merely repeat numerical data contained in the financial statements. The information provided should include that which is available to the converting institution without undue effort or expense and which does not clearly appear in the converting institution's interim financial statements.

3. The converting institution's discussion of material changes in results of operations should identify any significant elements of the converting institution's income or loss from continuing operations which do not arise from or are not necessarily representative of the converting institution's ongoing business.

4. Converting institutions are encouraged but are not required to discuss forward-looking information.

(d) Lending Activities.

(1) Briefly describe the applicable Federal and State restrictions on the lending activities of the converting institution, including applicable laws affecting mortgage loan interest rates. Also briefly describe the converting institution's general policy concerning loan-to-value ratios; customary methods of obtaining loan originations, such as the use of loan consultants; approval of properties as security for loans; the use of a loan committee, if any; and policies as to requiring title, fire, and casualty insurance on security properties. Indicate the converting institution's general future intentions with respect to activities in secondary mortgage markets, including transactions with the Federal Home Loan Mortgage Corporation or mortgage bankers. If significant, indicate loan service fee income as a percentage of net interest income for the years required by Item 14(b).

(2) As to the lending area of the converting institution, describe briefly (i) the lending area restrictions, if any, applicable to the converting institution, (ii) the areas in which the converting institution normally lends, and (iii) any material loan concentration areas of the converting institution.

The descriptions may include maps illustrating one or more of these areas. Furnish an estimate of the housing vacancy rates in areas where the converting institution' s loan concentrations are located, if practicable.

(3) Describe briefly the general long-term nature of investment in mortgage loans and the consequent effect upon the earnings spread of thrift institutions. State the normal maturity of loans made by the converting institution on the security of single-family dwellings and furnish an estimate as to the average length of time the loans are outstanding.

(4) For each of the periods required by Item 14(b), set forth in tabular form, excluding fees which are not considered adjustments of yield, the following:

(i) Average yield during the period on:

(a) loan portfolio,

(b) investment portfolio,

(c) other interest-earning assets, and (d) all interest-earning assets. Average yield should be computed on no greater than a monthly basis.

(ii) Average rate paid during the period on:

(a) deposits,

(b) borrowings and Federal Home Loan Bank advances,

(d) all interest-bearing liabilities ([a], [b], and [c] ). Average rate paid should be computed on no greater than a monthly basis.

(iii) Weighted-average yield at end of the latest required period for the items in (i) and (ii) above.

(iv) The net yield on average interest-earning assets (net interest earnings divided by average interest-earning assets, with net interest earnings equaling the difference between the dollar amount of interest earned and paid). Average interest-earning assets should be determined on an interval no more frequent than monthly.

(v) For each of the periods required by Item 14(b), set forth in tabular form:

(a) the dollar amount of change in interest income and (b) the dollar amount of change in interest expense. The changes should be segregated for each major category of interest-earning asset and interest-bearing liability (as stated in [i] and [ii] above) into amounts attributable to (1) changes in volume (change in volume multiplied by old rate), (2) changes in rates (change in rate multiplied by old volume), and (3) changes in rate-volume (change in rate multiplied by the change in volume). The rate/volume variances should be allocated on a consistent basis between rate and volume variance and the basis of allocation disclosed in a note the table.

(5) For each of the periods required by Item 14(b), present the following:

(i) return on assets (net income divided by average total assets);

(ii) return on equity (net income divided by average equity);

(iii) equity-to-assets ratio (average equity divided by average total assets).

Instructions. Converting institutions should supply any additional ratios which they deem necessary to explain their operations.

(6) As of the end of the last fiscal year reported on, with respect to (i) real estate mortgage loans, (ii) real estate construction loans, (iii) instalment loans, and (iv) commercial, financial, and agricultural loans, present separately the amounts of loans in each category which are due:

(i) in each of the three years following the balance sheet,

(ii) after three through five years,

(iii) after five through ten years,

(iv) after ten through fifteen years, and

(v) after fifteen years.

In addition, present separately the total amount of all such loans due after one year which have predetermined interest rates and floating or adjustable interest rates.

Instructions:

1. Scheduled principal repayments should be reported in the maturity category in which the payment is due.

2. Demand loans, loans having no stated schedule of repayments and no stated maturity, and over-drafts should be reported as due in one year or less.

3. Determinations of maturities should be based upon contract terms. However, such terms may vary due to the converting institution's "rollover policy," in which case the maturity should be revised as appropriate and the rollover policy should be briefly discussed.

(7) Describe briefly the risk elements within the loan and investment portfolios including the converting institution's customary procedures regarding delinquent loans. As of the end of each of the periods covered by the statements of operation required by Item 14(b)(1) and as of the date of the latest statement of financial condition required by Item 14(a), set forth in tabular form the amounts and categories of nonaccrual, past due, restructured, and potential problem loans and the ratio of such loans to total assets. Where the amount of real estate that has been in substance foreclosed, acquired by foreclosure, or by deed in lieu thereof is significant, include a brief description of the major properties and a statement as to the converting institution's probable losses, if any, upon disposition of such properties.

(e) Savings Activities.

(1) State whether the maximum rate of interest which the converting institution may pay is established by regulatory authorities. State that, in the event of liquidation of the converting institution after conversion, savings account holders will be entitled to full payment of their accounts prior to payment to holders of the capital stock of the institution. Also indicate the percentage of total savings accounts which are from out-of-state sources, if such total is significant.

(2) Set forth in tabular form the amounts of time deposit accounts by categories of interest rates as of the dates of each balance sheet filed. Each interest-rate category should not be more than 200 basis points. As of the date of the latest balance sheet, set forth, in tabular form for each interest-rate category, the amounts of savings maturing during each of the three years following the balance sheet date and the total maturing thereafter.

(3) Disclose the weighted-average rate and general terms (as well as formal provisions for the extension of the maturity) of each category of short-term borrowings, along with the maximum amount of borrowings in each category outstanding at any month-end during each period for which an end-of-period balance sheet is required. In addition, disclose the approximate average short-term borrowings outstanding during the period and the approximate weighted-average interest rate (and a brief description of the means used to compute such average) for such aggregate short-term borrowings. The disclosure required by this paragraph (3) need not be furnished as regards borrowings in each particular category when the aggregate amount of such borrowings at the balance sheet date does not exceed one percent of assets at that date. Notwithstanding this reporting threshold, if the weighted average of such borrowings outstanding during the year exceeds one percent of assets at year-end and significantly exceeds the amount of such borrowings at year-end, the disclosure called for by this paragraph (3) should be furnished. This information is not required to be given for any category of short-term borrowings for which the average balance outstanding during the period was less than 30 percent of stockholders' equity at the end of the period.

(f) Federal Regulation. Describe briefly, to the extent not otherwise covered by other items, Federal regulation of the converting institution and the conduct of its operations. In particular, describe briefly the Federal Home Loan Bank System, the Federal Deposit Insurance Corporation, and/or the Federal Reserve System, as applicable and state that the converting institution is a member or is otherwise subject to the jurisdiction thereof. Such description shall include (i) the insurance of accounts and the general regulatory authority of the Federal Deposit Insurance Corporation, (ii) Federal regulatory capital requirements and the converting institution's regulatory capital position in relation to those requirements, (iii) limitations on borrowings, (iv) recent loan policies of the converting institution's Federal Home Loan Bank or other applicable regulator and current interest rates, and (v) Federal Home Loan Bank or other applicable regulator's stock purchase requirements and the converting institution's position with respect to those requirements. Also describe the assessment authority and requirements of the Federal Deposit Insurance Corporation. In addition, describe briefly applicable liquidity requirements and state the converting institution's position with respect to those requirements.

(g) State Law. Describe briefly provisions of State law which have a material effect on the business of the converting institution.

(h) Federal and State Taxation. Describe briefly the Federal income tax laws applicable to the converting institution including:

(1) permissible bad debt reserves;

(2) the converting institution's position with respect to the maximum bad debt reserve limitations as of the date of the latest statement of financial condition required under Item 14(a);

(3) future increases in the effective income tax rate;

(4) the date through which the converting institution's Federal income tax returns have been audited by the Internal Revenue Service; and

(5) the tax effect to the converting institution of the payment of cash dividends on capital stock of the applicant after conversion. Also describe briefly the State taxation of the converting institution.

(i) Competition. Describe the material sources of competition for thrift institutions generally and indicate to the extent practicable the converting institution's position in its principal lending and savings markets.

Instruction. In answering Item 7(j) give to the extent known the converting institution's savings and mortgage product market shares by county in its geographic market. Also indicate its rank and any material changes or trends in its competitive standing.

(j) Offices and Other Material Properties.

(1) Furnish the location of the converting institution's principal office and each existing and approved branch office and other office facilities. State the total net book value of all such offices as of the date of the latest statement of financial condition required by Item 14(a). If any such office is leased, state the expiration dates of such leases.

(2) Describe briefly undeveloped land owned by the converting institution, including location, net book value, and prospective use and holding period. If the converting institution or a subsidiary own or leases electronic data processing equipment principally for its own use, describe briefly such equipment indicating net book value if owned or the principal lease terms if leased.

(k) Employees. State the number of persons employed full-time by the converting institution including executive officers listed under Item 5. State whether employees are represented by a collective bargaining group and whether the converting institution's relations with its employees is satisfactory. Summarize briefly any loans, profit sharing, retirement, medical, hospitalization or other remuneration plans provided for employees not already included pursuant to Item 6.

(l) Service Corporations, Operations Subsidiaries and Leeway Subsidiaries. Describe briefly the converting institution's investment in any subsidiary and the major lines of business (including any joint ventures) of the subsidiary which are material to its operations.

(m) Legal Proceedings. Furnish the information regarding legal proceedings required to be disclosed by Item 7(n) of 12 CFR 563b.101 (see footnote #1). [FN1] Unless the context otherwise requires, the word registrant in that regulation shall refer to the converting institution.

(n) Additional Information. The Superintendent may upon the request of converting institution, and where consistent with the protection of account holders and others, permit the omission of any of the information required by this Item or the furnishing in substitution therefor of appropriate information of comparable character. The Superintendent may also require the furnishing of other information in addition to, or in substitution for, the information required by this Item in any case where such information is necessary or appropriate for an adequate description of the converting institution's business done or intended to be done.

Item 8. Description of the Plan of Conversion.

(a) A statement to the following effect shall be inserted in the proxy statement immediately preceding the information required by this Item: The Banking Department has given approval to the Plan of Conversion, subject to its approval by depositors or shareholders, as applicable, and the satisfaction of certain other conditions. However, such Department approval does not constitute a recommendation or endorsement of the Plan of Conversion by the Department.

(b) The proxy statement shall contain a description of the plan of conversion. Such description shall contain the information required by paragraphs (c) through (j) of this Item and such additional information as may be necessary to accurately describe the material provisions of the plan.

(c) Describe the effects of conversion from a mutual institution to a stock institution including the following information:

(1) state that share and deposit accounts of the converting institution will not be affected by the conversion with respect to such matters as balances in the accounts and the extent of insurance of such accounts by the federal deposit insuror;

(2) state whether shareholders or borrowers of the converting institution will continue to have voting rights in the converting institution after conversion, and describe any voting rights they will have;

(3) state the present liquidation rights of account holders and describe the liquidation account to be established and maintained by the converting institution, including the conditions under which such account will be paid, the interest of Eligible Account Holders in such account and the formula by which such account will be adjusted;

(4) state that the rights and obligations of borrowers from the applicant will not be changed in any manner;

(5) state that capital stock to be sold by the converting institution will not be insured;

(6) state that none of the assets of the converting institution will be distributed in order to effect the conversion other than to pay expenses incident thereto;

(7) state the reasons why management is recommending the conversion, including any advantages to the community served by the converting institution; and

(8) state any reasons why management believes that such conversion would be detrimental to the interests of the depositors or shareholders.

(d) Describe any contacts which have occurred during the period beginning one year prior to publication of approval of the plan of conversion by the board of trustees or directors with the converting institution, or any of its trustees, directors, or executive officers, concerning: a merger conversion, the acquisition of securities of any class of the converting institution, or a sale or other transfer of a material amount of assets of the converting institution or any of its subsidiaries; provided, however, that no disclosure shall be required under this paragraph unless the proposed transaction is:

(1) communicated in writing;

(2) definitive by its terms; and

(3) not subject to significant conditions which, if considered at the time of such proposed transaction, would make consummation of the transaction unlikely. In determining the significance of any condition the converting institution shall consult with the superintendent as to all such proposed transactions occurring within the applicable time period which were communicated in writing and definitive by their terms. Describe the factors considered by the board of trustees or directors in rejecting any such proposed transaction.

(e) With respect to the subscription rights of depositors or shareholders, furnish the following information:

(1) the formula to be used for determining the subscription rights of depositors or shareholders to purchase shares;

(2) any optional provisions included in the plan of conversion for the purchase of shares of capital stock, including the purchase priorities, limitations on total purchases, the total number of shares which may be purchased, and the formula for the allocation;

(3) the allocation formulas to be used in the event that there is an oversubscription of shares at any time during the sale of stock under the plan of conversion; and

(4) the use and timing of the order forms with respect to the exercise of subscription rights.

(f)

(1) Set forth on a per-share basis the estimated public offering price range of the shares of capital stock to be sold pursuant to the plan of conversion, except that an estimated price range is not required to be stated if the offering of stock is not to commence until after the meeting of depositors or shareholders to vote on the plan of conversion;

(2) state that the offering price will be the pro forma market value of such shares as determined by the institution's management and the underwriters, as the case may be; and

(3) state that all of the shares are required to be sold.

(g) Unless the offering of stock is not to commence until after the meeting of depositors or shareholders to vote on the plan of conversion, discuss (1) the earnings per share on a pro forma basis of the capital stock to be sold as of the end of the most recent period covered by the statements of operation required by Item 14(b)(1); and (2) the book value per share on a pro forma basis as of the date of the latest statement of financial condition required by Item 14(a).

Instructions:

1. Earnings and book value per share shall be furnished, without giving effect to the estimated net proceeds from the sale of the capital stock, and then after giving effect to such proceeds with all assumptions used clearly stated.

2. In computing pro forma earnings, the applicant shall use the arithmetic average of the (i) average yield on all interest-earning assets (Item 7[d][4] [i][D]) and (ii) average rate paid of deposits (Item 7[d][4][ii][A]).

3. If significant changes in interest rates occur during the periods presented, the Superintendent will consider permitting alternative computations proposed by a converting institution that are properly supported.

4. An appropriate statement should be included which explains that the pro forma data should not be relied upon as indicative of the actual financial position or results of continuing operations that will be experienced by the converting institution after its conversion.

(h) State the proposed commencement and expiration dates of the subscription period and describe any provisions in the plan of conversion related to the timing or extension of the subscription period. Also, state (1) that a maximum subscription price will be set forth in the offering circular used for offering of subscription rights; (2) that the actual subscription price will be the public offering price; (3) that the actual subscription price will not exceed the maximum subscription price shown on the order form; and (4) that any difference between the maximum and actual subscription prices will be refunded unless the subscribers affirmatively elect to have the difference applied to the purchase of additional shares of capital stock.

(i) Furnish the following information:

(1) describe to the extent practicable the converting institution's present intentions with respect to listing the capital stock on an exchange or otherwise providing a market for the purchase and sale of the capital stock in the future;

(2) describe the tax effect of the conversion both to the converting institution and to the depositors or shareholders receiving nontransferable subscription rights to purchase capital stock in the conversion;

(3) state that the plan of conversion is attached as an exhibit to the proxy statement (or will be made available on request in the case where a short-form proxy statement is used) and should be consulted for further information.

(j)

(1) State whether the plan of conversion provides for unsubscribed capital stock to be offered to the public through underwriters or directly by the converting institution. If such is the case, provide the information to the extent known required by Item 6 of Form 86-OC and indicate the estimated timing of the proposed offering.

(2) State whether the plan of conversion provides for the purchase by any person or group of any insignificant residue of shares remaining at the conclusion of the offering.

(k) Furnish the following information in tabular form regarding proposed purchases of capital stock involving directors, officers and trustees of the converting institution:

(1) State the total number of shares proposed to be purchased by all directors, officers and trustees as a group without naming them.

(2) As to each officer, director or trustee named in Item 6(a)(1)(i), name him, state his position, and the number of shares proposed to be purchased by him.

(3) As to any officer, director, trustee or associate thereof who proposes to purchase one percent or more of the total number of shares of capital stock of the converting institution to be outstanding, name him, state his position, and the number of shares proposed to be purchased by him.

(4) With respect to the information required by (1), (2), and (3) above, indicate separately the number of shares proposed to be purchased in each offering category.

Instructions: With respect to the information requested as to associates of officers, directors and trustees, such information is required only to the extent known. In a case where such information is not obtainable, only the number of shares which the associate is given subscription rights to purchase need to be disclosed.

(l) With respect to the appraisal required by section 86.4(e) of this Part:

(1) Briefly describe the qualifications of the appraisers and the method of selecting the appraiser.

(2) Describe any material relationship between the appraiser and the converting institution or any underwriter.

(3) Furnish a summary concerning such appraisal which shall include, but not be limited to, the procedures followed, the findings and recommendations, the bases and assumptions for and methods of arriving at such findings and recommendations, instructions received from the converting institution or any underwriter, and any limitation imposed by the converting institution or underwriters on the scope of the investigation.

(4) Furnish a statement to the effect that such appraisal shall be made available for inspection and copying at the principal executive offices of the converting institution during its regular business hours by any interested eligible account holder of the converting institution or his or her representative who has been so designated in writing. This statement may also provide that a copy of such appraisal will be transmitted by the converting institution to any interested eligible account holder of the converting institution or his or her representative who has been so designated in writing upon written request and at the expense of the requesting eligible account holder.

Item 9. Description of Capital Stock.

(a) Furnish the information regarding capital stock of the converting institution required to be disclosed under Item 9(a) of 12 CFR 563b.101 (see footnote # 1). Unless the context otherwise requires, the term registrant in that regulation shall refer to the converting institution.

(b) An undertaking should be included in the proxy statement that the converting institution where practical will use its best efforts to encourage and assist a professional market maker in establishing and maintaining a market for the capital stock of the converting institution.

(c) Outline briefly the trading market that is expected to exist for the capital stock following the conversion including the estimated number of market makers and stockholders, and the anticipated success of the converting institution in listing the stock.

Instructions: Any discussion of the listing of the converting institution's stock should include the basic requirements that must be satisfied in order to accomplish such listing.

(d) If the rights evidenced by the capital stock will be materially limited or qualified by the rights of savings account holders or borrowers, include the information regarding the limitations or qualifications necessary to enable investors to understand the rights evidenced by the capital stock.

Item 10. Capitalization.

Set forth in substantially the tabular form indicated below the dollar amounts of the capitalization of the converting institution:

(A) (B) (C) Capitalization Adjustments Pro forma as of Latest as a Capitalization Statement of Result of After Giving Condition Conversi- Effect to the Date on Conversion 1. Share and Deposit Accounts $ $ $ 2. FHL Bank Advances 3. Subordinated Debt Securities 4. Other Borrowings 5. Capital Stock 6. Paid in Capital 7. Undivided Profits 8. Other Net Worth 9. Federal Insurance Reserve, if applicable 10. Other Reserves 11. Total $ $ $ Instructions: 1. With respect to capital stock, indicate in the table or in a footnote the total number of shares to be authorized, the par or stated value of such shares, and the number of shares to be sold as part of the conversion.

(2) With respect to the funds to be received by the converting institution from the sale to its capital stock, indicate in the table the estimated total amount of funds to be obtained and in a footnote state the price per share used in making such estimate. Such total amount and price per share shall be clearly identified as being estimates.

Item 11. Use of New Capital.

State the principal purposes for which the net proceeds to the converting institution from the capital stock to be sold are intended to be invested or otherwise used, and the approximate amount intended for each such purpose.

Instructions: Details of proposed investments are not to be given. There need be furnished, for example, only a brief statement of any investment or other activity of the converting institution which will be affected materially by the availability of the proceeds. Examples of such activities may include expanded secondary market activities, larger scale lending projects, loan portfolio diversification, increased liquidity investments, repayment of debt, additional branch offices and other facilities, service corporation investments, and acquisitions.

Item 12. New Charter, Bylaws or Other Documents.

Describe briefly any material differences between the provisions of existing charter, bylaws and any similar documents of the converting institution and those which will take effect after conversion, including, if applicable, optional charter provisions provided for in Section 86.10 of Part 86.

Instruction: This Item requires only a brief summary of the provisions which are pertinent from both an investment and a voting point of view. A complete legal description of the provisions referred to is not required and should not be given. Do not set forth the provisions verbatim; only a succinct summary is required.

Item 13. Other Matters.

State that the converting institution will register its capital stock under section 12(g) of the Securities Exchange Act of 1934, as amended, and that it will not deregister such stock for a period of three years. State that upon such registration the proxy rules, insider trading reporting and restrictions, annual and periodic reporting and other requirements of that Act will be applicable.

Item 14. Financial Statements.

Notes:

1. The following instructions specify the consolidated balance sheets, the consolidated statements of income, the consolidated statements of cash flows, and stockholders' equity required to be included in the proxy statement.

2. If the converting institution has previously used an audit period in connection with its certified financial statements which does not coincide with its fiscal year, such audit period may be used in place of any fiscal year requirement provided it covers a full 12 months' operations and is used consistently.

(a) Consolidated Balance Sheets.

(1) There shall be furnished for the applicant and its subsidiaries consolidated, audited balance sheets as of the end of each of the two most recent fiscal years.

(2) If the latest balance sheets furnished under (1) of this paragraph are in excess of 135 days prior to the date of the Superintendent's approval of the conversion, there shall be furnished an interim balance sheet as of date within 135 days of such approval. This interim balance sheet need not be audited.

(b) Consolidated statements of income and cash flow.

(1) There shall be furnished for the converting institution and its subsidiaries and predecessors consolidated, audited statements of income and cash flows for each of the three fiscal years preceding the date of the most recent balance sheet furnished.

(2) In addition, for any interim period between the latest audited balance sheet and the date of the most recent interim balance sheet being filed, and for the corresponding period of the preceding fiscal year, statements of income and cash flows shall be furnished. The interim statements may be unaudited.

(c) Changes in stockholders' equity. An analysis of the changes in each caption of stockholders' equity presented in the balance sheets shall be given in a note or separate statement. This analysis shall be presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which an income statement is required to be furnished with all significant reconciling items described by appropriate captions.

(d) Financial statements of business acquired or to be acquired. There shall be furnished the information required under Item 14(d) of 12 CFR[FN*] 563b.101 regarding business acquired or to be acquired.

(e) Separate financial statements of subsidiaries not consolidated and 50 percent or less owned persons. There shall be furnished the information required under Item 14(e) of 12 CFR 563b.101 (see footnote #1)1 regarding separate financial statements of subsidiaries not consolidated and 50 percent or less owned persons.

(f) Filing of other statements in other cases. The Superintendent may, upon the request of the converting institution, and where consistent with the protection of eligible account holders and others, permit the omission of one or more of the statements herein required or the filing in substitution therefor of appropriate statements of comparable character. The Superintendent may also require the inclusion of other statements in addition to, or in substitution for, the statements herein required in any case where such statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise necessary for the protection of eligible account holders and others.

Item 15. Consents of Experts and Reports.

(a) The proxy statement shall briefly describe all consents of experts filed pursuant to Part 86.

(b) The statement shall contain a report of the independent public accountants who have certified the financial statements and other matters in the statement.

Item 16. Attachments.

There shall be attached to the proxy statement distributed to depositors or shareholders and others a copy of the converting institution's plan of conversion as approved by the Superintendent unless the following procedure is observed. The converting institution may in the alternative set forth in the proxy statement that the plan of conversion will not be provided unless the recipient so requests by returning within a specified period a postage-paid or other written communication.

[FN1] 12 CFR Part 563b was published in the November 30, 1994 copy of the Federal Register, Vol. 59. Publisher: Office of the Federal Register, National Archives and Records Administration, Washington, DC 20408. A copy of this document is on file at the NYS Department of State, Office of Information Services, 41 State Street, Albany, NY 12231 and in the library of New York State Banking Department, at 2 Rector Street, New York, NY 10006.

[FN1] 12 CFR Part 563b was published in the November 30, 1994 copy of the Federal Register, Vol 59. Publisher: Office of the Federal Register, National Archives and Records Administration, Washington, DC 20408. A copy of this document is on file at the NYS Department of State, Office of Information Services, 41 State Street, Albany, NY 12231 and in the library of the New York State Banking Department, at 2 Rector Street, New York, NY 10006.

[FN*] For information regarding the United States Code (USC or U.S.C.), the Code of Federal Regulations (CFR) and the Federal Register, see Supervisory Policy G 1.

Notes

N.Y. Comp. Codes R. & Regs. Tit. 3 § 86.14

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